Development Finance

“We’re bringing OPIC into the 21st century’” says new executive vice-president

David Bohigian, executive vice president Overseas Private Investment Corporation (OPIC)

Following your appointment to the role of executive vice-president of OPIC, you’ve cited among your strengths your experience in venture capital, private equity, hedge funds, and investment banking. Could you describe for us the work you’ve done previously with regards to overseas developmental impact?

Well, I’ve always realised that capital is a powerful engine to create jobs, peace and prosperity. From my venture capital [experience], you’ve seen that in California and Massachusetts and around the world the ability of capital to make leapfrog changes in technology and bring people a better life. This, I think, is fairly demonstrated. When I was at the commerce department, I’m proud to say I led the US government’s first green energy trade mission. That was another example of catalysing the private sector, where it took dozens of US companies to China and India. Those companies built relationships that led to hundreds of millions, if not billions, of dollars in sales in those markets. So, really seeing the ability of US companies to be able to change the world is something that I was passionate about. Beyond that, in my role as assistant secretary of commerce for trade, I developed a series of entrepreneurship initiatives, which allowed entrepreneurs in their home countries, in over a hundred countries, to be able to talk to their policymakers about pro-growth policies they wanted to see created.

What are your immediate priorities for OPIC’s US$21.5 billion portfolio?

OPIC’s existing portfolio is strong, and over the last several years has returned more than US$300 million a year to taxpayers. For the existing portfolio, my priority is ensuring that we’re monitoring and making sure that we’re in compliance with the high standards we put on these projects. As we look forward, OPIC traditionally has put out several billion dollars a year across our product line of insurance, private equity and project finance. One of the big initiatives that we’re pushing is a women’s initiative, which is intended to unleash the multi-trillion dollar women’s economy. This is to be able to provide financing for end-users who are making sure that women are empowered throughout the developing world across all three lines of business. That’s an exciting initiative and should yield tangible results in the global economy.

Around 30 percent of OPIC commitments were made in Africa during the Obama administration. Is this likely to continue, or do you feel OPIC could do better in other regions?

I think OPIC has done tremendous work in Africa. I’m sure that we’ll continue to invest there, but we’re taking a global approach right now. With only a month into office, I can’t lay down markers of which regions will be priorities, but I’d say women’s empowerment a key piece of it, and I think its important that we’re coordinating with all our stakeholders to support US foreign policy. We’re undergoing a strategic review right now, so we’re talking to everyone from our stakeholders, to development finance institutions, to congress. Clearly there’s wide support to continue to work in Africa – the Power Africa initiative gave many people their first exposure to OPIC and we’re very proud of that track record.

To what extent do you feel OPIC and other development finance institutions have been misunderstood in their roles as a benefit to domestic economies as well as developing countries?

It’s a case that I’ve been making for trade over the past fifteen years, really. Ensuring that everyone understands the power of the private sector to catalyse capital and change lives when globally engaged is crucial, but sometimes gets missed when people talk about trade and investment. One quick statistic: for every dollar of OPIC’s budget that is spent, OPIC catalyses US$60 of private investment. That goes to the supply chain in the United States through to developing countries. When you look at the Fortune 500 in the US for instance, it was just a few years ago that they developed more than 50 percent of their revenue from operations outside the US. When I would talk about trade or investment with people, they wouldn’t realise on the factory floor that half the lines were going out to developing countries. I think development finance institutions need to make that case as well, and people need to understand that American jobs and American values are dependent on our engagement with the world, and that development finance is a tool for that.

Would you like to see OPIC not only maintain but increase its budget going forward?

I think OPIC’s mission is an important one, and I’m looking to further that mission, not necessarily through increased or decreased budget, but by catalysing more dollars in the world. Traditionally, development finance institutions have looked at how much money they’ve committed to funds and how much has been dispersed projects, so it’s important to look at the crowding-in factor. I think OPIC’s professional staff is enormously efficient. Over the last six years, OPIC has returned more than US$2 billion to the US taxpayer. It’s a tremendous deal for the taxpayer, and I hope OPIC can continue to be more effective and efficient.

How might you adapt your experience as assistant secretary of commerce for market access and compliance at the International Trade Administration to ensure fair global market competition remains a priority at OPIC?

My role in the international trade administration was to ensure compliance with trade agreements as well as level the playing field for American businesses and workers. I think one of the best ways of doing this is to ensure that American values and American capital are injected into developing countries. So I really feel like this is a continuum of what I was doing there. This role gives me the ability not just to talk about some of the levers of that, but be able to put tangible projects on the ground. Earlier, I might have gone to a country to talk about environmental or social or governance issues. Now, I can talk about it with a very specific project in mind, which tends to focus the minds of policymakers and business leaders around the world. For that reason, I think it’s an important tool in the public diplomacy arsenal that the US has. Being able to work with capital providers is something that we can put a stamp on projects and countries to say: ‘this is a great place to do business’. I think that has a great developmental effect.

How would you phrase your message to the team at OPIC at this early stage, particularly given the long period of uncertainty it has endured since the beginning of 2017?

The staff at OPIC is second to none. It has consistently drawn from the ranks of top bankers, underwriters and legal professionals, and from professionals across the board. I have a tremendous amount to learn from them and that’s one of the true joys of the job. Beyond that, my message to the staff would be what Ray Washburne the CEO has said repeatedly, which is that he and I are builders. We expect to ensure that OPIC is not only the best development finance institution in the world, but also one of the best financial institutions in the world. That’s the way we’re benchmarking it, and we think that the mission of OPIC is something that needs higher visibility in the United States and abroad. While some have used the word ‘reform’.  We prefer the word ‘modernise’. What we’d like to do, both from an authority standpoint as well as a learning organisation standpoint is to bring OPIC into the 21st century. There are authorities we don’t have currently that other development finance institutions do which we think could be important tools for US foreign policy. An example of this is equity authority, which is a decision for congress and the president to make over time. But the staff is phenomenal and I’m proud to be a part of it.

How do you define a financial institution fit for the 21st century?

I think the most important things are the culture of a financial institution, in particular whether or not it is truly a learning organisation. Second is to be data-driven and be able to produce feedback loops so that you’re making evidence-based decisions, be that the underwriting process or understanding the impact you’re having. That also comes with having the discipline to make the world a better place.