U.S. Department of State
For Immediate Release
Special briefing via telephone
OPIC Acting President Bohigian
August 20, 2019
Moderator: Greetings, everyone, from the U.S. Department of State Media Hub of the Americas in Miami, Florida. I would like to welcome our participants who have dialed in from the United States and across the region. Today we are joined by David Bohigian, acting President and Chief Executive Officer of the Overseas Private Investment Corporation, also known as OPIC. Mr. Bohigian will discuss the upcoming launch of the U.S. International Development Finance Corporation DFC. A new modernized development finance agency that brings together the capabilities of OPIC and USAID Development Credit Authority, while introducing innovative financial products to bring private capital to developing economies. Also joining us today are Kristie Pellecchia, OPIC senior advisor for the Western Hemisphere and William Thompson, OPIC’s director for the Western Hemisphere. We will begin with remarks from Mr. Bohigian and then we will open it up to your question. For those of you on the call, please press star one on your phone to join the question queue. If you are using a speaker phone, you may need to pick up the handset before entering star one. If you should require assistance during the call, please press star zero and the operator will assist you off line. Today’s call is on the record. And with that, I’ll turn it over to Mr. Bohigian.
OPIC Acting President Bohigian: Great! Well, thank you for joining us today. I’m pleased to be with you and share some details about the U.S. International Development Finance Corporation or DFC. The new agency, launching October 1st, is going to continue an OPIC almost 50 year tradition of investing in emerging economies around the world with an extraordinarily strong focus in Latin America. The Overseas Private Investment Corporation has been mobilizing private sector capital that has helped build airports, and ports, and power plants, and schools, and expanded access to affordable housing, healthcare and financial services. When I think of the mission of the Overseas Private Investment Corporation and DFC, it’s really the spirit of the Marshall Plan. The remarkable U.S. initiative that helped rebuild Europe after the devastation of World War Two. And what we’re seeing today is a confluence of investment and government and non-government organizations working to catalyze capital into emerging markets to meet the development needs across the world.
Our tools include loans and investment in private equity funds, as well as political risk insurance, all to do transactions the private sector wouldn’t do on its own. And it’s dedicated to advancing stability and prosperity around the world. We’re trying to advance the development goals and we’ve done that over time at the Overseas Private Investment Corporation with almost 6 billion dollars of investment, which has been able to catalyze billions of dollars more of investment from the private sector partners. That more than 6 billion dollars is almost, is 25 percent of our portfolio and we expect that the Development Finance Corporation will continue to invest even more heavily to promote stability and prosperity across the region.
Now on October 1st, OPIC will transform into the U.S. International Development Finance Corporation and with our colleagues from the Development Credit Authority of USAID will usher in one of the biggest changes in U.S. foreign policy in a generation. And will give the U.S. significantly more resources to invest in development. Where I wanted to talk about quickly was the background here, and then I’ll move in to some of the new tools that we’ll have to be able to support development. The new DRC was created October of last year when President Trump signed the Better Utilization Investment Leading to Development Act for the Build Act, which enjoyed broad bipartisan support in Congress. And it really is because stakeholders around United States recognize an emerging markets around the world, including Latin America, have a great need for investment and private sector capital is absolutely key to that. So on October 1st, we’ll continue our strong record of mobilizing investment with new tools. We will have up to 60 billion dollars to invest, which is more than double our current cap and allows us to catalyze hundreds of billions of dollars more in the years ahead. We’ll also have the ability to make equity investments for the first time. We’ll have technical assistance and feasibility studies. We’re going to continue to prioritize those countries that have the greatest development needs. And we’re going to expand upon our important work in empowering women that we’ve done through our 2X Women Initiative that’s already been able to put more than a billion dollars of work, catalyzing billions more into women owned, women empowering businesses. And I think it’s important to note that there are different models of development finance around the world. And what we’re going to do at the Development Finance Corporation is going to follow five crucial factors that are important for policymakers and for people who are looking to do development projects to understand.
Those five factors – first, that a nation needs to protect its own sovereignty. More important than anything that deals that the private sector in the U.S. government have done have been meant to promote a community of nations and our neighborhood in Latin America to be able to work together rather than having a different type of relationship. Second, we’re trying to ensure that local workers get the benefit of these development finance deals. Third, we’re working to ensure that we are respecting the beautiful environment that we all share in this hemisphere. Next, it’s crucially important that anti-corruption and transparency measures in place so that the taxpayers of all these countries understand that their dollars are going to – their money is going to the projects that are going to lift the prosperity levels. And last it’s important that these are quality products that are built to last. So I want to make sure that we’ve got a good background around the Development Finance Corporation. I’m happy to take questions. I know Kristie and William are also. But we’ve had the chance to travel to many countries around the region. I’ve had a chance to recently go to El Salvador, where, for instance, when I went to the president’s inauguration, we were able to say the U.S. government, our tax payers working with the private sector capital are going to build a power plant that in the future will deliver 20 percent of El Salvador’s energy needs. Recently, a team here directed by President Trump went to the Caribbean, where I was able to visit Haiti, where OPIC has supported the rebuilding of a major flour mill that was destroyed in the earthquake less than 10 years ago. So it’s an example of major infrastructure projects that we do, major development projects that we do that’s happened across the region throughout so many countries. And we’re dedicated to in the years ahead Development Finance Corporation really making sure that we maintain and expand our commitment to the Western Hemisphere. So thank you and we’re happy to take your questions.
