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USAID Administrator Raj Shah has called for “massive private and commercial-sector investment” in development as imperative to ending extreme poverty. Dr. Shah, whose five year leadership of America’s international development agency ends next week, urged the development community to do more to bring forth large sums of private capital for much-needed infrastructure projects in developing countries.
Speaking to me in a CGD podcast, Shah pointed to major initiatives such as Power Africa and Feed the Future, implemented under his stewardship, as successful examples of mobilizing private-sector money for public development gains. Shah described the increased use of public-private partnerships as a new model for development that had been one of the key successes of his time at USAID.
But new and more public-private partnerships, he stressed, were essential to the future of global development. “We need private-sector partners making investments, for commercial return, but real investment. And we need governments, like the United States government, and institutions like USAID being the conveners that brings people together to get the job done,” said Shah. Without public-private partnerships, he warned, it is “hard to see how we mobilize lots of additional resources for the things most critical to create inclusive growth around the world.”
Here at CGD, we are focused on this summer’s Financing for Development Conference in Addis Ababa, Ethiopia, as a key moment to galvanize private-sector resources. In our podcast, Shah would not reveal if the United States plans to make any specific proposals at the event, but he said it would be a chance for the country to be “much more effective and aggressive” at increasing private-sector investment in development projects. Watch what Shah says about the Addis event here; below you’ll find links to the full podcast, available both as video or audio only.
Before I sat down with Shah I asked you for suggested areas of questioning. Thanks to those who responded — I incorporated some of your thoughts when I asked about local ownership versus centralized control, and when I asked about things that have not gone so well. In particular, I wanted to know what lessons he’d learned from the Global Health Initiative, a potentially huge project that has fizzled. I’d love to hear your reactions when you hear how Shah answered that question!
Shah leaves his job next week after five high profile years at the helm of USAID. He gave few clues about what lies in his future — but obscurity certainly does not. Click these links to listen to the podcast or watch the full video.
Tomorrow, USAID Administrator Mark Green heads to Capitol Hill to defend the Trump administration’s FY 2019 foreign assistance budget request. It won’t be easy. Lawmakers have pushed back hard against the drastic cuts to US global development and humanitarian spending proposed by the administration.
And while, under Green’s leadership, USAID has advanced several smart ideas to improve the agency’s effectiveness—including developing a framework for thinking about aid transition, piloting new ways to pay for results, and improving procurement processes—there remain significant questions about how these efforts will fare in the absence of sufficient resources and whether proposing such deep cuts provokes a level of skepticism that jeopardizes reform efforts.
Here are some specific issues I hope receive attention during tomorrow’s hearing:
At this time last year, the Trump administration was reportedly contemplating folding USAID into the State Department as part of an effort to “streamline” the federal government. The consensus reaction from the development community was that preserving USAID’s independence is paramount. For several months we’ve heard repeated assurances that consolidation is no longer on the table. But ongoing unease about the relationship between the State Department and USAID suggests the point remains relevant.
The rapport between the department and agency is liable to change with new leadership on the horizon for State. Even so, the hearing provides a useful opening for the many members who support USAID’s independence to go on record and give Green a chance to make the case for it.
Green’s vision for USAID’s development work is centered on a “journey to self-reliance”—supporting the development of countries’ capacity to finance and manage their own development so they can eventually transition away from aid. This vision isn’t new—previous administrators have espoused similar convictions. But Green’s proposal to develop a transparent and evidence-based approach to deciding if, when, and how to transition a relationship with a country from one based on grant-based economic assistance to one focused on trade support and other forms of development finance is more focused than many previous efforts and deserves recognition.
An idea, however, is only as good as its implementation, and there are a number of unanswered questions about how this concept will be put into practice. If the hearing delves into Green’s signature “journey to self-reliance,” I hope members ask, how would USAID seek to redefine its relationship with a country based on the new framework? How will proposed metrics be used to inform decisions about readiness for transition and/or the approach USAID should take in a particular country, and what makes them an appropriate tool for this purpose? What is the relationship between the “journey to self-reliance” framework and other strategy-setting processes?
And how does it feed into processes that seek to include local priorities and goals? Directives and initiatives from Washington already tend to dominate missions’ strategic decisions; how will USAID ensure its “journey to self-reliance” framework doesn’t become yet another Washington-based tool that limits the influence of country-determined priorities?
