NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, June 9, 2015

In 1969, 38 years before the term “impact investing” was first coined at a convening hosted by the Rockefeller Foundation, U.S. President Richard Nixon saw the writing on the wall when it comes to using market-based mechanisms to alleviate poverty.

In a speech he delivered that year, Nixon argued for a new focus to the country’s foreign assistance efforts. “We must enlist the energies of private enterprise in the cause of economic development,” he said. To do so, he advocated for the creation of the Overseas Private Investment Corporation, or OPIC. According to Nixon, this new government agency would provide a “businesslike management” approach to mobilize and guide investment capital to higher-risk areas so as to contribute to the economic and social progress of developing nations.

Since its establishment in 1971, OPIC continues to serve as the United States’ development finance institution, pushing the frontier of private-sector led approaches to development—and doing so on a self-sustaining basis at no net cost to American taxpayers. Over the course of its 44-year history, OPIC has supported more than $200 billion of investment in over 4,000 projects.

Last month, the agency hosted its second-annual Impact Awards. (Full Disclosure: My organization, Root Capital, receives investment from OPIC and was among the awardees). Following the event, OPIC’s President and CEO, Elizabeth Littlefield, was kind enough to share with me her perspective on impact investing, and OPIC’s evolving role in development.

Willy Foote: With an $18 billion portfolio supporting private investment in developing economies, OPIC operates on a self-sustaining basis at no net cost to American taxpayers. What distinguishes the role of OPIC, as a public sector agency, from other impact investors?

Elizabeth Littlefield: There are several factors that give OPIC a unique role among other development finance agencies and private-sector impact investors.