SEATTLE — In recent years, distribution of funds from the Overseas Private Investment Corporation (OPIC) has fallen under scrutiny for sending money to wealthier nations while largely neglecting the world’s poor. After taking a closer look at the OPIC spending report, Jared Kalow and Ben Leo of the Center for Global Development (CGD) noticed alarming investment patterns between 2002 and 2014.
Upon release of OPIC’s 2015 report, however, the pair discovered that investment in low-income nations rose significantly last year. The trend is both necessary and encouraging.
This increase in funding to low-income and lower-middle-income countries comes after a period of massive decline. While examining OPIC’s investment portfolio, Kalow and Leo were discouraged to see that in 2013 and 2014, the corporation focused nearly one-quarter of its commitments on high-income nations.
Between 2002 and 2014, commitments to aid programs in low-income nations declined fairly rapidly according to calculations by the CGD. In 2002, a staggering 75 percent of OPIC spending went to projects in low-income countries, while just 1.3 percent was used as such in 2014.
Over the course of that 12-year period, there were two exceptions. In 2009, OPIC committed $150 million to a power generation project in Togo. Two years later in 2011, the corporation dedicated $400 million to two renewable energy projects in Kenya and Liberia.
Aside from those expenditures, investment in lower-income countries was lacking. At its lowest point, OPIC dedicated less than five percent of its investments to the world’s poorest nations. The pattern persisted for two years between 2012 and 2014.
That is not to say that OPIC’s investments during that period were not valuable. In 2014, for example, it helped aid agencies make great strides in the realm of renewable energy with a $1.2 billion commitment.
That being said, two of their key projects that year were centered in Brazil and Poland, which are upper-middle-income and high-income nations, respectively.
Because of extensive investment in energy projects in Kenya, Pakistan and Ghana in 2015, the new trajectory of OPIC spending works in favor of low-income and lower-middle-income countries.
OPIC made a total commitment of $4.4 billion in 2015, $1.83 billion of which went to projects in sub-Saharan Africa. This level of financial commitment is significant. New research by the Overseas Development Institute (ODI) suggests that 90 percent of all impoverished children will be isolated to sub-Saharan regions by 2030.
As stated in the 2015 report, “OPIC was created on the understanding that the resources needed to address major world challenges far exceed the resources of the public sector, and that private businesses and investors have an essential role to play.”
Although there is much work to be done, OPIC took a huge step in the right direction by prioritizing the world’s poor last year.
Just two years ago, 25 percent of OPIC spending went to high-income countries. In 2015, 47 percent of its investments went to what is arguably the most at-risk region on Earth in terms of poverty. Not only does the corporation understand its role, but it has begun to play it.
– Madeline Distasio