In recent years, the global community has tackled some of the world’s biggest development challenges. Significant progress has been made in identifying policy priorities and in agreeing to some specific approaches.
Consider the following developments:
- In 2015 leaders from nearly 200 countries adopted the 2030 Agenda for Sustainable Development, which outlined a set of global development priorities for the next 15 years, including ending poverty, achieving gender equality, building more sustainable cities and taking urgent action to address climate change.
- The United Nations Climate Change Conference reached a historic agreement to reduce global greenhouse gas emissions through a long term durable framework.
- World leaders convened in Ethiopia for the UN’s Financing for Development, discussing the importance of financing as a tool for advancing global development.
As the U.S. Government’s development finance institution, the Overseas Private Investment Corporation (OPIC) has long worked to address some of the world’s biggest challenges by mobilizing private capital. OPIC supports development with loans, guaranties and political risk insurance in more than 100 developing countries around the world, and we are increasingly focused on Africa. Last year, Sub-Saharan Africa accounted for about a quarter of our new commitments.
How does OPIC help advance development in Africa?
The projects we’ve supported are as diverse as the continent itself and include major power plants, a water desalination facility, hospitals and health clinics and schools. While these critical infrastructure projects are crucial to Africa’s less developed countries, we also recognize that even in the poorest countries, demographics are changing, creating growing demand for more modern infrastructure, technology and financial services, which will all help enhance job creation and increase opportunities.
Recently, much of OPIC’s focus in Africa has been providing electricity to the estimated two-thirds of the population that live in darkness. OPIC is a key partner in President Barack Obama’s Power Africa initiative, aimed at doubling the number of people on the continent who have access to electricity. To date we’ve committed more than $1.6 billion to that initiative, with a strong focus on renewable projects that will generate electricity from the sun, wind and geothermal steam, and also off-grid power projects, reaching the majority of the population that is not grid-connected.
In Nigeria, we’re supporting a project to introduce portable, affordable solar kits to homes that are not grid connected. These compact panels enable families to use lights, fans and small appliances, so that children can do their homework after dark, small businesses can stay open longer, and people can have the comfort and convenience provided by basic lighting, cooling from an electric fan, or access to a computer. We are also providing financing to support the construction of larger power plants, including a 55 MW facility in Senegal.
While OPIC’s model for development finance is based on the understanding that successful development takes a lot of money, our approach brings several other benefits as well:
- We invest for the long term – Many of the projects, such as power plants, that we support require large amounts of time and money that the private sector cannot solely finance can be difficult to obtain from private sector lenders. OPIC provides financing with tenors of up to 20 years.
- We help investors address risk – Because investing in emerging markets brings its own set of challenges, OPIC political risk insurance provides coverage of up to $250 million to protect against losses due to currency inconvertibility, expropriation, regulatory risk, political violence and breach of contract.
- Our objective is to make a positive impact – OPIC only supports projects that are likely to benefit people and the planet. We carefully review all projects to assess their likely impact before we commit and continue monitoring over the life of the project.
- We are flexible – OPIC’s ability to commit well over $1bn in support of Power Africa in just two years speaks to our ability to quickly respond to major needs and initiatives. Likewise, we’ve dramatically increased our commitments to renewable resources, which have surpassed $1bn worldwide for the past five years. We have a long history of working in some of the world’s most challenging markets, developing creative solutions to logistical demands, and developing new finance and insurance products to address the needs of our partners.
Most important, we get results. The positive impact of the development projects that OPIC supports is tangible and significant – from helping farmers produce more food, to helping low income families obtain housing, children attend school and communities access electricity. This is a testament to what can be achieved when the resources of the private sector are mobilized to advance global development.