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Speeches and Testimony

Remarks by OPIC Executive Vice President David Bohigian at The Currency Exchange Anniversary Conference

September 21, 2017 | Washington D.C.

(As prepared)

Intro

Thank you for the opportunity to be here today. As you may know, I joined the leadership team at the Overseas Private Investment Corporation just last month, so I come here understanding that I have much to learn from all of you in the development finance community.

What I did know before even arriving at OPIC – indeed one of the reasons I found this opportunity so compelling – is that investment is one of the best ways to advance the well-being of people around the world, from reducing hunger to expanding access to healthcare to building modern infrastructure for the 21st Century. And, if we want to make finance effective against both the most persistent challenges the world faces, and the newer challenges that are sure to arise –we must embrace innovation and collaboration.

At OPIC, we are always working to innovate our finance and insurance tools to better serve the needs of our partners and much of this work focuses on addressing the specific challenges associated with lending in foreign currencies. We’ve long been a supporter of MFX Solutions, an innovative entity which provides access to currency hedging products for microfinance and other investors to help ensure that lending is not too risky for the borrower or the lender. And we’re inspired by the TCX platform that provides greater ability to help those who need it most. I’m eager to learn more from all of you about the tools we might develop and collaborate on to mitigate foreign exchange risk.

OPIC Status

But first, I should address something that may be on your minds. That is, the future of OPIC. The best way to address concerns about our future is to paraphrase the great American author Mark Twain, who once said

"The report of my death was an exaggeration.”

The same applies to OPIC. It can be difficult to make sense of the news coming out of Washington, and the headlines from last spring had OPIC on a list of agencies targeted for elimination.

Here’s what the headlines didn’t explain.

First, a more careful reading of the President’s budget showed that the administration was open to updating OPIC in ways that would make the agency more effective, in effect modernizing the agency rather than winding it down.

Second, the U.S. budget process is long and complex and the budget is ultimately approved by lawmakers on Capitol Hill, where OPIC has long enjoyed significant bipartisan support.

And finally, over the last several months, OPIC has recently received multiple strong signs of support from the White House as well as Capitol Hill, most significantly with the nomination of Ray Washburne to serve as OPIC’s new President and CEO. I’m here today because the Senate confirmed Ray and me to lead OPIC.

I want you to know that Ray Washburne and I are builders, and we expect to build OPIC into a DFI for the 21st-century.

The discussions at this forum touch on just about everything OPIC does. We have a portfolio of more than $21 billion dollars -- across almost 100 countries in Africa, the Middle East, Latin America and Asia – all who have their own currencies. Much of our work is in the world’s poorest countries or in regions affected by conflict – places that are not only dearly in need of investment in development, but where it is crucial that we ensure that any risk of investment is not transferred to the most vulnerable.

I’m here today to learn more about the ways OPIC can offer the most effective financial tools to support development, and to tell you that we intend to work with you.

So ... far from a possible wind down, I’m focused on modernizing OPIC and there is a lot of discussion on the best ways to do so. We’ve seen several proposals for reforms such as granting OPIC equity authority and raising our $29 billion cap. I’m optimistic that over the coming years we will build an OPIC that is doing even more to advance sustainable development.

Now, I do know a bit about finance. I’ve worked for the world’s largest hedge fund, the world’s most innovative venture capital firm, and for important investment banks. I’ve developed new financing models for energy efficiency projects. I was the Assistant Secretary for Trade at the Commerce Department. And throughout my career I’ve seen how finance can make a real, tangible impact on the world.

Global Challenges

As Einstein said, “We cannot solve our problems with the same thinking we used when we created them."

But let me suggest that we really take Einstein’s words to heart. Although we may be inclined to focus on the specific changes sweeping our industry today, it’s important to see the bigger picture too. We are living through a seismic shift in the way the global economy operates. As the World Economic Forum has laid out, we are in the midst of a new Industrial Revolution.

So why am I showing you a painting from the 19th Century?

This Pony Express rider looking up at telegraph poles captures a time when we were moving from regional agrarian economies to national industrial economies. It was a transition that caused deep disruptions and significant turmoil. For a short period in the mid 19th century – around the same time Mark Twain was becoming a writer – the Pony Express was a critical government program in which horseback riders delivered letters from the Mississippi River to the Pacific Ocean, covering about 2,000 miles in just ten days or less.

Truly, it was a marvel of innovation at a time when the American West was an emerging market. While the Pony Express remained in business, people were willing to pay the equivalent of more than $100 dollars just to send a letter. But the world was changing and the government was also supporting construction of the transcontinental telegraph. President Lincoln called the effort to build this infrastructure across the vast plains and tall mountains “a wild scheme” but like so many other wild schemes, it worked.

