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Africa, debt relief, international financial institutions, private investment, aid selectivity
Ben Leo is a visiting fellow at the Center for Global Development (CGD) and a member of the Center’s Advisory Group. He currently serves as the Chief Executive Officer of Copernicus.io, an Africa data analytics firm. Copernicus is a proprietary geospatial platform that provides reliable and representative data on almost any customizable geographic area across the African continent.
Until October 2016, Leo served as a CGD senior fellow. His research focused on the rapidly changing development finance environment, with a particular emphasis on private capital flows, infrastructure, and debt dynamics. In addition, he tested a range of new technological methods for collecting high-frequency information about citizens’ development priorities. His research has been cited in leading international and regional media outlets, including the New York Times, Wall Street Journal, Washington Post, Financial Times, Forbes, USA Today, Mail and Guardian, CNBC Africa, This Day, and Daily Nation.
Prior to CGD, Leo held a number of senior roles at the White House, US Treasury Department, the ONE Campaign, African Union, and Cisco Systems.
In this series of briefs, Center for Global Development experts present concrete, practical policy proposals that will promote growth and reduce poverty abroad. Each can make a difference at virtually no incremental cost to US taxpayers. Together, they can help secure America’s preeminence as a development and security power and partner.
What does the 2016 election mean for America’s future position in the world? It’s likely too early to tell at this stage of the campaign cycle. Many of the early Republican contenders — such as Jeb Bush and Scott Walker — have been relatively quiet on foreign policy issues or have focused almost exclusively on Iran, Israel, and Russia. That’s to be expected at this point. Yet, other candidates — like Marco Rubio and Lindsey Graham — are already outlining a more comprehensive vision for advancing American interests. This includes promoting prosperous and stable societies, combatting violent extremism, and opening up new markets for US goods and services. One would expect Hillary Clinton, as a former Secretary of State, to emphasize many of these priorities as well, even if she hasn’t said much yet. Regardless of whoever wins the 2016 election, he or she will inherit the same responsibility: to protect the American people and promote their prosperity. Within that context, US development policies will play a pivotal role.
Please make sure to join us next Monday, July 20, at 3 p.m. for a high-level panel discussion about global development and the 2016 election. The panel will include Michael Elliott, President and CEO of the ONE Campaign; Tony Fratto, Partner, Hamilton Place Strategies and former US Treasury and White House official; Tom Nides, former Deputy Secretary of State in the Obama Administration; and CGD’s President, Nancy Birdsall. Space will be limited, so please RSVP as soon as possible.
The Center for Global Development also will be launching its flagship product, The White House and the World 2016. It includes over a dozen practical ideas for the next US president. They cover a wide array of development issues, such as investment, migration, trade, gender, foreign aid, health, climate, and energy poverty, as well as ensuring that US development institutions remain fit for purpose. Each of these ideas — at little or no extra cost to US taxpayers — can make a major difference. Together, as part of a broader strategic vision of promoting prosperity abroad, they can deliver a more secure future both for Americans and for the world’s most vulnerable people. Hard copies will be available at the July 20th event.
Updated 7/17/15 to add Tony Fratto as a panelist; Steve Hadley is unable to attend.
Congress apparently isn’t getting the data it wants from the Overseas Private Investment Corporation, or OPIC. That makes two of us. The House Appropriations Committee is now calling for OPIC to provide reporting on the volume and destination of all new loans, guarantees, and insurance transactions. The optimist in me sees this as a welcome sign that Congress is focusing more on OPIC’s strategic role within America’s development and foreign policy toolkit. It has long been an under-utilized, highly constrained, and under-appreciated agency. So, shedding more light on what it actually does is a good thing. But, here’s the problem: this report would be confidential, with only authorized Hill members and staff able to see its contents. Moreover, it would only cover OPIC’s inputs (e.g., financing volumes), not what it actually achieves with those resources. The results, not the inputs, are what really matter.
Granted, OPIC is already one of the most transparent development finance institutions in the world. It posts descriptions of all approved and pending transactions on its website. And OPIC publishes an annual policy report, which includes a lot of helpful information, such as data on how its overall portfolio has impacted developing countries and whether project sponsors have complied with OPIC’s environmental and social safeguards. Despite this, OPIC still has a long way to go.
