Bringing U.S. Development Finance into the 21st Century

I'm Dan Runde. This is another episode of Building the Future with Dan Runde. I'm here with my friend David Bohigian, who's the Executive Vice President of the Overseas Private Investment Corporation. We're going to be talking about the topic of development finance. I think we're going to be able to cover a number of other issues as well. David is a very experienced finance professional and is a very respected government leader in the Trump administration, and we're very fortunate that he's joined us today, and the country should be very pleased that he's agreed to do public service. He's a really gifted guy, and David, thanks for being here today. I'm glad you're with us.

Well, Dan, thanks to you and CSIS and to all your listeners for spending time on this important topic.

So, David, where did you grow up?

Grew up in St. Louis, the best of the north, south, east, and west.

Meet me in St. Louis.

Absolutely.

And so, did you go to school out there in Missouri?

I went back there for law school. I went to law camp when I was my son's age, at 13, and made a 10-year plan to go to law camp at Washington University. That's when I stopped making 10-year plans.

That's great. And so you came to Washington to work for Newt Gingrich?

That's right. I was able to as Mark Twain once said, not let my schooling interfere with my education. So in high school, I had a chance to intern for my congressman.

Who was that?

Jack Buechner in the 2nd District of Missouri.

Oh, fantastic.

Beyond that, in college, took a term off to work in the White House, which was fantastic.

This is Bush 41?

Bush 41. And then got a chance to skip my last semester of law school to work for then the Speaker of the House, Newt Gingrich, for the first 100 days. What an exciting time in Washington.

What an exciting time. I was an intern for Dan Quayle. In 1992. It was a fabulous experience. I had a fabulous experience, and I worked on the Bush-Quayle '92 reelect for 2 weeks in New Hampshire, and I had a wonderful time. I met President Bush, the father. I have a picture, and I have very fond memories of that, being an early intern and working my first couple times in Washington. It must have been a lot of fun. Then working for Newt Gingrich in the first 100 days, it must have been historic.

Absolutely. Really the center of the political universe, and the Republican Revolution has echoes through to today. And so how did you end up getting a job working for Newt Gingrich? Well, it's a story of luck and persistence and a little bit of humor. I had applied to work for him before he became Speaker when he was Minority Leader with phenomenally interesting ideas. When he became Speaker, as you can imagine, in November of—

'94.

'94, his office became exponentially more exciting, interesting, and people wanted to work there. But I already had my application in with a friend. In addition, in the advent of the internet, sent off a list of 100 jokes to go with it. And so that broke through the clutter, and I started there the first week of January in 1995.

It's unbelievable. It's unbelievable. Yeah, I think he's a wonderful man, and I've gotten to know him a little bit in his post-political career. He is just so smart and has an idea a minute. It's wonderful to be around his brain.

Absolutely. He's one of the great thinkers of our lifetime, and I'm hoping to actually see him next week when I go to the Vatican for an impact investing conference. Where his wife is the ambassador.

That's exactly, exactly. Please tell her I said hello, actually. They're really great. They're really great people. So then you were in Bush 43. What did you do in the Bush 43 administration?

I started off in the policy office of the Commerce Department, which oversaw everything from salmon to census to trade, working with Don Evans, and then later worked for Carlos Gutierrez as an Assistant Secretary for Trade. My job was to knock down trade barriers to create a level playing field for American businesses. So when the Chinese were cheating on intellectual property rights or the Russians were behaving improperly because of corruption or the Brazilians had slow customs, it was my job to go over and advocate for American businesses and American workers.

And so then you, you did that for a while and then you went into the private sector.

Correct. I started my career in venture capital between Gingrich and the Bush administration. I really just worked for Gingrich for a few months while I studied for the bar exam, but then went into venture capital early where I Started a firm, sold a firm in 1999, then got a call from Dina Powell to join the Bush administration. After the Bush administration, went into private equity where I worked on an energy efficiency fund that had an innovative financing mechanism, then went to the world's largest hedge fund, and then did some impact investing and worked with one of the world's largest investment banks as well.

