Report of the

OVERSEAS PRIVATE INVESTMENT CORPORATION

ANNUAL POLICY REPORT

FISCAL YEAR 2008

Submitted Pursuant to

Section 240A of the

Foreign Assistance Act of 1961,

As Amended

March 2008
OPIC Annual Policy Report FY 2008 i

Table of Contents

Executive Summary ......................................................................................................ii

I. OPIC in 2008...............................................................................................................1

Fiscal Year Overview............................................................................................1

OPIC Initiatives in Fiscal Year 2008......................................................................3

II. U.S. ECONOMIC & HOST COUNTRY DEVELOPMENT IMPACTS..........................7

U.S. Economic Effects ..........................................................................................7

Host Country Development Effects.......................................................................9

III: ENVIRONMENTAL, HEALTH & SAFETY IMPACTS.............................................13

Fiscal Year 2008 New Initiatives Summary.........................................................13

Project Screening and Assessment ....................................................................13

Climate Change Mitigation..................................................................................17

Fiscal Year 2008 Reporting ................................................................................20

IV. LABOR AND HUMAN RIGHTS..............................................................................21

Labor Rights .......................................................................................................21

Human Rights .....................................................................................................23

V. MONITORING OF ACTIVE PROJECTS..................................................................23

Fiscal Year 2008 Monitoring Activity...................................................................23

Compliance with OPIC Conditions and Covenants.............................................24

Site Monitoring....................................................................................................25

Self Monitoring....................................................................................................30

VI. EXHIBITS................................................................................................................34

1. U.S. Employment and Associated Effects of OPIC-supported Projects....... 35

2. Breakout of Final Third Country Destination of the Output

of OPIC-supported Projects...............................................................36

3. U.S. Employment Effects and Host-Country Location

of OPIC-supported Projects...............................................................38

4. Methodology for Calculating Economic/Employment Benefits...................42

5. Development Matrix Methodology.......................................................43

6. Financial Services Development Matrix Methodology..............................44

7. Methodologies for Site Monitoring.......................................................45

8. PACE Inventory Report.................................................................... 47
OPIC Annual Policy Report 2008 ii

OPIC ANNUAL POLICY REPORT –FY 2008

Executive Summary

 In Fiscal Year 2008 (FY 2008), OPIC assisted 72 new projects (including 26 investment funds

subprojects and 19 framework subprojects) in 31 countries or regions, involving a wide range of

industries. These projects are expected to generate more than $423 million in U.S. exports and

support over 600 U.S. jobs.

 Of all the projects that OPIC supported in FY 2008, 68 percent, or 49 new projects involved small

businesses. In addition, the projects OPIC assisted in FY 2008 are expected to procure $276 million

from U.S. small businesses located in 15 states, plus the District of Columbia, supporting 432 U.S.

jobs during the first five years of operations.

 In 2008, OPIC completed the baseline greenhouse gas inventory and established internal accounting

procedures that will enable OPIC management and interested members of the public to track OPIC’s 

progress toward achieving a 20 percent reduction in emissions represented by projects in OPIC’s 

active portfolio.

 OPIC’s Board of Directors in FY 2008 approved $505 million in financing for six new private equity

funds that will invest in clean and renewable energy projects in OPIC-eligible countries worldwide.

 Eighty-eight percent of FY 2008 projects target the services sector, which includes financial services,

social services, communications, tourism and other services. The high proportion of projects in this

sector reflects the increasing importance of services to the global economy and the desire of U.S.

services companies to expand their operations internationally.

 The projects that OPIC supported in FY 2008 are expected to generate close to 9,000 jobs in

developing countries. Total initial host-country expenditures are projected to be $6.3 billion, which

will support these jobs and spur additional economic activity and indirect employment in the host

countries. Ninety percent of the 72 OPIC-supported projects in FY 2008 were located in low- and

middle-income developing countries.

 In FY 2008, OPIC site monitored 46 insurance, finance and investment fund projects in various

sectors in almost all world regions. FY 2008 was the first complete fiscal year of integrated site

monitoring where, in most cases, OPIC monitored each project during the site visit for all three

disciplines –Labor and Human Rights, Environment Impacts, and Economic and Developmental

Effects.

 All OPIC-supported projects approved in FY 2008 were subject to a human rights review. OPIC

works in close consultation with the U.S. Department of State’s Bureau of Democracy, Human Rights, 

and Labor (DRL) in performance of that review..

 OPIC support is conditioned upon adherence to internationally recognized worker rights. All OPICsupported projects are subject to statutorily required contract language; most potential projects also

are subject to supplemental contract language addressing one or more internationally recognized

rights.

 OPIC pursued its strategic initiatives by working in close collaboration with other U.S. agencies in

promoting economic development within key regions in the world, including the Middle East and North

Africa, Sub-Saharan Africa, and Central America.
OPIC Annual Policy Report 2008 1

I. OPIC in 2008

Fiscal Year Overview

In Fiscal Year 2008, OPIC assisted 72 projects in 31 countries and regions.

OPIC assisted 72 new projects1 located in 31 countries and regions around the world in FY 2008. OPIC

faced a challenging environment in FY 2008, partially due to the delay in Congressional passage of the

agency’s authorizing legislation. This delay prevented OPIC from making any new project commitments

for nearly six months –from April 2nd through September 30th, 2008. For this reason, the 2008 total

project count reflects a significant decrease over 2007, when OPIC committed to 139 projects.

In Fiscal Year 2008, the 72 new projects included:

 3 structured finance projects

 19 framework subprojects

 14 small and medium enterprise finance projects

 26 investment fund subprojects2

 12 insurance projects3.

The total investment amount of the 72 new projects was $6.5 billion, of which approximately 63 percent

($4.1 billion) represents investment from U.S. sources (including OPIC), 32 percent from host countries

($2 billion), three percent from third countries ($213 million), and two percent ($107 million) from

multinational development institutions (see Figure 1). Thus, OPIC's assistance to U.S. investors

leveraged over $2.3 billion worth of investment from non-U.S. sources, mobilizing capital from numerous

international investors.

1 In previous years, OPIC had included in its project count its framework agreements and investment funds as single projects. The

downstream investments of the framework agreements and investment funds were not included in the project count. However,

beginning with FY 2007, the downstream investments of the framework agreements and investment funds are now included in the

project count -- rather than the overall framework agreement or investment fund. Using this more inclusive approach, the data will

cover all projects that OPIC supports on an annual basis.

2 One of the 26 investment fund subprojects also received financing through OPIC’s Finance Department. OPIC also approved

three new investment funds. However, due to modifications in the project count methodology beginning in FY 2007, these three

funds and projected impacts are not included in the annual project total.

3 This count includes one project that received financing through both OPIC’s Insurance Department and OPIC’s Finance 

Department.




OPIC Annual Policy Report 2008 6

Peru

Under its third global framework agreement with Wachovia Bank, OPIC provided an investment guaranty

on a $10 million loan to Banco Financiero del Peru (BFP). Based in Lima and founded as a construction

bank in 1964, BFP started expanding into personal and commercial lending activities in the 1980s. This

investment is being used to expand the bank’s SME lending portfolio, and OPIC funds have already 

resulted in more than 200 new loans to Peruvian SMEs, with an average loan size of just over $46,000.

This project will have a positive impact on the availability of credit to local SMEs, facilitating their

expansion of operations and generating ancillary multiplier impacts through demand for goods and

services from local suppliers and increased production which should benefit consumers.

Moldova

In continued support of mortgage lending, OPIC provided a $10 million investment guaranty for the

expansion of ICS Prime Capital’s mortgage financing business. Prime Capital is a new-comer to the

mortgage lending sector in Moldova. Founded in 2005 by the U.S. investor, New Century Holdings

(NCH), which contributed an additional $300,000 in equity for this project, Prime Capital began writing

loans in 2006 with a focus on mortgage and SME financing. Prime Capital expects to issue 300 new

mortgages to low- and middle-income borrowers, with an average loan amount of $30,000. Nearly half of

OPIC-guaranteed funds will be lent to rural and suburban areas outside of the capital city. This project

will have significant developmental impacts by encouraging Moldova’s nascent mortgage market, thereby

increasing homeownership, home construction demand, and strengthening private property rights.

Kazakhstan

Under its third global on-lending facility with National City Bank, OPIC provided a $30 million investment

guaranty on a $40 million investment in an expansion of ATF Bank’s SME lending portfolio in Kazakhstan. 

Founded in 1995 as the Almaty Trade-Financial Bank, by 2006 ATF had grown to the third largest bank in

Kazakhstan. With this investment, ATF expects to write 700 new SME loans largely to urban borrowers,

with an average loan size of $150,000. More than half of the loans that ATF Bank issues under this

OPIC-supported investment will have tenors of longer than five years, substantially longer than most loan

tenors in the country. This project’s lending activities will deepen the Kazakh banking sector through its 

positive demonstration impact to other local lenders.

Bangladesh

In Bangladesh, OPIC supported a loan to the Bangladesh Rural Advancement Committee (BRAC), a

local microfinance institution, under its Citibank Asia Framework facility. OPIC provided an investment

guaranty of $16.7 million on the $20 million Citibank loan, which leveraged a total investment of $55

million that included participation by the International Finance Corporation (IFC). Originally established

as an organization to assist with refugee resettlement following the war of independence in 1971, today

BRAC focuses on poverty alleviation and low-income empowerment. BRAC has programs that target the

needs of the landless poor, especially women, through microcredit, health, education and training. The

OPIC-supported investment will be used to expand BRAC’s lending programs through an estimated 

67,000 new loans, with an average loan amount of about $225, whose borrowers will be over 90 percent

female. This investment will have a direct employment impact through the creation of over 60 new

positions at BRAC. This project will have a significant development impact by providing capital in one of

the poorest countries in the world.
OPIC Annual Policy Report 2008 7

II. U.S. ECONOMIC & HOST COUNTRY DEVELOPMENT

IMPACTS

In FY 2008, OPIC committed to 72 projects, a decrease over 2007 when OPIC committed to 139 projects.

As noted earlier, the decrease in the total number of new projects supported was primarily due to the

delay in passage of the agency’s authorizing legislation.

Prior to FY 2007, OPIC estimated the economic and developmental impact of its framework agreements

and investment funds using a model based on actual monitored results from similar types of facilities.

