An OPIC anniversary: Good business, good government
By Elizabeth Littlefield
President and Chief Executive Officer, OPIC
Thirty years ago this week, OPIC, the U.S. Government’s development finance institution, celebrated a rare feat in the federal government: it made good on its promise to pay back every cent of the $106 million that Congress had allocated to start the agency in 1971.
The occasion was heralded by President Ronald Reagan, who sent on December 10, 1984, a congratulatory note to OPIC lauding the development agency’s business acumen and multifaceted development role. He wrote that OPIC “not only helps transfer technology and create new jobs in the developing world … it strengthens our own economy through increased exports and new jobs.”
How times change.
Through the 1970s, OPIC’s annual net income averaged $44 million. In the early 1980s, it averaged $85 million. Since 2010, OPIC’s average net income has been $317 million.
Growth in income, however, is perhaps the least remarkable aspect of the OPIC story.
Over the past three decades, OPIC has nearly quadrupled the number of countries, to 161, in which it operates. It has steadily increased its environmental and social standards. It has devoted ever more resources to estimating, monitoring and evaluating its development impact. And it is ever more focused on the poorest countries; with Africa now at nearly 30 percent of the portfolio, up from nine percent a decade ago
As American businesses navigated the turbulent Latin American debt crisis of the early 1980s, they turned to OPIC for political risk insurance. Indeed, more than 90 percent of OPIC’s financing was political risk insurance, primarily to larger companies. Today, the agency’s focus is on the poorest countries in the world in most need of sustainable economic development.
Today, most of OPIC’s financing is in the form of direct loans and guaranties (71 percent) and financing to equity funds (17 percent), while insurance represents 12 percent of the agency’s portfolios. In the early years, OPIC’s clients were mainly big business, today, more than half of its investments last year included a small or medium-sized U.S. business.
Moreover, in recent years, OPIC has introduced several new financial products, ranging from technical assistance for early-stage, high-impact projects, to loans for working capital, to intermediated currency swaps.
OPIC’s strategy and expanding set of tools have allowed it to both operate globally and become a globally recognized leader in development finance, all while maintaining the fiscal discipline that brought it to the attention of “The Gipper.”
This year, OPIC will celebrate its 37th consecutive year returning money back to the taxpayer with yet another strong performance, a broader reach, and more far-reaching impact. It is no wonder, then, that OPIC continues to have bipartisan support and a bright future.
OPIC collaborates to make business a force for good in development. That is good news for American businesses, and it is even better news for poverty alleviation, development, and for the global economy and environment.