[Senate Hearing 112-64]
[From the U.S. Government Publishing Office]
S. Hrg. 112-64
INTERNATIONAL DEVELOPMENT POLICY PRIORITIES IN THE FY 2012 BUDGET
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HEARING
BEFORE THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
APRIL 13, 2011
__________
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COMMITTEE ON FOREIGN RELATIONS
JOHN F. KERRY, Massachusetts, Chairman
BARBARA BOXER, California RICHARD G. LUGAR, Indiana
ROBERT MENENDEZ, New Jersey BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania MARCO RUBIO, Florida
JIM WEBB, Virginia JAMES M. INHOFE, Oklahoma
JEANNE SHAHEEN, New Hampshire JIM DeMINT, South Carolina
CHRISTOPHER A. COONS, Delaware JOHNNY ISAKSON, Georgia
RICHARD J. DURBIN, Illinois JOHN BARRASSO, Wyoming
TOM UDALL, New Mexico MIKE LEE, Utah
Frank G. Lowenstein, Staff Director
Kenneth A. Myers, Jr., Republican Staff Director
(ii)
C O N T E N T S
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Page
Cardin, Hon. Benjamin L., U.S. Senator from Maryland, opening
statement...................................................... 1
Lugar, Hon. Richard G., U.S. Senator from Indiana, opening
statement...................................................... 3
Yohannes, Hon. Daniel W., Chief Executive Officer, Millennium
Challenge Corporation, Washington, DC.......................... 10
Prepared statement........................................... 12
Shah, Hon. Rajiv J., Administrator, U.S. Agency for International
Development, Washington, DC.................................... 4
Prepared statement........................................... 6
Additional Material Submitted for the Record
Webb, Hon. Jim, U.S. Senator from Virginia, prepared statement... 26
Responses to Additional Questions Submitted for the Record by
Members of the Committee
Responses of Administrator Rajiv Shah to Questions Submitted
by Senator Richard G. Lugar................................ 26
Responses of Daniel Yohannes to Questions Submitted by
Senator Richard G. Lugar................................... 53
Responses of Daniel Yohannes to Questions Submitted by
Senator Benjamin L. Cardin................................. 59
Responses of Administrator Rajiv Shah to Questions Submitted
by Senator Benjamin L. Cardin.............................. 61
(iii)
INTERNATIONAL DEVELOPMENT POLICY PRIORITIES IN THE FY 2012 BUDGET
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WEDNESDAY, APRIL 13, 2011
U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met, pursuant to notice, at 2:03 p.m., in
room SD-419, Dirksen Senate Office Building, Hon. Benjamin L.
Cardin, presiding.
Present: Senators Cardin, Menendez, Lugar, Risch, and Lee.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN,
U.S. SENATOR FROM MARYLAND
Senator Cardin. Well, let me welcome Administrator Shah and
Mr. Yohannes to our committee.
Today, we will be talking about the international
development policy priorities in the FY 2012 budget. I can't
think of a more challenging time we've had for international
development policies than we have now. There certainly are a
significant number of humanitarian challenges around the globe.
Poverty and the challenges of dealing with poverty, the global
food shortages, and the impact of climate change all have made
it even more important for how we implement our international
development policies.
U.S. global development and U.S. foreign aid are critically
important to our national security concerns, to promote
economical and political stability throughout the world.
They're part of what we call our ``three-D strategies''--the
development assistance, defense, and diplomacy.
What is, I think, surprising to most Americans is the
amount of money America spends on its foreign assistance. There
was, recently, a survey done by the Kaiser Foundation which
asked Americans how much of the national budget they thought
went for foreign assistance. And the numbers centered around 25
percent. As you all know, it's less than 1 percent of the
Federal budget. So, it's a relatively small part of the Federal
budget, but a very important part of the Federal budget, that
is used for foreign assistance. It's critically important that
those funds be used in the most accountable way, and that is
one of the issues that we will be talking about today, to make
sure that all of our funds are used appropriately to advance
our foreign interests.
But, let me start off by quoting from General Anthony Zinni
who said, before this committee in the past, ``From our time on
the front lines of America's presence in the world, we know
that the United States cannot rely on military power alone to
keep us safe from terrorism, infectious diseases, or global
threats that recognize no borders.''
And what concerns me, when you take a look at the proposed
cuts, particularly in the budget that is currently being
considered in the House of Representatives, which is authored
by Congressman Ryan, those cuts will have real concern. The
FY12 budget is cut by 29 percent--29 percent, if my numbers are
correct. And by 2016, the cuts become 44 percent.
Well, those types of cuts are going to have real
consequences. It would affect 5 million children, who could be
denied treatment for malaria, 400,000 people will be turned
away from life-saving treatment for HIV/AIDS, and farmers would
lose access to seeds, soils, and technical assistance that make
their farms viable in the economy.
These individual impacts, taken collectively, will affect
global politics and economic stability and security. These cuts
could have real, negative ramifications for U.S. interests
abroad, and severely damage our efforts to promote human
rights, democracy, and free markets, which, in turn, will lead
to more instability and, ironically, cost the taxpayers of this
country more money. So, I think it's not only wrong from the
point of view of what is the right policy for America, I think
it also will jeopardize us from a financial point of view.
But, as I said before, we need to have full accountability
on the use of our development assistance. We need to have more
efficient programs. And I want to applaud both of our witnesses
today for the steps that you have taken. There have been many
reviews that have been done and initiatives that have been
taken. And I really do think that you're moving in the right
direction to make sure that we have more efficient programs,
end the duplication, establish the priorities, and make sure
that the programs are managed as efficiently as possible.
But, I must also point out that there are additional, I
think, standards that we need to make sure that, wherever we
participate in foreign aid, that certain minimum standards are
met: minimum standards in good governance, as it relates to
transparency, in the countries that we do business with, that
they have active programs to fight corruption in their own
country, that they have programs to deal with gender equity
issues. I think all of that is important as part of our
expectations of where we participate in foreign development.
Recent events in the Middle East have indicated to us that
it's critically important, in that region, that countries that
we participate with meet minimum standards of sharing our
vision to fight extremists and terrorists, to support our
efforts for peace in the Middle East, and to provide basic
human rights and basic standards to the people of their own
country, and that we need to be tough, as we deal with these
countries, to make sure that these standards, in fact, are met.
I'll be interested in hearing from our witnesses the views
on some of the new initiatives that you all have started. The
Feed the Future Program is one that, Administrator Shah--I
would appreciate you directing some attention, in your
comments, to--and the Global Health Initiative.
It's interesting, with Feed the Future, that 925 million
people are suffering from hunger, worldwide. Now, when you look
at that number, it's rather staggering. When you take a look at
it by gender, you find that 60 percent are women. And then you
start looking at the economic realities, globally, where women
represent 66 percent of the work done in the universe and
receive only 10 percent of the income. We need to make sure
that if we are, in fact, going to feed the future, that it
needs to start with equality with women in other countries.
The Millennium Challenge Corporation has initiated many
matters that I think can be models for us, looking at
transparency and country ownership and looking at gender
equity. The President has stated that he wants to see the
United States have the premier development agency in the world.
I share those sentiments. At this critical crossroads, it is
essential that we continue our commitment to provide the
strongest development assistance in the world, fulfilling both
a moral obligation as well as strengthening our long-term
national and global prosperity and security.
Countries that descend into chaos and anarchy are breeding
grounds for extremism. Our comparably small investments in
their development will yield enormous results. I will continue
to strongly advocate for not only adequate funding for these
programs, but also the broader structural and organizational
reforms that are necessary for the 21st century foreign
assistance and development policies and delivery.
I look forward to working with my colleagues on this
committee to ensure that these goals, in fact, are met.
And I want to thank both of our witnesses for their
commitment to service in our country. We're very fortunate to
have you in these positions, and we look forward to working
with you in partnership.
And with that, I would turn to Senator Lugar.
STATEMENT OF HON. RICHARD G. LUGAR,
U.S. SENATOR FROM INDIANA
Senator Lugar. Well, it's a privilege to join Chairman
Cardin in welcoming Administrator Shah and Chief Executive
Officer Yohannes to the committee this afternoon.
Our hearing today takes place in the context of deep
economic uncertainty at home, coupled with extraordinary
upheaval overseas. These conditions necessitate that the State
Department, USAID, and the Millennium Challenge Corporation
prioritize initiatives that contribute to fundamental national
security and foreign policy goals. As our country is challenged
by a large budget deficit and an overwhelming national debt
that exceeds $14 trillion, we must examine the value of every
program. This is true of programs across government, including
those dedicated to international development.
In receiving your testimony today, I will be considering
how your priorities and plans will satisfy a number of
principles.
First, our investment in development programs must
demonstrate clear objectives that are closely connected to the
interests of the United States.
Second, assistance programs have to be run efficiently,
minimizing duplication, waste, and unnecessary expense.
Third, the work of USAID and the MCC must be measurable and
transparent, allowing programs or approaches that are showing
poor results to be jettisoned or revised. I am especially
interested in lessons we can draw from the MCC's rigorous
evaluation frameworks.
Fourth, the United States is just one actor among many
countries and organizations that provide various types of
humanitarian and development assistance. The United States
should emphasize those areas that we do best and that are most
likely to benefit our interests over the long term.
One such area is food. Food shortages and high prices for
commodities have been issues in almost every Middle Eastern
country that has experienced upheaval. This underscores, again,
the pivotal position of the United States as the largest and
most diverse grower and exporter of food and the leader in
agricultural science. This role comes with both enormous
economic opportunities and national security imperatives.
The world will experience explosive growth in demand for
food as large populations in China, India, and elsewhere become
more affluent. Meanwhile, countries throughout Africa and Asia
suffer from severe hunger and malnutrition. The United States
must give high priority to executing a global food policy that
both creates export opportunities for our farmers and
agricultural businesses and addresses hunger in volatile
regions that could negatively impact our national security.
These circumstances require a new focus on increasing
agricultural productivity both here in the United States and
throughout the world. We must challenge the talents of
America's agriculture community to improve product yields
through new technologies, stretching beyond the achievements of
the Green Revolution.
Further, as with our other development investments, we must
lead a coordinated effort across all agencies to prevent
duplication and overlap of these programs. I applaud Dr. Shah's
personal interest in this topic and encourage him to continue
to work with the Congress on this issue.
Finally, we should recognize that personnel from USAID,
MCC, the State Department, and other agencies are on the front
lines in many impoverished or war torn locations, including
Afghanistan and Iraq. We appreciate the sacrifices that they
make and the risks that they take daily on behalf of the United
States.
We thank you, again, for your appearance today and look
forward to your testimony.
Senator Cardin. Thank you, Senator Lugar.
Administrator Shah.
Both of your entire statements will be made part of our
record.
You may proceed as you see fit.
STATEMENT OF HON. RAJIV J. SHAH, ADMINISTRATOR, U.S. AGENCY FOR
INTERNATIONAL DEVELOPMENT, WASHINGTON, DC
Dr. Shah. Thank you, Chairman Cardin, Ranking Member Lugar,
members of the committee. It is an honor to be here again
before you and have a chance to describe the great work that
we're trying to pursue in our development portfolio under the
Obama administration.
Since my full remarks are in the record, I may just limit
my opening statement to three basic points.
The first is that USAID, the MCC, and the work we do in
international development is fundamentally a core part of our
national and economic security strategy. It is less costly and
more effective to invest in agricultural development, as
Senator Lugar just described, rather than dealing with the food
riots, famines, and failed states that result when we fail to
do so. We know that countries ravaged by HIV/AIDS and malaria
and child death that is unnecessary are unable to grow and
unable to achieve stability, as families destroy their capital
assets and seek refuge in any manner that is possible. We know
that today in Southern Sudan, a part of the world that is
receiving significant influx of people from the north, a girl
is more likely to die in childbirth than she is to complete a
secondary education.
It's precisely because our work is so critical to our
national security that we have pursued a set of reforms in how
we do our work so that we can be more efficient, more
effective, more results-oriented, and better stewards of
precious U.S. tax dollars. In doing so, USAID is also seeking
to be a better partner with the U.S. military and with the
State Department and others so that we can be effective at
implementing these programs and bring all of the tools the U.S.
Government has to offer to our core development objectives.
These reforms were initiated through a Presidential Study
Directive (PSD) on development and the Quadrennial Development
and Diplomacy Review or QDDR, which resulted in reprioritizing
growth in governance, science, technology, and innovation, the
concept of mutual accountability, and an absolute and
relentless pursuit of development results as the tenets of our
development policy. At USAID, we have internalized both the PSD
and the QDDR in a specific set of reforms we call USAID
Forward. These include policy and budget reforms that have led
to the creation of new policies at USAID so that, for example,
our education strategy is now more focused on specific results,
with respect to child literacy and learning all around the
world. It's led to specific budget reforms that have allowed us
to identify $400 million in reallocations that we've found
because we're moving resources from less efficient programs to
more efficient programs. It has allowed us to pursue science,
technology, and innovation investments, such as a unique
partnership we called Saving Lives at Birth, that will look at
new technologies to help bring the costs down and help save the
1.6 million women and children that die either during
childbirth or in the first 48 hours of life. And it's allowed
us, importantly, to really fundamentally restructure our human
resources and our procurement strategies so we can shorten the
cycle time between ideas and impact, work with a broader range
of partners, and execute new accountability efforts, like the
Accountable Assistance for Afghanistan Program, to allow us to
better track resources, better manage subcontractors and
private security contractors, and serve as better and more
accountable stewards of U.S. taxpayer dollars.
Perhaps the single program where this is most visible is in
the Feed the Future effort, where we have selected 20 countries
to participate, based on their willingness to increase their
own investment in agricultural development, where the
agricultural sector is critical to their economic success, and
where we think we can work in a spirit of real results, in
partnership with other donors, so we leverage our dollars 2- or
3-to-1 as we pursue an effort of eliminating hunger in these 20
countries. In pursuing this program, we think we will reach 18
million people, and help them move out of a state of poverty
and hunger in 5 years, 7.2 million of which are children who go
to bed hungry every night, today.
Third, and perhaps most importantly, we believe that all of
our development investments should be focused specifically on
achieving results. I described the results we are trying to
achieve in Feed the Future. In our Global Health Initiative, we
are reprioritizing those specific investments that save the
most lives at, frankly, the least cost.
We're reprioritizing getting diarrheal and pneumonia
vaccines to communities that do not have them, so that we can
save lives at $10 to $20 per life-year.
We are trying to build on some of the incredible bipartisan
successes of the past administration, and the first 2 years of
this one, in the President's Malaria Initiative, where, for the
first time, we've seen validated data that has documented a 30-
percent reduction in all-cause child mortality in countries
that benefit from the program, which means that, by getting
poor children in local communities a $2 or $3 bed net to sleep
under, among other things, we're not only saving their lives,
but, by keeping them out of the hospitals there, we're allowing
the hospitals to save other children's lives from other
diseases.
And we're pursuing a results-oriented development strategy
in very difficult-to-work areas like Afghanistan, where our
program is part of an integrated civilian and military effort
that is being executed in specific key terrain districts that
are both part of current kinetic operations and part of our
transition strategy.
We believe these are results that will keep us safe, keep
us secure, and improve our ability for our country to have
viable and effective trading partners around the world. And we
recognize that budgets are an expression of both values and
priorities. And we appreciate the chance to be here today to
describe our priorities.
Thank you.
[The prepared statement of Dr. Shah follows:]
Prepared Statement of Dr. Rajiv Shah
introduction
Thank you very much Mr. Chairman, Ranking Member, and members of
the committee. I am honored to join you here today in support of the
President's fiscal year 2012 budget request.
Before beginning my testimony, I want to briefly comment on USAID's
response to the devastating earthquake and subsequent tsunami in Japan
and the remarkable events taking place in the Middle East.
In Japan, USAID is leading the U.S. Government's response,
coordinating an interagency effort with the Nuclear Regulatory
Commission, and the Departments of State, Energy, Defense and Health
and Human Services. We also have deployed a Disaster Assistance
Response Team--including urban search and rescue specialists and
nuclear experts--to support Japanese emergency response efforts. I'd
like to thank the brave men and women on these teams for their enormous
courage. USAID has provided 10,000 personal protective equipment sets--
including suits, masks, gloves, decontamination bags, potassium iodide
and other supplies--to help those working near the contaminated zone in
Fukushima Prefecture.
Our thoughts and prayers are with the Japanese people at this time,
and we will continue to work closely with the Government of Japan to
respond to their requests for assistance as quickly as possible.
USAID also has led the humanitarian response to recent events in
the Middle East. As we speak, USAID teams are working on the Tunisian
border with Libya and in Egypt, helping deliver assistance to those
affected by conflict. In eastern Libya, we have delivered health kits
capable of providing basic care to 40,000 people, with more en route.
We have also provided key support to the World Food Programme, which
has moved more than 10,900 tons of food in and around Libya, enough to
feed more than 650,000 people.
We will work with counterparts to help the people of the region
realize their democratic aspirations through a credible transition.
Drawing on experience USAID has gained over decades, we will help
countries strengthen civil society, extend the rule of law, and create
more transparent and accountable democratic governance.
results
Both the President and Secretary Clinton have emphasized that
development is as important to our Nation's foreign policy as diplomacy
and defense, and as a result have actively championed the goal of
reestablishing USAID as the world's premier development Agency.
Representing less than 1 percent of the Federal budget, the
President's FY 2012 request balances difficult tradeoffs with a clear-
eyed assessment of where we can most effectively achieve dramatic,
meaningful results for the American people and the developing world.
The President's request includes significant investments in
bipartisan initiatives promoting global health and food security, the
foundations of which were laid by the previous administration and
bipartisan supporters in Congress.
Representing the largest portion of the President's budget request
for foreign operations, the $8.7 billion USAID and State are requesting
for the Global Health and Child Survival account will allow us to
transform HIV/AIDS from a death sentence to a manageable disease for
more than 4 million HIV-positive patients, reduce the burden of malaria
by half for 450 million people and prevent hundreds of millions of
child deaths from preventable diseases by providing them vaccines and
bed nets.
Our Global Health Initiative is designed to efficiently deliver
these results. Rather than create separate facilities to treat separate
diseases, we will save money and expand the reach of coverage by
integrating treatments into single points-of-care. In Kenya, we worked
with PEPFAR to couple HIV/AIDS treatment with maternal and child health
services. As a result, we've extended the availability of reproductive
health services from two to all eight of the country's districts, at no
increase in cost.
We can also help countries develop their own agricultural sectors,
so they can feed themselves. For the $1.1 billion we are requesting for
bilateral agricultural development programs, we will be able to help up
to 18 million people in up to 20 countries--most of them women--grow
enough food to feed their families and break the grips of hunger and
poverty.
We chose these potential countries for our Feed the Future
Initiative selectively, based on their own willingness to invest in
agriculture, undertake reforms, and encourage coordinated investment
from other donors, foundations, and private companies, leveraging our
investments several-fold. We have worked closely with these countries
to develop rigorous agricultural strategies that will bolster the
success of our Initiative.
But our foreign assistance will not just assist people abroad; it
will benefit us here at home.
from the american people, for the american people
Our assistance represents the spirit of our country's generosity;
captured in USAID's motto: ``From the American People.'' Recent events
underscore the critical importance of our humanitarian assistance
request.
But now more than ever, it is critical that the American people
understand that our assistance also delivers real benefits for the
American people: it keeps our country safe, and develops the markets of
tomorrow.
Keeping America Safe
By elevating the role of democracy, human rights, and governance,
we help to consolidate freedom in new and fragile democracies and
expand liberty in authoritarian and semiauthoritarian countries. We
also support the rebuilding of failed and fragile states during and
after conflict, forging new compacts between state, civil society, and
the private sector that lead to increased stability and ultimately keep
Americans out of harm.
As Secretary of Defense Gates, Joint Chiefs Chairman Admiral
Mullen, and General Petraeus have all emphasized, we need a fully
engaged and fully funded national security presence, including the core
components of our Nation's civilian power: the State Department and
USAID.
This year, for the first time, the President's budget designates
$1.2 billion of USAID funding for Afghanistan to a separate account
called the Overseas Contingency Operation Account. This transparent
approach, modeled upon the Defense Department's well-established
example, distinguishes between temporary costs and our existing budget
in an effort to consistently budget for Defense, State, and USAID
spending.
In the most volatile regions of Afghanistan, USAID works side by
side with the military, playing a critical role in stabilizing
districts, building responsive local governance, improving the lives of
ordinary Afghans, and--ultimately--helping to pave the way for American
troops to return home.
For example, we are helping to improve agricultural yields in the
Arghandab Valley. As a result, farmers shipped the first agricultural
exports out of Kandahar in 40 years. We have also helped rebuild the
civil service in the southeast and helped fuel a 40-percent reduction
in the growth of opium poppies that fund Taliban operations.
In Northwest Pakistan--the current base of operations for al-Qaeda
and the Pakistani Taliban--USAID staff and partners undertake enormous
personal risk administering over 1,400 small-scale development
projects. In the Malakand province, they have helped rebuild 150
schools so children there can become productive members of their
economy, instead of turning to extremist madrassas.
Our work in promoting national security is not just limited to
active zones of conflict. Throughout the world, USAID is deploying
development specialists today to strengthen democracies, rebuild
livelihoods and build strong health and educational systems so that we
do not have to deploy our troops tomorrow. As Secretary Gates has said:
``Development is a lot cheaper than sending soldiers.''
In Southern Sudan, the USAID mission worked with partners to
design, procure, and preposition ballots and supplies months before the
recent referendum on independence. That foresight helped ensure the
referendum, which many predicted would never occur, proceeded
peacefully and successfully, but also left us prepared in the event it
would not.
Developing the Markets of Tomorrow
In addition to strengthening our national security, USAID's work
also strengthens America's economic security.
Today, long-time aid recipients like India, Indonesia, Poland, and
South Korea and other emerging economies have become America's fastest
growing markets. Exports to developing countries have grown six times
faster than exports to major economies and today they represent roughly
half of all U.S. exports.
In 2009, we exported over half-a-trillion dollars in American goods
and services to those countries, and 97 percent of those exporters were
small- and medium-sized U.S. companies. That is why for every 10
percent increase we see in exports, there is a 7-percent increase in
the number of jobs here at home.
We need to accelerate the economic growth of tomorrow's trade
partners, ensuring those countries grow peacefully and sustainably.
But beyond these impacts, winning the future will depend on
reaching the 2-3 billion people currently at the bottom of the pyramid
who will come to represent a growing global middle class. By
establishing links to these consumers today, we can effectively
position American companies to sell them goods tomorrow.
Make no mistake: our success is intertwined with the progress of
those around us. By fully funding the $2.9 billion USAID is requesting
for its Development Assistance account, we will save lives, expand
global freedom and opportunity, and crucially strengthen America's
national and economic security.
reform
Because development is critical to our national security and future
prosperity, USAID has worked tirelessly to change how we work with all
of our partners.
Consistent with the President's Policy Directive on Global
Development and the Quadrennial Diplomacy and Development Review, we
have launched a series of reforms we call USAID Forward.
Learning, Monitoring, and Evaluation
To ensure our assistance is effective, we are taking monitoring,
evaluation, and transparency seriously. In 1994, USAID conducted nearly
500 independent evaluations. By the time I arrived, only 170
evaluations were submitted to Washington, despite a threefold increase
in programs managed. In many instances, these evaluations were
commissioned by the same organizations that ran the programs.
To end this practice, we introduced a new evaluation policy that is
quickly setting a new standard in our field. We are requesting $19.7
million to implement this policy and provide performance evaluations
for every major project, conducted by independent third parties, not by
the implementing party themselves. And we will release the results of
all of our evaluations within 3 months of their completion, whether
they tell a story of success or failure.
Combating Fraud, Waste, and Abuse
We are fighting vigorously to prevent and respond to fraud, waste,
and abuse, and to ensure a culture of vigilant oversight. I have
created a new suspension and debarment task force led by our Deputy
Administrator, Don Steinberg, and staffed with talent across our
Agency. This task force will provide a coordinated effort to closely
monitor, investigate, and respond to suspicious activity.
Private Sector Partnerships
We are also placing a renewed emphasis on economic growth, driven
by private sector investment. In all aspects of our work, we are
relying much more on leveraging private sector investment and building
public-private partnerships in countries committed to good governance
and pro-business reforms.
For example, through the Feed the Future initiative, we have
launched groundbreaking new partnerships with Kraft, General Mills, and
Wal-Mart in Ghana, Tanzania, El Salvador, and Guatemala to connect poor
farmers to local and international food markets. And in Haiti, we are
supporting Coca-Cola's initiative to promote the Haitian mango juice
industry.
These efforts strengthen the sustainability of our economic growth
work, while also improving the bottom line for American companies.
Science, Technology, and Innovation
Across our portfolio, we are seeking new ways to harness the power
of science, technology, and innovation. For our request of $22.1
million, we will recapture USAID's legacy as the leader in applying
scientific and technical solutions to the challenges of development.
We have developed a new venture capital-style investment fund--the
Development Innovation Ventures Fund--so we can support startups,
researchers, and nonprofits focused on the problems of the developing
world. We are requesting $30 million to continue using this simple but
highly competitive business model to sustainably scale innovative
solutions to development challenges.
By providing seed capital to incentivize the emergence of these
innovations, we practice development with an exit strategy. This fund
has already funded several projects, including an easy-to-use self-
administered test for preeclampsia, the leading cause of maternal
mortality in the world.
In Haiti, instead of rebuilding brick-and-mortar banks devastated
by the earthquake, we are partnering with the Gates Foundation to begin
a mobile banking revolution in the country. By allowing Haitians to
save money and make transactions on their cell phones, we are
encouraging local wealth creation and cutting back on corruption and
wage-skimming.
This approach forms the foundation of a new series of grant
challenge partnerships USAID introduced just last month. Rather than
building hospitals and power plants throughout the developing world,
USAID will partner with foundations, foreign governments, inventors and
engineers to generate new, low-cost innovations that can help countries
skip the need for some of this physical infrastructure.
Procurement
Fundamentally, all of the reforms I have outlined are designed to
achieve the same result: to create the conditions where our assistance
is no longer necessary.
The President's budget request puts this approach into practice. It
cuts development assistance in at least 20 countries by more than half,
including 11 countries where all bilateral Development Assistance has
been eliminated. It also terminates USAID missions in three countries.
And it reallocates almost $400 million in assistance and shifts 30
Foreign Service positions toward priority countries and initiatives.
USAID must continue to do its work in a way that allows our efforts
to be replaced over time by efficient local governments, thriving civil
societies and vibrant private sectors. That is why we have launched the
most aggressive procurement and contracting reforms our agency has ever
seen. Instead of continuing to sign large contracts with large
contractors, we are accelerating our funding to local partners and
entrepreneurs, change agents who have the cultural knowledge and in-
country expertise to deliver lasting, durable growth.
These procurement reforms are crucial to delivering assistance in a
much more effective and evidence-based way, generating real results
faster, more sustainably and at lower cost so more people can benefit.
To implement the QDDR and USAID Forward, implement our procurement
reforms and deliver development gains more cheaply and efficiently for
the American people, it is crucial that USAID's FY 2012 operational
request of $1.5 billion is fully funded.
We can only make these reforms meaningful if we can bring in the
contracting officers, controllers, and technical advisors who can
provide accountability and oversight over our contracts and grants and
safeguard taxpayer funds.
As we continue the Development Leadership Initiative begun under
President Bush, with strong support from Congress, we plan on filling
key staffing gaps in priority countries and frontline states. By
bringing in experts in conflict and governance, global health,
agriculture, education, economics and engineering, we can restore the
technical capacity our Agency has lost over time, and has had to
contract at far greater expense.
conclusion
The evidence is clear: development saves lives, strengthens
democracies, and expands opportunity around the world. It also keeps
our country safe and strengthens our economy. But our development
assistance also expresses our American values.
When we protect girls from sex trafficking in Asia, stop
deforestation in Latin America or help Afghan girls return to school,
we express American values.
When Americans see a neighbor in need, or witness suffering and
injustice abroad, we respond; we mobilize; we act. We are a generous
people. That fact was never clearer than when 20 million American
families donated money to Haiti relief; more than watched the Super
Bowl.