Projects were evaluated at the framework and fund level and the impacts at the subproject level were not

included in the cumulative reporting data. However, in FY 2007, OPIC changed its methodology to

include the estimated economic impact of the individual downstream subprojects in its cumulative

reporting data instead of the modeled data for the framework agreements and investment funds. This

change is intended to increase the transparency and accuracy in its cumulative reporting data.

U.S. Economic Effects

The projects that OPIC supported in FY 2008 will support over 600 U.S. jobs.

The FY 2008 portfolio of OPIC-supported projects will result in important economic benefits to the U.S.

economy. These include:

 A substantial portion of the initial procurement for OPIC-supported projects will be supplied by

U.S. firms, resulting in an estimated $70 million in U.S. exports of capital goods and services.

 The value of American materials and equipment required for ongoing operations is estimated at

$353 million over the next five years.

 As a result of this level of initial and operational procurement from the United States, the FY 2008

projects will support an estimated 3,182 person-years of direct and indirect employment for U.S.

workers. This is equivalent to an average of 636 U.S. jobs over a five-year period.

 Taking both the financial and trade flows into account, the combined impact of the FY 2008

projects on the U.S. balance of payments over the first five years of operation is expected to be a

negative $2.9 billion. However, it is expected that over the lifetime of these projects, they will

have a positive net balance of payments impact for the U.S.

Information in the Exhibits section at the end of this report shows the break-out of OPIC-supported

projects and their impact on the U.S. economy through procurement and support of U.S. employment.

Exhibit 1 breaks out all of the OPIC-supported projects in 2008 by sector –including agribusiness,

minerals and energy, manufacturing, and services. Using these four sectoral classifications, the chart

provides data on the markets –host country, U.S., and third country - in which revenue will be generated

for all OPIC-supported projects in 2008, and what the U.S. procurement amount –both initial and

operational –will be, as defined by sector. The U.S. employment impact is generated using procurement

data provided by investors.
OPIC Annual Policy Report 2008 8

Exhibit 2 shows in detail the revenues generated by third-country sales from all OPIC-supported projects

in Fiscal Year 2008, classified by sector. Projects are classified according to their impact on U.S.

employment –one group includes projects having a positive U.S. employment impact, and the second

group includes projects with a neutral U.S. impact. There were no projects that OPIC supported in FY

2008 that is expected to result in the loss of U.S. jobs.

Table 1: Estimated U.S. Economic Benefits of Fiscal Year 2008 Projects

Total project investment $6,570 million

U.S. investment in projects $4,165 million

U.S. percent of total 63 percent

Total direct U.S. project exports $423 million

Initial procurement from U.S. $70 million

Operational procurement (5 years) $353 million

Estimated U.S. employment supported

(5 years, direct and indirect) 3,182 person-years

(636 U.S. jobs)

OPIC-supported projects are carefully screened for their U.S. employment effects. OPIC does not

support projects that would harm the U.S. economy or result in the loss of U.S. jobs. OPIC collects and

analyzes, both geographically and sectorally, the projected U.S. employment and associated economic

effects of the projects that it assists. Even before taking into account their positive U.S. employment

impacts, none of the Fiscal Year 2008 projects are expected to result in the loss of U.S. jobs. For a

detailed description of the methodology used to calculate the U.S. employment effects of initial and

operational procurement generated by OPIC-supported projects, please refer to Exhibit 4.

OPIC supports U.S. small businesses, directly and indirectly.

OPIC is dedicated to assisting U.S. small businesses to expand into developing markets. According to

the U.S. Small Business Administration, U.S. small businesses represent 99.7 percent of all employer

firms and employ about half of all private sector employees. U.S. small businesses have generated 60 to

80 percent of annual net new jobs to the economy over the last decade and small businesses play an

important role in U.S. trade flows, comprising nearly 97 percent of all identified exporters and producing

28.6 percent of total reported exports. OPIC recognizes the importance of small businesses as a key

driver of U.S. economic growth and actively seeks to partner with these firms in enabling their expansion

overseas.
OPIC Annual Policy Report 2008 9

OPIC’s efforts to reach out to small businesses have yielded positive results in Fiscal Year 2008. OPIC

supported 49 new projects that involved small businesses, representing 68 percent of all new projects

supported by OPIC in Fiscal Year 2008. This includes:

 10 small businesses received OPIC political risk insurance

 34 small businesses received OPIC investment guarantees6

 6 small businesses received OPIC support in the form of direct loans, which totaled over $111

million.

Since 1997, OPIC has provided over $1.8 billion in direct loans to U.S. small businesses. In addition, of

the 164 active OPIC insurance and finance projects,, 15 include U.S. investors that are women- or

minority-owned businesses.7

Many small businesses benefit from foreign investment by larger U.S. firms. Larger companies often turn

to small U.S. businesses for products and services to support an overseas project. During their first five

years of operations, the projects OPIC supported in FY 2008 are expected to procure $276 million from

U.S. small businesses located in 15 states plus the District of Columbia, supporting 432 U.S. jobs.

OPIC collects data on the specific U.S. companies that will provide goods and services to OPICsupported projects. This data help to ensure that procurement estimates are as accurate as possible and

also help identify specific regions of the country benefiting from OPIC-supported foreign investments.

According to the data collected for the fiscal years 1994 through 2008, OPIC has identified the specific

U.S. suppliers for over $15 billion in expected procurement for OPIC-supported projects. These U.S.

companies are located in 49 states, plus the District of Columbia and Puerto Rico.

It is estimated that approximately 57 percent of these identified suppliers to OPIC-backed projects are

U.S. small businesses. Nearly all U.S. procurement associated with OPIC-supported projects is identified

by specific product type, and in FY 2008, 97 percent of project-related U.S. procurement was identified by

specific supplier. Investors are encouraged to provide as much detail as possible regarding their

procurement of U.S. goods and services so that the positive impacts on the U.S. economy of OPICsupported projects can be recorded fully and accurately.

Host Country Development Effects

In FY 2008, OPIC continued to systematically evaluate the developmental impacts of all projects.

OPIC’s core mission is to promote private U.S. investment that will contribute to the economic

development of the world’s less developed countries. OPIC selects projects that are likely to serve as 

foundations for long-term economic growth, and that provide innovative products or services to emerging

market countries. To further enhance OPIC’s assessment of the relative benefits of the projects that it

supports, in FY 2007 OPIC created a development assessment model specifically for financial services

projects. The general structure of the financial services matrix is similar to the standard development

matrix, but includes core indicators that are specific to financial services-related projects. For a detailed

description of the methodologies employed for both the development matrix and the financial services

development matrix, refer to Exhibits 5 and 6.

6 One project received both an OPIC investment guaranty and political risk insurance.

7 This data is not collected for OPIC investment fund and framework subprojects, as they do not have U.S. ownership stakes.

OPIC Annual Policy Report 2008 11

In Fiscal Year 2008, OPIC focused its activities in low- and middle-income developing countries,

providing an important source of employment and tax revenue for these economies.

The projects supported by OPIC in FY 2008 will provide significant economic and social benefits for

developing host countries. The projects are expected to generate 8,961 jobs in developing countries

directly, of which 4,927 (or 45 percent) are projected to be in skilled (management and professional)

positions.

Twenty-seven projects (38 percent) are located in low-income countries, such as Paraguay and Sri

Lanka, while 38 projects (53 percent) are located in middle-income developing countries, such as Peru

and Turkey.10 Seven projects (10 percent) are located in high income countries, with six of those

projects in Mexico, a country that “graduated” from medium-income to high-income only two years ago,

and one project in South Korea.11 The concentration of projects in low- and middle-income countries, 90

percent of the projects that OPIC supported in Fiscal Year 2008, demonstrates OPIC’s success in fulfilling 

its mission to focus on countries most in need.

The total initial host-country expenditures for Fiscal Year 2008 projects are projected at $6.3 billion. This

procurement of local raw materials, services, and semi-finished goods will support economic activity and

employment in the host countries. The OPIC-supported foreign enterprises are expected to generate

$1.1 billion annually in taxes and duties for the host countries.12 Once in operation, the projects will

generate an estimated $1.8 million in annual export earnings for the host countries. Approximately 90

percent of the output associated with FY 2008 projects will be sold in host country markets. Exhibit 2 (at

end of document) shows a break-out of the final destination of output for FY 2008 investments over the

first five years of operation for projects that will export to third countries.

10 As defined in OPIC’s statute, low-income countries are classified as those with per capita GNP of $984 or less in 1986 dollars.

Middle-income countries are those with per capita GNP of $985-$4,268 in 1986 dollars.

11 Despite this change in classification, over 20 percent of the Mexican population lives on less than $2.00 per day, indicating that

there is significant income disparity within the country.

12 This estimate includes host government revenues generated by large public infrastructure projects OPIC supported this year,

including a toll road in Mexico.
OPIC Annual Policy Report 2008 12

Table 2: Estimated Developmental Impacts of Fiscal Year 2008 Projects

Amount or Number

Host Country (millions of $ or

Effects # workers)

A. Foreign exchange benefits 1

Exports generated $184 million

Imports replaced $0

Total A $184 million

B. Foreign exchange costs 1

Capital outflows $1,541 million

Project imports $78 million

Total B $1,618 million

Net foreign exchange impact (A less B) 1($1,434) million

Net annual taxes, revenues and

duties paid to the host country 1$1,147 million

Initial local expenditures $6,290 million

Local employment generated in fifth year of

operation

Technical and management 4,927

Skilled and unskilled labor 4,034

Total 8,961

1

Average annual amount over a 5-year

forecast period.
OPIC Annual Policy Report 2008 13

III: ENVIRONMENTAL, HEALTH & SAFETY IMPACTS

The Environmental, Health and Safety Impacts section of OPIC’s 2008 Policy Report represents the 11th

year of reporting on environmental, health and safety considerations of OPIC-supported projects. This

section replaces and continues the reporting of these environmental considerations in what had been

previously reported in a stand-alone OPIC Annual Environmental Report. Specifically, this section will

report information related to environmental, health and safety screening and assessment, annual

greenhouse gas reporting as well as introduce and summarize any other environment-related policy

matters undertaken by OPIC during the previous fiscal year.

Fiscal Year 2008 New Initiatives Summary

Since 1985 OPIC has had a strong environmental mandate, incorporated into its authorizing statute. In

Fiscal Year 2008, OPIC undertook new initiatives to enhance and strengthen its implementation of that

mandate, including efforts to increase support for the development of clean and renewable energy

projects and to enhance monitoring and reporting on efforts to address the issue of climate change.

