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Results Not Receipts explores how an important and justified focus on corruption is damaging the potential for aid to deliver results. Noting the costs of the standard anticorruption tools of fiduciary controls and centralized delivery, Results Not Receipts urges a different approach to tackling corruption in development: focus on outcomes.
Ambassador Mark Green—President Trump’s pick to lead the US Agency for International Development (USAID)—is slated to appear before the Senate Foreign Relations Committee for his nomination hearing on Thursday morning.
Green’s nomination was heralded by many in the international development community, who know his extensive development experience and orientation toward smart reform. While his qualifications are not in dispute, Green is likely to face questions from lawmakers about how he’ll position USAID for success, in light of massive budget cuts proposed by the administration and ongoing discussions of potentially major reorganization.
Drawing on themes of efficiency, effectiveness, accountability, and results, here are a few questions we’d pose to Ambassador Green (and a few of the things we’d love to hear in response).
How can USAID plan for sustainable engagement with partner countries over the medium to long term?
The administration proposed deep funding cuts that, if enacted, would appear to force the near-term closure of several USAID missions. Lessons from previous mission closures suggest hurried deadlines that leave insufficient time to develop a transition strategy in consultation with partner country and US interagency stakeholders can damage bilateral relationships and compromise US interests. Not only that, mission closures are costly in the short-term, so decisions to close that are revisited shortly thereafter (witness the reopening of the closed mission in Tunisia, for example) can be deeply inefficient. That said, USAID can and should do more to plan for what US engagement, in its set of partner countries, should look like over the medium to long-term. In some cases, especially among middle-income partner countries, that planning should consider shifting away from bilateral grant assistance. As part of prioritizing where USAID spends its grant resources and planning for how longer term US engagement should look, Green should reject hasty decision-making in favor of strategic processes that involve deep participation of partner country and interagency stakeholders. For countries under consideration for reduced grant-based assistance, we hope he will encourage missions to explore approaches and tools that help transition countries to a new kind of partnership. Avenues for engagement that move beyond traditional grant-based financing could include trade promotion, loans, and other sources of US development finance.
USAID has made significant progress toward greater accountability through transparency over the last two administrations. What will you do to build on that progress?
When Publish What You Fund first started measuring donors’ progress on transparency in 2011, USAID was in the bottom quartile of the evaluated agencies. By 2016 it ranked better than half of the 46 global donor organizations—a commendable jump in a fairly short time.
Green has an excellent opportunity to build upon recent momentum toward greater transparency by committing to publish USAID’s contracts. The benefits include shortening the chain of accountability, increasing the likelihood that contracts are in the public interest. It can also increase the quality and competition for contracts and has the potential to save the government money and prevent corruption. As our colleague Charles Kenny points out this is totally doable—in fact, other countries are already onboard.
Even short of agreeing to publish USAID contracts, Green could do more to ensure data on USAID contracts and their implementation is made available to the public. Under the Federal Funding Accountability and Transparency Act of 2006, prime awardees of USAID contracts are required to report first-tier subawards, but that information isn’t published in any comprehensive way. (This is a big reason our colleagues had such a hard time tracking aid money that went to Haiti after the 2010 earthquake.) Green could take a small but meaningful step toward greater transparency by ensuring data on USAID subcontractors is made publicly available.
How will you work to institutionalize learning and evidence-based programming to maximize the potential for delivering results?
