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?
CGD Policy Blogs
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.
Even among policymakers, there is plenty of misunderstanding around how the US government’s premier agency charged with advancing a private sector-based development agenda, the Overseas Private Investment Corporation (OPIC), actually operates. When we searched for a database with key OPIC project-level information, we couldn’t find one. So we spent months manually entering all of the publicly available information on OPIC projects into a single location, the OPIC Scraped Portfolio dataset.
For years, the Overseas Private Investment Corporation (OPIC) has been attacked by a handful of organizations as corporate welfare. But, were the charges of corporate welfare actually true? My colleague Todd Moss and I spent months looking at the data to get an answer, and here it is: no.
Last night the House of Representatives passed the Electrify Africa Act. They followed the Senate, which passed the same bill by unanimous consent last December. Yes, amazingly enough, Congress has finally spoken: Combatting African energy poverty is the official policy of the land, or at least will be once President Obama holds a signing ceremony in the next 14 days.
Our recent paper suggesting that there are stark tradeoffs between energy access and pursuing a renewables-only energy strategy has attracted a lot of attention. We responded to Michael Levi’s post on CFR.org here, but it seems worth addressing some of the other critiques, notably this detailed post by UC Berkeley’s Daniel Kammen, that have challenged our projections and findings.
Over at the Council on Foreign Relations website, Michael Levi posted a reply to our recent paper on estimating the tradeoffs between OPIC power generation investments based upon natural gas and renewable sources. We are grateful to Michael for his thoughtful comments and for instigating a sensible discussion of the underlying issues.
Of the many outcomes in the FY2014 Omnibus Appropriations legislation, one that stood out was buried in section 7081. This provision now allows the Overseas Private Investment Corporation (OPIC) to invest in fossil fuel power projects in IDA and IDA-blend countries. In other words, OPIC’s carbon cap has been lifted at least until the end of September.
This is a joint post with Ben Leo, former CGD research fellow and now Policy Director at ONE.
The Overseas Private Investment Corporation is the best US development agency you’ve probably never heard of. Known as OPIC, it’s often mistakenly confused with the oil cartel. But if you care about promoting economic opportunity around the world, then OPIC should be on your radar. And with a few changes, the Government could make OPIC a whole lot more impactful.
Launched in 1971, OPIC leverages public money to create market opportunities and crowd-in private capital by providing insurance, loans, and seed capital for new private equity funds. Over four decades, OPIC has helped to generate nearly $200 billion in new investment, enabling US investors to enter new markets and building a private sector in support of US policy objectives. The bonus of OPIC is not only that it works, but that it comes at no cost to US taxpayers. In fact, for 34 years in a row, OPIC has generated profits and contributed funds into the US Treasury (the FY2012 budget expects a $188 million contribution).