Congress should consider steps to further improve OPIC’s transparency and accountability to US taxpayers. Specifically, this should include project-level information about OPIC’s results. Each year, the agency collects reams of data on all of its projects, like job creation, local procurement, and tax payments. Some of this cannot be released publicly due to commercial confidentiality issues. But, OPIC should find ways to publish as much disaggregated performance data as possible. This will enable Congress, researchers, and other interested parties to identify where OPIC performs well and where adjustments might be needed. Simply knowing where its money is going is not enough.
The Electrify Africa Act, which the House passed last year, called for ‘measurable development impact’ reporting at the project level. Unfortunately, the Senate failed to follow suit. If legislation is reintroduced this year, I hope the earlier transparency provisions will be part of any new package.
The African Development Bank dramatically raised the bar for public accountability and transparency in its presidential selection process by live tweeting the voting rounds last week in Abidjan. It’s already old news then that Akinwumi Adesina, the Nigerian candidate, will be the bank’s next president. Adesina garnered an impressive 60 percent of the regional vote and 58 percent of the total vote of the AfDB’s shareholders.
So what will the institution get with its new leader? You can judge for yourself by watching his performance during the CGD-hosted AfDB candidates forum in April. Although many of his comments were delivered in French, so have your translation software ready if you’re not fluent. Here’s a clip:
As far as vision goes, Adesina offered up an agenda that looks a lot like that of his predecessor, with emphasis on infrastructure, private sector, job creation, and regional integration. This does not represent a radical reset or course correction for the institution. Fortunately, by most accounts none is called for. It’s what the African continent overwhelmingly wants and what the AfDB does well.
There is one question mark though. Beyond the issues mentioned above, Adesina has repeatedly stressed the need for a greater focus on agriculture. That’s no surprise coming from an agriculture minister with a PhD in agricultural economics. And there’s no question that agriculture has been an underperforming sector in most African countries. Yet, beyond financing feeder and trunk roads, the AfDB hasn’t been a particularly big player in agriculture. This might lead to a future clash in priorities. Put differently, how much agriculture minister will stay within him as the AfDB President? Only time will tell.
But Adesina definitely will have the opportunity to make his mark early by shaping the institution through his management and staff selections. With current vacancies and expected departures, and against the backdrop of the bank settling back into its headquarters in Abidjan, the new president will need to make key hires a top priority in the early months.
Ultimately, the bank’s effectiveness and Adesina’s legacy will rest on the institution’s ability to attract, retain, and promote the best and brightest from the region and from around the world. President Kaberuka has helped a great deal by handing off an institution with a strong reputation. But it will be up to the new president to build on that reputation one person at a time. Good luck Mr. Adesina.
After months of delays, Congress is finally moving on the Africa Growth and Opportunity Act (AGOA). Last week, the Senate quietly (and overwhelmingly) passed an unprecedented 10-year reauthorization for this trade preference program. Insiders believe that a similar bill could pass the House soon, perhaps even this week. This is very positive news. At the same time, it’s a missed opportunity to simultaneously outline a clear path towards more mature, reciprocal trade and investment agreements with a range of African countries. However, there is a bipartisan Senate effort afoot, led by Senators Inhofe (R-OK) and Coons (D-DE), which could change this. Their proposed amendment would direct the executive branch to develop a plan for concluding free trade agreements (FTAs) and bilateral investment treaties (BITs) over the next decade, and assessing African countries in terms of readiness. USTR needs just this kind of congressional pressure and political license to move beyond the status quo.
For more than 15 years, the US government has granted duty-free access to America’s multi trillion-dollar economy as a means of creating economic opportunities and incentivizing reforms in Sub-Saharan African countries. Nearly 40 nations are currently eligible for AGOA benefits. Congress has extended and broadened this preference program multiple times with strong, bipartisan support. While AGOA’s overall impact has been modest, it has helped to catalyze private sector-based opportunities in several countries and sectors. It clearly should be extended.
This may have been palatable when AGOA was launched in 1999. Regional GDP was only $370 billion then. Today, it totals nearly $2 trillion. Nigeria’s roughly $600 billion economy alone is larger than Malaysia and Vietnam combined – both prospective new FTA partners.
It’s sorely time to move more strategically toward mature economic relationships with several African countries. Many will not be in a position to do this for some time. But, others – like South Africa, Nigeria, Kenya, and Ghana – are prospective candidates now. If crafted well, trade and investment agreements with these kinds of countries could provide a big boost for America’s development, foreign policy, and commercial objectives in the region.
