Topics:
Expertise
Africa, debt relief, international financial institutions, private investment, aid selectivity
Bio
Ben Leo is a visiting fellow at the Center for Global Development (CGD) and a member of the Center’s Advisory Group. He currently serves as the Chief Executive Officer of Copernicus.io, an Africa data analytics firm. Copernicus is a proprietary geospatial platform that provides reliable and representative data on almost any customizable geographic area across the African continent.
Until October 2016, Leo served as a CGD senior fellow. His research focused on the rapidly changing development finance environment, with a particular emphasis on private capital flows, infrastructure, and debt dynamics. In addition, he tested a range of new technological methods for collecting high-frequency information about citizens’ development priorities. His research has been cited in leading international and regional media outlets, including the New York Times, Wall Street Journal, Washington Post, Financial Times, Forbes, USA Today, Mail and Guardian, CNBC Africa, This Day, and Daily Nation.
Prior to CGD, Leo held a number of senior roles at the White House, US Treasury Department, the ONE Campaign, African Union, and Cisco Systems.
February 20, 2018
Publications
We conducted phone-based surveys on energy access and demand in twelve African countries. From these findings, we draw several potential policy implications. First, both grid electricity and off-grid solutions currently are inadequate to meet many African consumers’ modern energy demands. Second, grid and off-grid electricity are viewed by consumers as complementary, rather than competing, solutions to meet energy demand. Third, a market exists for off-grid solutions even among connected, urban Africans.
January 17, 2018
Publications
Development Finance Institutions (DFIs)—which provide financing to private investors in developing economies—have seen rapid expansion over the past few years. This paper describes and analyses a new dataset covering the five largest bilateral DFIs alongside the IFC which includes project amounts, standardized sectors, instruments, and countries. The aim is to establish the size and scope of DFIs and to compare and contrast them with the IFC.
October 24, 2016
Blog Post
Foreign assistance has come a long way in becoming much more transparent. The idea, pushed by campaigns like Publish What You Fund and embodied in the International Aid Transparency Initiative, is that being more open about concessional aid will lead to less waste and more accountability. So what about non-concessional development finance? As the importance of development finance institutions (DFIs) grows, how transparent are they?
This is more than a question for nerdy researchers. DFIs are using public funds and supporting public policy by making investments in private companies in emerging economies. Knowing how and where these agencies are operating is fundamental to ensuring alignment with other goals and protecting taxpayer money. For example, the American DFI, the Overseas Private Investment Corporation (OPIC) has been dogged by allegations of corporate welfare. By accessing all of OPIC’s publicly available data, we were able to investigate these charges in a data driven manner (Verdict: no.)
So we dug into publicly available project-level data for six of the largest DFIs. Here’s what we found:
CDC Group (United Kingdom): CDC Group provides a definitive list of investments supported in annual reviews with limited information. They also have additional data in an investments database, but what is available is very limited and difficult to use, as it cannot be filtered by year or country. The CDC Group publishes data to IATI. DEG (Germany): DEG provides topline country-by-country numbers on investments but no year-end list of projects. More detailed investment-level information is locked up in PDFs and only available for 2015 and 2016, and these figures do not add up to the topline numbers. FMO (Netherlands): FMO publishes annual reports with topline numbers but not year-end project lists. FMO maintains a filterable, searchable project list, which appears to contain all publicly available data on projects dating back to 2012. As of January 2016, FMO is publishing data to IATI. FMO is also currently piloting an ex-ante disclosure program to disclose high-risk transactions earlier in the process. IFC (World Bank): IFC offers detailed project-level data through an accessible and a user-friendly projects database. Unlike some of the bilateral DFIs, there is no definitive list of projects. There is also no data on the IFC’s Development Outcome Tracking System, which measures development impact. OPIC (United States): OPIC provides a definitive list of all commitments since 2000 in their annual reports. Since 2009, OPIC has released PDF project summaries with project-level data, but its PDFs are not machine-readable, are unwieldly to analyze, and lack data from an internal development impact matrix. There is also a searchable project database, but we found it incomplete, prompting us to build our own OPIC Scraped Portfolio database. Proparco (France): Proparco publishes annual reports with a list of all projects and basic project-level information along with a map of current projects.Overall, the largest DFIs are getting more transparent, but still have quite a way to go. At the same time, DFIs are not the same as aid institutions, and not every detail of an investment can or should be published publicly due to the commercial nature of OPIC’s projects. We identified five potential standards of DFI transparency that we believe should be available and would help bolster accountability without raising concerns over commercial confidentiality.
