SPECIAL FEATURE
Development (OECD), a think tank, ODA from official donors rose to an all-time high of US$178.9 billion in 2021. Bilateral sovereign loans by donor countries on a grant equivalent basis represented 10 percent of ODA. OPEC Fund grants can finance technical assistance, feasibility studies as well as advisory and consultancy services. Eligible purposes include, for instance, assistance for project preparation, institutional capacity building, project evaluation, impact assessment and support of relevant institutions of partner countries. Examples of grants provided recently include technical support for rural infrastructure projects in Colombia and a program empowering Liberian women in the fishing sector. Since inception, the OPEC Fund has extended more than US$600 million in grants, with about two-thirds going to health, agriculture and humanitarian aid.
OPEC Fund grant commitments by sector since inception
3%
4%
Health
7%
Agriculture
24%
Humanitarian aid
9%
Education
Social infrastructure and services
12%
Energy
Water and sanitation
18%
23%
Other
Mzuzu City is Malawi’s third largest city and the capital of the country’s Northern Region. Yet planes can only land at the city’s small and outdated airport during good weather in daylight and its location within the city limits poses safety concerns to citizens and air traffic. A technical assistance grant from the OPEC Fund will pay for a technical and economic feasibility study for the construction of a modern regional airport. The study may spur additional financing from the Fund and international development partners for the required infrastructure investment, while unlocking further inward investment in related sectors such as tourism. Feeding a pipeline of Latin American projects to support water and sanitation,
energy and transportation facilities, the OPEC Fund is teaming up with CAF-Development Bank of Latin America to establish a joint project preparation facility. Each organization will contribute US$1 million in grants to support infrastructure projects over the first three years to be funded by the two organizations. Such an agreement is critical to the development of projects in the infrastructure sector, which require long-term resources, complex designs and carry significant economic and social implications. Given the growing demand for climate finance toward adaptation, mitigation and green transition, this joint project preparation facility aims to catalyze additional funding from other donors.
Scaled-up solutions One feature of the new grants
framework is a focus on projects that can be scaled-up and supported through the OPEC Fund’s other financing facilities. Similarly, grants that spur broader action are well-featured under the new framework. Two recent examples include an airport feasibility study and new joint technical assistance facilities with other development finance institutions. In June 2022, the OPEC Fund and the Asian Development Bank launched a US$3 million trust fund to improve project preparation and implementation in developing countries.
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