This is why the Inhofe-Coons amendment could be so helpful. It would apply pressure on the White House and USTR to develop a clear plan of action and to assess individual countries’ readiness. Yet, it also would provide the executive branch with sufficient flexibility to pursue sensible negotiating strategies. It gets the balance about right. This is one reason why organizations like the ONE Campaign and the US Chamber, who have championed AGOA’s extension, also support this general push.
Congress is about to lock down US-Africa trade relations for the next decade. Simply maintaining the status quo would be a missed opportunity for modernizing US-Africa economic relations. As such, Congress should ensure that strategic pressure is brought to bear on the White House and USTR to negotiate more African FTAs and BITs. And, I strongly suspect that the current US Trade Representative, Michael Froman, would welcome the challenge.
Last week, President Obama’s Global Development Council (GDC) released a second report calling for bold, as well as incremental, reforms to “make US development efforts more catalytic and innovative.” This is a high-powered group of outside thinkers and doers, and their recommendations are excellent. At this point, however, it’s unclear whether the White House will act on their advice. The litmus test will be whether the Obama Administration goes big and bold at the Financing for Development Conference in Addis Ababa this July, which arguably is their last real chance to act. If this doesn’t happen, then the GDC members should consider going a little rogue and directly consult with congressional members who could put their recommendations into practice. And, perhaps even the various presidential candidates who hope to succeed President Obama in 2017.
The second GDC report lays out a number of compelling ideas whose time has finally come. They endorse recent proposals for a US Development Finance Bank, which would consolidate existing US development finance tools into a financially self-sustaining, results-based institution. They call for greater support for social impact investing. And, the GDC encourages USAID and other aid agencies to embrace outcome-based financing models, such as Cash on Delivery. Their report includes ideas for improving resource mobilization in developing countries, such as increasing tax collection, improving customs systems, and combatting international tax evasion. My colleague Frances Seymour was also pleased to see the emphasis on deforestation.
These are bold recommendations that would further modernize US development institutions and approaches. Yet, the White House fact sheet did not even “welcome” or publicly “acknowledge” the Council’s latest report. There are only two dry paragraphs on the Council’s creation and its latest set of thematic recommendations. Following that, there are six pages of the Administration’s accomplishments in the development space. The message seems to be – we’ve already covered all of the Council’s recommendations. In other words, there’s nothing else to see here folks, so please move along.
Granted, the Obama Administration has launched some innovative initiatives, such as Power Africa and the Global Innovation Fund. It also has implemented a number of institutional reforms, like USAID Forward. But, there is a lot of work that remains undone. As noted, perhaps the White House is just holding its fire for Addis Ababa. I sure hope so. But, if that isn’t the case, then it might be time for GDC members to go a little rogue. Better that than letting their report collect dust somewhere in the West Wing.
Yesterday the UK government formally launched its much-awaited Energy Africa campaign, which aims to accelerate electricity access for rural Africans. In a surprise move, DfID’s new plans include only support for small-scale solar power solutions. Typically these systems provide just enough power for a LED light bulb or two and a cellphone charger (see here and here for a few DfID favorites).
That is hardly transformational access. Granted, it could have an incremental impact at the household level. A little electricity is better than none. And replacing expensive and polluting diesel generators with clean power is a good thing. Beyond this, however, DfID seems to have been captured by the environmental NGOs’ narrative about leapfrogging over traditional energy systems and meeting the need for transformational energy access with renewable off-grid solutions. The reality is that most people want access to “real electricity” that can at least power appliances like televisions, fans, radios, and perhaps even a small business. By that, they usually mean a reliable and affordable connection to the national grid.
Based on the DfID press release, the Energy Africa campaign will focus on two overlapping tracks in 14 target countries:
(1) Removing policy and regulatory barriers to market expansion, and better coordinating donor sector-level support;
So, what would targeted beneficiaries think about this new campaign? A recent CGD energy access survey of over 2,000 Tanzanians – the country that supposedly inspired Energy Africa – may give us a clue (see methodological note below). This survey was broken into two branches – those with a grid connection and those without one. For those with a grid connection, we asked about things like electricity usage patterns, frequency of power outages, and satisfaction with service quality. For those without a grid connection, we asked a different series of questions. Such as whether they rely on a generator, have access to other energy sources like solar power, and whether they want a connection to the national grid.