USAID is proud to put American values into action--distributing
antimalarial bed nets donated by school children, supporting faith-
based organizations that help ease suffering abroad, and engaging all
Americans in solving the greatest global challenges and generating
results.
Right now is a critical moment in our country's history. As a
nation, we are making a lasting determination about the future of our
country, and the future of our global leadership.
Now is the time when America must decide whether it will engage and
lead the world, actively using its tools of development, diplomacy, and
defense to improve human welfare and freedom across the globe . . .
. . . or whether it will retract, leaving many of its poorest,
most fragile global partners without assistance, and leaving other
emerging global powers like China to promote alternative economic and
political models.
Budgets are an expression of policy; they are an expression of
priorities. But fundamentally, they are an expression of values.
Senator Cardin. Thank you very much, for your testimony.
Mr. Yohannes.
STATEMENT OF HON. DANIEL W. YOHANNES, CHIEF EXECUTIVE OFFICER,
MILLENNIUM CHALLENGE CORPORATION, WASHINGTON, DC
Mr. Yohannes. Thank you, Mr. Chairman, Senator Lugar, and
every member of the committee, for the opportunity to discuss
the work of the Millennium Challenge Corporation.
I'm honored to be here and work with this committee to
reduce poverty and to advance American interests and values
around the world.
Mr. Chairman, as you know, promoting stability, building
the next generation of emerging markets, and developing strong
and capable partners make Americans more secure. But, to be
successful, we need a robust, effective array of development
tools. That's why I am so pleased to be here with my good
friend, USAID Administrator Shah.
President Obama has called on MCC to play a distinct,
integral role in implementing the new U.S. global development
policy, one that complements the work of USAID. Dr. Shah and I
coordinate closely to find ways that our agencies can work
together and leverage our comparative advantages to help poor
countries help themselves.
The President's new development policy is built around core
principles: economic growth, sustainability, country ownership,
transparency, and results. These same principles have guided
MCC since its creation in 2004, when Democrats and Republicans
came together to pioneer a new vision for development that is a
vision based on accountability, a focus on economic growth, and
a rigorous analysis and evaluation to ensure maximum impact.
MCC takes a businesslike approach to development, requiring
that each investment meet meaningful economic rates of return.
But, sustainable growth and lasting poverty reduction require
good governance, too. That is why MCC is so selective in
deciding where to invest. We choose to work with only those
countries that are accountable to their people, that stand
against corruption and that create conditions for markets to
thrive and human dignity to flourish.
Part of MCC's distinctiveness is our focus on results. From
the start, we have emphasized rigorous, transparent program
evaluation. We measure our progress by the number of girls who
would receive an education in schools like the ones we
established in Burkina Faso, by the growth in trade and
business activity that flows from safe, modern roads like the
ones we paved in Georgia, by the gains in productivity and
health that will derive from cleaner and more efficient water
solutions like those we are introducing in Jordan, and many
other indicators of progress.
But, the ultimate result we seek is higher incomes for
citizens of our partner countries. All of the successes I have
just described are stepping stones toward that goal.
This is an exciting time for MCC. MCC's first compacts are
now closing out and we are evaluating the results. In Honduras,
for example, MCC provided agricultural productivity and
business training to help more than 7,000 farmers boost their
yields. We upgraded hundreds of miles of road to help farmers
get their harvests to market. And we encouraged policy changes
to ensure that the infrastructure improvements would endure.
Preliminary data collected by the program implementer
suggests that the farmers we work with saw their annual net
income rise 88 percent on land being cultivated with new
practices, allowing them to invest more in their families, in
their farms, and in their futures. I want to stress that this
is preliminary data, and we will know more when independent
evaluations are completed, later this year.
Looking ahead to the next fiscal year, the President has
requested $1.125 billion to fund MCC, which would enable us to
sign compacts with Indonesia, Georgia, and Ghana. I am
committed to ensuring that Americans' hard-earned money
invested in MCC will yield a return in global prosperity and
security.
Mr. Chairman, my own background is in banking, and I bring
a banker's perspective to my job. But, my perspective is also
informed by my travels in poor countries and by my faith in the
values that make America strong: freedom, opportunity,
responsibility, and the willingness to lend a helping hand. I
have seen the toll that poverty takes in broken dreams and in
wasted potential. But, I've also seen how much hardworking men
and women can achieve when they are given the tools and the
chance to build a better life. I am proud that our Nation
supports those aspirations for dignity and progress. And I'm
grateful to this committee for your leadership.
Thank you for this opportunity to testify. I request that
an extended version of my testimony be entered into the record.
And I'm happy to answer any questions.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Yohannes follows:]
Prepared Statement of Daniel W. Yohannes
Thank you, Mr. Chairman, and every member of the committee for the
opportunity to discuss the work of the Millennium Challenge
Corporation. I am honored to be here and to work with the committee to
reduce poverty and advance American interests and values, around the
world.
Mr. Chairman, as you know, promoting stability, building the next
generation of emerging markets, and developing strong and capable
partners makes Americans more secure. But to be successful, we need a
robust, effective array of development tools. That is why I am so
pleased to be here with my good friend, USAID Administrator Shah.
President Obama has called on MCC to play a distinct, integral role
in implementing the new U.S. Global Development Policy, one that
complements the work of USAID. Dr. Shah and I coordinate closely to
find ways our agencies can work together and leverage our comparative
advantages to help poor countries help themselves.
The Millennium Challenge Corporation (MCC), like other U.S.
Government agencies, is operating in a constrained budget environment.
MCC holds itself accountable to the American people to ensure that
every taxpayer dollar generates the best possible return on investment.
As good stewards of American taxpayer resources, every day we ask
ourselves the tough, fundamental questions about the effectiveness and
efficiency of our approach to development and our operations.
Before discussing President Obama's fiscal year 2012 budget request
for MCC, and highlighting issues of strategic importance to the agency
in the coming months, I would like to address three fundamental
questions about MCC. First, what makes us distinctive? Second, are we
delivering results? And third, how are the American people benefiting
from MCC's investments?
mcc's selective, targeted approach to development assistance
What makes MCC distinctive? One of the most distinctive features of
MCC is our broad-based, bipartisan support. The MCC approach to
development--with our focus on economic growth, sustainability, country
ownership, transparency, and accountability--has been embraced by
Democrats and Republicans in Congress; Presidents Obama and Bush;
Secretaries Clinton, Rice, and Powell; and leading voices from the
right and the left, from the Heritage Foundation and the American
Enterprise Institute to the Brookings Institution and the Center for
American Progress.
There is good reason we have won the support of policymakers and
analysts across the political spectrum: our innovative, reform-minded
mission and business model. MCC's mission is to reduce poverty through
economic growth in a select number of well-governed countries. MCC
selects country partners carefully to ensure the highest returns on our
investments, and creates strong incentives to advance democratic,
market-based principles--not just in MCC countries but in emerging
markets across the developing world.
Part of MCC's accountability model is the ability and willingness
to say ``no''--no to countries that do not meet MCC's high standards
for eligibility, and no to proposed investments that do not have
promising returns for economic growth and poverty reduction.
In determining eligibility for funding, MCC evaluates whether a
country has created a policy environment for sustained economic growth
through 17 independent, transparent policy indicators that measure a
country's commitment to ruling justly, economic freedom, and investing
in its own people. We believe that engaging with developing countries
in a selective, targeted way is not only fiscally responsible in the
short term, but also is critical to poor countries attracting private
investment and ending their reliance on aid in the long run.
Good governance is critical for economic growth. We look for
opportunities for reform in areas that will ensure the sustainability
of our investments. These reforms have included changes to national
policies, laws, regulations, and even the traditional ways of doing
business by government institutions. For example, before investing in
Lesotho, we worked with the government to change a law that treated
adult women as minors, so that women could be full participants in the
economy. In most cases, these reforms, and the domestic capacity that
MCC's country-led programs build, not only help unlock the full
potential of U.S. taxpayer dollars, but also help improve the broader
conditions for continued growth and investment in our partner
countries.
Signing up to work with MCC means a country is committing itself to
tackle the tough policy reforms necessary to create an environment in
which the private sector can thrive, citizens can hold their
governments accountable, and U.S. taxpayers can see they are getting a
good return on their investment. Our goal is to help poor countries
rise out of poverty and achieve self-sufficiency, as well as to create
stable trading and investment partners for the United States, which
will strengthen the American economy and make our Nation more secure.
mcc is delivering results
The second fundamental question I confront on a daily basis is on
MCC's impact: Are we delivering results? MCC's focus on economic
growth, sustainability, country ownership, transparency, and
accountability is working. All development partners, both donors and
host countries, are interested in achieving results. What distinguishes
MCC is our commitment to technically rigorous, systematic, and
transparent methods of projecting, tracking, and evaluating the impact
of our programs. MCC's results exist along a continuum--from policy
changes countries make to become compact eligible (``the MCC Effect''),
to interim outputs and outcomes as compacts mature, to our ultimate
goal: income increases over the long term.
We expect MCC's current investments to benefit more than 170
million people in the poorest countries around the world--and we expect
incomes to rise by over $12 billion over the life of those investments.
Even before these income gains are achieved, MCC and our country
partners have tangible results to show. To date, MCC investments in new
or improved irrigation and technical assistance have facilitated the
adoption of new agricultural practices on 82,510 hectares of land--an
area slightly larger than Shenandoah National Park in the United
States. Our funded programs have trained over 150,000 farmers in
techniques that help them produce higher quality, higher value crops.
We have provided funding for $66 million in agricultural loans, and
have financed assistance for over 3,800 private enterprises involved in
agriculture-related business. We have supported construction of more
than 890 kilometers of roads that link markets and encourage trade, and
have another 2,400 kilometers under construction. These interventions
aim to increase incomes though market-driven agriculture. MCC tracks
these results closely because they are the drivers of the income gains
that we and our partners aim to achieve.
While these results are important indicators of success, they do
not tell the whole story. We are pleased that our program outputs are
on track, but we hold ourselves to a higher standard: are MCC
investments increasing incomes? That is why we are so excited about
preliminary, promising data that is coming from Honduras, our first
completed compact program.
In Honduras, we have preliminary data from our agriculture program
implementer showing that farmers who received assistance from MCC saw
their annual net income rise 88 percent, from $1,880 per hectare of
land cultivated using new practices to $3,550 per hectare.
I want to stress that this is preliminary data, and we will know
much more when the work of our independent evaluators is completed. But
it is consistent with the output- and policy-based results that we have
seen and the personal stories I have heard directly from farmers and
entrepreneurs with whom I have visited.
mcc's investments are helping to build the next generation of emerging
markets and make americans more secure
The third fundamental question is: Are the American people
benefiting from MCC's investments? President Obama's new development
policy is building on the best ideas of the Bush administration and
calling on U.S. development agencies to help build the next generation
of emerging economies. By doing so, we are investing in a better future
that offers opportunities to poor people in MCC partner countries and
to American businesses and our own citizens.
In a speech earlier this year, Bill Gates noted that fully half of
current U.S. exports--more than half a trillion dollars--go to
developing markets. Looking forward, leading economists expect the
developing world to become the growth engine of the global economy.
MCC investments look to remove constraints to growth so that the
private sector will invest and flourish. These investments are helping
to build a foundation for U.S. exports and increased business activity,
which will mean increased growth and job opportunities here at home.
MCC is funding more public-private approaches that can leverage our
effort and bring in the private sector from the beginning. We are
focusing on policy reforms, such as an initiative in Jordan that has
attracted $90 million in private investment in the water sector.
Our approach creates strong incentives for policies that are
business-friendly. In Cape Verde, for example, the time required to
register a business dropped from 54 days to as little as one day. Those
are the kinds of changes that convert foreign assistance from a well-
intentioned contribution into a productive investment.
Our commitment to private sector engagement is the reason we have
taken action to prevent state-owned enterprises from bidding on MCC
contracts. MCC's original procurement guidelines included no guidance
on this matter, and many--including some members of this committee--
rightly expressed concern. MCC's aim is to ensure a level playing field
for commercial firms that bid on MCC-funded contracts. Because state-
owned enterprises have built-in advantages such as access to
preferential credit terms, we took this step to ensure private
companies--including American companies--get a fair opportunity to
compete for MCC-funded contracts.
MCC also is helping to make Americans safer and more secure by
promoting stability and developing strong partners in key regions
around the world. Defense Secretary Robert Gates has been one of the
most persuasive advocates for financing development work. In recent
remarks, Secretary Gates stated:
. . . [I]n military planning, what we call phase zero is,
how do you prevent conflict? How do you create conditions so we
don't have to send soldiers? And the way you do that is through
development. Development contributes to stability. It
contributes to better governance. And if you are able to do
those things and you're able to do them in a focused and
sustainable way, then it may be unnecessary for you to send
soldiers . . . Development is a lot cheaper than sending
soldiers.
That is one reason why President Obama, like President Bush, has
made development--together with defense and diplomacy--a critical
pillar of our national security.
the president's fiscal year 2012 budget request for mcc
When President Obama unveiled the new U.S. Global Development
Policy last year, he made clear that the United States is ``changing
the way we do business'' in development assistance. Laying out a set of
principles and practices that are at the core of MCC's model, he called
for all U.S. Government programs to embrace a focus on results,
selectivity, country ownership, and transparency.
In his budget for fiscal year 2012, President Obama requested
$1.125 billion for MCC, making the agency a central part of the U.S.
Government's effort to promote opportunity and prosperity in poor
countries around the world.
President Obama's fiscal year 2012 budget request would enable MCC
to sign compacts with Georgia and Ghana, as well as fully fund a
compact with Indonesia.
MCC's estimated budget requirements for these compacts are based on
several factors, including policy performance on MCC's indicators,
total population, population living below national poverty lines,
absorptive capacity, and, in the case of Ghana and Georgia, performance
in previous compact implementation. Final compact amounts will be based
on funding availability and on the scope of agreed upon projects.
MCC requests $912 million of the total fiscal year 2012 request for
compact programs, divided between a second tranche of funding for
Indonesia and subsequent compacts for Georgia (est. $100-$150 million)
and Ghana (est. $350-$400 million). Because of its proposed size, the
Indonesian compact would be funded over fiscal years 2011 and 2012, for
a total compact range of $700-$770 million.
Indonesia is the fourth most populous country and the largest
Muslim-majority country in the world, with more than 100 million of its
250 million people living on less than $2 per day. Given Indonesia's
strategic importance to the United States, its economic potential, and
the high number of people living in poverty, an MCC compact would be a
smart investment for the American people.
Both Ghana and Georgia were selected by the MCC Board of Directors
as eligible to develop subsequent compacts. These countries were
selected because of their continued strong policy performance, their
status as important emerging markets, their strategic importance both
globally and regionally, and their successful implementation of their
first compact.
The Republic of Ghana consistently performs well on MCC's indicator
criteria and is generally viewed as one of Africa's most stable policy
performers. Since 2004, Ghana has scored among the top low-income
countries on the Control of Corruption indicator. In a region where
constitutional transfers of power are often disputed, Ghana has a
record of peaceful democratic elections and the transfer of power to
opposition parties. In 2009, Ghana ranked better than almost two-thirds
of all countries on Transparency International's Corruption Perceptions
Index, and is preparing for transparent management of potential oil
revenues.
Georgia is recognized globally as one of the best investment
climate reformers, even though 30 percent of its population still lives
on less than $2 a day. Over the last 5 years, its scores on the World
Bank's Doing Business assessment have improved more than any other
country in the index. The country has also made significant strides to
privatize state-owned industries and improve its Transparency
International rank on the corruption perception index. This good
economic policy performance is reflected by the fact that Georgia has
seen a 55-percent increase in new businesses registered.
mcc's subsequent compacts will focus on constraints to investments
Entering our eighth year, MCC is beginning a new phase of
innovation and partnership. As first compacts strengthen the foundation
for economic growth, subsequent compacts--new MCC investments with
countries that have successfully concluded their first compacts--are
expected to target constraints to private investment. MCC aims to help
countries, like newly selected Georgia and Ghana, solidify an economic
growth path that attracts private investment, reducing the need for
aid.
MCC's engagement with partner countries is not open-ended. MCC
carefully considers the appropriate nature and duration of each country
partnership based on the country's policy and implementation
performance, as well as the opportunities for impact on growth and
poverty reduction. A defining characteristic of MCC's model of aid
effectiveness is selectivity, both in the countries we work with and
the investments we make. MCC's business model emphasizes selectivity
and our mandate to partner with countries where investments will have
the greatest potential returns in terms of poverty reduction and
economic growth, and where U.S. taxpayer resources can be used most
efficiently and effectively.
While a single compact alone cannot address all binding constraints
to a country's growth or transform an entire economy, a subsequent
compact in a country that continues to perform well has the potential
to help countries change their growth path away from aid dependence and
toward greater reliance on private sector investment and internally
generated revenue. For the poorest countries, even the ones with the
right policies in place, it may take decades of sustained growth to
lift citizens out of poverty. For low-income countries like Tanzania,
where the annual per capita income is $500, economists estimate that it
could take over 20 years to double per capita income even if the
country sustains annual per capita growth of 4 percent (a historically
high rate).
This does not mean, however, that MCC engagement should last
anywhere near that long. On the contrary, MCC's role is targeted and
selective, and only the best performers will be eligible for continued,
limited engagement. MCC's Board is particularly discerning when
determining eligibility for follow-on partnerships. In addition to good
policy performance, countries must show meaningful progress toward
achieving first compact results before being considered for a
subsequent compact. Of the 10 countries that will successfully conclude
first compacts by the end of 2012, MCC's Board has thus far only
selected three as eligible for a subsequent compact. Cape Verde was
selected in fiscal year 2010 and Georgia and Ghana in fiscal year 2011.
In our approach to subsequent compact design, MCC focuses
increasingly on specific constraints to investment and private sector
engagement; by removing such constraints, MCC helps to expand
opportunities for U.S. businesses in emerging markets. This is in line
with the President's Global Development Policy directive to foster the
next generation of emerging markets by encouraging broad-based economic
growth and democratic governance.
MCC supports this effort by reaching out to the private sector, by
grounding our investment choices in a constraints analysis that
identifies specific obstacles to private sector-led growth, by
introducing financial instruments designed to enhance access to
capital, and by promoting innovative project content in areas of
potential growth, such as alternative energy, applied technology, and
financial inclusiveness.
Potential to leverage MCC funding with a direct impact on
investment growth serves as one of the screens for evaluation of second
compact programming, in addition to MCC's mandate to promote poverty
reduction through economic growth. By helping these countries solidify
the progress they have made and become better integrated in the global
market system, the United States is opening new investment
opportunities for American firms as well.
mcc believes corruption erodes private sector growth
1 would like to discuss another critical topic, which is how MCC
deals with corruption in potential or current partner countries.
Because corruption has the power to completely undermine private sector
growth, and any investment MCC or other donors make in developing
countries, we take this issue extremely seriously.
MCC's approach to fighting corruption begins before we even select
a country for eligibility. MCC's corruption indicator is a key part of
country eligibility decisions.
Earlier in my testimony, I spoke of the strong results we are
seeing from our partnership with Honduras. Honduras, however, did not
pass MCC's control of corruption indicator at the time of country
selection for fiscal year 2011. For me, it was difficult to not have
Honduras selected for a second compact. But MCC tries to stick to its
principles, and we place great emphasis on fighting corruption.
While the State Department remains the lead on working with the
Government of Honduras to address human rights and political issues,
MCC has been engaged in very constructive conversations with the
government to improve performance on accountable governance, enhanced
management of public resources, and fiscal transparency. The Honduran
Government has initiated a set of reforms to improve budget management
and transparency, increase civic participation in budget preparation
and reporting, upgrade legislative oversight, and strengthen internal
and external audit functions.
Our scrutiny regarding corruption does not stop after selection.
Corruption is closely monitored as a country develops a compact and
proceeds into compact implementation. MCC has a publicly available
antifraud and corruption policy that outlines precautions that MCC
takes and describes ways of responding to any instances of corruption
in a compact program. We are currently training our local ``MCA''
accountable entities on how to apply this policy and develop risk
assessments for their own work.
In addition to protecting against corruption in our compacts and
assessing individual cases of corruption, MCC assesses broader patterns
of government actions that undermine institutions of accountability:
courts, anticorruption commissions, auditors, and the media.
Governmental actions that undermine these institutions of
accountability make individual instances of corruption more likely,
enable corruption to flourish, and cultivate a culture of impunity. By
emphasizing the institutional response, MCC incentivizes governments to
take greater responsibility for rooting out corruption.
For example, MCC and several other donors made clear to the
Government of Senegal that recent changes to their procurement code and
implementing agency, in part due to legitimate national security
concerns, were an accountability concern to us. In response, the
government entered into discussions with donors, including MCC
specifically, to address our concerns as they further revised the
procurement code. Consequently, they have taken steps to amend the
changes that would have weakened procurement procedures--including a
January 2011 decree and a more recent draft decree under consideration
by the Government of Senegal and various stakeholders. MCC is studying
these amendments.
Working with some of the poorest countries in the world means
working with countries that struggle with policy performance including
corruption. MCC's challenge is to find the right way to pursue poverty
reduction while staying true to our model of selectivity and
accountability, and this is particularly true in the case of
corruption.
mcc's proposed legislative changes would strengthen an
already strong model
We hope to work with the committee again this year on passage of a
package of legislative changes to MCC's current authorities, including
allowing for concurrent compact authority and longer compacts in
certain circumstances.
The proposed changes are based on lessons learned since MCC's
creation in 2004, and will provide the flexibility needed to maximize
the impact of MCC programs through more innovative approaches to
development assistance.
Concurrent compact authority would allow MCC to sign separate
compacts with a country based on the specific timing requirements of
individual projects, rather than as part of a package driven on a
single timeline. Concurrent compacts would improve MCC's ability to
manage our compact pipeline with greater predictability and serve as an
added incentive for policy reforms in partner countries.
With concurrent compacts, the agency could move forward with
projects that are investment-ready, instead of putting several projects
at various stages of readiness into a single compact or delaying
compact signing for a promising but less-developed project. As part of
a larger, cohesive framework, concurrent compacts will allow for
smaller, staggered agreements; speed implementation; improve project
management by allowing countries to focus on managing fewer projects at
a time; build management capacity with early projects; ease the current
burden of managing large, complex compact programs; and foster
innovation by allowing MCC to pursue new approaches and partnerships
that could otherwise slow down the compact development process.
Additionally, while having definite timeframes for MCC compacts is
an important best practice for effective foreign assistance, in some
cases projects face implementation challenges that mean they cannot be
completed within the mandated 5-year period, particularly given MCC's
emphasis on country-led implementation and MCC's high accountability
standards. In these cases, MCC's options for responding to
implementation challenges are limited by the 5-year timeframe. Allowing
MCC, in exceptional circumstances, to extend the duration of our 5-year
compact period for up to two additional years would allow MCC and our
partner countries to pursue a fuller set of options for managing
challenges and achieving compact objectives.
MCC also has sought legislative changes aimed at ensuring that
changes in countries' income categories do not prevent the agency from
working with the best policy performing countries that also have
populations living in extreme poverty. Each year, countries abruptly
graduate from one income category to another with no transition period.
Sudden shifts in income category, due in part to changes in exchange
rates, pose serious issues for MCC. This impacts whether they can be
candidates for MCC assistance at all, and changes both the policy
performance standards against which they are measured and the levels of
funding they can receive.
conclusion
Mr. Chairman, my own background is in banking--and I bring a
banker's perspective to my job. But my perspective is also informed by
my travels in poor countries; by my personal experience; and by my
faith in the values that make America strong--freedom, opportunity,
responsibility, and the willingness to lend a helping hand.
I have seen the toll poverty takes--in broken dreams and wasted
potential. But I've also seen how much hardworking men and women can
achieve when they are given the tools and the chance to build a better
life. I am proud that our Nation supports those aspirations for dignity
and progress, and grateful to this committee for your leadership in
promoting the security and stability of these countries.
Thank you for this opportunity to testify. I request that an
extended version of my testimony be entered into the record, and am
happy to answer your questions.
Senator Cardin. As I said before, your statement will be
made part of our record.
And again, I thank both of you for your presence here, but,
more importantly, for your service in these extremely important
positions.
You mentioned the budget submitted by President Obama. Many
of us support the initiatives that President Obama has in his
budget, as it relates to your agencies. The reality, though, is
that what is moving through the House of Representatives is
substantially below those numbers. Not only do they not
increase your funds, there are significant reductions, totaling
approximately 29 percent for the FY12 budget.
Can you just relate to us, if that budget became real, if
the House-passed numbers in its budget were to be reflected in
the final budgets you receive, what impact that would have on
the programs that you have referred to in your testimony, but,
as it relates to your commitments, generally?
Dr. Shah. Certainly. And thank you for the question. We
have been working in a spirit of bipartisanship and with the
desire to be very efficient in how we achieve cost reductions
in the portfolio of work, which is why the FY12 budget request
already presents more than $400 million of USAID budget
reallocations from programs that are good programs, achieving
impacts, but to a range of other programs that we think buy
more outcomes for the dollar.
That said, a 30-percent reduction to the various accounts
that USAID manages would effectively end our ability to pursue
the Feed the Future Program, which has, I think, particular
unique and timely value, because it is a program that really
was started between FY08 and FY09, with significant budget
increases proposed by the Bush administration, and then picked
up by President Obama. So, if we go back to FY08 levels, that
program essentially will not exist, and the resources will not
exist to invest in the 20 priority countries, as we've defined
them.
Second, in our Global Health Initiative, we've proposed
additional resources for precisely those areas of investment we
think buy the most value, in terms of human life, like malaria,
immunization, child survival in that first 48-hour period of
life, and a number of other health priorities. Those specific
programs would be affected and we would not only not be able to
pursue the expansions of, say, the malaria program into the DRC
and Nigeria, where we think they can save tens of thousands of
lives, but we would be cutting back on those types of efforts.
Also, we have--we recognize that the consequences in our
international disaster assistance accounts, for example, would
greatly limit our ability to lead international responses to
crises from Haiti to Sudan to elsewhere around the world.
So, they would have very significant and deleterious
consequences to our national security.
Senator Cardin. Thank you.
Mr. Yohannes.
Mr. Yohannes. Thank you very much, Mr. Chairman.
We've been working with Indonesia, Zambia, and Cape Verde.
And we've been working with them for the last 3 years. So, any
cuts would have huge consequence, especially when you said
``about 30 percent.'' And the biggest problem with a number of
those countries is, we want to have a huge investment to
transform those countries from aid-dependency to self-
sufficiency. So, that funding is going to be impaired. We'll
make a decision based on which investment would yield the best
return for the American taxpayers.
And also, we have to scale down on some of the proposed
projects, making sure that we only invest in those projects
that would have the most impact in reducing poverty in our
partner countries. We will be creative, and we're going to try
to complement our investment with private-sector investment, as
we have done in Jordan. We signed a compact in Jordan last year
for $275 million. The compact was complemented with funds from
the private sector, worth approximately $85 million.
So, we're going to try to be creative. We're going to try
to find every way to make sure that our program is not
impacted, even though we understand, you know, there are some
huge ramifications, in terms of not being able to get things
done as we have hoped for.
Senator Cardin. One of our more significant commitments is
in Afghanistan. And I think this committee has been very
supportive of the reduction of our combat costs in Afghanistan,
recognizing that we need to build the country's economic
future, that that will be in our economic interest and in our
security interest. But, as I said in my introductory remarks,
there is an expectation that our participation in any country
depends upon that country's commitment to root out corruption
and to have a transparent system and to deal with gender-equity
issues.
We're on the verge of passing the 2011 budget; and in that
budget, there is direct language requiring that you certify,
Mr. Shah, that certain commitments have been made to adopt
anticorruption policies, that there have been progress made in
gender-equity issues. And it's pretty specific in the language
that's included in that budget document that I expect will be
approved later this week, maybe as early as tomorrow.
What assurances can you give us that, in making that
judgment, you will comply not just with the spirit, but the
letter, of what we're trying to accomplish here in making sure
USAID promotes anticorruption and gender equity?