How did you end up at OPIC? And what— first of all, what is OPIC?

OPIC, the Overseas Private Investment Corporation, is the United States development finance institution which seeks to advance U.S. foreign policy and development goals through investing billions of dollars in a self-sustaining way so that it actually returns money to the taxpayer through investing in private equity, through investing in political risk insurance, as well as project finance. It really is just a wonderful synthesis of everything we've talked about earlier in my career.

But how long has OPIC been around?

OPIC was founded in 1971. In many ways, it's thought of as the successor to the Marshall Plan. The Marshall Plan is one of the proudest moments in American history, helping to rebuild Europe after it was devastated in World War II. And OPIC continued that tradition by catalyzing private sector capital to help in fragile states that need to be able to move along the development spectrum.

So I, I met a guy who is I think on the Morgan Library board still, and I think he was either the general counsel for IBM and had been in the Nixon administration and was one of the architects of spinning OPIC out of AID. So it was part of AID and it was spun out of it in 1971. AID's administrator is still on the board, I think partially as a function of that, among other people who are on your board. You have the Secretary of State's on your board, Secretary of Treasury's on your board, if I recall correctly.

Right.

Is the Secretary of Commerce on your board?

Yes.

So you have a really interesting government board, and you have some private sector representatives as well.

That's right.

Now, when it was set up, it was mainly focused on political risk insurance. What's political risk insurance, and why did OPIC have to— why did OPIC have to exist, and what was the goal of what OPIC was trying to do? What is— what was— what was the rationale of setting up OPIC? Tell us a little bit about what is political risk, and then, because I know you've talked about these other things, but you guys have evolved into sort of a variety of lines of business. So talk a little bit about that, because I think over time political risk, you've kind of gotten out of the political risk business, or you've deemphasized it as other things have taken more importance over time.

That's right. Fundamentally, our goal is to attract private capital to places that it wouldn't go in the developing world.

And have a demonstration effect, essentially.

Correct.

Look, we can make money and you can make money.

That's right.

Right?

We— behavioral economics would call it the nudge factor, where we're helping investment firms help businesses they wouldn't otherwise reach out to in post-conflict states, in fragile states, in low-income states, so that we can help them better handle the risks in entering those markets.

So when it was first stood up, much of the focus was political risk concerns. So I have an oil rig in in a developing country and there's a coup and the country says, I'm going to nationalize the oil rig. That's a form of political risk insurance. I guess at the time, maybe insurance companies weren't providing that kind of insurance. Is that basically what the— what it was?

Certainly. And still today, we will not work on projects where the private sector alone will be able to take care of that, whether that's political risk insurance or in private equity or lending money. We want to make sure we're crowding in capital.

Right. Okay. So the idea is there's a concept that IFC uses There's a fancy term that I think has different meanings to different people called additionality.

That's right.

Do you guys use that term?

Absolutely.

So if I say the word additionality, what does that mean for OPIC?

In my simple terms, it means, but for OPIC, that transaction wouldn't happen. Okay.

Okay. That's a good way of— that's an elegant way of describing the concept of additionality. So if I said to you, okay, so then fast forward a couple decades. And OPIC began to get into a number of other businesses. It said, okay, we're going to provide— maybe it had always provided project finance lending and had also had the ability, if you and I said we're going to set up a private equity fund for Africa, we could also go to OPIC to maybe get some money to set up a fund. Maybe not— there's— I want to come back to the issue of equity. You can't actually get money from OPIC to make equity investments, but you can get—

Debt.

other kinds of financing capital that helps get you close to that. But the point I want to make is that you guys are in a number of different businesses where you're trying to crowd in private capital. How does— have you ever had Citibank or HSBC, a big global bank, said to you, you know, look, Opik, you really ought not to be in business X because you're really getting in the way of me doing my job, that you're actually not being additional You're actually competing with me in an unfair way. Does that ever happen?

