Jack Aldane spoke with Ray Washburne, CEO of the Overseas Private Investment Corporation (OPIC), at the institution’s head office in Washington DC, about why the Texan businessman has chosen to head up the United States’ development finance agency at a critical time for its operations.
What were your first thoughts when President Trump offered you the chance to head up the Overseas Private Investment Corporation? Can you describe the circumstances to us?
I ran the transition team from the time of the convention until the election for the congress department, so I was well versed in what OPIC did and its role and function in the world. I spent the fall of 2016 putting together the congress team, so when they asked whether I’d like to serve in the administration I said yes. Because I had been so deeply involved, they asked which area I’d like to be involved in. I said I’d like to do OPIC. When they asked why, I told them it takes my business experience and matches it with the purpose and mission of OPIC on a worldwide basis. They gave me an opportunity to look at the whole landscape of everything that can be available here, but this is the one I really wanted to do.
You’ve had notable success in businesses across a range of sectors. You’ve managed investments in restaurants (M Crowd), real estate (Charter Holdings), oil and gas and the purchase of the Highland Park Village shopping centre. What do you already suspect will prove the most challenging distinction between these and the investments you’re going to be in charge of at OPIC?
What you saw there were of course public, but I also own a lot of manufacturing businesses in West Texas. I see the manufacturing process and what we can do in other countries based on that. A stable economy comes from people having jobs. I’ve travelled to many of these countries – I’ve been in Zambia a good bit – and you see that people need jobs, they need things to do. OPIC can go in and set up operations in a lot of them to help get their manufacturing base. One challenge is that OPIC’s pipeline of deals from the past few years, and also the ones we want to do going forward, are going to change. Our focus has become more strategic towards regions such as the Northern Triangle of Central America, the Middle East, Afghanistan, the former Soviet States like Ukraine, the Indo-Pacific, and Sub-Saharan Africa. It’s really about getting in and understanding those countries, what their strengths are and then finding US companies to match up into it. So we going to be a much more outward facing organisation, and going out to aggressively look for companies in countries those companies might not even have thought about.
OPIC isn’t the first institution of its kind to be derisively termed ‘corporate welfare’, but as someone who rejects this criticism, can you share with us what you feel many misunderstand about what development finance institutions do?
Great question. This is really a tool of foreign policy, more than anything else. The US is the most innovative financial economy in the world, the most innovative business economy in the world. Other countries need our expertise. If we sit back and simply let free enterprise take care of it, it’ll bypass a lot of places. If we bypass those places, then the Chinese or the Russians will go in and their influence will be felt. Only 8 percent of our business is with Fortune 500 companies, and the majority are small businesses. That’s another thing we want to encourage – small, middle-of-America manufacturing companies that typically wouldn’t do business unless there’s an organisation like OPIC to help them do it. Since I’ve been here, I have been educating Capitol Hill on exactly what OPIC’s about. Through trade organisations, we’ve been able to get word out to organisations who are excited to pass word down to their membership. That’s the way we get the word out; starting with trades and allowing it filter down.
The US administration’s emphasis on job creation seems centred on the belief that a person’s livelihood and sense of purpose supersedes any collective duty we might have towards the natural environment. Going forward, how do you intend to treat energy projects that do not immediately produce jobs but which provide rural communities in the poorest countries with basic sources of energy such as indoor electricity or heat for cooking stoves?
First of all, we’re going to look at the full energy spectrum. All energies. Second, we are a lender. These projects come to us and we have to underwrite them through a very strict underwriting process. It’s the American taxpayer’s money that I’m here to protect. We’re not an aid organisation. To go out into some of these rural areas, they’ve got to show there’s actually a buyer for the energy and that they’re willing to pay for it. The organisations we’re lending money to that built it have to show that they can actually sell it.
Last summer in Zambia you financed a K-12 school for 300 children in Lusaka. How did you come across this opportunity and how has it done since?
That’s a personal project. My family and I have gone over there these past few summers and worked in an orphanage outside of Lusaka. The orphanage has around seven hundred kids and is was an organisation actually based in Dallas where I’m from. You spend a week working in the slums with the kids. We were very touched by it. My wife and I built a school in the middle of Lusaka where around 300 kids go every day. To us, emotionally it’s something that really opened our eyes. Especially for kids from the United States, to go from having everything you want here to a place where kids have nothing. It’s been a very grounding thing for all of us to do. In the summer, a thousand kids are taken out of the slums and brought up to the school. We pay for their food, their clothing, their schooling, everything. It’s all privately funded. From a business perspective, it really opened my eyes to the logistics of getting things like paper towels and pencils to more than a thousand people. I saw what a nightmare it was to take a container from the United States to Zambia. It took six months. I went along the road to see the bottlenecks along the way. You get to each border crossing, and trucks were lined up for 10 to 15 miles, trying to get across. You see the drivers and you don’t know what kind of deals they ended up cutting. That’s one thing I’d like to work on in Africa – the logistics, and understanding how to smooth that part of the process out. We also fund an HIV clinic for these kids. Some of them live in the most horrid conditions, but you know what, they’re happy because they don’t know any different. But if they can just learn to read and write, then they’re in the middle classes of these countries, and that stabilises them.
You spoke to OPIC’s staff shortly after your appointment to reassure them that you have no intention of winding down OPIC and that you are essentially here to build. Part of that intention is to make OPIC a more efficient organisation. Where have you identified OPIC’s weakest points so far?
I told everyone when I showed up that I’m not looking to reform this place. ‘Reform’ to me suggests someone’s done something wrong. What we want to do is just bring new financial instruments to our staff, so more creative and entrepreneurial thinking about how we structure deals. Modernisation is really just about being innovative, and so many things have changed on the financial markets in the last few years that there are great opportunities to partner up with other DFIs, there are chances to bring in some non-profits and foundations to go alongside us. We’re just trying to look at all the options that are out there.
In his address to congress on the subject of foreign aid in 1969, Richard Nixon said: “If we [the United States] turn inward, if we adopt an attitude of letting the underdeveloped nations shift for themselves, we would soon see them shift away from the values so necessary to international stability.” How well has Nixon’s address aged in your view?
We call it ‘leaning in’. If we can lean into a country, stabilising those countries serves our national interest. A stable country is a stable government. If the US private sector won’t go in there alone for whatever reason, that’s why we’re there. The first question we have to ask is: If you bring us a project, will the US bank do the deal without us involved? First question. If the banks won’t do it, we can.
What has been the most valuable piece of advice given to you about doing business the smart way, and which feels more relevant to you now than ever?
Hire people smarter than you. Hire really smart people and let them go do their job. If you micromanage a business, you’ll never get anywhere. It’s real simple advice.