Operator: Just quick reminder, ladies and gentlemen, if you have a question. Star one.
Moderator: Thank you, Mr. Bohigian. We will now begin the question and answer portion of today’s call. For those asking questions please state your name and affiliation and limit yourself to one question related to the topic of today’s briefing. Our first question will go to Mr. Luis Alonso of AP.
Question: Thank you. Good morning. Can you hear me well?
Moderator: Yes we can go ahead.
Question: Great, many thanks for this call and this opportunity. Mr. Bohigian first I would like to clarify you said that the DFC would be have a portfolio of 60 billion to invest. Is that amount only for Western Hemisphere or is that global? How much of that amount is going to [inaudible]? And if you could give us a sense of the timeline. By when would you see that investment being made? And the second part of my question is, of course, we all know that Chinese money in the region has been growing for several years. If you could please give us a comment on how this new tool by the U.S. government, what the goal is about the Chinese. I mean how important, will this be changing the dynamic in the region? Because of the [inaudible] in respect to the Chinese money. Thank you very much.
OPIC Acting President Bohigian: Well, thank you for that question. OPIC’s global portfolio today is almost 25 billion dollars, and approximately 6 billion of that is invested throughout the Western Hemisphere. We expect that under the DFC, that total cap will go to 60 billion dollars over the next several years. And we will also be increasing our investments into Latin America. What we also expect is that those investments will help catalyze billions of dollars more private sector capital. So I’d expect that over time we’d be doubling our portfolio in Latin America. But it’s a matter of ensuring that we can find bankable opportunities, ensuring that governments there are putting in place rule of law and other commercial protections to make their economies more bankable for the prosperity of their people. To the China question, I think it’s important to remember that the entire belt and road initiative that China announced five years ago was intended to be – it’s opaque but some say a 700/800 billion dollar project. What gets overlooked sometimes is that foreign direct investment in Latin America from the private sector is more than two trillion dollars from global sources. And much of that is the United States with investing in Latin America.
As a matter of fact, foreign direct investment just in 2017, just by United States was almost 300 billion dollars alone. So, I think many people make the mistake of trying to look at state directed authoritarian investment versus other governments investment. The crucial, the crucial comparison needs to be with investment and private sector investment from the United States and its businesses far outstrips what the belt and road program is doing. Beyond the mere dollars, though, it’s important to understand that countries face choices when they’re looking to finance their infrastructure and development needs. And first and foremost, they need to protect their sovereignty. Second, they need to make sure that their workers are getting the job and able to support their families. Third, that the environment is respected. Fourth is that transparency and anti-corruption measures are in place and that these products are built to last. So not only are we talking about the important halo effect, the effect that will pull in more investors when the United States and their businesses invest in countries in development needs. We’re also talking about really raising global standards and making sure that everybody prospers from these investments.
Moderator: Our next question comes from Yuliana Toral of W Radio. Please go ahead.
Question: Thank you. Thank you for doing this brief. This is Yuliana Toral with W Radio and Mr. Bohigian I have a question. And this is in regards to specifically Colombia. What will be the OPIC plan for mobilizing investment and bringing U.S. financial corporations and support development to Colombia?
Sr Advisor Kristie Pellecchia: Hi, this is Kristie thank you for your question. So specifically regarding Colombia, your question was, can you just repeat the question so I make sure I got it?
Question: Mobilizing investment in bringing U.S. financial corporations and support development to the country – to Colombia.
Sr Advisor Kristie Pellecchia: Yes, so our portfolio right now in Colombia is significant. It’s about seven hundred million dollars. Just in 2017 alone we’ve done six projects there. And if you look at the nature of the projects that we’ve done, the bulk of our capital raising has been around providing low income mortgages, providing residential housing [inaudible] for residential housing, and most recently supporting the 4G toll road, which, as you might be aware is the 4G program is certainly very important for Colombia. Colombia ranks very low in terms of the World Economic Forum’s ranking of infrastructure and it’s critical to make sure that in the rural areas, the small and medium enterprises have access to roads so that they can transport their produce and other goods. And this is a really important source of growth for the country. Much of the region was hindered a bit by the Odebretch scandal, and that also hurt infrastructure investment in Colombia. And so we were able to be there at a time when the country needed additional financial support. And we’re very pleased to be a part of that program.
Moderator: Our next question comes from Perla Pineda of El Economista. She asks, “Mexico is contemplated in the investment program. If so, which projects would be invested in the short and long term? And why would that decision be made to invest in those programs?”
