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Archives for Economic Growth

Building the Bridges of the New Silk Road

Silk still plays a role in the New Silk Road. Household silk production feeds Afghanistan’s carpet and textile industry. USAID is helping open up trade routes and increase economic connectivity between Central and South Asia as part the New Silk Road Initiative. / USAID

Silk still plays a role in the New Silk Road: Household silk production feeds Afghanistan’s carpet and textile industry. USAID is helping open up trade routes and increase economic connectivity between Central and South Asia as part the New Silk Road Initiative. / USAID

For hundreds of years, the main trade routes between Europe and the Pacific passed directly through what are now the countries of Central Asia. These trade routes brought prosperity and fostered the exchange of ideas and technology across cultural boundaries. In recent decades, civil unrest, ethnic tension, and mistrust have led to Central Asia being a roadblock instead of a thoroughfare for trade.

What would it take to reconnect Central and South Asia?

Support for new transmission lines connecting the sources of power in one country with customers in another?

Or millions of dollars in trade agreements, reviving age-old connections between traditional trading partners?

Maybe it’s a fortified wheat program, poised to improve nutrition for millions of Afghanistan’s children; or strengthened cooperation in transboundary watersheds to enhance regional peace and stability?

USAID has made these contributions and more as a part of the U.S. Government’s New Silk Road initiative, an ambitious effort to build a more secure, stable and prosperous region with Afghanistan at its heart.

While the goals of the program are lofty, the benefits of these programs are quite specific.

Manzura Zhabarova is an Uzbek entrepreneur who owns a clothing and thread manufacturing company. Our programs helped connect her with a new market: prospective clients in Mazar-i-Sharif, Afghanistan. “I could not believe that this world existed 800 meters away from us on the other side of the bridge,” she said. “It’s our responsibility to help our neighbors in Afghanistan. Trade is how we can help.”

USAID’s Deputy Assistant Administrator Manpreet Anand meets with regional traders attending USAID’s Central Asia Trade Forum held last year in Almaty, Kazakhstan. / USAID.

USAID’s Deputy Assistant Administrator Manpreet Anand meets with regional traders attending USAID’s Central Asia Trade Forum held last year in Almaty, Kazakhstan. / USAID.

There are few greater challenges for U.S. foreign policy today than the continued development and stabilization of Afghanistan. As military engagement winds down there, it becomes even more critical to build on the gains of U.S. defense, diplomacy and development efforts.

Afghanistan’s new administration is working to bolster its regional ties in order to promote the economic growth and stability its citizens need. As Afghan President Ashraf Ghani noted during a recent visit to Turkmenistan, “At the moment, Afghanistan has turned into a bridge.  Our trade and transit can create many opportunities; energy and electricity and natural gas will be sent to Afghanistan and to other countries through Afghanistan.”

Our efforts are helping to make this vision a reality. For example, we’re advancing regional electricity efforts, particularly through our support for CASA-1000, an ambitious electricity transmission system sending surplus summer hydropower from Kyrgyzstan and Tajikistan to energy-strapped markets in Afghanistan and Pakistan.

USAID helped the Aga Khan Foundation and Pamir Energy inaugurate newly constructed power transmission lines in Khorugh, Tajikistan, to meet the energy needs of Afghanistan's Badakhshon province. / USAID

USAID helped inaugurate newly constructed power transmission lines in Khorugh, Tajikistan, to meet the energy needs of Afghanistan’s Badakhshon province. / USAID

Recently, our support helped finalize a regional pricing agreement, helping pave the way for regional electricity transfers which would bring much needed revenue to Central Asia as early as 2018.

The benefits would be felt well beyond the exchange of energy. As State Department Deputy Assistant Secretary Fatema Sumar said, “CASA isn’t really about turning the lights on. It’s about getting countries to work together. That’s priceless.”

From Karaganda to Karachi, our programs are breaking down trade barriers and creating economic opportunity in ways that promote political understanding. Around the region, we are helping countries join and participate in the World Trade Organization, bringing businesses together, leading to millions of dollars in regional deals and sparking new demand for intra-regional trade between Central and South Asia.

These efforts have prompted us to think in new ways about how we work together as an Agency. Our New Silk Road initiatives involve the coordinated efforts of five separate USAID missions, representing two regional Bureaus and leveraging shared human and financial capital toward achieving shared objectives.