These initiatives are discussed in detail in this section and the Monitoring section.

Project Screening and Assessment

OPIC screens all applications to identify the risk of adverse environmental and social impacts of a project

and to identify project impacts that could preclude OPIC support on categorical grounds. If a project is

determined to be categorically ineligible, OPIC immediately informs the applicant so as to avoid any

unnecessary effort or expense. If the project is categorically eligible, OPIC categorizes the project to

determine the requirements for documentation, disclosure, consultation, reporting and post-commitment

monitoring. Projects may be categorized as A, B, C or D, with Category A representing the greatest

potential for adverse environmental and/or social impacts.

OPIC’s Utilizes a Rigorous Methodology for Assessing and Calculating Potential Environmental 

Impacts.

Environmental assessment is the process used by OPIC to evaluate the environmental and social

impacts of an applicant’s project and to identify the means to improve the project by preventing, 

minimizing, remediating or compensating for adverse impacts as a condition of OPIC support. The

process includes the following:

 Identification of potential adverse environmental and social impacts;

 If the project has been screened as Category A, disclosure of the project’s environmental impact 

assessment (EIA) for public review and comment;

 Comparison of the project’s performance in relation to internationally-accepted standards and

alternative approaches;

 Evaluation or design of mitigation measures;

 Evaluation or design of associated management and monitoring measures.

One of the 72 projects that OPIC provided a commitment to in Fiscal Year 2008 (or one percent of all

projects) was screened as Category A; that is, likely to have significant adverse environmental and/or

social impacts that are sensitive, diverse or unprecedented in the absence of adequate mitigation

measures. This project, which involved toll road construction in Mexico, required the preparation of a full

EIA, which was subsequently disclosed to the public for comment.


OPIC Annual Policy Report 2008 16

No transactions were rejected on environmental grounds this Fiscal Year.

OPIC did not reject any applications for finance or insurance in Fiscal Year 2008 on the basis of

categorical ineligibility.

OPIC expands greenhouse gas accounting and support for renewable energy projects

In Fiscal Year 2008, OPIC Management renewed its commitment to work with the private sector to

encourage and support renewable energy projects and projects that incorporate energy efficiency

technology. As part of that commitment, OPIC dedicated personnel to increase market outreach to the

renewable and clean energy business community for development of new projects.

In January 2008, OPIC formed a new unit within its primary small business group to focus on clean

projects, the Renewable Energy and Sustainable Development Finance Group in the Small and Medium

Enterprise Finance Department. The group consists of two Senior Managers who proactively identify

renewable energy and sustainable development transactions in emerging markets, develop a program

that facilitates such investments that might not otherwise proceed without OPIC project finance, and

develop in-house expertise in key technologies and industry issues to advance OPIC’s support of and 

presence in U.S. small business growth in the sector overseas.

On September 18, 2008, OPIC’s Board of Directors approved $505 million in financing for six new private

equity funds designed to invest in clean and renewable energy projects in OPIC-eligible countries

worldwide. The funds will mobilize a total of $1.6 billion in capital for the sector, representing an historic

commitment by OPIC to renewable energy.

For several developing countries, these funds will provide the first significant pool of capital available for

investment in clean and renewable energy projects. As such, they represent an important breakthrough

for renewable energy globally—a step forward from general agreement on the need to develop more

renewable energy sources, to the actual provision of capital to make it happen.

On a transactional basis OPIC is also considering reduction and control alternatives for all projects,

including opportunities to enhance energy and operational efficiencies and to protect and enhance sinks

for greenhouse gases such as natural forests. Projects in energy intensive sectors are now required to

meet energy efficiency guidelines and benchmarks. Many OPIC-supported projects incorporating energy

efficiency improvements in capital expenditure planning. Examples include the following:

Darby BBVA Latin America Holdings L.P –Grupo Bajo Cero, S.A. de C.V.

The project involves a $35.6 million investment made by OPIC-supported Darby BBVA Latin America

Holdings, L.P. in the largest producer, distributor and marketer of ice in Mexico. A portion of the Fund

investment was used by Grupo Cero to achieve their goal of reducing energy use by 20 percent. Major

actions taken by Grupo Cerro include replacement of all motors with more energy efficient models,

installation of more efficient ammonia condensers at existing facilities, replacement of an aging

distribution fleet with more efficient diesel trucks and gradual replacement of all old freezers throughout

their distribution system.

Aqua International Partners, L.P. –Grupo Rotoplas

The project involves a $40.5 million investment made by OPIC-supported Aqua International Partners in a

manufacturer of residential, commercial and agricultural water storage tanks, filtration products and other

water-storage related equipment in Mexico. Part of the Fund investment enabled Grupo Rotoplas to

modify production procedures to reduce natural gas usage by 50 percent. The company is now

monitoring electricity use in hopes of identifying other production process changes to achieve further

reductions in energy use.
OPIC Annual Policy Report 2008 17

Firebird Aurora Fund –SB Iberia

The project involves a $6.3 million loan to construct the Kavtaradze Street Housing Project in Tbilisi,

Georgia. The design and construction of the building incorporated the innovative use of soil as insulation

on the roof top as a means of energy conservation in winter. Additionally, the builder installed high quality

PVC windows and doors on the outer perimeter of every floor to further conserve electricity.

Climate Change Mitigation

On June 14, 2007, OPIC announced the Greenhouse Gas/Clean Energy Initiative to systematically

evaluate, monitor, and report on OPIC’s investment decisions and to demonstrate to OPIC’s stakeholders 

OPIC’s progress in reducing climate change impacts in our investment decision making. 

OPIC initiated a four-part plan to address the issue of Greenhouse Gas (GHG) Emissions and increase

support for clean energy and green technology: (1) Reduce Portfolio Emissions; (2) Cap Transactional

Emissions; (3) Support Energy Efficiency, Renewable & Clean Technology; and (4) Enhance Accounting

and Transparency.

OPIC is committed to reducing direct GHG emissions.

As a part of the Initiative, OPIC has committed to reducing the direct GHG emissions associated with

projects in the OPIC’s active portfolio as of June 30, 200814 by 20 percent over a ten-year period and to

shift investment focus to renewable and energy efficient projects.

For the purpose of tracking progress in achieving the 20 percent reduction goal, in 2008 OPIC procured

the services of an outside auditor (Pace Global Energy Services LLC) to develop a baseline GHG

inventory of existing OPIC supported projects. (See Exhibit 8 for the PACE inventory report). The

organizational boundary for the inventory was defined as 100 percent of the direct, on-site emissions from

all projects within OPIC’s active portfolio as of June 30, 2008. The organizational boundary is consistent 

with the voluntary Scope 315 emissions reporting methodology that OPIC adopted in 2004. Under that

approach OPIC reported 100 percent of the direct emissions associated with the power projects that

received OPIC support in any given year. Accounting for 100 percent of project emissions is more

conservative than the equity or operation control approach more commonly used in greenhouse gas

accounting. OPIC’s accounting is limited to direct emissions because (1) these emissions are verifiable 

and (2) directly attributable to the project activity that is benefiting from the OPIC support.

OPIC directly estimates greenhouse gas emissions from all projects that have significant emissions,

which have been defined as emissions exceeding 100,000 tons of carbon dioxide equivalent (CO2eq) per

year. In order to account for GHG emissions from active projects in OPIC’s portfolio that have less than 

100,000 tons of CO2eq, OPIC adds an additional 5 percent emissions to the aggregate emissions number.

OPIC believes this additional 5 percent is conservative because a significant percentage (over half) of the

14 This date which was originally March 31, 2007 was moved to June 30, 2008 when OPIC’s reauthorization 

legislation was not finalized by March 31.

15 Under the World Resource Institute’s Greenhouse Gas Protocol, corporations choose to report emissions based on 

either an equity share or a financial or operational control basis. In other words, a corporation chooses to report

either a share of a facility’s emissions consistent with its equity ownership or it chooses to report all emissions from a 

facility (regardless of share ownership) based on its having operational or financial control of the facility. The

corporation then assesses two types of emissions (Scope 1 and Scope 2) and may assess a third type of emissions

(Scope 3). Scope 1 emissions are direct emissions; Scope 2 emissions are indirect emissions associated with

purchased electricity; and Scope 3 emissions are other indirect emissions, which can involve any indirect emissions

associated with the lifecycle of products or services associated with the company’s activities (other than those

associated with purchased electricity, i.e., Scope 2 emissions). Reporting of Scope 1 and Scope 2 emissions is

mandatory while reporting of Scope 3 emissions is voluntary.
OPIC Annual Policy Report 2008 18

projects in OPIC’s portfolio are in sectors that are not expected to result in significant direct emissions

(e.g. financial services, telecommunications, home construction).

OPIC calculates GHG emissions from projects in its active portfolio using methodologies and algorithms

that rely on activity data such as fuel consumption or gas/oil throughput. In most cases OPIC uses

methodologies approved by the Climate Registry.16 For emissions from sources without Registryapproved methodologies, OPIC uses emission estimates provided by the U.S. Environmental Protection

Agency (EPA). For project-specific information on the methodologies and assumptions used in emission

estimates, see the Pace report.

Following the completion of the independent audit OPIC provided investors an opportunity to comment on

the Independent Auditor’s estimate, activity data, and methodology. The audit estimates and comments 

received from investors are provided in Table 3.

Based on the independent audit findings, the estimated 2007 inventory of GHG emissions from all

significant projects that were active as of June 30, 2008 is 48,050,463 million short tons of CO2eq. The

total is based on Pace’s estimate unless the Investor provided data indicative of actual operating 

conditions. Five percent was then added to the total to account for GHG emissions from active projects in

OPIC’s portfolio that have less than 100,000 tons of CO2eq, Thus, the 2007 total inventory of GHG

emissions is 50,452,986 million short tons of CO2eq.

16 THE CLIMATE REGISTRY is a nonprofit collaboration among North American states, provinces, territories and

Native Sovereign Nations that sets consistent and transparent standards to calculate, verify and publicly report

greenhouse gas emissions into a single registry. The Registry supports both voluntary and mandatory reporting

programs and provides comprehensive, accurate data to reduce greenhouse gas emissions.


