OPEC Fund for International Development

The OPEC Fund for International Development ( English OPEC Fund for International Development , OPEC Fund , formerly OFID ) is an international organization for the financing of development aid . It was established in 1976 by the member states of the Organization of Petroleum Exporting Countries (OPEC). The idea arose in March 1975 on the occasion of the conference of the heads of state and government of the OPEC countries in Algiers . In a solemn declaration at the conference, “the increased solidarity that connects the OPEC states with other developing countries in their struggle to overcome underdevelopment” was affirmed and measures to strengthen cooperation between these countries were called for.

The OPEC Fund has set itself the goal of strengthening financial cooperation between OPEC countries and other developing countries by providing financial aid for their socio-economic development. The central mission of the organization is to promote South-South cooperation with other developing countries around the world with the aim of overcoming poverty entirely. The seat of the fund is in Vienna. General Director and Chief Executive Officer is Abdulhamid Alkhalifa from Saudi Arabia , who took up his position on November 1, 2018.

Headquarters

The main building of the Fonds on Ringstrasse in the heart of Vienna was originally a private palace of the Austrian Archduke Wilhelm Franz Karl. Built between 1864 and 1868 according to plans by the architect Theophil von Hansen (1813-1891), the palace was sold to the Teutonic Knights in 1870 and used as the headquarters of the Grand Master, most recently Archduke Eugen. From 1894, the palace was available to the grand master and the German masters as a residence under the name Palais Deutschmeister. After the order of the Teutonic Knights was dissolved in 1938, the building was taken over by the German National Socialists, who handed it over to the police authorities in 1942. The palace served as the headquarters of the Vienna Police Department from 1945 to 1975. The building was idle for a long time before it was finally acquired by the OPEC fund.

history

After the first OPEC summit in Algiers , Algeria , in 1975, member states pledged their financial support to developing countries through a collective finance facility. At the subsequent meeting of the finance ministers of the OPEC countries in 1976, the OPEC Special Fund was founded to channel OPEC financial aid to developing countries. In the same year, the OPEC special fund began operations with an initial endowment of around 800 million US dollars. At the end of 1977 71 loans had already been granted to 58 developing countries. Development aid institutions such as the Trust Fund of the IMF (International Monetary Fund, IMF) or the International Fund for Agricultural Development ( IFAD ) had provided the OPEC member countries with non-repayable financial aid.

The financial aid proved so successful that in 1980 the member states decided to create the financial account, which was initially designed for temporary purposes, as a permanent institution with its own legal personality under the name OPEC Fund for International Development. In May 1980, the OPEC special fund had finally become a full-fledged, long-term development organization at international level. The Council of Ministers, the highest governing body, approved a US $ 1 billion increase in funding in June 2011, the last one to date, in response to the growing needs of developing countries and the negative impact of the financial crisis on their countries' economies.

Member States

After an absence of 22 years, Ecuador rejoined the OPEC fund in June 2014.

Funding

The OPEC Fund provides various types of financial assistance, with priorities shifting over time as the framework conditions and requirements of the recipient countries have developed and changed. The types of financing include:

Financial assistance on preferential terms in the form of loans for development projects and programs, balance of payments support and trade financing
Financing private sector activities in developing countries
Technical assistance, food aid, research and related grants and emergency humanitarian aid
Contributions to other development organizations from whose work developing countries can benefit.
Acting as an agent for OPEC member countries in international finance when collective action is deemed appropriate.

Financial medium

The financial resources consist of voluntary contributions from OPEC members and accumulated reserves from the operational activities of the fund. In June 2011, the Council of Ministers of the OPEC Fund approved a $ 1 billion increase in response to the growing needs of developing countries and the negative impact of the financial crisis on their economies.

Recipient countries

In principle, all developing countries are eligible, with the exception of the OPEC member states themselves. The least developed countries in the world, however, enjoy higher priority and thus receive the lion's share of the OPEC funds. 135 states have been supported over the years.

