Selectivity and Focus for High Impact Development. Will Budget Austerity Help?

The President’s Policy Directive on Global Development (PPD) called for two important concepts to guide U.S. foreign assistance.  Recognizing that aid has become scattershot in where and what the United States does, the PPD asserted that the U.S. needs to be more selective in where investments are made and more focused in what it does.  Being more selective and focused would result in what the PPD called high impact development.  At the same time, we have entered an era of budget austerity that will require an even more efficient use of resources.  Being selective and focused now has even more immediacy.It has been one year since the PPD was issued and nearly one year since the QDDR was issued, time enough to take a look at implementation.In recent analysis, I looked at the 2012 budget request for indications of more focus and selectivity.  I chose the following indicators that would show selectivity and focus:  1) a reduction in the number of countries receiving aid, a reduction in aid as countries move into higher income categories, or a recognition that some countries are not in a position to benefit from assistance; 2) resources focused in a smaller number of sectors identified as crucial for economic growth; and 3) selectivity around high-impact initiatives.My conclusion?  On the first indicator, there’s good news and bad.  First, the good.  The budget request, which was informed by both the PPD and QDDR, does indeed show focus and selectivity in the accounts managed by USAID.  The budget request shows an attempt to scale back or end programs in some countries and to instead focus resources on Feed the Future and Global Health Initiative countries.  Final country allocations for FY2011 show even greater refinements than the 2012 request.The State Department?  Not so much.  The largest aid account managed by the State Department is its Global Health and Child Survival account, from which PEPFAR is funded.  Of the 54 countries receiving assistance from this account in previous years, none are zeroed out.  This could well be because previous commitments to provide life-saving antiretroviral treatment must continue in order to be effective.  On the other hand, seven of eight countries identified for decreases are PEPFAR countries, some with very high prevalence rates.More troubling is that several countries receive very small amounts of funding.  This suggests to me that funds are being provided for a diplomatic rather than a development purpose.  The following countries would receive less than $500,000 in health funds:  Belize, El Salvador, Jamaica, Kygyz Republic, Madagascar, Peru, Sierra Leone, Thailand, and Turkmenistan.On the second indicator – sector focus – the evidence is muddled.  The PPD and QDDR stressed the importance of investing in economic growth and democratic governance, yet the areas receiving the highest funding are peace and security (33%) and health (28%).  Programs that are identified as promoting economic growth (see USAID’s Dashboard) comprise 13% of the aid budget, making it the third highest funded.  Democracy and governance, on the other hand comes in at 9%.On the third indicator – a focus on special initiatives, what some think will be high-impact – there are positive signs, as mentioned above, although more clarity is needed on the new Partnership for Growth model.Yes, being focused and selective means hard choices and push back from many quarters. Congress loves to earmark funds by country and sector.  In 2010, Congress assigned dollar amounts for activities relating to water, education, climate change, microenterprise, agriculture, and various diseases.  Pending 2012 spending bills include earmarks for women, water, education, microenterprise, and health.  But Congress cannot expect good management if it simultaneously cuts resources and also limits the administration’s flexibility to manage those resources.  There’s a good tradeoff here just waiting to happen.  The conflation of development and diplomacy as indistinct concepts means that the State Department, driven by short-term diplomatic imperatives, likes to allocate aid dollars for purposes other than development.  Ambassadors do not like to tell their host governments that programs will be ended.  And then there’s the inertia problem – it’s just politically easier to maintain underperforming programs than to end them.Nevertheless, today’s environment of budget austerity provides an opportunity to implement  selectivity and focus principals. Perhaps no other time is better.

1. Re-evaluate and eliminate small programs.  Development objectives should drive greater selectivity in the number of countries in which the United States provides assistance.  The United States should engage with those countries that are most willing to partner on achieving development objectives.  The State Department and USAID should not shy away from ending programs elsewhere.  Small aid programs that are used as deliverables to maintain friends and allies are not likely to have a significant development impact, although they may have a diplomatic one.  Aid programs in 41 countries would receive less than $5 million in 2012.  All should be scrutinized for termination.
2. Create a State Department aid account for strategic/political purposes.  Diplomatic objectives should be pursued with diplomatic tools. Development programs implemented for diplomatic reasons may simultaneously be diplomatic successes and development failures.  Policy makers should consider making development and diplomacy distinct through the creation of a State Department aid account, similar in purpose to ESF, which is to support countries of strategic importance to the United States that might not otherwise qualify for aid.
3. Focus on a smaller number of objectives that have big impacts and get out of unrelated programs.  If economic growth is the overarching objective, then how do food security, health, and climate change work toward that goal?
4. Identify comparative advantage.  What does the U.S. do well or better than other donors?  I’m not sure, but an exercise that identifies the comparative strengths of international donors might help to refine a U.S. focus while not producing “aid orphans.”