STRATEGY OVERVIEW
“I know a lot of people who say, we love working with the OPEC Fund because we have found you to be a very flexible institution.” Malcolm Bricknell, International Liaison Manager, Modern Energy Cooking Services
Floating solar facility of Maldives
idea of private sector engagement. It was one of the criteria from the very beginning that our private sector lending would not be concessional. OFQ : That was the theory. But how was the reality? MB: One of the big challenges we faced was that we had the requirement of a so-called Agreement for Encouragement and Protection of Investment (AEPI) to be able to engage in any partner
country’s private sector. It means that you will not work in a jurisdiction unless you get the same protection that they’re giving other development finance institutions. The first thing we had to do was to go to our partner countries and secure these agreements. We got a dozen countries fairly quickly — and then it just snowballed. OFQ : And in terms of available funds? MB: We had US$250 million allocated for a five-year period. That meant our average ticket size was only about US$5 million. So we were doing quite a lot of credit lines, which are relatively uncomplicated financial sector operations. OFQ : Sounds pretty straightforward… MB: Yes, but in reality we faced a number of di ffi culties. One was finding the right projects in the right countries. The second was execution: Executing a line of credit is relatively simple, but a real economy project can be much more complicated. The third big issue was that before the 2008/09 global financial crisis, commercial banks were very liquid and therefore creating additional value was a real challenge. When the market is flush with cash, why turn to a DFI credit with all its procedures and requirements? For us the development impact of the project was key: Projects would have to include a lot of benefits to make a real di ff erence for all parties involved, not
least the people in our partner countries where our investments were designed to support sustainable and resilient development. OFQ : How did you overcome the initial challenges? MB: When we started private sector operations, we were going in an entirely new direction. Doing a public sector loan is completely di ff erent from a private sector loan. There is a borrower credit risk as well as a country risk. It was a steep learning curve. But luckily we had excellent leadership and a strong, highly motivated and experienced team. OFQ : What institutional and organizational changes did the introduction of the Private Sector Department bring about? MB: The OPEC Fund was lucky that we had Mr. Aissi as head of operations at that time. He saw the big picture and
“Doing a public sector loan is completely di ff erent from a private sector loan. There is a borrower credit risk as well as a country risk. It was a steep learning curve.” Malcolm Bricknell, International Liaison Manager, Modern Energy Cooking Services
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