In Tajikistan, about half of all Tajik rural households do not have access to safe, potable water. USAID helps turn water from a source of conflict to a source of cooperation. / USAID

In Tajikistan, about half of all rural households do not have access to safe, potable water. USAID helps turn water from a source of conflict to a source of cooperation. / USAID

This is a pivotal time for Central and South Asia. This vast region faces challenges and opportunities. On the one hand, the Central Asian states have begun to grapple with the potential rise of violent extremism. On the other, in South Asia the world’s largest population centers seek faster economic development and integration into the global economy. We have responded accordingly – with diplomatic engagement and development leadership – because increasing prosperity and stability in this part of the world benefits us all.

At the recent London Conference on Afghanistan, Secretary Kerry reaffirmed that “Afghanistan’s economic future depends on improved connectivity with regional and international markets.”

The New Silk Road is an example of the far-reaching impact our development programs can have, and raises the bar of what we can expect from our investments in international development.

ABOUT THE AUTHORS

Assistant Donald “Larry” Sampler serves as Assistant to the Administrator in the Office of Afghanistan and Pakistan Affairs (OAPA). Jonathan Stivers serves as the Assistant to the Administrator in the Asia Bureau.

Historic Donor Agreement: More Money Where It Is Needed Most

In Barisal Sadar, Bangladesh, Ayub Ali serves his community by producing quality fingerlings (young fish), which is a key factor for local fish farming. As part of the USAID-Aquaculture project, he learns about modern method of aquaculture through training. This knowledge and support has made him a successful entrepreneur. / World Fish, A. W. M. Anisuzzaman

In Barisal Sadar, Bangladesh, Ayub Ali serves his community by producing quality fingerlings (young fish). As part of the USAID-Aquaculture project, he learns about modern method of aquaculture through training. / World Fish, A. W. M. Anisuzzaman

This year, 2015, will be seminal in setting not only bold new goals – like ending extreme poverty – but also in making bold reforms that change the way things get done.

As donors, one of our primary concerns is to use our taxpayers dollars as effectively and efficiently as possible in order to leverage significant change. That means attracting other forms of capital (public, private, social, multilateral – you name it) and directing those resources to where they can best have the sort of transformative development impact that we all want.

At December’s High-Level Meeting of the Organization for Economic Cooperation and Development’s Development Assistance Committee (OECD-DAC) in Paris, we advocated for and achieved important policy and structural changes to how donors allocate resources and report those numbers. These changes will impact the future of Official Development Assistance (ODA) — the international definition of foreign aid that is used to track donors’ foreign aid commitments.

First, 29 DAC members agreed to “allocate more of total ODA to countries most in need,” including low-income countries, the least-developed countries (LDCs), small island developing states, landlocked developing countries, and fragile and conflict-affected states.

We believe this policy is critical. The countries that can least afford to self-finance are the same ones lagging behind on the eradication of extreme poverty and the basic human development needs that form the foundation of the Millennium Development Goals.

Second, we created a fairer, more transparent, and better targeted system for development-focused lending. Three integral changes include:

  • Creating a fairer accounting system. Previously, donors got equal credit for grants and qualifying loans¹ – even though the loans needed to be repaid.  Under the new rules, only the grants and a portion of loans (known as the “Grant Element”) will count as Official Development Assistance (ODA). The United States only provides assistance in the form of grants.
  • Directing money to the most needy. The formula for deciding what counts as ODA now rewards donors who lend money to least-developed countries – i.e., those who can least afford commercial terms or self-financing.
  • Increasing transparency. During the meeting, members agreed to publish all ODA statistics more regularly, with frequent reviews and updates.
A worker at Muya Ethiopia weaves fabric that will become clothing and accessories sold on store shelves thousands of miles away. From 2005 to 2014, with support from USAID, Muya expanded from seven to 400 full-time employees and now sells 90 percent of its products overseas. / IESC, Steve Dorst

A worker at Muya Ethiopia weaves fabric that will become clothing and accessories sold on store shelves thousands of miles away. From 2005 to 2014, with support from USAID, Muya expanded from seven to 400 full-time employees and now sells 90 percent of its products overseas. / IESC, Steve Dorst

In order to unlock more development funding for the least-developed countries, the changes also endorse focusing on work with the private sector in support of the New Model of Development. These changes will also bring transparency to development transactions and encourage donors to send money to the neediest countries. They could not come at a more perfect time.