The results are very striking, and likely instructive for actors like DfID. Especially when it comes to those who “have access to electricity outside of the national grid, such as solar power, that is not provided by a generator.” Amongst this group of respondents (N=378), nearly half still want a national grid connection “very much”. Another 40% want a connection “a little”. Taken together, roughly 90% of them want a grid connection even though they already have access to alternative sources of electricity. We find even more striking results in Ghana, where roughly 70% of these types of respondents want a grid connection “very much”. Now, we don’t know whether these people are accessing the types of household solar solutions that DfID plans to support. Nonetheless, the response rates are very, very high.
If nearly everyone wants grid-based power, then what is stopping them? Roughly one-third of surveyed Tanzanians, and one-quarter of Ghanaians, do state that the grid is too far away. However, most of the remaining Tanzanians raise a different challenge – such as usage costs, connection fees, or utility delays. Why wouldn’t DfID focus on solving these problems while simultaneously pushing household solar as a stopgap measure for those who want it?
Greatest Obstacle to Accessing New Grid-Based Power, Tanzania
In your view, what is the greatest obstacle to your household having such a connection?
If you would be unable to pay for the electricity
If you would be unable to pay for the initial connection fee
If the power company would take too long to connect to your house
If you don’t have an electrical grid near your house
If you prefer to rely on other sources of electricity
If you have a different obstacle that prevents your household from having a connection
I honestly expected more from a premier development agency like DfID. Yes, there is pressure ahead of the Paris Summit next month. And yes, environmental groups are strong in the UK. But so is the development expertise and capacity of DfID staff. They know that there are no silver bullets for big development challenges. And the leapfrogging narrative just does not match the reality on the ground – both in terms of what people really want as well as how to get there. Yes, solar-based power systems can be an important part of the broader solution; they just can’t be the solution, even for most rural Africans without existing grid access.
Now, there is a constructive way forward. DfID could build upon Energy Africa and announce plans to support a range of other power generation, transmission, and distribution solutions. This could even simply mean seamlessly incorporating the new campaign into DfID’s existing energy programs in the region. While far from perfect, President Obama’s Power Africa initiative could provide a blueprint. Namely, how its ‘Beyond the Grid’ program and solar investments are just one component of a broader sector-wide approach across the continent.
**Methodological Note – The referenced survey was conducted between 26 June and 2 July 2015. The sample includes 2,046 phone owning Tanzanians over the age of 15, which were randomly selected and interviewed in Swahili and English. The survey used interactive voice recognition and random digit dialing (RDD) techniques. The sample was compared and weighted to known population parameters, which suggest an estimated sample error of +/- 5.74 percent. The full results will be released alongside a CGD analytical product.
The imperative for US development finance has increased significantly due to a number of factors over the last decade. There is growing demand for private investment and finance from businesses, citizens, and governments in developing countries. Given the scale of challenges and opportunities, especially in promoting infrastructure investments and expanding productive sectors, there is an increasingly recognized need to promote private sector-based solutions.
Ghana’s recent recalculation of its GDP led to an overnight $500 per capita jump, putting in motion unexpectedly rapid graduation from the International Development Association (IDA) and ultimately a new relationship with the World Bank. In this week’s Wonkcast, I speak with Todd Moss, vice president for programs and senior fellow at CGD, about his recent trip to the newly categorized lower-middle income country, the implications of IDA graduation, and a sudden influx of oil wealth.
Why Ghana? Todd explains that the country was the first country in Sub-Saharan Africa to gain independence from colonial rulers after World War II and a pioneer in making the transition to a stable democracy. Many in Africa and elsewhere therefore look to Ghana as a harbinger of things to come for the region. Graduation from IDA may be similar in this way, since many African countries are enjoying moderate-to-high sustained growth and will soon breach the IDA income ceiling of $1,175 GDP per capita.
As an IDA graduate, Ghana will soon lose access to the highly concessional IDA loans, with their long grace periods and extremely low interest rates. Instead, Ghana will rely more on international markets and the IBRD, the bank’s hard loan window, which offers terms that are closer to internationally available commercial credit. And, Todd adds, Ghana will need to pay back outstanding IDA loans at an accelerated rate.
