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CGD seeks to inform the US government’s approach to international development by bringing evidence to bear on questions of “what works” and proposing reforms to strengthen US foreign assistance tools.
The policies and practices of the US government wield formidable influence on global development. CGD seeks to strengthen US foreign assistance tools with evidence of “what works” and propose reforms grounded in rigorous analysis across the full range of investment, trade, technology and foreign assistance related issues. With high-level US government experience and strong research credentials, our experts are sought out by policymakers for practical ideas to enhance the US’s leading role in promoting progress for all.
We are pleased to join 12 colleagues in signing the Redesign Consensus: A Plan for US Assistance that launched today. The four main recommendations are to empower USAID as the lead independent aid agency, to create a full-fledged development finance institution, to establish a global development and humanitarian strategy, and to upgrade systems to better manage personnel, procurement, information, and evidence. This proposal concretely advances the dialogue between Congress, the administration, and civil society on reforming the US development architecture. It captures the main conclusions of a series of robust discussions among a diverse group of leaders, experts, and practitioners—and it represents a bold and comprehensive vision for a more coherent and modern development architecture.
Importantly, the recommendations of the Redesign Consensus represent a holistic package. Policymakers should—indeed must—pursue such reforms in order maintain the impact and relevance of US development engagement. But the bulk of the major structural reforms should roll out in a comprehensive, rather than piecemeal, manner. Taking an a la carte approach to these recommendations would in some instances undermine their effectiveness. For example, the recommendation to move PEPFAR and other aid programs from State to USAID is most viable if joined with the recommendation that the USAID Administrator be simultaneously empowered with more expansive budget and planning authority.
Given that implementing a comprehensive reform package would require legislation and/or lengthy administrative and consultative processes, we also believe it is important to act now to build momentum. Action on a set of immediate, actionable reforms—low-hanging fruit options —could “grease the skids” for a more comprehensive reform effort. In July, we proposed just such a set of 14 practical recommendations (many of which are also included in the Consensus) that could advance progress, separately or together, while laying the groundwork for a full redesign.
Finally, we underscore the sentiment in the Redesign Consensus that moving around deck chairs alone will not yield greater impact. Any changes should be accompanied by renewed focus, changes, and requirements around increased effectiveness, accountability, and transparency. This should include a standard approach to assess program effectiveness, as well as emphasis on cost-benefit analysis and impact evaluations. It is the combination of changes in structure, incentives, and accountability for results that will drive a broader cultural and bureaucratic transformation. Such a transformation would not only help make the best use of precious taxpayer dollars, but also most expeditiously advance our national security objectives.
OPIC recently announced it will invest $2 million in a Development Impact Bond (DIB) aimed at improving the availability and quality of cataract surgery services in Cameroon. Specifically, OPIC’s investment will support the Magrabi ICO-Cameroon Eye Institute, a new hospital with an efficiency and financing model based on the acclaimed Aravind Eye Hospitals, over several years. The OPIC news is particularly exciting for four reasons.
First, the investment is another example of the development community’s continued pivot toward results-based financing and greater private sector engagement. DIBs involve three main players: investors, implementing organizations, and outcome funders (typically aid agencies or foundations). Investors provide start-up or growth capital for an intervention, and implementing organizations use that capital to deliver services to a target population. If an independent third party verifies the achievement of targets previously agreed to by all the involved parties (e.g., 80 percent of patients have successful surgeries), the outcome funders repay the investors their principal plus some extra amount. If the targets are not reached, outcome funders do not have to repay the investors in full. In addition to leveraging upfront funding from them, DIBs can incentivize deeper engagement from the investors, as the success of the project influences their final payout. Investors consequently have a reason to apply their knowledge of performance-management to drive innovation and progress. UBS, the investor in a DIB on education known as the Educate Girls DIB, applied risk management and monitoring strategies it had not applied in similar projects.
Second, once the cataract bond is launched, OPIC will be one of the first development finance institutions (DFIs) to support an impact bond. The Inter-American Development Bank’s Multilateral Investment Fund has committed to providing technical assistance for a recently launched impact bond in Colombia on urban employment, and it already provides technical support to other Latin American countries seeking to implement impact bonds. Lots of DFIs have talked about scaling up their impact investment portfolios, but none until OPIC has done so with much rigor. The approval of the cataract bond sets the stage for other teams at OPIC and other DFIs to understand the potential role that DIBs could play in their overall portfolios.
