How the U.S. Government is Helping Italian Businesses Contribute to Italy’s Pandemic Response
One year ago, Italy was facing the worst outbreak of COVID-19 in Europe. In an effort to support one of the United States’ oldest friends and allies, USAID asked its INVEST initiative to develop an approach to help increase the local manufacture of personal protective equipment (PPE), COVID-19 tests, and other medical supplies in the areas of Italy that were most affected by the pandemic. With a focus on mobilizing private capital and providing relevant technical assistance, INVEST identified four partners who would help the U.S. work with Italy’s private sector to aid local Italian communities and bolster future healthcare response efforts.
By Maxfield Hubych, INVEST Activity Associate
In the last days of 2020, surgical face masks began rolling off a factory production line in the Italian region of Campania, a region badly affected by COVID-19. These were the first of 33 million masks which, with support from a much larger effort of the U.S. Government, this factory will produce in 2021. All across Italy the U.S. is helping local manufacturers retool their manufacturing lines, switching from products as diverse as bedding and dental implants, to produce essential supplies to fight COVID-19.
A little over a year ago, when Italy reported the first cases of the virus in Europe, a domestic supply of medical materials was almost non-existent in Italy. Global supply chains dried up as countries stockpiled critical materials, and Italy quickly became overwhelmed with COVID-19 cases. Now, with the help of the U.S. Government, Italy’s private sector is playing a key role in addressing the first and second order impacts of pandemic.
Supporting a Longtime Ally
Early in 2020, the world watched as Italy wrestled with the novel coronavirus. To assist Italy with its healthcare response, the U.S. Government committed $50 million through the U.S. Agency for International Development (USAID) to aid its longtime friend and ally.
In addition to traditional humanitarian work including the provision of medical supplies and providing immediate support to healthcare facilities and vulnerable communities, USAID also designated $10 million to help Italian businesses respond to both the health and economic impacts of the crisis, particularly in the manufacturing sector.
Finding the Right Private Sector Partners
In order both to bolster Italy’s health sector and to contribute to the resilience of Italian small and medium-sized enterprises (SMEs), USAID INVEST — an initiative that mobilizes private capital for better development results — looked to the business community.
INVEST partnered with four firms, each having experience either helping companies convert production lines, expand operations to enter into higher-level competition, or attract and facilitate debt and equity investment. These four partners are supporting more than 50 companies across Italy. The partners’ experience working in Italy’s private sector allows INVEST to create meaningful solutions that fit the needs of local communities.
USAID INVEST has partnered with DEM Consulting srl, located in Campania, Italy. By February 2021, DEM Consulting had already helped two Italian companies retool their factories and has overseen the distribution of more than 350,000 masks so far.
Roncucci & Partners srl, another Italian partner, is providing technical assistance to 25 Italian companies to strengthen their manufacturing capabilities, increase their competitiveness in the market and help them attract the direct investment they need to step up their role in Italy’s COVID-19 response.
PEDAL Consulting srl, a Slovakia-based company with consortium partners in Italy and Poland, is providing technical assistance and leveraging $10 million in debt and equity capital for 10 Italian medical supply manufacturers and service providers.
Interlink Capital Strategies, located in Washington, D.C., is using USAID support to catalyze an additional $20 million in private investment for Italy’s health sector.
To date, Interlink Capital Strategies and PEDAL Consulting are almost halfway to reaching their fundraising target: a total of $30 million for Italian companies manufacturing COVID-19 equipment, services, and supplies.
Creating Enduring Solutions
As the global community works together toward universal vaccination, people will need to remain safe and vigilant until the last doses are administered. The new masks being made in Campania, along with the products of the more than 50 local companies receiving support from USAID, are playing an important role.
A robust, domestic supply chain of PPE and medical supplies is essential for overcoming COVID-19. It will also ensure Italy is prepared for future global health emergencies.
Beyond responding to the immediate health care needs of Italians, strengthening Italy’s private sector, specifically small and medium enterprises that are integral to the economic and social health of local communities, is key to ensuring the country’s recovery and ongoing resilience. With USAID support, technical and financial investments in these companies will have a lasting impact for years to come.
In Italy, USAID’s INVEST initiative is delivering assistance rapidly and sustainably to create the greatest impact possible. Key to this response is its technical approach, which pairs technical assistance with catalytic capital — a form of funding that helps improve the risk-return profile of a transaction, thereby crowding in additional private investors into deals that generate positive development impact. INVEST is testing this combination in markets around the world with positive results, and lessons learned in Italy will be used to hone USAID’s future activities.
In collaboration with the private sector, USAID is helping a longtime friend and ally respond to an acute health emergency, address its long-term economic impacts, and lay the groundwork for response to future challenges. The U.S. Government continues to stand with Italy, and the global community, in the fight against the pandemic.