“I don’t think Ghana has realized the implications of this yet,” Todd says. “I was surprised when I was in Accra that people had not discussed this with the World Bank and the bank hadn’t raised this with finance officials. So, one of the things I hoped would be an outcome of my visit is that this would start to be discussed so that the government could understand the implications.”
I ask Todd if accelerated loan re-payment and higher interest rates on IDRB loans will place Ghana in a financial bind. He replies that Ghana’s new influx of oil revenues will cushion these effects. While Ghana does not rank among Africa’s top ten oil producers, starting in 2013 oil revenue will be about 1.5 billion dollars per year– the equivalent of what the country receives annually in aid.
Oil rich countries often suffer from high poverty and endemic corruption—the so-called “oil curse.” To combat this trend, Todd and others are urging direct distribution of some or all of the oil proceeds, with the government then taxing back part of it. This Oil2Cash approach is designed to encourage accountability and transparency. Todd had hoped that Ghana might try the new approach. Instead the government has opted to spend most of the funds on roads, ports and other infrastructure.
"Spending most of the oil money on big infrastructure makes sense in one way,” explains Todd, since there are genuine needs. “But if there was one sector you wanted to spend a lot of money in if you were trying to fuel corruption and waste, it would probably be large construction projects. It's a little bit worrying. “
On the bright side, Todd says, people in Ghana are engaged in a wide-ranging debate on public policy. NGOs, civil society, and government have been participating in a lively circle of discussion. Todd has special praise for the Institute of Economic Affairs, his host while he was in Accra, which during the last election hosted a debate by the four candidates running for president.
We conclude with discussion of the impact on the World Bank of the large number of countries poised to graduate from IDA, a topic Todd and co-author Ben Leo explored in a recent CGD working paper and the focus of a CGD working group that recently had its first meeting. Want to know more? Listen to the Wonkcast!
While I was plowing through Morten Jerven’s enlightening book Poor Numbers last year, my mind concentrated on Nigeria. It stayed with Nigeria. At that time, I was consumed with figuring out what on earth was going on with Nigeria’s poverty figures. How was it possible for the country to experience growth in both its GDP and extreme poverty rates at the same time? It didn’t seem to add up. I could imagine a scenario whereby Nigeria’s elite was capturing the majority of the economic gains. But, how could that lead to more Nigerians living in extreme poverty – both in relative and absolute terms?
After reading Jerven’s book, I stopped my quest for answers. It appeared that all, or a good deal, of the publicly reported statistics were rubbish. His argument was as shocking as it was convincing – bad Nigerian GDP and population data was being used to produce even worse estimates for things like poverty rates. Worse, this game had been going on for a very long time. Until the Nigerian National Bureau of Statistics produced more current and accurate statistics, it was a fool’s errand to look for answers that simply couldn’t be found.
This past Sunday (April 6), the Nigerian authorities finally provided new, rebased GDP statistics after three years of suspense. It turns out that Nigeria’s economy was actually nearly 90 percent larger than previously thought. As expected, this has set off a flurry of media attention. Disappointingly, most of it has focused on Nigeria surpassing South Africa as the region’s largest economy. That’s simply the surface story. There are many, much more fundamental stories that aren’t being reported. Here are three that deserve more attention, both now and in the future.
1) We need to revisit what we think we really know.
Thousands of econometric studies about Sub-Saharan Africa have included GDP or income per capita data as a factor, whether they’re on the left- or right-hand side of the equation. Following Nigeria’s 89 percent GDP rebasing, Ghana’s 60 percent adjustment in 2010, Zambia’s 25 percent adjustment earlier this year, plus more coming soon, we need to reconsider how well these past studies have actually captured the reality on the ground. This should send shock waves and cold shivers through the research community. It raises fundamental questions about the explanatory power of studies related to almost every development, financial, or economic issue. My prediction is that we’ll soon see a wave of entrepreneurial young economists replicating seminal papers with more updated data. And that’s probably a good thing.
2) Nigeria’s social spending levels are even worse than we thought.
Before the GDP re-basing, Nigeria had some of the lowest social spending levels in the world. Well, those government spending levels, when measured against GDP, just got a whole lot worse. For example, public health spending equaled only 1 percent of GDP in 2011 (not the 2 percent we thought). And we still have no clue about public education spending because the Nigerian government doesn’t publish those figures. This is the sub-story of Nigeria’s alarmingly low tax mobilization base, which at 10 percent of GDP, is one of the lowest in the world.