This year, the Millennium Development Goals will expire and the world will come together to decide on a new set of post-2015 sustainable development goals. These new benchmarks are likely to redefine USAID’s target of ending extreme poverty–a mission that will rely heavily on effective financial policies. Thanks to the lending reforms and support from other donor countries, USAID is in a strong position to move forward in tackling the development of countries most in need.

We can provide support to boost the economies of low-income countries to minimize poverty, but this renewed emphasis on countries most in need, including LDCs, small island developing states, landlocked developing countries, and fragile and conflict-affected states, stands to make an even greater difference.

This summer, donor countries and recipients will have a chance to further refine their approach to these issues at the third International Conference on Financing for Development in Addis Ababa, Ethiopia in order to achieve the next set of global development goals.

Currently, we are poised to bring significant changes to global development. With this early success in agreeing to changes in the recording of ODA loans and a renewed focus on countries most in need, large steps have been taken to help us realize an end to extreme poverty.


¹To be counted, loans had to be concessional in character and convey a grant element of at least 25 percent (calculated at a rate of discount of 10 per cent), a formula that has grown very out of date. Click here for more information.

ABOUT THE AUTHOR

Alex Thier is USAID Assistant to the Administrator for Policy, Planning and Learning. Follow him @Thieristan

A Spotlight on the World’s ‘Invisible’ Workers

Haitian construction workers in the Dominican Republic include an estimated 900,000 to 1.2 million undocumented migrants. The USAID Global Labor Program is supporting research and advocacy for international standards to protect their rights. / Ricardo Rojas

Haitian construction workers in the Dominican Republic include an estimated 900,000 to 1.2 million undocumented migrants. The USAID Global Labor Program is supporting research and advocacy for international standards to protect their rights. / Ricardo Rojas

USAID invests in people and their communities. But the people who do the most to bring wealth, infrastructure and services to a globalizing world may be those who leave their communities behind. They are construction workers, nurses, dishwashers, farm workers and maids. They are not likely to vote, or be leaders in their communities, or even lead their own households. But they do provide nearly half of all financial flows to developing country economies. They are the world’s 232 million migrant workers.

“Than,” one of many Burmese migrant worker in Thailand’s fishing industry, who face some of the worst abuse in the world.  / Jeanne Marie Hallacy, Solidarity Center

“Than,” one of many Burmese migrant worker in Thailand’s fishing industry, who face some of the worst abuse in the world. / Jeanne Marie Hallacy, Solidarity Center

“Than,” whose full name is protected for his privacy,is a 16-year-old Burmese boy who came to Thailand with his parents to find work. He works on fishing boats, earning only a little over $200 for an entire one-month boat journey. His father was arrested for not having a work permit, so now Than must provide for his two younger sisters, and earn back the money his family paid for a labor broker to bring them across the Thai border. His sisters hope to attend a school for migrants. Than only completed a sixth grade education.

Than is one of the luckier ones. Many Burmese migrant workers in Thailand’s seafood industry are little more than forced laborers. A report by the Solidarity Center found many workers were forced to work 16 to 20 hours a day and went without pay for months. Employers told workers their wages were being used to repay the labor brokers who brought them to Thailand.

Unemployment and underemployment have forced over half of Dominican Republic workers, many domestic workers from Haiti, into the precarious informal economy.  USAID’s partner Solidarity Center is supporting these workers to organize for their rights. / Solidarity Center

Unemployment and underemployment have forced over half of Dominican Republic workers, many domestic workers from Haiti, into the precarious informal economy. USAID’s partner Solidarity Center is supporting these workers to organize for their rights. / Solidarity Center

Thanks to interventions supported by USAID, some of these workers have been able to win back wages and better working conditions.

Even when migration is voluntary, life can be very difficult. Domestic workers migrating from Asia to the Middle East often lose the ability to communicate with their families or even their children; yet they keep working for wages they hope will enable those children to have a better life.

Even though migrant workers’ contributions to global financial flows are stunning (in 2014, remittances from expatriate workers were estimated to be $436 billion up from $132 billion in 2000), these workers are almost never the beneficiaries of any development program. They are largely invisible, restricted by law from participating in political or civic life in their countries of destination, and cut off from family and community ties in their countries of origin. They fall outside of human rights norms, and therefore are often victims of exploitation.

