OPEC Fund for International Development
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The OPEC Fund for International Development (OPEC Fund) is an intergovernmental
development finance institution Development finance institution (DFI), also known as a Development bank, is a financial institution that provides risk capital for economic development projects on a non-commercial basis. DFIs are often established and owned by governments or ...
established in 1976 by the member states of the
Organization of the Petroleum Exporting Countries The Organization of the Petroleum Exporting Countries (OPEC ) is an organization enabling the co-operation of leading oil-producing and oil-dependent countries in order to collectively influence the global oil market and maximize Profit (eco ...
(OPEC). The OPEC Fund was conceived at the Conference of the Sovereigns and Heads of State of OPEC Member Countries, which was held in
Algiers Algiers is the capital city of Algeria as well as the capital of the Algiers Province; it extends over many Communes of Algeria, communes without having its own separate governing body. With 2,988,145 residents in 2008Census 14 April 2008: Offi ...
,
Algeria Algeria, officially the People's Democratic Republic of Algeria, is a country in the Maghreb region of North Africa. It is bordered to Algeria–Tunisia border, the northeast by Tunisia; to Algeria–Libya border, the east by Libya; to Alger ...
, in March 1975. A Solemn Declaration of the Conference "reaffirmed the natural solidarity which unites OPEC countries with other developing countries in their struggle to overcome underdevelopment", and called for measures to strengthen cooperation between these countries. The OPEC Fund's objective is to reinforce financial cooperation between OPEC Member Countries and other developing countries, by providing financial support to the latter for their socioeconomic development. The institution's central mission is to foster South-South Partnership with fellow developing countries worldwide with the aim of eradicating poverty. OPEC Fund's headquarters are located in
Vienna Vienna ( ; ; ) is the capital city, capital, List of largest cities in Austria, most populous city, and one of Federal states of Austria, nine federal states of Austria. It is Austria's primate city, with just over two million inhabitants. ...
,
Austria Austria, formally the Republic of Austria, is a landlocked country in Central Europe, lying in the Eastern Alps. It is a federation of nine Federal states of Austria, states, of which the capital Vienna is the List of largest cities in Aust ...
. The current president and chief executive officer is Dr. Abdulhamid Alkhalifa of
Saudi Arabia Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in West Asia. Located in the centre of the Middle East, it covers the bulk of the Arabian Peninsula and has a land area of about , making it the List of Asian countries ...
, who assumed office on November 1, 2018.


History

Following the First OPEC Summit in
Algiers Algiers is the capital city of Algeria as well as the capital of the Algiers Province; it extends over many Communes of Algeria, communes without having its own separate governing body. With 2,988,145 residents in 2008Census 14 April 2008: Offi ...
,
Algeria Algeria, officially the People's Democratic Republic of Algeria, is a country in the Maghreb region of North Africa. It is bordered to Algeria–Tunisia border, the northeast by Tunisia; to Algeria–Libya border, the east by Libya; to Alger ...
, in 1975, Member Countries expressed their commitment to assist the developing countries through a collective financial facility. As a result, in 1976, the Finance Ministers of Member Countries met and established the OPEC Special Fund, through which Member Countries would channel aid to developing countries. The OPEC Special Fund started its operations in 1976, with initial resources of about $800 million. By the end of 1977 it had extended 71 loans to 58 developing countries, and had channeled donations from its Member Countries to other development institutions, including the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...
(IMF) Trust Fund and the International Fund for Agricultural Development (IFAD). As a result of its successful performance, member countries decided in 1980 to convert the temporary facility into a permanent legal entity called the OPEC Fund for International Development; it became a permanent international development agency in May 1980. The institution ceased using the abbreviation OFID in 2020.


