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Small loans, big impact: A look at OPIC’s PI program

To address big development challenges such as world hunger, you sometimes have to start small.Pamiga

In Sub-Saharan Africa, food insecurity affects millions, but the solution rests largely with the individual smallholder farmers who often can’t afford to pay for basic farming equipment. Small amounts of financing offer the potential to deliver significant benefits to them and the communities they serve. In Sub-Saharan Africa, food insecurity affects millions, but the solution rests largely with the individual smallholder farmers who often can’t afford to pay for basic farming equipment. Small amounts of financing offer the potential to deliver significant benefits to them and the communities they serve. 

Last year, OPIC helped address this challenge when it committed a $4.75 million loan to the microfinance institution PAMIGA S.A. to support small loans to African farmers to help them buy micro-irrigation systems and other equipment such as home solar kits to improve productivity.

The loan to PAMIGA was the first project approved through Portfolio for Impact, or PI, a pilot program OPIC launched in 2014 to provide financing to impact investing projects that offer significant potential for positive social impact but may face challenges obtaining financing because they are small or early stage.

Here Dia Martin, a director on OPIC’s Social Enterprise Finance team and manager of the PI program, talks about PI.

So many major corporations that have substantial resources are pursuing development in emerging markets. Why are the smaller players also important?

Small players often focus on markets, regions or client groups that are being overlooked. We recently committed to a second project under the PI program, providing financing to a small company calledTiaxa that is a good example of this. Tiaxa saw an opportunity to help some of the millions of people around the world who don’t have access to formal banking services, but have mobile phones. Tiaxa utilized proprietary technology to extend tiny credits — what they call Nano-credits — to mobile phone users with insufficient account balances. The business has expanded the use of this technology to provide small cash loans to users for non-airtime uses, including transfers, remittances, bill payments and access to other financial services. Tiaxa’s technology enables it to provide small loans in a way that traditional financial institutions cannot provide profitably and it expects the OPIC loan will enable it to reach 500 million people globally. You can see a similar pattern in many industries such as energy. There are many large companies working to build utility scale power plants but there are also smaller players providing home solar kits to communities that are off the grid.

Farmer with cow

This program is called Portfolio for Impact, yet all of the projects OPIC supports are designed to deliver a far-reaching impact in host countries. What’s different about PI?

Some of the most transformative ideas are developed by highly innovative, early stage ventures that could have a significant development impact if provided with the necessary capital and resources to reach a commercially sustainable scale. The projects that we are supporting through PI were started with the express intention of being highly developmental. They are typically projects that purely private sector lenders might consider too small or too early stage to support, or the size of the loan they are seeking might be too small to merit consideration by a private lender. PI is providing loans of $1 million to $5 million.

Why was the program developed?

At OPIC, we challenged ourselves to support more of these smaller, highly developmental projects in a resource efficient manner. We tailored our internal processes and underwriting guidelines to support working on these projects. We wanted to establish that these are actually viable projects to bridge the gap in capital needs from early stage grant funding to mainstream financing. Through PI, we want to help increase the pipeline of impact deals for private sector investors, and ultimately increase the amount of private sector investment in these projects.

We decided to establish PI as a systematic program and consider as a group some of these projects that individually might be further along on the risk spectrum. Projects approved under the PI program are monitored individually and as a group. By setting up a program to consider a portfolio of projects, we hope to mitigate risk through diversification, gain efficiencies in underwriting and monitoring and utilize lessons learned from individual deals for the entire portfolio.

We have an in-house working group comprised of OPIC staff across different departments that meets quarterly to review the pipeline and outstanding projects. We also require additional reporting on PI projects.

PI was launched as a pilot program more than a year ago. Discuss the level of interest you’ve seen.

We’ve seen a very high level of interest. We’ve received more than thirty queries and proposals and we are on target to surpass our two year, $50 million objective, committed across a dozen or more projects. And private investors have been very supportive and eager to work with us. The projects that we’ve committed have received financing from social investors including the Calvert Foundation, the Rockefeller Foundation, Omidyar Network, Accion Frontier Investments Group, Shell Foundation, Deutsche Bank Social Investment Group’s funds, and Global Partnerships SIF 5.0.

What’s your ultimate hope for the PI program?

I would love to see this program grow and develop to a point where the projects we support are viable and can expand to other markets, extending their impact and generating increased investor interest. A lot of larger financial institutions talk about building a pipeline of high impact projects. I see the projects financed under PI as feeding that pipeline.

How do you apply for financing through the Portfolio for Impact program?

Interested applicants should visit this page to learn more and complete the OPIC financing application Form 115 ( Once an application is submitted, the assigned OPIC investment officer will decide if a project should be considered for the PI.

To be considered for PI, projects must meet minimum eligibility criteria regarding impact and credit. All PI projects have an explicit intention to have and measure developmental impact. The product, business model, service or delivery mechanism should be innovative. Projects must have minimum annual revenues and assets of $1 million, a scalable business model and meet certain sector based financial ratios. The involvement of strong, like-minded social investors and experienced management teams are critical in determining a project’s eligibility for PI.

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