Measuring and monitoring impact: OPIC’s Office of Investment Policy (Part Two in a series)
Earlier this year, The OPIC Blog featured Margaret Kuhlow, Vice President, Office of Investment Policy, which works to ensure that OPIC-supported projects deliver real and measurable benefits in their host countries. This post, the second in a series that looks at the Office of Investment Policy, offers an overview of the department’s work in supporting OPIC’s development mission.
OPIC’s core mission is to advance sustainable development, and it strives to support projects that deliver a real and measurable developmental impact. OPIC holds all of its projects to high standards, and works to ensure the projects in which it invests
- are environmentally and socially sustainable
- respect human rights, including workers’ rights
- have no negative impact on the U.S. economy
- encourage real and measurable host country developmental benefits.
OPIC employs a staff of about 20 economists, environmental experts, and labor analysts who conduct a rigorous analysis of every potential project and its expected environmental, social and overall developmental impact as well as its impact on the U.S. economy. Ultimately, only a portion of the projects screened are approved. OPIC also monitors every active project from inception to conclusion with annual self-monitoring questionnaires and randomized and risk-based on-site monitoring. In 2012, the Agency visited 32 projects.
OPIC also regularly reviews its development impact measurement methodology, taking into account similar efforts in the private sector as well as other public sector organizations, and in 2012 it revised and simplified the metric it uses to measure the developmental impact of projects. The new “development matrix,” which was rolled out in October 2012, measures projects across five key categories:
- Jobs and human capacity building: OPIC looks at the number of local jobs a project will create, as well as the quality of those jobs measured by required skill level, employee benefits and other factors such as training that exceeds basic on-the-job training.
- Demonstration effects: OPIC considers whether the project will result in the introduction of new products, services, business practices or production processes in the host country as well as whether it may have a positive influence on the local regulatory or legal environment.
- Host country impact: OPIC looks at whether the project will result in procurement of local goods and services, whether it will generate export earnings, or pay some form of local taxes, fees or duties to the local government.
- Development reach: OPIC considers the extent to which the project will reach previously underserved populations such as women, the poor, and people who live in rural areas through infrastructure improvements or financial inclusion.
- Environmental and community benefits: OPIC looks at a wide range of potential benefits, such as the creation of a new supply of renewable power, as well as the corporate social responsibility initiatives that offer benefits to the local community.
Each year, OPIC publishes an Annual Policy Report that summarizes the development impact of its work. See the 2012 report here.