I’d guess the guy on the horse was thinking about his job, and he was right to be concerned: Just two days after the telegraph line was completed, the Pony Express was shut down. We all know the rest of the story. The telephone eventually replaced the telegraph. And smart phones have given a whole new meaning to the concept of a phone.

In hindsight we can see those changes clearly. In real time, it can be harder to comprehend the magnitude of change the world is experiencing, or what the future has in store. But what I can say that with certainty is change is coming to the developing world as much as anywhere. It will impact the countries where we all live and those where we work and invest. And I think the story of how swiftly the Pony Express went from modern marvel to obsolescence points to the urgency of anticipating change, adapting, and seizing opportunity.

Let me quote Mark Twain once more: “History doesn't repeat itself but it often rhymes.”

Today, there are thousands of truck drivers looking at the self-driving car the same way that Pony Express rider looked at telegraph poles.

Today’s transition to a global information economy may dwarf other economic and political transitions.

GDP/Jobs/Markets

Here are some of the metrics we use more often to track economic growth. Global economic growth over the same period is xx percent. The stock market is up xx percent. The work force has grown xx percent. These are growing in a linear manner.

We’re all familiar with Moore’s law that processing power doubles every year and a half. It’s doubled 11 times this century. Computing power is up around 20,000 percent so far this century. Ninety percent of the data in the world today has been created in the last two years alone.

Development Finance Innovation and Collaboration

Are we ready for what this relentless pace of change will mean in even just a few years?

Last year, Elizabeth Littlefield, who many of you worked with in her role as President of OPIC, declared that OPIC is an agency “whose time has come.” It’s a statement that I think all of us can agree applies not only to OPIC, but to all of the DFIs that are tackling some of the world’s toughest challenges. The world faces major challenges and both the resources and the ingenuity of the private sector are needed to address them.

I know that, in this room is a gathering not only of great minds but also great hearts. All of you are motivated to channel finance in support of people around the world who need it most. OPIC has partnered with many of you on some wonderful projects and we will continue to do so.

I believe that development finance is a tool that can lead the way to a more peaceful and prosperous 21st-century. The connection between economic stability and political stability is a concept that underpins all of the work we do. But as the world changes, its challenges also change and all of us will need to adapt.

As transition occurs at a faster and faster pace, it’s critical that all of us work together and develop a common language for our work in development finance. We know we have shared values. Developing effective finance tools can that we can share – and scale -- will help us continue to offer effective solutions to major world problems.

Here’s an example. As many emerging markets see a growing middle class and a growing urban population, OPIC is supporting more projects to address the more modern ways that these people are living and working.

  • In Myanmar, a country where until recently almost no one had cell service, OPIC supported a project that helped expand coverage to the majority of the country
  • In Indonesia, we’re helping small cacao farmers reach global markets
  • And in microfinance markets around the world, small borrowers in remote regions where there is little physical infrastructure, are using their mobile phones to keep current on their loans.

It’s one of the many ways the developing world has embraced a leapfrog technology and it illustrates why first class financing systems are needed to invest in the developing world.

With the rise in FDI flows to emerging markets comes increased challenges in foreign currency financing. Indeed, if foreign exchange risk is not sufficiently addressed, it can stand as a hurdle in the way of effective, sustainable development. Of course we all know that ... it’s why we’re meeting here today.

We speak different languages and we work in different currencies, but those are small differences. We share common values that are far greater than our differences. The motto of the European Union – in varietate Concordia, or united in diversity – sounds a lot like the U.S. motto E pluribus unum or “out of many, one.” Both speak to the core value that we multiply our varied strengths by coming together.

And to return to the theme of this gathering, is imperative that we develop a common language around currency risk. To date, many of the existing instruments have not been adequately scaled to address the foreign exchange risk we all encounter. Failure to do so will limit how much we can invest, and how much we can achieve. For that reason we engaged with TCX. When talking about managing currency risk in the absence of a commercial solution, we fully subscribe to the rationale of the founding investors that diversification and scale are crucial. TCX is a good example of the benefits of collaboration between like-minded institutions with a similar mission. Of how a common goal, not to burden our clients with a risk they cannot and should not have to manage, can lead to a successful global enterprise.

Anyone here speak Latin – What’s the Latin verb To Give?

Data.

Based on my discussion so far of telegraph lines and Moore’s Law, you probably won’t be surprised to learn that I believe the universal language of the world today – and of development finance -- is Data. Today we have an unprecedented opportunity to harness data in the service of people around the world. You’ve all heard of data-driven research and development for product and service innovations. I’d like to work with all of you to produce data-driven research to inform both the challenges that will arise in our industry and the ways we can innovate.

Over the summer, while I waited for the United States Senate to approve my nomination, I had one simple question for everyone I met: how can OPIC do the most good in the world?

I haven't found all the answers yet, but think collectively that we can advance our understanding. I want to learn, and I know I can learn from you. know my path to that answer lies in working together today and beyond.