The CGD Podcast: "The Little Agency That Could"

Date: June 23, 2015
Host: Rajesh Merchandani, Center for Global Development
Guest: Elizabeth Littlefield, President & CEO, Overseas Private Investment Corporation (OPIC)

Episode Overview

This episode explores the dynamic role of the Overseas Private Investment Corporation (OPIC) in U.S. and global development finance. Host Rajesh Merchandani and guest Elizabeth Littlefield discuss how development finance has shifted from traditional aid to private sector investment, OPIC’s unique position and limitations, the challenges and opportunities of leveraging private capital, and the vital importance of high social and environmental standards.

Key Discussion Points & Insights

The Shift from Aid to Private Finance

• Evolution of capital flows: In 1971, development aid was the dominant funding source for emerging markets, but this has reversed dramatically. For each $1 of aid today, $7 comes from foreign direct investment (FDI).

  • “...only a little sliver of it was foreign direct investment. And we’ve seen in the ensuing 40 years that’s completely flipped. So now... $1 of aid, it’s $7 of foreign direct investment.” (Littlefield, [00:54])

• Drivers of change: Growing recognition that FDI drives jobs and growth, and globalization has led companies to focus on emerging markets.

OPIC’s Model, Limitations & The Case for Expansion

• OPIC’s impact despite size: OPIC manages an $18B portfolio across 106 countries with just ~230 staff, consistently returning $300M-$500M annually to the U.S. Treasury.

  • “...among the development finance institution peers ... we’re actually very, very small in terms of resources, but not so small in terms of our financial impact.” (Littlefield, [03:21])

• Calls for a larger mandate: CGD has advocated for “unleashing” OPIC—turning it into a full-service Development Finance Corporation for greater impact.

• Needed reforms:

  • More staff to match global demand
  • New instruments: Unlike peers, OPIC lacks authority for grants or equity investments, limiting flexibility.
    • “OPIC is the only development finance institution to have neither grant authority nor equity authority. ... I do believe [grant authority is] the expertise in the business of usaid, whereas our expertise... is really in the purely private, financial, commercial approach.” (Littlefield, [04:51])

• Cooperation with AID: Collaboration between grant-focused aid and commercially-focused OPIC can address multifaceted development issues.

Global Competition & High Standards

• Rise of new players: Asian and European development finance institutions are growing rapidly, notably the Asian Infrastructure Investment Bank (AIIB).

• Urging high standards: OPIC hopes new actors maintain rigorous environmental, social, and labor standards, essential for positive development impact.

  • “...we would hope and urge that the same standards... are also embraced by these new actors. ... our development impact isn’t just coming from the financing, it’s coming from those standards themselves.” (Littlefield, [06:24])

Private Finance: Promise & Peril

• Concerns from civil society: NGOs worry private finance could undermine safeguards for labor and human rights.

• Role of quality investors: Responsible private actors help elevate standards; bad actors must be isolated.

  • “...as we encourage higher quality investors... we’re going to see the standards rise across the board. ... there’s no question that private actors are playing a more and more constructive role...” (Littlefield, [07:59])

• Double bottom line: Private finance can both create profit and advance community well-being.

  • “...very responsible private investors...really do have a double bottom line of creating value for the local communities and doing so in a sustainable manner.” (Littlefield, [09:18])

Blending Public and Private Capital

• Balance needed: Private funds alone won’t suffice—public sector incentives unlock greater private flows.
  • “...private actors are a critical part, but the public sector still has a role to play and as we know, AID still has a very important role to play because not every problem... can be solved through private capital.” (Littlefield, [09:44])

Development as a “Win-Win” for the U.S.

• Political perspective: U.S. development finance is increasingly a bipartisan priority, seen as a tool for foreign policy and economic opportunity.
  • “...there’s a strong sense that the US Government needs to be involved in development... businesses as ambassadors... creating mutual prosperity and... demonstrate the best of American goodwill...” (Littlefield, [10:49])

Development Finance & National Security

• Stability through investment: A third of OPIC’s portfolio supports countries in or near conflict, offering jobs and opportunity as bulwarks against extremism.
  • Jordan success story: OPIC-funded water and power projects, and SME programs—critical for a country absorbing refugees and facing resource scarcity.
    • “OPIC has invested about a billion dollars in projects in Jordan ... providing 20% of the water... 25% of the power... and a small and medium enterprise lending program...” (Littlefield, [12:22])

Looking Ahead: The Future of OPIC & Development Finance

• 2030 vision: More tools, deeper engagement, and harnessing private capital for climate and resource solutions.
  • “Resource scarcity, a growing middle class ... and climate change ... one of the world’s greatest, greatest opportunities ... to transform our global economy from one that is inefficient and polluting ... to one that is inclusive and cheaper and cleaner...” (Littlefield, [14:32])

The Obama Administration & What Comes Next

• Momentum to continue: Significant development initiatives like Power Africa still require implementation; OPIC has spent years updating its systems to support future scaling.

  • “...Power Africa is one of the most important signature development initiatives that the President has launched and we’ve seen incredible impact already...” (Littlefield, [15:55])

• Bipartisan support for future growth: Both major U.S. parties are likely to support a “global development bank” model.

  • “The notion of a global development bank... is something that is being talked about on both sides of the aisle. ... if you can create organizations that are doing development, advancing foreign policy goals, helping US Businesses ... and ... make money ... that’s a model that you definitely would want to scale up...” (Littlefield, [17:56])

Notable Quotes & Memorable Moments

• On the changing landscape:
  “Now it’s $1 of aid for every $7 of foreign direct investment.” (Littlefield, [00:54])

• On OPIC's size and ambition:
  “We’re too small for the global challenges. Proud of what we’re doing with what we’ve got, but could be bigger.” (Littlefield, [04:15])

• On rigorous standards:
  “...we would hope... that the same standards of environmental and labor and social standards... are also embraced by these new actors.” (Littlefield, [06:24])

• On the double bottom line:
  “...very responsible private investors who really do have a double bottom line of creating value for the local communities and doing so in a sustainable manner.” (Littlefield, [09:18])

• On development and security:
  “A full third of OPIC’s portfolio right now is in countries that are either in conflict or vulnerable to conflict.” (Littlefield, [12:22])

• On bipartisan future:
  “...if you can create organizations that are doing development, advancing foreign policy goals, helping US Businesses tap into these fast growing markets, and ... make money consistently for the taxpayer, that’s a model that you definitely would want to scale up in the future, right?” (Littlefield, [17:56])

Timestamps for Important Segments

• [00:54] – Shift from aid to private finance as the primary development input
• [03:00] – Discussion of CGD’s proposal to expand OPIC powers
• [04:51] – Need for new instruments and discussion of grant/equity authority
• [06:24] – U.S. standards and the entrance of new players like the AIIB
• [07:59] – Responding to civil society concerns about private sector involvement
• [09:44] – Importance of public sector in catalyzing private finance
• [10:49] – U.S. development finance as a foreign policy “win-win”
• [12:22] – National security and OPIC’s investments in conflict zones
• [14:32] – The future vision for OPIC and U.S. development finance (2030/SDGs)
• [15:55] – Obama administration’s ongoing development efforts and Power Africa
• [17:56] – Bipartisanship and future of U.S. development finance

Conclusion

This episode showcased the strategic importance and potential of OPIC and U.S. development finance, arguing for expanded tools, greater scale, and a continued focus on high standards and public-private partnership. The conversation spotlighted how evolving global challenges—from economic to security and climate—require innovative, blended approaches that mobilize both public sector leadership and responsible private capital.