Third, OPIC’s commitment fulfills almost all the cataract bond’s investment needs ($2.5 million) at a time when the cataract bond already has its outcome funders in place (the Conrad Hilton Foundation, the Fred Hollows Foundation, and Sightsavers). Apart from a Humanitarian Impact Bond on physical rehabilitation that launched early last month, no other health-related impact bonds have reached the launch stage. Many, however, have been proposed, including a few on malaria, HIV, early childhood development, sleeping sickness, and family planning. Several of these have struggled to find investors. OPIC’s commitment thus represents a significant step toward the launch of the cataract bond, as well as further testing of the DIB model itself. Results from year one and year two of the Educate Girls DIB were very positive, but it remains vitally important to test the DIB model in various forms.
Finally, insights gleaned from the cataract bond will be valuable for future health-related DIBs. We’ve been interviewing members of the cataract bond’s design coalition on the lessons they learned throughout the development of the bond. We’ll soon release a policy paper outlining those lessons and how the challenges they faced compare to the questions and obstacles others have experienced while attempting to launch health-related impact bonds. Much of the literature on DIBs and Social Impact Bonds (impact bonds where a government serves as an outcome funder instead of a foundation or aid agency) focuses on whether impact bonds have worked, and not what common pitfalls or concerns should be kept in mind before diving into preparation (Brookings launched a report in this space recently). CGD will also host the key stakeholders of the cataract bond at a launch event in early 2018 to discuss the findings from the paper.
As the development community seeks opportunities to leverage blended finance for the achievement of the Sustainable Development Goals, the OPIC-supported cataract bond has much to offer. It will test the DIB model more generally and in the health space, as well as highlight the potential benefits DFIs can bring to and receive from a DIB. Congratulations to OPIC for its commitment to generating evidence on what works (or doesn’t work) in global health and beyond.
When foreign policy types refer to soft power, whether deployed by the United States, China, or Germany, it’s not always clear what they’re talking about. But one form of soft power is concrete enough. That is, it’s literally concrete. And by a measure of bricks and mortar, it’s clear that the United States is rapidly losing the soft power game to China. In fact, the contrast between the two countries on display this week in Washington is startling.
China is using the occasion of the annual meetings of the IMF and World Bank to showcase its multi-trillion-dollar program to pave Asia, the Belt and Road Initiative (BRI), featuring a high-level panel with the American head of the World Bank and the Chinese head of the Asian Infrastructure Investment Bank (AIIB). This panel will examine, no doubt from a favorable perspective, the potential of BRI’s infrastructure agenda to spur greater levels of poverty reduction throughout Asia and beyond. (At CGD we are also hosting an event this week on the BRI, looking at how to ensure it can be a sustainable success for developing countries.)
A few days later, the United States will deploy the president’s daughter to champion a $300 million multi-donor trust fund focused on women’s entrepreneurship globally. A worthy issue certainly, but the contrast of millions and trillions alone is telling.
Far more telling though, are press comments from a senior Treasury official, which appear to be aimed at squashing any ambition at the World Bank in the years ahead. On the question of the United States and other World Bank member countries putting more capital in the bank to increase its development lending, the official indicated that the 188-member institution ought to scale back its ambition and stop lending to countries that can borrow elsewhere.
This is where China’s ambition meets US retrenchment. The United States is the largest member of the World Bank and can effectively block any major expansion, despite the wishes of the other member countries. But now that a majority of the bank’s members (measured by their voting power in the institution) are also members of the Chinese-led AIIB, squashed ambition at the World Bank is no longer the end of the story.
A landmark new report from AidData documents the scale and quality of China’s soft power ambitions through bilateral aid and government-directed development bank lending. China deploys a mix of traditional aid and non-aid financing in ways that do not appear to be very hung up on questions of whether countries “should” be eligible for borrowing.
Certainly, this raises important questions about debt sustainability in these countries, but there’s also an underlying principle at work—one that has the United States increasingly isolated from most other countries, including close allies in the G7. Namely, many development finance objectives globally are indifferent to the per capita incomes of developing countries. At the top of the list, investing in a new generation of clean energy infrastructure, something that has a limited window of opportunity from a climate perspective, needs to be driven primarily by the scale of impact globally. That means active investment in large emerging market countries, including China itself.
It’s no secret that the climate agenda is not compelling for the Trump administration. But actors in the White House and the Treasury and State departments should at least pause to consider the question of soft power. Are they really comfortable with a world in which a US-guided World Bank is engaged in fewer countries, while China is engaged in more? That seems like a losing strategy for US interests in the world.