Both of the last two administrations have made concerted efforts to make US foreign assistance a more evidence-based enterprise. Important steps have been taken to increase evidence-based program design and to track and measure the outputs, outcomes, and impacts of US foreign assistance programs. Working with a strong policy foundation, Green could redouble USAID’s commitment to evaluate and learn from its programs and apply that learning (as well as external evidence) to future project design and implementation. The agency, with Green at the helm, also has the opportunity to develop leadership in emerging approaches in evidence-based programming. One interesting opportunity USAID has so far left on the table, is to pilot programs that disburse funds upon the achievement of outcomes. By exploring innovative approaches—such as cash on delivery and development impact bonds—the United States’ largest aid agency can ensure value for money from our aid dollars by paying only when development outcomes are achieved. And, again, the road is not untested. Rather than paying for textbooks, school construction, or teacher training, the UK’s aid agency committed to support education progress in Ethiopia by agreeing to pay a fixed amount for each additional student above a baseline to complete grade 10 and sit for the final exam. The same approach can be applied to sectors beyond education. The agency could agree to pay for each additional household and business with access to reliable electricity, or for decreased travel time and costs across a commercially valuable transit route. Let’s hope Green is willing to give it a shot.
How will you ensure that USAID's emerging "policy voice" doesn't disappear amidst budget cuts and structural changes?
Despite being the largest bilateral aid provider in the world, USAID has long suffered under an inferiority complex in relation to other aid agencies, particularly the UK's Department for International Development. In large part, that reputation came from being known more as a procurement agency than a development policymaker. Fortunately, the agency has made important strides in more recent years toward a robust internal policy function and a strong policy voice within the US government and in multilateral settings. It remains important for US interests around the world to have USAID at the table, helping to shape policy informed by experience on the ground. Policymakers at the State Department or Treasury typically lack an on-the-ground development perspective. And, if confirmed, it will fall to Green to ensure USAID continues to fulfill this important role. A US government foreign policy that lacks USAID’s vital input, whether pertaining to a country relationship or a multilateral set of issues, will be weaker and less effective as a result.
In your view, what is USAID’s comparative advantage vis-à-vis other US departments and agencies working to deliver US foreign assistance?
There are many US institutions involved in foreign assistance. (You can read more about the roles of a few key players here.) Members of the committee are likely to seek assurances from Green that he will provide a strong voice on development and humanitarian issues in any conversations on government reorganization. His approach to this will depend on how he views USAID’s role in the development and humanitarian landscape. Having served two stints on MCC’s board, Green will have a particular advantage in explaining USAID’s role relative to that of the Millennium Challenge Corporation whose model inherently limits its scope. But it will be critical for him to articulate USAID’s strengths and ensure that any reorganization seeks to capitalize on those.
As we mark World Refugee Day, it is increasingly clear that there is a desperate need to fill the gap between short-term humanitarian response and long-term development need. Jordan’s Minister of Planning and International Cooperation Imad Fakhoury and CGD senior policy fellow Cindy Huang join the CGD podcast to discuss an innovative solution: refugee compacts.
“Twenty percent of our population is made up of Syrian refugees,” Jordan’s Planning Minister Imad Fakhoury tells me in this edition of the CGD Podcast. His estimate is twice the official count from UN agencies, and is based on his country’s last census. “There are villages and towns in the north and the center where the number of Syrians is higher than the number of Jordanian citizens living there, so it makes it very difficult to maintain social cohesion.“
Jordan’s response has been to innovate, through piloting a more integrated approach to refugee response called a compact—an agreement between host and donor governments and humanitarian and development actors. Compacts acknowledge that traditional short-term approaches to humanitarian crises—for example, refugee camps and emergency hand-outs—are no longer appropriate when 65 million people have been forcibly displaced, and the average duration a refugee stays away from home is ten years.
As we mark World Refugee Day, it is increasingly clear that there is a desperate need to fill the gap between short-term humanitarian response and long-term development need. CGD senior policy fellow Cindy Huang, along with IRC’s Nazanin Ash, are authors of a joint report between the two organizations that looks at how compacts of the type pioneered in Jordon, and in Lebanon, can be used more widely to address this gap.
Minister Fakhoury and Cindy Huang join me for this podcast. Click below to hear some results from Jordan’s refugee compact experiment.
Secretary of State Rex Tillerson is likely to face some tough critics when he heads to Capitol Hill this week. In his first appearance(s) before Congress since his January confirmation hearing, Secretary Tillerson will have the unenviable task of defending a deeply unpopularFY2018 budget request for international affairs.