Definitive list: An annual list of all projects or investments. Historical data: Project data for at least five years. Project-level information: Detailed investment- or project-level information including a longer project description. Development impact data: Data on the projected and ex post impact of the project. Accessibility: All publicly available data can be found and analyzed through a user-friendly, machine-readable database.Here’s how the six large DFIs scored on each of these standards:
DFI
Definitive List
Historical Data
Project-level Info
Development Impact
Accessibility
Score
IFC (World Bank) ✔ ✔ ✔ 3 OPIC (US) ✔ ✔ ✔ 3 CDC Group (UK) ✔ ✔ 2 FMO (Netherlands) ✔ ✔ 2 Proparco (France) ✔ ✔ 2 DEG (Germany) ✔ 1
The big takeaway: None of the DFIs are perfect and each has plenty of room to improve on transparency. Most of all, these agencies are all mandated to be catalyzing private investment to generate development impact like job creation and tax revenue. They each to varying degrees internally estimate and track such indicators. The public deserves to know how well they are doing.
October 19, 2016
Publications
Attention presidential transition teams: the Rethinking US Development Policy team at the Center for Global Development strongly urges you to include these three big ideas in your first year budget submission to Congress and pursue these three smart reforms during your first year.
August 30, 2016
Blog Post
With the release of OPIC’s 2015 annual report, we have now updated CGD’s OPIC Scraped Portfolio database with detailed information on 90 new project commitments. So what does the rundown look like? Three key points stood out to us:
A noticeable focus on energy: OPIC committed $1.7 billion to power projects, which is almost half of projects by value. Renewable energy projects account for slightly more than half of this total. This is the first time since data has been available that roughly half of OPIC’s annual portfolio has gone to energy projects. Nearly half of commitments to Sub-Saharan Africa: 47% of commitments supported projects in Sub-Saharan Africa, which is the largest relative amount since at least 2000. A move away from high-income countries: Only 0.04% of new OPIC commitments were located in high-income countries last year.Of these three points, we are the most happy to report the third. Why? Because until 2015, OPIC had been devoting an increasing portion of its scarce resources in much wealthier countries, while committing a smaller and smaller portion of its portfolio in poorer countries. The 2015 list of projects seems to buck this trend.
OPIC’s Recent Rich Country ProblemWhen we took a deep dive into OPIC’s portfolio earlier this year, we found that the share of commitments going to high-income countries had increased significantly. These are countries with a GDP per capita of at least $12,746 in 2015 (think Aruba, Chile, and Israel). In 2013 and 2014, nearly one-quarter of OPIC commitments focused on these much wealthier countries. This raised a larger, more uncomfortable question about OPIC’s ‘additionality’ – both in development and investment terms. For instance, was OPIC’s involvement in solar energy projects in Chile truly ‘additional’, where credit markets are well-developed and over 99 percent of the population already had access to electricity? OPIC also increased its support for upper middle-income countries such as Brazil, Mexico, and Turkey. Collectively, these two income categories accounted for over 70 percent of OPIC commitments in 2014.
At the same time, the share of OPIC commitments in poorer countries had been declining over the previous 15 years (see figure above). The occasional exceptions to this downward trend are explained by a handful of large projects. In 2009, OPIC committed almost $150 million for a power generation project in Togo. And in 2011, OPIC committed $400 million to two renewable energy projects in Kenya and Liberia. Excluding these three projects, the share going to the world’s poorest nations was in the very low single digits. Now, there are several factors that contributed to this trend, such as a declining number of low-income countries over time (see our recent paper for details). Nonetheless, these levels were quite low overall.
In contrast, in 2015, there was a clear uptick in the percentage of OPIC commitments going towards lower middle-income countries. This trend is partly driven by large energy projects in Pakistan, Ghana, and Kenya. There also was an increase in commitments to low-income countries (those with a GDP per capita under $1,025) from $30 million to $225 million. While OPIC could certainly do more in low-income countries, the overall trend is a clear step in the right direction.
