Mimi Alemayehou’s Remarks at the 2012 Global Diaspora Forum


Good morning, everyone.  Thank you.  It’s great to be here with all of you today at the second annual Diaspora Conference.  I also had the pleasure of being at last year’s event.  And as Maura said, as a member of the diaspora myself, I’m quite passionate about all the discussions that will take place today.

I think a few years ago the word diaspora tended to be sort of applied in the context of cultural or political connection, and I’m really happy that the last several years, however, have increasingly put diaspora and economic growth in the same sentence.  I think several studies by the World Bank, McKensey and others have documented the dramatic contributions of remittances by members of the diaspora to their countries of origin.

The diaspora do so much more than just send money home, as Dr. Shah just stated, even though I myself sent money home to my grandmother until a couple of years ago.  Today’s topic is, therefore, particularly timely.  From my standpoint, this has been very interesting for OPIC, the Overseas Private Investment Corporation, where the diaspora are increasingly becoming our important client base.

A little background on OPIC, for those of you not familiar with the institution.  OPIC is the U.S. government’s development finance institution.  It has been around for about 40 years.  We provide loans, guarantees and risk mitigation products like political risk insurance to companies, entrepreneurs, NGO’s that pioneer investment in developing nations.

OPIC focuses working with U.S. entities, but this can mean a U.S. citizen or even a permanent resident who’s a green card holder.  Today we have about 15 billion in exposure in about 100 countries; evenly spread across regions of the world.  We take pride in being very nimble, flexible and ready to take risks that commercial banks won’t, and developing with our clients the kind of creative and accommodating structures that investing in frontier markets require.

By the way, Dr. Shah is actually on our board, so he also gives us direction on the kinds of stuff that we should be doing.

At the same time, we believe in taking prudent risks.  That’s why our portfolio continues to be profitable and we turn in a profit to the U.S. Treasury every year.  And in more than 40 years of OPIC’s history, we’re very proud to say that we’ve written off less than 1.5% of lending and less than 0.7% of our insurance exposure.

I think I would be in trouble with my boss or CEO Elizabeth Littlefield if I didn’t say OPIC is self-sustaining, and we do good while making money.  How about that?

We are, of course, firm believers in the power of the diaspora.  I mean, you didn’t have to convince me that.  We put funds on the line to back that up.  We have worked with diaspora entrepreneurs like yourself all over the world.  We have seen how pivotal your work can be for your home countries, just as it has been valuable to the U.S. economy.  I think the value is illustrated by the fact that U.S. Hispanics control one trillion dollars in purchasing power in the United States.  That’s pretty powerful.

I think there are a few reasons why the diaspora entrepreneurs are becoming an important class of investors and important partners for us at OPIC.  First, I think they have a much better understanding of the risk assessment capability of their country, which makes them less risk averse through the opportunities that appear kind of risky to the average investor.  Time and time again, across sectors and across regions, we have seen diaspora entrepreneurs to be among the first investors into a country after a conflict or a recession or difficult period, creating confidence and a demonstration effect that attracts others to follow their lead.

Soon after the Arab Spring, the first entrepreneurs that were knocking the doors at OPIC were the Tunisian-Americans or Egyptian-Americans that were really bullish on their new economies opening up, and they wanted to do something way before the dust settled while other investors waited.

Second, their personal I think attachment and commitment to their country of origin makes them into investors with a much longer-term outlook, which often is very critical, particularly when you’re making long-term investments in infrastructure. And entrepreneurs we find investing in their home country are usually very hands-on.  You engage your investments on a very personal level, you make long-term commitments; you bring knowledge and expertise home.  You, the diaspora, tend to draw very deeply on your knowledge of local markets and needs.  You invest also in local talent.  You’re savvy about credit and country risks.

My own brother moved back to Ethiopia a few years ago.  Something I never imagined would happen.  It took him about five years to get a broadcasting license from the Ethiopian government, but he did not pack up and move after the first few rejections, because he had a very long-term outlook and connection to the country.  Not to mention, he’s quite a stubborn guy.

And third is, I think once the investment has been made, the diaspora investors also have a much easier time developing the local relationship and reflexes that I think are quite essential to making a long-term success of the investment.

And the fourth reason I think is in situation when also the project faces great difficulties, the diaspora investors generally show greater tenacity and resilience.  The bottom line is, if you’re an investor, as we are at OPIC, investing alongside a diaspora entrepreneur will increase our comfort level before we even sign the check.

