Overseas Private Investment Corporation (OPIC)
What Was the Overseas Private Investment Corporation (OPIC)?
The Overseas Private Investment Corporation (OPIC) was a U.S. development finance institution. This government agency assisted private businesses that wanted to invest abroad. OPIC empowered development in emerging markets through private sector investment overseas by helping corporations to examine and manage risks while empowering development in emerging markets. This assisted the agency with propelling the country's foreign policy and national security objectives.
OPIC was consolidated with the U.S. Agency for International Development's (USAID) Development Credit Authority to form the U.S. International Development Finance Corporation in 2019.
Grasping the Overseas Private Investment Corporation (OPIC)
The Overseas Private Investment Corporation was laid out in 1971 as a U.S. government agency under then-President Richard Nixon. It was the nation's solitary development finance institution (DFI) and was based in Washington, D.C. DFIs are government-owned organizations that invest in private sector projects and advance national interests.
As the nation's DFI, OPIC helped private sector investment abroad. OPIC-upheld projects were supported and lined up with U.S. foreign policy. They encouraged economic and political stability, alongside free-market beliefs, especially in struggle ridden areas.
Its initial portfolio included political risk insurance worth $8.4 billion alongside $169 million in loan guarantees. That portfolio expanded to more than $20 billion, connecting with in excess of 160 different emerging nations. Direct loans and guarantees went from a couple million to $350 million for as long as 20 years in underserved areas without simple access to commercial financing.
Funding was simply furnished to companies with a sound business model, for which it charged market-based fees. This permitted the agency to operate without the requirement for any taxpayer assistance. The agency reported that it actually produced money for American taxpayers, contributing as much as $3.7 billion toward decreasing the national deficit somewhere in the range of 2006 and 2016.
As per OPIC's operating statute, the ventures it aided couldn't cause job loss in the United States.
Special Considerations
As referenced above, OPIC was consolidated with USAID's Development Credit Authority to form the U.S. International Development Finance Corporation (DFC) in 2019. The merger was realized after the death of the Better Utilization of Investments Leading to Development Act was passed on Oct. 5, 2018. The new entity permits the utilization of fresher and more imaginative financial products to help circulate private capital to creating economies.
Just like its ancestor, DFC means to advance the interests of American foreign policy and national security as the private sector helps the development of emerging market economies. It achieves this through political risk insurance and debt financing, including direct loans and guarantees of up to $1 billion for as long as 25 years. It likewise gives:
- Support for equity investment and investment reserves
- Feasibility studies
- Technical assistance
The DFC permits private sector investment in several sectors, including energy, medical care, critical infrastructure, technology. Businesses are required to fulfill specific guidelines and have a laid out history in their specific industries.
Features
- The agency merged with the U.S. Agency for International's Development Credit Authority in 2019 to form the U.S. International Development Finance Corporation.
- The agency gave both risk insurance and loan guarantees to companies with sound business plans.
- The Overseas Private Investment Corporation was a U.S. development finance institution.
- It empowered development in emerging markets through private sector investment overseas, especially in emerging markets.
- OPIC supported projects that built up and were lined up with U.S. foreign policy, advancing the country's national security interests.