Between 2 million and 4 million migrant workers toil in Thailand as dockworkers, in seafood and domestic work. / Jeanne Marie Hallacy, Solidarity Center

Between 2 million and 4 million migrant workers toil in Thailand as dockworkers, in seafood and domestic work. / Jeanne Marie Hallacy, Solidarity Center

However, human rights advocacy organizations are beginning to advocate for the rights of these workers in new and innovative ways, and USAID is supporting a range of activities in several countries with high numbers of migrating workers.

According to the national census data in Nepal, as of 2011 over 700,000 Nepalis were recorded as working in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, with over a quarter of the country’s GDP coming from remittances. Unfortunately, too many Nepali workers are also exploited and trafficked as they migrate for work and in the destination country.

In Qatar, it’s been reported that more than 400 Nepali workers have already lost their lives working on World Cup construction sites. To help thwart the exploitation that may occur in the labor recruitment and migration process for foreign employment, USAID’s CTIP Project in Nepal has established 250 Safe Migration Networks to help educate community members on safe migration and monitor those who do migrate for employment. Much more needs to be done, such as ensuring ethical labor recruitment practices in countries of origin and decent working conditions in countries of destination.

The Thai fishing industry in Thailand has been described as being built on the slavery of migrant workers from Burma, Cambodia, and Laos. / Jeanne Marie Hallacy, Solidarity Center

The Thai fishing industry in Thailand has been described as being built on the slavery of migrant workers from Burma, Cambodia, and Laos. / Jeanne Marie Hallacy, Solidarity Center

USAID’s Global Labor Program has elevated the profile of some of the world’s most invisible workers: domestic workers around the world. A successful global campaign led by representatives of migrant domestic workers themselves succeeded in winning a new international convention on the rights of domestic workers, and bringing them from their homes into the world’s spotlight.

On this International Migrants Day, civil-society groups from around the world are presenting a framework for migration and development called the “Stockholm Agenda” to U.N. Secretary General Ban Ki-Moon. This initiative is a starting point for a broad and robust dialogue on how to ensure we spotlight and support the world’s migrant workers. It is our shared responsibility to ensure that “migration works for all.”

ABOUT THE AUTHORS

Bama Athreya is a Labor and Employment Rights Specialist
Marina Colby is a Senior Counter-Trafficking in Persons Advisor
Both work in USAID’s Center of Excellence on Democracy, Human Rights and Governance

Delivering More Bang for Development Bucks: Cost-Benefit Analysis and Feed the Future

Ireen Mapfumo, a Zimbabwean farmer, shows off a handful of protein-rich soybeans she harvested as one of eight lead farmers contracted by a USAID project in Zimbabwe. /  Fintrac Inc.

Ireen Mapfumo, a Zimbabwean farmer, shows off a handful of protein-rich soybeans she harvested as one of eight lead farmers contracted by a USAID project in Zimbabwe. / Fintrac Inc.

Now more than ever, development professionals and policymakers ask a fundamental question: Is a project worth the investment? Many are looking to cost-benefit analysis (CBA) for an answer.

Starting in 2009, USAID re-committed to cost-benefit analysis (CBA) as a critical tool for effective decision-making, and dramatically expanded its usage and training. CBA is an economic model that weighs strengths and weaknesses to determine how to implement or modify a project. USAID uses CBA to help determine when and where to invest for maximum results.

Feed the Future, Meet Cost-Benefit Analysis

Coinciding with this renewed interest in CBA was an increase in U.S. investment in global food security. At the 2009 G8 Summit in L’Aquila, Italy, President Obama called on global leaders to reverse a three-decade decline in agriculture investment. The U.S. Government’s global hunger and food security initiative, Feed the Future, embodied the U.S. contribution to this global commitment to reduce poverty, hunger and undernutrition.

Feed the Future wasn’t just a commitment of funding. It signaled a new way of doing development, founded in support of country-led efforts, deep partnership, and a relentless focus on results. It’s fitting, then, that Feed the Future became a critical player in the renewed push for incorporating CBA into USAID’s efforts.

