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OPIC is dead. Long live OPIC.
In the last few years of US president Obama’s administration, there were increasingly loud calls for the government to get rid of the Overseas Private Investment Corporation (OPIC), the development agency which encourages investment by US companies in Africa.
The problem, as the critics saw it, was the four-decades old agency was now “institutionally ill-suited to its mission and harms poor people around the world,” said a 2015 paper from CEI, a libertarian Washington DC think tank, which also claimed OPIC projects end up “enriching the politically connected.”
With US president Trump’s “America first” mantra it was completely unsurprising when the administration’s first budget in 2017 proposed essentially killing off OPIC.
But at the same time there had also been a long debate with development analysts and DC lobbyists pushing the US Congress for a reform and improvement of the country’s approach to development finance. And, in what now seems with hindsight, an unexpected turn of events, the reformists won.
On Oct. 5, president Trump signed into law the Better Utilization of Investments Leading to Development (BUILD) Act, which does do away with OPIC, but by doubling its budget to $60 billion under a new name, the US International Development Finance Corporation (IDFC).
Aside from the much bigger budget, the key change for most observers is that the new agency now has authority to make equity investments, something OPIC lacked and which many believe will make it a more competitive dealmaker. It’ll also be able to make deals and loans in local currency thereby saving investor currency exchange risk.
So what changed the US government’s mind on this?
One word: China.
“Part of the motivation has been China which is very active in a lot of markets,” says Todd Moss, an analyst at the Center for Global Development and a long-time supporter for reform in the US development finance. “This is an attempt to modernize our foreign policy tools.”
But it won’t be as easy as it sounds. “The Chinese model is bigger and quicker, if you’re a government in Africa and want to build infrastructure before the next election you probably will still go with the Chinese,” Moss concedes.
It’s also notable that while $60 billion is a lot of money from the US it’ll be spent across the developing world including countries in Asia and South America as well as Africa. Last month, China pledged $60 billion towards development on just Africa. But as our columnist Andrew Alli has written, the availability of more competition in terms of funding and expertise should be the ultimate benefit of China’s Africa presence. The more, the better for Africa.
— Yinka Adegoke, Quartz Africa editor
Stories from this week
More African countries are looking into cash transfers for entrepreneurs to help solve unemployment. Most African nations facing the twin problems of a young population and rising unemployment. But as Dan Kopf explains, some governments on the continent are testing a new solution: backing job-creating entrepreneurs with millions of dollars in grants.
It costs more to ship goods to Nigeria from the US than to any other destination. Inefficiencies in Nigeria’s few functioning ports have driven up logistics costs of transporting goods from the US to Nigeria. With recent reform efforts yet to yield results, Nigeria’s ports remain congested and difficult to navigate despite the country’s import-reliant economy.
The flip-flopping fortunes of Africa’s visa-free dreams. Ethiopia’s president this week announced the nation will soon issue visas on arrival for all African travelers, a bold political and economic move. A day later, it emerged that Tanzania has been quietly tightening its visa regime to African states including to nationals visiting from Ethiopia, Nigeria and Djibouti.
Chinese investors are taking control of Ghana’s fishing industry with opaque deals. Ghana’s laws prohibit foreign vessels from catching fish within its waters. But as a new study shows, Chinese investors are finding their way into this lucrative sector through “front” Ghanaian companies.
Nigeria’s poverty crisis is much worse than we thought. Barely months after Nigeria overtook India as the world’s poverty capital, two new pieces of research paint an even grimmer picture, Yomi Kazeem notes. Reports by Oxfam/Development Finance International and the World Bank suggest Nigeria’s poverty problem will persist for at least a generation given the government’s poor social spending.
Somalia is on its way to being a completely cashless, mobile money economy. In terms of the number of mobile money transactions, Somalia, which has been through years of civil war and economic upheaval, has overtaken Kenya. It is still behind in dollar terms given it’s a smaller economy, but it’s catching up. However this progress is not without significant long term risks.
Chart of the Week
The reason US leaders visit the same few African states. US first lady Melania Trump’s four-nation African tour didn’t impress or engage Africans, writes Ciku Kimeria. But the choice of countries she visited strongly aligned with the same ones favored by previous US presidents and first ladies over recent decades. Abdi Latif Dahir looked into why the same few countries have been visited since independence.
Other Things We Liked
The dark story of a Liberian girl charity that failed its wards. Some extraordinary people believe they can single-handedly change the world—and actually try to do it. That’s true of idealist Katie Meyler, founder of the acclaimed American charity More Than Me, who created a school for destitute girls in Monrovia, Liberia. But a damning expose about abuses of power at the school by Finlay Young, published by ProPublica and Time, reveals the daunting complexity of best intentions and international development.
Social media has been shifting the political landscape in Zimbabwe. While many have posited Zimbabwe’s election results ended up following the predictable and traditional trends, Jacquelin Kataneksza argues in Africa is a Country, Zimbabweans at home and abroad have been impacting the nature of political discourse. “Zimbabwean Twitter feeds, WhatsApp threads and Facebook walls have become digital town halls for expressing dissent and debating the goals and methods of political and social transformation.”
ICYMI
Exploring Ghana’s role in peacekeeping. Master’s degree holders can apply for three, fully-funded doctoral scholarships at the University of Ghana to study the linkages between peacekeeping contributions, domestic security provision and drivers of stability in Ghana. (Oct. 15)
Investigating infectious diseases. The University of Cape Town’s Wellcome Center is offering doctoral and post-doctoral fellowships for candidates interested in combating infectious diseases through clinical and laboratory research. (Nov. 12)
Stanford Africa MBA Fellowship. Up to six candidates from African countries will receive tuition and associated fees waiver to gain a business education aimed at training the continent’s next business leaders. (Jan. 10)
Keep an eye on
Felabration 2018, Lagos (Oct. 15-Oct. 21). The Nigerian Afrobeat pioneer and political activist, Fela Anikulapo Kuti, who died in 1997, would have turned 80 on Monday. His family will have an annual Felabration week-long event, Baba@80 Overtaking Overtake, featuring political discussions, art and live music at The New Afrika Shrine in Ikeja, Lagos.
Accra MBA Conference (Oct. 15). Business schools from the US, UK, Canada and Spain will be among those available to meet potential MBA candidates at the Mövenpick Ambassador Hotel in Accra, Ghana. There’ll be individual school presentations and admissions advisors.
TEDxKampala (Oct. 20). TEDx returns to Kampala, Uganda after a three-year break since the last one in January 2015. The event will take place at Kyambogo University and will also be live-streamed.
*This brief was produced while listening to Overtake don Overtake Overtake by Fela Anikulapo Kuti (Nigeria)
Our best wishes for a productive and thought-filled week ahead. Please send any news, comments, suggestions, Tanzanian visas and Felabration tickets to africa@qz.com. You can follow us on Twitter at @qzafrica for updates throughout the day.
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