The following interview with Elizabeth Littlefield, OPIC president and CEO, appears in World Agriculture Outlook 2014-2015 Edition.
The Overseas Private Investment Corporation (OPIC) is the U.S. government’s development finance institution. It mobilizes private capital to help solve critical development challenges and, in doing so, advances U.S. foreign policy. OPIC operates in 150 countries and manages an $18 billion portfolio of financing and insurance to support private investment in sustainable economic development, especially in the world’s poorest countries. Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets, catalyzing revenues, jobs, and growth opportunities both at home and abroad. OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds. It operates on a self-sustaining basis at no net cost to American taxpayers.
Elizabeth L. Littlefield was appointed by President Barack Obama as the president and CEO of OPIC, an under secretary-level position. Under Littlefield’s leadership, OPIC’s annual commitments to renewable resources projects grew tenfold in three years to $1.5 billion, while generating increasing income for the federal budget – a number that reached $426 million in 2013. She has also instituted major reforms of the agency’s policies, systems, and processes and introduced new financial innovations to augment the agency’s development impact. Littlefield has been appointed by Obama to serve as a member of the White House Development Council and the President’s Export Council. Littlefield was presented in 2012 with the Secretary’s Distinguished Service Award, the highest award in the Foreign Service, by then-Secretary of State Hillary Clinton.
World Agriculture Outlook: Why is private investment so critical to promoting renewable resources and what is the value of public-private collaboration?
Elizabeth Littlefield: Nations need a robust private sector if they hope to have economies that will create and sustain better jobs. Reliance on foreign aid and reliance on foreign sources of energy can be a bridge toward sustainability, but more and more, nations are realizing that it should not be more than a temporary bridge.
OPIC’s mission is at the junction of these two issues. We leverage private business to make long-term investments in high-impact sectors, which helps create economic sustainability in developing markets. In doing this, we have also made major strides in increasing our investment in renewable resources, contributing to both economic and environmental sustainability. We believe this type of investment is more durable for development, and it helps harness business as a tremendous force for good in a way that was not envisioned on this scale even 10 or 20 years ago. Private investment abroad, helped by agencies such as OPIC, has a tremendous multiplier effect there and at home. The advantage OPIC brings is 40 years’ worth of experience in making that happen. We’re open for business in more than 150 countries around the world.
Though “renewable resources” is a phrase generally associated with energy, can you explain why food and food security also fall under OPIC’s renewables sector?
Once a nation mines and exports, say, mineral or oil and gas deposits, they are gone forever. They cannot be replenished and can no longer help the economy. Through smart growth and new technology, private investment can help economies manage and in some cases restore their agriculture, aquifers, biodiversity, and complex ecosystems. People around the developed and developing world need these basic natural resources to sustain and renew their livelihoods. We are going to have to find more effective ways of producing and deploying the Earth’s bounty in the future than we have in the past.
Is it fair to say that activities related to agriculture, nutrition, and health need to be better coordinated and linked?
Absolutely. If you look at some of the long-term projections for health care around the world, some of the most alarming changes in the developing world are in what are called non-communicable diseases, such as heart ailments and diabetes. Those two, in particular, are intrinsically diet related. So when we invest, we do look for opportunities to support organics, sustainable farming, and a more diversified food supply chain that can get better food to more people.
More broadly speaking, OPIC’s experience shows that the best development projects are ones that have multiple linkages to other projects and sectors. We invest in power, infrastructure, agriculture, access to finance, education, and health care, to name a few. Without power, for example, manufacturing or food processing is slow to flourish. Without roads and transportation infrastructure, it is much more difficult to get fresh farm produce to market or to get farm workers reliable medical care. As a development finance agency, we not only focus on those linkages but try to help private investors optimize them because it helps both businesses and communities in the long run.
Why is it that many African countries are still food insecure and what is OPIC’s role in addressing these challenges?
True food security depends on countless factors that are far beyond the seeds, irrigation, fertilizer, livestock, and equipment on a farm. Roughly 600 million Africans still do not have basic access to electricity. Clearly, you cannot have food refrigeration and food- packaging facilities if you do not have electricity. And that’s just one barrier. You must have roads, ports, trucking companies, and shipping containers to get to local and global buyers. Integration into local and regional markets is necessary to send the right price signals to producers, so efficient producers are rewarded and inefficient producers can adjust their strategies. In Africa, we have seen cases where agribusiness exporters had to solve gaps in the land registry system for smallholder family farms. Our approach to development addresses not just farming and agriculture directly, but also broader development.
Can you explain the concept of impact investing and how it differs from socially responsible investing? What do you see as OPIC’s role in impact investing?
Impact investing aims to transform private capital into solutions for common challenges such as access to education, financial inclusion, housing, health care, and climate change, while at the same time generating sufficient returns to constitute viable investments. Socially responsible investing is a broader term that encompasses investments that have a positive development effect or that screen out negative effects, but OPIC reserves the specific term “impact investing” for instances when the partners we support design their very business models with an explicit and inherent intent to address environmental or social issues, as well as a structure dedicated to achieving both impact and financial returns.
Through a system of tagging our investments to categorize their development impact, OPIC has helped to inform the growing field’s definition of what constitutes impact. OPIC also offers pilot innovations such as the Portfolio for Impact [PI] to support impact projects at an early stage, and the Innovative Financial Intermediary Program [IFIP] to combine the development effects of private equity funds and direct project financing.
Can you give an example or two of an impact investing project that OPIC has supported?
Some recent examples of OPIC’s commitments to support impact investing include:
- $15 million in financing to Seattle-based Global Partnerships for microfinance lending across Latin America, with particular focus on institutions that provide services in health services, rural livelihoods, green technology, and microentrepreneurship.
- Political risk insurance coverage to Arkansas-based Westrock Coffee Holdings, to support modernization of a coffee milling and processing plant in Kigali, Rwanda. Westrock has helped transform Rwanda’s coffee sector by investing in facilities, training, and sustainable farming and business practices, and by connecting farmers with international buyers.
Caption for top photo: Elizabeth Littlefield, president and CEO of OPIC.