Finance Champions: Summaries and Takeaways from USAID Missions in Georgia, India, Kosovo and the REFS Bureau



The Finance Champions group was established in March 2023 with the aim to share innovative approaches being tested by USAID Missions, Bureaus and Independent Offices and to exchange learning on the topic of mobilizing finance in development. This group, which is internal to USAID, meets every six weeks, and has grown from an initial group of 20 to 160 members.


Finance Champions: Summaries and Takeaways from USAID Missions in Georgia, India, Kosovo and the REFS Bureau
Photo Credit: Douglas Gritzmacher/USAID

On October 27, 2023, the Finance Champions group met to discuss four different approaches to Mobilizing Finance in Development. The Group heard presentations from USAID/Georgia, USAID/India, USAID/Kosovo, and the USAID/Bureau for Resilience, Environment and Food Security (REFS). Below are summaries and takeaways from each of the presentations. These are provided on Marketlinks to share our experience with our development partners as well as the broader development community.

USAID GeorgiaSophiko Skhirtladze presented an innovative Global Development Alliance (GDA) grant, which was used in part to provide loans with 0% interest. The GDA is also interesting in that it was structured to disburse grant funds on a milestone basis,upon evidence of success in catalyzing additional private capital.

In 2021, USAID/Georgia entered into a cooperative agreement with Gazelle Finance for a $1,000,000 grant to be used to support Gazelle Fund clients to become more competitive, to create jobs, and to attract additional investment capital. This “technical assistance facility” is deployed in three ways: through loans, through grants, and through technical assistance provided by Gazelle Finance (e.g., building capacity).

The Gazelle Fund-managed by Gazelle Finance-was established in 2017 as a $30,000,000 impact fund to provide financing (debt and equity) to support high-growth small and medium enterprises (SMEs) in Georgia and Armenia. Finance for SMEs is a challenge in Georgia, as in most USAID countries. Gazelle Finance addresses this gap by providing financing to early and fast-growing SMEs, with an average ticket size of $1,500,000.

These loans are provided by Gazelle Finance to Gazelle Fund clients/companies on terms of 36 months, with a grace period on loan amortization. The purpose of the loans is to fund internal investments which will support growth. At the close of the grant, the loans and reflows therefrom will remain in Gazelle Finance to be recycled to new loans and support a new fund Gazelle Finance is establishing.

Two years in, job creation targets have been exceeded (with 675 new jobs created) and the GDA grant has mobilized $2,500,000 in private capital, and $10,600,000 in total new capital—including International Finance Institution (IFI) funds.

  • Takeaways: The Mission took an innovative approach in this cooperative agreement by authorizing issuance loans to SMEs rather than grants. This ensures that market discipline is imposed, and allows for the recycling of those funds. In addition, the Mission structured a competitive milestone-based cooperative agreement, in which funding is disbursed based upon evidence of Gazelle Finance meeting its private sector leverage targets (i.e., investment of private capital into their portfolio companies).

USAID IndiaImrana Khera and Aproov Shukla presented globally-applicable learnings from a COVID-19 ESF activity it piloted—the REVIVE Alliance blended finance facility. REVIVE was initially launched to support micro businesses and informal sector workers that are economically impacted by the pandemic and the ensuing lockdown, which has evolved over time. It aims to support the informal economy by providing stop-gap financing through grants, recoverable grants and concessional loans coupled with skilling opportunities, market linkages, and access to social schemes for micro businesses and individuals. There was a gender focus as 90% of women-owned enterprises operate in the informal economy in India. USAID contributed $3,900,000, which was able to attract additional funding to create a $22,000,000+ grant pool from 34 funders, including bilateral and multilateral donors alongside Indian, foreign private, and corporate social responsibility (CSR) funders.

A primary feature of the pool was a recoverable grants program—but at very small amounts-from $20 to $2,500. These were largely micro businesses and collectives owned and operated by 1-5 individuals with little collateral and typically unable to attract commercial financing. Through this program, these businesses and individuals began to build credit histories, and in the near future we anticipate many will become (formal) credit eligible. It should be noted that recoverable grants are compliant with Islamic Finance principles as they do not bear any interest. This program positively impacted over 550,000 beneficiaries.  Remarkably, grant recoveries averaged around 85%.

Through REVIVE, USAID/India also piloted a creative approach to working with non-bank finance companies (NBFC) and microfinance providers to encourage repayments of loans by micro businesses and individuals. It rewarded positive repayment history by covering the last payment, resulting in lower cumulative fees and interest changes. It thereby incentivizes positive financial behavior, lowers costs of financing, and customers develop a credit history; finance providers also benefit through higher repayment rates and onboarding of new customers.