OPIC Annual Policy Report 2008 21

Fiscal Year 2008 Reporting

As illustrated in Table 4, OPIC reports no direct (Scope 1) emissions associated with its activities because

OPIC has no direct CO2 emissions. OPIC reports indirect (Scope 2) emissions totaling 1,475 short tons of

CO2 associated with its purchase of electricity. OPIC is reporting as Scope 3 emissions for 2008 the direct

GHG emissions associated with projects with emissions exceeding 100,000 tonnes CO2eq/year that were

in the OPIC’s active portfolio as of June 30, 2008. In future annual reporting OPIC will report as Scope 3 

emissions the direct emissions associated with projects with emissions exceeding 100,000 tonnes

CO2eq/year that are in the OPIC’s active portfolio on the final date of the fiscal year (September 30).

Table 4: OPIC FISCAL YEAR 2008 CO2 Emissions (in short tons)

SCOPE 1 EMISSIONS SCOPE 2 EMISSIONS SCOPE 3 EMISSIONS

OPIC 0 1,475 50,452,986

OPIC has established an annual emissions cap for new projects it supports.

To meet the portfolio reduction target OPIC established an annual emissions cap for all new, OPICsupported projects to which OPIC provided a commitment in a given year, OPIC has established a cap of

3 million metric tonnes of GHG emissions for all significant new projects it undertakes in any fiscal year.

OPIC provided a commitment to one major emitting project in the first year the cap was in place: Contour

Global Togo S.A., a 100 MW Multi Fuel-Fired Power Generating Facility located in Togo. Annual cap

allocated to this project was 527,000 tonnes of CO2eq.

On a transactional basis, OPIC considers reduction and control alternatives for all projects, including

opportunities to enhance energy and operational efficiency; protect and enhance sinks and reservoirs of

greenhouse gases, such as natural forests, and the application of emerging technologies for capture,

storage, and recovery of GHGs.

IV. LABOR AND HUMAN RIGHTS

Labor Rights

OPIC tracks countries’ eligibility as part of its statutory obligations.

OPIC programs are subject to a country-level statutory criterion, specifically whether a country is taking

steps to adopt and implement “internationally recognized worker rights,” as defined under the Trade Act 

of 1974. The Generalized System of Preferences (GSP) program, a trade benefits program overseen by

the Office of the U.S. Trade Representative (USTR), has parallel statutory requirements for GSP

beneficiary countries. For U.S. Government-wide consistency on country-level determinations based on

this particular “taking steps” standard, OPIC follows the USTR’s actions on country eligibility for the GSP 

program on worker rights grounds. When a country becomes ineligible for the GSP program on grounds

other than worker rights, or in some exceptional cases where the grounds for a country’s GSP eligibility or 

ineligibility have not been established firmly, OPIC makes its own country eligibility determination, in

consultation with the U.S. Departments of State and Labor and relevant members of its Board of

Directors.
OPIC Annual Policy Report 2008 22

OPIC follows the USTR’s petition and review process, including their Trade Policy Staff Committee’s 

(TPSC) final determinations on these reviews. During Fiscal Year 2008, no countries regained their GSP

benefits on worker rights grounds, and hence their eligibility for OPIC programs. Similarly, no countries

became ineligible for GSP benefits or OPIC programs on worker rights grounds. However, for its 2008

GSP Annual Review, the USTR continues to review the GSP eligibility of the following countries on

worker rights grounds: Bangladesh, Niger, Uzbekistan, and the Philippines. Furthermore, the USTR

received petitions challenging the GSP eligibility of Iraq and Sri Lanka, on worker rights grounds, in

December 2008. The decision regarding whether to accept these new country practice petitions for formal

review is expected to be announced later this year. OPIC will implement in its own programs the TPSC’s 

final determinations of these countries’ GSP eligibility. 

Historically, as a result of USTR’s GSP and/or OPIC’s own determinations, OPIC programs have been 

suspended in 15 countries17 on account of their failure to meet the statutory "taking steps" standard. In a

number of those countries, including Liberia and Chile, GSP and OPIC programs have been restored as a

result of progress in adopting and implementing internationally recognized worker rights standards. At the

present time, the following countries remain ineligible for OPIC programs on worker rights grounds:

Belarus, China, Maldives, Qatar, Saudi Arabia, Sudan, and the United Arab Emirates.

OPIC places contractually binding worker rights conditions on every project it supports.

At the project level, OPIC requires that projects do not "contribute to violations of internationally

recognized worker rights.” These rights include: the right of association; the right of organization and 

collective bargaining; a prohibition on forced or compulsory labor; minimum age for employment and a

prohibition on the worst forms of child labor; and acceptable conditions of work with respect to minimum

wages, hours of work, and occupational health and safety. OPIC includes statutorily required standard

worker rights language in every insurance contract, and every finance and investment funds agreement.

The language prohibits explicitly the use of forced labor and requires the investor to respect the rights of

association, organization, and collective bargaining, and to observe applicable laws with respect to

minimum age and wage requirements, hours of work, and occupational health and safety.

In certain cases, the applicable laws of the host country or the implementation of such laws may not meet

internationally recognized worker rights standards. In these instances, and as a condition of OPIC

support, OPIC requires further that the investor meet the relevant International Labor Organization’s (ILO) 

standards for internationally recognized worker rights through additional contractually-binding conditions.

Such contract conditions typically refer to non-discrimination on account of union activities, minimum age

of workers, payment of minimum wages, timely payment of wages, limits on hours of work, and rights

related to hazardous work situations. In FY 2008, all OPIC-supported projects were subject to a full

worker rights review, and OPIC support was conditioned upon contractual adherence to internationally

recognized worker rights standards. Supplemental contract conditions addressing one or more of these

rights were included in an overwhelming majority of the project contracts and agreements.

The Labor and Human Rights Group conducts on-site due diligence for particularly sensitive

proposed new projects.

For projects deemed particularly sensitive upon initial project review, OPIC may conduct additional due

diligence at the project site prior to issuing approval on worker rights or human rights grounds. A variety

of factors may determine whether a potential project warrants on-site due diligence, including general

country- or sector-level labor and human rights sensitivities, location, project size and size of workforce,

potential for the use of child and/or forced labor, and the nature of the work conducted at the project,

17 These countries include: Belarus, China, Maldives, Sudan, UAE, Saudi Arabia, Qatar, L beria, Central African Republic, Chile,

Nicaragua, South Korea, and Mauritania. Some countries (e.g., Chile and Liberia) regained GSP and/or OPIC eligibility as a result

of steps taken to implement internationally recognized worker rights standards.
OPIC Annual Policy Report 2008 23

including the level of hazardous work activity. The number of potential projects that warrant on-site due

diligence varies yearly.

Human Rights

The promotion of respect for basic human rights is essential to successful OPIC-supported projects, and

OPIC recognizes the importance of human rights in its programs and project evaluation process. The

OPIC human rights clearance process is designed to ensure that OPIC-supported projects meet the

requirements of the Foreign Assistance Act. For all potential projects, OPIC works in close consultation

with the U.S. Department of State’s Bureau for Democracy, Human Rights and Labor (DRL), prior to 

making a final commitment.

In FY 2008, OPIC continued to collaborate with DRL on the human rights clearance process by utilizing a

quarterly system of updates to keep apprised of human rights matters that could have an impact on

potential OPIC projects. Every project considered for OPIC financing, insurance or for investment by an

OPIC-supported investment fund in FY 2008 was subject to a human rights review.

OPIC focuses attention on human rights at projects in all sectors and supports multi-stakeholder

initiatives such as the "Voluntary Principles on Security and Human Rights." The Principles provide

guidance on safety, security, and human rights for companies in the extractive and energy sectors. OPIC

encourages signatories to the Voluntary Principles to implement them to the best of their ability in OPICassisted projects.

V. MONITORING OF ACTIVE PROJECTS

Fiscal Year 2008 Monitoring Activity

OPIC considers monitoring active projects an important part of the project oversight process and

undertakes two types of project monitoring: site monitoring and self monitoring.

Site monitoring involves field visits to OPIC-supported projects to ensure compliance with relevant

conditions and covenants in OPIC support agreements. These projects (1) have been randomly sampled

by the monitoring team, (2) have been designated as sensitive for at least one of OPIC’s statutory 

disciplines (U.S. economic impact, host country developmental impact, labor and human rights,

environment), or (3) are located in close proximity to other projects that are planned for site-monitoring.

Self monitoring requires the project investor to complete a “Self-Monitoring Questionnaire” (SMQ) 

annually - the SMQ reports on the project’s actual results from the most recent fiscal year. A new, more 

user-friendly website for this questionnaire was launched in 2008 and represents a significant

improvement in terms of easy of use for investors, quality of data collected and overall program

performance from previous versions.

Information gathered during both site monitoring and self monitoring are similar, but site monitoring

involves more detailed and qualitative discussions between OPIC personnel and representatives of the

OPIC-supported project. In addition, OPIC site monitors projects to ensure compliance with relevant

conditions and covenants in OPIC support agreements.

FY 2008 was the first complete fiscal year of integrated site monitoring where, in most cases, OPIC’s 

Office of Investment Policy (OIP) monitored for all of the statutory disciplines for each selected OPIC

project on one visit. The integrated monitoring program allows all three OIP disciplines to track monitored
OPIC Annual Policy Report 2008 24

projects and compliance with project-specific conditions precedent while using a comprehensive and

integrated SMQ, which is responsive to the needs of all OIP disciplines.

In total, approximately 230 OPIC projects were self monitored and 46 OPIC projects were site monitored

in FY 2008, an increase of over 20 percent from FY 2007. All projects that OIP site monitored

demonstrated a quantifiable positive impact on the host country’s economic development. Further, site

monitoring provided OPIC with a more complete understanding of country conditions and revealed a

strong commitment by U.S. businesses to contribute to local communities in ways that extend above and

beyond OPIC’s contractual requirements, such as initiatives on social certification programs and general 

job skills training.

Compliance with OPIC Conditions and Covenants

Each discipline within the Office of Investment Policy monitors projects to ensure compliance with OPIC

conditions and covenants. The results of the site monitoring this year are:

U.S. Effects and Host Country Development: U.S. economic and host country developmental impact site

monitoring concluded that no projects were out of compliance with conditions precedent.