As the lead agency for the Feed the Future initiative, USAID determined early on that it would roll out CBA analysis to Feed the Future countries through its overseas missions. This included specialized CBA training for agricultural officers and others working on Feed the Future’s early implementation so that CBA methods could be incorporated into agricultural program design.

Cost-Benefit Analysis Explained

CBA blends smart design with evidence to figure out if a project makes sense for the people USAID serves.

Analysts examine the incentives facing multiple stakeholders, including prices, profits, and losses over a long period of time. USAID uses this information to determine who is likely to win or lose as a result of a project, and adjusts design as necessary. Once the incentives are clear, the CBA model calculates the project’s costs and benefits.

Since we live in an inherently uncertain world, CBA analysts don’t stop there. CBA has helped Feed the Future projects account for volatile changes in circumstances, such as food price fluctuations over time.

Twenty-three missions around the world have used CBA to analyze or inform Feed the Future programming. Initial results have found that Feed the Future investments will achieve a 32 percent economic rate of return on average. By comparison, long term U.S. Government bonds only yield about three percent.

Perhaps even more important for the growth of CBA practice are the hundreds of USAID officers — including many agriculture officers — who have received training in how to incorporate CBA methods in program design. These agricultural officers will incorporate what they have learned into future projects, amplifying the effects of CBA.

USAID Cost Benefit analysis for Feed the FutureCreated by Gregory Gangelhoff

Cost-Benefit Analysis in Action

CBA is producing concrete results. In Haiti, USAID analysts conducted CBA of agricultural projects under Feed the Future West, an ongoing USAID program. Feed the Future West aims to modernize and create productive agricultural zones. Analysis determined that farmers would enjoy an internal rate of return (IRR) of 49 percent if all project targets were met. In other words, for every 1 dollar invested the host society receives an average of 49 cents in additional income over the project’s life.This result is significant: development institutions typically accept a minimum IRR of 12 percent for most projects.

Seventeen kilometers of improved roads in the Haitian mountain community of Fond-Baptiste now provide easy access to this local Monday market and larger markets on the coast. / Steve Goertz

Seventeen kilometers of improved roads in the Haitian mountain community of Fond-Baptiste now provide easy access to this local Monday market and larger markets on the coast. / Steve Goertz

USAID’s CBA analysts also examined how to remedy a shortage of rural roads in Haiti so that farmers could bring goods to market.

In Ethiopia, CBA helped guide $54 million in recent program planning. USAID estimates that these CBA-assisted programs have the potential to pull up to 400,000 people out of extreme poverty, explains Daniel Swift, an economist for USAID/Ethiopia.

In particular, USAID calculated the costs and benefits for Ethiopians of meat and dairy value chains as part of the Pastoralist Resiliency Improvement and Market Expansion (PRIME) project. The Mission’s original plan called for animal health and maintenance training, but CBA proved that the benefits of this training could not justify the investment. Instead, CBA led the mission to investments with more bang for the development buck.

This includes helping establish a meat processing plant that is expected to yield an estimated “$68 million in economic benefits for Ethiopia” in the form of a “tangible and sustainable market for poor pastoralists in the region,” according to Swift. Here and elsewhere, CBAs allowed decision makers to identify new opportunities and expand successful initiatives in the right places.

In concert with strategic analysis and a strong record of collaboration with private-sector partners, CBAs have become a part of the Feed the Future success story in this critical country.

Cost Benefit analysis in Feed the Future at USAIDCreated by Gregory Gangelhoff

CBA is more important than ever at USAID, but this work is far from complete. Tom DiVincenzo, USAID/Guatemala Mission Economist, notes that CBA analysts continue to seek new ways of explaining their work to decision-makers, who can struggle to fully understand the value of this type of analysis.

So what can the development community do to promote CBA and empower decision-makers in using it? Connect CBAs to “concrete examples” that non-economist decision-makers can understand easily, DiVincenzo notes. The results are worthwhile. When quantitative analysts work hand-in-hand with agricultural experts, their collaboration can plant the seeds for future prosperity.