Dr. Shah. Thank you. I would start by noting that, in the
FY12 budget, we propose, across State and AID, a $4 billion
overseas contingency account that--in Iraq and Afghanistan--
that essentially enables a $40 billion reduction in military
spending. And that's the kind of aggregate offset that we
believe represents the large-scale fiscal stewardship that we
want to pursue across all accounts. That also highlights the
integral nature of our work in Afghanistan, in particular,
where we are part of an integrated civilian and military plan.
And we have taken a number of specific steps to address the
point that you raised and to address the certification
requirements. To begin with, we've reviewed our award
mechanisms, and actually broken contract sizes down into
smaller award mechanisms, and collapsed the number of layers of
subcontractors, so we have more visibility and more vetting of
specific individuals and of the subcontract firms, themselves.
Second, we have implemented a much more aggressive vetting
system that allows us to track people we are potentially
funding against a range of databases, including DOD and
intelligence community information.
Third, we have put in place more aggressive financial
controls that allow us to better manage the way assistance is
working in Afghanistan. And part of making that real was
increasing, by more than threefold, our basic staffing in
Afghanistan, and especially outside of Kabul, so that we could
be more in touch with the programs, themselves.
And finally, we have dramatically improved specific project
oversight, where we now have, between our direct-hire staff and
our foreign service nationals, far more contact with specific
program managers and visits to the field to explore those
activities.
These all take place, of course, in a difficult security
environment. And I would just point out that, over the last 8
years, USAID and its partners have lost more than 300 people in
pursuit of this mission in Afghanistan. And I want to take this
moment to just thank our team out there for their tremendous
service.
Senator Cardin. And we share your thoughts on that.
Let me just make an observation. We put a lot of
certifications in appropriation bills here. And sometimes
they're viewed as giving you leverage to make progress. But,
these are meant to be more than that. And we appreciate the
progress that you're making, but it's a rare case where you do
not certify. And I think it's time, and I'm--Afghanistan, I
hope everything works well. I hope all the funds can be
allocated and the progress can be made as you have suggested.
But, it seems to me that it's incumbent upon you to carry out
the letter of the appropriation bill and, where the
circumstances do not exist for the certification, that you be
prepared to take action to block the funds, according to
congressional intent.
Dr. Shah. Sir, if I may respond to that. There are specific
programs, and one very significant and central effort, that we
have not certified, and therefore, are effectively holding
funds against. This is part of a larger dialogue that we have
with our partners in Afghanistan. And I can assure you that
we're not just observing the letter or the spirit, we're using
this as an opportunity to take actions to make sure we're
protecting taxpayer dollars. And we are in the process of doing
that right now.
Senator Cardin. Well, thank you. I say that as a friend of
your agency, but one who's going to be looking very carefully
at the basis of your certifications, as it relates to fighting
corruption and gender equity.
With that, Senator Lugar.
Senator Lugar. Administrator Shah, Congress has approved a
significant new sum of $150 million, for the State Department
and USAID to expend in the post-Mubarak Egypt. Let me ask,
first of all, How are these funds being administered? Does the
Egyptian Government presently have the capacity to absorb this
$150 million? Finally, what impact are these funds having if
any? How would you gauge the effect of the $150 million?
Dr. Shah. Thank you, Senator. I would just start by
pointing out that our approach to the program in Egypt is
highly coordinated across the United States Government, and
tied very specifically to our diplomatic strategy, which, as
the President has identified, is about supporting an effective,
peaceful, democratic transition.
Second, the Secretary, upon her return from her trip, has
offered a very specific direction around ensuring that we do
everything we can to support the short-term transition, but
also, keep our eye on the larger fiscal situation because the
essential economic situation and fiscal situation, given
current events, is particularly challenging.
In those contexts, these resources have been divided into
specific categories. Some of the projects are supporting the
democratic training and support for basic effective election
processes--and some of the support will be targeted to larger
economic and fiscal assistance. And we're currently in the
process of designing that second part of the program.
The things I would highlight are: We have moved very
quickly to reprogram these resources, and target them against
opportunities. We are seeking to be, as we have been for
decades, consultative with the Egyptian Government and with
local civil society organizations, in how the funds are spent.
And the team has moved very quickly on certain components of
this so that they've already engaged with hundreds of
individuals and groups in order to be able to be efficient and
responsive to the opportunity and the needs.
Senator Lugar. Well, who is the government? The military
establishment? Just physically, who handles the money?
Dr. Shah. There are different types of funds that we move.
Some move directly to validated international organizations.
Some can move directly to local civil society groups. And other
parts of funds move through existing government-to-government
agreements. The basic mechanisms for public administration of
programs continues, as it has, unabated through the Minister of
International Cooperation, with whom we had lunch earlier
today. But, it is a process that we have worked on for years,
and is one that allows for transparency in how resources are
spent in the Economic Support Fund Program.
Senator Lugar. Mr. Yohannes, looking at the MCC's
calculations for the amount of benefits each compact provides,
it appears Congress is appropriating more money for four MCC
compacts than those compacts provide in benefits. These four
compacts are with Mali, Moldova, Namibia, and Vanuatu. Now, how
do you explain this phenomenon? Why would the costs exceed the
benefits of these compacts? Does this indicate something about
the MCC's criteria, forecasts, or accounting?
Mr. Yohannes. Thank you very much, Senator. A couple of
things. No. 1, our $8 billion investment is projected to
generate about $12\1/2\ billion in additional income for our
partner countries. Now, I believe, Senator, we're talking about
the benefits. In fact, there may be some misunderstanding, in
terms of how it's calculated.
When we calculate the benefit, we used a standard, private
sector approach, which is, we take the net present value over
the next 20 years. And then, if you look at that for Mali, as
one of the countries where we are spending about $460 million,
and the net present value benefits, in about 20 years, is about
$457 million. But, if you discount the $460 million for Mali,
for example, to a 20-year's net NPV, then that amount is about
$320 million. So, in terms of how we calculated, I'll be more
than happy to bring my economists and then work with your
staff.
Senator Lugar. Well, that would be helpful----
Mr. Yohannes. Thank you.
Senator Lugar [continuing]. To get more clarification for
those four countries, and for the whole process.
Mr. Yohannes. But overall, Senator, they all expect that
they will have very positive numbers.
Senator Lugar. Administrator Shah, the administration has
requested $1.1 billion for the Feed the Future Program, and an
additional $308 million for the United States contribution to
the World Bank Global Agriculture and Food Security Program
trust fund. The administration has also asked for $1.69 billion
in funding for the Food for Peace, Title II program. Now, let
me ask, in this difficult budget climate, How can you assure us
that these programs are working together in a nonduplicative
manner to accomplish our foreign policy goals? In other words,
how do you sort out the missions and the expenditures?
Dr. Shah. Thank you, sir. The $1.69 billion for title II
primarily funds emergency food security programs around the
world. And that would include programs like Darfur feeding
programs and in certain other countries where there are acute
emergencies and where we need to respond to famine and acute
hunger and starvation. The $1.1 billion plus the $308 million,
that really makes up the agricultural development investments
that support us to, over time, transition from what we believe
is more costly and, over time, less efficient--that we don't
want to be providing food when we can help countries provide
for themselves, and do that in an efficient manner.
In terms of how we coordinate those components, they are
fully coordinated. USAID sits on the board of the World Bank
Fund. The value of that fund is the money we put into it gets
leveraged manifold by other donors. And we are constantly
working aggressively, with partners from Qatar and the U.K. and
Spain and Canada, to make sure that every dollar we put in gets
leveraged in that capacity.
The $1.1 billion allows us to really scale up efforts in
the countries that have been carefully selected and have gone
through a rigorous now-18-month process of changing their legal
rules so that they can attract more foreign direct investment--
in many cases, from U.S. companies, like PepsiCo--so that they
can make greater investments in agriculture, themselves, and so
that our resources can really target small-holder farmers, most
of whom are women, who are very much a part of the solution,
because, we know, as they earn more incomes and produce more
food, the first thing that happens is, they improve the
nutrition of their children and then send their kids to school
and begin that pathway out of poverty and hunger.
So, that's how the program sticks together. And, country by
country, we have developed specific country investment plans
that detail how our money will be spent, but also align our
resources with funds from the World Bank, from other donors,
and from the local government and the private sector. And it's
really the first time in decades that that kind of coordination
has come together in the agriculture sector. And it gives us
great hope that these programs will be highly effective,
compared to their alternatives.
Senator Lugar. Thank you very much.
Thank you, Mr. Chairman.
Senator Cardin. Senator Menendez.
Senator Menendez. Thank you, Mr. Chairman.
Thank you both for your service.
I want to follow up, on Senator Lugar's comments about
Egypt. Those of us who have supported aid to Egypt and to the
Middle East know our support is not, in my mind at least,
unconditional. I would like to support a country that is making
strides in a secular, more democratic direction--respecting the
rights, for example, of Coptic Christians. And I agree that aid
is an incredibly important tool of U.S. foreign diplomacy, but
it also must elicit certain responses as part of that aid. I
hope that we are doing that in the case of Egypt, especially as
circumstances unfold there and hope you will give me a sense of
some of that.
Second, President Obama's trip to Latin America shone a
light on the region, one that I believe has been overshadowed
by what are seemingly more pressing issues in other parts of
the world. And I understand that. But, I believe this constant
march, where we see aid to Latin America and the Caribbean move
in a downward slope, is not in the national and security
interests of the United States. What is occurring in Latin
America and the Caribbean affects the American people and our
debates in Congress more than those that are occurring in other
parts of the world.
I mean, if you talk about undocumented immigration,
narcotic trafficking, organized crime and gangs in the
hemisphere, new diseases that we had largely eradicated and are
now resurfacing--they know no boundaries; if you talk about the
creation of opportunities for U.S. products and services to be
sold in markets in the hemisphere, whose rate of growth in some
countries is a GDP we'd only desire to accomplish, then you see
the natural interests of the United States.
And so, I look at that reality, and then I look at where
we're going, in terms of foreign assistance based on what you
said in a previous hearing, Mr. Administrator, that AID would
be seeking to shift funding away from some regions to other
areas of the world to maximize the effectiveness of AID
dollars. But, we're going in a direction that I think is not in
our interest.
Based on the FY12 budget that's exactly where we're headed,
with foreign assistance requests for Latin America and the
Caribbean for FY12 approximately $1.89 billion, which is about
8 percent less than FY11 requests, and 16 percent less than the
FY10 base enacted appropriation. In the last decade, compared
to other regions in the world, Latin America has dropped from
14 percent of the foreign assistance budget to just 10 percent,
at a time when all these issues I talked about at the beginning
are rising.
So, explain to me, in light of what we are seeing in our
own front yard, why this makes sense. And how are we going to
stop this slide? What is the priority that you have at AID for
Latin America, in the context of worldwide development
activities?
Dr. Shah. Thank you, Senator. I'll start with the second
point in question. We absolutely have a priority for Latin
America. It's based on a desire to see real results in specific
areas. Funding for USAID-managed accounts for the Latin America
region has stayed relatively stable. The FY12 request for
USAID-managed accounts is about $1.29 billion, which is $23-$24
million less than FY11, but is also slightly higher, about $29
million higher, than the similar request for FY10. And we, of
course, made difficult tradeoffs to produce the budget,
overall. And so, we're certainly seeing that.
The ability to maintain the programs in Latin America, when
we factor out many of the major initiatives, is even more
strong, because the initiatives do tend to skew toward sub-
Saharan Africa, although we have managed to identify and make
real specific, targeted, initiative-oriented investments in
places like Guatemala and El Salvador. Guatemala has been
designated both a Feed the Future country and a Global Health
Initiative country. El Salvador is one of only four countries
that are part of the President's new Partnership for Growth,
where we are bringing together the entire interagency and, in a
coordinated way, trying to explore expanding, significantly,
growth and economic development partnerships with El Salvador.
And we've specifically targeted increases in funding in
both the Mexico ESF development assistance and health accounts
and in the ESF funding for CARSI. And in CARSI, in particular,
we have tried to be very goal-oriented in identifying, what are
the specific security benchmarks, where are we seeing real
progress in areas like local and community policing and
programs that interface with high-risk youth, and our ability
to bring local private-sector funding into those programs to
supplement U.S. taxpayer dollars.
So, Mark Feierstein, who's the Assistant Administrator in
this area, has been focused on this, as have I, and we will
continue to maintain this type of a results-oriented focus in
Latin America programming.
Senator Menendez. Do you expect to continue to see that,
when you have challenges elsewhere in the world, it will be the
Latin America and Caribbean accounts that suffer?
Dr. Shah. I think--in the current budget environment, I
don't feel that I'm able to really say that anything is
protected. We believe this is an important investment. You're
absolutely right to point out that this is both our front yard
and the investments we make have direct consequences for our
border, the management of our border, migration flows, as well
as our own ability to have viable, effective safe trading
partners.
Senator Menendez. I appreciate your recognition of that.
The problem is that what AID has been doing over time is taking
from the Latin America accounts whenever it faces a challenge.
So, while I appreciate that nothing is protected, something
that never seems to be protected is this. And so, I am
concerned that this is the pot by which we ultimately go to.
And that is not acceptable. That is not acceptable.
Last, on a third matter, I look at Congress's language, as
it relates to the economic support funds for Cyprus, and find
that they go to bicommunal projects aimed at reunification
measures to reduce tensions and promote peace and cooperation
between the two communities in Cyprus. However, according to
the list of projects published on the AID Cyprus Web site, it
seems to me that almost all of the work is focused heavily on
the Turkish Cypriot programs and not bicommunal in nature.
So, can you explain how such projects fit within the
definition that the Congress put forth of bicommunal projects
meant to promote cooperation and reconciliation on the island?
And in light of congressional concern about the lack of
transparency and advance consultation of these funds, can you
speak about the existing bicommunal programs which follow the
intent of the law and are focused on promoting cooperation,
which is the purpose of these moneys, in the first place,
between Greek and Turkish Cypriots?
Dr. Shah. Thank you, Senator. We believe our programs do
follow the spirit and the letter of the congressional guidance.
I would note that we have supported, in FY10, over 140 civil
society organizations in their efforts to build trust and
understanding between communities. There are a number of
different projects and programs that they pursue to do that in
a myriad of different ways. But, in total, they have hosted 400
events in which 17,000 people from both communities have, in
fact, participated.
So we have also seen, and track, media responsiveness to
that, and, frankly, believe there have been hundreds of
positive stories in the international press and more than 1,000
in the local press, that really do achieve that goal.
Senator Menendez. My time is running out, so I will follow
up with further questions, in writing.
The reality is that a lot of this is about tourism on the
northern side, and attracting people from other parts of the
world there. It isn't about bicommunal efforts. I don't know
how you get to bicommunal efforts if you don't have
conversations and engage the Cypriot Government, certainly on
the Greek side, as part it.
So, I'm concerned with your statement that, ``Yes, we
follow congressional intent,'' because I really feel that is a
lot lacking here.
So, I hope to follow up with you on Latin America, and
again, I appreciate your engagement.
Thank you, Mr. Chairman.
Senator Cardin. Well, thank you, Senator Menendez.
Let me just follow up, just very briefly, on Senator
Menendez's point. We understand that there's going to be some
very difficult decisions that may have to be made during this
appropriation process. Many of us would like to see your
budgets more robust. I think that's going to be extremely
difficult during these times. But, I would just urge you to
work very closely with this committee and the subcommittees of
geographical interest, as well as the subcommittee that has
general jurisdiction over your programs, and with the
appropriators, because I think you're going to find the point
that Senator Menendez made about the regional equity issues
here are going to be of great interest to the Members of
Congress. And I understand the priorities that you are trying
to move forward. We can always do that when we have a growing
budget. When we don't have a growing budget, it's a little bit
more difficult to make those judgments. And I would just urge
you to work very closely with our committees as those decisions
are being made.
We want to work with you. And we want to have harmony as we
go through this. But, if we just find out that a--some aid that
we thought was going to be coming in a particular region, all
of a sudden is cut back, where other regions seem to be doing
better or other programs seem to be held harmless, that may
cause some problems as we go forward.
So, please work very closely with Senator Menendez, as it
relates to our hemisphere. And we--I'm sure that there are
other subcommittees here that are going to have equal interest
in what is happening in their geographical area.
Senator Lugar.
Senator Lugar. I have no more questions.
Senator Cardin. Senator Menendez.
Senator Menendez. No.
Senator Cardin. Let me thank, again, both of you very much
for your testimony.
Senator Webb has asked that I mention that he was
unavoidably unable to attend. But, he has submitted a statement
for the record which will be made part of the record.
The record will remain open for 3 days.
And we thank you all very much for your participation.
[Whereupon, at 2:56 p.m., the hearing was adjourned.]
----------
Additional Material Submitted for the Record
Prepared Statement of Hon. Jim Webb, U.S. Senator From Virginia
I am presently chairing a personnel subcommittee hearing in the
Senate Armed Services Committee, and unfortunately cannot participate
in this hearing today. I would like to commend Senator Cardin for
chairing this important oversight hearing on our foreign assistance
programs and priorities.
As the authorizing committee for foreign assistance, the Foreign
Relations Committee bears special responsibility for examining the
direction, policy, and levels of funding for overseas aid. This aid
plays a critical role in our diplomacy, and nowhere is this more
important than in East and Southeast Asia.
This region--with 45 percent of the world's population--is the only
place in the world where the direct interests of the United States,
China, Russia, and Japan directly intersect. Despite the
administration's stated attempt to engage Asia, the FY 2012 budget
fails to provide the diplomatic funding and foreign assistance needed
to rebalance our long-term and short-term strategic priorities. Of all
the regions in the world except Europe, the East Asia region has the
lowest budget for foreign assistance.
I look forward to working with the committee to redress this
problem and increase the committee's oversight of U.S. foreign
assistance.
______
Responses of Administrator Rajiv Shah to Questions Submitted by
Senator Richard G. Lugar
feed the future
Question #1. In response to my question at today's hearing
regarding the Feed the Future Initiative, you stated that while both
the Feed the Future and the Food for Peace Title II programs may
operate in some of the same countries, because they focus on different
hunger and food issues, there is no duplication between them. In
addition to these two food security programs, the United States also
contributes to the World Bank Global Agriculture and Food Security
Program (GAFSP) Trust Fund, and the administration has requested $1.69
billion for it in FY12. I note that using FY10 data, all three of these
programs are being funded in Bangladesh and Haiti. I would also note
that several other programs and accounts, including the McGovern-Dole
International Food for Education and Child Nutrition program, Migration
and Refugee Assistance, and International Disaster Assistance, also
address issues of food security.
Please describe in more detail exactly how each program
works in these countries to address food security, where there
is duplication and how they may complement each other.
Answer. The United States will continue to provide food aid during
times of crisis, but a lasting solution to hunger requires a long-term
commitment to agricultural growth. Agricultural growth fosters economic
growth, reduces poverty, improves health, and is necessary to meet the
needs of a growing world population in the face of climate change and
other environmental challenges. The U.S. Government's Feed the Future
(FTF) Initiative addresses the root causes of hunger that limit the
potential of millions of people, using a combination of bilateral
programs and multilateral mechanisms. Feed the Future promotes
sustainable growth in the agriculture sector, facilitates local and
regional trade, and invests in game-changing innovations and
technologies to support productivity and income increases, so that
countries are better able to combat hunger, feed their people, and
contribute to stable global food supplies. Other agricultural programs,
such as Title II Food for Peace, and the GAFSP trust fund, employ
approaches that are complementary to FTF, thereby increasing the impact
of USG investments in food security.
One of the key principles of FTF is to support country-led
agriculture and food security efforts, including the development of
country-owned food security strategies and investment plans, with
participation from U.S. food assistance implementing partners and their
local counterparts. Through these country-led strategies, FTF
collaborates with other U.S. agricultural programs, such as Food for
Peace, to ensure efficiency and the greatest impact at the country
level. During FTF strategy development, USG country teams analyze
current country-specific food assistance programs in the design of
their FTF strategy, targeting regional interventions that are
complementary to these programs.
In both Haiti and Bangladesh, USG-provided food assistance plays a
critical role in supporting vulnerable populations through short-term
humanitarian assistance as well as support to safety net mechanisms. In
Haiti, the food assistance programs are complementary to FTF
interventions as they support earthquake-affected populations and other
vulnerable groups outside of the FTF growth corridors. In Bangladesh,
the food assistance programs provide a solid basis for the FTF strategy
and support safety net interventions for the most vulnerable groups.
Given the magnitude of poverty and hunger in both countries, USG
resources are not sufficient to fully solve these problems; however,
our complementary programs combined will make great strides in reducing
poverty and malnutrition.
In addition, the administration's FY 2012 budget requests $109
million in FTF economic resilience programs. Targeted toward vulnerable
but viable rural communities, in areas with high concentrations of
chronic hunger, these programs will bridge humanitarian and development
objectives through expanded support for productive rural safety nets,
livelihood diversification, microfinance and savings, and other
programs that reduce the vulnerability to short-term production,
income, and market disruptions. Specifically, this request will
directly fund community development activities in lieu of monetization
of food aid for these programs; expand the proportion of Title II Food
for Peace resources available for emergency humanitarian needs;
leverage the potential of the World Food Program's local and regional
procurement of food assistance to strengthen local markets and increase
small holder access to them; and pilot innovative, scalable mechanisms
to reduce households' vulnerability to economic and climatic shocks.
The Feed the Future Initiative also works to increase donor funding
for agriculture-led growth. In line with the objectives of the
administration's food security initiative, the USG supported the
creation of the GAFSP trust fund which pools donor funds to provide an
additional, unified source of financing to support sustainable food
security strategies for those developing countries that demonstrate
their commitment to addressing the food security needs of their
population. The U.S. contributions to the GAFSP are leveraged by
significant contributions from other donors. The trust fund is eligible
to make investments in five areas that are central to food security:
(1) improving agricultural productivity; (2) linking farmers to
markets; (3) reducing risk and vulnerability; (4) improving nonfarm
rural livelihoods; and (5) supporting capacity-building and technical
assistance needs. In Haiti, the trust fund awarded $35 million for
agricultural productivity growth through adoption of high-yielding
technologies and research and extension. Bangladesh received $50
million for agricultural productivity growth through technology
generation and adoption and water management.
Question #2. Is it the administration's intention to seek
legislative authorization for the Feed the Future Initiative?
Answer. At this time, the FY12 budget request does not include
legislative authorization for the Feed the Future Initiative.
global health
Question #3. I recently released a Senate Foreign Relations
Committee Minority Staff Report on transparency and the Global Fund to
Fight HIV/AIDS, Malaria, and Tuberculosis. The report is critical of
the United Nations Development Program's (UNDP) refusal to make public
its audit reports. My staff has recommended the withholding of funds to
the UNDP until its internal policies are changed to allow for greater
transparency and accountability.
What are your views on this recommendation?
Answer. We appreciate the SFRC Minority Staff Report, and the
administration strongly supports reform of the Global Fund to ensure
funds reach people in need and increase the impact of the Global Fund
in saving and improving lives affected by HIV, TB, and Malaria.
The administration has been playing a leading role in driving
Global Fund reforms: In October 2010, Ambassador Goosby issued a call
to action for Global Fund reform; the USG played an instrumental role
in creating an independent panel to review the Fund's fiduciary
controls and; we are working intensively with the Board to enact
comprehensive reforms to improve the Fund's performance.
The report recommends withholding all funding to the U.N.
Development Program and U.S. contributions from the Global Fund to UNDP
until it certifies that its internal rules and procedures have been
sufficiently modified to allow ``any investigate[ive] arm of any
multilateral organization to which the United States contributes FULL
access to their audits, investigations, records and personnel.'' We
strongly support coordinated action by the Global Fund OIG and UNDP in
preventing, identifying, and aggressively addressing instances of fraud
and corruption and strongly support granting the Global Fund access to
UNDP Office of Audit and Investigation (OAI) reports on Global Fund
grants. We understand the UNDP Executive Board will address this issue
at its next meeting in June.
We are working closely with the Global Fund and UNDP to urge them
to address these issues immediately. But we are not proposing to
withhold resources to the Global Fund and UNDP, as recommended by the
report. Our goal is to strengthen the Global Fund's operations and
oversight systems, while maintaining life-saving services for people
affected by the three diseases.
Question #4. The staff report also references a recently released
study by the United Kingdom Department for International Development
evaluating the effectiveness of 43 international funds to which Great
Britain contributes for value for the investment and effectiveness in
combating poverty. The report recommends that the United States conduct
a similar exercise.
As our U.S. commitments are being evaluated, do you believe
that the United States should conduct a similar exercise to
better evaluate contributions to international funds and
organizations?
Answer. A broad and standardized review of agency performance, such
as the review by the United Kingdom, is a worthwhile approach that
merits thorough and thoughtful consideration. The Obama administration
has made accountability for results central to our global development
policy and indeed to our wider national security strategy. Especially
in this budget environment, we couldn't agree more that international
funds and organizations need to demonstrate results.
The United States has consistently pushed for concrete improvements
in efficiency, effectiveness, and accountability in international
organizations and we are currently working to implement results-based
management at the U.N. and other agencies. As a routine matter, U.S.
funding to multilateral agencies is subject to review as part of any
funding agreement, and, of course, we exercise oversight of assessed
contributions through a range of governance and accountability
mechanisms, depending on the agency.
Previously, the United States established the U.N. Transparency and
Accountability Initiative (UNTAI) to verify that concrete improvements
in management and accountability are being made within the U.N. system.
The Department of State is currently reviewing the successful UNTAI
initiative and considering improving its usefulness and relevance with
a follow-on effort. Nevertheless, taking a broader more standardized
approach does merit additional consideration.
multilateral vs. bilateral aid
Question #5. Should we be focusing more on bilateral assistance vs.
multilateral programs or vice versa?
Answer. Each one has its value and usefulness, and we need both
bilateral and multilateral aid programs to achieve U.S. foreign policy
and development objectives. The key is for a balanced approach,
combining bilateral initiatives and multilateral programs to maximize
their impact. Bilateral programs give us greater control over the
design and delivery of aid to a specific country. Multilateral aid
programs have some unique advantages: they can help generate
international support and leverage donor financial resources for
particular causes or issues. Multilateral programs can also help us
reach places where we do not conduct bilateral programs or we do not
have sufficient expertise or resources to meet the needs. For example,
the U.N. played an important role in administering a multidonor trust
fund for Iraq reconstruction and made valuable contributions helping
Afghanistan build elections processes. Our participation in
multilateral forums also provides us the opportunity and platform to
help set the development agenda for the broader international community
and to drive reform, transparency, and accountability in these bodies.
global health
Question #6. In June, the Global Alliance for Vaccines and
Immunizations (GAVI) will hold their first-ever pledging conference.
The United States has played a huge role in the creation of GAVI. As a
strong supporter of vaccines, I have closely followed the rollout of
the pneumococcal vaccine.
Should the United States make a multiyear pledge to GAVI;
and if so, how much should the United States commit?
Answer. USAID is a staunch partner of GAVI. We strongly believe
that immunization, and GAVI which supports global immunization, are
amongst the highest impact and most cost-effective uses of U.S.
Government investments in global health. Vaccines have the power to
transform our global health efforts. By expanding the coverage of
existing vaccines and introducing new immunizations, we can save the
lives of 4 million children over the next 5 years. And future potential
vaccines against malaria, TB, and HIV/AIDS will allow us to break the
backs of these deadly diseases and save the lives of millions more.
USAID has played a lead role in GAVI's creation and in its first
successful 10 years. In addition to the $657 million in USAID funding
to GAVI between FY 2001 and FY 2010, we play a critical leadership role
on the GAVI Board of Directors and the GAVI Executive Committee. USAID
also provides technical assistance to countries to strengthen national
immunization programs so they can introduce and rapidly scale up access
to the new vaccines that GAVI funds.
We appreciate and share your interest in addressing GAVI's funding
gap. USAID's FY 2011 request for GAVI was $90 million. The President's
FY 2012 budget includes a request for GAVI of $115 million. We look
forward to discussing future commitments to GAVI with the Congress
prior to the pledging conference in June.
pakistan
Question #7. It is my understanding that significant child and
maternal health funds in Pakistan have been allocated, but not fully
committed.