Member states

As of 2022, the OPEC Fund has 12 member states: Ecuador reactivated its membership in June 2014 after a 22-year absence. Qatar terminated its membership in 2019 at the same time it left OPEC. OPEC member countries may apply for membership within the OPEC Fund. However, there are some OPEC Fund member states that are not part of OPEC (
Ecuador Ecuador, officially the Republic of Ecuador, is a country in northwestern South America, bordered by Colombia on the north, Peru on the east and south, and the Pacific Ocean on the west. It also includes the Galápagos Province which contain ...
and
Indonesia Indonesia, officially the Republic of Indonesia, is a country in Southeast Asia and Oceania, between the Indian Ocean, Indian and Pacific Ocean, Pacific oceans. Comprising over List of islands of Indonesia, 17,000 islands, including Sumatra, ...
) and some OPEC member states that are not part of the OPEC Fund (
Angola Angola, officially the Republic of Angola, is a country on the west-Central Africa, central coast of Southern Africa. It is the second-largest Portuguese-speaking world, Portuguese-speaking (Lusophone) country in both total area and List of c ...
,
Republic of the Congo The Republic of the Congo, also known as Congo-Brazzaville, the Congo Republic or simply the Congo (the last ambiguously also referring to the neighbouring Democratic Republic of the Congo), is a country located on the western coast of Central ...
and
Equatorial Guinea Equatorial Guinea, officially the Republic of Equatorial Guinea, is a country on the west coast of Central Africa. It has an area of . Formerly the colony of Spanish Guinea, its post-independence name refers to its location both near the Equ ...
).


Beneficiaries

All developing countries are, in principle, eligible for OPEC Fund assistance, although the
least developed countries The least developed countries (LDCs) are developing countries listed by the United Nations that exhibit the lowest indicators of socioeconomic development. The concept of LDCs originated in the late 1960s and the first group of LDCs was listed b ...
are given higher priority and have received more than one-half of the institution's cumulative commitments to date. Also eligible are international institutions whose activities benefit the developing countries. OPEC Fund Member Countries are excluded from benefiting from assistance, except in the case of disaster relief or within the context of a regional program. Over the years, the OPEC Fund has spread its presence to 125 countries.


Means

The OPEC Fund provides financial assistance in a number of ways, with the distribution between the different types of aid changing over time as conditions in recipient countries evolve and needs alter. The methods of funding have included: * Extending concessionary financial assistance in the form of loans for development projects and programs,
balance of payments In international economics, the balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., a ...
support and trade financing * Financing private-sector activities in developing countries * Providing grants in support of technical assistance, food aid, research and similar activities, and humanitarian emergency relief * Contributing to the resources of other development institutions whose work benefits developing countries * Serving as an agent of OPEC Member Countries in the international financial arena whenever collective action is deemed appropriate


Resources

The OPEC Fund's resources consist of voluntary contributions made by its member countries and the accumulated reserves derived from the institution's various operations. A replenishment of US$1 billion was approved in June 2011 by the institution's supreme authority, the Ministerial Council, as a direct response to the increasing needs of developing countries and the negative impact of the financial crisis on their economies.


Operations

The OPEC Fund's operations are organized into 8 focus areas: *Agriculture:Funding has helped boost crop and livestock production, as well as improve rural infrastructure, such as irrigation systems and storage facilities for animal fodder. Support has also been extended to help promote agricultural research. *Education:The OPEC Fund's financing has helped construct and rehabilitate schools, purchase equipment and teaching materials, as well as provide teacher training. The OPEC Fund has also sponsored the attendance of participants from developing countries to various conferences and workshops. *Energy:A lead partner in the UN's
Sustainable Energy for All Sustainable Energy for All (SEforALL) is an international organization working in partnership with the United Nations, leaders in government, the private sector, financial institutions and civil society with as goal to drive further, faster action ...
initiative, the OPEC Fund has supported energy projects ranging from infrastructure and equipment provision to research and capacity building. *Financial:Support to this sector has primarily been the channeling of funds to Micro-, small- and medium-size enterprises (MSMEs) via financial intermediaries such as national and regional development banks, commercial banks and leasing companies. *Health:Support has included construction and modernization of hospitals, health clinics and other infrastructure. Capacity building and support to primary healthcare programs has also been extended. The OPEC Fund is also an active partner in the global fight against HIV/AIDS through a special grant program. *Multisectoral:This includes undertakings that cut across more than one sector and often supports the activities of Social Investment Funds, whose projects are usually demand-driven at a local level and have a strong element of community participation. *Transportation:The OPEC Fund's support has been consistently high to this sector and ranges from construction and rehabilitation of roads, seaports and airports, to railways, inland waterways and urban mass transit. *Water and Sanitation:The OPEC Fund has helped finance a wide range of operations to help provide clean drinking water and safe sanitation systems. These range from large-scale water storage, treatment and distribution projects to village pumps and school latrines, as well as to schemes to optimize water use in arid regions.


