What Was the Overseas Private Investment Corporation (OPIC)?
Key takeaways
– OPIC was the U.S. government’s development finance institution (DFI), created in 1971 to encourage and support U.S. private sector investment in emerging and developing markets.
– OPIC provided political-risk insurance, direct loans, and loan guarantees, charging market-based fees and operating on a self-sustaining basis.
– OPIC focused on projects aligned with U.S. foreign-policy and development goals (and its statute prohibited projects that would cause U.S. job losses).
– In 2019 OPIC was folded into the U.S. International Development Finance Corporation (DFC), under the 2018 BUILD Act, which expanded tools and financing capacity.
Understanding OPIC — mission and role
OPIC (established 1971) was the U.S. government’s one-and-only DFI. Its core mission was to mobilize private capital to promote economic growth in developing countries while supporting U.S. foreign policy and national security objectives. OPIC did this by helping U.S. firms assess, structure and manage the risks of investing or operating overseas—particularly in higher-risk or underserved markets where commercial financing was scarce.
Primary services OPIC provided
– Political-risk insurance: Protection against non-commercial risks such as expropriation, currency inconvertibility, political violence and breach of contract by foreign governments.
– Financing: Direct loans and loan guarantees to projects and companies; loan sizes historically ranged from a few million up to hundreds of millions (OPIC made loans and guarantees up to roughly $350 million, with maturities up to about 20 years in underserved areas).
– Project support and risk analysis: Due diligence, project structuring and alignment with U.S. development objectives.
How OPIC operated financially
– OPIC charged market-based fees and interest—designed to be self-sustaining rather than subsidy-based. OPIC reported that it contributed net receipts to the U.S. Treasury (for example, roughly $3.7 billion contributed between 2006 and 2016).
– Projects supported by OPIC had to meet statutory criteria, including a requirement that they not result in loss of U.S. jobs.
Impact and scale
– OPIC’s portfolio grew from initial programs (noted early figures included political-risk insurance exposure of $8.4 billion and $169 million in loan guarantees) to a multibillion-dollar portfolio covering more than 160 developing countries.
– Typical sectors included energy, infrastructure, financial services, and other private-sector activities that fostered economic development in host countries.
Limitations and special considerations
– Country and project eligibility: OPIC focused on emerging markets and underserved areas; not every country or activity qualified.
– Standards and safeguards: Projects needed to meet OPIC’s eligibility criteria and standards (economic, legal, operational). OPIC was required by statute to avoid projects that would harm U.S. employment.
– Political objectives: OPIC investments were explicitly intended to further U.S. foreign policy and stability objectives, not just financial returns.
Fast fact
– OPIC was consolidated with USAID’s Development Credit Authority to form the U.S. International Development Finance Corporation (DFC) after passage of the BUILD (Better Utilization of Investments Leading to Development) Act on Oct. 5, 2018. The DFC broadened authority and product offerings (including larger financing capacity and newer tools) and began operations in 2019. [Sources: Investopedia; U.S. International Development Finance Corporation]
Transition to the U.S. International Development Finance Corporation (DFC)
The BUILD Act created the DFC to succeed OPIC and to give the U.S. a stronger, more flexible DFI. Key differences include:
– Expanded financial capacity: DFC can provide larger loans and assume larger commitments (statutory authority for direct loans/guarantees up to $1 billion and longer tenors—up to 25 years in some cases).
– New instruments: Greater authority to make equity investments and other financing instruments beyond what OPIC could offer.
– Continued mission: Like OPIC, DFC’s mandate combines development impact with U.S. foreign policy and national security objectives. [U.S. International Development Finance Corporation, “Overview.”]
Practical steps — how a U.S. company would have engaged OPIC (historical steps) and how to engage DFC today
Below are practical, step-by-step actions for a U.S. firm seeking OPIC-style support historically, and the equivalent steps to engage today’s DFC.
If OPIC were still operating (historical / illustrative)
1. Confirm eligibility and fit
– Check whether the host country and project type were eligible under OPIC rules and whether the project aligned with U.S. development and export objectives.
2. Prepare project documentation
– Develop a detailed business plan, financial projections, risk assessments (especially political and foreign-exchange risk), and background on equity sponsors.
3. Environmental and social screening
– Complete required environmental and social impact information; OPIC required projects to meet statutory standards and not cause adverse U.S. employment impacts.
4. Initial contact and pre-application
– Reach out to OPIC with an outline of the project to get early feedback and guidance on documentation and likely product (insurance, loan, or guarantee).
5. Formal application and due diligence
– Submit a formal application; OPIC would conduct legal, financial, technical and political-risk due diligence, which could include on-site visits.
6. Negotiation of terms
– Negotiate the contract terms, fee schedule, loan amortization, insurance coverages and conditions precedent.
7. Approval, closing and monitoring
– After OPIC approval and signing, the transaction closed and OPIC monitored implementation; compliance reporting and periodic reviews were typical.
How to pursue similar support today (using the DFC)
1. Visit DFC resources and confirm eligibility
– Use DFC’s website to review eligible countries, sectors and the full menu of financing tools (loans, guarantees, political-risk insurance, equity).
2. Prepare a strong project package
– Build a comprehensive business plan, development-impact case, financial model, sponsor track record, and environmental/social documentation.
3. Reach out to DFC early
– Contact DFC’s business development or country teams for pre-application guidance and to discuss the right product and structure.
4. Follow DFC application process
– Submit a formal application and engage in DFC’s due diligence, which will include development-impact assessment, technical and financial review, and environmental and social standards compliance.
5. Negotiate and close
– Work through terms, commitments and any sovereign or contractual protections; close and comply with ongoing reporting and monitoring requirements.
Sources and further reading
– Investopedia. “Overseas Private Investment Corporation (OPIC).” (Source URL provided by user.)
– U.S. International Development Finance Corporation. “Overview.” Accessed April 27, 2021. (DFC is OPIC’s successor under the BUILD Act.)
– OPIC archival pages (Wayback Machine): “OPIC HISTORY” and “WHO WE ARE — FREQUENTLY ASKED QUESTIONS.” (Archived OPIC content explaining history, portfolio and operations.)
– EDFI (European Development Finance Institutions). “European DFIs.” (For context on DFIs generally.)
Closing note
OPIC was a key U.S. tool for leveraging private capital in support of development and U.S. policy objectives for nearly five decades. Although OPIC itself no longer exists, its mission and many of its functions continue and have been expanded under the DFC, which offers a broader array of financing tools to mobilize private investment in developing economies. If you are evaluating an overseas project now, the DFC is the direct place to start for the modern equivalents of OPIC support.