SOCAP18 - A New Era of US Development Finance

So I have to admit that I have found it pretty surprising that 2 pieces of legislation have happened this year, because when I heard about each of these, I was like, okay, yeah, let me know when that happens, not expecting it would be anytime soon. So it's a pretty remarkable feat. Less than 3 weeks ago, on October 5th, a new piece of legislation was signed that combines OPIC and parts of U.S. USAID into a new U.S. International Development Finance Corporation. And so I'm thrilled that with us here today, we have David Bohigian, who is the Executive Vice President of OPIC, the Overseas Private Investment Corporation, to tell us more about what this legislation means for everyone in the room and for U.S. international development. Please welcome David.

Thank you.

Thanks.

Well, thank you so much, Lindsay, and I'm thrilled to be back here in the city of my birth. I was born about 3 miles away from here and made the awful decision to move, but I give myself a break because I was 18 months old. But I'm not going to go through all my mistakes today because we don't have that kind of time. What I'm thrilled to go through is we just were talking about Opportunity Zones in the United States, and now we're going to talk about opportunity societies worldwide based on really exciting legislation we passed with a 47-year history of accomplishing results with OPIC, the United States Development Finance Corporation. So I'm going to try and turn that on. Nope, that's slide 75. I'm just kidding, not too many.

Okay.

So if I'm talking about a new era in development finance, why am I showing you a picture from almost 160 years ago? Well, it's because this was an emerging market in 1860. The Pony Express was the high-speed information network of its day, moving mail from my adopted home of Missouri California in only 10 days, 2,000 miles in 10 days. But within 2 years, you see the telegraph poles going in there, the Pony Express was gone. It was replaced by the Transcontinental Telegraph, which President Lincoln called a wild scheme. Well, today, you all know better than anybody that innovation can be delivered in anywhere instantly to a global audience, which transforms societies and transforms economies. You also know that emerging markets are some of the most fertile areas for that innovation, where leapfrogging is truly happening and created unprecedented prosperity. But it's not easy. It's not easy. When we went from an agrarian regional economy to a national national manufacturing economy, there were major dislocations, right? That guy needed to train to be able to provide for his family after he could no longer be a Pony Express rider. But while that transition was difficult, his family, later generations, and ours welcomed the telephone and the internet. And so, the new era that we're talking about is going from a national manufacturing economy to a global information economy, and that's not going to be easy either. Here's what most economists look at, what most government policymakers look at. How's the workforce doing? How's GDP doing? How's the stock market doing? Right? You here are looking at a different curve altogether, technological growth, and you can't see the others if you plot that against the 21st century. That is Moore's Law, and it doesn't just apply there. It applies in energy, it applies in healthcare, it applies to every segment of society, and it's not going to be easy. Incumbent operators and entrenched stakeholders form a real constituency for inertia, and it's difficult to develop a free and open future. So government and the private sector must collaborate and cooperate to move society forward. Some call it blended finance, but I'll tell you where these ideas start. It's with what Einstein once said, we can't solve our problems with the same level of thinking that created them. So what we're seeing today is a synthesis of NGOs and governments and the private sector working together to solve problems they couldn't solve by themselves. Each has unique strengths, and each has their piece in developing solutions for the 21st century. Now, we're— I'm going to talk more about blended finance tomorrow, a little teaser to come back out when we talk about a blended finance vehicle unlike the world has ever seen that's reaching truly millions of retail customers with institutional investors, but I'm not going to talk about that today. What I am going to talk about is the U.S. government's development finance institution. I don't know if I am or not. I can do without the slides. OPIC, the Overseas Private Investment Corporation, has a long history of supporting capital in emerging markets. We've helped build airports. We've helped build power plants. We've helped build housing and hospitals, and you can't see any of those. Infrastructure remains a major part of our $23 billion portfolio, but we're going to deepen our emerging market impact through expanding our portfolio of 21st century innovative solutions to solve persistent challenges. Again, we're catalyzing private sector capital, and this is the group that invented political risk insurance. They've transformed project finance. We've come out with new products for limited partnerships in private equity funds, and we've helped propel more than 90 countries and their societies. One example of this is last year, if I were standing here in front of you, an idea was to have a women's empowerment initiative. Today, governments and the private sector and NGOs have come together with the 2X Challenge that not only started from an idea, but has become the G7 nations combined working together to catalyze billions of dollars of capital to help the majority of the world's population. Now, I'm up here taking credit for it, but there are almost 300 people at OPIC, and I'd like everyone who's here from OPIC to stand up for a second here, if you could. And there's too many other partners to name. I see friends out here. Let's clap for these guys. And here's what I want you to do. Find these guys today, tomorrow, Friday, and beyond, not just for the deals that you want to do to catalyze money into emerging markets, but also we need your help in thinking through these problems. We've got a major opportunity with legislation that's passed that I'm trying to be like a zombie and get all the brains I can. And Washington, D.C. can be a tough place for that sometimes. So we truly are trying to transform the business landscape, and we're doing that through all the sectors I was talking about earlier. And it's hard to pick some favorites, but I believe that entrepreneurs are some of the world's most engaged citizens, and that entrepreneurial ecosystems create opportunity societies. So SunFunders out here, that's providing millions of people with power in Africa off-grid. I visited a Cameroonian eye hospital that's literally going to change lives by curing blindness for 18,000 people with a social impact bond, where I met a patient whose family said, welcome back to life. I just returned from India where I met with Dr. Water, who's providing water in kiosks at train stations, bus stations throughout India that's promoting health. And I've been to more than 60 countries around the world, and they all want the entrepreneurial ecosystem that you have here, and they all admire the American ecosystem of creating entrepreneurs. But as a former venture capitalist, I know that's not easy either. So here's one thing that we're doing. We're, for the first time, launching a venture capital initiative. We've been in private equity across 40 funds, with $3.5 billion, but we were never in private equity, we were never in venture capital. So here's why we weren't. We invest in debt products, and venture capital has higher risk, higher return. If you can't capture that return, it is economically irrational to go into a higher-risk category. But the answer is impact. Right? We're talking about the intersection of money and meaning, And entrepreneurs provide that sort of impact in a way that no one else does. So today, with Mohan Jeet here, we're announcing an investment in Iron Pillar, which is a late-stage India and Bay Area venture firm providing capital in the enterprise and consumer technology sectors. I've met with a couple of their portfolio companies. One of them is helping to recycle phones. The other is helping Indian entrepreneurs get an online presence, literally 16,000 Entrepreneurs, everyone from people providing camel tours to bicycle repair to souvenir shops are online because of these guys, and that's propelling the entrepreneurial economy throughout the Indo-Pacific and the world. So I'm going to try one more time for an exciting slide, but it's not going to work. You're just going to look at me. Sorry. That's the first slide. I don't— I'm pressing the wrong button. So I'm here to tell you about something exciting as well. Here's a quiz for you guys in San Francisco. What do you think Nancy Pelosi and Donald Trump agree on? The BUILD Act. You're right. For those of you out there in the audience, this is a new era in development finance. This is a new era, hopefully, In Washington, where we're coming up with shared solutions, literally passing the House unanimously and getting people from across the political spectrum to agree that development finance is the answer. So what is this going to do for you? What's this going to do for the world? We're going to have equity authority. We're going to be able to invest equity in your deals for the first time. We're going to be able to have a $60 billion portfolio. That's a big number on any coast.