OPEC Fund headquarters

The OPEC Fund Headquarters (located in
Vienna Vienna ( ; ; ) is the capital city, capital, List of largest cities in Austria, most populous city, and one of Federal states of Austria, nine federal states of Austria. It is Austria's primate city, with just over two million inhabitants. ...
's first district, on the
Ringstraße The Ringstrasse or Ringstraße (pronounced Help:IPA/Standard German, ɪŋˌʃtʁaːsə:File:De-Ringstraße.ogg, ⓘ, lit. ''ring road'') is a 5.3 km (3.3 mi) circular grand boulevard that serves as a ring road around the historic city centre, ...
) was the residential palace of the Austrian Archduke Wilhelm Franz Karl. Built between 1864 and 1868 to the architectural design of Theophil von Hansen, the palace was sold to the German Order of Knights (
Teutonic Order The Teutonic Order is a religious order (Catholic), Catholic religious institution founded as a military order (religious society), military society in Acre, Israel, Acre, Kingdom of Jerusalem. The Order of Brothers of the German House of Sa ...
) in 1870 and used as headquarters of the Grand Master, the last of whom was Archduke Eugen. From 1894, it served as the palace of both the Grand and German Masters, acquiring the name, ''
Deutschmeister-Palais The Deutschmeister-Palais or Palais E ...
''. In 1938 following the dissolution of the German Order of Knights, the building was seized by National Socialist (Nazi) Germany and, in 1942, it was handed over to the police authorities. Between 1945 and 1975, it served as headquarters of the Vienna police. After an
interregnum An interregnum (plural interregna or interregnums) is a period of revolutionary breach of legal continuity, discontinuity or "gap" in a government, organization, or social order. Archetypally, it was the period of time between the reign of one m ...
, the building became the property of the OPEC Fund.


Energy for the Poor Initiative (EPI)

The OPEC Fund's Energy for the Poor initiative (EPI) emerged from the Solemn Declaration of the Third OPEC Summit, which took place in Riyadh in November 2007. The Declaration called for the complete eradication of energy poverty as a global priority and urged the OPEC Fund to intensify its efforts in support of this goal. The EPI was launched by King Abdullah bin Abdul Aziz of Saudi Arabia in June 2008 and subsequently adopted by the OPEC Fund as its flagship program. Since 2008, the OPEC Fund has worked tirelessly to push energy poverty to the top of the international agenda and was responsible for the universal acceptance of energy poverty eradication as the “missing” Millennium Development Goal. In June 2012, the OPEC Fund Member Countries issued a Ministerial Declaration on Energy Poverty and dedicated a revolving minimum sum of US$1 billion to finance the EPI. The OPEC Fund is boosting the volume of its operations in the energy sector accordingly, in collaboration with all relevant stakeholders.


The OPEC Fund and the United Nations’ Sustainable Energy for All initiative (SEforAll)

The OPEC Fund has Permanent Observer status at the United Nations. As a result of its high-profile advocacy efforts, the OPEC Fund is a key partner in
Sustainable Energy for All Sustainable Energy for All (SEforALL) is an international organization working in partnership with the United Nations, leaders in government, the private sector, financial institutions and civil society with as goal to drive further, faster action ...
(SEforAll), which has three goals: to achieve universal access to sustainable energy, to double energy efficiency, and to double the share of renewables, all by the year 2030. The OPEC Fund considers its own EPI as complementary to the objectives of SEforAll. In 2011, the OPEC Fund's then Director-General Suleiman Jasir Al-Herbish was invited to join the UN Secretary-General's High-level Group on SEforAll, which was charged with developing the Action Agenda that was presented to the 2012 Rio+20 Summit.


Public sector operations

Public sector lending forms the central pillar of the OPEC Fund's operations, accounting for more than two-thirds of total, cumulative commitments. These operations are carried out in direct cooperation with the governments of partner countries in support of their national development strategies. The OPEC Fund's public sector loans are concessional, with low interest rates and long repayment periods. Lending terms are based on several factors, including the per capita gross national income (GNI) of each Partner Country. Also included under the public sector is the OPEC Fund's contribution to the Heavily Indebted Poor Countries (HIPC) Initiative.


Private sector operations

The Private sector facility (PSF) was established in 1998 in response to growing demand among partner countries for investment in private enterprise, which is increasingly seen as the engine of economic and social growth. The Facility is a market-oriented financing window that responds to the demand for financing in developing countries in support of their private sector development strategies. The PSF seeks to promote economic development by encouraging the growth of productive private enterprise in developing countries and supporting the development of local capital markets. Successful interventions stimulate economic growth, generating jobs and income and thereby reduce poverty.