I think that's an argument from the last decade, the last century. We listen closely to the marketplace to make sure that we're not crowding out private sector players, whether that is political risk insurance or project finance or the financial institutions that you might be talking about. It's a matter of working with them in places that they wouldn't otherwise go. We're not operating in countries that are in the G7.

You're not in Canada. You're not in Canada. You're not in Australia.

Correct. We are in the toughest places to go in the world.

How many, how many countries are eligible? I went one time to OPIC and they have flags of all the countries. How many countries can you operate in today?

We're eligible to operate in over 160 countries. Countries that we're not eligible to operate in include North Korea, China, Venezuela, Cuba, Iran, the usual suspects.

The bad guys.

And then we operate currently in 90 countries where we have a portfolio.

So you're eligible to work in 160, but you kind of do day-to-day work in 90?

That's right.

Okay. So how does somebody come to you with an idea for a project? Do you— does someone knock on your door?

By and large, that's been the case. Under President Washburn at OPIC, we've tried to be more forward-leaning while still being market-led, to go out into the marketplace and understand how best to advance U.S. foreign policy or development goals. For instance, in talking to key stakeholders, we realized the Northern Triangle would be a prime area where where the OPIC could help with immigration goals.

So let's talk. What is the Northern Triangle? Just so people— I can tell you what it is, but you know what it is too.

El Salvador, Guatemala, Honduras. The southern border of Mexico is where 60% of the immigration through the southern border of the United States comes from.

It's from those 3 countries.

Through the southern border, but a bulk of that through those 3 countries. And by creating jobs there, by creating affordable housing there, you obviate the need for people to immigrate in the first place.

So I did— I spent a year working on the Northern Triangle. We did a report. report here at CSIS about why are people leaving the Northern Triangle. Actually, General Kelly, when he was General Kelly of Southern Command, asked me to go to Miami to help him with this issue because I had been at a conference and I said we need a Plan Colombia for the Northern Triangle. This was in 2014. And the U.S. Congress, in partnership with the Inter-American Development Bank and the 3 presidents of those 3 countries, set up something called the Alliance for Prosperity, which I believe still continues. And Vice President Pence is very active in it, and I know OPIC is very active in it. And so after I spent a year looking at this, visited all 3 countries, I interviewed about 100 people, and my big takeaway was we need to have— we need to juice up the economic growth and the amount of jobs. Everything you were just saying, that what we want is to have— we need to make it as interesting as possible for people to stay in their home countries and prosper in their home countries. I was in a conference in October in Honduras, and the president of Honduras said, I, the president of Honduras, consider it a failure every time a Honduran leaves Honduras and goes to the United States. So I thought that was a really interesting insight. So we want to make it less attractive. So what OPIC can do, in the case of the Northern Triangle, I'm assuming, David, is that you— if someone says, hey, we really need to— there's opportunities for big construction of houses or— Hey, there's an opportunity for an infrastructure project and there's some construction jobs that'll be created. So the kinds of investments you support in the Northern Triangle also come with a lot of jobs that are attached with it or economic opportunities. Is that right?

Absolutely. We think about this as creating stable societies and stable families and over the long term creating stable trading partners for the United States. We talk about the Marshall Plan again, a wonderful success there is helping to rebuild Germany. And then 70 years later, seeing them launch their own Marshall Plan for Africa. That's what success looks like. It's a win-win for countries and for families.

And countries like Germany, after they were rebuilt, became one of our largest buyers of American goods and services, creating jobs for the United States. So helping rebuild countries like Germany or helping rebuild or strengthening countries like in the Northern Triangle means that they're wealthier and therefore can buy more goods and services from the United States.

That's exactly right.

So it's a form of enlightened self-interest.

Exactly.