That is why when we were approached by the State Department, we were more than willing to carve out $150 million for qualifying winners of the business competition for the diaspora-led investment in Latin America and the Caribbean.  One hundred million will be for the IdEA Program, with the IDB and other important partners; $50 billion has already been committed through CIM, the Caribbean IdEA Marketplace.  And I had the pleasure of being in Jamaica, of all destinations to go to, with Kris Balderston for the official launch of the CIM event.

For OPIC there is no such thing as a typical diaspora-drive project.  We don’t have preconceived notions about size, sector or region.  We’re open to working with big companies, small businesses, individuals and even NGO’s.  Last year, OPIC’s board signed off on two impact investment funds led by Mexican-Americans.  One will invest growing capital in SME’s in Mexico and others led by Roy Sosa of MPower Ventures provides financial services to people in countries across the region.

In Afghanistan, OPIC has approved $68 million in financing, partnered with $10 million grants from USAID to Afghan Growth Finance, a financial institution led by Afghan-American members of the diaspora.  This financing will allow Afghan growth to extend loans to SMEs in Afghanistan, which account for more than 80% of economic activity in this country and is a leading provider of jobs for Afghans.

In Ghana, OPIC approved $250 million in political risk insurance to a Miami-based company Bell Star Development, which was established in 2006, by a member of the Ghanaian Diaspora, to provide medical equipment services and infrastructure to benefit up to 100 hospitals throughout the 10 administrative cities in Ghana.

In India, OPIC is providing $41 million in financing to a California-based company Azura Power, led by an Indian-American entrepreneur to build a 3 megawatt solar power plant in the Indian states of Punjab, Gujarat and Rajasthan.   It will power about 4,000 rural homes.

So in Central America as well, OPIC has approved $25 million in financing to enable a Miami-based financial services holding company Lafise Group, led by a member of the Nicaraguan diaspora to expand its lending to small and medium-sized enterprises in Costa Rica, Honduras and Panama.  OPIC has partnered with Lafise on other projects enabling it to expand its portfolio of low and middle income residential mortgages to qualified borrowers in several Central American countries, and has committed a total of $107 million in financing since 2003.

So in fact, we have diaspora projects in every single region of the world: Asia, Africa, the Middle East, Central and Central Europe and Latin America.  But I am confident we can do even better.  Beyond allocating capital, we can take concrete steps to increase the diversity, scale and impact of diaspora entrepreneurs.  At OPIC, we believe the most promising scenarios are where an entrepreneur aims as a private investor are in sync with the country’s broader development agenda.  And I think that’s what Dr. Shah was also trying to point out.

We don’t have an infinite amount of resources, so when we evaluate a proposal, we’re looking for factors above and beyond commercial viability and regulatory compliance.  We ask: Will this project have a positive impact on the country’s development?   Will it, for example, be located in a post-conflict country, where job creation is an urgent need?  Will it address critical need, such as water or healthcare?  We ask whether a project can be scaled up or replicated.  I know Maura O’Neill asks those same questions as chief innovation office of USAID.  One can literally find millions of small, worthwhile local projects.  But the most efficient use of our capital is to find projects that can be scaled up or transplanted.

We want projects designed for long-term growth.  We ask whether a project will aim to address a global public good, such as the environment.  We provide clean renewable energy, will it address biodiversity?  Those are just some of the questions that we tend to ask.

If you are  a diaspora entrepreneur and can answer yes to one or more of those questions, you will find that OPIC and other development finance institutions as well will take a very close look at your proposal.

Let me say in closing that I don’t think there’s ever been a better time to be a diaspora entrepreneur.  I recently returned from a trip to four countries in Africa led by the White House Deputy National Security Advisor Mike Frohman, and in each of the four countries that we visited, we met with entrepreneurs involved in a variety of businesses.  And a large number of them were educated right here in the U.S., spent many years working here.  Some are naturalized U.S. citizens and have gone back to their country of origin to take advantage of the tremendous growth opportunity that Africa now provides for the private sector.  These companies are employing thousands of people, bringing new technologies and having an incredible impact on the ground.

In 2010, global foreign direct investment into developed nations outweighed foreign direct investment into developed countries for the first time ever. This represented over a trillion dollars of investment.  This trend is not changing any time soon.  There is an enormous, I think, opportunity for diaspora entrepreneurs right now.  There is an enormous opportunity also for development right now, and we hope to succeed on both fronts.  So OPIC applauds this initiative moving forward by giving back.  We stand ready to partner with the diaspora community, and we have every confidence our partnership will grow in the coming years.  Thank you.

This speech originally appeared on the USAID website. To read the full text, click here