Operational activity

Focus

Agriculture: The funding has helped develop crops and livestock, as well as improving rural infrastructure, such as irrigation systems and animal feed storage facilities. The promotion of agricultural research is also financially supported.
Education: The OPEC fund has helped to build and refurbish schools, buy teaching materials and enable the training of teaching staff. It also made it possible for teachers from various developing countries to take part in conferences and workshops.
Energy: As one of the leading partners in the UN Initiative Sustainable Energy for All (SE4All) , the OPEC Fund has financially supported a wide variety of energy projects, ranging from the supply of infrastructure and equipment to research and performance.
Finance: The support for this sector is primarily the brokerage of funds for micro and medium-sized enterprises (MSMEs) through financial intermediaries such as national and regional development banks, credit institutions and leasing companies.
Health: The support includes the construction and modernization of hospitals, clinics and other infrastructure. Support for primary health care is also provided. The OPEC fund is also an active partner in the global fight against HIV / AIDS .
Industry: Financial support from the OPEC fund benefits all sub-sectors, including building materials, steel, fertilizers and chemicals.
Cross-Sectoral: These include grants that affect more than one sector and often support the activities of the Social Investment Fund, whose projects are typically demand-driven and have a strong element of community participation.
Telecommunications: Most of the funding for this sector comes from the OPEC Private Sector Fund, which also finances mobile operators in Africa and Asia.
Transport: Support in this sector is high, ranging from the construction and rehabilitation of roads, seaports and airports to railways, inland waterways and urban transport.
Water and Sanitation: The OPEC Fund has helped finance a wide range of operations to provide clean drinking water and safe sanitation systems. These range from large-scale water reservoirs, treatment and distribution projects to systems for optimizing water consumption in arid areas.

"Energy for the Poor" initiative

The initiative "Energy for the Poor" of the OPEC Fund ( english Energy for the Poor Initiative - EPI ) grew out of a solemn declaration during the third OPEC summit in November 2007 in Riyadh, Saudi Arabia. The declaration calls for the complete eradication of energy poverty as a global priority and called on the OPEC Fund to step up its efforts to support this goal. The initiative was launched by King Abdullah ibn Abd al-Aziz Al Saʿud of Saudi Arabia in June 2008 and then approved by the OPEC Fund as its flagship program.

Since 2008, the OPEC Fund has been working to bring energy poverty to the top of the international agenda and has been responsible for the worldwide acceptance of the fight against energy poverty as a “missing” Millennium Development Goal.

In June 2012, the OPEC Fund member countries passed a ministerial declaration on energy poverty and dedicated a minimum of 1 billion US dollars to finance the initiative. In this context, the OPEC Fund has increased the volume of its business activities in the energy sector and works closely with relevant players in this area.

The OPEC Fund and the UN Initiative "Sustainable Energy for All" (SE4All)

The OPEC Fund is an important partner of the United Nations Sustainable Energy for All (SE4ALL) initiative. This pursues the following three goals that are to be achieved by 2030:

universal access to modern energy services;
Doubling of energy efficiency;
Doubling the share of renewable energies in the global energy mix

The OPEC Fund sees its own “Energy for the Poor Initiative” EPI as complementary to the goals of SE4ALL . In 2011, the then General Director of the Fund, Suleiman Jasir Al-Herbish, was invited to join the UN Secretary-General's high-level group for SE4ALL, which was charged with drawing up the agenda for action and presented at the Rio + 20 summit in 2012.

Funding mechanisms

Public sector projects

Public sector loans represent the bulk of the OPEC Fund's activities. They comprise two thirds of total cumulative commitments.

All loans in the public sector are carried out in cooperation with the governments of the recipient countries to support their national strategies.

The public sector also includes the OPEC fund contribution to the HIPC initiative for heavily indebted poor countries ( Heavily Indebted Poor Countries ). The OPEC fund has supported the initiative since it was launched in 1996.

Projects in the private sector

The Private Sector Facility (PSF) was established in 1998 in response to the growing demand from partner countries for investment in private companies, which are increasingly seen as engines of economic and social growth. The PSF is a market-driven funding window that responds to the demand for funding in developing countries to support their development strategies in the private sector.

The PSF seeks to promote economic development by promoting the growth of productive private companies in developing countries and by supporting the development of local capital markets. Successful interventions promote economic growth, create jobs and income, and thus reduce poverty.

Financing the trade

In 2006, a Trade Finance Facility (TFF) package was launched to expand the resources available to the OPEC fund to alleviate poverty and promote economic development. It is a separate, additional window to support eligible developing countries in their efforts to achieve growth and prosperity. TFF funding is used to support the import / export of a wide range of goods / sectors including oil, cotton, steel, strategic food, clothing and equipment.