Domestic resource mobilization
An administration-released factsheet on the FY19 budget request highlighted a new commitment to domestic resource mobilization (DRM)—$75 million for activities that help countries self-finance their own development. This is a welcome push that aligns well with USAID’s “journey to self-reliance” framework, as well as with the internationally endorsed Addis Tax Initiative, which asks donors to increase their support for DRM.
But even amid widespread support for DRM, there are real gaps in what we know about assistance in this area. To begin with, we don’t even have a good account of how much we’re currently spending on DRM, though this is improving. We also know relatively little about the effectiveness of various interventions, which largely fall into the camp of more-difficult-to-evaluate technical assistance. I hope, as part of the new initiative, that Green can articulate how the agency will define success in this area and assess the degree to which its investments achieve their intended outcomes.
While it may not sound glamorous or exciting, getting procurement right is foundational to USAID’s effectiveness. Previous administrations have spearheaded some important shifts in how USAID makes awards, but more work remains to ensure award types are better aligned with USAID’s vision for how it wants to do business.
The Trump administration makes a lotofreferences to the importance of evidence-based decision making. And USAID, with Green at the helm, has demonstrated this commitment in some noteworthy ways. Within the last year, for instance, the agency hosted a day-long event showcasing evidence and evaluation and announced participation in a new development impact bond (DIB), an innovative results-based financing scheme.
On the other hand, the administration’s proposed budget would strike a massive blow to USAID’s evidence and evaluation functions. The FY19 budget request contains a 40 percent cut (compared to FY17 levels) to the Bureau of Policy Planning and Learning—the headquarters of the agency’s learning, evaluation, and research efforts. And it would slash funding for the Global Development Lab (the Lab) by 80 percent.
Within the Lab, the evidence-focused components have been particularly shorted. Last year, USAID closed new applications for Development Innovation Ventures (DIV), the part of the Lab that rigorously tests new ideas for solutions to development problems and helps scale those that prove successful.
Green has talked a lot about improving the efficiency and effectiveness of USAID. The hearing provides an opportunity for him to highlight some of the innovative ways USAID is using evidence to pursue these objectives, but he should also be pressed on the risks that downsizing the agency’s evidence engines poses to the broader effectiveness agenda.
Fragile and conflict-affected contexts
At least a third of USAID’s assistance goes to fragile and conflict-affected states.* Fragile states are where poverty is increasingly concentrated, humanitarian relief is most needed, and US national security interests are often most pressing. Fragility, however, is extraordinarily complex, often confounding the most well-intentioned efforts by donors to promote stability and development. Recently introduced legislation (H.R. 5273), sponsored by a number of panel members, would require USAID—along with the State Department and Department of Defense (DOD)—to take a hard look at what works and what doesn’t in aid to fragile states, create a strategy for violence reduction in select countries, and better assess impact.
With over 15 years of experience providing assistance to fragile states, USAID should already have some thoughts on how to approach these questions. It would be great to get Green’s take on how USAID should adjust its procurement, program design, and implementation processes to respond quickly to emergent needs and adapt interventions in constantly evolving fragile environments.
One of the big threads in the recent US foreign assistance reform and redesign conversation has focused on how the fragmentation of aid across 20-plus agencies compromises its efficiency and effectiveness. Eliminating this fragmentation isn’t really on the table—it would be hugely complicated and require a complete rework of the distinct roles of various agencies. But it may be possible to ease the symptoms of fragmentation through improved coordination and collaboration.
This has been critical in the context of a cross-cutting initiative like Power Africa—and would likewise be necessary for doubling down on DRM. The new proposed US International Development Finance Corporation would need to coordinate closely with USAID. And the agency has highlighted the need for better coordination with DOD in its work in fragile states. For each of these needs, what can USAID do to improve coordination and collaboration? What does good coordination look like in practice?
*In FY16, 29 percent of USAID’s obligations went to the 20 most fragile states as ranked by the Fragile States Index.
Even before he took office, USAID Administrator Mark Green made clear his vision that the objective of foreign assistance “should be ending its need to exist.” While his predecessors espoused similarconvictions, Administrator Green’s pledge to make “working itself out of a job” central to USAID’s approach has focused renewed attention on the question of how to responsibly and sustainably transition countries away from traditional, grant-based development assistance.
