The government should let the charter of the Overseas Private Investment Corporation (OPIC) expire because it “harms poor people all over the world” and enriches the “politically connected,” according to a new report from the Competitive Enterprise Institute (CEI).
The paper argues that the OPIC is “institutionally ill-suited” to its mission of stimulating growth in developing countries and helping U.S. businesses abroad.
Founded in 1971, OPIC provides companies with loans, loan guarantees, political risk insurance and direct investments in developing countries and emerging markets.
OPIC’s funding ranges from loans of $100,000 to $10 million with terms going from three to 15 years. CEI blasts the agency that is often likened to the Export-Import Bank for creating “ineffective job creation schemes” and shelling out cash to extravagantly wealthy special interests.
According to OPIC’s data, the top 10 of its beneficiaries capture 90 percent of its business. More than 40 percent of OPIC’s business goes to the renewables industry. (RELATED: Pull The Plug On The Ex-Im Bank Now!)
CEI argues that OPIC is structurally incapable of making wise investment decisions as it’s priorities are “heavily politicized,” meaning many projects are often funded for reasons other than economic logic. But OPIC’s influence is even more destructive than poor investment strategies.
According to CEI, every time the organization guarantees a loan it “deprives other entrepreneurs of that capital, even if these entrepreneurs’ projects would create greater value for people in developing countries.”
OPIC has benefitted some of the world’s largest companies such as JPMorgan Chase and Virgin. “OPIC is a government agency that’s supposed to help economic growth and job creation in developing countries, but instead it uses taxpayer money to benefit a select list of politically favored corporations and money-losing green energy interests,” said CEI fellow Ryan Young, author of “The Case Against the Overseas Private Investment Corporation.”
Since 1971, OPIC has doled out $200 billion to support a meager 278,000 jobs, with each job costing $719,000. “Surely there are less expensive ways to support jobs. OPIC is supposed to help the world’s poor, but in practice it mostly helps large, politically connected companies,” Young added. OPIC’s charter is set to expire Sept. 30.
OPIC employs more than 200 staff and boasts a total portfolio of approximately $18 billion, with $2.96 billion worth of business in 2014.