Subsidies

Grants are largely awarded on the basis of the type of project and its expected results, the number of beneficiaries, and the socio-economic situation of the recipient country. The subsidy program comprises the following sub-programs:

Technical assistance: Awarded for national and regional development projects aimed at sustainable development and poverty reduction. These cover a wide range of developmental areas, with women and children being given high priority.
Research and related activities: Supports activities that enhance South-South and North-South cooperation, particularly in the areas of know-how exchange and capacity building, including human resource development.
Emergency measures: To reduce the suffering of the victims of disasters - including in the member states of the OPEC Fund. The support is directed by specialized aid organizations.
Special health subsidy program: The OPEC fund has been an active partner in the global fight against HIV / AIDS since 2002. Meanwhile, this focus has expanded to include other preventable diseases such as tuberculosis, malaria, and water-borne diseases. The focus is also on non-communicable diseases such as cancer, diabetes and heart disease, which are more common in poor developing countries.
Program for Palestine: This program supports sustainable development measures in the West Bank and Gaza Strip as well as humanitarian aid in times of crisis. It also addresses the needs of Palestinians in refugee camps in neighboring countries.
Energy poverty: The energy portfolio supports the “Energy for the Poor” initiative of the OPEC fund and focuses on the provision of innovative energy poverty solutions, especially for rural households that are not connected to the electricity grid.

Contributions to other organizations

Common Fund for Commodities (CFC)

The OPEC fund has been supporting the Common Fund for Commodities (CFC) for a long time. To date, the fund has received a total of US $ 83.6 million. This amount consists of a voluntary contribution of US $ 46.4 million to the CFC's second account and a payment of an additional US $ 37.2 million to cover the subscription of shares in the 35 Least Developed Countries on the directly paid-in capital of CFC. In the context of the second account, payment obligations of US $ 32 million were assumed for raw material projects in 29 countries in Africa, 15 countries in Asia and six Latin American countries.

At the 30th annual meeting of the Council of Ministers of the OPEC Fund on June 17, 2009, three new countries (Democratic Republic of the Congo, Senegal and Mozambique) were added to the list of eligible countries, which now have subscriptions to the CFC's first account (and thus benefit from receiving payments on the capital subscriptions). The OPEC Fund continues to follow the activities of the CFC with great interest and enjoys observer status in the two highest bodies of the Fund.

International Fund for Agricultural Development (IFAD)

The OPEC Fund played an important role in the creation of the IFAD, with the OPEC states contributing US $ 861.1 million to the initial capital as well as to the initial increase in the fund. The OPEC states have been actively supporting IFAD since it was founded by contributing to additional funding. In addition, the OPEC fund made a further US $ 20 million available from its own resources as a special contribution.

International Monetary Fund (IMF) Trust Fund

A number of OPEC countries have transferred funds amounting to US $ 110 million to the trust fund established in May 1976 and administered by the IMF via an account of the OPEC fund. These funds are made up of profits made by seven of these countries from the sale of gold that the IMF managed on their behalf. They were made available on preferential terms to support the balance of payments of eligible low-income countries that are also members of the IMF.

Web links

OPEC Fund website

Individual evidence

[1] OPEC Fund: Who we are - At a Glance. In: opecfund.org. Retrieved on August 19, 2020 (English).

[2] OPEC Fund: OPEC Fund new Director-General Assumes office in Vienna. Press release. In: ofid.org. June 25, 2018, accessed August 19, 2020 .

[3] ttps://content.yudu.com/web/435ju/0A43r2d/BPD2019/html/index.html?refUrl=https%253A%252F%252Fopecfund.org%252Fpublications%253Faction%253Dsearch_publication%2526publications%325D255 .Bkeyword%2526publications%325D255 .Bkeyword%2526publications%325255 .Bkeyword% 253A % 2526publications% 25255Boptions% 25255D% 25255B% 25255D% 253D45008

[4] ttps://opecfund.org/who-we-are/the-organization/ministerial-council

[5] ttps://opecfund.org/who-we-are/member-countries

[6] ttps://opecfund.org/media-center/press-releases/2014/ofid-marks-re-admission-of-ecuador-with-art-exhibition

[7] ttps://opecfund.org/what-we-offer/overview

[8] ttps://opecfund.org/media-center/press-releases/2012/rio-20-ofid-commits-us-1-billion-to-address-energy-poverty-alleviation

[9] ttps://opecfund.org/operations/countries-az

[10] ttps://opecfund.org/focus-areas/overview

[11] ttps://opecfund.org/var/site/storage/original/application/27bf8de334726a0d34182112ba4e1f56.pdf

[12] ttps://opecfund.org/what-we-offer/public-sector-lending

[13] ttps://opecfund.org/what-we-offer/private-sector-trade-finance

[14] ttps://opecfund.org/what-we-offer/private-sector-trade-finance

[15] ttps://opecfund.org/what-we-offer/grants