Labor and Human Rights: Labor and human rights monitoring found that the vast majority of the projects

visited were in compliance with OPIC’s contractual requirements. Of the 21 projects site monitored by the 

group, two were found to be out of compliance with OPIC’s contractual requirements. In these instances, 

OPIC worked with the project investor to determine whether the project was able to cure the noncompliance within a reasonable timeframe. One non-compliant project could not meet the cure

requirements and as a result, OPIC’s insurance support of the project was terminated. The other noncompliant project worked in close consultation with OPIC to cure the non-compliance in a timely fashion

and in a manner that did not negatively impact the existing workforce. All other site-monitored projects

demonstrated a generally strong commitment to the OPIC worker rights requirements.

Environment: Environmental monitoring focuses on those projects that present the greatest

environmental and social risk. In FY 2008, priority was given to the monitoring of Category A projects,

which represented over 30 percent of site visits the Environment Group performed. During site

monitoring, approximately 82 percent of projects were found to be in compliance with OPIC covenants

and conditions pertaining to environmental and/or social considerations, and approximately 18 percent

were found to be deficient in some manner. By far, the majority of instances in which a deficiency was

noted involved a failure to submit required documentation or a required study in a punctual manner. In

these instances, the OIP Environment Group officer informed the project investor of the deficiency and

the appropriate documentation or study results were submitted shortly thereafter.

One project was found deficient in numerous areas related to environment, health and safety. During a

site visit conducted in February 2007, it was noted that the facility appeared out of compliance with a

number of the environmental conditions required by OPIC's contract with the investor. Subsequent

attempts to obtain additional monitoring data, reports, and other information and attempts to have the

investor provide a corrective action plan were unsuccessful and did not provide a convincing picture that

project was in or could come into compliance with the environmental provisions of it contract with OPIC.

Furthermore, information was obtained showing there were several government fines and a citizen

complaint regarding project operations. In June of 2008, OPIC hired a contractor to undertake a more

extensive environmental review of this facility. The consultant found numerous incidents of noncompliance. On January 15, 2009 OPIC sent notice to the investor that its insurance coverage was

terminated.

The following sections provide additional detail on the results of OPIC’s FY 2008 monitoring. 


OPIC Annual Policy Report 2008 27

FY 2008 Monitoring Observations

Latin America

In FY 2008 OPIC site monitored 18 projects in Latin American for statutory compliance. One project of

note is a honeydew melon and cantaloupe farm in Guatemala which is making efficient use of land in a

poor region that previously was significantly underutilized. The project provides employment to over

1,000 Guatemalans in the Ipala region who previously had limited job opportunities. All of these workers

are paid at or above minimum wage and receive training (at least 25 hours/year) and various other

benefits. While almost all of the project’s output is exported, these sales are a source of foreign currency 

for Guatemala. The project employs approximately 20 permanent workers, but has a minimum of 150

temporary workers on site at any time, with over 1,000 during the main harvest months. This is significant

as there is little to no other employment in the region.

Another Latin America project monitored in FY 2008 is involves a $15 million investment in regional

Paraguayan commercial and retail bank with an agricultural focus. With OPIC-backed financing, the bank

has been able to provide long-term loans to agribusiness companies in rural Paraguay. For example, the

bank is now able to offer tenors of up to five years under the OPIC-supported loan, where one-year

tenors were the norm prior to the OPIC support. As such, bank borrowers have been able to increase

their production and sell on to Paraguayan-based agro-processors that export to needy markets around

the world. The bank has been able to leverage its historical connections to the agribusiness sector to take

advantage of the world’s increasing demand for agricultural commodity products. 

Asia

OPIC monitored three projects in Asia this year. One of these projects is one of the first microfinance

institutions (MFI) established in the Philippines. By replicating the Grameen Bank lending-style, the MFI

has effectively targeted impoverished, rural communities by providing financing to women in numerous

provinces around the country. The MFI has created a successful model to easily provide financing in rural

communities through its unique structure which sends loan officers to isolated community centers, called

“barangays”, to meet with existing borrowers and generate new business through local outreach. The MFI 

keeps its product line simple and straightforward and is limited to two products: business loans and

emergency loans with a set interest rate repaid over a six-month or twelve month period. It has a very

low default rate, and based on past successes and strong product demand, the MFI has ambitious growth

plans for the future. The project provides a critical source of capital that will help augment the financial

sector in the Philippines. The MFI promotes a high-level of corporate governance, through auditing,

transparency, and receiving a rating from a microfinance credit rating agency. This project is sustainable

and the OPIC-supported capital is, in part, enabling the bank to continue on a strong growth trajectory

which will put financing in the hands of nearly 400,000 women entrepreneurs around the country. This

microfinance bank is one of the most effective microfinance institutions, in terms of utilizing a financially

viable model to successfully target rural borrowers, that has been monitored by OPIC to date.

Sub-Saharan Africa

OPIC monitored 15 projects in Sub-Saharan Africa in FY 2008. One of these projects involved a $250

million investment in a natural gas and crude petroleum extraction company in Cote d’Ivoire. The project

is a thriving business venture, from a financial, economic and developmental perspective. The company’s 

drilling efforts were successful early on, and subsequent exploration has found significant quantities of oil

and gas reserves on the concession. These reserves ensure a constant and considerable stream of

revenue flows for the project and CIE has signed a 20 year off-taker agreement with the investor.

The investment is having a positive economic impact, both in Cote d’Ivoire and in the U.S. The project

provides 75 percent of the natural gas needed to power Cote d’Ivoire’s national electric grid, and during 

the past five years, the supply of electricity has expanded to include a wider portion of the population

while also becoming more stable, contributing to economic growth and overall social development. The

investor has created numerous local jobs and provided a strong training program for these workers, good

benefits, and a local community outreach program that benefits numerous local groups. On average, the

project contributes $100,000 per annum to local community outreach programs. Also, the project

contributed nearly $300,000 to the local university to establish a doctoral program for local students
OPIC Annual Policy Report 2008 28

interested in studying energy sciences. This activity alone has had a significant impact for Ivoirian

students and provides a long-term boost to the creation of a skilled, local workforce.

In Kenya, OPIC provides an umbrella political risk insurance policy to a non-profit agency that provides

humanitarian services to refugees and victims of armed conflict worldwide. This agency employs 115

Kenyan nationals and two expatriates, as well as approximately 600 refugees to work on various projects,

from manual labor to staffing its administrative programs. Full-time employees are eligible for three

months of maternity leave, 24 days of annual leave and comprehensive health, accident and life

insurance. Employees working in the field receive meals and a housing subsidy. The agency has a fully

developed medical evacuation plan and security protocol.

Another project site monitored in FY 2008 is an OPIC private equity fund investment in a South African

company involved in the retailing of plumbing materials in the domestic market. The company appears to

be well-managed and maintains a close relationship with the OPIC-supported fund. The company’s 

internal human resources policies and overall management improvements stemming from the fund

investment could have lasting impacts for a new class of emerging professionals that work for the

company.

The firm has introduced performance management concepts and a 360 degree rating process that was

not existent before the fund’sinvolvement. Additionally, the company is working to bring on more black

management employees and has created an incentive program where black employees and staff will

receive a seven percent equity stake in the company along with an enforceable non-compete clause to

attract and retain quality staff. Although a secondary share purchase, the fund investment is not passive

in the sense that fund partner is heavily involved with company strategy and human resources decisions.

The company also supports a social investment policy aimed at combating the AIDS epidemic. The

company raised 120,000 Rand ($17,000) last year in support of this program. Lastly, the company offers

a housing support fund where employee provident fund savings are used as collateral. Use of this fund is

based on employees’ employment history, financial status, etc.

Another sub-Saharan project involved a $3.3 million investment to expand an international school in

Lusaka, Zambia and renovate the school’s library/media center, IT and science labs. Before the existence

of the school, it was difficult to attract high level expatriate management to Zambia because of the lack of

adequate schooling. With a strong international school, more top management comes to Zambia,

facilitating high level knowledge transfer to mid level local management. The quality of the school also

makes it easier for Zambians who have had success abroad to return to their native country and invest

and transfer the knowledge they have achieved in other parts of the world. The school appears well run

and provides a top level educational experience. There is significant enthusiasm from its board of

directors to continuously improve the school and make effective investments.

In Mozambique, OPIC provided financing support for the development of the Ibo Island Lodge, a small

ecotourism lodge. The project appears to have had a positive impact on the local communities through its

efforts on historic preservation, as well as job creation and training. Ibo Island Lodge employs a total of 40

permanent staff, 34 of whom were hired locally. Because there is no secondary school on Ibo Island, the

lodge provides extensive on-the-job training, including English lessons. Wages at the lodge are

competitive and all workers who are not from Ibo Island are given housing and two round trip tickets

home each year. Workers are also given three meals per day, one month of holiday leave, and are

eligible for personal loans from the company.

Middle East and North Africa (MENA)

OPIC monitored five projects in the Middle East and North Africa in FY 2008. Two of these projects

involve OPIC-supported microfinance banks in Jordan, both leaders in the MFI space and specifically

target low- income women borrowers. One of the MFIs has a particular interest in maintaining its outreach

to the most underserved in the market and its conscious decision not to increase its maximum loan

amount in 2008. This decision was taken due to increasing inflation, risk management prudence and a

concern about the financial health of its borrowers. In this case, bank management indicated that they
OPIC Annual Policy Report 2008 29

are placing extra emphasis on making sure that borrowers in an uncertain and inflationary economic

environment can service their loans. The other Jordanian MFI OPIC monitored has a formal CSR

outreach program that has been quite effective at addressing the primary and secondary school dropout

rate in Amman. In sum, both banks are professionally run institutions that dominate the Jordanian

microfinance landscape.

Central Asia

In FY 2008 five projects were monitored in Central Asia. One of these projects involves the construction

of a new hotel in Bukhara, Uzbekistan. Monitoring revealed that the project is financially successful even

though it is located in a difficult operating environment. The project has strong human capacity building,

local procurement, and corporate social responsibility impacts on the host country. It has created over 25

permanent local jobs in the host country, most of which are receiving strong training in hospitality and

customer service. All project funds have been spent in the host country, thus stimulating the construction

sector as well as the local agricultural and hotel supply sector.

The OPIC-supported investor has created and developed a successful chain of hotels throughout

Uzbekistan, due in large part to OPIC assistance. The hotel itself has become a leading place to stay in

Bukhara, and has established itself as a popular destination for foreign visitors. The investor’sclose

relationships with its tour operators ensure a steady inflow of tourists from abroad, and the company’s 

focus on providing superior service has given it a step up on its competition in the local hotel market.