How Can OPIC Safeguard This Progress?OPIC’s portfolio in 2015 clearly demonstrates that the agency is capable of focusing new commitments in poorer countries. Despite this, there is still the risk that OPIC could slip back into a portfolio dominated by wealthier, lower-risk countries with much deeper credit markets.
So, how can we help to ensure that OPIC continues to focus on the countries where its services are needed most? In a recent CGD policy paper with Todd Moss, we proposed a number of stoplights that would trigger increased OPIC Board scrutiny if the respective project promised more limited development impact or ‘additionality’. These sensible hurdles could provide further institutional safeguards against OPIC devoting too much of its new commitments in much wealthier countries like Chile and Aruba.
In the meantime, we should commend OPIC for striking a much better balance last year, and demonstrating that this modest US development agency is increasingly prioritizing development needs in the world’s poorer countries.
Check out the updated OPIC Scraped Database, which includes new information on OPIC’s 2015 commitments.
July 25, 2016
Publications
As mobile phone surveys are gaining popularity among researchers and practitioners in international development, one primary challenge is improving survey response and completion rates. A common solution is to provide monetary compensation to respondents. This paper reports on our experience with using incentives with a mobile phone survey conducted in Ghana and Tanzania in June 2015.
May 25, 2016
Blog Post
America’s development finance agency is constantly being pulled in three directions. The primary mandate of the Overseas Private Investment Corporation (OPIC) is to promote development by catalyzing private capital from US firms in emerging and frontier markets. OPIC is also supposed to support US foreign policy by making commercial investments aligned with diplomatic, security, or democracy objectives. Lastly, OPIC must operate on a commercial basis so projects are both sustainable over the long-term and cost nothing to US taxpayers.
OPIC has frequently succeeded in each of these goals, for instance by providing capital for an African credit fund for health clinics and debt finance for a power plant in Jordan. The agency has been run at a small profit too, enabling it to pay money into the US Treasury for 38 consecutive years.
Sometimes individual projects will check all three boxes: a commercially-viable project in a poor country that’s an important strategic ally. But often these three objectives are in tension and over time, the incentives can be distorted. That’s why OPIC’s overall portfolio matters more than any one project. Our analysis of OPIC’s portfolio since 2000 has found that the agency has done a good job of moving into sectors like infrastructure and financial services that are the biggest constraints to growth in most countries. But we’ve also found that OPIC’s overall portfolio has drifted lately into wealthier markets, where the development needs are less acute and where the necessity of government-backed finance may be far less obvious.
To get a better picture of how OPIC is balancing its portfolio, we have a new paper out that recommends two steps that could bring additional clarity to the tradeoffs for OPIC management, its board, and outsiders.
(1) OPIC should go much further in public disclosure, including the release of:
Development Matrix Scores, which it already assigns to prospective proposals; Co-financing data to illuminate its catalytic effect (or not); Project-level data on commitments, to give Congress and the general public a clearer picture of how well the agency is balancing pressures among its competing objectives.(2) Utilize Stoplight Screens to track prospective projects’ development impact and market additionality. Green-lit projects could be fast tracked, yellow-lit projects would require more board scrutiny and a higher approval bar, while red-lit projects would be approved only in rare exceptions. The portfolio as a whole could then be reported on its balance of green-yellow-red over time.
Development Impact ScreenMarket Additionality Screen
OPIC is a high-performing, if still little-known, agency. These modest steps could help it better balance its competing objectives—and make it even more effective in supporting US policy. Read the full paper here.
Pages
July 20, 2015
Publications
The future of development policy is in development finance. Developing countries need aid less and less as their incomes rise and economies grow. What they need now is private investment and finance. US development policy, however, has failed to bring its development finance tools in line with this reality. Related US efforts have not been deployed in an efficient or strategic manner because authorities are outdated, staff resources are insufficient, and tools are dispersed across multiple agencies.
Other players are doing more. Well-established European development finance institutions (DFIs) are providing integrated services for businesses, and these services cover debt and equity financing, risk mitigation, and technical assistance. Moreover, emerging-market actors — including China, India, Brazil, and Malaysia — have dramatically increased financing activities in developing regions such as Latin America and Sub-Saharan Africa.