Does USAID have the authority to reprogram those funds to be
dedicated to polio eradication efforts in Pakistan? Is this
matter under consideration?
Answer. USAID/Pakistan in FY10 programmed an additional $1.5
million of MCH funding toward polio eradication. This was a $1.5
million increase from previous years. This higher level of funding is
planned for FY11. Other MCH funds have been committed to other, equally
essential programs.
global health
Question #8. With USAID being the lead agency on the
administration's Global Health Initiative, how does it work that the
bulk of the funding comes through the global HIV/AIDS under the
jurisdiction of the State Department?
Answer. With passage of the Tom Lantos and Henry J. Hyde United
States Global Leadership Against HIV/AIDS, Tuberculosis, and Malaria
Reauthorization Act of 2008 (Pub. Law 110-293), the U.S. Global AIDS
Coordinator in the State Department was granted specific budgetary
jurisdiction over all USG funding for international HIV/AIDS programs.
Under this authority, funding for USAID's PEPFAR activities is provided
through the State Department under the Lantos-Hyde Act. The Lantos-Hyde
Act began in FY 2009 and continues through FY 2013. USAID does not
believe that this funding structure, which has been in place since FY
2009, will constraint USAID's role as the lead agency under the Global
Health Initiative (GHI).
enterprise funds
Question #9. When communism was crumbling in Eastern Europe, an
innovative new concept of development, the Enterprise Fund, was brought
forward through the Support for East European Democracy Act and later
the Freedom Support Act. These Enterprise Funds were private equity
funds which received grants from the U.S. Government. The funds were
managed under the direction of distinguished Boards of Directors,
serving pro bono, tasked with investing and creating businesses to aid
in the transition from command to market economies. USAID monitored
their activity, and for the most part, these Funds were very
successful. For example, in Albania, one of the poorest and most
underdeveloped countries in Europe, the Enterprise Fund invested in a
Western-style bank which became the financial nerve center of the
entire country, providing credit cards, loans, and other financial
products that Albanians had not experienced before. The bank was
eventually sold to an international financial institution for over $150
million.
Given these facts, and the obvious need for the goals of our
international development efforts to evolve, how do you view
the Enterprise Fund concept? Do you see a role for Enterprise
Funds in our country's development strategy going forward?
Answer. An Enterprise Fund is one of a broad spectrum of USG and
USAID assistance mechanisms that have been utilized to assist the
former Soviet-bloc countries to successfully navigate the transition
into free market economies. Between 1990 and 1995, USAID provided $1.2
billion in funding to finance 10 Enterprise Funds covering 18 countries
in the Europe and Eurasia region to assist in these transformations.
The investment has leveraged total investments of nearly $9 billion in
the region. Further, the use of liquidation proceeds from the
investments of the Funds has resulted in the creation to date of nine
legacy foundations with over $1 billion in assets, and the Funds are
on-track to return over $430 million to the American taxpayers. The
10th Fund is also expected to generate sufficient returns.
The Enterprise Funds themselves, while making significant
developmental and financial contributions, would likely not have been
as successful, without parallel assistance from USAID and other donors
to simultaneously provide a wide range of necessary technical
assistance, training and capacity-building, macroeconomic policy and
regulatory reform, development of existing rule of law and judicial
reform, and assistance to host nations to develop and implement
policies and practices to create functioning democracies and free
market economies out of the former centrally planned Communist system.
The Enterprise Funds were created as public/private partnerships
wherein experienced private sector Boards of Directors provided
oversight on a pro bono basis and hired full-time day-to-day investment
managers to make investments which would promote private sector
development and policies conducive to private sector development.
The Enterprise Funds invested directly in thousands of private
sector businesses throughout the Europe and Eurasia region. Further,
the Enterprise Funds collectively have created over 30 successful
private sector financial institutions in the region.
These Enterprise Funds have played an important role in the
promotion of free market economies, development of private sector
businesses and financial markets, and have contributed significantly to
the advancement of the USG's foreign policy objectives.
As with any such intervention and transformation, the model has
continued to evolve over the 20 years in which these Funds have
operated. Many lessons have been learned, which should be carefully
reviewed during the consideration of creating any future investment
funds in other countries.
Not all Enterprise Funds were equally successful and even the
successful Funds, as might be expected in a transition economy, made
progress unevenly.
When the Enterprise Funds were established, the circumstances in
the Europe and Eurasia Region were well suited to the Enterprise Fund
approach. There was a serious shortage, almost a complete absence of
investment capital for the private sector in the region, capital
markets and private financial institutions were almost nonexistent, and
institutions to provide financial regulatory oversight and enforcement
were underdeveloped or nonexistent. In considering the establishment of
future Enterprise Funds for countries in other parts of the developing
world, the decision should not be based solely on the experience of
Enterprise Funds in the Europe and Eurasia Region. The specific
circumstances of each country should be carefully studied to ascertain
if there is, in fact, a shortage of private sector capital and if so,
what types of capital and/or additional financial sector institutions,
training, technical assistance or other forms of assistance are needed,
and whether the circumstances are conducive to the operation of an
Enterprise Fund or a similar private equity investment entity.
It's important to recognize that Enterprise Funds are only one of
the possible structures that USAID has utilized to provide increased
access to capital and investment expertise and there are other
alternatives which should also be considered, depending on the existing
circumstances in each country or region.
international development policy priorities in the fy 2011 budget
Question #10. USAID's FY12 budget request includes $322 million in
core funding through several programs including Development Assistance,
USAID Forward, Feed the Future, and the Global Health Initiative, for
Science, Technology, and Innovation. Science, Technology and Innovation
are longstanding strengths of the United States in the global economy
and have the potential for a win-win situation for U.S. economic growth
and for assisting developing countries. The proposal is an innovative
one with its inclusion of other federal science agencies, the private
sector, and philanthropic organizations.
How do you plan to engage the private sector in this effort?
How can these ideas move forward in a constrained fiscal
climate with no new funding?
Answer. USAID understands the importance of achieving development
outcomes more cost-effectively. This is why cost efficiency, scale, and
leverage are at the heart of our innovation efforts which focus on
identifying, testing, and scaling solutions--including those based on
science and technology--with the potential to significantly improve
USAID's ability to address development challenges more effectively,
more cost-effectively, and sustainably. Working with the private sector
and leveraging the resources and capabilities of partners in the
private-sector, the nonprofit sector, and other governments is a
critical component of this effort. However, we do not believe that our
science, technology, and innovation efforts will be successful if they
rely solely on private sector support. This is why USAID is requesting
funding to support the development of initiatives such as Grand
Challenges, Development Innovation Ventures (DIV), and mobile banking,
which we believe have the potential to produce cost-saving
breakthroughs in development.
USAID is actively engaging the private sector and other potential
partners through a variety of outreach mechanisms, including
roundtables, speeches, and conferences. Public-private partnerships,
such as Global Development Alliances which have an average leverage
ratio of over 4:1, are a key component of our efforts to achieve
development outcomes, and the majority of the first round of DIV grants
leveraged contributions from partners. USAID is also committed to
working more closely with the private sector, entrepreneurs, and
innovators outside government to help identify, source, and develop
potential development solutions rather than viewing them purely as
implementers or donors.
budget cuts in foreign assistance funding
Question #11. I note that the President's budget request cuts
development assistance in at least 20 countries by more than half,
including 11 countries where all bilateral Development Assistance has
been eliminated. It also terminates USAID missions in three countries.
Have these countries graduated from U.S. assistance?
Answer. Given the budget restraints facing the entire country,
USAID will focus and concentrate its efforts to have the greatest
development impact with the resources available. The reductions
outlined in the question target countries with rapidly expanding
economies or those who should be graduating from assistance, as well as
those exhibiting a weak commitment to good governance. Through USAID's
Country Development Cooperation Strategy and other planning processes,
we are working closely with our host country partners and other donors
to concentrate our efforts in fewer countries and focusing our efforts
within countries. While we are continuing health and other targeted
funding to some of these countries, we are aiming more broadly to
change the nature of our relationship in these and other countries from
assistance provider to development partner, working with nonassistance
tools to further development cooperation.
Question #12. Are these mission closures already proceeding? What
savings are they generating?
Answer. The missions scheduled to close in FY 2012 are currently
making the preparations necessary to undertake the closure. There will
be significant savings in Development Assistance and Assistance for
Europe, Eurasia and Central Asia from the closures of these missions in
FY 2012 ($16.6 million below FY 2010, an 84 percent decrease). Since
the proposed mission closings and position restructuring will not occur
until the end of FY 2012, the budget request for Operating Expenses
does not reflect any savings for these actions. Savings would begin to
be realized in FY 2013.
Question #13. How does the 50-percent cut in aid to a strategic
partner like Djibouti--home to our CJTF-HOA--reflect the strategic
interest in sustaining that footprint in this volatile region?
Answer. Djibouti is an important strategic partner in supporting
stability and combating terrorism in the Horn of Africa. The reduction
of Development Assistance funding in FY 2012 is part of a focused
effort concentrating on improving border and maritime security and
providing food aid, basic health services, and education and job
training opportunities. While Development assistance will be
significantly reduced, other assistance will remain level or increase
including:
Foreign Military Financing, which will remain steady, will
work to modernize and maintain equipment for law enforcement
and border protection professionals, including procuring
communications equipment.
International Military Education and Training, which will
increase 6.1 percent, will provide training to military
personnel to continue professionalization of the Djiboutian
military and improve their ability to monitor Djibouti's land
and maritime borders.
International Narcotics Control and Law Enforcement, which
will begin a program for training and equipment to enhance the
professionalism and capacity of the national police,
particularly in forensics and border security.
PEPFAR, which will provide increased funding focused on
addressing HIV/AIDS in the Djibouti-Ethiopia transport
corridor.
usaid forward-monitoring and evaluation
Question #14. An important component of foreign assistance
legislation introduced in the last Congress, as well as in the
Quadrennial Diplomacy and Development Review (QDDR) and the
administration's budget request, is effective monitoring and evaluation
of foreign assistance programs.
What is the status of your agency's work in establishing a
rigorous system to evaluate our foreign assistance investments?
Answer. On January 19, 2011, USAID released a new evaluation
policy. USAID's Evaluation Policy states two primary purposes:
accountability to stakeholders and learning to improve effectiveness.
The renewed focus on evaluation led to an evaluation policy that
establishes higher standards for evaluation practice across USAID.
All large projects (defined as a project that equals or exceeds in
dollar value the mean project size for that office or field mission)
will be subject to evaluation. This is intended to ensure that the
majority of resources under management will be subject to evaluation.
Additionally, all pilot projects must, if feasible, undergo a rigorous
impact and/or performance evaluation.
The evaluation policy establishes firm protocols and procedures for
ensuring that all USAID evaluations will be transparently conducted,
unbiased, integrated into project design, relevant for decisionmaking,
methodologically sound, and oriented toward reinforcing local capacity.
USAID began implementing the evaluation policy earlier this year.
To provide USAID staff with the tools and technical expertise necessary
to make this policy a reality, USAID is offering a suite of new
evaluation courses and training modules to project managers and program
officers throughout the Agency. Between January and April, more than
100 trainees completed the courses.
In addition to committing to training staff, overseas missions are
required to create multiyear evaluation plans that are coordinated with
the program and project design, implementation and contracting cycles.
To promote full transparency and disclosure of evaluation findings,
USAID is creating an evaluation registry, which will be publicly
accessible, and evaluation findings will be available on the USAID Web
site.
Question#15. Do you plan to outsource any of these evaluations?
Answer. To ensure that evaluations are conducted in an unbiased
manner, USAID's evaluation policy stipulates that most evaluations will
be conducted by external third-party evaluators who are not directly
involved in project implementation. To promote unbiased evaluation work
at USAID missions, these evaluations will be managed by the USAID
Program Office (which has multiple responsibilities but does not
generally manage projects directly) rather than the offices that manage
the projects.
USAID expects that the majority of these evaluations will be
conducted by externally contracted organizations that have specialized
expertise in evaluation. Recognizing, however, that USAID
simultaneously needs to build in-house evaluation capacity, the Agency
is training its staff in evaluation design, methods, and management.
USAID staff and/or implementing partners will conduct evaluations when
this serves the evaluation purpose, is cost-effective and does not
compromise objectivity. However, it is anticipated that all evaluation
teams will be led by an external expert.
Question #16. Will the system also include the ability of your
staff to recommend the elimination of ineffective programs?
Answer. USAID's Operating Units will use evaluation findings to
inform budget requests, which includes focusing resources on better
performing programs and away from those that have a smaller probability
of success.
There are two important caveats. First, programs may be ineffective
for a number of reasons. For example, an ineffective or underfunded
program that was based on faulty assumptions and was not yielding good
results in a cost-effective manner might be eliminated. But in some
cases, redesigning and/or fully funding might be the most effective and
efficient approach to address that development problem in a timely way.
Second, USAID has deliberately chosen to promote evaluation as a
tool for agencywide learning and accountability. Building a culture of
learning requires an environment that is willing to innovate and that
acknowledges development as a process of continual learning. USAID does
not intend to promote evaluation solely as a means by which to justify
the elimination of ineffective programs. From past experience, the
excesses of such an ``audit culture'' actively warps organizational
incentives, and it can prevent the Agency from making evidence-based
budgeting and programming decisions.
sustainable growth
Question #17. Over the past 50 years, our notion of international
development has evolved as problems in the world have evolved; while we
still focus on providing clean water, disease prevention, and
educational opportunities, we have also come to be faced with the
challenge of spurring sustainable economic development as a means of
allowing countries and regions to solve their own more basic
humanitarian problems. It is clear that the same approach to
eradicating polio or fighting cholera will not work when it is applied
to creating sustainable economic development. So a question for
development agencies is how to adjust to the new reality of what
development should be.
How are USAID and the MCC seeking to further sustainable
economic growth?
Answer. USAID supports sustainable economic growth through diverse
efforts to improve the environment for enterprise growth and
competitiveness; strengthen economic policy and governance; create
sound, well-governed financial systems; support business enabling
environments; support microfinance programs and business services for
micro and small enterprises; and build trade capacity. Other sectors
where USAID works to promote economic growth include: agricultural
development; infrastructure improvement, including the upgrading of
energy, telecommunications and water and sanitation services; workforce
development; education; the environment; and health.
At the same time, USAID and MCC are working in parallel on many
different fronts to wean countries off U.S. assistance and ensure the
sustainability of development efforts by working through efficient
local governments, thriving civil societies, and a vibrant private
sector. In particular, USAID and MCC are collaborating in the whole-of-
government ``Partnership for Growth'' efforts in El Salvador, Ghana,
Tanzania, and the Philippines to increase investment, strengthen
prodevelopment policies, and leverage new capital flows in those
countries.
USAID and MCC are also working together to identify private sector
investments that can sustain and enhance the investments of both
agencies in MCC compact countries. We are pursuing private sector
engagement to bolster the sustainability of the developing MCC compacts
with Zambia and Indonesia, and to complement the recently signed
compact with Malawi. Finally, USAID is implementing threshold programs
for MCC that target reforms in key areas--such as anticorruption and
rule of law--that can inhibit economic growth.
afghanistan
Question #18. The new authorities and significant new resources
provided the Department of Defense recently created a new Afghanistan
Infrastructure Fund (AIF) and a Task Force for Business Stabilization
(TFBS).
What role does USAID have in the conduct and implementation
of funds associated with the Afghanistan Infrastructure Fund
(AIF)?
Answer. The dual key nature of the Afghanistan Infrastructure Fund
requires a joint formulation of the project list proposed to be funded
from the AIF. In the field, two working groups are involved in the
formulation and selection of the proposed projects: the Infrastructure
Working Group (IWG) and the Executive Working Group (EWG).
The IWG, an interagency group cochaired by USAID and the USFOR-A
Joint Engineering-Joint Programs Integration Office, meets on a regular
basis to discuss infrastructure project coordination and planning. The
IWG, keeping in mind the broader infrastructure strategy and
implementation limitations (including schedules and resources), defined
the requirements for the 2012 AIF project nomination process. The IWG
then vets projects proposed for funding under the AIF and develops the
prioritized list of projects for nomination to Department of State,
USAID, and Department of Defense (DOD) leadership. This process also
includes a discussion of timelines and resource levels necessary for
each proposed project as well as which agency--USAID or DOD--is best
placed to implement the project. The projects are often complemented by
ESF-funded activities; e.g., the completion of Kajaki Dam Hydropower
Plant complementing the proposed AIF-funded transmission lines from
Kajaki Dam to Kandahar City.
The IWG presents the prioritized project list to the EWG, which is
composed of senior leadership from the interagency group in Kabul,
including the USAID Deputy Mission Director. After review by the EWG,
the proposed project list is submitted to Ambassador Eikenberry and
General Petraeus prior to being sent to Washington for approval by the
Secretaries of Defense and State before it goes to Congress.
Question #19. What role does USAID have in the conduct and
implementation of funds associated with the Task Force for Business
Stability Operations (TFBSO)?
Answer. Although it depends on the sector in question, usually
USAID has no role in ``the conduct or the implementation of funds
associated with the any projects or other activities undertaken by the
Task Force for Business Stability Operations (TFBSO).'' Over the past
several months, USAID/Kabul through its Office of Infrastructure,
Engineering, and Energy and TFBSO have discussed proposed USAID and
TFBSO support for the development of the Sheberghan Gas Field in order
to coordinate which entity is best placed to support key infrastructure
components that will facilitate the construction of a powerplant by the
private sector.
Pursuant to Section 1535 of the FY 2011 National Defense Act
Authorization, the Secretary of Defense, the Administrator of USAID and
the Secretary of State ``shall jointly develop a plan to transition the
activities of the [TFBSO] in Afghanistan to the Department of State.''
Initial discussions have begun on ways in which State, Defense, and
USAID could collaborate to prepare this transition plan. In relation to
the transition, USAID/Kabul and TFBSO have continued their dialogue on
how TFBSO-supported components at Sheberghan could possibly transition
to USAID.
Question #20. What oversight role does USAID maintain for these
programs? Who has the oversight function for these infrastructure and
business development programs?
Answer. State and USAID work jointly with DOD to develop and
finalize AIF projects as well as determine which agency is the most
appropriate implementer of the proposed project. Following receipt of
the funds, each implementer, USAID or DOD, will follow its authorities,
regulations, practices and procedures to implement its approved
projects, including with respect to oversight, such as USAID's
requirement for independent quality assurance and control for all
infrastructure projects. USAID will not have oversight over USACE-
implemented projects nor will DOD have oversight of USAID-implemented
projects. In accordance with Section 1217(i) of the FY 2011 National
Defense Authorization Act (NDAA), the Secretary of Defense, in
coordination with the Secretary of State, will submit a report to the
appropriate congressional committees regarding AIF implementation that
includes, with respect to the fiscal year, the allocation and use of
AIF funds, and a description of each project for which funds were
expended or transferred.
USAID does not have an oversight role for any Task Force for
Business Stability Operations (TFBSO) programs in Afghanistan. The
Secretary of Defense does submit a report to the appropriate
congressional committees regarding its activities and the plan for
transition.
Question #21. What Title 150 funds are associated or provided to
support the Afghan Infrastructure Fund (AIF) or the Task Force for
Business Stability Operations (TFBSO) in FY10, FY11, and foreseen in
FY12?
Answer. A concerted civil-military effort unites DOD and Function
150 funds in the Afghanistan Infrastructure Program to achieve
complementary objectives. Under this program, DOD resources from the
Afghanistan Infrastructure Fund (AIF) are focused on infrastructure in
key terrain districts that have a greater short-term counterinsurgency
impact, by providing fuel and expanding power, transport, and water
services in the southern and eastern provinces. ESF resources are
focused on supporting the foundational mid- to long-term infrastructure
needs of the nation, such as developing indigenous power production and
expanding power transmission capability, reliability, and efficiency.
These parallel but interlinked investments support the transition
efforts by contributing to immediate stabilization while consolidating
the gains to date in the more stable areas of the country. AIF and
Function 150 funds are complementary in achieving key infrastructure
objectives, but there are no Function 150 funds associated or provided
to support the AIF or the TFBSO in FY10 or FY11. With respect to the
TFBSO, initial transition planning has begun for the possible
transition of some TFBSO activities to the Department of State and/or
USAID for FY12. Depending on the number of, and types of, TFBSO
projects that are determined to be desirable and feasible for transfer
to the Department of State and/or to USAID, FY12 funding likely will be
needed to continue implementation of those projects. USAID staff in
Kabul initiated discussions with TFBSO staff in March, though
discussions on gas sector development were initiated earlier.
Projects in banking, mining, and energy appear to have some
potential for transfer to USAID although more due diligence is needed
before an accurate assessment can be made for transition. In banking,
USAID is exploring the use of mobile money applications as a way to pay
Afghan Government civil servants through mobile phone operators and
banks, while TFBSO has prepared a design for third party payments using
a consortium of small banks that might be useful for payments via
mobile money. In mining, TFBSO has been assisting the Ministry of Mines
in preparing tenders for oil, gas, and mineral exploration. USAID plans
to work with the Ministry of Mines in a capacity-building project that
could build upon TFBSO efforts to date. With respect to energy, USAID
plans to support the Sheberghan gas field redevelopment project and
could build upon TFBSO work in this sector.
Question #22. Why does USAID support what appear to be typically
civilian authorities and activities for the Department of Defense?
Could USAID carry out any of these tasks and if not, why not? What
authorities and other obstacles exist to USAID or other civilian
agencies?
Answer. USAID is supportive of ensuring that the activities
currently undertaken by the Task Force for Business Stability
Operations (TFBSO) continue. USAID, State, and DOD are working together
to make a recommendation to Congress as to the best home for TFBSO
activities in conflict and post-confict environments, and will work
with Congress to effect that transition, as appropriate.
USAID was not actively consulted when the TFBSO was set up to
engage in operations initially in Iraq and subsequently in Afghanistan.
USAID has just begun to gain an initial understanding of TFBSO
operations in Afghanistan and some limited understanding of TFBSO
projects in the mining, banking, and energy sectors. As to any
determination of the feasibility of USAID carrying out any of the
current or planned TFBSO projects in Afghanistan, USAID will need to
obtain a much more detailed understanding of the TFBSO portfolio and
the current implementation status of any projects underway, including
financial and other contractual commitments that may have been made.
With respect to authorities or other obstacles that USAID might
encounter in implementing any TFBSO projects that might be transferred
per the FY 2011 NDAA, four sets of issues must be considered:
Security restrictions set by the Embassy's Regional Security
Officers that currently proscribe or limit movement throughout
Afghanistan for USAID staff or USAID partners often do not
apply to TFBSO staff and partners operating under DoD Combatant
Command guidance. These security constraints might limit
USAID's ability to engage in some TFBSO-like activities, but
use of implementing partners who are not subject to Diplomatic
Security requirements is possible.
Potential lack of specific funding beginning in FY 2012 for
any TFBSO activities that may be transferred to the Department
of State/USAID.
In infrastructure development, such as gas sector
development, TFBSO is not bound by the same environmental
regulations as USAID. As a result, for USAID to continue or
support investments made by TFBSO, USAID would likely need to
conduct initial environmental examinations and determine
whether additional environmental assessments and mitigation
measures are required.
Question #23. Given Secretary Clinton and Gates statement that
``the Departments of State and Defense are committed to close
collaboration on the execution of an infrastructure program'' what has
USAID done to narrow its focus to those areas of strategic importance
to our specific goals as part of the integrated Civil-Military Campaign
plan?
Answer. Through its consultative strategic planning process USAID
has prioritized its focus on infrastructure investments that achieve
the goals of the Civil-Military Campaign plan, including the key
transition objectives. The U.S. is committed to a policy of
``transition'' by 2014 with GIROA taking on increasing responsibility
for security and development. USAID's job is to support the civilian
component of this transition, to increase stability while building
capacity across sectors--including infrastructure. The USAID has
proposed allocating substantial resources to Afghanistan's
infrastructure development to consolidate U.S. counterinsurgency and
stabilization efforts and lay the necessary foundation for economic
growth. Over 80 percent of Afghanistan's regional highways and 30
percent of the national highway system have been revitalized, but an
interconnected national electricity energy grid does not yet exist.
Asia Foundation surveys of the Afghan people reveal that access to
electricity is one of the highest priorities of the Afghan people,
which reflects their understanding that the lack of electricity narrows
the range of available economic and social development opportunities
and their perception that the Government has not been responsive to the
needs of its people.
Beginning in FY 2010, a strategic reorientation of USG resources to
the power sector will help meet the more than $6.6 billion in near-term
energy sector infrastructure investment required to serve Afghanistan's
burgeoning power demand. While USAID is planning to prioritize
improvements in power in the infrastructure program, we also will
continue to support construction of key transport projects, such as the
construction of the Bamyan-Dushi national highway and supporting roads
operation and maintenance. Smaller investments in demand-driven water
activities, including water supply systems, and renewable energy
programs will support stabilization efforts by improving access to
clean water and modest energy supplies to improve the quality of life.
Together, these activities will result in increased opportunities for
Afghan firms and greater local employment.
Question #24. What programmatic consolidation has occurred that
shows a prioritization of infrastructure in our assistance for
Afghanistan?
Answer. Please see the FY 2012 Congressional Budget Justification
for further information on the prioritization of infrastructure, and
more specifically for energy. As noted in the previous question,
beginning in FY 2010, a strategic reorientation of USG resources to the
power sector will help meet the more than $6.6 billion in near-term
energy sector infrastructure investment required to serve Afghanistan's
burgeoning power demand.
Question #25. Describe the individuals and mechanisms for
engagement that USAID has as it relates to the Civil-Military Campaign
Plan and at what levels does the Mission Director in Afghanistan
participate in the planning and monitoring of stabilization and
development programs?
Answer. USAID is involved in the planning efforts across horizontal
and vertical lines of engagement as laid out in the Civil-Military
Campaign Plan. At the national level, USAID (Deputy Mission Director
and technical office directors (as appropriate) participates in the
Executive Working Group, and is the lead agency on infrastructure in
the Economic Opportunity Working Group, as well as leading, with the
Coordinating Director for Development and Economic Affairs (CCDEA), the
Gender Policy Working Group. USAID also participates in the Afghan-
First, Economic and Financial Policy, Governance and Rule of Law
Working Groups.
The USAID Stabilization Unit and the USAID Office of Program and
Project Development (OPPD) are the primary interlocutors for the
various Kabul based civ-mil coordination efforts. USAID also
participates in the District Delivery Program Planners Board,
Transition Interagency Working Group, the Governance and Sub-National
Governance Consultative Group and the Governance Policy Working Group.
USAID/Afghanistan also participates in the many civ-mil anticorruption
working groups.
At the subnational level, USAID Senior Development Officers serve
as the lead USAID coordinator for development programs and personnel
that fall under their Regional Command. USAID is a part of the Civ-Mil
Fusion cells at the regional commands, and USAID personnel serve in the
Task Forces, Provincial Reconstruction Teams and District Support
Teams.
USAID personnel are involved in the many military planning efforts,
and are able to wield their stabilization and development programs to
build on military gains. At all subnational levels, USAID officers meet
regularly and frequently with their military counterparts to coordinate
USAID programming. Often USAID programs are designed to dove-tail with
military efforts. CERP projects tend to be used to build the
infrastructure (i.e., schools and clinics), and then USAID projects
provide the technical oversight and additional inputs (e.g., school
curriculum, teacher training and clinic supplies). In the
counterinsurgency effort, CERP projects tend to be used to help with
the clearing and the initial ``hold,'' while USAID stabilization
efforts follow in behind to provide ``hold-build'' activities. Many
development programs are designed to link to stabilization programs and
``build'' and then ``transition.''
USAID Field Program Officers at the provincial and district levels
are critical in their ability to oversee and monitor stabilization and
development projects. Recognizing this valuable resource, the USAID
Mission Director has issued increased authorities to engage with
implementing partners and provide updates on progress and the impact to
the programs' Contracting Officer's Technical Representatives.