In recent months, USAID has been working diligently to craft its approach to “strategic transitions,” framing the principles it will follow, the benchmarks that will help inform transition decisions, and the programs and tools it can bring to bear. This Thursday, in a public discussion with the agency’s Advisory Committee on Voluntary Foreign Aid (ACVFA), USAID will outline its initial thinking about strategic transitions.*
In formulating its approach to strategic transitions, USAID should draw on the following 10 lessons that emerge from its own history and that of other bilateral donors:
Define transition goals, while recognizing broader US foreign policy objectives. Country transition plans should include both the development results and policy objectives USAID hopes to sustain as well as the actions required to achieve them, while taking into account the nature of the bilateral relationship.
Consider options short of complete aid exit. While complete withdrawal may be prudent in some circumstances, USAID should have leeway to pursue other options—such as approaching transition on a sector-by-sector basis, maintaining a development representative in country to support limited programming, or funding programs from Washington or a regional mission.
Recognize that coordination is crucial for effective transition planning. Close collaboration between USAID Washington and the field mission, as well as with other US government agencies, Congress, partner country stakeholders, implementing partners, and other bilateral and multilateral donors, is critical for transition success.
Assess and mitigate risks to sustaining development results (i.e., know who will fill the vacuum). USAID should protect the value of its past investments and seek to sustain its results by collaboratively identifying priority areas to be advanced by local actors (or other donors) and considering how to prepare the designated actors to take on new managerial or financial responsibilities.
Prioritize evaluation and costing of assistance activities that will be wound down. Critical to ensuring USAID-supported development results are sustained is understanding what (and whether) results have been achieved; costing exercises are similarly important for determining the appropriate actors—and the capacity of those actors—to take on additional obligations.
Transparently monitor progress on the transition plan. Monitoring progress toward the agency’s goals of ensuring sustained results can help USAID understand whether a transition approach is on track, and, if not, explore opportunities to adjust plans.
Ensure sufficient time for the above steps to occur. Sufficient time—at least 3-5 years—is necessary to meaningfully implement good transition practices; in contrast, overly compressed timelines can compromise US interests by hurting bilateral relations, undermining past development results, and/or leaving a void for competing powers to exploit.
Balance clarity and flexibility in the transition strategy. While it is important for USAID to define and clearly communicate its objectives, timeline, plans, etc., there should be enough flexibility to accommodate new information (e.g., from consultations) and contextual shifts (e.g., natural disasters, economic shocks) that emerge during the transition process.
Plan for mission staffing adjustments as part of the transition. USAID should recognize that transitions may require specific managerial skills and expertise that may not already exist within all missions; in addition, any staff downsizing must be sensitive to the need to preserve important relationships throughout the transition and support local staff in moving to new employment.
Learn and capture lessons. USAID should expand knowledge around common challenges and pitfalls by building into each transition process opportunities for real-time learning through experience sharing, as well as formal ex-post evaluation.
The pros and cons of using quantitative benchmarks to identify countries for transition—and an idea for how to do it
USAID has signaled interest in using quantitative benchmarks to evaluate a country’s readiness for transition. Using quantitative metrics ensures evidence is brought to bear on an important determination and can lend greater transparency, credibility, and accountability to the process. However, quantitative indicators will never provide a comprehensive picture of a country’s transition readiness, nor will they easily quantify broader US foreign policy and national security interests. Furthermore, data often carry some imprecision and are reported with a time lag. For these and other reasons, it is important that USAID not adopt a rigid or overly prescriptive interpretation of the quantitative criteria it develops.
We recommend a two-stage assessment for determining which countries might be ready for transition. The first stage would employ quantitative indicators to measure factors such as country need, fragility, good governance, business and economic environment, and financing capacity. The set of countries that show high performance across these measures would be analyzed further in the second-stage analysis that would employ both quantitative and qualitative information to assess whether national-level performance masks important subnational, gender-based, or other disparities, as well as a wider range of policy, institutional, and capacity issues most relevant to the sectors USAID funds.
Defining US engagement through the transition process and beyond
As USAID seeks to define a path for sustained partnership with transitioning countries, the agency should explore a full range of tools, some of which go beyond traditional, grant-based assistance.
The avenues of engagement that USAID pursues and the legacy structures it seeks to put in place will vary by country, depending on the nature of the agency’s existing investments, capacity and financing gaps in the partner country, the priorities of the partner country government, and the character of the broader bilateral relationship, among other things.