Okay. So, all right, so you guys can do political risk insurance. You can do project finance. So if I want to build a bridge, you can lend me money for that. And someone will come to you and say, I've got a bridge, I want to finance it. You guys can help with that.

Absolutely.

If I say, I've got a fund I want to set up to invest in small and medium-sized enterprises in Africa, you also can help with that.

Absolutely. We've got a $3.5 billion private equity portfolio across more than 30 private equity firms operating across the globe.

In the last several years, we've done a lot of work here at CSIS about development finance. We did a report in 2011 about U.S. development finance capacities. We did a working group on that. It was co-chaired by Rob Mossbacher and Mildred Collier, who works with you at OPIC. And then we did— in 2016, we reviewed global development finance, saying that development finance had come of age and that this was a much bigger deal. We looked at it, and in the year 2000, all of the alphabet soups of the OPICs of the world— and there are these funny acronyms, KfW and Proparco and CDC, the other one, not the one in Atlanta, but the one in the UK, and JBIC and EBRD and EIB, and a whole alphabet soup of these things— But the point is, in the year 2000, all of those guys, including the IFC, which is the World Bank's development finance organization, catalyzed about $10 billion. By 2015 or 2016, it was $77 billion. How much did you guys push out the door last year, for example? How much did OPIC?

Last year, about $3.5 billion.

And I'm guessing in the year 2000, it was probably about a billion. I'm guessing. You probably don't know the number off the top of your head, but I bet it's been There's been a trip— I bet, I bet you guys have tripled in size in the last 15 years.

Right now we've got about a $29 billion cap on our portfolio.

So you have a credit card, you have a credit card limit. That's not a term that maybe you want to use, but for Earth people, there's a credit card limit on how much the U.S. Congress has said you can only have so much that you can have outstanding, and you can do about $3 billion a year of new business, but you have a pool of about— how much do you have right now in the Just over $23 billion across the line in 2018. So you're coming close to the $20— you're coming close. In a year or so, you're gonna bump up against— if you, at the current rate, in a year or two, you're gonna bump up against your credit card limit with the Congress, right?

Absolutely.

Okay. So the size of the development finance sector and OPIC has vastly increased in the last 15 years. Why do you think it's grown so much?

I think, as Einstein once said, you can't solve problems at the same level of thinking that created them. And today, people are realizing the confluence of nongovernmental organizations, governments, and the private sector working together is the answer to many of the world's most challenging problems.

I think like 9 out of 10 jobs are in the private sector in developing countries. They're not in the government. They're not in the NGO sector. Those are very important, but jobs are— 9 out of 10 jobs are in the private sector. So a lot of the problems that we face, whether it— we were talking about the Northern Triangle before. There's a private sector component. If you want to deliver electricity or you want to deliver water or you want to finance infrastructure, even health and education have private sector components to them, right?

Absolutely. You need to leverage the private sector and catalyze their capital to solve these problems.

So if that's the case, then you need instruments to work alongside or catalyze the private sector, and that's where you guys come in.

Exactly. That $3.5 billion I talked about that we put out last year catalyzed an additional $7 billion So over $10 billion was put out because the U.S.

is seeking to advance foreign policy goals through OPIC. All right. So, David, just so I understand, so you put in a dollar and you attract $2 of private money?

That's a fair ratio.

Right? OK. I was in the Bush administration, and I've been here for 8 years. So when the Trump administration first came in, there was talk about zeroing out OPIC. At the same time, they put forward your boss, President Washburn, to run OPIC. So I didn't really believe it when they were putting forward one of the most prominent people who'd helped elect President Trump as the head of an organization that they were going to notionally zero out. Could you talk a little about— was there— there was some moment where you guys were going to be zeroed out. Could you spend just one minute on that?

Sure. I think there had been a long-held belief that OPIC had been corporate welfare and not meeting that additionality test. I think primarily that argument had been answered by people that you mentioned, President Mosbacher, President Littlefield, and you and others working deep, deep throughout the development community over the last decade. So to bring in President Washburn, he was clear that he was going to be a builder of this organization. He said that throughout his confirmation hearing.