Despite promises of continued support for national security and economic priorities, the administration’s proposed budget takes an axe to foreign aid—leaving plenty of questions about how to reconcile the narrative and dollar figures. But with four hearings scheduled over two days, lawmakers may just have a chance to ask them.
Here are a few big picture issues (of many) that deserve greater scrutiny.
Prioritizing near-term foreign policy objectives over sustainable development
The budget’s rhetoric emphasizes the administration’s desire to allocate foreign aid in service of achieving US strategic and security objectives, which include building markets for US businesses and fighting violent extremism. And in key ways, rhetoric matches reality in this budget, whether in the wholesale shift in programming from the development oriented budget accounts to the strategically-oriented Economic Support Fund (newly rebranded as the “Economic Support and Development Fund”), or the full protection of support for Israel and Egypt amidst deep cuts nearly everywhere else. Using development assistance to accomplish near-term foreign policy goals isn’t new, but when aid has mixed objectives political or security needs frequently override development considerations. This can lead to tensions in program design and implementation—where the focus on achieving actual development outcomes gets blurred.
In fact, when the George W. Bush administration and Congress teamed up to establish a new aid agency focused on results—they deliberately insulated the agency from political interference. Secretary Tillerson praised the Millennium Challenge Corporation (MCC) during his January testimony. He should acknowledge that one of MCC’s key strengths lies in its ability to target assistance to promote economic growth without pressure to fulfill other objectives.
Furthermore, to the extent that private sector activity is the key to sustained growth—both at home and abroad—it makes zero sense to kill OPIC, especially since it expands opportunities for US businesses.
Targeting assistance to maximize efficiency
While not a popular subject, the issue of aid selectivity is one that deserves attention. In a joint CGD-Brookings effort to measure the quality of official development assistance (QuODA) donors earned higher marks for focus and specialization by country and sector. This is consistent with the aid effectiveness literature which suggests donors can maximize impact through targeting assistance to reflect their comparative advantage rather than risk fragmentation or programs that are spread too thin. And yet there is little in this budget to suggest that evidence of effectiveness or comparative advantage was used to guide the decision-making that produced such deep cuts. The budget request would reduce the development aid budgets of 46 countries by more than 60 percent (see map below), absent anything other than a broad, topline justification. And the request would slash spending for global health—where we have some of the best evidence of successful interventions—by more than a quarter.
An ounce of prevention is worth a pound of cure
Amidst four looming famines and the ongoing refugee crisis in Syria, the budget request proposes deep cuts to humanitarian funds, including life-saving emergency food assistance. Where Congress has increased appropriations in recent years to address these realities, under the administration’s budget the US response would come up short.
And while the situations referenced above are caused by a complex set of political factors rather than food shortages alone, the administration’s budget also ignores an age-old adage by reducing US assistance designed to mitigate other causes of hunger. USAID’s Bureau for Food Security (BFS) works to bolster agricultural production—achieving higher yields and bringing drought and flood resistant crops to regions susceptible to such conditions. And in particularly vulnerable areas, US investments include pre-programmed response tools. Under the administration’s budget, BFS would lose 70 percent of its funding compared to FY2016. And the development assistance account—the largest source of funding for agricultural development initiatives in recent years—suffers a proposed cut of nearly 45 percent as part of its merger into the Economic Support and Development Fund. These cuts are short-sighted.
In addition to being called upon to explain massive spending cuts, Tillerson is likely to face questions about the structure of the institutions tasked with delivering US foreign assistance. Check out the questions my colleagues would pose of any reorganization plan or effort. Needless to say, we’ll be watching closely to see what gets asked—and answered—in the days ahead.
Thanks to Jared Kalow for the interactive map and chart.