Question #26. Your budget request implies a reduction in assistance
to Afghanistan for FY12 based on FY10 levels. However, I understand
that significant funds remain in the pipeline for projects in the
country which beg a few questions regarding the actual funding
imperative and limited decisions to reduce in areas not imperative to
our goals.
What is the level of funding that remains unspent in current
and prior year funds by fiscal year as well as broken out by
category (ESF/INCLE/GHCS/NADR, etc.)?
Answer. As of March 31, 2011, USAID/Afghanistan has $1.99 billion
in its pipeline which represents roughly 6 months of funding at the
current expenditure rate of $323 million per month. An additional $1.24
billion is appropriated, but not obligated; of which, approximately
$908.185 million is programmed to directly or indirectly benefit the
Government. This latter amount requires a Secretary of State
Certification that the Government of Afghanistan (GIROA) is cooperating
with U.S. reconstruction, taking credible steps to protect the
internationally recognized human rights of Afghan women and
demonstrating a commitment to accountability and facilitating active
public engagement in governance and oversight of public resources per
amendments to the FY 2010 supplemental. Below is the breakdown of the
pipeline by FYs and funding accounts:
------------------------------------------------------------------------
Pipeline in
Fiscal year Fund type million $
------------------------------------------------------------------------
2007............................... Child Survival and 11
Health.
Development Assistance 10
Economic Support...... 35
2008............................... Development Assistance 9
Economic Support...... 145
Global Health and 9
Child Survival.
2009............................... Economic Support...... 698
Global Health and 11
Child Survival.
2010............................... Economic Support...... 997
Global Health and 67
Child Survival.
------------
Total........................ ...................... 1,996
------------------------------------------------------------------------
Question #27. What is the current and projected monthly ``burn
rate'' given historical measures?
Answer. The current expenditure rate for the quarter ending March
31, 2011, is $323 million per month and the projected expenditure rate
is $370 million ($272 million disbursement + $98 million accruals). The
expenditure rate for the FY 2010 last quarter was $240 million per
month and for the FY 2011 first quarter was $243 million per month.
These rates were projected to be $83 million per month greater due to
$250 million transfers to ARTF planned for the quarters ending December
31, 2010, and September 30, 2010.
Question #28. How has the USAID mission through the Embassy country
team and the reach-back offices at USAID and State sought to narrow the
broad range of development efforts to focus on the highest priorities
to U.S. interests?
Answer. After conversations in February 2011 in Kabul between USAID
Administrator Rajiv Shah, USAID/Afghanistan Mission Director Earl Gast,
Ambassador Karl Eikenberry, and General David Petraeus about the need
to focus development assistance in support of transition and Afghan
ownership, USAID introduced the concept of ``foundational
investments.'' Foundational investments are high-impact, capital-
intensive interventions made in priority sectors that will have long-
term, sustainable, and durable benefits for the Afghan people, and will
assist the transition to Afghan self-sufficiency. Foundational
investments are designed to be mutually reinforcing by leveraging gains
across sectors for the overall benefit of the Afghan people. USAID/
Afghanistan has prioritized the following sectors for foundational
investments: energy; agriculture; extractive industries; financial
inclusion; human capacity development; and, construction. In addition,
USAID/Afghanistan is developing work plans for the foundational
investment priority sectors.
Question #29. How have efforts in Pakistan development coincided
and integrated with efforts in Afghanistan in each border area of RC
East and RC South and RC Southwest?
Answer. One area of coordination between USAID's development
efforts in Afghanistan and Pakistan has been the area of trade. Thanks,
in part, to USAID support, on July 18, Afghanistan and Pakistan signed
a historic transit trade agreement, the Afghanistan-Pakistan Transit-
Trade Agreement (APTTA), which will update and improve the joint
transit system to reflect current economic conditions, infrastructure,
technology, and transport practices. The new transit regime provides
for 10 additional transit corridors in Pakistan and eight new corridors
in Afghanistan (the new corridors, including one in Zaranj in RC-
Southwest, will be a significant increase from two previous corridors:
Torkham--RC-East and Spin Boldak--RC-South). This increased freedom of
transit will link Pakistan to Central Asia and beyond and will give
Pakistan improved access to raw materials from the region. Similarly,
APPTA will link Afghanistan to the world via three Pakistani ports
under designated routes. Afghan trucks will now be allowed to transport
Afghan exports to any of the three Pakistan seaports (Karachi, Qasim,
and Gwadar), load goods, and return with imports from other countries.
Additionally, USAID/Pakistan's TRADE program is providing instrumental
technical assistance to the Government of Pakistan (GOP) on APTTA.
TRADE not only assisted the GOP in securing ratification of APTTA, it
also helped the GOP develop a financial guarantee system that will
ensure Pakistan collects duties and taxes owed on transiting Afghan
goods. Assistance with the guarantee system and other issues helped
Pakistani and Afghan officials overcome longstanding obstacles to
APTTA's implementation at a meeting of the delegations in Kabul on May
7.
USAID's Trade Accession and Facilitation for Afghanistan (TAFA)
program assisted in eliminating key policy and technical bottlenecks
obstructing the signing of APTTA. During the final round of
negotiations in July 2010, TAFA advisors assisted the negotiating team
to understand the various alternatives and commitments available,
particularly concerning the revised dispute resolution mechanism and
measures to address cross-border issues, such as smuggling. Moving
forward, USAID will assist both Afghanistan and Pakistan on
implementation of the APTTA, focusing on antismuggling, customs
modernization, trade facilitation, and other cross-border issues.
Question #30. Describe how USAID professionals are working in an
environment with a stabilization imperative.
Answer. USAID professionals are working shoulder-to-shoulder with
our military colleagues in the counterinsurgency environment throughout
the ``shape, clear, hold and build'' phases, particularly following
military clearing operations. USAID has expanded the definition of
stabilization programming beyond just the counterinsurgency campaign to
include programs that aim to reduce the social, economic, and political
conditions that give rise to violence in a particular geographic
setting.
Recognizing that the closer our civilians are to the population the
better they can respond to on-the-ground realities, we are working to
get more of our U.S. Direct Hires (USDH) outside of Kabul at Provincial
Reconstruction Teams (PRTs), District Support Teams (DSTs) and in
regional platforms. Currently, 53 percent of USDH in Afghanistan are
working outside of Kabul; with an ultimate goal of 60 percent. The
mission is working to devolve more authorities to the field, providing
increased oversight of programs and building stronger links between the
field staff and our implementing partners.
An increasing number of USAID employees have begun the use of the
District Stability Framework (DSF). The DSF is a system developed by
USAID and used by civilian-military teams. It allows the collection,
analysis, prioritization, design, and assessment of local level sources
of instability. With the use of this methodology, USAID Field Program
Officers (are better able to align resources to drivers of local level
instability. Further, this methodology allows for better continuity of
effort and better synchronization of personnel and resources with our
interagency partners, including the military.
Question #31. What outcomes should Congress expect as the
stabilization spend rate diminishes rapidly in conflict areas that are
stabilized?
Answer. As areas are stabilized, USAID will work with other donors
and the Afghan Government to shift to a more traditional development
role. With increased security, we will be able to build a more vibrant
private sector, support social sector development, and develop a
skilled workforce that is capable of servicing needs in an a growing
economy.
While our stabilization programs are small-scale and community-
focused, they must also have a sustainable impact. Our largest cash-
for-work program makes longer term investments by bringing together the
district government with the community to decide on projects that
address priority issues for the community, and then hires a 100-percent
local workforce to implement the project. Through another stability
program in the now stabilizing Shindand District in Herat, a $10,000
investment in a drip-irrigation system will irrigate a pomegranate and
almond orchard that the community elders expect will provide
approximately 100 families with $3,000 per year. These sorts of
investments are for the long-term.
Of course, in some areas it may be a challenge to maintain positive
momentum, and so to prevent insurgents from regaining a foot-hold we
will need to make sure that some form of programming remains available
in the near term to be targeted for areas that have moved into the
transition phase of the counterinsurgency effort. One USAID program,
Community Based Stabilization Grants, targets small grants to insulate
communities that may be at risk of insurgent influence. Recognizing
that the funding for these programs will continue to diminish over
time, we continue to look at more efficient ways of using our funds,
and partner with locals to understand, identify, and develop programs
that mitigate instability.
Question #32. What outcomes are expected by the Afghan population
and do they coincide with Afghan Government's capacity to deliver?
Answer. In March 2011, President Karzai announced the start to the
Transition process, through which lead responsibility for security will
be transferred to the Afghans by 2014. Afghans have signaled
expectations for a ``peace dividend,'' in the form of increased
development assistance, for transitioning provinces. The latest version
of the July 2010 version of the Afghan National Development Strategy
(ANDS) Prioritization and Implementation Plan (PIP) signals that
Afghans expect donor contributions to ``core socioeconomic development
initiatives'' would total $10 billion over the next 3 years, with
``additional resources available to support current governance and
security sector strengthening priorities.''
Given these factors, USAID has embarked on a process to focus its
assistance to Afghanistan through ``foundational investments'' in
priority sectors--such as energy, agriculture, extractive industries,
and human capital, to name a few--which are aligned with Afghan
expectations as outlined in the ``Kabul Process.'' The Kabul Process,
which began in London (January 2010) and continued through the Peace
Jirga (May 2010) and Kabul International Conference (July 2010), is an
Afghan-led strategic planning process, which marks beginning of a
transition toward full Afghan ownership of the development process.
Through the Kabul Process, the Afghan Government identified 22 National
Priority Programs (NPPs) and subsequently the USG, along with other
donors, committed to aligning at least 80 percent of its assistance
against these national priority programs, as well as moving at least 50
percent of its assistance through Afghan Government mechanisms by the
end of 2012. To date, USAID has already exceeded the 80-percent
alignment goal and is on track for reaching the 50-percent on-budget
goal by the end of 2012.
Finally, the expectations and needs of the Afghan people are being
increasingly satisfied by the Afghan Government. According to the Asia
Foundation's 2010 ``Survey of the Afghan People,'' satisfaction with
the performance of the Afghan National Government has risen steadily
over the last 3 years. In fact, 2010 saw the highest reported levels of
satisfaction of national government performance since 2007 in almost
all regions. Finally, compared to 2009, the 2010 survey found that
Afghans judged government performance more positively in relation to
the provision of basic public services such as education, health care,
and security.
Question #33. What specific areas has there been a need for
reconsideration due to development professionals' guidance on best
practices and what has been the degree of consideration by other U.S.
actors? (i.e., poor development practices and ineffective or
unsustainable programs)
Answer. Stabilization is one of USAID's key areas of focus in
Afghanistan, particularly in the conflict-stricken south and east. In
these areas, USAID works hand in hand with the U.S. military to deliver
quick-impact stabilization projects that help eliminate key drivers of
conflict, such as unemployment and lack of government services.
Stabilization efforts are also designed to support the nascent
transition process by helping connect Afghans at the local level to
their local governments, through the creation of district development
councils and community-driven development projects. While stabilization
efforts are critical to U.S. objectives in Afghanistan, they are not an
end in and of themselves. In the past year, USAID has adapted the
design and implementation of its stabilization programs to build
``bridges'' between the short-term stabilization projects and the
longer term development projects that will contribute to an Afghan-led,
sustainable future. Similarly, USAID has worked with the Department of
Defense (DOD) to ensure that the design and implementation of the
Commander's Emergency Response Fund (CERP) activities are connected to
longer term objectives. CERP projects have traditionally paid for the
``brick and mortar'' activities, such as building schools or repairing
small infrastructure. USAID's projects, on the other hand, often
provide technical support and expertise needed to sustain these
investments. To take advantage of both of these approaches, USAID and
DOD agreed to give USAID field personnel veto authority on CERP review
boards at Task Force and Regional Command levels. USAID field personnel
also provide input and insight during the CERP proposal review process.
A good example of this interagency coordination, as well as the
linkages between short-term and long-term objectives, is the District
Delivery Program. Through this program, individual Afghan districts
outline their development and governance priorities and develop a
viable district development plan. DOD then uses CERP funds to pay for
infrastructure to support this plan, and USAID both provides support to
line ministry staff, as well as aligns its longer term development
projects to compliment the district plan.
Question #34. The second round of discussions of the Strategic
Engagement Partnership (SEP) with Afghanistan have recently concluded.
What are the parameters of the Strategic Engagement Partnership (SEP)
that are being considered with Afghanistan?
Answer. On May 12, 2010, President Obama and Afghan President
Karzai issued a joint statement in which they committed to a series of
intensive, senior-level bilateral discussions to conclude with the
signing of a strengthened U.S.-Afghanistan Strategic Partnership
Declaration (SPD), updating the 2005 ``Joint Declaration of the United
States-Afghanistan Strategic Partnership.'' The current plan is to seek
to conclude the new SPD in the summer of 2011. To this end, the first
rounds of negotiations were held in Kabul this past March and a second
round will be held this summer. As negotiations have not concluded, the
below statements about the expected parameters of the new SPD are
subject to change.
It is envisioned that a new SPD will provide a framework to guide
our long-term relationship with Afghanistan. It is expected to address
issues related to (1) security; (2) democratic development and
institution-building; (3) economic and social development; and (4)
regional issues. Specifically, as currently envisioned, the new SPD
will set forth political commitments that:
Reiterate the United States and Afghanistan's shared vision
and commitment to Afghanistan's future;
Reinforce Afghan sovereignty as Afghanistan increasingly
takes on responsibility for its own security, justice, and
development; and
Articulate how the United States plans to work with
Afghanistan to enhance its ability to contribute to regional
stability and prosperity.
Question #35. What estimate of resources are most likely essential
for longer term development in Afghanistan post 2014 and in what
sectors are they essential?
Answer. By 2014 we expect our stabilization efforts to reduce as
Afghan security increases, while our foundational investments lay the
groundwork for long-term economic growth. We expect to focus on sectors
such as infrastructure, agriculture, mining, private sector enabling
environment, health, and education to provide the means for Afghanistan
to achieve the necessary long-term economic growth and revenues needed
to support the government.
pakistan
Question #36. The FY12 budget for Pakistan contains no OCO account
funds for economic development assistance. This implies that recent
economic assistance is not perceived by the administration as critical
in the strategic calculus of our relationship and our national security
interests.
Why has PCCF/PCF been the only account included in the OCO
in this strategically sensitive country?
Answer. The Overseas Contingency Operations (OCO) request,
including all of the funding for the Pakistan Counterinsurgency
Capabilities Fund (PCCF) is intended to fund the extraordinary and
temporary costs for operations and assistance in Iraq, Afghanistan, and
Pakistan for the Department of State and U.S. Agency for International
Development (USAID). This is the first year State and USAID are
requesting funds under OCO method used by the Department of Defense to
identify funding requirements for the exceptional costs incurred in
these three countries.
The OCO contribution from Pakistan includes the entire amount of
Pakistan Counterinsurgency Capabilities Fund (PCCF) funding ($1.2
billion), which is a temporary contingency-based account related
directly to the need to counter the insurgency within Pakistan.
The decision to not include sources of civilian assistance was
predicated on the establishment of the level of long-term civilian
assistance support within the Enhanced Partnership with Pakistan Act.
This act authorized funding for civilian assistance in the amount of
$7.5 billion over a 5-year period (FY 2010-FY 2014) and was intended to
demonstrate U.S. commitment to Pakistan and to help strengthen and
build a long-term partnership between Pakistan and the United States.
As such, the request did not include these funds in the OCO request
which are intended for temporary extraordinary costs.
Question #37. What priority does USAID place on economic assistance
relative to OCO given the fiscal and geopolitical environment in
Pakistan?
Answer. USAID, together with the State Department, believe that the
core, non-OCO economic assistance and the OCO assistance requested are
both vital to achieving our national security objectives in Pakistan.
Both serve equally important roles within the overall effort to build
our long-term relationship with Pakistan. In the request, important
focus was placed on balancing the amount of civilian assistance
requested with security assistance for Pakistan. Since USAID is
managing the bulk of the economic assistance, our focus is on ensuring
effective and accountable implementation of this assistance in
conjunction with the State Department's policy coordination of U.S.
assistance efforts.
Question #38. How does USAID characterize the recent and
prospective environment for fiscal stability in Pakistan?
Answer. The current fiscal stability in Pakistan is troubling. From
2005 to 2010, Pakistan averaged 4.9 percent GDP growth proving its
resilience in the face of multiple adverse events. In recent years the
growth of the economy has slowed and is predicted to only grow by 2.8
percent in 2011. Exacerbating slow growth is an underfunded government
budget and a narrow tax base. The IMF estimates the deficit at 6.7
percent in FY10/11, up from 6.3 percent the previous year. This is
significantly above the IMF target of 4.7 percent. The tax-to-GDP ratio
is only around 9 percent, one of the lowest globally.
The government's fiscal deficits lead to heavy government borrowing
that drives inflation. Over the past 3 years, Pakistan has experienced
aggregate inflation of 48 percent against GDP growth of just 12.5
percent. Prices are increasing at a rate of 15-20 percent. Food
insecurity affected close to half the population in 2009, and is likely
substantially higher after the 2010 floods. Combined with lack of
power, soaring prices are beginning to create social unrest.
Massive subsidies to the energy sector (approximately 1.4 percent
of GDP) contribute to the fiscal crisis. The burden of energy subsidies
has tripled in the last 3 years. The Asia Development Bank estimates
that the energy shortfall (including load shedding) is estimated to
have reduced GDP growth by 2.0-2.5 percent.
Despite continued problems with the fiscal deficit and subsidies,
the Pakistan economy shows some positive signs. Financial sector size
and depth has improved, and the banking system is becoming more
efficient. The booming inflow of remittances continues to support the
financial sector, as well as consumption in the real sector of the
economy.
The United States and other donors realize assistance will be far
more effective if Pakistan can reestablish macroeconomic stability and
implement long-awaited policy reforms. USAID is working closely with
critical stakeholders in an attempt to demonstrate progress in the
short-term to incentive long-term reforms, and position Pakistan to
seize opportunities for economic transformation as they emerge.
Pakistan's recent devolution of certain fiscal authorities to its
provinces will require closer attention to the fiscal capacities and
budget priorities of the provinces.
U.S. economic growth assistance is closely aligned with the
Government of Pakistan's (GOP) ``New Development Approach/New Growth
Strategy'' which is focused on opening markets, increasing
productivity, and improving competitiveness. U.S. assistance also
complements the National Poverty Reduction Strategy, which emphasizes
agriculture as the key driver of job growth in predominantly rural
districts and recognizes its multiplier potential in generating
macroeconomic growth. Despite political uncertainty and turnover of
senior GOP officials, Pakistan has well-placed people and institutions
with significant vision and capacity for policy improvements, as well
as substantial ongoing reform initiatives. Additionally, new technology
is increasingly available to improve efficiency and eliminate
opportunities for corruption. These factors create the environment
needed to stimulate broad-based, inclusive economic growth.
The IMF shares this positive outlook in Pakistan's economy and
estimates GDP will reach 6 percent growth by 2015.
Question #39. How does USAID assess the geopolitical environment
for stability in Pakistan?
Answer. A significant proportion of the threats to Pakistan's
stability are the result of insurgent activities, which are primarily
centered in the Federally Administrated Tribal Area (FATA) and Khyber
Pakhtunkhwa (KP). The current instability in the FATA and KP owes much
to decades of poor governance, underdevelopment, and regional conflict.
After 9/11, insurgents were able to exploit these vulnerabilities to
establish de facto control over much of the FATA and pose a threat to
the Pakistani state.
Military operations against these groups began as early as 2002,
but their success was limited. The GOP attempted a series of negotiated
settlements, but none proved enduring or effective at curbing violence.
The high water mark for insurgent groups came in early 2009, when a
branch of the Pakistani Taliban moved out of the FATA and took over
large settled areas of the Swat Valley in KP's Malakand Division.
U.S. stabilization activities are closely aligned with the
objectives of the 2010 Post Crisis Needs Assessment for FATA and KP,
which include: building responsiveness and effectiveness of the State
to restore citizen trust; stimulating employment and livelihood
opportunities; ensuring the delivery of basic services; and countering
radicalization and fostering reconciliation. As FATA stabilizes, other
donors have been coming to USAID to seek advice on how they might
become involved in stabilization and development activities in FATA.
Additionally, polling indicates that USAID's community-level
programs have helped engender some community support for the political
administration in FATA. But the complex political environment and
security concerns argue against an aggressive branding campaign for
most community-level U.S.-supported activities in FATA as this could
result in threats to recipients of U.S. assistance by remaining
insurgent elements.
Despite the political instability and history of military coupes,
the military has yet to have taken sides in the political crises and
largely has both engaged (i.e., peacekeeping in FATA) and not engaged
(i.e., conducting the census) in operations to boost its public image
with the people. In the near term, the military seems content to exert
influence over the civilian government without resorting to a coup. By
Pakistani law, the next general election must be held by early 2013; it
is currently scheduled for February 2013 but could occur at any time.
Question #40. In a recent briefing of Congress, your staff
indicated that greater than 50 percent of assistance was now flowing
through the Pakistan Government.
Why has the essential monitoring and evaluation program for
Pakistan still not been established and will not be in place
until mid-summer?
Answer. Several factors contributed to delays in finalizing this
program. During winter/spring 2010, USAID engaged in a lengthy
discussion with other USG entities over the appropriateness of using
international firms to fill this function. Following the flood,
attention was focused on recovery and reconstruction activities. When
the new mission and Embassy leadership arrived, there was mutual
agreement on the importance of this project and the mission moved
forward finalizing the documents and deciding on the most appropriate
contracting mechanism. We anticipate the third-party monitoring system
to be operational in July 2011.
Question #41. What are the current methods for monitoring and
evaluation and what is the level of confidence in this large amount of
funding moving through suspect institutions within a weak civilian
government?
Answer. Ensuring that Pakistani organizations, including the
government, act responsibly with U.S. taxpayer money begins long before
program implementation. USAID/Pakistan carefully vets all potential
partners for technical capacity, risks of financial misconduct, and
terrorist financing before awarding funding. USAID also conducts
preaward assessments of all local organizations, examining their
organizational and management structures to determine if systems are in
place that will lead to the transparent and accountable use of USG
funds. When weaknesses are found in these local entities, USAID
provides capacity-building efforts to help them meet accountability
requirements before funds are released. USAID/Pakistan is implementing
a robust monitoring and evaluation structure in place to monitor
progress and measure results. The mission increased staffing levels and
institutional support to support monitoring and evaluation, auditing,
contracting, and financial management oversight capabilities of local
partners.
Vetting
USAID/Pakistan carefully reviews and vets applications for
technical capacity, quality, cost effectiveness, and applicability to
USG objectives. Prior to awarding a grant or contract, the grant or
contracting officer makes a responsibility determination as to whether
or not the recipient meets business and ethical standards. The preaward
assessments, discussed further below, are an important part of
responsibility determination for local awards. In addition, USAID/
Pakistan checks all contract and grant recipients issued by the mission
against the USG Excluded Parties Listing System (EPLS) and the list of
suspected terrorists designated as ``Specially Designated Nationals and
Blocked Persons'' by the Office of Foreign Asset Control (OFAC) of the
Department of Treasury. Further, certain grants and contract
instruments provide USAID/Pakistan with the authority to approve
subrecipient awards. Such provisions allow the mission to make
responsibility determinations and vet the subgrantees and
subcontractors that might ultimately be the recipient of USG funds.
Finally, all grants and contracts include provisions that prohibit the
funding of terrorism. In this regard, USAID/Pakistan implements the
Guidance for State and USAID funding and the Risks of Terrorist
Financing with respect to all of its programs in Pakistan.
Preaward Assessments
USAID/Pakistan continues to use a number of additional tools to
ensure proper monitoring and evaluation of USG assistance, including
conducting preaward assessments of Pakistani organizations. The
assessments examine organizational and management structure,
accounting, financial management systems, internal controls, technical
capabilities, and quality assurance capabilities, as well as the
organizations' policies, procedures, and practices for effective and
efficient management of USG resources. If the results of these
assessments show that there are mitigating risk factors,
predisbursement and post-disbursement conditions are built into the
awards/agreements made with these organizations, to ensure
strengthening of relevant issues and reduction of risk for USAID/
Pakistan.
Since FY 2009, USAID/Pakistan has completed 81 preaward assessments
of Pakistani Governmental and nongovernmental organizations, and will
undertake additional assessments if needed for future awards. When
needed, USAID/Pakistan also has placed staff from accounting firms with
its implementing partners to support successful implementation of
financial policies and procedures.
Monitoring and Evaluation
USAID/Pakistan adheres to standard procedures in the monitoring of
its activities to ensure proper use of U.S. foreign assistance funds:
Implementing partners are required to maintain accurate and
constructive performance management plans (which identify goals
and targets) and report their progress toward those goals
quarterly.
Activity managers and implementing partners perform spot
checks whenever possible of activities to monitor progress.
By July, USAID/Pakistan will have finalized a contract for
third-party monitoring and evaluation services to verify
monitoring data reported by our implementers and Government of
Pakistan partner entities; monitor projects in hard-to-reach
remote and insecure areas; conduct baseline, midline, and end-
line surveys to capture information on program results; conduct
evaluations; and train implementing partners to enter all
monitoring data into this system. An inventory of ongoing
evaluations will be maintained, used for coordinating
evaluation efforts, and timed to provide input into strategic
planning decisions.
As exemplified by USAID's monitoring and evaluation of flood
relief efforts, USAID/Pakistan employs a variety of methods to
conduct oversight in an insecure environment. In 2010, when the
security environment permitted, USAID Islamabad staff visited
flood relief project sites monthly. USAID provincial teams in
Peshawar, Karachi, and Lahore visited projects and assessed
progress in their regions as much as security allowed. USAID
also used a third-party monitoring effort for flood relief,
working through local Pakistani firms in Sindh, Balochistan,
KP, and Punjab to verify, monitor, and document flood relief
progress. These partnerships made it possible, in a difficult
operating environment, for USAID to receive first-hand accounts
of project challenges and successes.
In addition, USAID/Pakistan has established a Monitoring and
Evaluation Working Group to help institutionalize performance
management and use of evaluation for program design and
strategic planning.
Over the past 12 months, the mission increased staff levels
to add activity, financial and contracts managers to meet the
increasing management burden and to ensure adherence to
standard monitoring and evaluation responsibilities. The USAID
Office of Inspector General established its office in Islamabad
in 2010 and as of February 2011, and has 12 staff. Currently,
61 staff members in Pakistan are involved in auditing,
contracting, and financial management oversight capabilities,
the vast majority of which have been added within the last
year.
Question #42. What is the monthly spending rate for U.S. assistance
in FY10 broken out by sector?
Answer. USAID's monthly expenditure rates by sector throughout FY
10 were as follows:
FY 2010 MONTHLY EXPENDITURE RATES BY SECTOR
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Q1 Q2 Q3 Q4
----------------------------------------------------------------------------------------------------------------
Education....................................... $8.1 $3.7 $3.5 $3.8
Governance...................................... 1.5 1.8 1.4 2.0
Health.......................................... 7.4 4.6 4.5 2.9
Economic Growth................................. 4.6 3.7 5.0 9.7
EQ Reconstruction............................... 2.9 4.1 3.0 2.8
FATA............................................ 6.1 4.4 3.4 7.7
----------------------------------------------------------------------------------------------------------------
USAID has increased expenditure rates since FY 2010. As of the
first quarter of FY 11, USAID has increased its monthly expenditure
rate by 38 percent over FY 10 Q1 monthly expenditure rate.
Question #43. What is currently remaining in the pipeline by
sector?
Answer. The estimated pipeline of our assistance to Pakistan as of
the end of December 2010 is $1.6 billion. As FY 2010 funding was not
available for obligation until the end of the fourth quarter and FY
2010 supplemental funding was not available until late in the first
quarter of FY 2011, it is to be expected that most FY 2010
appropriations remain in the pipeline.