The hotel has contributed to the development of the local economy by creating many new jobs, using

local farmers and businesses for ongoing operational needs. As a result of this project, more foreign

tourists are coming to Uzbekistan, where they spend $500 to $1,000 per trip. This influx of tourists

greatly benefits the local economy, as the tourists buy souvenirs and other goods from local artisans,

patronize local restaurants and cafes, and use the local transportation system. This also has had positive

foreign exchange impacts, as these foreign visitors are exchanging their foreign currency into local

currency. The investor said that his hotels have also stimulated competition among other hotels in the

country.

OPIC has made a positive contribution to this project by providing long term credit at lower than local

market interest rates. The local Uzbek banking system does not support small businesses, and securing

a local loan would have been very costly for the investor, due to high interest rates, corruption, and short

tenors. Had the investor not been able to secure an OPIC loan, the company would have tried to obtain

financing from local investors. The OPIC loan also paved the way for the company to obtain credit from

other international institutions and the investor recently secured financing from the European Bank for

Reconstruction and Development (EBRD) and the Asian Development Bank (ADB) for its other hotel

projects in the country.

OPIC also provided financing support to an international school in Tashkent to refurbish and expand its

campus. The school is considered is the only institution in the region to have both European and

American accreditation. Non-local teachers receive substantial benefits, including furnished housing and

utilities, a return ticket home, health insurance, disability benefits, life insurance, moving expenses, and

retirement contributions. All employees receive tuition waivers at the school for up to two of their children,

an annual consultation at the Tashkent International Medical Clinic, and can participate in various

professional development opportunities. The school’s bylaws provide for a comprehensive grievance 

process that aims to solve issues efficiently and prescribes specific steps towards remediation, such as

an established timeline, and the right to a hearing before the School Board.

As is evident from the selected project examples above, OPIC supports a wide array of developmental

projects in various sectors and industries. Site monitoring allows OPIC to document project compliance

with conditions precedent in their OPIC loan agreements and insurance contracts, and evaluate each

investment’s developmental impact. While the vast majority of projects site monitored are free of issues,

non-compliant projects are guided through a process to remedy their shortcomings. Additionally, the

entire site monitoring process serves to inform OPIC on the future support of investments across regions

and sectors worldwide.
OPIC Annual Policy Report 2008 30

Self Monitoring

The Self Monitoring Questionnaire (SMQ), required by contract/agreement since 1993, is completed by all

active OPIC investments.

In an effort to make OPIC’sinternal data management processes more efficient and to make procedures

as streamlined and clear as possible to OPIC investors, in FY 2008 OPIC launched the integrated SMQ

that better reflects the nature of OPIC’s supported projects while making the form more user-friendly. As

such, the SMQ is now divided into two sections. Users are required to only complete one section, not

both sections and in no case shall an OPIC investor have to complete both sections for the same project.

Section A of the SMQ is to be completed by all “bricks and mortar”OPIC Finance and Insurance projects

and OPIC Investment Funds and onlending facility/framework agreement subprojects. While Section A

contains roughly the same original content from the previous version of the SMQ, it has been improved to

reduce the burden on the investor while making data analysis easier for OPIC officers. Specifically,

Section A includes the following improvements:

 Addition of “check” boxes where the OPIC investor can simply mark the correct response instead 

of completing the answer in prose form. This step will significantly reduce the time it takes for the

OPIC investors to complete the form while improving the accuracy of responses.

 Streamlining of U.S. supplier and procurement information question (Section A –Part III). This

page has been simplified by asking only for most recent fiscal year data. In addition, we have

also added an example entry to facilitate OPIC investors’ ease of use.

 Addition of environment and workers and human rights questions. These questions have been

added to better track compliance with conditions precedent in OPIC loan agreements and

insurance contracts while improving the utility of the SMQ for the Environment and Workers

Rights/Human Rights disciplines in the Office of Investment Policy.

Section B is completed by OPIC-supported financial intermediary transactions as directed by OPIC staff.

The term “financial intermediary” refers to, but is not limited to, general lending banks, specialized lending

institutions, mortgage facilities, microfinance institutions, private equity funds, and other capital market

transactions.

Section B was developed as it became evident that the current SMQ for “bricks and mortar” OPIC finance 

and insurance projects was not responsive to the growing number of OPIC-supported financial

intermediary transactions. Section B also uses “check” boxes for the majority of its questions.

The analysis in this section is based on data obtained from approximately 247 SMQs, 186 of which are

Section A respondents and 61 of which are Section B respondents. Of these received in FY 2008, Table

1 below shows the percentage of OPIC-supported projects which had certain quantifiable developmental

impacts.
OPIC Annual Policy Report 2008 31

Table 5: FY 2008 Self-Monitoring Results

Capacity

Measured

Qualitative Monitoring18 Percentage of

Self- Monitored

Projects Reporting

Affirmative

Involve Other Federal/Regional/Multilateral Organizations 37.24%

Capital Mobilization

Involve a Public/Private Partnership 24.27%

Provide Overseas Training for Workers* 50.56%

Have Equal Employment Policy* 73.89%

Have Policies for Women’s Needs* 80.56%

Human Capital

Development

Provide Company Benefits 91.63%

Help the Local Community 66.53%

Corporate Social

Responsibility Compliance with Environment, Health, & Safety

Conditions 99.15%

Introduce Innovative Management Techniques* 43.33%

Introduce New Marketing Techniques* 30.56%

Introduce New Technology* 27.78%

Introduce New Products* 24.44%

Technology and

Knowledge Transfer

Lower Local Prices* 26.11%

Have a percentage of Local Ownership* 55.00%

Local Owner is a Small & Medium Enterprise* 25.00%

Help a Poor Region* 73.89%

Economic

Diversification

Strengthen the physical, financial or social infrastructure* 68.89%

Capital Mobilization

One of OPIC’s statutory objectives is to play a key role in leveraging private sector resources for 

development. The most obvious parameters to measure this is the involvement of non-OPIC project

financing and equity, the involvement of other development institutions, and the promotion of PublicPrivate Partnerships (PPPs) through the involvement of local development banks, civil societies and nongovernmental organizations.

Of the 2008 SMQs received by OPIC, approximately 37 percent reported the use of non-OPIC investment

sources such as USAID, IFC, ADB, and EBRD, or a host country government entity, civil society or a nongovernmental organization. In 2008, about 24 percent of OPIC supported projects involved a PPP.

Examples of local government support may include a local government agency offering technical

assistance, or a state agency providing construction support. The idea behind PPPs is to bring about

local ownership in the project and to increase the number of stakeholders which would amplify the

projects significance and support.

18 Indicators noted above with an asterisk only contain information taken from Section A of the SMQ, as Section B does not request

this information.
OPIC Annual Policy Report 2008 32

Human Capital Development

Employment generation is one of the key indicators OPIC uses to evaluate the developmental impact of

projects it assists. In 2008, OPIC-supported projects created approximately 67,942 local jobs or on

average 284 local employees per self-monitored project. The added employment contributed to the

growth of the local economy generating around US$52,586 of revenue per employee.

The aim is not just to create jobs, but also to increase the overall skill level of the workforce through

proper training and development. In 2008, SMQ respondents reported approximately 2,879 local

employees received formal training and around 51 percent reported employees receiving training abroad.

When these employees are trained in their various job aspects outside of their home country, they are

able to diffuse the same knowledge that they received abroad to the local employees, increasing the

technical knowledge base of the population.

Company and employee benefits are another indication of a maturing employment market. In 2008, 92

percent of the SMQ respondents offered various company benefits to its employees such as

transportation or meal subsidies, pension plans, medical coverage, etc. An equal employment policy is a

way to protect discrimination on the basis of race, color, gender, religion, etc.; approximately 74 percent

of SMQ respondents had an equal employment policy over and above that required by local law. Finally,

about 81 percent of OPIC-supported projects had special policies and benefits in place specifically to

benefit women in their workplaces.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) defines organizations taking responsibility for the impact of their

activities on customers, employees, shareholders, communities and the environment in all aspects of

their operations. OPIC evaluates CSR in its projects by identifying socially responsible and

environmentally conscious benefits that are offered to the greater community. For example, in 2008, 99

percent of the SMQ respondents sought to improve the environment through compliance with

environment, health and safety conditions. CSR also includes community outreach programs whereby

the foreign enterprise allows public access to company-sponsored clinics and schools, funds community

centers, sponsors sports teams and cultural events, and provides financial support for local foundations

and organizations. In 2008, 67 percent of the SMQ respondents were involved in community outreach

programs through application of various programs.

Technology and Knowledge Transfer

These transfers include the dissemination of innovative management practices, marketing and distribution

expertise, and adoption of new production technologies. Often they lead to the development and

introduction of new products or services into emerging markets. These transfers frequently have a

substantial effect on the host country by improving worker productivity levels and the quality of other

factors of production. Moreover, additional impacts may be created through the diffusion and adoption of

new technologies and ideas by other firms in the host country due to the implementation of these ideas by

OPIC-supported investors.

OPIC seeks to gauge such transfers of technology and knowledge in its support. For example, in 2008,

43 percent of SMQ respondents introduced innovative management techniques in the host country while

31 percent introduced novel marketing methods. Furthermore, almost 27 percent of OPIC-supported

projects sought to introduce new technologies in the host country, while almost 24 percent of projects

introduced new products in foreign markets. Such practices assist the foreign enterprises trying to seek a

competitive edge in the global market, lead to the strengthening of national capacities through

development of a domestic technology base, and can result in increased operating efficiencies. This

enhancement of productivity can be reflected in lower local prices and in 2008, 26 percent of OPICsupported projects reported that they offered lower prices in the market than their main competitors.
OPIC Annual Policy Report 2008 33

Economic Diversification

OPIC encourages private sector ownership of projects in order to promote entrepreneurial growth and

sustainable development around the world. In 2008, approximately 23 percent of OPIC-supported

projects were located in Africa and the Middle East, 19 percent in Asia and the Pacific, 34 percent in

Europe and Eurasia, and 25 percent in Latin America and the Caribbean. Moreover, OPIC encourages

economic diversification of the private sector as it decreases the local economy’s dependence on 

international market swings and on domestic business cycles; and brings about overall macroeconomic

stability.

