THE HISTORY OF THE OPEC FUND
Demand for the OPEC Fund’s new financing window was strong. “Private Sector Operations – trade finance as well – grew very impressively during my time here between 2007 and 2015,” remembers Geoffrey Skipper, Corporate Planning and Economic Development. “That was the most interesting and dynamic sector, but also the most challenging as well.” Private Sector Operations offers a diverse array of financial products, including debt, equity, quasi equity, risk sharing arrangements and Islamic finance products. In the first 25 years of Private Sector Operations, more than US$10 billion have been committed for more than 600 transactions across multiple sectors and in more than 70 countries. The OPEC Fund’s engagement with the private sector was complemented in 2006 with the launch of trade finance operations to boost economic growth, create jobs and build resilience by facilitating essential imports and exports, closing liquidity gaps and strengthening Private Sector @25 A quarter-century of the OPEC Fund’s private sector financing has stimulated development across key economic sectors
local economies, especially small businesses. The OPEC Fund’s trade finance often complements public sector projects with vital private sector support for trade flows and market access. The OPEC Fund offers guarantees, co-lending and support for local banks. To date, it has provided over 11,000 unfunded guarantees globally for over US$12 billion. The operations cover various financial solutions, including import and export financing, structured commodity finance and unfunded risk- sharing programs. Karin Oszuszky, Senior Investment Manager, Private Sector Operations, was one of the pioneers of trade financing at the OPEC Fund and says: “We were able to establish ourselves in the market very quickly, and often trade finance also works as a door opener for further commercial operations.” Trade is widely seen as an engine of economic development. It is also hugely competitive and many private banks offer trade financing. Yet there is also a distinct role for development finance institutions (DFI), says Karin Oszusky: “I see our part as additional to commercial banks. What we’ve seen is that it’s always welcome that a DFI is on board. This is not only about additional sources of funding. It can also provide some political comfort. But the main factor is that these institutions stand for longer- term commitment.” One prominent example of a successful partnership is the cooperation with the Eastern and Southern African Trade and Development Bank (TDB), which dates back to 2009 when the OPEC Fund made a US$10 million equity investment in the lender. TDB was established in 1985 and is an African regional development group, financing and fostering trade, regional economic integration and sustainable development. TDB President Emeritus Admassu Tadesse says: “We see strong potential for further cooperation with the OPEC Fund. Shared priorities include supporting energy security and climate transition in a practical and realistic way that aligns with developing country needs.” The wave of economic transition in the 1990s also touched many developing countries. Privatization of
publicly owned enterprises, alongside fundamental structural reforms, was regarded as the fast track to much- needed investment. The private sector became central as the engine of growth, innovation and job creation, but despite vibrant local and national private sector entrepreneurship, many developing countries missed out as they found it challenging to establish themselves in international high-value chains. This pointed to fundamental problems and raised concerns. A series of conferences in the late 1990s highlighted issues such as poverty, hunger, social inclusion, human rights and – increasingly – climate concerns. While the first UN Climate Change Conference (COP1) gathered in Germany in March 1994, work was progressing elsewhere to formulate a set of global development goals which would become known as the Millennium Development Goals (MDGs). Adopted in 2000, these included eight goals such as eradicating poverty and hunger, achieving universal primary education, promoting gender equality and empowering women – and set a timeframe for delivery of 15 years. The MDGs were adopted with the ambition of “shaping the 21st century,” as a UN report put it. The OPEC Fund embraced the agenda wholeheartedly, prioritizing projects such as poverty reduction, education, health and infrastructure. OPEC Fund Director- General Abdulai welcomed the agenda “Trade finance also works as a door opener for further commercial operations.” Karin Oszuszky, Senior Investment Manager, Private Sector Operations, OPEC Fund
Trade Finance US$4.13 BN
Banking and Financial Services US$2.98 BN
Agriculture US$875 MN
Energy US$760 MN
Industry US$205 MN
Communications US$148 MN
Transportation and Storage US$227 MN
Health US$49 MN
Multisector/Other US$56 MN
38
Powered by FlippingBook