  1. The approach has proven to be a force multiplier. The moral nudge to ‘repay’ the funds was sufficient to encourage 85% of recipients to do so. Once repaid, those funds were subsequently redeployed as recoverable grants to new participants. In 25% of the recoverable grant (RG) cases, the funds revolved three or more times; some have revolved up to six times. This implies that recoverable grants may mobilize an additional 2.7 times the original grant amount, if we assume 85% repayment rates across four to five cycles.
  2. Recoverable grants can quickly provide much-needed working capital during a time of financial uncertainty for businesses, particularly those owned by women. When coupled with skills training and digital interventions, this could help recipients formalize their small businesses.
  3. Behavioral change messaging is important. USAID and its Implementing Partner explained that repayment is a social good—it is an individual act that allows others to benefit. Some women grant recipients repaid more than the value of the grant; they explained that they felt that they were empowered, as donors, and wanted to help other borrowers in their community.
  4. Intermediaries can help. Success depends, in part, on working with community-embedded intermediaries, such as NGOs who have trusted relationships with the women borrowers. USAID’s implementing partner helped to manage the successful deployment and collection of recoverable grants in their communities.
  5. For some women-only cohorts accessed through NGOs who have a long-standing relationship in their communities, there was a 100% repayment rate over five times. Similarly, with other women-only cohorts, the recoverable grants revolved three times with full 100% repayment. This underscores that, contrary to the market’s view, women borrowers are not riskier, and should be prioritized for access to credit through both recoverable grants and formal credit. For the recoverable grants alone, women-only cohorts would have a very high multiplier based on the full repayment and the number of times the credit could revolve among women collectives.
  6. Recipients can use recoverable grants to build credit histories. We anticipate many will become eligible for formal credit products.
  7. The recoverable grants can be linked to pooled default protection funds using philanthropic donation to de-risk and unlock loans for microenterprises, especially those owned by women who cannot otherwise own property.
  8. The USAID brand matters. As our partner set out to create a pooled blended-finance facility, they noted the value of the “USAID brand” to convene multilateral, bilateral, philanthropic and corporate donors.

USAID/REFS Bureau - Songbae Lee presented the Financing for Agricultural Small-and-Medium Enterprises in Africa (FASA) Fund. The Fund is intended to spur investment in agriculture-related SMEs in Africa—with financing requirements between $200,000 and $5,000,000. USAID and Norway will each provide an initial commitment of $35,000,000 (totalling $70,000,000) which is expected to attract an additional $170,000,000 from other donor contributions (for a total of $200,000,000). This pool of funds will act as a Fund of Funds, which also capitalizes a number of other funds—each focused on separate segments and providing debt and/or equity financing based on market demand. The intent is to catalyze hundreds of millions more (at least a 3x multiple) in commercial financing by reducing investment risk. It will accomplish this through providing “first loss”—a tranche of funding which will incur any losses to the portfolio first, before the other funders are affected.

While there are other large funds operating in agriculture in Africa, FASA is unique in that it will be used as first loss—which is the level of financing below senior debt and limited partners’ interest. Basically it is subordinated financing, which is the type needed to bring in commercial financing. In an illustrative structure, FASA would be the first loss (the most junior tranche), a development financial institution would be the subordinated/mezzanine (middle tranche), and the private sector would be the most senior tranche. The first loss will thus be an equity investment, not a grant.

A second feature of FASA is that it will be managed by a third party professional Fund Manager. The Fund Manager will invest in 30-40 funds, which are expected to support 500 large agri-SMEs and benefit 1.5 million smallholder farmers, ultimately benefiting nearly 7.5 million people. The Fund will also create nearly 60,000 private sector jobs. The FASA Fund Manager will earn a fee for investing the capital on behalf of the donors.

A key feature of FASA will be the ultimate impact from the investments, which the Fund produces. Attention is given to leverage (how much private capital is engaged alongside our public capital. However what is really important is the impact on farmers and other stakeholders resulting from this investment.

  • Takeaways: FASA is a great example of how USAID can drive scale—ultimately catalyzing many millions of dollars of commercial financing for development challenges. The Fund of Funds approach is a wholesale approach to catalyzing other funds provided with direction on the sorts of investments they can engage in (which ensures that we accomplish our development objectives). Finally, FASA addresses the ‘so what’ involved in catalyzing financing, which is: what impact are we really having downstream at the stakeholder level?

USAID/KosovoBesa Iliaze and Dardane Peja presented on the American Bank of Kosovo (ABK) experience, which is an approach it used back in the early 2000s, using grants and technical assistance to launch a commercial bank.

Following its breakaway from Serbia in 1998, Kosovo was in crisis. Many businesses had been destroyed, and the unemployment rate was near 50%. Commercial capital was needed, but there were no licensed banks operating in Kosovo. The USAID Mission sought to attract banks to establish a presence in Kosovo, but there was no interest as the economy was weak and the future uncertain. So USAID decided to establish a bank directly.

The Mission entered into a $10,000,000 three-year agreement with an implementing partner (IP), which included a $3,000,000 Grants Under Contract (GUC) amount to launch a revolving loan fund (to be transitioned into a bank). The award was also granted on a pay-for-results basis, with semi-annual performance payments (of up to $1,000,000 in total) tied to criteria such as deposits gathered, loans issued, loan recovery percentages, etc. The IP quickly launched the loan fund, and when a banking license was granted, created the American Bank of Kosovo (so-named to provide confidence to a population which had seen its deposits disappear). ABK acquired the assets of the revolving fund and began to build its deposit base and loan portfolio.

Within one year, ABK had over 21,000 accounts with over 10,000 loans and deposits of Euro 40 million. It was the only source of commercial loans to Kosovar businesses, allowing them to restart and grow—and thereby generating—critically needed employment.

Within two years, ABK was in solid shape and had attracted interest from banks operating within the Balkans. Raiffeisen Bank bought 76% of the shares in 2002, and the remainder in 2003. Sales proceeds were equivalent to the grant funds USAID initially invested, and were used to endow the Kosovo American Education Fund that still today supports scholarships for students to study in the United States. Raiffeisen Bank today is the largest commercial bank in Kosovo with assets of Euro 1.4 billion.

  • Takeaways: The Mission’s ability to think creatively about how to solve an urgent development challenge led to a remarkable solution which was supported by the flexibility USAID enjoys in its authority to issue grants. Grants Under Contracts (GUCs) of $3,000,000 led to billions of dollars in loans over the past 20 years. Finally, a large measure of the success of this award was due to its being issued with a significant pay-for-results incentive fee, which ensured alignment of everyone’s interest in success.

"The optimist sees the opportunity in every difficulty” — Winston Churchill.