3) As a middle-income country, Nigeria will quickly graduate from access to concessional financing.
Nigeria’s access to cheap financing from the African Development Bank, World Bank, and many other development agencies will come to a rapid end. Its per capita income now vastly exceeds the MDBs’ concessional cutoff ($2,700 versus $1,200) and has ready access to international credit markets. My colleague, Todd Moss, wrote about a similar implication for Ghana after its GDP adjustment in 2010. Since Nigeria has very low public debt levels (11 percent of GDP in 2012), it has plenty of borrowing headroom. However, the terms of that borrowing are about to get a lot harder, which will need to be watched more closely than in the past.
Update: This week, African officials, businesspeople, and non-profit organizations are gathered in Abuja for the Africa World Economic Forum. Several of the formal discussion sessions will focus on ways to diversify sources of development finance, including through improved domestic resource mobilization (e.g., tax policy and efficiency).
Following its recent 90 percent GDP adjustment, Nigeria is now a solidly middle-income country. With an income per capita of $2,700, it now stands alongside countries like the Philippines and Morocco. Not exactly a rich country per se, but with a GDP of roughly $500 billion, it’s far from an impoverished one in terms of national resources. With donors providing $2 billion a year in aid to Nigeria, this raises the natural question: If Nigeria is significantly wealthier than previously thought, then should we still be providing large-scale assistance there?
This is a big question – not just for Nigeria, but other countries like Pakistan that have sizable pockets of poverty but abysmal local tax collection rates. In these countries, the US and other donors should be focusing much more on helping to unlock vast domestic resources than continuing to finance the direct delivery of social services.
Here are two figures that highlight the untapped potential in Nigeria:
(1) An additional $67 billion could have been mobilized last year, if the Nigerian government’s revenue ratios matched its African peers.
According to IMF estimates, the median African country had a revenue-to-GDP ratio of just under 25 percent in 2013. By comparison, Nigeria’s ratio was a paltry 10 percent of revised GDP figures (down from 15 percent the previous year). Only the Central African Republic has a lower ratio. If its tax collection efforts yielded the same as the median Sub-Saharan country in relative terms, then an additional $67 billion could have entered the Nigerian government’s coffers. That is an eye-popping 33 times greater than donors’ total aid disbursements to Nigeria in 2012.
(2) An additional $11 billion could have been mobilized for life saving programs if Nigeria matched its African peers’ revenue ratios and met its own health spending commitments.
In 2001, the Nigerian government – along with other African nations – committed to spend 15 percent of its budget to combat HIV/AIDS, malaria, and other pressing health needs. This was the African Union’s Abuja Declaration. According to the World Health Organization, the Nigerian government spent roughly $4.5 billion on health in 2012, or nearly 7 percent of its total budget. If it met its own Abuja commitments, then an additional $5 billion would have been mobilized for the fight against HIV/AIDS, child and maternal mortality, and other pressing needs. This is more than 5 times greater than donors’ total health disbursements that year. Now, if Nigeria mobilized the same comparable level of revenues as the median Africa country and met its Abuja spending commitments, then it would have spent $11 billion more on health priorities. That is 12 times greater than donors’ total health assistance to Nigeria in 2012.
The tremendous untapped resources aren’t lost on the Nigerian government either. Finance minister Ngozi Okonjo-Iweala has stated that closing gaps in non-oil tax collection present “significant opportunities for raising revenues for development financing.” Moreover, she welcomes greater outside help through support for audits that show who’s not paying their taxes and for Nigeria’s under-resourced Federal Inland Revenue Service.
So, has the US been helping? Not especially. Out of the $3.3 billion in total US aid disbursements to Nigeria over the last decade, only $2 million focused on improving its public finance management (which includes tax policy and administration). Instead, the US has continued a near singular focus on social sector spending, particularly on combatting HIV/AIDS – despite the fact that helping the Nigerian government raise more revenue could increase total health spending by an order of magnitude. USAID hopes to do more in this area, but will need greater support and flexibility from Congress.
It’s time for more US policymakers and development advocates to start championing this agenda. Improving tax collection and efficiency isn’t sexy, but it does present the biggest opportunity to mobilize greater resources for development priorities – whether it’s the fight against HIV/AIDS and malaria, providing quality education, or improving infrastructure. It’s the tide that could lift all boats, which should excite every development constituency in Washington.