Two bills just introduced in the Senate and the House, both called the Economic Growth and Development Act, take on a central challenge in US development policy and programs: lack of collaboration to mobilize private investment among the 12 departments, 26 agencies, and more than 60 federal government offices involved in delivering aid. We lack a strategy and process that make the whole greater than the sum of the parts. While Power Africa aims to bring together the whole toolkit, it is an exception. In this era of intense fiscal strain, we can ill afford inefficiency, weak results, fragmentation, or duplication. The ultimate and optimal solution may turn out to be some merging of agencies and functions. But even with reform of the architecture, it will still be essential to make the gears mesh with less friction.
The bills are timely, practical proposals grounded in two widely agreed imperatives: (1) promoting sustained and sustainable growth as the strongest long-term driver of poverty reduction, and (2) multiplying the force of aid dollars by using them to mobilize private finance for development. At the moment, the US development architecture is not set up to concentrate resources and efforts in the service of either purpose. (There are, of course, other core aid imperatives—such as aid for health and humanitarian purposes.)
The budget for MCC, the only US agency with a singular focus on growth for reducing poverty, is about 3 percent of bilateral US aid. (This excludes US multilateral contributions such as the funding for the international financial institutions that are more focused on growth.) OPIC needs to be bigger and better (e.g., given authority to keep some of its earnings and make equity investments) to mobilize more private finance, as my colleagues have consistently argued.
Why cooperation matters
But the solution is not simply to make MCC and OPIC bigger. To have real impact in making markets and sectors investable, especially frontier markets, it is essential, as I saw repeatedly during my time at MCC, to combine project finance with support for changes in underlying market conditions. Market conditions here encompass a broad range of factors: policies, laws, and institutions; infrastructure; available skills; innovative business models and technologies; and new, or better access to, financial instruments.
Let’s say the United States decides—as a priority for security, development, and humanitarian reasons—to undertake a large-scale rural development initiative in a country or countries in sub-Saharan Africa. Such an initiative would need private as well as public investment. Making agriculture in rural areas investable might ideally require irrigation infrastructure, organization of water user groups, farm-to-market roads, farmer training and organization into producer groups, finance for the producer groups, storage and processing facilities, land titling, renewable energy investment to raise farmer productivity, and microcredit or microinsurance for the famers. No one agency has the tools, expertise, or partners to take on all these activities. But coordinated and coherent efforts across agencies could together achieve the transformative, sustained and sustainable impact that remains so elusive in much of development.
The House and Senate bills seek to knit agencies together by requiring a common strategy for mobilizing private investment; common country, sectoral, and global targets for private investment facilitation and coordination; common diagnostics for the constraints to growth and investment; a common monitoring and evaluation framework; one point of contact with private sector entities interested in partnership opportunities with US aid agencies; and defined roles and responsibilities for each agency involved in meeting targets. These elements taken together would be significant drivers of collaboration and would build on and enhance approaches taken in previous efforts like Power Africa, Feed the Future, and Partnership for Growth.
Two more success factors
But experience demonstrates that there is a tendency for agencies to respond to such requirements by continuing business as usual and focusing their efforts on repackaging existing programs into the new framework in a way that allows them to count as much as possible as contributing to the goals.
Two thoughts on governance and resources may help change that dynamic and incentivize agencies to prioritize collaboration. First, the effort needs a specially designed governance structure. An ordinary interagency process, pulled in many different directions not related to these aims, will not suffice. A strongly empowered public-private finance coordinator should be appointed to work with a purpose-built interagency board of senior development leaders. The coordinator is probably best placed at the National Security Council to elevate the role and avoid capture by any particular agency. The coordinator and the board should be given authority to:
decide countries of focus based on a set of clear criteria, including country strategic importance, private sector interest, and recipient government willingness to put in place needed policies;
ensure that the different agency activities fit together in a coherent whole that effectively addresses the identified constraints to growth;
monitor implementation performance, with the ability to direct and oversee solutions or course corrections that address emerging problems.
Second, the coordinator needs a dedicated pool of grant resources to allocate to different agencies to perform particular functions essential to the overall success of the effort. The pool need not be large. Rather, its purpose is to fill small finance gaps that can unlock larger agency efforts as well as private finance. Such gaps could include funding for growth constraint diagnostics, early project development and due diligence, transaction advisors, or building necessary public-private partnerships. The idea is to incentivize agencies to prioritize this set of activities and give them some of the early-stage resources needed for success.
