USAID Walks Tightrope Between Government Reform and Corporate Influence

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April 27, 2013; The Economist

In a discussion of the U.S. Agency for International Development, the Economist has asked whom is actually being helped. The U.S. program of food aid was called out as one area in need of reform. For example, Congress requires that half of U.S. food aid must be carried on ships bearing the American flag—not the cheapest on the high seas—meaning that ocean shipping costs consume 16 percent of the budget of the Food for Peace program. In addition, about 30 percent of Food for Peace food is given to NGOs overseas, who sell the food on local markets and ostensibly use the proceeds for other charitable programs. But the Government Accountability Office (GAO) says that that process—monetization—wastes about 25 percent of those dollars.

In USAID’s reform plans, the monetization program would be terminated and some portion of Food for Peace would be given in the form of dollars or vouchers to buy food on local markets, rather than inundating fragile local agricultural markets with U.S. farm products. That would also bypass the time and cost of ocean shipping. To mollify American business interests, the White House proposes that more than half of the Food for Peace dollars would still be used to buy and transport American farm goods, and plans to offer shippers transitional money to assuage the transition to lower shipping volumes.

One would think that these money-saving, efficiency-generating proposals of the Obama White House would be winning arguments with a revenue- and spending-conscious Congress, but The Economist suggests that farm-state interests might fight back, regardless of the fiscal rationality involved.

Though a tiny proportion of the federal budget, the USAID budget takes its requisite share of the sequestration cuts, with the biggest impacts in USAID’s health assistance, cutting about $400 million, and humanitarian aid, losing around $200 million. Although he acknowledges that private sources cannot make up for all of the aid funds USAID will lose, Raj Kumar, the president of Devex, suggests that “one bright spot in the aid picture,” according to the Voice of America, “is the increasing role of private philanthropies, like the Bill and Melinda Gates Foundation” and corporations becoming involved in development aid “in communities where they do business and want people to be able to afford their products.” USAID chief Rajiv Shah also touts public-private partnerships as a necessary strategy for the agency, which faces an additional six-percent budget cut in President Obama’s FY2014 budget proposals.

Under Shah, the agency has been actively cultivating relationships with corporate partners. For example, this month USAID announced the Libya Diaspora Marketplace program in conjunction with its cosponsor, Western Union, for “supporting entrepreneurs who are U.S. citizens or permanent resident members of the Libyan diaspora community.” Nike partnered with USAID in the LAUNCH program “to seek out visionaries whose ideas and technologies can create a more sustainable world.” In USAID’s Global Development Alliance, there are 1,700 corporations, including Microsoft, Starbucks, and Coca-Cola, who are involved in partnerships with USAID “to develop a business enabling environment” through “business-minded, market-driven approaches.”

It is a difficult quandary for USAID. On one hand, using U.S. foreign aid to generate or guarantee business interests, such as elements of the pre-reform Food for Peace program, is an inefficient strategy that sometimes undermines the credibility of U.S. assistance. On the other hand, in the face of persistent budget cuts, USAID logically turns to private sector partners that can play productive roles in promoting development assistance priorities, but based on a tradeoff for promoting U.S. business interests and market ideologies. USAID’s latitude for reform may be limited by simple economics and not getting enough money from the federal budget.—Rick Cohen


    USAID needs to become REAL:

    It needs to seek out visionaries whose ideas and technologies can create a more sustainable world. To do so, USAID must reform it’s internal HR SYSTEM before it tries to reform others….

    Officers and their COUNTRY CHIEF’s who are responsible in foreign countries for PPP alliance building must have experience on the ground, in the field, in far flung locations. Today these people are like “bean counters” distant from the realities on the ground.

    This is never more evident than when USAID officials host local nationals to bid for projects. Information briefings are held and our UAID officers many time “just don’t talk the language of the local”. These officers are there to develop a business enabling environment” through “business-minded, market-driven approaches but they have NEVER really have done it themselves… And, host nationals find the bid process, the officers explanations, and the USAID business process toooooooo complex

    When I moved to Asia nearing forty years ago there were few Americans in far-flung locations of this region, Africa, or Latin America. We Americans were pioneering the way for American agencies, multi laterals, non-profits, and corporations to do its work today. Many of the few of us in Asia were “E”ntrepreneurs working on our own, building trading and service businesses in marginalized communities. We survived and prospered on our ingenuity, on our ability to get down to the grassroots and interact, communicate and build partnerships with SME’s, Corporations, Civic and Community Groups, Government Officials… To succeed we assimilated into these far-flung locations on our “where for alls….”
    And many of us succeeded and stayed abroad our entire working life.

    Today, as I still work advising commercial groups and non profits in Asia (I live in the Philippines and know the Philippines officers that work at USAID here and in many other SE Asian and S Asian country offices). I am amazed that the officers who represent USAID seldom if ever have lived in local working class communities or travel long term to far flung locations and stay local to understand the community they are servicing. Seldom if ever are USAID officers from the commercial sector. Most of the time what I have learned is that they have traveled the world, may have been humanitarians or peace corp volunteers but have NO commercial experience building business. And yet their responsibility is to develop PPP’s.

    They have separate lives from the local community, they keep to themselves, they live in the best corporate housing in the best areas of town ( rich folk) they talk their own professional American jargon and when they need to communicate (such as when grant proposal meetings are held to prep the prospective local suppliers) they have sadly many times not done their homework.

    So many of these officers who stay only in their OFFICE find talking about business (beyond the number jargon!) difficult and uncomfortable. These officers (and their CHIEFS) really don’t relate to the host national environment— to those far flung locations and their issues related to supply and service chain.

    Attending grant briefings are entertaining and embarrassing because I hear the local host nationals comments from the background. And, 90% of the time I agree with the locals’ commentaries because I live where they do. So many of our officers just “don’t get what is really needed”: I equate this to the fact that these people contain themselves in their OFFICES seldom having experienced living and working in the field, in the village, in the small ( and corporate) business environment where partnership building must happen on local terms.


    To bring stakeholders together— specifically to align USAID employees to work productively, effectively, and efficiently and MOST COOPERATIVELY with host national country’s USAID needs to look at who it hires to run USAID agencies. They should be bringing in people like myself and my colleagues who are SME and CORPORATE leaders who have set up and structured businesses in foreign countries. We know the ground, we understand the issues, and we solve problems laterally thinking out of the box—-creatively with

    We don’t write 200 page proposals but one page briefs and max ten page business proposals. We are NOT the defined by archaic stale methods of writing PhD dissertations.

    We simplify, we plan , we implement, we monitor, and we evaluate.
    But, not following complicated out of date methodologies.

    We are not confined to OFFICES far away from local neighborhoods.

    We are Americans on the ground who know both the host nationals and the Diasporas who return. We are the people USAID needs to hire . For partnership (PPP) development officers trained to be humanitarians are not the people to be running USAID’s Global Development Alliance.

    USAID needs an overall of its HR SYSTEM to get mileage in the future, to build PPP systems that work. In my opinion CHANGE can only come about when USAID addresses this internal issue at HQ in DC and hires Americans with global commercial experience as well has a history of living in the field, in far flung locations of the world.