OPIC measures the economic diversification impact of its investments through various indicators. This

can be achieved by developing a new sector of economic activity such as introducing a home mortgage

financing program in a country without such lending facilities. OPIC’s products also extend credit to 

SMEs in order to encourage private sector investments in entrepreneurial endeavors which would lead to

further economic diversification. As such, approximately 55 percent of OPIC’s projects have a 

percentage of local ownership and around 25 percent of these local owners are SMEs. Finally, in order to

facilitate widespread development in the country, OPIC recognizes the need for rural development in

order to avoid creating or exacerbating income and developmental disparities between thriving cities and

rural communities. Approximately 74 percent of OPIC-supported projects reporting in FY 2008 were

located in poor and affected regions in order to promote overall societal welfare and prosperity. Also,

around 69 percent of OPIC’s projects worked to strengthen the physical, financial, or social infrastructure, 

making infrastructure more accessible and affordable to all segments of the population.
OPIC Annual Policy Report 2008 34

VI. EXHIBITS

9. U.S. Employment and Associated Effects of OPIC-supported Projects

10. Breakout of Final Third Country Destination of the Output of OPIC-supported Projects

11. U.S. Employment Effects and Host-Country Location of OPIC-supported Projects

12. Methodology for Calculating Economic/Employment Benefits

13. Development Matrix Methodology

14. Financial Services Development Matrix Methodology

15. Methodologies for Site Monitoring

16. PACE Inventory Report
OPIC Annual Policy Report 2008 35

EXHIBIT 1: U.S. EMPLOYMENT & ASSOCIATED EFFECTS OF OPIC-SUPPORTED

PROJECTS, FY 2008 (PROJECTIONS)

(All Dollar Figures are in Thousands)

Number U.S. Effect on

Industry of Current Account Final Destination of Project Output 2/ U.S. Effect on U.S. Employment 1/ 3/ U.S. Trade

Sector Projects Inflows 1/ Host Country U.S. 3rd Country Procurement 1/ Initial Operating Total Balance 1/

A. Projects with Positive Effects on Employment 4/

Agribusiness 1 $0 $1,200 $10,800 $0 $6,500 0 94 94 ($54,000)

Communication 4 $256,850 $103,645 $0 $0 $229,974 274 1,251 1,524 $256,850

Manufacturing 1 $13,842 $0 $0 $0 $1,129 10 0 10 $13,842

Other Services 4 $149,228 $132,824 $0 $0 $129,578 41 1,485 1,527 $149,228

Positive Total 10 $419,920 6/ $237,669 $10,800 $0 $367,180 325 2,830 3,156 $365,920

B. Projects with Neutral Effects on Employment 7/

Agribusiness 2 $0 $250 $0 $7,400 $0 0 0 0 $0

Communication 5 $238 $220,175 $0 $52,200 $238 2 0 2 $238

Financial Services 34 $650 $531,696 $0 $71,585 $706 3 3 6 $650

Housing Construction 4 $433 $22,637 $0 $0 $433 1 4 5 $433

Manufacturing 5 $1,940 $42,258 $0 $41,961 $1,015 11 0 11 $1,940

Services 10 $240 $237,810 $0 $0 $240 0 2 2 $240

Transportation 2 $0 $315,900 $0 $0 $0 0 0 0 $0

Neutral Total 62 $3,501 $1,370,725 $0 $173,146 $2,632 18 8 26 $3,501

C. Projects with Negative Effects on Employment 8/

Negative Total 0 $0 $0 $0 $0 $0 0 0 0 $0

Net FY Total 72 $423,420 $1,608,394 $10,800 $173,146 $369,813 343 2,839 3,182 $369,420

1/ Total effect during first five years of project operation.

2/ Average annual effect during first five years of project operation.

3/ Person years of employment.

4/ Projects with a U.S. employment effect of 2 or more jobs (10 person years or more of employment during the first 5 years of project operation).

5/ There is one project within the Agribusiness sector and in the Infrastructure sector in Section A (positive effects). To protect business confidentiality,

the data for these projects is included in the data for the Manufacturing sector.

6/ Totals may differ slightly from the sum of individual sectors due to rounding.

7/ Projects with a U.S. employment effect of plus or minus 2 jobs (plus/minus 10 person years of employment during the first 5 years of project operation).

8/ There were no projects supported in fiscal 2008 that resulted in the loss of any U.S. employment.
OPIC Annual Policy Report 2008 36

EXHIBIT 2: BREAKOUT OF FINAL THIRD COUNTRY

DESTINATION OF THE OUTPUT OF OPIC-SUPPORTED

PROJECTS, FY 2008 (Projections)

PROJECTS WITH POSITIVE EFFECTS ON U.S. EMPLOYMENT 1/

Agribusiness

Sector Total $0

Minerals and Energy

Sector Total $0

Manufacturing

Sector Total $0

Services

Sector Total $0

TOTAL POSITIVE

EFFECTS $0

1/ There were no projects with positive U.S. employment effects that had sales to third countries.

There were no projects supported in fiscal 2008 that resulted in the loss of any U.S. employment.

Continued on next page
OPIC Annual Policy Report 2008 37

EXHIBIT 2 (continued): BREAKOUT OF FINAL THIRD COUNTRY DESTINATION OF

THE OUTPUT OF OPIC-SUPPORTED PROJECTS, FY 2008 (Projections)

PROJECTS WITH NEUTRAL EFFECTS ON U.S. EMPLOYMENT 3/

Agribusiness

China $6,000,000

India $200,000

Italy $600,000

Pakistan $200,000

United Kingdom $400,000

Sector Total $7,400,000

Minerals & Energy

Sector Total $0 2/

Manufacturing

Africa Regional $6,179,400

Algeria $16,947,400

Europe Regional $3,653,900

Libya $11,015,000

Mauritania $1,719,000

United Kingdom $2,446,100

Sector Total $41,960,800 2/

Services

Botswana $6,000,000

Egypt $1,294,117

El Salvador $5,200,000

Guatemala $17,400,000

Guinea $31,620,000

Honduras $9,000,000

Jordan $1,941,176

Kenya $1,500,000

Lesotho $3,000,000

Malawi $2,000,000

Nicaragua $3,500,000

Rwanda $3,250,000

Sierra Leone $20,580,000

Tanzania $6,250,000

Uganda $4,250,000

Zambia $7,000,000

Sector Total $123,785,293 2/

TOTAL NEUTRAL

EFFECTS $173,146,093

FY TOTAL $173,146,093

2/

3/ Represents projects with a U.S. employment effect of plus or minus 2 jobs (plus/minus 10 person years of

employment during the first 5 years of project operation). There were no projects supported

in fiscal 2008 that resulted in the loss of any U.S. employment.

Totals may differ slightly from the sum of individual countries due to rounding.
OPIC Annual Policy Report 2008 38

EXHIBIT 3: U.S. EMPLOYMENT EFFECTS AND HOST-COUNTRY

LOCATION OF OPIC-SUPPORTED PROJECTS, FY 2008

A. PROJECTS WITH POSITIVE EFFECTS ON EMPLOYMENT 1/

COUNTRY/REGION AGRICULTURE

MINERALS &

ENERGY MANUFACTURING SERVICES TOTAL

Africa Regional 1 1

Liberia 1 1

Total Sub-Saharan Africa 0 0 0 2 2

A bania 1 1

Russia 2 2

Total Europe 0 0 0 3 3

Latin America Regional 1 1

Guatemala 1 1

Mexico 1 1

Total Latin America 1 0 0 2 3

Iraq 1 1

Total Middle East & N. Africa 0 0 1 0 1

Afghanistan 1 1

Total South Asia 0 0 0 1 1

TOTAL POSITIVE 1 0 1 8 10

1/ Projects with a U.S. employment effect of 2 or more jobs (10 person years or more of employment during the first

five years of operation). The vast majority of projects were in the services sector. There were no projects in the minerals and

energy sector. Furthermore, there were no projects supported in 2008 that resulted in the loss of any U.S. employment.

Continued on next page
OPIC Annual Policy Report 2008 39

Exhibit 3 (cont): U.S. EMPLOYMENT EFFECTS AND HOST COUNTRY LOCATION OF OPIC-SUPPORTED PROJECTS

B. PROJECTS WITH NEUTRAL EFFECTS ON EMPLOYMENT 1/

COUNTRY/REGION AGRICULTURE

MINERALS &

ENERGY MANUFACTURING SERVICES TOTAL

Africa Regional 3 3

Central African Republic 1 1

Liberia 2 2

Mauritania 1 1

Nigeria 1 1

South Africa 5 5

Total Sub-Saharan Africa 0 0 0 13 13

A bania 1 1

Moldova 1 1

Russia 5 5

Total Europe 0 0 0 7 7

Afghanistan 2 1 3

Bangladesh 1 1

India 1 1

South Korea 1 1

Pakistan 1 1

Sri Lanka 1 1

Total East & South Asia 2 0 1 5 8

1/ Projects with a U.S. employment effect of 2 or more jobs (10 person years or more of employment during the first

five years of operation). The vast majority of projects were in the services sector. There were no projects in the minerals and

energy sector. Furthermore, there were no projects supported in 2008 that resulted in the loss of any U.S. employment.

Continued on next page
OPIC Annual Policy Report 2008 40

EXHIBIT 3 (cont): U.S. EMPLOYMENT EFFECTS AND HOST COUNTRY LOCATION OF OPIC-SUPPORTED PROJECTS

B. PROJECTS WITH NEUTRAL EFFECTS ON EMPLOYMENT 1/ (continued)

COUNTRY/REGION AGRICULTURE

MINERALS &

ENERGY MANUFACTURING SERVICES TOTAL

Brazil 4 4

Costa Rica 3 3

Ecuador 1 1

Honduras 2 2

Mexico 5 5

Paraguay 3 3

Peru 2 2

Total Latin America 0 0 0 20 20

Algeria 1 1

Iraq 1 1 2

Jordan 1 1

Lebanon 2 2

Tunisia 1 1

Total Middle East & N. Africa 0 0 2 4 7

Azerbaijan 1 1

Kazakhstan 2 2

Turkey 2 2 4

Total Western & Central Asia 0 0 2 5 7

TOTAL NEUTRAL 2 0 5 54 62

1/ Projects with a U.S. employment effect of 2 or more jobs (10 person years or more of employment during the first

five years of operation). The vast majority of projects were in the services sector. There were no projects in the minerals and

energy sector. Furthermore, there were no projects supported in 2008 that resulted in the loss of any U.S. employment.