Funds are being expended at $66 million per month, well above the
average USAID FY10 expenditure rate of $58 million. The slight decrease
from FY 2010 Q4 to FY 2011 Q1 is due to the need to focus on responding
to the August and September floods with immediate emergency accounts
and reprogramming existing ESF to support recovery and reconstruction
efforts. The 1st quarter of FY 2011 expenditure rate is 38 percent
higher than 1 year prior and 128 percent higher than the end of FY
2009, indicating the rollout of programs in Pakistan has picked up its
pace significantly over the past year.
Q1 FY 2011
------------------------------------------------------------------------
Monthly
expenditure rate Pipeline
------------------------------------------------------------------------
Education....................... $6.4 million...... $364.8 million.
Governance...................... $3.9 million...... $233.5 million.
Health.......................... $6.5 million...... $272.8 million.
Economic Growth................. $42.8 million..... $685.9 million.
Social/Humanitarian Assistance.. $6.397 million.... $62.64 million.
---------------------------------------
Total..................... $66 million....... $1.6 billion.
------------------------------------------------------------------------
Question #44. What are the primary obstacles and challenges that
remain before U.S. assistance can flow more effectively and
transparently?
Answer. Despite the devastating impact of the 2010 floods and our
requirement for assessments of all partner institutions to ensure that
U.S. taxpayer funding is used for the purposes intended, USAID has
increased its expenditure rate by 38 percent over the past year.
However, given the level of resources being committed to the Pakistan
program and the importance to our national security, we are aware that
we must further increase our expenditure rate and continue to achieve
results.
The 18th amendment to the Pakistani Constitution passed by
Parliament in April 2010 calls for a fundamental decentralization of
government services to the provinces. Given the uncertainty about what
functions will be devolved to the provinces, how to do it, and how to
finance these changes, an important challenge is trying to keep the
momentum going and ensuring successful transition of services. There
are several significant risks to effective devolution including lack of
capacity at the provincial level, political infighting, and corruption.
A significant implementation challenge is the work we need to do
with Pakistani institutions to strengthen their management and
implementation capabilities. These are important components of the
evolving partnership we are developing with the Pakistanis. We continue
to assess what is necessary to speed up implementation, and to develop
new mechanisms and approaches that will help us to achieve our overall
objectives. Our recent refocusing of the program into four key sectors,
our reduction of management units to help streamline operations, and
our provision of direct assistance to overcome critical program-
specific hurdles, all are examples
of the ways in which we are adapting program implementation to meet
these challenges.
Question #45. Consulates in Peshawar, Lahore, and Karachi are now
up and operating.
List the staff levels and agency for each U.S. consulate,
including the percentage of time the staff is actually posted
to the consulate site.
Answer. All employees in the consulate spend approximately 82
percent of their time posted to the site. Their remaining time away
from the consulate accounts for R&R and/or Regional Rest Break travel.
The staff level for each consulate site is as follows:
Peshawar *--26 total USAID staff
7 U.S. staff
19 FSN staff
Lahore--10 total USAID staff
U.S.
7 FSN
Karachi--8 total USAID staff
2 U.S.
6 FSN
*All Peshawar staff currently located in Islamabad due to security
concerns
Question #46. How important is the consulate staff to the planning,
implementation, and monitoring of U.S. assistance?
Answer. The USAID field office operations add to total oversight
personnel available per dollar of program funding. Monitoring program
work would be more difficult and program vulnerabilities would increase
if the consulate staff were not in place. Each USAID consulate staff
member is of great importance in these regards. This includes all phase
of the development lifecycle: planning, implementing, and monitoring of
programs in each region of Pakistan.
Question #47. Southern Punjab and Sindh have proven to be volatile
regions of the country that also harbor threats to the Pakistan
Government, threats to the region, and threats to United States.
What are the priority areas for U.S. assistance and how does
the U.S. partner with Pakistan in addressing these threats?
Answer. USAID/Pakistan is focusing its activities in northern
Sindh, southern Punjab, Khyber Pakhtunkhwa (KP), and the Federally
Administered Tribal Areas (FATA). These are shown to have among the
worst socioeconomic indicators in the country and are some of the most
vulnerable areas to extremist recruitment.
In Punjab and in Sindh, USAID's primary objective is to support the
provincial governments to deliver basic education, health, and
municipal services to the local population. As the GOP prepares to
begin implementing devolution policy established by the 18th amendment
on July 1, 2011, the provincial governments need to quickly build the
capacity to provide social services. USAID/Pakistan will provide
technical assistance in resource management and program planning,
commodities provision, and construction of community infrastructure.
Question #48. What are the primary development programs in these
areas and what are the essential parallel programs of others (donors
and Pak Federal and Provincial government), including our own security
assistance programs?
Answer. USAID/Pakistan is working in five priority sectors: energy,
economic growth, stabilization, health, and education. We engage our
Government of Pakistan counterparts at the federal and provincial level
to identify individual programs and projects within these sectors.
Sindh
While several of our national programs are working in Sindh (e.g.,
health, economic growth), we are also targeting programs to address
particular needs in the priority areas in those provinces. The programs
focus in the areas of energy, stabilization, education, and health. In
energy, we are renovating two thermal powerplants in Sindh (Jamshoro
and Guddu) to increase the power generation capacity of the national
grid and alleviate electricity shortages. We are also replacing
inefficient tubewell motor sets with more energy efficient models,
which will save farmers money on their electricity bills. In education,
we are finalizing a Sindh education program that will increase basic
education enrollment and retention rates for children in target
districts of Sindh, primarily girls.
USAID/Pakistan has also entered into a 5-year agreement with the
Government of Sindh for a Municipal Services Delivery Program, which
will improve the quality of municipal infrastructure and public service
delivery by instituting necessary policy reforms in underserved and
vulnerable parts of the province. We hope this will have a stabilizing
effect by increasing the provincial government's capacity to deliver
critical public services, thus demonstrating responsiveness to their
constituents. More than two-thirds of the budget for this program will
be spent on improving and expanding drinking water supply, water
quality, sanitation/sewerage, hygiene, and other municipal services in
14 out of 23-three districts of Sindh.
Finally, USAID/Pakistan is constructing a 60-bed obstetric and
gynecological ward at Jinnah Postgraduate Medical College in Karachi,
as well as renovating the Karachi Central Contraceptive Warehouse and
the Jacobabad Civil Hospital. These projects will improve the tertiary
and primary health care services for over 1 million underserved
Pakistanis in Sindh and neighboring districts of Balochistan, as well
as provide a consistent supply of contraceptives throughout the
country.
In terms of donor and Government of Sindh engagement, in education,
the World Bank and European Union are the primary donors working in
Sindh, while the DFID is considering expanding its education
programming. We coordinate very closely with donor counterparts to
share lessons and ensure complementarity of actions to support
important education sector reforms as well as no duplication of effort.
For example, the Asian Development Bank is now implementing a $300
million loan for the Sindh Cities Improvement Investment Program ($300
million from ADB and $100 million Government of Sindh contribution)
that seeks to improve water, wastewater and solid waste management in
six of the provinces secondary cities in the north (Sukkur, New Sukkur,
Rohri, Larkana, Khairpur, and Shikarpur). This project seeks to
mobilize strong private sector participation to improve health, quality
of life, and economic competitiveness for an estimated 4 million
residents. This complements MSDP, which works in small- to medium-size
towns in the same region. USAID and the ADB project are and will
continue to coordinate their activities by dividing up geographical
areas of work and responsibilities between the two projects in order to
avoid duplication and waste.
The Government of Sindh's efforts in education have been focused on
important and long overdue reforms. They are transitioning to a merit-
based hiring system for teachers, and are currently only recruiting
female teachers, which will in turn support increased girls'
enrollment. They are also implementing a policy of consolidating
schools so that a single compound comprises a single school
administered by a single body, not three or four as is the current
norm. USAID's education program in Sindh will support this effort.
The health donors are still determining geographic locations and
have not made any formal commitments to Sindh at this time.
Punjab
USAID/Pakistan activities in Punjab aim to improve basic service
delivery while addressing the widespread corruption and poor governance
issues that drive extremism. USAID/Pakistan and the Government of
Punjab have signed agreements to support the delivery of municipal
services and education with FY 2009 and FY 2010 resources, with a focus
on southern districts with high poverty rates. The municipal services
delivery program will focus on two components: capacity-building of the
Punjab Government and the provision of infrastructure and equipment
upgrades focused on a few essential urban services; i.e., safe water,
sanitation, streets improvements and street lighting. Specific inputs
will be prioritized by the provincial government with inputs from
districts and community engagement activities. The education program is
focusing on new school construction with a particular focus on schools
damaged by the floods, supporting school councils, and building the
capacity of the Punjab Department of Education to manage resources, and
continue to provide operations and maintenance on new buildings. An
ongoing USAID program supporting teacher training will complement these
provincial activities.
USAID/Pakistan is also planning to use FY 2010 funds to support the
Punjab Government to address three key health needs --birth spacing
using family planning and maternal and child health including
immunizations. A Technical Advisory Unit supported by USAID is
currently working with the federal and provincial governments to help
determine policies related to the devolution of the health sector,
which are critical to further developing this activity.
In addition to these activities to be implemented through the
provincial government, USAID is also supporting high impact, highly
visible projects in Punjab. USAID/Pakistan is rehabilitating the
Muzzaffargarh Thermal power Plant Rehabilitation, located 45km
southwest of Multan, which will increase generation capacity to the
power station by 95 MW. In a cost-sharing arrangement with farmers in
Punjab, approximately 250 inefficient tubewell pump sets have been
replaced with energy efficiency models, greatly reducing farmers'
electric bills. In addition, USAID/Pakistan is renovating Lady
Willingdon hospital in Lahore, the largest maternity hospital in the
country, to improve the capacity and quality of maternal services for
low-income women.
USAID/Pakistan is coordinating closely with other donors in Punjab
to avoid duplication of efforts, to ensure the international community
has consistent messages on policy reform, and to align our government-
to-government assistance mechanisms to avoid over complicating the
government's efforts to manage donor resources. For example, the World
Bank and DFID provide direct support to the Punjab Government, working
through a project management unit created within the Punjab Department
of Education. U.S. assistance will continue to be provided through the
same project management unit to ensure U.S. assistance is value added
and not duplicative to ongoing work. Other major donors in include DFID
(budget support), GTZ (teacher development, library facilities), CIDA
(debt swap teacher college renovations), World Bank (stipends, teacher
development, school construction and upgrades), and JICA (school
upgrades).
The Southern Punjab Basic Urban Services Program is another Asian
Development Bank-funded program that was initiated in 2004. The program
cost is estimated at $128.6 million with ADB funding $90 million and
the rest being provided by the Government of Pakistan. The projects
geographical focus is in 21 towns in Southern Punjab, including towns
in Multan and Bahawalpur Districts. This complements similar efforts by
MSDP in Punjab.
USAID is also taking the lead in coordinating donor health funding
and is fostering agreement on Pakistan's health priorities and a
division of labor based on the strength of each partner. Primary donors
in the health field in Pakistan are DFID (health sector support and TA
for maternal and child health) and the World Bank (reproductive health
and infectious diseases).
egypt
Question #49. I asked in the hearing about USAID efforts in Egypt,
with respect to the reprogrammed $150 million. Specifically, I asked
what impact are our programs having, and more importantly, with whom
are we working.
Please provide more specific answers for the record to these two
questions.
Answer.
What impact are our programs having?
At the brink of the revolution, USAID moved rapidly to provide
urgent assistance for the transition in Egypt by reprogramming $150
million in funds for economic growth and democracy and governance to
support a peaceful, equitable transition. The Egyptian people's
response to our democracy and governance and economic growth grants
opportunities has been tremendous:
Approximately 2,500 people representing more than 1,000
organizations lined up to participate in information sessions
and proposal writing workshops throughout the country. USAID
has received over 200 proposals to date, primarily from
Egyptian organizations that have not worked with USAID before,
with more coming in weekly.
In less than 4 months, USAID has committed $55 million in
transition assistance funding. Of this, we have obligated $32.5
million to Egyptian and U.S. partners to support democracy and
governance transition initiatives and $2.5 million in economic
growth transition initiatives. USAID also transferred $20.5
million to the Department of State's Democracy, Human Rights
and Labor (DRL) Bureau and Middle East Partnership Initiative.
In addition, USAID is currently negotiating the details of
$55 million in grants (including $37 million to support
economic growth) with U.S.- and Egyptian-based organizations.
As USAID is in the early stages of implementing the transition
program, it is too soon to assess direct impact. However, the strong
interest among Egyptian civil society organizations and entrepreneurs
in the USAID transition program is an important indication that the
people of Egypt stand ready to work with the United States through
Egypt's transition to democracy.
With whom are we working?
With funding to support the transition process, USAID is engaging
directly with a wide range of critical actors, including civil society
organizations, youth, political party representatives, labor, and
others who have been mobilized by recent events and are working to
support their country's historic transition.
Specifically:
As noted above, nearly 2,500 attendees representing more
than 1,000 organizations have attended USAID grants information
sessions throughout Egypt. To date, USAID has received a total
of 236 proposals, 70 percent of which are from Egyptian
organizations.
USAID has obligated $25 million to U.S. organizations that
support democracy and governance activities worldwide,
including the National Democratic Institute (NDI),
International Republican Institute (IRI), and the International
Foundation for Electoral Systems (IFES).
In general:
To widen contact with youth organizations and encourage
youth engagement in the political process, USAID, working with
an Egyptian grantee, has held a series of meetings with youth
in Sinai and Qena to identify their priorities for democratic
change and gauge their opinion of the current situation.
To broaden engagement away from elites and established
political leaders, USAID is providing training for members of
newly formed political parties on methods, and mechanisms for
political participation, including communication and public
speaking skills, election campaigns, and working with
traditional and new media modes. USAID is also working with IRI
to develop skills of women candidates, in existing and emerging
political parties.
To widen engagement with new Egyptian organizations, USAID
is working with partners to expand training efforts and share
civic education materials, including video spots, brochures,
manuals and games. One Egyptian USAID partner has already
trained 900 facilitators from other organizations on how to use
media and outreach materials.
When appropriate, USAID is also working with government-
related institutions that have a role in supporting the
organization and implementation of democratic elections for
other purposes related to a democratic transition. In addition,
USAID is providing funds to help address economic grievances
expressed in the protests.
Questions #50, 51, 52. Presumably during the Mubarak era, there
were a number of initiatives that were stymied by the government and
their policies--for instance prohibiting NGOs and effectively barring
the NED institutes.
Are you aggressively pursuing these items now? Please be
specific.
How many grants have you issued and to whom?
Is USAID/Egypt able to get out of Cairo and solicit grant
proposals from civil companies and small and medium enterprises
from around the country?
Answer. Since 2005, the USG has provided continuous support to a
wide range of civil society organizations, including the National
Democratic Institute (NDI) and the International Republican Institute
(IRI). Local and U.S. recipients of USAID grants faced issues from time
to time regarding holding events or bringing consultants into the
country. The USG continually raised with the GOE these and other issues
related to the freedom of association and civil society operation.
To support the political transition, USAID increased the amount of
funding allocated for democracy programs to $65 million and issued an
open call for proposals in March. The call for proposals was based on a
series of listening sessions with Egyptian organizations, and it
reflects identified priorities to increase civic engagement, support
the upcoming elections and political party development, promote
transparency and accountability, improve access to justice and protect
human rights, and develop mechanisms for sustained citizen
participation. USAID is moving quickly to support new Egyptian
initiatives in these areas, and to continue and expand the work of
organizations such as NDI and IRI.
In addition to the call for proposals, USAID has mobilized its
network of existing civil society grants to respond rapidly to new
opportunities. For example, Egyptian and U.S. organizations have
changed their programs to provide direct medical assistance and legal
advice to those injured or detained in the protests, to share
transition experiences from other countries, to evaluate options for
administering elections, to consider the role of women in the
transition, and to host debates and conferences on constitutional
reforms.
Question #53. Is USAID reviewing other Egyptian programs that are
either less relevant in the new context or underperforming, in order to
potentially free up additional resources?
Answer. USAID is reviewing its programs constantly to ensure they
are relevant to the evolving situation. Immediately after the
revolution, USAID conducted a detailed review of each program to
identify areas for adjustment, expansion, or discontinuation.
USAID redirected funds to support the Annual Program Statements
(APS) issued to address needs related to the transition, focusing on
short-term efforts in areas such as job creation, civic participation,
media, and preparation for the coming elections. It is also making an
effort to do more work directly with NGOs. However, it should be noted
that performance has been on target and efforts have continued
throughout the transition. Nonetheless, USAID has delayed start of new
programs, such as activities addressing health, education, youth,
education activities, and trade to free up resources for Washington
priorities such as debt relief, OPIC engagement, and the proposed
Enterprise Fund.
USAID will continue to pursue interventions with the Egyptians that
address economic growth challenges such as job creation, efforts to
promote decentralization, community development, small and medium
enterprise business development, business lending, job skills and
vocational training, entrepreneurship, and youth participation. It will
also continue to address needs to ensure equitable participation by
NGOs, and free and fair elections. Though at times, difficult tradeoffs
may have to be made, USAID will continue to pursue activities that are
relevant for the Egyptian context.
Question #54. During the hearing, you mentioned that you were
working with Minister Fayza Abul Naga, who was in town, and that we
have been working with her for years.
Does she represent a new way of thinking in the current
government? Is she bringing forth new ideas that will help put
the powerful Egyptian economy back on track?
Answer. Minister Abul Naga served in the Mubarak administration
from 2001 until Mubarak recently left office, first as the Minister of
Foreign Affairs, then as the Minister of Planning, and finally, as the
Minister of International Cooperation. As a high-level official
throughout the latter part of the Mubarak era, she does not represent a
new way of thinking. The Minister supports donor assistance that is
planned and managed bilaterally at the government level, and her
objection to USAID's direct engagement with NGOs and the private sector
clearly represents an old way of thinking. She also opposes USAID
assistance to unregistered NGOs. The Minister considers that the
Egyptian Government is in the best position to prioritize the needs and
improve the lives of the Egyptian people. In this light, the GOE has
identified, among other priorities, promoting low-cost housing
construction, developing small- and medium-sized enterprises,
increasing youth employment opportunities, and bilateral debt
forgiveness. USAID is consulting with the GOE on these government-led
priorities, and will also continue direct engagement with, and direct
assistance to, civil society organizations.
Questions #55, 56, 57. During the hearing, you mentioned that you
were working with Minister Fayza Abul Naga, who was in town, and that
we have been working with her for years.
Mrs. Abul Naga was appealing for debt relief. Please provide
the latest Paris Club figures on the Egyptian debt situation.
What percent of Egypt's debt is to the United States and
what is their debt to reserve ratio?
How does Egypt's debt situation compare to other countries
globally with similar per capita GDP?
Answer. Paris Club claims in Egypt amounted to $16.8 billion as of
December 31, 2010, and include previously rescheduled and new bilateral
loans from Paris Club members.
Egypt's total external debt at the end of 2010 was $35 billion,
around 14.7 percent of GDP. Net International Reserves fell to $28.0
billion at the end of April 2011. The ratio of short-term external debt
to international reserves is still low, just over 10 percent. The total
debt to reserve ratio is roughly $35 billion/$28 billion. Short-term
external debt is around $3 billion to reserves of $ 28 billion.
The United States holds 9.4 percent of Egypt's total external debt.
Japan (12 percent), France (11 percent), and Germany (10.7 percent) are
the only countries that hold more. Arab countries hold 4.4 percent
(mainly Kuwait, Saudi Arabia, and UAE).
Countries with similar per capita incomes to Egypt have a wide
range of indebtedness. Egypt's $35 billion in external debt is in the
medium to low range compared to others with similar per capita incomes.
Questions #58, 59. What impact will relieving Egypt's debt have on
their economic recovery at this point in time? What would providing
debt relief to Egypt cost the U.S. taxpayer, and how would it be
funded?
Answer. Through the interagency process, we are discussing a
variety of
short-, medium-, and long-term economic reforms and interventions, of
which debt relief or a debt swap are possibilities. No final decisions
have been made. Debt relief would ease some long-term budgetary
pressures, and reduce the costs of borrowing for Egypt in the near
term. However, other more targeted programs are necessary to address
the short-term needs of Egyptians confronting the negative impacts of
the recent economic downturn. A debt swap could include programs
jointly funded by the United States and the GOE to address economic
growth issues.
Depending on what option is selected, we will discuss with the
Congress the costs and implications of that intervention.
Question #60. What other options are there to outright forgiveness,
such as deferment, and what would that cost in terms of ESF?
Answer. USAID is working with the interagency to identify the most
appropriate interventions for Egypt, including debt forgiveness,
deferment, debt swapping, or loan guarantees. Fiscal stability in Egypt
is a critical need during the transition, and as we discuss
intervention options within the administration, we will continue to
work closely with the World Bank and International Monetary Fund about
ways the debt issues can be addressed.
The cost of each option varies depending on its scope and timeline.
Full debt forgiveness would cost nearly $1 billion. A 1-year deferment
would cost approximately $20 million. Given the range, and limits of
USAID's budget, we believe that coordinating with international
partners gives the administration the greatest leverage.
Question #61. Tourism makes up some 16 percent of the Egyptian
economy, what can be done to get that back up and running quickly?
Answer. Tourism, a vital sector in Egypt's economy, has been hard
hit since the revolution. Tourist arrivals dropped by over 80 percent
in February from the previous February. The economy has lost around $1
billion each month due to low tourism revenues, and is expected to lose
between $4-$7 billion in total. Air carriers have cancelled routes to
Egypt, leaving about 40 percent fewer flights available.
Given the size of the sector, USAID is reviewing potential
interventions related to international and regional marketing, training
in tourism services; and diversifying tourism options in cultural,
volunteer, vacation and eco-tourism. In addition, economic growth
proposals related to tourism have been solicited under the Annual
Program Statement and are under review.
USAID continues to support improvements in the business regulatory
environment, including in the tourism sector. The reprogrammed $100
million Annual Program Statement for economic growth encourages
proposals from businesses and NGOs in the tourism sector and will
support innovative and promising ideas for rapid recovery in the
sector.
Questions #62, 63. Some, including the Secretary of State have
suggested that Egypt is ripe for an Enterprise Fund. Do you agree?
What specifics can you share about liquidity in the Egyptian
economy, and what would encourage investment in this period prior to
elections slated for the fall?
Answer. The Obama administration is working with a bipartisan group
of Members of Congress to establish an Egypt-American Enterprise Fund
that will stimulate private sector investment, support competitive
markets, encourage public-private partnerships, and provide businesses
with access to low-cost capital.
As a private nonprofit entity, the fund would have wide latitude in
the types of investments it undertakes. This flexibility is important
because it will allow Fund managers to target the most appropriate
segments of the Egyptian market for investment. The amount of capital
available in Egypt is not the issue--a large number of local and
international investment firms are active there, and banks tend to have
sufficient liquid capital. The loan to deposit ratios of banks is below
50 percent, meaning banks have room to expand lending significantly.
Pending congressional approval, the Egyptian-American Enterprise
Fund will be a not-for-profit, privately managed corporation launched
with U.S. grant assistance and governed by a joint American-Egyptian
board of directors. The United States plans to capitalize the Fund with
up to $60 million of Egypt ESF funding. The Overseas Private Investment
Corporation (OPIC) through separate funding streams would then be able
to partner with the fund to offer cofinancing downstream for OPIC-
eligible investments.
Investors are generally hesitant about making new commitments in
Egypt, although several U.S. firms with long-term Egyptian operations
such as Apache Corporation, Coca-Cola, and G.M. have told us that they
are continuing with previously planned investments. Many, especially
potential new investors, are taking a ``wait and see'' approach before
making commitments and it will take time to fully restore investors'
confidence in Egypt.
For their part, the Egyptian Government has said that they will not
roll back the series of market-based economic reforms which began in
2004, and they are cognizant of the positive role international
investors can play in their economic recovery. At the same time, the
new government will need to make sure that any new economic policies
address the concerns of Egypt's citizens and ensure that the benefits
of economic development are enjoyed by all segments of Egyptian
society.
The Obama administration is taking steps to address the private
sector's concerns about doing business in Egypt, and is working closely
with the U.S. Chamber of Commerce to coordinate our efforts. In early
June, a delegation from the Chamber's U.S.-Egypt Business Council will
travel to Cairo to meet with government and business leaders. In late
June, the U.S. Trade and Development Agency is hosting a
2-day Egypt trade and investment forum in Washington, DC, which will
immediately be followed by four reverse trade missions of Egyptian
company representatives to different cities in the United States. The
Department of Commerce is also considering sending trade delegations to
Egypt later this year.
Question #64. Is your economic development strategy long term or
short term? What is the view of the World Bank on this, I understand
they have had a $300 million offer on the table for some 2 years with
no takers.
Answer. USAID's economic development strategy combines long-term
programming with short-term steps to meet immediate technical
assistance needs of the GOE during this period of democratic transition
and economic stress. The World Bank's strategy is similar as it is
providing development policy loans that are fast moving but require
reforms to promote long-term stability and growth.
The World Bank has provided two $300 million loans to the GOE; one
in the area of finance to SMEs, and the other providing targeted
subsidies to expand affordable housing and mortgages. The SME finance
loan is moving ahead, albeit at a slower rate than planned. The first
$100 million of the housing loan has been disbursed but the remainder
is in question due to diminished GOE support in this area.
Question #65. I understand that the coming elections in Egypt will
be open to observers. What plans is USAID initiating to participate?
Answer. Previously, USAID has supported extensive domestic election
observation programs in Egypt, fielding more than 5,000 formal
observers in the 2010 parliamentary elections and providing other more
informal observation efforts, including citizen journalists, bloggers,
and direct voter reporting of conditions inside polling stations.
USAID plans to support both domestic and international observation
for the parliamentary and Presidential elections, and is currently
reviewing a number of applications for these activities.
foreign assistance transparency
Question #66. The International Aid Transparency Initiative (IATI)
aims to make information about aid spending easier to access, use, and
understand.
What is your assessment of IATI? Is it useful?
Answer. The United States welcomes the efforts of IATI to provide a
framework for aid donors to be more transparent and to develop a common
international standard for the publication of aid information. Yes, the
United States has found IATI to be a useful point of reference as the
USG develops a standard process for collecting and disseminating data
on international aid flows across U.S. agencies in fulfillment of our
aid transparency commitments under the Paris Declaration on Aid
Effectiveness, the Accra Agenda for Action, the President's commitments
at the Pittsburgh G20 Conference, and the Open Government and
Transparency initiative.
Question #67. How does the information disseminated through IATI
differ from that of the USAID dashboard?
Answer. As a point of clarification, the Foreign Assistance
Dashboard Version 1.0 was launched in December 2010 by both State and
USAID and is maintained by the Office of the Director of U.S. Foreign
Assistance at the Department of State. Most of the information fields
in the IATI standard are similar to the data fields being developed for
future versions of the Dashboard.
One difference is the scope of aid information. IATI centers on
Official Development Assistance (ODA) from donor countries, and
facilitates other official flows and those of private philanthropic
organizations (e.g., the Hewlett Foundation, which recently began
reporting in the IATI format). The Foreign Assistance Dashboard covers
only USG foreign assistance (including ODA, other official flows, and
military grant flows) and excludes both USG foreign credit flows and
aid flows from private U.S. philanthropic organizations.
Another difference lies in the reporting of forward aid budget/
spending levels. IATI requests levels in detail for 3 years out from
the current operating year. The USG does not plan multiyear requests,
so the Dashboard will only include information for 1 year out from the
current operating year.
Question #68. Is the administration planning to sign up for IATI?
Why or why not?
Answer. The United States does not currently plan to sign up for
IATI in light of the forward spending requirement and the opened-end
financial commitment to implement and maintain the IATI Secretariat.
However, the United States has participated in the IATI Technical
Advisory Group (TAG) from its inception. The TAG developed the IATI
standards and formats that were adopted by the signatories in June
2010. The United States does plan to enable a cross-walk of the Foreign
Assistance Dashboard information to the IATI format in the future,
where consistent with U.S. law and policy.
budget support
Question #69. Which countries receive budget support from the U.S.
Government? How much do we provide and how much is the administration
requesting to provide (FY11 and FY12)?
Answer. The below FY 2011 and FY 2012 levels reflect the
President's requests; actual allocations may change depending on need
and consistent with legislative authorities.