A string of legislative efforts this year reveal two things about congressional attitudes toward US foreign assistance that might surprise you: support for aid is often bipartisan, and the seriousness and quality of thinking about aid reform is often very high. Case in point on both fronts is new legislation introduced by US Senators Bob Corker (R-Tenn.) and Chris Coons (D-Del.) that would create the architecture and principles for a policy review and assessment of US contributions to multilateral institutions.
The basic idea is compelling for the US government, which channels over $10 billion to multilateral entities each year. And it should be compelling to other countries and the multilateral entities themselves, since this $10 billion makes the United States in many respects the driver of key decisions in the multilateral system. This system has a strong stake in a thoughtful, evidence-driven approach to US policy engagement, whether in United Nations entities or at the World Bank.
The legislation reflects a good understanding of the multilateral entities themselves as well as earlier efforts by other countries, most notably the UK, to conduct multilateral aid reviews (MARs).
Having called for a US MAR two years ago, it is gratifying to see this legislation come to fruition. My assessment of the idea at the time also points to particular strengths of the Corker-Coons bill as well as some risks.
A key strength of this legislation is that it does not outsource the MAR. It is tempting to set up eminent persons groups to advise policymakers on major policy issues, but such groups, commissions, and panels are too easily ignored. Recognizing the stakes involved in a MAR exercise, with direct implications for budget allocations, the Corker-Coons bill integrates the review into the work of the relevant policymakers in the executive branch and congressional committees. In this way, the results of a MAR stand a much greater chance of directly informing budget and policy decisions.
Any MAR runs a risk that the results may serve to undermine the case for multilateralism. A review is inherently a critical exercise, aimed at identifying relative strengths and weaknesses among a group of multilateral institutions. All institutions under the review will have identified weaknesses, and any such weaknesses can bolster the arguments of those who tend to oppose multilateralism in general.
There are two ways to guard against this risk. One would be to broaden the scope of the review to all US aid, bilateral and multilateral. In this way, the strengths and weaknesses of multilateral institutions can be compared directly to USAID and other bilateral programs. This sounds appealing in principle but would be extremely challenging to implement in practice. In an earlier post, my colleague Charles Kenny points to the challenges of like-to-like comparisons among multilateral institutions, a challenge that is only compounded if you broaden the scope to bilateral programs. It’s a relief, then, the Corker-Coons bill maintains a focus on the MAR.
The other approach would pair the MAR with an ex ante policy commitment to devote a share of US assistance to multilateral channels. With a well-defined budget envelope, the MAR can be appropriately focused on relative funding allocations among multilateral institutions without as much worry that the exercise will lead to an erosion of the multilateral share of US assistance.
Making such a commitment, which has echoes of the international “0.7 percent” aid commitment long rejected by the United States, would be no easy task politically, so I understand why the legislation does not embrace the concept. But I do worry, particularly in the current political environment, that any critical assessments, even honest and careful ones, can be misused by political actors who do not embrace the principles of multilateralism in the way that I know Senators Corker and Coons do.
And here we come to the greatest question about this bill. It is encouraging to see such strong intellectual leadership coming from the Hill on the details of US foreign assistance. But as the legislation itself recognizes, leadership on a MAR must ultimately come from the executive branch. Unfortunately, very little from the past nine months reassures me that this administration would approach a MAR as a means to strengthen multilateralism, rather than a way to walk away from longstanding multilateral partners. Senators Corker and Coons have written a strong congressional oversight role into the MAR process, and if the MAR becomes a reality, I am reassured by the prospect that they and the other co-sponsors of the bill will exercise that oversight aggressively.
Since his first day on the job two months ago, Mark Green has emphasized his commitment to improving the efficiency and effectiveness of USAID. In charting the agency’s path toward these goals, he will weigh a variety of reform and redesign proposals and gather input from a wide range of stakeholders. Regardless of what the final reform plan looks like, if Administrator Green is serious about enhancing USAID’s efficiency and effectiveness, one of his priority areas should be improving how the agency uses evidence to inform its policies and programming. In the absence of attention to learning more about what works and applying these lessons to the agency’s work, the effectiveness of any reform or redesign effort will ultimately fall short of its potential.