There is a growing paradox on the US aid transparency front. The US government is simultaneously home to the world’s most open and most opaque development agencies. And the chasm between them has grown wider over the last year. That’s our main takeaway from Publish What You Fund’s (PWYF) latest Aid Transparency Index rankings of 67 major donor organizations.
Transparency matters. It helps recipients and contributors alike to hold donors to account. And it helps everyone learn – it is very hard to know if aid is working if you don’t know where it is going and what it is meant to do. Transparency across agencies and through the entire chain from contributor to beneficiary is even more powerful. Take two recent examples: DFID’s development tracker, which allows you to follow the chain through for at least one agency, compared to the international aid effort to Haiti, where it is simply impossible to follow the chain down and immensely complicated to aggregate data across agencies (ask Vijaya Ramachandran and Julie Walz if you are in any doubt).
Publish What You Fund ranks agencies both on what information they publish on their work and how they publish it – top marks go to agencies that publish both a lot of good quality (machine readable) data and do so according to internationally agreed (IATI) standards that make it easy to use and compare.
Here’s a snapshot pulled from PWYF’s new report, which shows how the US government’s five largest aid agencies (and one initiative) stacked up against their bilateral and multilateral peers.
Note: We've circled the five US agencies and one initaitive surveyed in this year's Index to highlight where they rank.
Using PWYF’s 2013 Index, we’ve designed our own extremely modest scheme for classifying US agencies’ performance into the good, the bad, and the ugly (see table at the bottom).
The Good – MCC, USAID, and Treasury: Amongst US agencies, the MCC is in a category of its own – now ranking as the most transparent development organization in the world. It got there by taking deliberate steps to improve both the scope and quality of its data publications (see their Open Data Catalog). Compact and project information is now available in IATI XML format and includes a number of “added-value” fields. The latter go above and beyond what the US government promised in its implementation schedule last year. So, a hearty congratulations to the dedicated MCC staff that delivered this impressive achievement. It is a point of pride and something to protect next year.
USAID and Treasury also improved their Index rankings this year by publishing data in the IATI format, jumping 5 and 15 spots respectively. USAID further benefitted from its publication of over 50,000 transaction records, which provide a more granular view of its assistance efforts. But as we’ve mentioned before, there’s a big difference between “data dumping” and providing user-friendly information for development stakeholders’ consumption. High quality data means meeting the entire IATI standard – including activity budgets, accurate sector and project titles, and clear links between financial data and actual projects. USAID is definitely moving in the right direction, and for that, they get a “good” ranking. But, there is still a lot of room for improvement looking ahead to PWYF’s Index next year.
The Bad– DoD and State: The Departments of Defense and State remain lackluster contributors to the USG’s aid transparency efforts. Both have published minimal (and aggregated) data to the Foreign Assistance Dashboard and IATI. Defense has at least upped its ranking over the past year, while State has hardly even managed that – particularly disappointing since it has the interagency lead on aid transparency and manages agencies’ Foreign Assistance Dashboard and IATI submissions. Meeting the US IATI implementation schedule is now largely contingent on State adding its data to the mix. Hopefully the folks at Foggy Bottom will put their foot on the accelerator this coming year and jump the bureaucratic speed bumps that are slowing them down.
The Ugly– PEPFAR: While PEPFAR has posted its country operational plans and results for years, there is shockingly little information available at the project level. As one of the most important US aid programs, it’s alarming that this information is not made available in machine-readable format. And that researchers, like our colleague Victoria Fan, must spend hours and hours manually reviewing available documents in an effort to shed light on PEPFAR’s financial flows. With PEPFAR facing its reauthorization, it should take concerted steps now to open its books to US taxpayers, developing country officials, and its ultimate beneficiaries.
Note: The Index's indicators and scoring methodology were revised in 2013. The number of donor organizations surveyed was also reduced. Comparisons bewteen 2012-2013 scores and ranks should take these changes into consideration.
As the Obama Administration pauses to assess its progress so far, there is a lot to be proud of. Yet, there remains a lot of terrain to traverse and a broad chasm separating individual agencies efforts that must be closed. Even the current IATI implementation schedule is slipping, despite the impressive efforts of several agencies like the MCC. Looking ahead, we’re hoping the Administration will breathe more life into its well-intentioned efforts. That could happen if the government issued a commitment to the full IATI standard.