Can we advance U.S. development and foreign policy and make money for the budget at the same time?
Yes. And we do. Private investors such as entrepreneurs and members of diasporas are ready to invest in projects that build sustainable economies, opportunities and hope in developing markets, while creating jobs at home. U.S. companies see these high growth emerging markets as the key to their long term priorities. It is the job of the Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, to provide the financing and risk mitigating tools that remove the barriers to those investments. Whether in Haiti or Afghanistan or Iraq, private investors, financed or insured by OPIC, are playing and can play an ever bigger role in supporting the U.S. development and foreign policy aims.
Our work supporting investment in post-conflict and developing regions around the world generated net income of $269 million in fiscal year 2011. For the 34th consecutive year, OPIC earned money for the U.S. Treasury even as we provided the tools for the private sector to address some of the toughest development challenges around the world and helped many American businesses expand into emerging markets. In 2011, OPIC mobilized $4.4 billion in capital for small and medium-sized American businesses to invest, a three-fold increase from the previous year.
The tools of OPIC’s trade are loan financing and guarantees, political risk insurance and support for private equity funds. Our projects in emerging markets span the globe:
–In Southeast Asia our political risk insurance will help preserve large tracks of Cambodian forest.
–In Central America our financing will support more affordable mortgage lending in Guatemala.
–We have invested in renewable energy projects from the Caribbean to sub-Saharan Africa. In fact in 2011, we tripled our commitments in the renewable resource sector.
–And in the wake of the Arab Spring, OPIC committed $3 billion in financial support for American business investment in the Middle East and North Africa. Within only 3 months of setting that target, OPIC has approved $657 million in transactions towards that commitment.
Since OPIC was founded in 1971, it has supported nearly $200 billion of investment in more than 4,000 development projects in low- and middle-income countries, generating $6.4 billion in revenue for the US federal budget, $74 billion in American exports and supporting more than 275,000 American jobs. Each dollar of OPIC support has catalyzed, on average, more than $2.50 in additional investment.
Today, OPIC’s portfolio totals about $15 billion, meaning that our small but talented staff manages the highest level of exposure per employee of any governmental or multilateral development finance institution in the world.
Looking back on a year in which debt ceiling discussions and proposed austerity measures cast a shadow over all federal spending, OPIC offers an example of how U.S. foreign investment can pay dividends to the domestic economy. History offers many instances of U.S. foreign policy helping to lay the groundwork for economic and political stability from post-World War II Europe to South Korea after the Korean War. Today, when instability in some developing nations poses a major global threat, investment in these regions is not only essential, it is also cost-effective. It is a lot less expensive to create an environment that supports economic opportunity than it is to deal with the instability and conflict that is born out of neglect.
Elizabeth Littlefield is President and CEO of the Overseas Private Investment Corporation