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- OPEC Fund provides US$1.5bn in new development financing in 2021, deepens impact and fully utilizes COVID-19 facility
OPEC Fund provides US$1.5bn in new development financing in 2021, deepens impact and fully utilizes COVID-19 facility
January 27, 2022: With a total of US$1.5 billion committed in 2021, the OPEC Fund for International Development made a strong contribution to the global development agenda last year. The OPEC Fund, which marks its 46th anniversary on 28 January, focused on helping its partner countries to increase economic resilience, strengthen economic growth and job creation through support for micro, small and medium-sized enterprises (MSMEs), provided much-needed funding for infrastructure investments and responded to the COVID-19 pandemic with the full deployment of its US$1 billion facility.
OPEC Fund Director-General Abdulhamid Alkhalifa said: “Thanks to our strong financials and close relationships with our partner countries and clients, the OPEC Fund was able to respond quickly and effectively to the pressing needs in these countries in 2021. Our strong delivery benefited a wide range of projects that aim to address people’s needs and improve their livelihoods. While we continue to pursue the Sustainable Development Goals, we have also been able to make a sizeable, swift and effective contribution to the global response to the COVID-19 pandemic. As we mark our 46th anniversary and start a new year, our 2021 performance inspires us with confidence and ambition to deliver another sizeable contribution to development this year.”
The OPEC Fund’s standing as a multilateral development institution was also recognized in 2021 by Fitch and S&P, two of the world’s leading rating agencies. In their inaugural assessment of the OPEC Fund, Fitch awarded a rating of AA+/Outlook Stable, emphasizing the Fund’s “excellent capitalization”, while S&P assigned a AA/A-1+, Positive Outlook rating and underlined the OPEC Fund’s “strong funding and liquidity positions”.
Following the outbreak of the COVID-19 pandemic, the OPEC Fund established a US$1 billion facility which was fully utilized by the end of 2021. In coordination with partner countries and other donors, the Fund adopted an agile approval process, enabling the rapid deployment of urgently needed financing. Operations under the COVID-19 facility included a US$70.5 million loan to Jordan in support of a government action plan and a US$10.0 million facility to benefit small and medium-sized enterprises in Maldives.
A breakdown of operations shows that US$496 million of committed amounts was earmarked for the financial sector, traditionally used for on-lending to MSMEs or women-led businesses. Other sectors included agriculture (US$211 million), transport and storage (US$205 million), energy (US$153 million), commodity aid (US$137 million), water & sanitation (US$20 million) and healthcare (US$15 million). Cross-cutting multisector projects received US$246 million.
In the energy sector, the OPEC Fund financed award-winning projects, which will significantly increase access to energy in partner countries and help address energy transition. In cooperation with international partners, the OPEC Fund provided loans to support the construction and operation of the Sirdarya power plant in Uzbekistan, the largest private sector-led project in the country to date, and the Temane gas power plant in Mozambique, which is expected to meet the electricity demand of up to 1.5 million households.
OPEC Fund financing was directed to support public sector development initiatives in partner countries with US$686 million (46 percent), while trade finance amounted to US$444 million (30 percent) and private sector loans totaled US$353 million in 2021.
In terms of regional distribution, engagements in Africa came to US$770 million (51 percent), followed by Asia with US$536 million (36 percent) and Latin America and the Caribbean with US$177 million (12 percent).
The adoption of an enhanced ESG policy in 2021 by the OPEC Fund’s Governing Board marked another milestone in the implementation of the institution’s Strategic Framework 2030. The Framework is designed to enable the OPEC Fund to expand its operations and deepen its impact to address long-term challenges such as the delivery of the Sustainable Development Goals, as well as emergencies such as the COVID-19 pandemic and its economic and social impact.
An important step towards this goal is leveraging the OPEC Fund’s strength by deepening the cooperation with international development institutions and partner organizations. In 2021, the OPEC Fund co-financed projects, among others, with the African Development Bank, the Asian Development Bank, IFAD, the Arab Coordination Group, the World Bank and the International Finance Corporation (IFC). The OPEC Fund also signed an agreement to enhance and promote cooperation in Latin America and the Caribbean with the Andean Development Bank (CAF – Corporación Andina de Fomento).
About the OPEC Fund
The OPEC Fund for International Development (the OPEC Fund) is the only globally mandated development institution that provides financing from member countries to non-member countries exclusively. The organization works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low- and middle-income countries around the world. The OPEC Fund was established by the member countries of OPEC in 1976 to drive development, strengthen communities and empower people. Our work is people-centered, focusing on financing projects that meet essential needs, such as food, energy, infrastructure, employment (particularly relating to MSMEs), clean water and sanitation, healthcare and education. To date, the OPEC Fund has committed more than US$22 billion to development projects in over 125 countries with an estimated total project cost of US$187 billion. The OPEC Fund is rated AA+/Outlook Stable by Fitch and AA/Positive Outlook by S&P in 2021. Our vision is a world where sustainable development is a reality for all.