Supporting Investment
in Emerging Markets
Overseas Private Investment Corporation
John Simon
Executive Vice-President
Net FDI and ODA to Developing Countries
350
300
$US billion
250
200
150
100
50
0
1998
1999
2000
2001
2002
Net FDI Inflows to Developing Countries
2003
2004
2005
2006
Net ODA
Source: IBRD and OECD
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FDI: Impact on Development
Benefits
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Capital Flow ($)
Technology Transfer
International Best Practices
Cross-border Linkages (supply chains, trade
markets, etc.)
• Competitive Pressure
Responds to Policy Signals
3
Challenges of FDI
• Stable in Global Sense; Can be Volatile
Locally
• Affected by Global Conditions
• Lags Policy Changes
• Highly Concentrated - Difficult for Small
Markets to Achieve Critical Mass
4
US Investment Related Activities
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•
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AGOA
MCC
USAID’s DCA Program
GDA
USTDA
OPIC
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Role of DFIs
• Address the Perception-Reality Gap
• Bear Risks Market Cannot
• Provide Finance Tools Not Yet Available in
Local Market
• OPIC’s Tools
• Political Risk Insurance
• Structured Finance
• Investment Funds
6
Africa Overview
• Macro Generally Improved
• Inflation Moderate (with exceptions)
• Fiscal Efforts Stronger
• Debt Levels Much Lower
• Payoffs From Reform
• Record Economic Growth
• Access to Global Capital Markets (Ghana Bond
Offering)
• FDI Flows Stronger
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Political Risk Insurance
Political Risk Insurance covers U.S. Investors against:
• Inconvertibility: Inability to convert and transfer
local currency into U.S. dollars.
• Expropriation: Losses due to expropriation,
nationalization or confiscation by a foreign
government.
• Political Violence: Losses due to war, revolution,
insurrection or political motivated strife.
Example:
• SORWATHE/Tea Importers, Rwanda: OPIC’s
payment of four political violence claims for losses
during 1990-1994 Civil War encouraged Tea
Importers to stay and rebuild. In 1997, OPIC
provided $1.2 million to insure expansion.
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OPIC Housing Initiatives
OPIC Housing Services
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Land Development – Home Construction
Lease-Purchase Finance
Mortgage Finance
Mortgage Securitization
Housing Support Services
Since 2001, OPIC has:
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•
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Provided support to more than 50 housing projects, with total commitments
of over $1.1 billion.
Leveraged over $7 billion in additional capital into the emerging markets.
Supported over 450,000 housing units to predominantly moderate and lowincome households.
Example
•
OPIC is providing a $30 million loan to Ghana Home Loans to fund residential
mortgages for up to 600 single family residences. Ghanaians will be able to
obtain 15 year GHL mortgages with a 25 percent down payment.
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Small Business Finance Initiative
for Latin American Banks
“People in this region have the talent and drive they need to succeed…What they
need is, in order to be able to realize that hope, is better access to capital.”
President George W. Bush
March 5, 2007
 Earlier this year President Bush called for “a new initiative that will
help U.S. and local banks improve their ability to extend good
loans to small businesses in Latin America.”
 In partnership with the US Treasury and the Inter-American
Development Bank, OPIC has responded to the President’s call by
significantly expanding the availability of risk-sharing guarantees
and loans to eligible banks in Latin America to extend their
financing activity for small businesses.
 OPIC currently anticipates $150 million will be available for small
business lending through several different mechanisms it has
available.
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Investment Funds - Africa
Recent Funds Include
Africa Social Development Fund Call:
• Africa Telecoms, Media, and Technology Fund ($100mm)
• AfricInvest Fund II ($175mm)
• Africa Healthcare Fund ($100mm)
Africa Capital Markets Call:
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Millennium Global Africa Opportunities ($300mm)
Africa Catalyst Fund ($300mm)
Atlantic Coast Regional Fund ($150mm)
Africa Debt Fund ($300mm)
Global Housing Call:
• International Housing Solutions ($300mm)
• Africa Capital Alliance Property Investment ($200mm)
Africa Call 2006:
• Helios Sub-Saharan Africa Fund ($300mm)
Sub-Saharan Africa Call 2004:
• EMP Africa Infrastructure Fund II ($533mm)
• Ethos Capital V ($780mm)
Total Capital Mobilization For Africa = $2.8 billion
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