Press Release
Friday, June 6, 2008
OPIC PROVIDES $250 MILLION FOR SMALL BUSINESS LENDING IN SOUTH AFRICA
CAPE TOWN, South Africa – Robert Mosbacher, Jr., President and CEO of the Overseas Private Investment Corporation (OPIC), announced today that OPIC would provide up to $250 million in financing to help banks and other financial institutions in South Africa expand their lending to small businesses. Mosbacher was joined at the announcement by South African Deputy President Phumzile Mlambo-Ngcuka and U.S. Ambassador to South Africa Eric M. Bost.
Through the project, OPIC’s support will help South African financial institutions increase not only the provision of short-term working capital for small businesses, but also long-term financing to help facilitate investment in plants and equipment they need to sustain growth and create jobs.
OPIC’s support is expected to generate at least $500 million in total investment in South African small businesses, new loans to at least 10,000 small businesses, and a minimum of 50,000 new jobs.
“Small businesses create the vast majority of jobs in every economy across the globe. In this respect, South Africa is no different: fostering an environment where small businesses can be started easily and grow rapidly is one of the most important ways to create jobs in South Africa and give people opportunity.” Mosbacher said
“Today, access to credit for small businesses in South Africa is limited. This is in spite of the Government’s efforts to address this need and the growing willingness of financial institutions in the private sector to move into this space,” Mosbacher added. “What OPIC proposes to do in this partnership with USAID and various South African financial institutions is to accelerate the process by sharing some of the risk.”
Mosbacher said that one of the first financial institutions OPIC expects to support under this initiative is Blue Financial Services, a South African financial institution. Blue Financial has already established a strong track record in providing microfinance in South Africa and other African countries, and it has recently introduced a small business lending program that it intends to expand rapidly. OPIC financing will enable Blue Financial to meet the near-term financing needs of many more small businesses than would have otherwise been possible.
OPIC was established as an agency of the U.S. government in 1971. It helps U.S. businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment, and supports U.S. foreign policy. Because OPIC charges market-based fees for its products, it operates on a self-sustaining basis at no net cost to taxpayers.
OPIC’s political risk insurance and financing help U.S. businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. Over the agency’s 37-year history, OPIC has supported $177 billion worth of investments that have helped developing countries to generate over $13 billion in host-government revenues and create over 800,000 host-country jobs. OPIC projects have also generated $71 billion in U.S. exports and supported more than 271,000 American jobs.