Continued on next page
OPIC Annual Policy Report 2008 41

EXHIBIT 3 (cont): U.S. EMPLOYMENT EFFECTS AND HOST COUNTRY LOCATION OF OPIC-SUPPORTED PROJECTS

C. PROJECTS WITH NEGATIVE EFFECTS ON EMPLOYMENT

1/

COUNTRY/REGION AGRICULTURE

MINERALS &

ENERGY MANUFACTURING SERVICES TOTAL

TOTAL NEGATIVE 0 0 0 0 0

D. TOTAL PROJECT EFFECTS ON EMPLOYMENT

TOTAL EFFECTS:

Positive, Neutral

& Negative

ALL OPIC COUNTRIES 3

1/ Projects with a U.S. employment effect of 2 or more jobs (10 person years or more of employment during the first

five years of operation). The vast majority of projects were in the services sector. There were no projects in the minerals and

energy sector. Furthermore, there were no projects supported in 2008 that resulted in the loss of any U.S. employment.

0 6 62 72
OPIC Annual Policy Report 2008 42

EXHIBIT 4: METHODOLOGY FOR CALCULATING U.S.

EMPLOYMENT EFFECTS

Each project seeking OPIC support is reviewed on a case-by-case basis to estimate its U.S. employment

effects. OPIC obtains estimates from the investor of the projected initial and operational procurement

from the United States by value and specific type of good or service. The U.S. employment generated by

a project’s initial and five-year operational procurement of goods and services is estimated by considering

the direct and indirect employment necessary to produce those goods and services. That is, the

employment effects incorporate the direct employment necessary to produce the procured goods and

services, as well as the indirect employment required for the production of the associated intermediate

inputs.

OPIC details each type of U.S. good or service procured for each project and calculates the employment

effect in that industrial sector as well as in the sectors that supply necessary components or inputs. By

using this methodology, OPIC is able to ascertain employment-generation levels with greater precision

than if it used an across-the-board average for all U.S. exports. By including indirect effects, OPIC's

employment figures present a more accurate picture of the benefits accruing to U.S. workers from the

procurement of goods and services. Finally, to confirm its estimates, OPIC monitors actual economic

effects after project start-up and throughout the life of the OPIC’s involvement with the project. OPIC’s 

monitoring is described in further detail in the Monitoring section.
OPIC Annual Policy Report 2008 43

EXHIBIT 5: OPIC’s DEVELOPMENT MATRIX EXPLAINED

OPIC supports projects that are likely to serve as foundations for long-term economic growth, especially

those that improve upon the host country’s infrastructure and provide the basic human necessities of 

shelter, food, water and health care – these types of projects are assessed on OPIC’s standard 

development matrix. Through this development impact assessment, OPIC evaluates and scores every

proposed project in 26 key areas across three broad categories that objectively quantify its expected

contribution to host-country development.

 Category I covers job creation, training, local procurement, corporate social responsibility, and

equal employment opportunity –five highly-weighted impacts that should be demonstrated by any

project, regardless of sector or the level of economic development within the host country.

 Category II covers 20 additional development indicators within such broad areas as human

capacity building (degree of training), private sector development, resource leveraging, social

effects, infrastructure improvements, macroeconomic and institutional effects, and

technology/knowledge transfer. The degree to which projects demonstrate these additional

developmental benefits depends significantly on the features of a given project.

 Category III adjusts for the host country’s per capita GNP, reflecting both OPIC’s priority to steer 

investment into the poorest countries and the reality that nations most in need often lack the

capacity to support more developmentally sophisticated investments.

A project must score at least 50 out of 160 possible points on the matrix to be considered developmental

and clearly eligible for OPIC support. A score of 100 to 160 qualifies a project as highly developmental.
OPIC Annual Policy Report 2008 44

EXHIBIT 6: OPIC’s FINANCIAL SERVICES DEVELOPMENT 

MATRIX EXPLAINED

As more of OPIC’s projects focus on financial services, it became evident that in many cases the 

development matrix, originally created for traditional “bricks and mortar” projects, did not capture

accurately the developmental impact of these projects. A new model was developed tailored to

assessing the development impacts of financial services projects. The general structure of the financial

services matrix is similar to the standard development matrix, but includes core indicators that are specific

to financial services-related projects. These core indicators result in a development matrix that is a more

comprehensive and accurate measurement of the developmental impact of financial services projects.

The types of projects that are scored on the financial services matrix include framework agreements,

investment funds, mortgage finance and securitization projects, microfinance facilities, and general bank

lending.

To support its developmental mission, OPIC evaluates and scores every proposed project in 11 key areas

across three broad categories that objectively quantify its expected contribution to host-country

development.

 Category I covers financial instrument innovation or augmentation, multiplier/spillover effects,

corporate governance, and capital mobilization and complementarity –four highly-weighted

impacts that should be demonstrated by any project, regardless of sector or the level of economic

development within the host country.

 Category II covers six additional development indicators within such broad areas as sustainability,

economic diversification, human capacity building (job creation and training), social effects,

macroeconomic and institutional effects, and technology/knowledge transfer. The degree to

which projects demonstrate these additional developmental benefits depends significantly on the

features of a given project.

 Category III adjusts for the host country’s per capita GNP, reflecting both OPIC’s priority to steer

investment into the poorest countries and the reality that nations most in need often lack the

capacity to support more developmentally sophisticated investments.

A project must score at least 50 out of 160 possible points on the matrix to be considered developmental

and clearly eligible for OPIC support. A score of 100 to 160 qualifies a project as highly developmental.
OPIC Annual Policy Report 2008 45

EXHIBIT 7: OPIC SITE MONITORING METHODOLOGY

(Statutory Disciplines: Environment, U.S. Economic Impact,

Labor and Human Rights, Host Country Developmental

Impact)

OPIC performs comprehensive and integrated monitoring to evaluate the U.S. and host-country economic

effects as well as the environmental, health and safety (EHS) and labor and human rights impacts of its

projects. OPIC’s integrated project monitoring is designed to ensure that each project complies with 

statutory and contractual requirements in these areas. Project monitoring consists of site visits to

projects, in addition to the analysis of information submitted annually by investors in the form of an online

“Self Monitoring Questionnaire.” As of 1993, Self Monitoring Questionnaires are required of all investors

per the OPIC finance agreement or insurance contract.

Using sampling theory, OPIC identifies investment projects that OIP staff across all disciplines will site

monitor during a three-year period, drawing active projects that exhibit specific characteristics within the

portfolio. OPIC currently is site monitoring projects that were supported by OPIC during fiscal years 2003

through 2005. The sample of projects selected for site monitoring includes: (1) a random sample of

projects supported by the agency during a three-year period or “monitoring round”; (2) projects supported

during this period that are sensitive with respect to U.S. economic effects, labor and human rights or

environment, health and safety issues; and (3) projects from other years that have either not been sitemonitored in the past or that fit in logistically with randomly sampled project in similar regions or countries.

This “sensitive project” sample ultimately provides a conservative bias to the monitored results.

Labor and Human Rights

OPIC monitors projects for compliance with contractual worker rights requirements through a combination

of annual reporting by companies as well as site visits to both random and selected samples of projects.

OPIC targets its worker rights monitoring efforts toward countries and sectors with a higher potential for

possible worker rights violations.

Because certain areas of worker rights violations may be difficult to identify from a typical project site

monitoring visit, in instances when OPIC determines further investigation is warranted for a project, OPIC

employs trained and certified labor rights auditors, usually recruited from the NGO community with

reputations for impartiality and credibility among both the labor and business communities, to perform a

full project audit. The auditors spend as much time as necessary to investigate thoroughly potential

violations. At a minimum, an audit would include independent and confidential interviews with

employees, management, government officials and knowledgeable local NGOs and organized labor

groups.

In order to improve its monitoring process, the Labor and Human Rights Group continues to review and

refine its on-site monitoring strategies, as well as its contractual instruments to communicate better to

potential investors OPIC’s expectations with respect to worker rights and how worker rights best can be

protected under diverse project and corporate structures, particularly projects involving contractors and

subcontractors.
OPIC Annual Policy Report 2008 46

Environment, Health, and Safety (EHS)

With respect to EHS issues, projects selected for site monitoring in a given year are prioritized based on

an environmental and social risk rating. Environmental and social risk ratings are based on several

factors including project sensitivity, host country context, project-level environmental and social

management system, and investor experience in implementing projects of similar complexity. OPIC

assesses the EHS and social performance of a project against applicable benchmarks including contract

conditions, international standards and guidelines, and industry best practices. Factors included in the

performance assessment include an evaluation of the project’s environmental and social management 

systems, the effectiveness of mitigation, including pollution controls in risk reduction, and the efficiency of

the operations, including energy efficiency.

U.S. Economic Impact

All projects visited are evaluated for their actual impact on the United States and host country economies,

including the employment generation effects of the investments. Those projects deemed sensitive with

respect to U.S. economic effects are visited to ensure that they are not negatively impacting the U.S.

economy. This exercise includes verifying export levels to the U.S. (if any) or to other countries,

calculating the U.S. balance of payments impact, and verifying compliance with any restrictions put

forward in the OPIC loan agreement or insurance contract (e.g. restrictions on exporting to the U.S. or

significant U.S. export markets).

Developmental Impact

Regarding host country economic impact, projects are reviewed across the same criteria as used at the

time of project approval. Thus, an “apples-to-apples” comparison can be made between original 

estimates and actual operations. For example, if a project originally expects to hire 100 local workers,

actual employment numbers are verified and compared to the forecast. Additionally, if a project is

expected to build a school for the children of its employees, this will be verified. Other developmental

impacts not identified or anticipated at the time of application also are evaluated and quantified during site

monitoring. Finally, the project is scored using actual findings against the initial developmental impact

evaluation using the same criteria projected in the project’s original OPIC clearance. 
OPIC Annual Policy Report 2008 47

Exhibit 8: PACE Report
OPIC Annual Policy Report 2008 48

007 Greenhouse Gas Emiss ons nventory Repor

pared fo

Overse t t nt Corpo tion

March 2009














*













*

* Information has been Redacted in accordance with the two principled exceptions of the Foreign Aid Transparency and Accountability Act 

(FATAA) of 2016; including the health and security of implementing partners, as well as national interest of the United States.