The upcoming USAID-led Evidence Day on September 28 at the Ronald Reagan Building (part of Global Innovation Week) provides a perfect opportunity for Administrator Green to spell out his plans to prioritize the role of evidence at USAID. In a new CGD Note, Advancing the Evidence Agenda at USAID, Amanda Glassman and I offer some suggestions. After characterizing the constraints the agency faces to better generation and use of evidence, we propose eight recommendations to address them. In particular, we urge USAID to:
Elevate and consolidate the evidence agenda with the establishment of a new unit: Evidence, Evaluation, and Learning (EEL)
Create incentives for improved evaluation quality through a public scoring system
Focus on synthesizing data for greater accessibility and use
Streamline reporting requirements to allow greater focus on more useful evidence
Evaluate staff performance on evidence use
Adjust staffing choices and opportunities to better emphasize skills in evaluation
Bake evidence-based programming into the procurement process
Continue to support and invest in external organizations’ contributions to learning
As Administrator Green starts his term, he should consider how he wants USAID’s results characterized at the end of his tenure. Will he point to numbers of people trained, or amounts of products purchased? Or will he be able to describe the attributable difference that USAID made to the people the agency is committed to help? With a renewed commitment to evidence, evaluation, and learning at the highest levels, he can edge the agency toward the latter, far more compelling narrative.
Front and center in discussions around the reform and redesign of the United States Agency for International Development (USAID) are the objectives of increased efficiency and effectiveness. The agency’s new administrator, Mark Green, who has highlighted these goals from day one, has an excellent opportunity to improve the agency’s efficiency and effectiveness through better generation and use of evidence to inform policy and programming decisions.
The very same week that USAID and the Department of State submitted a joint redesign plan to the Office of Management and Budget, the coauthors of four recent reform proposals packed the CGD stage for a timely debate. With each proposal unique in approach and substance, moderator and senior policy fellow Cindy Huang had the tough task of keeping the event to a strict timeline. Thankfully, with help from a terrific panel—comprising Erol Yayboke and Nilmini Rubin representing the Center for Strategic and International Studies (CSIS), CGD senior policy fellow Jeremy Konyndyk, Jim Roberts of Heritage, and George Ingram representing the Modernizing Foreign Assistance Network—the event featured an engaging discussion and covered a lot of ground in just 90 minutes. Here are a few of the big questions that panel members grappled with as they authored their reports, including areas of consensus and divergence (USAID/State transition teams—and other administration officials—take note!):
Fragmentation: “Form should follow function,” but how ambitious should we be in reorganization?
The panel was unified on the idea that the current system is deeply fragmented, but members took different approaches when specifying the level of reorganization needed to increase efficiency and effectiveness to achieve US development goals. For Rubin, “bigger isn’t always better.” To consolidate and streamline, Yayboke advocated for the USAID administrator act as coordinator of foreign assistance, ultimately deciding which agencies should implement new US development programs. Ingram took this a step further, outlining a vision for the creation of a “bigger and more powerful” new development agency (while leaving development finance functions distinct), bringing the best practices and the main instruments of the wide range of existing agencies together under a single director of foreign assistance with cabinet status.
Inclusive economic growth: How can we better harness tools for catalyzing private investment and economic growth?
One of the more controversial subjects the panel broached was how to approach the roles and tools of the Millennium Challenge Corporation (MCC) and the Overseas Private Investment Corporation (OPIC). Roberts called for the breakup of USAID, the elimination of OPIC, and the shifting of development functions—outside of global health programs—to an outsized MCC. For Roberts, this was driven by a vision that US foreign assistance agencies should be focused primarily on strategies to help improve economic growth, with a greatly diminished focus on non-growth objectives. This was met with resistance from some of his fellow panelists. In response to the idea of an “MCC on steroids,” Rubin countered with the metaphor of the evening, noting that her minivan is great for shuttling her kids to school and activities but would make a terrible lawnmower. In other words, while the small, growth-focused MCC can operate very effectively in certain contexts, that doesn’t necessarily mean the agency is the right choice to take on a very different mission. Most of the proposals envision market-driven, private sector investment as critical to realizing development progress well into the future. Ingram emphasized the need to modernize OPIC to help crowd in the private sector in frontier markets—an idea also championed in the CSIS and CGD reports.
Humanitarian assistance and fragile states: Given a lack of proven methods and tools, how do we develop the systems we need to engage effectively in post-conflict environments?
Speaking from his experience at USAID’s Office of US Foreign Disaster Assistance, Konyndyk noted it was time to apply lessons from US humanitarian response to US development programs in post-crisis contexts. He outlined steps that would allow programming to be more responsive and agile: more aggressive use of competition waiver authority within USAID in certain transitional and insecure environments, a dedicated surge staff mechanism for development surge or post-crisis surge capacity, and earmark flexibility for missions in transition settings. The proposal from CSIS aimed to increase effectiveness and streamline assistance by consolidating programming under USAID, such as the Bureau of Conflict and Stabilization Operations, while keeping policy functions at State. Ingram observed that while these specific suggestions are important, what was missing from all the proposals was an overarching instrument in dealing with state fragility that effectively engages the “three Ds”: development, diplomacy, and defense.