July 20, 2015
Publications
Since its establishment more than 50 years ago, the US Agency for International Development (USAID) has become a $17-billion-a-year agency stretched across the globe, operating in 125 countries and 36 different program areas. It covers nearly every development challenge, including those surrounding health, food security, microfinance, governance, counterterrorism, macroeconomic stability, trade, and transnational crime.
But USAID, the largest bilateral provider of development assistance in the world in absolute terms, could better maximize its development impact. It has been three decades since a US president instructed the agency to conduct a comprehensive top-to-bottom review of its programs. This is despite dramatic changes in basic development challenges around the world and in the broad economic and political landscape within which the agency operates.
April 14, 2010
Publications
The World Food Programme has world-class logistics, but its ability to manage financial risk is extremely limited. The WFP should consider implementing a targeted hedging pilot strategy for increased predictability. Greater commitments of untied cash from donors and support for the proposed Food Security Trust Fund at the World Bank would help.
October 19, 2015
Publications
Using an experimental design, we assess the feasibility of interactive voice recognition (IVR) surveys for gauging citizens’ development priorities. Our project focuses on four low-income countries (Afghanistan, Ethiopia, Mozambique, and Zimbabwe). We find that mobile phone-based approaches may be an effective tool for gathering information about citizen priorities.
April 7, 2015
Publications
In this project, we analyzed whether mobile phone-based surveys are a feasible and cost-effective approach for gathering statistically representative information in four low-income countries (Afghanistan, Ethiopia, Mozambique, and Zimbabwe).
March 22, 2016
Publications
As recently as 2011, only 42 percent of adult Kenyans had a financial account of any kind; by 2014, according to the Global Findex, database that number had risen to 75 percent. In sub-Saharan Africa, the share of adults with financial accounts rose by nearly half over the same period. Many other developing countries have also recorded gains in access to basic financial services. Much of this progress is being facilitated by the digital revolution of recent decades, which has led to the emergence of new financial services and new delivery channels.
August 23, 2010
Publications
In this working paper, the authors introduce an MDG Progress Index to assess how on or off track countries are toward MDG targets.
Pages
July 25, 2016
Publications
As mobile phone surveys are gaining popularity among researchers and practitioners in international development, one primary challenge is improving survey response and completion rates. A common solution is to provide monetary compensation to respondents. This paper reports on our experience with using incentives with a mobile phone survey conducted in Ghana and Tanzania in June 2015.
October 19, 2015
Publications
Using an experimental design, we assess the feasibility of interactive voice recognition (IVR) surveys for gauging citizens’ development priorities. Our project focuses on four low-income countries (Afghanistan, Ethiopia, Mozambique, and Zimbabwe). We find that mobile phone-based approaches may be an effective tool for gathering information about citizen priorities.
April 7, 2015
Publications
In this project, we analyzed whether mobile phone-based surveys are a feasible and cost-effective approach for gathering statistically representative information in four low-income countries (Afghanistan, Ethiopia, Mozambique, and Zimbabwe).
February 5, 2015
Publications
The need for infrastructure improvements is a top-tier economic, political, and social issue in nearly every African country. Although the academic and policy literature is extensive in terms of estimating the impact of infrastructure deficits on economic and social indicators, very few studies have examined citizen demands for infrastructure.
December 2, 2013
Publications
The United States government has made repeated declarations over the last decade to align its assistance programs behind developing countries’ priorities. By utilizing public attitude surveys for 42 African and Latin American countries, this paper examines how well the US has implemented this guiding principle. Building upon the Quality of Official Development Assistance Assessment (QuODA) approach, I identify what people cite most frequently as the ‘most pressing problems’ facing their nations and then measure the percentage of US assistance commitments that are directed towards addressing them.
June 3, 2011
Publications
This paper provides a review of the rationale for and against SME initiatives and an overview of existing targeted USG and IFI programs. The authors offer several new incremental options for private foundations to establish focused partnerships with donor agencies in their efforts to assist SMEs in order to meet their organization goals.
April 6, 2011
Publications
In this working paper, the authors examine four categories of existing resource-mobilization options and recommend which might best be used to finance global public goods.
March 10, 2011
Publications
By 2025, the number of IDA client countries will likely shrink substantially and primarily be smaller in size and overwhelmingly African. This working paper predicts how these changes will impact IDA's operational and financial models and recommends the World Bank begin addressing the implications of these developments sooner rather than later.
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