ABOUT THE AUTHOR

Gregory Gangelhoff is an Economist in USAID’s Office of Economic Policy working on cost-benefit analysis, domestic resource mobilization, and growth diagnostics. Follow him @gwgangelhoff
Sally Rey is a Program Analyst in USAID’s Bureau for Food Security working on Feed the Future. Follow her @SalCary

The Economic Case for LGBT Equality Worldwide

Dr. Claire Lucas, USAID’s senior adviser on partnerships, addresses the audience at the launch of the joint Williams Institute-USAID report on LGBT inclusion and economic development. Seated, left to right: Carla Koppell, chief strategy officer, USAID; M.V. Lee Badgett, report author and research director, Williams Institute; and Brad Sears, executive director, Williams Institute. Photo credit: Matthew Corso/USAID

Claire Lucas, USAID’s senior adviser on partnerships, addresses the audience at the launch of the joint Williams Institute-USAID report on LGBT inclusion and economic development. Seated, left to right: Carla Koppell, chief strategy officer, USAID; M.V. Lee Badgett, report author and research director, Williams Institute; and Brad Sears, executive director, Williams Institute. / Matthew Corso/USAID

What if there was hard-and-fast evidence that discriminatory laws and actions against lesbian, gay, bisexual and transgender (LGBT) individuals hurt economic prosperity in emerging markets and developing countries?

Last week, I was proud to join in the launch of a groundbreaking report published by the Williams Institute as part of USAID’s LGBT Global Development Partnership that undertakes this empirical analysis. The underlying study found that human rights and economic prosperity are intertwined and that greater inclusion of LGBT people in emerging economies, at both the micro and macro levels, is positively associated with a country’s economic development.

Across 39 emerging economies and other selected countries, the study found substantial evidence that LGBT people are limited in their freedoms in ways that also create economic hardships.

The study uses, for the first time, the Global Index on Legal Recognition of Homosexual Orientation, which establishes categories of legal recognition and protection for lesbians and gay men, as well as a provisional index on transgender rights that was created specifically for the report. The index identifies eight types of laws that indicate a country’s level of legal recognition of LGBT people. It includes legalizing consensual acts between same-sex adults, providing protections against discrimination in employment or the provision of goods and services, and legal recognition of same-sex couples or the legal ability of couples to adopt children. The index allows for a numerical value to be assigned to each country in the study based on the number of laws currently enacted that provide either basic protections or address family recognition and adoption rights.

Based on this index, the study was able to show that one additional legal right in the index is associated with approximately a $320 in per capita GDP, or about 3 percent of the average in the sample countries, and a higher human development index value. For instance, Kenya has a score of zero, as it does not provide any legal protections for LGBT people and has a per capita income of $1,318. In contrast, Argentina has a score of seven and a per capita income of $13,323.

This positive correlation is significant because it allows us to put a price tag on discrimination. Based on the models and anecdotal evidence, we can see that countries that discriminate against LGBT people are pushing entire groups of people out of the formal economy and reducing the economic gains they would otherwise enjoy if they were allowed to be productive members of society.

So what does this mean for development and the LGBT community?

This research has potentially powerful ramifications for the way USAID works, for the donor community, for business leaders, for policymakers in emerging markets, and even for the U.S. taxpayer and legislators.

By linking stigma and discrimination against LGBT individuals to a country’s economic well-being, the issue of bigotry is not just felt and understood by those who are LGBT, but by anyone who cares about that country’s economic growth.

In April, Marco Andrés Jaramillo—an entrepreneur and CEO of EgoCity, an online and print magazine in Medellín, Colombia—joined 60 LGBT Colombians for #ActivatingLGBT, an entrepreneur training hosted by USAID partner, the National Gay & Lesbian Chamber of Commerce of the United States, and the Colombian LGBT Chamber of Commerce.

The training, held in Barranquilla, coached innovative LGBT entrepreneurs on how to create and sustain economically viable businesses, conduct trade with international partners, and make use of inclusive procurement policies. With new skills and connections, his business is booming.

Today, Jaramillo is turning his business from a small, niche magazine focused on his local community into one serving major multinational clients throughout Latin America and Europe. In the past year alone, business has grown by roughly a quarter.

Entrepreneurs like Jaramillo are engines of growth for their communities, countries and continents. Far too often, LGBT individuals around the world are excluded from contributing to their economy because of who they are. The fact is simple: Economic growth depends on a healthy, inclusive workforce, and people can’t work if they are routinely excluded from schools, jobs and health care or subject to other harms such as violence and police abuse.

