OPIC is Wrong to Position Itself as the “We’re Not China Development Finance Agency”
Armed with $60 billion of new funding, a new leader and a new set of alliances with its peer agencies in Canada and the EU, the U.S. Overseas Private Investment Corporation (OPIC) is positioning itself for Washington to once again become the unrivaled leader in development finance.
In Africa, OPIC has already started to lend, funding three projects with an estimated $100 million of financing and they’re projected to spend an additional $12.4 billion on the continent, according to Bloomberg.
To understand how OPIC is selecting projects to finance in Africa and elsewhere, it’s worth considering the five principles that the agency says guides its lending decisions:
- The sovereignty of the host nation
- Environment protection
- Local job creation
- Transparency
- Sustainability
Sure, these laudable principles that pretty much everyone agrees is what should be done (except for the transparency one, I suspect that even the Chinese government would probably sign on to these as well).
But there’s a problem.
OPIC continues to define itself as “we’re not China development finance agency.” It’s likely not a coincidence that OPIC’s core values match word for word the very same criticisms that come from the State Department about Beijing’s “debt trap diplomacy” in developing countries. This is a strategic mistake.
Just as it is a bad idea for corporate brands to allow competitors define them, the same is true in geopolitics. OPIC didn’t have to say that each of their 5 principles is the opposite of what they perceive China to be doing with its development finance strategy in Africa, we all can see it.
This is too bad because OPIC really does stand for something radically different than what China is offering the world but yet because of the U.S. government and OPIC’s muddled communications strategy that message is lost entirely. First and foremost, OPIC is not a rival or alternative to China. The two are actually far more complementary to one another than competitors with each other.
“As long as you define yourself against a competitor, your identity is tethered to theirs and will always be limited. “ — Jasmine Mina, brand strategist and author of The 16 Rules of Brand Strategy
While China’s focus remains on high-value, large scale, state-led infrastructure projects like roads, bridges, airports and ports, OPIC will focus on smaller, private-sector enterprises that struggle to get funding from traditional sources of capital. Sure, from time to time, there may be some overlap between Chinese and OPIC-funded initiatives, but for the most part they are quite distinct from one another.
The other issue is scale. OPIC was not funded to compete head on with the Chinese. Sure, $60 billion is a lot of money to be allocated for a development finance agency that just months before the passage of the BUILD Act that provided the new funding, the agency was actually targeted to be shuttered by the Trump administration. But that $60 billion has to go a long way, financing projects around the world, not just in Africa. The Chinese, in contrast, have allocated $60 billion in 2015 and then again in 2018 just for Africa. Dollar for dollar, the U.S. and China are not competitors, so why even frame it that way?
Sure, China plays well in Washington but…
It made all the sense in the world to position OPIC as the “we’re not China development finance agency” in 2018 when the BUILD Act was making its way through Congress. Challenging China’s rising in influence in Africa, Latin America and elsewhere has a lot of currency in the U.S. capitol, so politically, that made a lot of sense.
“The US has a unique opportunity to lead development finance institutions (DFIs) in streamlining the fundraising process to provide increased, broader capital to African markets, helping African businesses and diversifying US portfolios.” — Aubry Hruby, Senior Fellow at the Atlantic Council
But now that the BUILD Act passed and OPIC has its second-lease on life, it’s time to move on. Forget about China. Really. Don’t talk about the Chinese implicitly or explicitly. Instead, communicate a positive vision for what you are going to offer, show don’t tell how a private-sector led financing strategy is an effective way to fund innovation and sustainable development — the results will then speak for themselves.
So, my bottom line advice for OPIC’s new chief: tell your staff and stakeholders along Pennsylvania Avenue to forget about China and just get down to work investing in great, innovative companies that are starved for capital.
Join the Discussion
Do you agree that OPIC should stop positioning itself in relation to China or do I have it all wrong? Let me know what you think. I’d love to discuss this more in detail with you.
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Twitter: @eolander | @stadenesque
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