The Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, today announced $3.7 billion in financing and insurance commitments during Fiscal Year 2016 to support economic development in emerging markets.
OPIC’s portfolio reached a record-setting $21.5 billion across 100 developing countries and the Agency marked the 39th year of achieving its mission at no net cost to taxpayers.
“Our financing for development advanced U.S. foreign policy and national security goals, all while helping American businesses gain footholds in Africa, Asia, Latin America and the Middle East,” said Elizabeth L. Littlefield, OPIC President and CEO.
“Partnering with businesses is a cost-effective way to lift people out of poverty, build markets, and create more stable and self-sufficient economies.
Whether they are building power plants in Senegal where only half of the population has access to electricity, providing affordable mortgages in El Salvador where six out of 10 families live in inadequate housing, or introducing better food production in Zambia where the chronic malnutrition is among the highest in the world, our clients are demonstrating how business can be a powerful force for good.”
When OPIC was formed more than four decades ago, private capital flowing into developing countries was a very small fraction of aid dollars. Today, that ratio of aid to investment has reversed as private businesses, often with initial financing or risk mitigation from development finance institutions, enter these new and growing markets. OPIC and its development finance institution peers worldwide are now investing an estimated $80 billion each year, which catalyzes that much capital from private investors and project developers.
OPIC financing and political risk insurance supports private investors investing their own capital in the most challenging frontier markets – such as very low-income, fragile or conflict-affected countries – where they are unable to obtain commercial loans or insurance.
OPIC’s investments in FY2016, for example, helped to provide employment and economic stability in conflict-affected countries such as Jordan, Egypt and Ukraine. Overall, about one-third of OPIC’s current portfolio now supports private sector projects in conflict-affected countries.
Highlights from FY2016 include:
- OPIC committed $1.4 billion to critical infrastructure and energy transactions around the world. This included $55 million for off-grid energy projects to bring electricity to some of the poorest and most remote communities in the world, especially in Africa.
- Nearly forty percent (40%) of OPIC’s commitments ($1.5 billion) will finance private sector projects in the lowest income countries, countries that are so poor, they rarely receive the investment they need.
- OPIC reached two important milestones in 2016. In the microfinance sector, providing access to financial services to low income entrepreneurs, OPIC’s portfolio reached $1 billion for the first time. In the information and communications technology (ICT) sector, which is so crucial to enabling low-income countries to connect to the world economy and become increasingly self-reliant, OPIC’s portfolio also topped $1 billion.
- Over three-quarters of OPIC’s 2016 projects involve a U.S. small business. Also in 2016, OPIC marked the 10th Anniversary of its Expanding Horizons Small Business Workshops. Since 2009, OPIC has doubled the number of annual workshops held to support U.S. small businesses and entrepreneurs.
“The 2016 results underscore OPIC’s role as a highly efficient and effective development agency,” added Ms. Littlefield. “The depth and breadth of our financing requires that we constantly balance strong portfolio growth on the one hand, while prudently managing risk, maintaining our tradition of extremely low write-off rates, and solid financial returns on the other. Our team prides itself on that.”
Over the past eight years, OPIC has focused deeply on building and modernizing its institutional infrastructure, developing modern systems, policies, processes and reporting mechanisms and replacing many outdated ones in order to respond to both the needs of its clients and the goals of U.S. foreign policy alike. This included developing an enterprise risk management system, all new management information systems, as well as human resources, security and knowledge management systems. Said Littlefield, “These investments have strengthened the Agency, making us more capable and nimble while also increasing our analytical rigor, transparency and accountability.”
Other highlights include:
- Since 2009, OPIC has introduced nearly a dozen new finance and insurance tools and processes to better serve the needs of the market, especially small business partners, with early-stage but high-potential projects, including off-grid energy solutions.
- Over the last six years, OPIC prioritized development of crucial power generation in countries with high levels of energy poverty. In particular, the Agency committed more than $8 billion to renewable energy projects, as well as $580 million to natural gas projects, mostly in Africa.
- OPIC increased its work across all sectors in Sub-Saharan Africa, a region which now accounts for nearly a third of the Agency’s global portfolio.
- OPIC’s prudently managed risks and strong financial performance have resulted in consistent returns to the U.S. taxpayer for 39 years. This has enabled OPIC to generate over $2.3 billion to reduce the U.S. budget deficit over just the past six years.
African Eye Report