But why was the Trump administration— so when they first came on board, let me just push just a little bit. There was on the table a notion of zeroing you guys out, is that correct?

There were 19 different agencies slated for elimination, and OPIC was on a path to being zeroed out over time.

Okay, fine, okay. And then when did that change?

That changed through a number of outreach—

Within like 3 months of sort of you guys coming on board, the government coming on board? When did that change?

Well, I tried to coin the phrase, what a difference a Ray makes, because Ray Washburn talked to every important stakeholder throughout Washington, D.C., to make sure that people understood that OPEC wasn't an oil cartel. No.

Right. Right. So OPEC is different than OPEC, right?

Correct. It's an important tool of U.S. foreign policy.

For all the reasons we were talking about earlier.

That's right.

There's some other reasons too we'll talk about.

Absolutely. But when you talk to key players in the White House and key players in Congress about this arrow that they have in their quiver, they quickly began to understand what impact this could have. And I think you saw that ensconced in the National Security Strategy that Nadia Shadlow and others, including you, helped put together.

Really smart people. So just on that, I mean, so let's say for the first 30 days of the government, there was some notionality, but sometime within sort of 60 to 120 days into the government, because of folks like Ray Washburn and yourself and others, some really thoughtful people, There was a wake-up call. I see there was sort of a before and after of President Trump's trip to Asia last year. Is that a fair statement?

Certainly when the president went to APEC last year in Vietnam, he said development finance needs to be modernized. He also said President Washburn is doing a perfect job. So you see that confluence about development finance, in particular in the Indo-Pacific strategy that the president—

What's the Indo-Pacific strategy?

Sure. We need to be, as a U.S. government, engaged in Asia on economics and beyond.

Yeah.

The National Security Strategy, in its 3rd pillar, talks about the importance of economic statecraft, and OPIC is a particular tool to—

It's mentioned twice in the National Security Strategy. Development finance is mentioned twice.

Development finance twice explicitly, but implicitly throughout. We are an important tool with the continuum of USAID, Sure. Moving through into the private sector.

So there was a realization very, very, very quickly that there was an— for all the reasons we were talking earlier about, the role of the private sector is important. You had great leadership in the form of Ray Washburn and yourself coming on board to take this over and making a very credible and salient case and relevant case for why this was needed. President Trump going to Asia on the APEC trip, seeing and talking about this inclusion in the National Security Strategy twice. There was some kind of almost like an awakening that this could be an important strategic asset of the United— instrument of the United States that was already an arrow in the quiver. And couldn't we do something different with it? Is that a way to describe it?

Absolutely. And I think what's important is the groundwork that you and others had laid over the decade prior. To make sure that we could get to this moment.

So that leads me to come back to this issue of what is the BUILD Act? So given kind of all this context and a thought that we could maybe do more or better or different, how did the BUILD Act come to— what's the BUILD Act and how'd that come together?

Sure. The BUILD Act modernizes development finance. As you noted, OPIC was started in 1971. The tools of finance have vastly changed since then. The world has changed since then. And so the BUILD Act provides important new authorities for development finance to operate on behalf of the U.S. government. I'll name 3. First, that limit that you were talking about earlier—

The credit card limit. Sorry, I must have used that term, but—

$29 billion goes to $60 billion, which would double—

Allow you guys to work for at least another 10 years at the same rate, 10 or so years easily.

And do larger deals in a prudent risk- Sure, sure. Right? So the— and it's important signal to the world that the U.S.

is going to be in the development finance game. Is going to play.

Yeah, that's right. Second is the addition of people who are working at Development Credit Authority over at USAID, which I think strengthens the bonds between our development finance institutions.

The law imagines having some additional connectivity between AID and OPIC.

Yes.

Right?