*Sarah Rose participated in an ACVFA working group focused on strategic transitions.
Since his first day on the job two months ago, Mark Green has emphasized his commitment to improving the efficiency and effectiveness of USAID. In charting the agency’s path toward these goals, he will weigh a variety of reform and redesign proposals and gather input from a wide range of stakeholders. Regardless of what the final reform plan looks like, if Administrator Green is serious about enhancing USAID’s efficiency and effectiveness, one of his priority areas should be improving how the agency uses evidence to inform its policies and programming. In the absence of attention to learning more about what works and applying these lessons to the agency’s work, the effectiveness of any reform or redesign effort will ultimately fall short of its potential.
The upcoming USAID-led Evidence Day on September 28 at the Ronald Reagan Building (part of Global Innovation Week) provides a perfect opportunity for Administrator Green to spell out his plans to prioritize the role of evidence at USAID. In a new CGD Note, Advancing the Evidence Agenda at USAID, Amanda Glassman and I offer some suggestions. After characterizing the constraints the agency faces to better generation and use of evidence, we propose eight recommendations to address them. In particular, we urge USAID to:
Elevate and consolidate the evidence agenda with the establishment of a new unit: Evidence, Evaluation, and Learning (EEL)
Create incentives for improved evaluation quality through a public scoring system
Focus on synthesizing data for greater accessibility and use
Streamline reporting requirements to allow greater focus on more useful evidence
Evaluate staff performance on evidence use
Adjust staffing choices and opportunities to better emphasize skills in evaluation
Bake evidence-based programming into the procurement process
Continue to support and invest in external organizations’ contributions to learning
As Administrator Green starts his term, he should consider how he wants USAID’s results characterized at the end of his tenure. Will he point to numbers of people trained, or amounts of products purchased? Or will he be able to describe the attributable difference that USAID made to the people the agency is committed to help? With a renewed commitment to evidence, evaluation, and learning at the highest levels, he can edge the agency toward the latter, far more compelling narrative.
With Hurricane Irma now pushing a devastating path through the Caribbean, USAID is gearing up to do what it does best. Its Disaster Assistance Response Teams (DARTs) do amazing work—deploying rapidly in the wake of natural hazards like hurricanes and often bringing the logistical might of the US military with them. These teams go in big and fast to save lives, distribute food, set up emergency shelter, and prevent secondary impacts like disease outbreaks.
But then things begin to falter.
When the effort pivots from disaster response to post-disaster recovery, USAID’s efforts are almost invariably understaffed, underfunded, and underwhelming. USAID development professionals are increasingly trying to take the baton when their disaster response colleagues depart; but invariably they find themselves hamstrung. This is because the powerful toolkit USAID has for disaster response abruptly turns into a pumpkin and disappears during the reconstruction and recovery phase.
With Irma raging ahead and other storms on the horizon, I fear the USAID is again poised to win the response and lose the recovery.
As the head of US foreign disaster relief during the Obama administration, I managed many of these mega-disasters. Typhoon Haiyan in the Philippines, the strongest storm to make landfall in recorded history (a record that Irma could eclipse). The massive 2015 earthquake in Nepal. The Ebola outbreak in West Africa. Hurricane Matthew, which ravaged Haiti last fall. In each of these disasters, USAID disaster teams deployed decisively, flexibly, and with ample resources—and their actions saved many lives.
But if the agency went four-for-four on those disaster responses, we went one-for-four on their recovery phases. Only the Ebola recovery was well resourced, through a special appropriation from Congress. The other three disasters were largely orphaned once the recovery phase began, because USAID’s ambitious plans for recovery support received only a fraction of what they required.
This is not a new problem. The post-disaster recovery gap has bedeviled the US government for decades. Over the past 25 years there have been countless initiatives and acronyms thrown at the problem, but little real progress. The core obstacle is that the USAID lacks the people, resources, and flexibility needed to ensure effective recovery.
This is a shame, because the real work of a natural disaster is in the long-term rebuilding, not the immediate lifesaving. Most of the people who die in a natural disaster do so in a short window of time as the event peaks: crushed in falling buildings as the ground trembles or swept away by torrential currents of water. Few of these people are plausibly savable once an event is underway. But nearly all of them are savable through good preparedness and early warning (which are chronically underfunded).