Trade Finance Facility

The OPEC Fund's Trade Finance Facility (TFF) was established in 2006 to broaden the means available to the OPEC Fund to alleviate poverty and promote economic development. It is a distinct, additional window for supporting eligible developing countries in their efforts to achieve growth and prosperity. The Facility seeks out transactions that are developmentally, environmentally and socially sound, applying credit principles in line with standard practices and setting reasonable market-based return targets. TFF financing has been used to support the import/export of a diverse range of goods/sectors, including oil, cotton, steel, strategic food products, garments and equipment.


Grants

Grants are awarded largely on the basis of the type of project and its expected outcomes; the number of beneficiaries; and the recipient country's socio-economic situation. The Grants Program includes the following sub-programs: *Technical Assistance: Extended to national and regional development projects that aim at fostering sustainable development and reducing poverty. These cover a wide range of development sectors, with women and children given high priority. *Research and similar activities: Supports activities that increase South-South and north–south cooperation, especially in the field of exchanging know-how and enhancing capacity-building, including human resource development. *Emergency relief aid: To help mitigate the suffering of victims of catastrophes―including those in the OPEC Fund Member States. Assistance is channeled through specialized relief agencies. *Special Health Program: Since 2002, the OPEC Fund has been an active partner in the global fight against HIV/AIDS, but this focus has now shifted to incorporate other preventable diseases, including TB, malaria and waterborne illnesses. Also targeted are non-communicable diseases (NCDs) such as cancer, diabetes and heart disease, which are more prevalent in poor developing countries. *Grant Program for Palestine: This program supports sustainable development interventions in the West Bank and Gaza, as well as humanitarian relief in times of crisis. It also addresses needs in refugee camps in neighboring countries. *Energy poverty: The Energy portfolio supports the OPEC Fund's flagship ‘Energy for the Poor Initiative’, and focuses on the delivery of innovative, medium and small-scale energy poverty solutions, primarily to off-grid, rural communities.


Contributions to other organizations


Common Fund for Commodities (CFC)

The Common Fund for Commodities (CFC) is an autonomous intergovernmental financial institution established within the framework of the United Nations. Since 1981, the OPEC Fund has supported the CFC, having made available a total of US$83.6 million in support of the institution. The First Account of US$37.2 million enabled 38 least developed member countries to complete their subscriptions to the CFC First Account Capital. By the end of 2014, the OPEC Fund had signed agreements with 37 of these countries. Under the Framework of Financial Support and within the context of the Second Account totalling US$46.4 million, the amount of US$37.9 million has been committed in support of 57 commodity projects in 52 countries; 32 in Africa, 14 in Asia and six in Latin America. Projects eligible for financial support are commodity-focused covering the value chain from production to consumption and benefiting the poor.


International Fund for Agricultural Development (IFAD)

The OPEC Fund has played a significant role in the establishment of IFAD, channeling US$861.1 million in contributions from OPEC member countries towards the agency's initial capital and first replenishment. Since IFAD's creation, OPEC member states have maintained their firm support of the agency, contributing to additional replenishments of its resources. In addition, the OPEC Fund itself has given a further US$20 million as a special contribution from its own resources.


International Monetary Fund (IMF) Trust Fund

Via the OPEC Fund, financial resources valued at US$110 million were transferred by a number of OPEC member states to the IMF-administered Trust Fund which was established in May 1976. Representing profits accruing to seven of these countries from the sale of gold held on their behalf by the IMF, these resources were allocated to provide concessional balance of payments assistance to eligible low-income IMF member countries.


See also

* Arab Bank for Economic Development in Africa (BADEA) * Arab Monetary Fund (AMF) * Islamic Development Bank (IsDB) * Kuwait Fund for Arab Economic Development (KFAED) *
Sustainable Development Goals The ''2030 Agenda for Sustainable Development'', adopted by all United Nations (UN) members in 2015, created 17 world Sustainable Development Goals (SDGs). The aim of these global goals is "peace and prosperity for people and the planet" – wh ...
*
World Bank Group The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Group ...


References


External links

* {{DEFAULTSORT:Opec Fund For International Development International development multilaterals OPEC United Nations General Assembly observers Recipients of orders, decorations, and medals of Sudan