Not only will the culture of DCA, the Development Credit Authority, be able to reach back into the missions that are so important at USAID, but they're also creating the formalized position of the Chief Development Officer, which will be looking across the former OPIC as well as USAID, the Millennium Challenge Corporation, USTDA, the Trade and Development Administration, and others to make sure we're taking a coordinated view of how to do development in the 21st century.

Within the development finance space?

That's right.

Okay. So one is about a credit card, raising the credit card limit, and another is to have some additional deepening, deeper connectivity with AID.

Yeah.

What about many of the projects that come to you, come through your front door, need some additional work? And that work is often described as technical assistance. Will OPIC, with this BUILD Act, would OPIC have the ability to— Do technical assistance work? Technical assistance—

we don't have that capability today, but technical assistance and feasibility studies would allow us to be able to go into a priority sector for the U.S. government and say, Powering Africa, and not wait for someone to do that feasibility study and bring it to us, but to say that Powering Africa, this grid which is going to interconnect these countries that no private sector entity would pay for out front, —allows us to go to the private sector and say, this makes sense for you, this makes sense for the United States.

OK. So, what the idea would be is to have sort of feasibility— the kind of capacities that the BUILD Act would give to OPIC would allow it to pay for feasibility studies, would it really? And as well as, say, if someone said, I have a bank, and yes, I could use some financing from OPIC for my bank, either, say, a lending guarantee, something like the Development Credit Authority provides, or OPIC provides, or a lending line, but what I could really use is someone to train my lending officers to decide whether this is a good credit risk or not. And that's the form of technical assistance. And so you, in the future, will be able to pay for something like that in the future. Is that right?

That's right. There's various forms of technical assistance. That's a great one. And I'll tell you what the third leg of the stool is that's crucially important, is the ability to invest equity in our deals, whether that's in project finance, Or in private equity. As you noted earlier, we've only been a debt player. So it's been a misnomer to say that in private equity, we've been a debt player only. And that limits the universe in which we can invest and limits the way in which we can advance U.S. foreign policy.

Well, I think one of the things— we did some thinking about this— was we are going to need to work more closely with our allies, whether it's Japan or the British or the Dutch or the Norwegians or the Danes. And so our ability as our OPIC to not co-invest on an equal basis with these partners makes it harder for them to work with us. So having this equity authority that you're talking about, or this ability to make equity investments, both on a standalone basis— so OPIC could take an equity position in a telecoms company— or providing money into a fund will allow you guys to work more closely and better with our allies. Isn't that right?

Absolutely. But it's not just about the government entities. It's about catalyzing the private sector. Right? When you think about what happened in 2008 and 2009 and the downturn of the global economy— The financial crisis, yeah. OPIC was in a senior debt position in many projects. And when the global economy turned down, we ended up being in a better position than many of our partners in these deals. And that left a lasting impression on many of them. And so the ability to have equity puts us into a deal right alongside them.

So if somebody said to you, well, isn't this— why have you gotten any pushback from the Congress? As you said, we need this additional equity authority. There must be some reason the Congress didn't give OPIC equity authority way back when. Has there been any concerns about giving OPIC equity authority?

I haven't heard any concerns today. I think, again, the financial world has changed so drastically since 1971. It's such a different world. Yeah. And I'll tell you what gives me confidence in our ability to handle this tool is that we have world-class origination, world-class due diligence, a credit committee that is second to none, and monitoring that is world-beating. So the fact that we're moving from credit to equity and applying all those skills developed over the last 47 years gives me confidence we'll handle this tool wisely.

So the foreign aid world, AID, is different than the development finance world. Could you spend a minute just talking a little bit about that? There's a different language, there's a different mindset. Do you just have any thoughts about that?

Sure. I think there's 3 pillars of American influence. That's defense, diplomacy, and development. And when you look at those 3 Ds, there's a continuum across development where the U.S. military can help stabilize the society. USAID and grant and aid can come in to help on the next steps. And then as you're bringing in the private sector, That's where the overseas private corporation can come in.