Sr Advisor Kristie Pellecchia: So thank you for the question again. So you might be aware that in December of 2008, the US and Mexico announced bilateral cooperation to jointly look to raise 4.8 billion dollars in the private sector and with a target of having two billion dollars targeted towards the south, where there is significant investment needed as many people leave that part of the country due to the lack of economic stability. And so we were recently in Mexico announcing 720 million dollars in capital that’s going to be mobilized through letters of interest that are where we’re looking to support small and medium enterprises, which is actually the bulk of our portfolio today in Mexico. Seventy percent of the deals that we have in Mexico are related to foreign medium enterprises as well as energy projects that are critical in the southern parts of Mexico. So we would expect to focus there and then to support other areas of Mexico that need capital. Specifically in the areas of infrastructure or continuing to support women in Mexico.
Moderator: Our next question is from Gabriela Villaroel of diario El Mundo. She wants to know if the new Development Financial Corporation will substitute the OPIC and USAID Credit Authority. And if so, will the new agency continue the projects that have already started and what or if any new projects are contemplated in El Salvador.
OPIC Acting President Bohigian: Great. Well, Development Finance Corporation combines the Overseas Private Investment Corporation and the Development Credit Authority. So you’ll continue to see those pipelines and those projects as OPIC’s done for almost 50 years and Development Credit Authority has done throughout Latin America, El Salvador and the world. We continue to look at projects in El Salvador and throughout Latin America. As I mentioned earlier, we’re extraordinarily proud of being able to support a significant portion of the power needs. OPIC has also supported
source capital, which is rehabilitated expanding water infrastructure to rural communities in El Salvador, providing clean water and sanitation for up to 300,000 people. So we continue to look to develop that pipeline and we continue to look to build on our successful portfolio in El Salvador and beyond. And I think the combination of the Overseas Private Investment Corporation and the Development Credit Authority to provide added synergies and strengths to our efforts to build improved development outcomes throughout the region.
Moderator: Mr. Bohigian can you share a bit more about OPIC’s current project in Latin America and or elaborate on the OPIC’s 2x Women’s initiative?
OPIC Acting President Bohigian: We have dozens of projects, hundreds of projects throughout Latin America. And what I think would be a great way for those on the line to look in more depth with the OPIC portfolio – The app in the Apple App Store to be able to plug in whatever countries they look at. I can talk about a Peruvian 26 million dollar loan supporting a major telecom project. In Paraguay we’re helping with banks to [inaudible] on land to 125 million dollars to small and medium sized businesses there. In Ecuador we have taken one of the most dangerous airports and made it one of the safest and busiest in South America in Quito. In Chile and throughout the region, we’re working with root capital support loans and trainings for smallholder farmers to improve productivity. It goes on and on and on to look at the projects that we’ve done in Latin America. And we expect to continue to build on that success through the Development Finance Corporation. We have 125 projects there now, approximately six billion dollars. And again, catalyzing billions of dollars more. And we expect that together with Development Credit Authority OPIC and in the new DFC, we’ll continue to expand our portfolio. But please look at OPIC’s portfolio in the app store for details.
Operator: Ladies and gentlemen, just a quick reminder, if you have a question, please press Star 1.
Moderator: Mr. Bohigian can you talk about how the DFC will select specific contracts and how do businesses apply?
OPIC Acting President Bohigian: DFC will continue in OPIC’s tradition as well as DCA to look at mobilizing private sector capital across the region throughout every segment of infrastructure and every segment of business, whether that’s airports and ports or whether that are water projects or supporting women’s small and medium sized enterprises, really just about every business can think about looking to the DFC for support, because what we are trying to do through providing private equity, what we’re looking to provide project finance and what we’re looking to do through political risk insurance is truly what OPIC has done for almost 50 years across the sectors, across the region and apply to work at OPIC right now, it is anything from a million dollar loan commitments to up to 350 million dollar loan commitments. And truly just coming to the website or giving us a call is the way to get that process started. Primarily we are looking at projects through a development lens to ensure that we’re creating prosperity throughout the region and for the people in each of the Western Hemisphere countries, because in the neighborhood that we share, we believe peace and prosperity go hand-in-hand and partnerships for trade and investment go hand-in-hand. And projects that OPIC supported for almost 50 years has helped create some of that prosperity. And we expect that to continue under the Development Finance Corporation.
Moderator: How will the DFC support US – Latin America relations?
OPIC Acting President Bohigian: Well, I think when you look at the ties throughout the region, it’s cultural, it’s economic, it’s security and it’s really sort of prosperity and security that we’re able to help promote through the Development Finance Corporation.
Whether that is ensuring that families are more stable when we invest in women owned businesses where women invest more in their families than men traditionally have or whether that’s helping build the infrastructure to help goods move throughout the region across ports, and airports, and roads, we believe that it benefits all of us – the United States and throughout the Americas when we’re helping to make sure that our neighborhood has more peace, prosperity and security.
Moderator: Thank you so much, Mr. Bohigian. That concludes today’s call. I want to thank Mr. Bohigian again for joining us. And thank all of our callers for participating. If you have any questions about today’s call, you may contact the Miami Media Hub at [email protected] Thank you so much.