----------------------------------------------------------------------------------------------------------------
Country FY10 Actual FY11 Request FY12 Request
----------------------------------------------------------------------------------------------------------------
Afghanistan.......................... $1.0 billion *......... $1.1 billion........... $1.2 billion
Egypt................................ $60 million............ $0..................... $0
Haiti................................ $7.5 million........... $0..................... $0
Jordan............................... $194 million........... $162 million........... $162 million
Pakistan............................. $860 million **........ $763 million ***....... $749 million
West Bank/Gaza....................... $150 million........... $200 million ........ $200 million
Zambia............................... $2 million............. $0..................... $0
----------------------------------------------------------------------------------------------------------------
* Figure reflects planned on-budget assistance for Afghanistan. Legislative restrictions have prevented the use
of FY 2010 funds for government-to-government assistance and assistance that supports the Government of the
Islamic Republic of Afghanistan until certain Secretary of State certification requirements were met. With the
recent Secretary of State certification that the legislative requirements have been met, USAID will obligate
FY 2010 funds for on-budget assistance programs.
** Approximately $860 million of FY 2010 is on-budget based on the current budget, taking into account changes
notified in CN #62 (flood reprogramming)
*** Approximately $763 million is on-budget based on a 55% on-budget level of the FY 11 CBJ Request of $1.388
billion (USAID-managed funds).
Approximately $749 million is on-budget based on a 55% on-budget level of the CBJ request level of $1.361
billion (USAID-managed funds).
Of the $200 million FY 2011 requested for budget support for the West Bank/Gaza, the USG has already provided
$150 million, as notified by USAID on October 7, 2010.
Question #70. Do all countries that receive budget support from the
U.S. publish their budgets and make their budget information accessible
and understandable? If not, which countries do not provide such
information?
Answer. U.S. foreign assistance is prohibited to the central
government of any country that fails to make its national budget
publicly available on an annual basis barring a transparency waiver
from the Deputy Secretary for Management and Resources. The Department
of State conducts an annual fiscal transparency review to process to
comply with the legislation and effect positive change toward better
fiscal transparency in the countries that need it. In FY 2010, of the
countries that received budget support, Egypt and Afghanistan required
waivers in order to continue to receive USG assistance. We continue to
work closely with those governments in order to improve the credibility
and completeness of the budgetary information that they make available
to the public.
______
Responses of Daniel Yohannes to Questions Submitted by
Senator Richard G. Lugar
results
Mr. Yohannes, you have previously noted that MCC is distinguished
by its ``commitment to technically rigorous, systematic, and
transparent methods of projecting, tracking, and evaluating the impact
of our programs.''
Question. What have you learned from MCC's evaluations?
Answer. We will have independent third-party evaluations on almost
every one of our projects. Most evaluations require substantial efforts
to collect end-line data that can begin only after investments have
been completed, and this often happens close to the end of a compact.
More time is required for data analysis and discussions around draft
findings. As a result, most evaluations are expected approximately a
year after a compact's completion. The first compacts with Honduras and
Cape Verde were completed last September and October, respectively, and
as a result, the first evaluation results are expected later this year.
It is important to focus on results throughout the compact's life,
however. In the beginning, targets help us and our partners set our
sights on the results that matter. During implementation, monitoring
results helps us identify trends that can lead us to make mid-course
corrections, and at the end help us be accountable to taxpayers and
other stakeholders. Not all the results will be positive, but
communicating even negative results is a fundamental part of MCC's
commitment to transparency and learning.
We have closed our first two compacts in Honduras and Cape Verde,
where positive income gains are being reported by the respective MCAs.
Preliminary data from the project implementer shows that Honduran
farmers assisted by the compact have seen their annual net income per
hectare planted rise from a baseline of approximately $1,880 to $3,550
on average after 2 years of assistance, a gain of 88 percent. We look
forward to the impact evaluation findings later this year to verify
these and other effects of MCC's investments in Honduras and Cape
Verde.
MCC has significant implementation results to report, which matter
because they are the drivers of the income gains we aim to achieve and
what we track. For example, MCC funded projects have:
Placed over 88,500 hectares under improved agricultural
production;
Completed 517 educational facilities; and
Formalized land tenure for almost 40,000 hectares.
On policy results, many MCC compacts support policy reforms that
help maximize the impact and sustainability of MCC's investments, and
create conditions for continued growth. For example, the Honduras
Compact supported a reform in the financial sector to significantly
expand access to credit by letting borrowers use new and different
kinds of collateral. This law, the first of its kind in Central
America, has now become a model for the region.
Question. Have MCC compacts achieved their expected economic rate
of return?
Answer. MCC makes long-term investments in economic growth and
poverty reduction, and our due-diligence process includes estimating
the expected impact. These estimates are based on models, data, and
assumptions that follow standard procedures but that vary by country
and activity, often depending on the specific design of the activity
and the data available. These economic rates of return are calculated
based on a 20-year investment horizon, so we do not expect that
compacts will achieve their expected rates of return immediately upon
completion. However, about a year after compact closure we receive
results of independent impact evaluations that use real monitoring data
from the compact programs to reestimate ERRs for every compact project,
based on what was actually achieved during the compact. We anticipate
that some of our projects will meet or exceed the preinvestment
estimates, but some will not achieve the expected rates of return.
We already know, for example, that a number of our earliest
infrastructure investments experienced higher than anticipated costs
during implementation. In such cases, we work together with our country
partners to decide which activities go forward, and the result of
higher costs and fewer activities usually implied lower than
anticipated returns. However, in many cases, it is possible to shift
funds to those activities with the highest returns which, even given
the higher costs, are still expected to generate positive net returns
on investment.
Question. What should be done differently to increase the impact of
MCC programs?
Answer. MCC is a learning institution, and our results framework
actually serves as a direct feedback loop for taking information from
past programs and using it in the design of future programs. This
mechanism ensures that we will use the results of impact evaluations to
inform how we design investments for greater impact. We are already
doing a lot to improve our programs, based on our first years of
implementation experience.
For example, we are increasingly recognizing that policy reforms
can be an essential part of increasing impact and sustainability of
investments. For this reason we are making policy reform a bigger and
more explicit part of compacts. The recently signed Malawi Compact is a
great example--it includes a $25 million project to support policy
reforms and institutional capacity-building in the energy sector. We
are also seeking more private sector partnerships that bring additional
resources and talent to MCC investments, as a way to increase impact
and sustainability.
compact costs appear to exceed benefits
Question. Following up on my question about MCC's calculation for
the amount of benefits each compact provides, it appears Congress has
appropriated for four MCC compacts more than those compacts provide in
benefits. The four compacts are with Mali, Moldova, Namibia, and
Vanuatu compacts. Specifically, the NPV of the $460 million Mali
compact is $457 million; the NPV of the $262 Moldova compact is $260
million; the NPV of the $304 million Namibia compact is $240 million
and the NPV of the $65 million Vanuatu compact is $54 million.
How do you explain this phenomenon?
Why would the costs exceed the benefits of these compacts?
Does this indicate something about the MCC criteria,
forecasts, or analysis?
Answer. The figures cited above are for total (undiscounted)
compact costs and discounted benefits, and therefore do not reflect an
apples-to-apples comparison of costs and benefits. As described below,
it is useful to compare compact costs, discounted over 5 years (the
implementation period of the compact), with projected compact benefits,
discounted over 20 years. With this comparison, the benefits of these
four compacts exceed their costs.
MCC is making long-term investments in poverty reduction. When
making an investment decision, MCC starts with the basic question--do
the expected returns on investment, in terms of increased incomes for
people in our partner countries, justify the costs of the program? Like
any investor, we expect the benefits of our programs to accrue for
years after the initial investment is made. For this reason, we
estimate the total benefits--increased incomes--of our compacts over a
20-year period. Also, like any responsible investor estimating a return
on an investment, we discount gains to reflect the idea that future
dollars have lower value the farther out in time they are. MCC publicly
reports these discounted total benefits as the estimated impacts of our
compact programs. We also routinely report total compact amounts, but
have not typically presented them in their discounted form. We are
certainly willing to do so in an effort to present an apples-to-apples
comparison that discounts both the dollars and the estimated benefits.
Indeed, when MCC makes an investment decision, we do that apples-
to-apples comparison through a benefit-costs analysis. Our current
practice is to look for investments where ex ante analyses indicate
that the Estimated Rate of Return (ERR) is expected to meet or exceed
10 percent. MCC also sometimes reports net present values (NPVs) or
Present Value of Benefits, as they can be easier to interpret than
ERRs. These NPV calculations compare total benefits, discounted over
the life of the project (usually 20 years), with the total compact
costs, discounted when they are incurred (all MCC costs are incurred
during the 5-year implementation period). The practice of discounting
costs and benefits when they occur is consistent with OMB Circular No.
A-94, ``Guidelines and Discount Rates for Benefit-Cost Analysis of
Federal Programs.''
Question. While one could argue that the disbursements of the
compact could be discounted over the term of their disbursement/compact
term, it would be inappropriate for the costs of the compact to be
discounted during the 20-year period that you referenced at the
hearing. If the benefits of the compact only slightly exceed the
discounted costs, a financier would argue that the country could be
better off investing the compact funds in the risk-free asset.
How can these four compacts be justified?
Did the expectation of benefits from these four compacts
change during implementation?
Answer. MCC agrees that costs should be discounted over 5 years
and, indeed, the discounted costs cited at the hearing were actually
discounted over 5 years rather than 20, while discounted benefits cited
were discounted over 20 years. The four compacts in question can be
justified based on the comparison of discounted costs and discounted
benefits, as described above.
second compacts
Question. Though MCC was not intended to provide perpetual
development aid, the MCC Board has declared that three countries are
eligible for second compacts--Cape Verde, Georgia, and Ghana. In these
difficult fiscal times, how do you balance offering a country a second
compact with trying to affect change in a new country with a first
compact?
Answer. MCC's mandate is to partner with countries where
investments will have the greatest potential returns in terms of
poverty reduction and economic growth, and where U.S. taxpayer
resources can be used most effectively. In some cases the greatest
opportunity for impact may be in deepening partnerships with existing
MCC partner countries. MCC's authorizing legislation specifically
allows for MCC to pursue subsequent compacts.
MCC does not have an inherent preference for working with new or
existing partners. The MCC Board of Directors makes decisions on which
countries are eligible for MCC assistance. The Board's determination of
eligible countries is based primarily on country performance on MCC
selection indicators. In determining country eligibility, the Board
also considers the opportunity to reduce poverty and generate economic
growth within a country, and the availability of MCC funds.
MCC's Board is extremely selective when determining eligibility for
subsequent compacts. Of the eight countries that will conclude compacts
by the end of 2011 (Armenia, Benin, Cape Verde, Honduras, Ghana,
Georgia, Nicaragua, and Vanuatu), MCC's Board has only selected three
as eligible for a second compact--Cape Verde in FY10 and Georgia and
Ghana in FY11.
MCC's engagement with partner countries is not open-ended. MCC
carefully considers the appropriate nature and duration of each country
partnership based on the country's policy and implementation
performance, as well as the opportunities to have an impact on growth
and poverty reduction. This includes consideration of the potential
sustainability of MCC's investments, and on the country's ability to
attract and leverage public and private resources in support of
development. MCC's targeted, selective engagements are critical to
ending the cycle of aid dependency, ensuring sustainability, and
promoting country ownership.
legislation
Question. Is MCC seeking any legislative authority changes? If yes,
what are they and why is MCC seeking those changes?
Answer. Yes, MCC is seeking legislative authority changes. One such
change is concurrent compact authority, which would allow MCC to have
multiple compacts with a country at once, and to start projects at
staggered times to improve project management and allow for more
innovation and creativity in program design. MCC would be able to start
projects when ready rather than holding the entire package until all
projects are ready--and disbursements on average should begin sooner.
In exceptional circumstances, an authorization change could allow
MCC to extend compacts for up to 2 years (e.g., natural disaster,
termination of a nonperforming contractor, or other events outside the
recipient's control).
MCC has also sought legislative changes aimed at ensuring that
changes in countries' income categories do not prevent the agency from
working with the best policy performing countries that also have
populations living in extreme poverty. Sudden shifts in income
category, due in part to changes in global inflation and exchange
rates, pose serious policy and structural issues for MCC. These and
other economic trends mean a substantial number of compact-eligible
countries are now in the Low Middle Incoming Country (LMIC) category.
Each year, countries abruptly graduate from one income category to
another with no transition period. This impacts whether they can be
candidates for MCC assistance at all, and changes both the policy
performance standards against which they are measured and the levels of
funding that they can receive.
MCC will work with members of your committee, the House authorizing
committee, and others in the Congress to make these important
legislative adjustments.
indonesia
Question. Please describe the process that determined the climate
change focus of the Indonesia compact. What other types of projects
were considered? How does the efficiency of the current Indonesia
compact focus compare to alternative projects that were considered? Is
there a tradeoff between MCC's core goal of promoting economic growth
with other political goals?
Answer. Indonesia has been developing its compact since it was
selected by MCC's Board of Directors as eligible for compact assistance
in December 2008 (FY09). When the Board takes such a decision, it not
only declares that the country in question is eligible for assistance,
but it invites that country to submit a proposal, and directs MCC to
``seek to negotiate a compact'' with the country. Since that decision,
MCC has undertaken compact development activities in partnership with
the Government of Indonesia.
Indonesia underwent a rigorous analysis to identify economic
constraints in 2009, which was followed by an extensive consultative
process that the government conducted. While the government considered
a broad range of themes, including a microfinance apex institution to
building infrastructure for universities, that were submitted to MCC in
13 concept papers, these and other ideas were dropped following an
initial screening against MCC investment criteria which included some
comparison of efficiencies between projects as well as preliminary
analysis of economic returns and potential beneficiaries.
In September 2010, the Government of Indonesia decided to move
forward with three investment themes: (1) green prosperity to support a
low-carbon sustainable growth strategy; (2) procurement modernization
to streamline and professionalize public procurement in order to reduce
corruption and increase efficiency and effectiveness; and (3) access to
basic services for economic growth--to address workforce development
and early childhood stunting, two significant issues in Indonesia.
engagement
Question. Over the years, I have encouraged the MCC to engage with
the private sector, foundations, nongovernmental organizations, and
other donors to develop new funding and implementation partnerships and
am pleased that the MCC is now doing so. How is MCC working to leverage
its investments?
Answer. MCC is working with other donors, often expanding the
projects of other donors (e.g., the World Bank's Kalahi-CIDSS project
in the Philippines), building on foundational project work (e.g., the
Asian Development Bank (AsDB) on vocational education in Mongolia) and
designs (e.g., the AsDB in Mongolia on roads) by other donors,
developing coordinated implementation (e.g., the European Bank for
Reconstruction and Development, the World Bank, and MCC on the Regional
Infrastructure Project in Georgia), and working to extend MCC project
impact (e.g., New Zealand Aid Programme and AusAid in Vanuatu). A
standard feature of MCC compact development is holding information and
coordination meetings with donors in-country to maximize the
opportunities to build on and supplement one another's work.
Increasingly, MCC is proactively seeking opportunities to divide
efforts along lines of cost-effectiveness and skill sets. Other donors
are also interested in this approach. Both AusAid and the New Zealand
Aid Programme have been actively expressing interest in working with
MCC to design a cost-effective strategy for coordinated efforts in the
Pacific region.
We are also working to develop a more proactive partnership
outreach to the private and nongovernmental sectors. During compact
development, MCC solicits input from the private and nongovernmental
sector, and representatives of these interests are included in the
countrywide consultations. More directly, many MCC programs are
specifically designed to promote private sector activity (e.g., credit
lines, grants to farmers, training to improve skills and productivity).
In addition, there are already a number of examples of engagement with
the private sector in investment and management, as opposed to
procurement (e.g., El Salvador, Ghana, Jordan, Mali). The Agricultural
Business Initiative in Ghana, Mali, and Morocco was designed as a pilot
in attracting private sector investment to extend the impact of MCC-
funded projects. MCC has recently introduced an Annual Partnership
Solicitation, on grants.gov, which is intended--as the name suggests--
to solicit interest from the private and nongovernmental sectors in
partnership and investment in MCC countries.
MCC is also working with other USG agencies, including OPIC, USTR,
and USAID, to capitalize on opportunities to bring together our
respective programs fostering private sector engagement in development.
Finally, there have been outreach events focused on diaspora
communities, including the Armenian and Salvadoran communities.
Engagement with the private and nongovernmental sector, as well as
donors and other potential partners, has been identified as among key
priorities for MCC now and in coming years.
Last, MCC's new ``Invitation to Innovate (I to I)'' plan is a
framework designed to facilitate the development of partnerships with
the private sector and nongovernmental organizations (NGOs).
early terminations
Question. Before you joined the MCC, compacts were terminated early
or suspended in Madagascar, Nicaragua, Honduras, Armenia. Since your
arrival, none have been terminated. What caused the early terminations
and was done to prevent them?
Answer. MCC terminated the Madagascar compact in full, and
suspended or terminated parts of the compacts in Nicaragua and Honduras
and placed part of the Armenia compact under operational hold. In all
cases, MCC's Board made these decisions in response to a pattern of
actions inconsistent with MCC's eligibility criteria. The Board has
shown its willingness to make difficult decisions and hold countries
accountable.
MCC selects partners where conditions are best for growth, poverty
reduction, and effective use of scare development resources. But
development is an inherently risky business, and many countries'
democratic institutions are more vulnerable than we would like.
MCC communicates very clearly to our partners that we expect them
to adhere to our high standards for governance and that we will hold
countries accountable for sustaining good policy performance. MCC
maintains an active policy dialogue with countries during compact
implementation, and makes it clear that countries are expected to
maintain or improve policy performance.
MCC's indicators are good at measuring current policy performance,
but no one can predict with certainty the future behavior of our
partner country governments.
technology
Question. How has MCC used technology in its compacts? What more
can MCC do to utilize technology to increase the amount of benefits
each compact generates?
Answer. Technology adoption has been employed across a range of
compact investments. For example, information technology systems have
been employed widely for the performance, procurement, and financial
management systems that our partner countries have employed to
effectively manage compact resources.
As part of its partnership with MCC, Cape Verde will expand upon
its e-government system to elevate efficiency and transparency of its
procurement system to world class standards. MCC will support NOSi
(Operational Nucleus for the Information Society), the Cape Verdean
agency responsible for e-government, by providing equipment, software,
and technical expertise. Roughly $1 million in compact funds have been
allotted to strengthening Cape Verde's e-government system.
The Cape Verdean e-procurement system will serve as the backbone of
compact procurements in the areas of infrastructure, agriculture
support, and private sector development. The system will standardize
purchasing procedures and terms and conditions. For the average
citizen, this translates into the guarantee of a less corrupt, more
transparent and efficient use of government resources.
Compacts in Lesotho, Nicaragua, and Benin have employed IT to
modernize their land registries and implement land tenure policy
reforms supported by MCC. The design and construction of major road,
water, irrigation, and other public works has, where appropriate,
employed advanced technologies to ensure that compact investments are
durable and of quality. The Honduras Compact also includes two main
subactivities surrounding the implementation of a movable property
registry--hiring a consulting firm to provide legal technical
assistance to implement a secured transaction law to allow for the use
of movable property guarantees and technical design/implementation of a
movable property registry system--authorized by the aforementioned law.
MCC is funding the Automated Clearing House which will connect
Lesotho's major commercial banks to a provider in South Africa to speed
the clearing of checks. MCC is also funding a debit smart card activity
being implemented by the Lesotho Post Bank, which will facilitate
deposits, withdrawals, and retail transactions in fairly remote areas
to holders of biometrically secured smart cards.
In Ghana, MCC has funded the computerization and automation of the
entire network of 120 plus rural banks and their more that 500 branches
including modern banking software, LANs, and satellite dishes for each
branch to connect to its HQ office and to connect all of the banks to
the national payments system thus enable transfers such as government
payments and remittances. MCC is also funding the computerized data
center at the ARB Apex bank, the regulator of the rural banking network
to support the newly automated transaction capacity using the satellite
technology.
Millennium Challenge Account-Armenia, in collaboration with ACDI/
VOCA, VISTAA and the Federation of Agricultural Associations found an
innovative way to address the lack of reliable information about
current market prices by taking advantage of widespread cell phone use
in Armenia. The innovation is the Armenian Agricultural Market
Information System (ARMIS), which sends out daily fruit and vegetable
prices from large markets in the Yerevan, Armavir, Lori, and Shirak
regions upon text message request. Farmers pay a small fee per text
message, ensuring that there is demand for this service and long-term
sustainability of its operations. Farmers text message using a 4-digit
crop- and market-specific number, which triggers an automated response
via text message from the ARMIS system. With this information, farmers
can bargain and negotiate with potential produce buyers from a stronger
competitive position.
Cell phones are also used in Honduras to improved communication
between growers with other growers, technicians, buyers, input
suppliers, and transport and services providers. What used to take days
to find out before can now be obtained in minutes, better decisions can
be taken which save or earn money (e.g., market conditions/prices,
buyer volume needs, pickup and delivery dates, input costs,
coordinating logistics). Market prices are sent automatically to cell
phones or accessed by calling a number. This knowledge of actual market
prices (and tendencies) assists growers in negotiating farm gate prices
for those who sell to intermediaries at farm gate.
MCC also takes the sustainability of its investments seriously, and
examines the capacity of its partners to sustain such technologies once
compact investments are complete.
innovation
Question. What innovative development programs has MCC supported?
Which ones seem promising? What have you learned from the innovations
that have not succeeded?
Answer. One of MCC's greatest innovations is its model--MCC's
ability to respond to partner countries' long-term development
priorities, to base investment indecision on rigorous economic
analysis, to put countries in the driver's seat when implementing
programs, to be transparent in projection and achievement of results,
and to hold firm on policy performance are innovations in and of
themselves.
MCC has worked on a wide range of projects, from traditional
infrastructure projects, to agriculture, irrigation, water and
sanitation, land tenure, and various microenterprise and small business
support projects. The innovation of our model, which emphasizes country
ownership, ensures that the countries themselves identify their project
priorities.
Last month, I launched a new initiative called ``Invitation to
Innovate (I to I).'' Through this program, we will seek innovative
ideas from the private and nongovernmental sectors to support MCC's
mission. Partnerships solicited through the Annual Program Statement
are expected to provide new funding opportunities, introduce new
technologies and approaches for development, increase the
sustainability of MCC investments, and enhance training and expertise
in the implementation of MCC compacts. Partners may include private
sector companies, nongovernmental organizations, social responsibility
funds, foundations, other donors, and development-oriented investment
funds.
______
Responses of Daniel Yohannes to Questions Submitted by
Senator Benjamin L. Cardin
Question. In working with well-governed, accountable partner
countries, the administration has prioritized country ownership as a
key component of its development policy, which follows a founding
principle of the MCC.
How are you helping to build local capacity in-country so
that partner countries can eventually assume full
responsibility for their development?
Answer. Partner country Millennium Challenge Account (MCA)
``accountable entities'' are primarily responsible for the management
and implementation of a compact agreement, including the conduct and
oversight of procurements. These entities are entirely staffed by host
country citizens. MCC helps build the capacity of the accountable
entities to execute this responsibility by providing training and
continuous technical assistance on responsible procurement, financial
management, and technical practices and by facilitating the exchange of
best practices among MCAs.
In Cape Verde, for example, MCC's compact helped to facilitate a
new electronic procurement system designed to standardize procurement
procedures and provide government officials, suppliers, and the public
information on procurement rules, opportunities, and transactions
records. This small investment, together with MCC-supported training of
450 officials from across the government, as well as the government's
own investments in broadband access and accounting systems, allowed
Cape Verde to put into practice its new procurement law. The law,
modeled on international procurement standards such as those used by
the World Bank and MCC, is designed to increase transparency and
efficiency across the public sector.
MCC's compact with Ghana includes a procurement capacity project
developing a cadre of procurement professionals and improving the
public procurement capacity of the Ghanaian Government. A complementary
key to this program's success is the establishment of a professional
designation, certification, and career path for procurement
professionals in the Ghanaian civil service.
Question. Under your leadership, the MCC has made several
groundbreaking improvements to gender integration, such as including a
focus on gender as one of five corporate strategic priorities of the
agency, developing operational guidance for how to integrate gender
throughout the MCA process, and providing incentive awards for
exemplary staff performance in gender integration.
In the context of the FY12 budget, how can the MCC ensure
that resources are available to support these innovative
improvements, which stand not only to improve the lives of
beneficiaries but also to improve the effectiveness of MCA
projects overall?
Answer. One of my top priorities is to ensure gender integration
throughout the lifecycle of MCC compact activities--design,
implementation, and evaluation. For example, integrating gender
assessment into the project design and tracking is one MCC's corporate
goals and MCC staff is trained on and encouraged to incorporate gender
considerations into their work. As such, MCC is working to mainstream
gender into its business operations and the work of all MCC staff. With
regards to MCC's Social and Gender Assessment team specifically, MCC
management will continue to review staffing needs.
Question. Experience has shown that gender integration is most
successful when staff is held accountable to incorporating gender work
into their portfolios. Over the past year, the MCC has made remarkable
improvements in holding MCC staff accountable for gender integration.
Under your leadership, how can you ensure to hold MCA staff
and implementing agencies accountable for their performance on
gender integration?
Answer. MCC has increased the number of staff focused on gender,
and, this year, we have adopted and begun to implement new gender
integration milestones and operational procedures in all of our
compacts. These milestones and operational procedures set the stage for
holding both MCC and our partner countries accountable for gender
integration. For example, MCC is requiring that each new MCA
accountable entity include a staff member with gender expertise and
gender assessment and monitoring is required for all relevant
activities.
Question. Two of the countries for which compact funding has been
requested in FY 2012--Ghana and Georgia--have already been awarded MCC
compacts.
If multiple compacts become a common occurrence, do you
believe this alters the fundamental concept of MCC providing
targeted, time-limited support?
How would a succession of MCC compacts in a country be
different from the long-term USAID development model?
Answer. Engaging in subsequent compacts is consistent with MCC's
model. MCC's authorizing statute specifically authorizes subsequent
compacts. MCC's mandate is to partner with countries where investments
will have the greatest potential returns in terms of poverty reduction
and economic growth, and where U.S. taxpayer resources can be used most
effectively. In some cases the greatest opportunity for impact may be
in deepening partnerships with existing MCC partner countries.
Second compacts may indeed present some of the best opportunities
to reinforce the key elements of the MCC model. By being very selective
in choosing second compact partners, MCC creates a strong incentive for
ongoing policy and implementation performance among partner countries.
By building on lessons and experience in first compacts, second
compacts provide good opportunities to drive deeper policy reforms and
for innovation and new partnerships with private sector and civil
society. Continued engagement with a well-performing country gives MCC
the opportunity to help countries establish a firm path toward growth
and greater private sector investment and away from dependence on aid.
A subsequent compact, or even two, in a country would be different
from the USAID development model in several ways, the most significant
of which is MCC's approach to selectivity. MCC's Board has been very
selective in choosing second compact partners. Second compacts are not
an entitlement, or an assumed follow-on to a first compact. Eligibility
for a second compact depends on countries maintaining good performance
on MCC's indicators, and on first compact implementation. In second
compacts will not be the norm because not all current MCC partners will
have second compacts. MCC will continue to look for country
partnerships where opportunities are greatest to support economic
growth, make investments with good returns for poverty reduction, and
use scare U.S. development resources effectively. In this regard, and
as MCC's authorizing statute envisioned, second compacts will be a part
of MCC's toolkit to pursue poverty reduction in well-performing
countries.
However, MCC's engagement with partner countries is not open-ended.
MCC carefully considers the appropriate nature and duration of each
country partnership based on the country's policy and implementation
performance, as well as the opportunities to have an impact on growth
and poverty reduction. This includes consideration of the potential
sustainability of MCC's investments, and on the country's ability to
attract and leverage public and private resources in support of
development. MCC's targeted, selective engagements are critical to
ending the cycle of aid dependency, ensuring sustainability, and
promoting country ownership.