You know, there's— because I'm just thinking about the word equity. So you and I understand that to mean taking an investment stake in a company. Now, folks in the international development world, equity means equality, right? There are these sort of these different mindsets about— and different— there's different vocabularies and different lenses, if you will, to look at these challenges. So that makes a lot of sense what you've described as sort of the spectrum of of tools that we need. How is the BUILD Act looking? How do things look for the BUILD Act?

This summer, we've had a very successful hearing in the House Foreign Affairs Committee. We've also had one in, in the Senate Foreign Relations Committee. Thank you for your testimony supporting the bill. And I think right now it's passed out of each one of those committees, and it's going to be a decision for the leader and the speaker and the leadership as to when they pass it. But I want to I applaud the work of Chairman Corker and Senator Coons, as well as Chairman Royce and everyone who's been—

Republicans and Democrats have been— Senator Coons has been all over this. He and his team have been a great partner to the administration on this.

Absolutely. There's broad bipartisan support for this bill.

Why do you think that is? I mean, I've been very taken with Senator Coons' critical support on this. What do you— is it just that maybe folks on the Democratic side want to see more capital going to Africa, and Republicans, why do they like— why do Republicans like— why Democrats Sure.

I think across the spectrum, development finance represents the best of America. We're promoting value and promoting American values overseas by catalyzing the private sector in order to solve some of the world's biggest problems, whether those are in Africa where we've helped power Africa for more than 100 million people there, which has brought people like Chairman Royce as well as Senator Coons together, or We have a co-sponsor that includes the chairman of the Freedom Caucus, Mark Meadows, who's interested in development finance as a projection of American power as a contrast to what the Chinese are doing in some markets.

Okay. So, yeah, let's talk about China because I think I would argue that there's been somewhat of a frozen conflict in Washington around development finance and OPIC for more than a decade because I think there were a subset of the Republican Party saw this as corporate welfare. And then I think some Democrats couldn't— hadn't learned to love it. And this was, say, 15 years ago. I think what's changed, at least on the Republican side, is China. That I think that China is now a credible and emerged— not an emerging— an emerged soft power challenger to the United States. And I think that's one of the reasons that the Trump administration went from saying we're on a path to zeroing it out to putting OPEC on steroids and doubling OPEC. through the BUILD Act, which I think is great. I also think it's also focused minds in the Congress. I mean, what struck me in my testimony, both in front of the House and the Senate, was that China was front and center, especially for Republicans. That's what moved folks. I think for critics who have over time criticized OPIC as corporate welfare, the problem has been, okay, so if you think it— so what's your answer to responding to the China challenge? And oftentimes, I think they've folks who've been critics of OPIC have not had a very good answer for that. And I think that's created an opening for this opportunity. One of the reasons, I think, along with sort of support from the building— from Senator Coons. I think also in places like Africa, you're hearing a lot more demand in places like Africa for investment and trade and less foreign assistance because this isn't your grandparents' Africa. Either it's richer, freer, more capable. There's an emerging middle class. It's urbanizing, and they want to have a business relationship with the United States. And one way to facilitate that is through you guys. Speaking of Africa, and then I'll come back to China for a second, how much of your business is in Africa these days?

25% is in Africa. We're actually, interestingly, by historical accident, fairly well balanced across Southeast Asia, throughout Africa, throughout Eastern Europe, and throughout Latin America, with about 20 to 25% of our portfolio in each of those regions.

So if I fast forward 5 years from now, How much of your portfolio do you hope to be in Africa?

I want to continue to go into the world's most challenging places for investment. And we will go where capital can best unlock human potential. The demographics in Africa are astounding over the next generation. By 2050, you'll see most of the population growth happen throughout Africa.

It's going to double.

And we hope a significant portion of the economic pie as well.

