Using the tools of business to create social good

Impact Investing is capturing the imagination of investors and entrepreneurs all over the world. Impact investments aim to transform capital into answers for common challenges such as access to education, financial inclusion, housing, healthcare and climate change, while at the same time generating sufficient returns to constitute viable investments. With more than 40 years of history investing in emerging markets, OPIC has long focused on investing to achieve a positive developmental impact and continues to innovate with new products and services to support impact investing.

OPIC’s Impact Investments in 2013

In addition to being a leader in impact investing around the world, OPIC has taken a lead in building a workable definition for what constitutes an impact investment. Using its own 2013 portfolio as a reference, OPIC came up with the three measures to consider the impact of its investments.

$3.9 billion – Investing for positive development impact. All of OPIC’s annual financial commitments – in 2013 totaling $3.9 billion – aim to have a positive development impact.

$2.7 billion – Investing in h igh impact sectors. More than two-thirds of OPIC’s $3.9 billion commitments for 2013 were in sectors that OPIC and the development finance community recognize as fostering positive social and economic good, such as agriculture, education, access to finance, housing for the poor, small and medium enterprise finance, healthcare, renewable energy, water and sanitation.

The 2013 OPIC commitments in high impact sectors included more than $950 million in financing for small and medium-sized enterprises (SME) and more than $1.2 billion for renewable energy projects. Examples of these projects include financial support for Guatemalan SME lenders that will be the backbone of development impact for thousands of small entrepreneurs, and a medical center in Malaysia that will serve people of all income levels with quality healthcare while creating thousands of local jobs.

$222 Million – Investing with “impact intent.” While all the projects that OPIC supports aim to achieve a positive developmental impact, a smaller subset meet OPIC’s narrower definition of impact investments. A much smaller subset of all of OPIC’s 2013 commitments were distinguished by the fact that they had “impact intent,” meaning that the implicit aim of the project was to address a social or environmental challenge while also generating financial returns.

Examples of these projects in 2013 include support for a network of schools throughout rural Kenya that provides a world-class curriculum for $60 per year per student and a $45 million loan to FINCA. a microfinance lending institution that operates in developing markets across three continents through community-based credit and savings opportunities. These projects display clear objectives of social or environmental return.

Other commitments from OPIC’s 2013 Impact Investing Portfolio include:

High Impact Sectors

• Solar Power in Chile: $147.5 million in financing to SunEdison to construct the largest solar photovoltaic field in Latin America in Chile’s Atacama Desert. The Atacama is one of the world’s most abundant regions for solar energy, but has seen little development in that sector.

Impact Investing

• MIcrofinance in Latin America: $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.
• Agriculture in Rwanda: Political risk insurance to Arkansas-based Westrock Coffee Holdings. to support modernization of a coffee milling and processing plant in Kigali. 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.