In addition, the elements of MCC's model that distinguish it in a
first compact--focus on economic growth, transparency in projected
impact and independent evaluation, and commitment to supporting
countries' own priorities for growth and poverty reduction--will
continue to distinguish MCC in subsequent compacts.
______
Responses of Administrator Rajiv Shah to Questions Submitted by
Senator Benjamin L. Cardin
Question. Administrator Shah, the President's development policy
called for your inclusion in meetings of the National Security Council
``as appropriate.'' Can you attest to your level of involvement on the
NSC as the development voice at the policymaking table, and do you
expect a more formalized role for USAID in the future as the U.S.
Government's lead development agency?
Answer. USAID plays a very active role in formally convened NSC-led
discussions on development. The Agency is a core participant in the
Global Development Interagency Policy Committee (IPC), which is the
forum for implementation of the President's policy directive on global
development and has been responsible for drafting discussion papers and
leading discussion of critical development topics in that forum.
USAID's leadership participates regularly in a variety of other IPCs,
including both country and region-specific issues as well as sectoral
issues. As Administrator, I participate regularly in Deputies' and
Principals' Committee meetings
on a variety of issue areas, including national security and other
administration priorities.
Question. To what extent does USAID actually have sole control over
its core accounts? What role does the State Department play in
determining where these funds should be directed and for what purposes?
And please discuss your plans for USAID to design its own budget.
Answer. The Quadrennial Diplomacy and Development Review (QDDR)
recognizes the establishment of the Office of Budget and Resource
Management (BRM) at USAID in September 2010, and charges it with
significant budget responsibilities. Specifically, the QDDR states that
USAID will propose a comprehensive development and humanitarian
assistance budget for USAID-managed programs to the Secretary and
Deputy Secretary of State, and be responsible for executing its budget
within country and strategic objective levels. This will allow the
Administrator to ensure that overall priorities and country and sector
strategies drive resource requests and deployment. State will continue
to be responsible for integrating all foreign assistance budget
proposals for the Secretary's approval, and the Secretary will continue
to submit an integrated State/USAID Congressional Budget Justification
that includes integrated country justifications, while clearly
identifying which agency will implement which resources.
Question. Accountability has been an explicit focus of the Feed the
Future Initiative and USAID should be commended for their work on the
Feed the Future Results Framework. However, it remains unclear how
USAID country missions will be accountable for integrating gender
throughout their implementation plans. How is Feed the Future holding
missions accountable for integrating gender throughout all stages of
planning and implementation in the field?
Answer. Strengthening human rights and fueling sustainable economic
growth in developing countries both depend on empowering women and
working toward gender equality. According to the FAO, women comprise,
on average, 43 percent of the agricultural labor force in developing
countries, ranging from 20 percent in Latin America to 50 percent in
Eastern Asia and sub-Saharan Africa. Eliminating poverty and hunger
cannot occur without bolstering the role women play in their societies
and economies.
The Feed the Future (FTF) Initiative attacks the root causes of
global hunger through accelerated agricultural development and improved
nutrition. This commitment to catalyze agricultural-led growth will
raise the incomes of the poor, increase the availability of food, and
reduce undernutrition through sustained, long-term development
progress. Because of their prominent role in agriculture and the
persistent economic constraints they face, women are the main focus of
many FTF programs.
USAID has taken important steps to address gender issues. The
administration's Feed the Future Initiative reflects a dedication to
increasingly include women and girls as leaders, implementers, and
beneficiaries of our programs.
Prior to investing a high level of resources in the implementation
of Feed the Future strategies, USAID coordinates multistakeholder
reviews of the technical quality of the country's food security
multiyear strategy for integration of gender concerns in all
investments. Each Multi-Year Strategy is thoroughly reviewed for gender
integration and is not approved without first ensuring that gender
issues are addressed throughout the plan. Moving forward, USAID will
work with missions to develop Gender Action Plans to accompany each
Multi-Year Strategy. The status of each Feed the Future focus country
and the overall investment portfolio will also be reviewed every year
to:
Ensure the incorporation of gender best practices in all
Feed the Future investments. We will provide technical
assistance, where necessary, and up-to-date information on best
practices through promotion and dissemination of resources.
Training is also a critical component, and the Agency will work
with missions to engender FTF-related solicitation and
procurement documents through
in-country trainings, technical assistance and the delivery of
training resources including the ``Tips for Integrating Gender
into Agricultural Solicitations'' document.
Assess the quality and content of a Feed the Future focus
country's consultative process on gender integration as one
criterion for deeper investments. USAID will assess how the
country uses social/gender analysis to involve and help ensure
meaningful participation of women and men, and how the country
involves organizations representing their respective interests
in the development and implementation of the Feed the Future
activities.
USAID is establishing a rigorous monitoring and evaluation (M&E)
system that will monitor performance and measure progress toward Feed
the Future goals at the country, regional, and initiative level. Feed
the Future M&E system development requires that all USAID missions
define the development hypotheses behind their strategies, develop a
country-specific results framework, clearly identify beneficiaries, and
undertake baseline studies. Gender equality and women's empowerment
are, by requirement, considerations that are integrated into all of
those steps.
The Feed the Future M&E system will measure gender results by
collecting sex-disaggregated data, tracking the impacts of our
investments on women and men, and measuring the progress of women's
achievements relative to men's. All Feed the Future standard (people-
specific) indicators collected at a household or individual level are
either disaggregated by sex or specific to women.
Additionally, impact evaluations will examine critical questions
related to gender equality, gender integration, and women's
empowerment. Missions are strongly encouraged to set impact evaluation
agendas that include questions on gender impacts.
Finally, under Feed the Future, USAID is developing an index--the
Women's Empowerment in Agriculture Index--to measure changes in women's
empowerment in the agriculture sector. The concept of Women's
Empowerment or Inclusion in Agriculture is broad and multidimensional
and measures change in the following: women's role in household
decisionmaking around agricultural production, women's access to
productive capital (such as loans or land), the adequacy of women's
income to feed family, women's access to leadership roles within the
community, and women's labor time allocations.
Question. One of the problems that has plagued USAID over the years
is the lack of accountability of any particular officials for the
performance of the programs under their purview. Partly as a result,
Congress has created a large number of special coordinators who report
through other departments and agencies. USAID is sometimes left with
minimal control over its programs, yet is still held responsible when
the programs fail to achieve their objectives. What is being done to
change the dynamic so that USAID has the ability to design and manage
for results?
Answer. The Presidential Policy Directive on Development and the
Quadrennial Diplomacy and Development Review (QDDR) have reiterated the
importance of USAID as the lead development agency for the United
States Government. With Congress' support for the Development
Leadership Initiative, USAID has significantly expanded the ranks of
development professionals at the Agency and therefore its capabilities
to design and implement effective development programs and manage these
for results. The QDDR establishes USAID as the lead agency for the Feed
the Future Initiative, and anticipates that the Agency will assume
leadership of the Global Health Initiative soon. USAID is also a core
agency implementing the Global Climate Change Initiatives and our staff
participates actively in many other interagency processes as the
administration pursues a whole of government approach to development.
Through these efforts USAID is drawing on the expertise of all federal
agencies to tackle the priority development challenges facing the world
and coordinating efforts to provide the most development impact.
USAID has instituted a variety of reforms through USAID Forward,
including more rigorous evaluation, procurement mechanisms that promote
increasing local capacity and partnering, where appropriate, with host
countries, and emphasis on science, technology, and innovation. These
reforms, coupled with the increases in staff, will continue to improve
USAID's ability to design and manage for results.
Question. In the most recent strategy document, the Global Health
Initiative principle of ``a woman- and girl-centered approach'' has
been expanded to a ``focus on women, girls, and gender equality.'' Can
you describe how USAID programs are addressing the question of gender
equity by addressing gender-related power dynamics between partners and
in families, gender-related barriers to access and demand for services,
and factors such as mobility, access to education, control over
resources, and the link between poverty and gender?
Answer. USAID's global health programs consider gender equality a
key determinant of women's and girls' health and well-being and
recognize that the lower status that women and girls often have
relative to male counterparts in their homes and communities requires a
concerted effort to transform unequal gender norms and power relations.
USAID continues to invest in cutting edge data collection through
the Demographic and Health Surveys (DHS), which includes modules on
domestic violence, female genital cutting/mutilation (FGC/M) and
women's status. Thirty-three countries have used the DHS domestic
violence module (10 more than once); 27 countries have implemented the
FGC/M module (of which 16 have collected the data more than once); and
3 countries have implemented the women's status module (of which 2 have
collected the data more than once). These data were instrumental in
bringing about legislative changes on domestic violence in Kenya, and
the development of new legislation in Uganda that protects women from
domestic violence, promotes gender equality in the home and prohibits
FGC/M.
In rural Yemen, USAID is raising awareness of child and adolescent
health needs and girls' rights and challenging local beliefs that
support the common practice of child marriage. As a result, the age of
marriage has increased from 14 to 17 in project sites; 53 girl-child
and 26 boy-child marriages have been averted; and the first-ever female
school principal was appointed, encouraging parents to enroll and keep
their daughters in school. The intervention is being replicated in two
new districts.
In Namibia, Ethiopia and Tanzania, USAID programming is engaging
older and younger men to identify and address harmful attitudes toward
gender norms and relationships. Program participants have reported
positive changes in behavior, including increased discussion about
sexuality, the treatment of women with more respect, and increased
awareness about HIV or feeling less negative toward HIV-positive
people.
In Malawi, Rwanda and Swaziland, USAID is working to explicitly
engage men in health services, such as the prevention of mother-to-
child transmission of HIV, as a way of increasing their support of
women's health needs and access to services, and increase couple family
planning and HIV counseling.
A recent USAID-supported analysis in health care facilities around
the world revealed widespread humiliation and abuse of women during
childbirth, a time of intense vulnerability for women. The study found
that such disrespect of women has become ``normalized,'' negatively
affecting women's use of facility-based skilled care. USAID is
supporting global advocacy, additional research, and maternal health
programming to tackle this problem.
In Northeast Bangladesh, which has the country's lowest health
indicators and where women live in seclusion, USAID is supporting an
integrated family planning--maternal, neonatal, and child health
program to improve access to services, through trained community health
workers who reach women in their homes to provide culturally
appropriate newborn care and reproductive health to mothers. As a
result, family planning in intervention sites has increased to 42
percent, compared with 27 percent in control sites.
In Kenya, USAID is providing microfinancing to disadvantaged women
and families in the lowest wealth quintiles (including young women) who
are living with or are affected by HIV/AIDS. This program incorporates
family planning and reproductive health information, and refers women
to local service providers to help them delay, space, or prevent
pregnancy.
Question. Violence against women is a horrific and widespread human
rights crisis that undermines the effectiveness of existing U.S.
investments in global development and stability, such as increasing
basic education or creating stability in Afghanistan and Pakistan.
Given the pervasiveness of sexual and gender-based violence and the
inherent links between violence and the various sectors in which USAID
is engaged, how can USAID utilize a more comprehensive approach to
ending violence against women and girls internationally?
Answer. USAID has adopted a comprehensive approach to gender-based
violence (GBV) in all its programming by: (a) mobilizing women/girls
and men/boys to prevent and mitigate violence; (b) working with
communities to address norms that perpetuate gender-based violence; (c)
supporting policies and programs to prevent and respond to GBV in
various settings, such as schools, workplace, and home; (d) supporting
policies and activities that protect the rights of women and children
and strengthen sanctions against violence; (e) increasing access to
psychosocial, legal, and health services; (d) supporting special
protections for women and children in conflict and humanitarian
emergencies; (e) supporting policies and activities that protect the
rights of transgender persons and strengthens sanctions against
violence directed at those who evidence variant gender expression; and
(f) providing original research and analysis of the prevalence of
gender-based violence and its effect on development objectives.
USAID's commitment to combating gender-based violence has also been
elevated by the Agency's most senior leadership, who are positioning
the Agency to advance the implementation of United Nation Security
Council Resolution 1325 and four related United Nations resolutions,
1820, 1888, 1889, and 1960, which call for the protection of women and
girls from sexual and gender-based violence in situations of armed
conflict. To protect women and girls in conflict-affected countries,
USAID assistance will combine targeted prevention and response
activities with an overall focus on the safe and equitable delivery of
relief and recovery assistance, and the active engagement of women in
peace-building and reconstruction efforts.
Further, in February, the Agency launched a Counter Trafficking in
Persons Code of Conduct, holding USAID personnel and implementing
partners accountable to a high level of ethical conduct and committing
the Agency to provide training and tools to identify trafficking and
implement appropriate programs. The Agency is developing a new Counter
Trafficking strategy, finalizing a Field Guide to Combat TIP as a
programming resource for missions, and developing a survey tool to
identify evidence-based practices in anti-TIP programming.
Question. As you know, the QDDR incorporates an unprecedented
emphasis on gender integration, recognizing it as a key approach for
effective development. As the QDDR reaches the stage of implementation,
how can you ensure that USAID employs gender integration as a
crosscutting approach for diplomacy and development rather than relying
on separate women's projects? The FY12 budget request does reference
this. But can you now tell me what that will actually look like? Can
you please share what concrete steps you view are necessary for USAID
to fully achieve this vision of addressing both women's and girl's
needs effectively throughout project outcomes, both in Washington and
abroad? What structures are being built at USAID? What requirements
will you have of contractors and programming? What will the Monitoring
and Evaluation on gender look like?
Answer. We have taken a number of steps throughout the Agency to
ensure that women's and girl's needs are met throughout project
outcomes in Washington and abroad. Last year, we updated our gender
programming requirements to reflect the administration's core
commitment to gender equality and women's empowerment. This guidance
reinforces the importance of gender analysis in informing the design of
strategies and programs to deliver better results, and makes it a
mandatory component of strategic planning and project design at every
level for all USAID staff and implementing partners (e.g.,
contractors).
Furthermore, all USAID officers now have at their disposal a strong
set of tools from which to implement and strengthen the integration of
gender into their projects. For example, we have complemented the above
guidance with additional documents on the subject matter, such as the
Tips for Conducting a Gender Analysis at the Activity Level, the USAID
Gender Integration Matrix: Individual Opportunities and
Responsibilities, and Sample Scopes of Work for Gender-Related Analyses
and Training.
We have increased our technical assistance to the field, with more
than 35 missions carrying out country gender assessments last year
alone to incorporate into planning and programming. And finally, we
have provided gender integration training to approximately 600 USAID
staff and implementing partners worldwide.
Last month, USAID established a Policy Task Team to craft a new
policy on gender equality and women's empowerment--our first in nearly
30 years. As with our other policy task teams, the Gender Policy Task
Team will consult widely with stakeholders, including USAID staff,
beneficiaries, and others in the development community and on Capitol
Hill on, among other things, the best way to achieve our gender
integration goals.
We recently restructured the former Women in Development Office
into a new Office of Gender Equality and Women's Empowerment focused on
building partnerships. This office will also give greater support to
female entrepreneurship, scaleup initiatives designed to enhance
women's ownership of key assets like land and housing, and work to
reduce gender gaps in access to new technology and infrastructure.
To assist the Agency in meeting its gender goals, we recently
welcomed Carla Koppell as our new Senior Coordinator for Gender
Equality and Women's Empowerment. Carla will accelerate our efforts to
integrate gender equality as cross-cutting throughout the agency. Carla
most recently served as director of the Institute for Inclusive
Security of the Hunt Alternatives Fund, and has worked extensively with
women and civil society leaders from conflict areas around the world
including Afghanistan, Colombia, Iraq, the Middle East, and Sudan.
Carla joins a growing number of gender experts in USAID including
Dr. Caren Grown, whom we welcomed as our Senior Gender Advisor in our
Policy, Planning & Learning Bureau earlier this year. Caren is
currently coleading the Task Team in charge of drafting the new policy
on gender equality and women's empowerment programming.
The Agency has placed a significant emphasis on evaluation,
measuring, and documenting program achievements and shortcomings, and
generating data on what works to drive decisionmaking. These processes
will be applied to our approach to gender integration. The new
Evaluation Policy establishes consistent terminology; requires at least
one performance evaluation for each major program and any untested and
innovative interventions, and encourages impact evaluation for each
major development objective in a country program, especially for
innovative or untested approaches and interventions. The policy calls
for evaluation to be integrated into programs at the design stage and
requires sufficient resources be dedicated to evaluation, estimated at
approximately 3 percent of total program dollars. To avoid bias and
situations where implementing partners evaluate themselves, it is
expected that external experts will lead evaluation teams, and requires
that evaluations use methods, whether qualitative or quantitative, that
generate the highest quality, reproducible evidence linked to the
evaluation questions. The policy also builds local capacity by
including local evaluators on evaluation teams and supporting partner
government and civil society capacity to undertake evaluations.
Finally, the new policy insists on transparency of findings with a
commitment to full and active disclosure.
Taken together, we believe these steps will reaffirm our commitment
to gender equality and help harness the power, creativity, and energy
of women and girls to deliver meaningful results for the developing
world today and into the future.
Question. Five days after being sworn in, Haiti experienced a
devastating earthquake. You led a swift, aggressive and coordinated
response to the devastation that they experienced. Now that we have
transitioned from emergency response and onto reconstructing and
rebuilding Haiti, what are some of the new initiatives that USAID is
engaged in? And, what is USAID doing to enhance civil society's
capacity to advocate for reform?
Answer. New Initiatives: USAID is doing business differently in
Haiti. In every sector, we are seeking to build local capacity at the
national and municipal levels so the Government of Haiti can meet the
people's needs and become less dependent on foreign aid. We are also
achieving greater focus and more effective use of our resources by
working primarily in three geographic corridors--north of Port-au-
Prince, the St. Marc area, and Cap Haitien--and in four primary
sectors: infrastructure and energy, economic security, health, and
governance.
USAID is also trying to promote sustainable development and promote
innovation by engaging the private sector through Public-Private
Partnerships, such as Haiti Hope, a $9.5 million partnership with Coca-
Cola and others, that aims to double income of 25,000 mango farmers in
5 years; or a partnership with CHF & Haytrac (Caterpillar's Haiti
dealer), that trains Haitian men and women to use heavy equipment for
rubble removal and demolition of damaged structures. USAID has also
partnered with the Gates Foundation, Digicel and Voila cell phone
providers to provide basic banking services and money transfers. The
project has 14,000 users thus far. The following is a summary of our
activities in the four sectors referenced above.
Infrastructure/Energy: USAID aims to improve infrastructure
that supports communities as well as commercial development in
Port-au-Prince and the development corridors of St. Marc and
Cap Haitien. USAID's goals are to improve access to and the
reliability of electricity; reduce the use of charcoal and
firewood for cooking; increase access to international markets
through new ports; and increase access to housing.
Food and Economic Security: USAID is investing in
agricultural development for competitive commodities; raising
rural income and increase food security; and creating a robust
formal micro-, small-, and medium-sized enterprise sector
resulting in improved performance of the agricultural sector,
improved nutritional status of women and children and increased
employment.
Health and other basic services: USAID is working to improve
the health care system with better infrastructure and
widespread access to good care; improve and expand the capacity
of the Haitian Government (GOH) to provide health services;
enable the GOH to govern and set standards for education;
enhance opportunities for at-risk youth; and provide services
for persons with disabilities.
Government/Rule of Law: USAID's programs aim to create a
more stable state, characterized by credible elections; support
a more inclusive, transparent, and accountable public
administration, and a government capable of delivering basic
services; and strengthen the rule of law and adherence to human
rights.
With regard to civil society, USAID is working to enhance
participation in relief and recovery through dialogue between citizens
and the GOH. We currently have programs with Haitian NGOs to:
Support oversight of the executive branch;
Strengthen capacity to identify and advocate for local
development priorities, and provide oversight of reconstruction
spending;
Support civic education;
Strengthen capacity to advocate for and monitor justice
service delivery; and
Support public information campaigns on the prevention of
violence against women, children, and other vulnerable groups.
We also continue to support the GOH's decision to include a civil
society representative on the board of the Interim Haiti Reconstruction
Commission. In so doing, we also anticipate that the IHRC, in its role
as a coordinating body, will facilitate dialogue among civil society,
government, and other actors.
Question. Do you have an estimate of what the overall humanitarian
response in Haiti is likely to cost the U.S. Government?
Answer. In FY 2010 and to date in FY 2011, the U.S. Government
(USG) has provided nearly $1.3 billion for humanitarian response
activities in Haiti, including $1,219,298,717 toward the January 2010
earthquake and $62,533,934 toward the October 2011 cholera outbreak.
All of USAID's Office of U.S. Foreign Disaster Assistance (USAID/OFDA)
earthquake and cholera humanitarian response programs in Haiti are
currently scheduled to conclude by the close of calendar year 2011 in
recognition of the evolution of both responses from the immediate,
life-saving phase to a longer term situation requiring development
interventions.
Question. Will the FY 2010 supplemental funding be sufficient for
the humanitarian response?
Answer. Though current conditions on the ground indicate that FY
2010 supplemental funding will be sufficient for the humanitarian
assistance portion of the Haiti response, USAID continues to closely
monitor needs in Haiti. In particular, the effects of continued
displacement from the earthquake, cholera, Hurricane Tomas, and high
prices for staple foods are being analyzed and may lead to requests for
additional emergency food assistance.
Question. In your view, how well is the humanitarian operation
being coordinated?
Answer. International humanitarian coordination mechanisms in Haiti
were stronger than in many recent crises due to the speed and quantity
of cluster activation, as the U.N. and Government of Haiti (GOH)
activated 12 clusters, or sectoral coordinating bodies, within the
first 10 days of the crisis to identify and prioritize relief needs.
Later in the response, however, staffing challenges hindered the
ability of the U.N. Office for the Coordination for Humanitarian
Affairs (OCHA) to robustly manage information on the response, leading
other relief organizations to assume a heightened coordination role
within their sectors.
As the lead federal agency for international disaster response,
USAID coordinated an unprecedented number of USG agencies in the
aftermath of the Haiti earthquake. With USAID leadership, the USG
humanitarian response accomplished the following:
Within hours of the earthquake, USAID established a 24-hour
interagency Response Management Team (RMT) with 20 interagency
liaison officers, including staff from the U.S. Department of
Homeland Security, U.S. Department of Health and Human
Services, and U.S. Department of Defense (DOD), working in
close coordination at the USAID Operations Center.
USAID grantees were part of an international effort that
accomplished the largest emergency shelter distribution in
history and increased piped fresh water to Port-au-Prince above
preearthquake levels.
The U.S. Military elevated operations at the damaged Port-
au-Prince airport to levels that were three times greater than
preearthquake capacity and coordinated with USAID for flight
prioritization. Through interagency coordination, the U.S.
Department of Energy and DOD helped restore the fuel supply to
Haiti, allowing the transport of relief commodities to
drastically affected communities.
USAID met regularly with representatives of other donor
nations to avoid gaps or redundancies in assistance. Strong
humanitarian donor coordination enabled common messaging, joint
donor missions to the field, and joint efforts to streamline
requests and expedite response activities.
Question. Please discuss ways that the humanitarian relief
operation has begun to transition toward early recovery and some of the
main obstacles that exist with regard to funding, resources on the
ground, and absorptive capacity.
Answer. Since mid-2010, USAID has been working on ways to integrate
emergency earthquake-response programming into USAID/Haiti's four-
pillar, post-earthquake renewal and economic opportunity strategy.
Specifically, USAID's Office of Foreign Disaster Assistance (USAID/
OFDA) and our mission in Port-Au-Prince outlined ways the mission might
provide follow-on funding for programs initiated by USAID/OFDA to
repair moderately damaged structures, rendering them safe to inhabit,
and to provide technical expertise to GOH housing and urban planning
officials.
USAID's food assistance helped meet the immediate food needs of
nearly 4 million in the first 4 months after the earthquake. Since
then, USAID's response has evolved to support early recovery while
ensuring that vulnerable people are able to meet their basic food
needs. In addition, as the cholera outbreak stabilized--with declining
overall case fatality rates, a decreasing rate of new cholera cases,
and establishment of cholera treatment facilities and cholera-related
commodities in-country sufficient to meet current needs--USAID began
planning to transition emergency response programs to longer term
programming, integrating cholera treatment into development health
activities.
Question. What are some of the key lessons USAID has learned so far
in the U.S. response to the earthquake? Do these lessons apply to other
situations or are they unique to Haiti?
Answer. An independent team commissioned by USAID to review the
first 6 months of the USG humanitarian response to Haiti's earthquake
issued the following recommendations: structurally strengthen USAID as
the lead federal agency for international disaster response, more
effectively bridge the divide between diplomatic response and
humanitarian relief, establish a USG International Disaster Response
Framework, clarify the role of DOD in humanitarian crises, and more
stringently monitor the impact of assistance funding. The majority of
the recommendations can be broadly applied to USG disaster response
activities worldwide, although the different country contexts will
naturally necessitate different balances of appropriate USAID, U.S.
Department of State, and DOD levels of involvement in each response.
Question. The President's new global development policy seeks a
shared, cooperative approach among donors so that the United States is
not shouldering an overwhelming majority of bilateral assistance to
poor countries. How are you achieving this division of labor and
coordinating effectively with other donors? Similarly, how are you
leveraging partnerships with the private sector, NGOs, foundations, and
diaspora communities to maximize our investments?
Answer. Under the implementation plan for the Presidential Policy
Directive on U.S. Global Development Policy, USAID's role with respect
to division of labor among donors is to:
Track and participate on behalf of the USG in the ongoing
international dialogue on cross-country division of labor;
negotiate for commitment to concrete action in the Busan
(Fourth High Level Forum on Aid Effectiveness) outcome
document;
Create a work plan based on mainstreaming division of labor,
accountability and transparency into the work of the three
technical working groups related to the U.S.-EU summit outcome
on aid effectiveness; and
Provide guidance to the field on participation in joint
assistance strategies and similar framework agreements that
codify country-level division of labor.
In addition, USAID is using its Country Development Cooperation
Strategy drafting and review process to collect information on existing
donor division of labor in-country.
Regarding partnerships, USAID is the recognized leader in
cultivating public-private alliances for development. Since 2001,
through the use of Global Development Alliances and other partnership
models, USAID has generated more than 1,000 alliances with over 3,000
individual partners. USAID has formed alliances with corporations,
private foundations, other donors, philanthropists, NGOs, social
entrepreneurs and diaspora communities.
Partnerships currently leverage approximately $4.20 for each $1.00
of USAID funding, in both cash and in-kind contributions. USAID
currently has 283 active partnerships with a total value of $8.8
billion.
Private sector companies and organizations have proven to be
valuable partners. For example, the Water and Development Alliance
(WADA) is a global partnership between the Coca Cola Company and USAID.
Launched in 2005, WADA addresses a broad range of water sector
challenges in 22 countries around the globe. The WADA partnership
supports customized responses to community water-related challenges in
each country through activities jointly designed and funded by local
USAID missions and Coca Cola system partners.
Similarly, throughout Asia, USAID's innovative public-private
partnership with MTV (through their EXIT Foundation) has leveraged over
$65 million in cash and in-kind resources. The partnership raises
awareness and increases prevention of trafficking in persons across
Asia through a wide-reaching social marketing media campaign. USAID put
$5.48 million into the partnership, which means the partnership
resulted in a match of more than $10 in private resources for every $1
from USAID.
Other donors have also worked in partnership with us. For example,
in Cambodia, USAID leveraged nearly $12 million from DfID, the U.K
Department for International Development, for a social marketing and
behavior change project focused on addressing the needs of vulnerable,
at-risk populations in HIV/AIDS, as well as reproductive health and
child survival. When added to USAID's initial $12.5 million commitment,
this resulted in a $24.4 commitment to the health of the Cambodian
people. Under the partnership, DfID channels resources to USAID and
provides in-kind contributions through commodities. The program has
exceeded targets ahead of schedule, achieving much more than USAID
could have done alone.
In addition, USAID has also forged partnerships with U.S.-based
diaspora communities. In 2010, USAID partnered with Western Union to
jointly fund the pilot African Diaspora Marketplace business plan
competition that awarded matching grants of up to $100,000 to African
diaspora entrepreneurs who had launched small and medium enterprises in
their country of origin.