The Board of Directors of the Overseas Private Investment Corporation (OPIC), the US Government’s development finance institution, last week approved $285 million to support six new investment funds. This is the US government’s largest commitment for impact investing in emerging markets to date. This support should raise more than $875 million in deployable capital for socially-focused businesses.
OPIC is an independent, self-sustaining agency of the US government that mobilizes private investment overseas in order to support economic development and expand new markets. It is a profitable federal agency –- it returned $352 million to the federal government in FY2010 –- and invests 25 percent of its portfolio in private equity funds that support companies in Africa and other developing regions.
Impact investing is a quickly growing industry where a wide range of private parties invest funds whose primary purpose is to effect positive social change in developing markets while also earning a respectable return. The six funds chosen are diverse and will invest in emerging market projects that improve lives, create employment, enhance health care, protect forests and address climate change. Two of the six funds will benefit Africa in particular:
- OPIC approved $83 million for the Investment Fund for Health in Africa II, which will invest in companies that improve health care for low- and middle-income Africans. Companies that operate in small- and medium-size hospitals and clinics fill the gap between expensive private health care and an over-burdened public health care system. The companies also import, distribute and manufacture health care products, provide insurance, and work in supporting areas such as water and sanitation, food and nutrition, education and environmental services. The target capitalization of fund is $250 million.
- The second fund that will benefit Africa is ManoCap, which invests in small- and medium-sizd enterprises in post-conflict West African countries that rank near the bottom of the UN Human Development Index, such as Sierra Leone and Liberia. ManoCap will invest in a broad range of sectors including agriculture, agro-processing, sustainable fisheries, services, health care, sanitation, construction and building materials, tourism, light manufacturing, and financial services. This fund is expected to enhance the standard of living for the poorest and provide employment and access to goods and services. OPIC approved $34 million for ManoCap, with a total target capitalization of $100 million.
OPIC’s March call for proposals for Impact Investments provoked 88 responses, a record high. Today, OPIC will launch another call for proposals, and expects to announce more approvals in early 2012.
ONE applauds the OPIC board’s decision to support impact investing and further efforts to mobilize private investment in support of broader development priorities.