Sovereigns and Heads of State of OPEC Member Countries (MCs) do not meet regularly. However, when they do meet, the impact is felt beyond the confines of the Organization’s MCs and for decades too. Such meetings also, have the tendency to affect lives in a positive way.
This could be said to be the effect their first meeting in 1975 has had on the world’s poor countries through the OPEC Fund for International Development, (OFID). Established as a multilateral development finance institution to promote cooperation between Member States of OPEC and other developing countries, OFID was conceived at the Summit of the Sovereigns and Heads of State of the OPEC Member Countries (MCs) held in the Algerian capital, Algiers, in March 1975.
The Solemn Declaration, issued by the Summit, ‘reaffirmed the natural solidarity which unites OPEC MCs with other developing countries in their struggle to overcome under-development, and called for measures to strengthen cooperation with these countries.’
In this spirit, OFID was established in January 1976, as a collective financial facility to consolidate the assistance extended by its Member Countries namely Algeria, Ecuador, Gabon, Indonesia, Islamic Republic of Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. OFID’s resources are additional to those already made available by OPEC MCs through a number of bilateral and multilateral channels. The resources of OFID consist mainly of voluntary contributions by OPEC MCs and income derived from OFID’s investments and loans.
OFID’s operations were launched in August 1976 with initial resources of about US$800m. This amount has since then been replenished four times. The last replenishment of US$1b was approved by the Ministerial Council in June 2011 as a direct response to the increasing needs of developing countries and the negative impact of the financial crisis on their economies.
|Resources (January 1, 2014)||US$m|
All non-OPEC developing countries are, in principle, eligible for OFID assistance. However, the least developed and other low-income countries are accorded priority and, therefore, receive a larger share. Over the years, OFID has spread its financing to 134 countries, of which 53 are in Africa, 43 in Asia, 31 in Latin America and the Caribbean, and seven in Europe.
OFID’s total approved commitments distributed through its four financing mechanisms and contributions to other institutions stood at US$17,546m as of the end of September 2014.
In the public sector, OFID has implemented 18 lending programs since its inception. The 19th Lending Program, approved for a three-year duration, became effective 1 January 2014. By the end of September 2014, a cumulative amount of US$11,632m had been committed for 1,440 public sector loans, of which US$7,091m had been disbursed. As of 1 January 2014, close to two-thirds of the outstanding loans were with Low Income Countries and half of all commitments were to Africa.
Under the Private Sector Facility established in 1998, 214 operations have been approved in support of private entities in Africa, Asia, Latin America and Europe. By the end of September 2014, US$2,266m had been committed and US$1,302m disbursed.
In 2006, a Trade Financing Facility was launched. By the end of September 2014, US$2,080m in lines of credit and US$2,250m in risk-sharing guarantees had been approved and US$1,778m had been disbursed.
In the framework of grants, assistance is extended to social and humanitarian aid and social development operations through six regular grant programs; Technical Assistance, Research and Similar Activities, Emergency Relief Aid, HIV/AIDS, Energy Poverty and the Palestine Program. OFID has also established a special grant account to respond to specific global needs — such as the grants for the establishment of the Common Fund for Commodities and the International Fund for Agricultural Development (IFAD). By the end of September 2014, 1,608 grants amounting to US$596m had been extended.
In addition, OFID channeled $972m to two international institutions: it has channeled OPEC Members’ contributions to the initial capital and first replenishment of IFAD’s resources and made irrevocable transfers in the name of seven OPEC Members to the Trust Fund of the IMF.
Focus on energy poverty: In November 2007 during the OPEC Summit in Saudi Arabia, OFID was mandated to align its programs with energy poverty eradication. In 2008 OFID, in implementing the above mandate, started action on the “Energy for the Poor” initiative. To enhance these efforts the OFID Ministerial Council, in its June 2012 Declaration, committed a minimum of a revolving US$1b, which was announced by OFID management at Rio +20.
For more on OFID, visit the website: http://www.ofid.org.
1 This amount excludes US$972m in contributions from OPEC Member Countries channeled through the OPEC Fund to the International Fund for Agriculture (IFAD) and the IMF Trust Fund.