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The Americas Capital Initiative: Priming the Engines of Growth in Latin America

Fact Sheet, Bureau of Economic and Business Affairs

Posted: November 5, 2005

Washington, DC
November 1, 2005

The Americas Capital Initiative (ACI) is a U.S. Government effort to expand the circle of prosperity in Latin America by priming what President Bush called "the real engines of hope in the Americas: its small business and private enterprises and entrepreneurs."

ACI seeks to help Latin America’s private sector by building on the existing programs of the Export-Import Bank of the U.S. (Ex-Im Bank), the Overseas Private Investment Corp. (OPIC), and the U.S. Trade and Development Agency (USTDA) in the hemisphere. The Initiative will expand efforts to publicize how these agencies can facilitate increased private sector growth. Latin American firms of all sizes can benefit as partners of U.S. businesses that are utilizing the Ex-Im Bank and OPIC programs. The Latin American private sector also benefits from USTDA’s diverse assistance for capacity building, project analysis, and other activities.

These three agencies are already significant players in the Americas. In FY 2004, they provided more than $5 billion in loans, guarantees, and technical assistance to expand Latin America’s private-sector trade and investment and to improve technical capacity.

Export-Import Bank of the United States (Ex-Im Bank)

The Ex-Im Bank’s main products are export insurance and loan guarantees.

Export Insurance: Most commonly for short-term finance (less than 360 days) of export sales of U.S. products, but may be used for up to five year terms. The U.S. exporter can sell on an open account to a single or multiple buyers, or can use a bank letter of credit.

Guarantees: Ex-Im guarantees commercial loans made by private lenders to foreign buyers to purchase, most often, U.S. capital goods and services. The program offers repayment terms of 5 to 7 years in the medium term; 8 to 10 years in the long term; and in certain transactions, such as project finance and aircraft, 12 years.

Environmental Exports Program (EEP): Ex-Im has special insurance and guarantee programs for exports that contribute to the clean up of land, air, or water. Special terms include repayment of up to 15 years for certain products; local cost financing of up to 15 percent of U.S. contract price, and interest capitalized during construction or disbursement period.

Ex-Im also has a financing program for working capital loans for eligible U.S. companies to facilitate U.S. exports.

At the end of FY 2004, Ex-Im’s exposure in Latin America totaled $15.6 billion – one-quarter of its worldwide total. Small and medium-sized U.S. companies account for about 80 percent of Ex-Im’s transactions.

More information about Ex-Im programs can be found at: www.exim.gov. Ex-Im has a web page for programs in Mexico and Brazil. These pages are in English, Spanish and Portuguese with links to other USG trade agency sites, such as USTDA, OPIC and the Commercial Service.

Overseas Private Investment Corporation (OPIC)

OPIC helps U.S. companies investing overseas by providing political risk insurance, financing, and supporting investment funds.

Insurance: Political risk insurance mitigates investor’s non-commercial risks stemming from the threats of political violence, inconvertibility of currency, and expropriation. OPIC insurance can provide up to $250 million in coverage per transaction or project for up to 20 years.

Finance: OPIC provides financing through loan guarantees and direct lending for medium- and long-term investments. OPIC can guarantee or lend from $100,000 to up to $250 million per project. Oil and gas sector projects with offshore, hard currency revenues may be approved for up to $400 million under certain conditions.

When both insurance and financing are used the exposure limits are the same -- $250 million per transaction or project, $400 million under certain circumstances.

Investment Funds: OPIC supports private equity funds that target investments in developing countries. These privately managed funds use OPIC debt to leverage direct equity investments in new, expanding, or privatizing companies. Three OPIC investment funds concentrate on investment in Latin America.

OPIC has a Small Business Center that offers special programs for smaller companies.

Over the past 34 years, OPIC has supported more than 3,000 projects worth over $160 billion in 150 countries. Latin America is OPIC’s largest geographic concentration of invested capital, accounting for approximately one-third of the global active portfolio. More information about OPIC programs can be found at: www.opic.gov.

U.S. Trade and Development Agency (USTDA)

USTDA is a U.S. foreign aid agency that provides technical assistance to developing countries. Nearly half of its 2005 budget was allocated to trade capacity-building projects that help developing countries meet international standards, comply with trade agreements, conduct market liberalization, and make other policy reforms. USTDA assistance is grouped as:

Trade Capacity-Building and Sector Development: This includes technical assistance to help governments develop economic sector strategies, industrial standards, and legal and regulatory regimes favorable for business and trade. USTDA also provides training for foreign officials in sectors where there are sales opportunities for U.S. companies and awards grants to overseas project sponsors to use in hiring trade and industry advisors.

Project Definition and Investment Analysis: USTDA conducts "orientation visits" for foreign project sponsors by bringing them to the United States to learn about the U.S. products and services that would be useful to them in achieving their development goals. USTDA also provides grants for project feasibility studies and assistance in establishing transparent procurement processes. In addition, the agency organizes workshops, conferences, and technical symposia worldwide aimed at connecting overseas project sponsors with U.S. firms.

More information about USTDA programs can be found at: www.ustda.gov.

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