ABOUT THE AUTHOR

Claire Lucas is a Senior Adviser in the U.S. Global Development Lab focused on partnerships.

Engaging China on Global Development

China is currently undergoing an evolution in its approach to development assistance and cooperation. The country continues to expand its contributions of resources, expertise and engagement on international development issues. As a result, the Chinese Government is continually reflecting on emerging challenges; the structure, mechanisms and partnerships needed to advance development priorities abroad; and new means of financing international development efforts.

Alex Thier addresses an audience member question during a CIDRN speaking engagement.

Alex Thier addresses an audience member question during a China International Development Research Network (CIDRN) speaking engagement. / Maria Rendon, U.S. Department of State

Recognizing the importance of frank, face-to-face bilateral dialogue to discuss these trends,  USAID held the inaugural U.S.-China Global Development Dialogue in Beijing on April 29.

China’s ongoing economic, social, political and environmental transformation will have a significant bearing on its domestic and global positions on related issues over the next 10 to 15 years. Despite progress, China still accounts for more than 10 percent of the world population living in extreme poverty – yet also sits on the world’s largest foreign cash reserves, some $4 trillion. Indeed, while we were in Beijing, the World Bank revised the purchasing power parity (PPP) exchange rates, which boosted Chinese GDP by more than 20 percent, putting it even closer to the size of the U.S. economy by that measure.

Alex Thier poses with Prof. Li Xiaoyun of China Agriculture University.  Prof. Li Xiaoyun co-chaired and commented during the CIDRN public event series on China and international development where Thier was a featured speaker.

Alex Thier poses with Prof. Li Xiaoyun of China Agriculture University. Prof. Li Xiaoyun co-chaired and commented during the CIDRN public event series on China and international development where Thier was a featured speaker. / Maria Rendon, U.S. Department of State

China is an important partner with developed and developing economies in negotiations around the post-2015 development agenda, climate change, financing for development and other global issues.

In the official U.S.-China global development dialogue, the Chinese exhibited a strong desire to engage with the U.S. Government on global development issues related both to broad international policy as well as practical elements of implementation.

The country is proud of the role it has played in achieving the current Millennium Development Goal of halving the proportion of its own people living in extreme poverty—over the last two decades China has helped lift nearly 600 million of its citizens out of extreme poverty—but still sees much need for continued domestic progress. We found strong agreement with the Chinese on the goal of ending extreme poverty  and common ground on increasing development cooperation effectiveness through internationally agreed on principles like the Global Partnership for Effective Development Cooperation.

USAID, like other government and private donors, has started small scale, practical cooperation with China in third countries (“trilateral cooperation”). For example, the United States and China recently launched an agriculture partnership in East Timor that is intended to improve the production of income-generating crops to enhance food security and nutrition. The first harvest was in March, and now more than 52 participating East Timorese farmers are seeing the benefits of modern farming techniques.

Charles Rice for USAID

A U.S.-China partnership is helping enhance food security and nutrition in Timor-Leste / Charles Rice for USAID

Discussions with a variety of Chinese universities, think tanks, foundations, and private sector and civil society organizations also demonstrate a growing interest and participation in development policy and implementation.

Overall, the first U.S.-China Global Development Dialogue was an important opportunity to advance our mutual interest in development policy dialogue, strengthening cooperation and enhancing policy coherence in partner countries. The next set of global development goals—including ending extreme poverty and sharing a sustainable global commons and economy—will require a concerted effort with all partners, China key among them.

ABOUT THE AUTHOR

Alex Thier is the Assistant to the Administrator in the Bureau for Policy, Planning and Learning. Follow him @Thieristan.

Liberia’s ‘Road’ (miles and miles) to Recovery

Little more than 10 years have passed since Liberia began rising from the ashes of a 14-year civil war that decimated its political, social and economic order.

While nearly 84 percent of Liberia’s population still lives in extreme poverty on less than $1.25 per day, during Nobel Peace Prize Laureate President Ellen Johnson Sirleaf’s presidency, the GDP per capita has grown on average by nearly 8 percent per year. The country is slowly navigating a development path leading to better health, a stable democracy, an improved domestic agriculture market, and increased exports of products such as iron and rubber.

Yet despite some advances, Liberians continue to face a daunting challenge – all too often, when the “rubber meets the road,” there is quite literally no road to travel.

