Robert Mosbacher, Jr., president and CEO of OPIC, was in Amman in September to lay the groundwork for new OPIC projects in Jordan. Wajih Halawa gets the details in an exclusive interview.

The Overseas Private Investment Corporation (OPIC) is a United States government agency that was created in 1971 to facilitate and mobilize U.S. private capital investment in developing and emerging markets, thereby supporting direct business investment as well as maximizing the benefits of such investments to their host countries.
OPIC’s products include political risk insurance for U.S. businesses (which was originally its main product back in the 1970s); loan guarantees and direct loans; and private equity funds in countries and regions where investment stimulation is needed. Some of the projects OPIC has supported in the Middle East and North Africa include lending facilities for SMEs, desalination and energy projects, education, and investment insurance.

JB: What are the reasons behind your visit to Jordan?
R.M.:  We are organizing a private equity fund for the region covering Egypt, Jordan and Lebanon, with a minimum of $50 million invested in private equity in Jordan. OPIC puts in between a third and half of these projects, so the fund could be as much as $150 million and as little as $100 million [for Jordan alone].

JB: What can you tell us about OPIC and its operations in the region?
R.M.: About 75% of what we do is driven by businesses that come to us for help. The other 25% is driven by U.S. foreign policy imperatives. We operate on the assumption that economic hope and opportunity are essential elements to creating an environment in which there is any chance for political stability. We have over $200 million of investments in Iraq, over $100 million in Afghanistan, and just shy of $200 million in Pakistan. We’re also in the process of pursuing a small business lending facility in the West Bank and Gaza Strip, which ultimately will be in the $150-200 million range, but the average loan will be closer to $200,000. We are working on a package of initiatives in Lebanon to help with rebuilding homes and businesses, and we’re interested in trying to facilitate economic integration in the region between Jordanians, Egyptians, Palestinians, Israelis, and Lebanese, because we think that economic integration probably has more to do with lasting peace than peace treaties.

JB: How do you feel about the investment environment in Jordan? What key investment areas are you seeing here?
R.M.: Well, tourism is one of those natural assets you have, particularly in the Aqaba zone. That tends to be more real estate oriented, but it’s a sector that has been attractive. We also think that there are some technology service opportunities that would be attractive, as well as pharmaceuticals and other industries. Evidence of progress that Jordan has made economically, both in terms of the climate for doing business as well as the interest level in equity investment here, is where the desirability to create this equity fund now comes from. Five years ago, it would have been a struggle. Today, it’s something that makes sense and that I think will have a lot of appeal.

JB: Is Jordan as conducive to investment as public officials like to say it is? What kinds of changes do you see room for?
R.M.: There’s no doubt that significant progress has been made. We see that in terms of the feedback we get from outside investors who want to be a part of this economy, but there’s also evidence of that [for us] as principal financiers of the Amman East Power Project. That’s a good way to watch up close and personal how serious the government is about Independent Power Projects (IPPs), privatization, or processes like this, to see whether there are impediments and if they are being addressed or ignored. I think that the disposition of the government to seek legal support from Parliament is very apparent. I’m not going to tell you that they are at the top of the list yet in terms of doing business, but they’ve clearly made progress, they’re heading in the right direction, and they’re open to hearing what is an impediment and what it would take to fix it. They are fairly small things like the amount of time it takes to register or close a business. They are things that do influence the willingness of people to invest, but they’re not deal killers.

JB: How can you encourage American businesses to come and invest in our region, especially Jordan? What are hot sectors right now?
R.M.: Unfortunately, not everybody is able to discriminate between countries that are strong, solid and stable versus those that are struggling. Our job at OPIC is to help identify and help support U.S. businesses that see opportunities, even in troubled areas. We don’t do business in Western Europe, [South] Korea or Canada because they don’t need us. We’re a risk mitigation agency, a bridge between countries on their way to developing good, strong, stable economic systems and countries that are already there.
An area where we are most heavily involved as a sector in investment is housing. You’d be hard pressed to think of anything that is more developmentally beneficial to a country than facilitating low and moderate income home ownership.

JB: Because that drives small- and medium-sized businesses and investment?
R.M.: Exactly. We have made that sector a very high priority, to the point that we’re now up close to $1 billion in housing commitments all over the world - $400 million in sub-Saharan Africa, which was [an important] target of ours, and I think you’d be amazed at the American companies that want to be involved in building homes or helping support title registration systems in places like Africa.

JB: There’s potential here in Jordan on the home ownership front, as well.
R.M.: This is exactly the conversation I was having with the housing minister, who said our timing couldn’t be better. He said that His Majesty the King has made this a high priority, that there are some initiatives here aimed particularly at government workers, but also that they would love to see if we can expand the availability of primary mortgages and create a secondary mortgage market, so we’re going to work with him on that.

JB: Does your work involve collaborating with other U.S. agencies like the American Chambers of
Commerce (AmCham) or the United States Agency for International Development (USAID)?
R.M.: Yes it does. In fact, one of my priorities since taking office 10 months ago has been to better complement what other U.S. agencies do. Now, we work very well with the AmChams all around the world; they are a great source of referrals to us, and a great source for understanding business culture. When U.S. trade representatives negotiate free trade agreements, for example, we typically ask countries to lower their tariff barriers so good things will happen, and generally they do. But they don’t necessarily happen fast enough for the political leadership to show its population the results. What [OPIC does] is sit with trade representatives and try to help with trade capacity building. We announce investments that promote home ownership and access to credit for micro- and small- to medium-sized enterprises (SMEs). So, we’re complementing and accelerating what these agreements seek to accomplish.

JB: Having been an entrepreneur yourself with your own businesses since the 1980s, and having been a client of OPIC in the past, how will your experience impact your tenure at OPIC?
R.M.: It helps that in 1993, when I had a concession to reactivate an abandoned oil field in Venezuela, I went to OPIC and bought political risk insurance. I can say without hesitation that without OPIC’s support of most of these businesses, they would not make these investments, so we have a critical role to play. Second, I’m convinced that as government agencies go, OPIC is as quick and nimble and responsive as any agency that I’ve ever seen, at least in the U.S. government. That’s very important to businesses who cannot afford to spend three or four years filling out forms and going through an elaborate bureaucratic process in order to finalize a deal. We can do these things in as little as 60 days.
In terms of the foreign policy side of this, I put a high premium on the developmental mission of OPIC. I think private capital, as a tool of foreign economic development, is underutilized. At OPIC, we’re not in the business of giving a man a fish; that’s for the multilaterals and the aid givers. We’re not even in the business of teaching the man to fish because that’s covered by USAID and other providers of technical assistance. We’re in the business of investing in the fishing industry as a whole, to extend that metaphor. I feel that we can be more proactively involved in using private capital to stimulate investment, stability, and economic hope.