We should not underestimate the constraints that agencies face under their statutes and in the context of earmarking that limits their flexibility to respond to new mandates. But the valuable proposals in the two bills, reinforced by these suggestions, could motivate agencies to see collaboration as a benefit rather than a burden.
Note: The Senate bill was introduced by Senators Johnny Isakson (R-GA), Chris Coons (D-DE), and David Perdue (R-GA). In the House, the measure was sponsored by Representatives Ted Yoho (R-FL), Adam Smith (D-WA), Adam Kinzinger (R-IL), Bobby Rush (D-IL), Thomas Rooney (R-FL), Keith Ellison (D-MN), and Jared Polis (D-CO).
A Global Skills Partnership combines training funded by donors with pre-agreed arrangements for qualified graduates to work temporarily overseas, usually in the donor country. This paper shows through one hypothetical example how a GSP for a specific sector (nursing) financed by a specific donor (the UK) delivering training in a specific country (Malawi) addresses critical nursing shortages in both countries.
The Trump administration’s first budget deals a harsh blow to the international affairs budget. With a topline reduction of 32 percent, few programs avoid cuts. One that fares relatively well, however, is the Millennium Challenge Corporation (MCC). Though the $800 million request is the lowest in the agency’s 15-year history, and—if enacted—would be its lowest-ever appropriation, it represents a cut of just 12 percent over last year’s enacted level. Compared to the 25 percent (and greater) reductions to global health and other mainstay development-focused accounts, MCC’s 12-percent trim is about as good an outcome as can be expected.
MCC Budget Summary (USD millions)
The budget request for MCC is not terribly surprising given historically solid Republican support for the President George W. Bush initiative that rewards good governance, emphasizes mutual accountability, and promotes private sector-led growth. Indeed, some conservative camps have sought to elevate MCC to be the US government’s lead foreign aid agency, a proposal that—while commendably based on a spirit of aid effectiveness—would be both impractical and counterproductive. In fact, a relatively small cut to MCC’s budget is almost certainly a better outcome for the agency than a massive increase.
That said, the cut, if enacted, will impact MCC programming. I’ve never subscribed to the “bigger is better” theory for MCC. Indeed, program quality, including the likelihood that interventions will efficiently address constraints to growth, and—ultimately—program results are more important than dollars spent. Investments must also be sized to be implementable by the partner country within MCC’s fixed five-year window. Nevertheless, there is a risk that budget constraints will force MCC to leave good projects on the table. What’s more, there’s some sense that an investment must be “big enough” to get the necessary attention from a partner country government to implement the program and make the accompanying policy and institutional reforms that are fundamental to achieving the desired results. The extent to which this may be a problem is difficult to project, however; it is tough to know, for any given partner country government, the “right” level of funding to attract sufficient commitment to the program.
Beyond the bottom line, one of the most encouraging pieces of the administration’s request for MCC is the proposed legislative change that would give MCC concurrent compact authority. This authority would allow MCC to pursue regionally focused investments and to better target important cross-border constraints to growth. Though MCC often invests in projects that have an inherent regional component (like infrastructure or energy), the agency hasn’t been able to coordinate programming across borders well because neighboring countries are rarely at the same stage of program design at the same time. With concurrent compact authority, MCC could pursue a regionally focused program with neighboring countries while simultaneously advancing a bilateral program with one or more participating countries on a separate timeline. This smart idea isn’t new. MCC has put it forth as a legislative priority since its FY16 request—and it’s gotten some traction on the Hill (see here, here, here, and a provision here). But it is helpful to have official endorsement from the new administration.
All in all, in a budget year that contains little good news for US foreign aid, non-decimated funding and the inclusion of a provision that would enable the agency to expand its impact sum up to a quiet vote of confidence for MCC.