Right?

We're going to be able to provide technical assistance and feasibility studies so we can get into countries early and say, hey, if you're looking for a port, if you're looking for the kind of infrastructure or ecosystem that you need, we can help build that. We're working with the whole-of-government approach to advance development needs, impact, and foreign policy. And we're going to focus more on the countries that need it most. Right? The World Bank Group lowest-income countries. That's where we can make an enormous difference on advancing development goals and creating opportunity societies. This is a new era in development finance. This is a new generational change. And again, please help us by bringing us your deals, and please help us by bringing us your ideas. We've never done equity investments before. We've never done technical assistance. Many even— many of you in this room have. I was thrilled to see Raj and others talking about Opportunity Zones, and Rockefeller and many of you in this room are partners of ours, but please help us know how we can be better partners to you. Because as we create a new generation in artificial intelligence, in materials, in renewables, in pharmaceuticals, That's— it's not going to be easy. That's what it's going to take. And to prove that this is truly a generational change, you've heard me quote President Lincoln, and I doubt he's been preceded by this guy, if you know who this is. Look, if you had one shot, one opportunity to seize everything you ever wanted in one moment, would you capture it? Or just let it slip. You know who it is. Eminem. That's right, Lincoln and Eminem, one room, one time, right here. So this is a generational change. So let's go after what Eminem was saying, and let's go after the wild schemes that President Lincoln said, because that's what 21st century impact is going to take. Thank you very much. Thank you, David.