Global health: How can we continue to build on past success?
US global health programs have some of the greatest evidence of effectiveness, so the question is often framed around how to improve coordination and build on existing progress. On the structural side, Yayboke recommended transferring PEPFAR to USAID’s Global Health Bureau to better help address what he sees as the changing face of tackling the HIV/AIDS crisis—one that is less of an emergency initiative and more focused on management and long-term sustainability. Konyndyk focused instead on the haphazard division of labor between PEPFAR’s implementing agencies, USAID and the Centers for Disease Control and Prevention. The current arrangement, which he sees as inefficiently maintaining parallel capabilities at both agencies, is not a functionally driven way to manage a multibillion-dollar aid program. We should move toward a deliberate arrangement where engagement plays to the comparative advantages of each agency. Roberts identified global health as an element of US development assistance worth preserving, but his view is that global health programs should be consolidated under the State Department and sit alongside US humanitarian functions.
Country graduation: How can we better match instruments and programs with country needs?
The panelists agreed that the United States requires a range of tools to address distinct development challenges, and that a broad aim should be to help countries transition away from traditional grant-based foreign assistance over time. USAID Administrator Mark Green has consistently suggested that developing models for strategic country transition will be a top priority during his tenure at the agency. Ingram highlighted the need for a transition strategy with benchmarks and plans to ensure sustainable engagement even after the United States is no longer providing traditional assistance. In a similar vein, Konyndyk highlighted the need for an updated toolkit to leverage private sector engagement and encourage domestic revenue mobilization in partner countries. Yayboke echoed this, and suggested the United States take a hard look at programs and missions that are not central to a newly crafted foreign assistance strategy, with a particular eye toward middle-income countries. Roberts reinforced that countries should be thinking about transition “all the time.”
This event was a great chance to learn more about the motivating factors behind elements of the reform proposals—and an opportunity to identify common ground.
If you missed the conversation, you can still watch the webcast here. And be sure to visit the proposals themselves:
Clear and rigorous evidence on the contributions of US global health programs is more important than ever, as the White House and lawmakers discuss and debate budgets and the future of US support to global health. Such information aids policymakers who must prioritize support to effective public health programs.
For this reason, CGD is pleased to co-host an event to discuss and—indeed—celebrate the release of a supplement in the American Journal of Tropical Medicine and Hygiene reporting on the work of the U.S. President’s Malaria Initiative (PMI) and partners to document the impact of malaria control interventions and new methods for evaluating programs. The event, co-hosted with the American Society of Tropical Medicine and Hygiene (ASTMH), PMI, and others, will take place on Wednesday September 27 from 12:30 to 3:30 pm at CGD. You can read more and register here.
In May, the president’s budget request outlined drastic funding cuts to PEPFAR, malaria programs,* the NIH, and CDC, among many others. Meanwhile, the House Committee on Appropriations approved more funding for several programs in July, and has maintained commitments to important multilateral programs like GAVI and the Global Fund.
In the malaria space, a good example of this generation of rigorous evidence is a recent study by Aleksandra Jakubowski and co-authors (including Harsha Thirumurthy, a former CGD Post-Doctoral Fellow) that uses data from 32 sub-Saharan countries to document PMI’s contribution to reductions in under-5 child mortality, as well as gains in the use of insecticide treated nets and indoor residual spraying. The analysis also places improvements within the context of other malaria and non-malaria aid. After accounting for the presence of other financing sources, the researchers found that support from PMI was associated with a 14 percent annual reduction in the under-5 child mortality rate.
The fact that solid evidence shows that PMI and other US efforts are important for global health is consistent with a desire to improve how public health programs are designed and implemented. There are many ways to elevate the return on investment in global health generally and allocate existing resources more efficiently, e.g., by:
Paying for outcomes, not inputs
Shifting toward evidence-based interventions where they’re not already in use
Publishing program data in a comprehensive and timely manner, to allow peer reviewers to see for themselves (and make suggestions on how to improve)
A recognition that the US global health programs are contributing to important and substantial improvements in health outcomes can be a productive starting point for discussing how to spend more wisely and increase that impact. The upcoming event at CGD is a great opportunity to get started on the right foot.
* Funding for malaria via USAID stood at $755 million in 2017 and $674 million in 2016. The 2018 funding request for malaria via USAID is $674 million and $250 million of that comes from a potential one-time transfer of Ebola funds.