I was in East Africa last week, and I was just struck by the enormous potential there. and the interest in having America invest in that part of the world has just struck me as this is, you know, ready-made for OPIC. Do you guys come across China in your projects?

Well, sure. China has a global presence as well. While they're focusing on a Eurasian strategy with their One Belt, One Road, I'm also keeping tabs on the fact that while OPIC has a $23 billion portfolio across 90 countries in the world, Last year, China announced they're going to put $30 billion into Haiti alone. So they are pursuing a global strategy. But what I think is important to keep our eye on is, first, we welcome good development wherever that happens in the world. If there's a good road to be built or a good power plant or a good hospital, that's wonderful. What I worry about is other countries that don't uphold environmental standards, that don't uphold labor standards. that put countries in risk of sovereign default when they're providing loans to them.

If they can't pay their debt, the country says, that's fine, I'll take your port?

That's happened in Sri Lanka.

Or if someone's making— providing easy money and it creates all sorts of destabilizing problems for a country in terms of taking on too much debt as a country?

Correct. Our hope is that like the Marshall Plan empowered Germany, you contrast that against the Russian Molotov Plan that looked to be a hegemonic A neocolonialism.

A vassal state.

A neocolonialism.

Yeah, how many— I think most of the countries I come across find working with the Chinese as a necessary evil. They don't run— they're not running the Chinese. No one wants to be a vassal state. But I have found that if the choice is between no road and a poorly built road by the Chinese, they're going to go with the poorly built road by the Chinese. We need to have a third option of higher quality, more thought through, more responsible financing. And this is something that OPEC and our allies should be able to provide, right? I mean, I think we need to be able to provide an alternative to China.

Absolutely. I think that's exactly what the BUILD Act is intended to do, that you and others have worked so hard to get it to this point because it's providing alternatives in the world. And when America competes fairly, America wins.

OK. Are you optimistic that the BUILD Act is going to pass?

I'm not a congressional prognosticator, but I've heard from key stakeholders in Congress and beyond, they hope to get something done this year.

Okay. So fast forward 2, 3, or 4 years. Let's say the BUILD Act passes, you get the ability to provide technical assistance, your credit card limit is raised. What will OPIC look like 5 years from now? How much business do you guys hope to be doing 5 years from now? Do you hope to be doing $5 billion a year or $6 billion a year, up from $3.5?

We're working through those strategic plans right now. We're focused today on making sure that—

Just doing a good job today.

OPIC can do the best job that it can today. And then as the BUILD Act passes, we'll have 120 days to provide a plan to Congress to provide more full details on the types of deals and the size of deals. What I can tell you is that we'll expect to be a more robust financial institution.

Bigger.

Bigger, doing potentially larger deals.

Maybe more in Africa, maybe more in fragile states.

The BUILD Act calls for us to work more in lower-income and lower-middle-income countries.

So that would sound— that sounds to me like Africa. That sounds to me like poor countries.

Well, more than 70% of our portfolio today is in lower-middle or lower-income states. So I think continuing to push into where we can have the most potential to unlock the human spirit is what we're going to try to do.

Okay, great. So, well, let me just— I want to talk about Afghanistan for a minute because I think you guys have been in— can you talk a little bit? How do you guys operate in Afghanistan, if at all?

Sure. In post-conflict environments, OPIC can play an important leg, as I mentioned, on those 3 legs of the stool between diplomacy and development and defense. So working closely with our stakeholders in the Defense Department, as well as in the State Department and USAID, we help to work in post-conflict and fragile states like Afghanistan.

Okay. David, it's great. Thanks for taking the time. This was really wonderful, and thanks for all your public service.

Thank you for all you've done to support me personally, as well as OPIC more broadly, and just the idea of development finance. Thomas Jefferson once said, I believe in the dreams of the future more than the history of the past, and you're helping to create that future.

Thanks, David. It's great to partner with you.

Thanks, Dan.