Text Size

Current Size: 100%

CSIS:The Evolving Role of OPIC

'We need US leadership in supporting development in low- and middle-income states, not less...' contends CSIS's Dan Runde, Schreyer Chair and Director of the Project on Prosperity and Development. Europe is doubling and China is quadrupling their investments, playing larger roles in building infrastructure, heallth and sanitation systems, and other critical sector needs. Yet the Trump Administration devalues development financing and has proposed zeroing out the Overseas Private investment Corporation (OPIC) that provides lending to corporations and small businesses. Job creation for US businesses and garnering good will in countries wanting US investment is at risk. Former presidents of OPIC address the value of OPIC's longevity. OPIC provides political risk insurance, project funding, and seed money for private equity funds among other roles. China and Europe are filling the development gaps from cutbacks in US investment. Development Financing Institutions (DFIs) play a critical role in supporting creation of corporate entities' growth in overseas operations in emerging markets, and addressing job creation and reducing incentives for terrorism. OPIC gained 350 Million in revenue in 2016 that goes directly to the US Treasury. The agency's role should be expanded to include small grants, larger first loss risk funds, and more agile processes for funding. Peter Watson, former OPIC president, notes that this type of risk sharing results in critical social gains, and creates a driving force for economic reform and US's national security. The US is best positioned to provide education services, food security, and other critical priorities. In country presence and platforms are needed to support US involvement in market solutions; we gain revenue from OPIC funded projects.

'DFIs are growing exponentially and we need the private sector to help fix all the problems', according to Elizabeth Littlefield, former OPIC president. 'OPIC has neither a grant nor equity capability and needs restructuring as other DFIs do across the globe...to generate the most capital and support US business, it needs corporate bonds functionality and access to first loss funding, such as, USAID grants for Haiti implementing partner agencies. The US development architecture at this moment in time needs rethinking thus OPIC could grow and cross-subsidize USAID--to do the hard work in difficult places.'


See CSIS live Events website and events are archived for viewing later.