For those who do survive, the road ahead is difficult. International resources flood in for the immediate response and invariably falter beyond that. So families often find that the “temporary” shelters they receive in the immediate aftermath become semi-permanent due to lack of reconstruction assistance. And without support to re-start their livelihoods, they lack the resources to rebuild for themselves.
The jarring contrast in how USAID performs on relief vs. recovery mirrors a jarring contrast in how Congress allocates and oversees the resources it gives to USAID. For disaster response, Congress grants the agency broad flexibility to contract staff, allocate resources, and set response priorities. It has established a long-standing and well-funded disaster assistance account to support the agency’s disaster efforts. And it has also given USAID a “notwithstanding” authority for disaster response—meaning that USAID can (judiciously) choose to bypass normal legal requirements if they would obstruct a speedy response. This means that when a disaster strikes, USAID can rapidly mobilize reserve staff, assess needs, and focus resources on the areas of greatest need.
But in the recovery phase, by contrast, USAID becomes straitjacketed by congressional requirements. Reconstruction needs are generally funded through other foreign aid accounts, which lack the flexibility the disaster account enjoys. To spend money from these accounts, USAID must go through arduous federally-mandated procurement procedures, which can take one to two years to complete. Needless to say, that sort of delay doesn’t much help a population that is living under plastic sheeting after losing their homes and livelihoods.
But it gets worse. Before USAID can even begin that arduous programming process, it first must find the money—and rarely does Congress appropriate any extra funds. While Congress issued special appropriations in the cases of Ebola and the 2010 Haiti earthquake, these are rare exceptions. More typically, USAID is forced to find resources within its existing funding—meaning cuts to other programs. USAID needs to be willing to make those hard trade-offs—but even when it is, it finds itself prevented from doing so by congressional spending directives. Each year, Congress mandates that USAID spend predetermined amounts on major sectors like education, health, or microfinance. These directives leave little flexibility for the agency to change course and reprioritize after a disaster strikes.
And then of course there is the problem of people—or rather the problem of too few people. Ramping up a large recovery effort takes bodies—people to assess needs, coordinate with partners, plan programs, and issue grants. At the height of the 2016 response to Hurricane Matthew in Haiti, USAID deployed more than 60 disaster professionals to the country. Once that team departed, the recovery planning fell to the local USAID development mission, which lacked the bandwidth to cover this role along with its day-to-day obligations. This is a common story, yet the agency lacks an organized roster to identify, hire, train, and deploy staff for this sort of function. Congressionally-imposed caps on staffing levels make it difficult for the agency to staff for these occasional contingencies without undermining other functions.
Fortunately, much of this can be fixed—if Congress and the Trump administration choose to do so. The administration is midway through a review and reorganization of foreign affairs and foreign aid tools. Congress has signaled that it wants to be involved—the foreign aid budget draft released by the Senate this week requires that Congress be consulted on any major changes. So the time is ripe to fix this long-running problem.
How to do so? As I wrote in a recent paper advising the administration’s reform effort, there are some concrete options available—right now—to give USAID the resources, people and flexibility to nimbly execute post-disaster recovery efforts.
On the resources front, Congress could help greatly by authorizing earmark relief to USAID in the wake of a declared disaster. Granting USAID’s country programs a two- to three-year waiver on fulfilling sector earmark directives would free up resources to be redirected toward reconstruction programs. Similarly, loosening the restrictions on hiring—particularly on the agency’s staffing cap—could enable USAID to build a deeper bench of transition and recovery experts to deploy after disasters, without undermining ongoing program obligations elsewhere. Finally, USAID should be more aggressive—with congressional backing—in waiving standard grant-making processes in post-disaster settings. Rather than reverting to the standard one- to two-year turnaround for developing and issuing new grants, USAID should exercise authorities to waive those requirements when exigent circumstances demand faster action.
The perpetual question, of course, is one of trust. Congress applies tight restrictions on staffing, funding, and procedures because it has not historically trusted the agency’s own judgment in these matters. Yet the agency’s consistently excellent performance on disaster response is a powerful counterpoint: when given greater leeway, USAID can use it responsibly to deliver powerful programming. It’s time for Congress, and the administration, to take a joint leap of faith and equip the agency to be as effective on disaster recovery as it is on disaster response.