"Continued growth of the country’s overseas investment is essential, and will assist both the U.S. community and the developing nations of the world in the years ahead.”
President Richard Nixon
In 1971, President Richard Nixon established OPIC as an agency of the U.S. Government. Unlike traditional aid models based on providing grants, OPIC’s model was based on private sector investment. OPIC disbursed political risk insurance and loans only to projects with sound business plans. This rigorous attention to sound business plans was designed to enable OPIC to operate as a self-sustaining agency at no cost to American taxpayers.
OPIC began operations with a portfolio of $8.4 billion in political risk insurance and $169 million in loan guarantees.
“Without OPIC political risk insurance, we would not have gone ahead with the investment.”
U.S. investor in Ghana, 1973
Some of the early projects OPIC supported included political risk insurance to support the expansion of Kenya’s tourism industry, as well as financing and insurance support for food processing facilities in Africa and Latin America and for the construction of irrigation equipment in India.
In addition to promoting economic growth and addressing major world challenges like hunger, these projects enabled many U.S. companies to conduct business in countries that would have otherwise been inaccessible.
“Congratulations to OPIC on its success in showing the private sector the benefits of full participation in the development process in the Third World.”
President Ronald Reagan
OPIC became more proactive in reaching out to American small businesses interested in investing in developing markets and addressing their specific concerns. OPIC expanded its political risk insurance to cover civil strife and business interruption.
In addition, OPIC established the Investment Funds program to support private equity funds investing in emerging markets. The first funds deal was a $20 million loan guarantee for a regional growth fund designed to raise equity capital to develop private sector projects in Sub-Saharan Africa. Today, OPIC’s Investment Funds Department remains a powerful tool for supporting many of the local businesses in emerging markets that are a vital source of job creation, economic stability, and growth.
The year 1984 was also significant in confirming OPIC’s endurance as a self-sustaining agency. OPIC presented President Ronald Reagan with a check , making good on its promise to pay back every cent of funds that Congress allocated to start the Agency in 1971. OPIC has continued to honor this promise, operating as a self-sustaining agency at no cost to taxpayers and generating money for the U.S. Treasury for four decades.
“By standing behind the U.S. private sector, OPIC has both encouraged long-term stability in developing markets and makes significant contributions to America’s economic growth.”
President Bill Clinton
OPIC responded quickly to the fall of communism, dispatching staff to Poland and Hungary to prepare to support investments in the region. This swift response demonstrated OPIC’s capacity to rapidly enter newly opened markets where private investment could serve as a stabilizing force.
Through the Freedom Support Act of 1992, Congress asked OPIC to play a major role in working toward economic stability of the New Independent States. As centrally controlled economies gave way to free markets and privatization throughout Central and Eastern Europe and the former Soviet Union, OPIC helped U.S. businesses invest in new countries and work to repair, upgrade, or replace long-neglected infrastructure.
OPIC's work in Russia began with $10 million of insurance for Ingersoll-Rand Co.'s new power tool manufacturing facility east of Moscow. OPIC then completed its first finance project in Russia with support for a joint venture in which Conoco helped develop oil reserves near the Barents Sea.
During the 1990s, OPIC also advanced its longstanding commitment to the energy sector. OPIC's largest deal in its first 25 years was $400 million in finance and insurance to support California-based Mission Energy's investment in the first privately-owned and operated power plant in Indonesia.
In order to best meet emerging business needs and project risks, OPIC enhanced the processes by which it delivers financial products and services. OPIC expanded its insurance offerings and extended insurance to OPIC-supported investment funds.
To further strengthen the Agency's small business partnerships, OPIC established its Small Business Center to provide qualified businesses a streamlined application process. OPIC also began hosting workshops around the U.S. to educate small businesses about the opportunities in emerging markets. This continued support of American small businesses is reflected in OPIC’s portfolio. Each year, well over half the new OPIC project commitments involve a small- or medium-sized U.S. business.
“When American companies invest in development abroad, it pays dividends here at home.”
U.S. Congressman Mark Meadows
OPIC continues to help American businesses compete in the global economy, its model based on investment rather than aid is rapidly gaining traction.
When OPIC was formed in 1971, there were just a handful of agencies in the world doing development finance. Now there are more than 30 development finance institutions working to catalyze private capital and provide finance in a self-sustaining, commercially-oriented manner.
Today, OPIC maintains a robust portfolio of more than $20 billion, which has doubled over this past decade. This portfolio spans more than 160 developing countries, including a large number of conflict-affected countries and a growing portfolio in Sub-Saharan Africa.
Internally, OPIC has fine-tuned its enterprise risk management system to ensure that its portfolio is well-balanced across sectors and regions. OPIC has also further streamlined the application process, reduced paperwork, and invested in technology to build a first-rate financial institution.
Multiple new products and processes have been introduced to reach some of the early-stage or less conventional projects that have potential to make a strong positive impact, but might be particularly challenged to find financing support. OPIC also redoubled its focus on business development, establishing a new business development “HUB” a new outreach program to streamline and improve business development efforts and client relations.