Photo Credit: USAID Food and Enterprise Development

Liberia has 66,000 miles of roads, but less than 7 percent are paved. / USAID

Liberia cannot continue to break the cycle of poverty without an effective road network to connect its people and resources.

The country, approximately the size and shape of Tennessee, boasts a mere 66,000 miles of roads, and of these less than 7 percent are paved. By comparison, the Volunteer State has more than 93,000 miles of paved roads. Quantity is only part of the problem though: potholes the size of small vehicles scar what few paved roads exist, while dirt roads become muddy parking lots during the rainy season of May to October. In Bong County, a heavily populated agricultural region, citizens regularly voice their frustrations at their inability to access markets, hospitals, and government services:

“My village there,” said Sarah, one resident of Bong Mine, pointing across a rice paddy, “has no way to reach [services]. We walk to schools, we walk to clinics, it takes all day.”

The country’s infrastructure network represents the most visible symptom of the former conflict, stifling access to markets outside the capital. These broken roads decrease the food supply and exacerbate hunger and malnutrition in rural Liberia.

Members of a women’s farming group harvest rice in Liberia. / David Benafel, USAID FED

Members of a women’s farming group harvest rice in Liberia. / David Benafel, USAID FED

Before the war Liberia was a net exporter of rice. Today, 97 percent of rice consumption in the capital city of Monrovia is imported. Amazingly, it is cheaper, by volume, to ship rice the 7,500 miles from Thailand to Monrovia than it is from Gbarnga, a leading agricultural community just over 100 miles away.

Yet Liberia has no intention of leaving their economy stuck in neutral. Our partnership with Liberia, the World Bank, the Swedish International Development Cooperation Agency, and the Japan International Cooperation Agency will provide a total of $240 million in the next five years to improve up to 300 miles  of Liberia’s ailing network of roads.

USAID helped by first conducting a cost-benefit analysis of which improvements would yield the most positive and sustainable possible outcome for the people of Liberia.

Photo Credit: USAID Food and Enterprise Development

Because of the poor state of Liberia’s roads, it is cheaper, by volume, to ship rice the 7,500 miles from Thailand to Monrovia than it is from Gbarnga, a leading agricultural community just over 100 miles away. / USAID

Here’s one example of the types of information this analysis considered: When the cost of transportation decreases and the risks associated with traveling these roads dwindle, traders begin to reach these farmers with new information. Fertilizer and improved seeds can arrive at the farms before the planting season, agricultural yields increase, and farmers find it cheaper to deliver produce to the market.

Moreover, children will be more likely to make the trip along the road to school, sick individuals can plan a visit to the clinic, and government officials can better reach constituents with much-needed services. In short, the roads provide a number of ancillary benefits, and all must be factored in when selecting the most cost-effective use of development dollars. It is no simple calculation.

In the course of one month, the USAID team measured the myriad economic benefits from increased activity along the roads against the costs of road construction and long-term maintenance.

Armed with this analysis, USAID began rehabilitation in February 2014, galvanizing access to a better life to approximately 140,000 people who live within a mile and a half of these rural roads, and potentially many thousands more in the broader region through improvements in food security, health, and education.

There is strong reason to believe, in other words, that the figurative roadblocks to peace and prosperity for Liberia may be overcome as soon as the actual ones are.

 

ABOUT THE AUTHORS

Michael Nicholson is an Economist for the USAID Liberia mission @dr_nicholson
Colin Buckley is a Program Analyst at USAID in the Office of Economic Policy @colinhpbuckley
Kristen Schubert is an Economist at USAID in the Office of Economic Policy @KristenSchub

Transforming Cities Today for Equitable Societies Tomorrow

The Medellin metrocable, Colombia

The Medellin metrocable, Colombia / Patrick Benning, Deutsche Welle

I recently spent 50 agonizing minutes gently swaying several hundred feet over a forested mountain in the northeast of Medellín, Colombia. I was sharing a six-person gondola on the city’s famed Telemetro, a lift system constructed to enable poor slum dwellers on the outskirts of the city to more easily access the city center. In Spanish it’s called a teleférico; for me, it was terrifying. The nonchalance with which the other passengers in the car continued their conversation about sustainable approaches to public landscape architecture only made things worse.

We were all in town for the World Urban Forum (WUF), and had signed up for a tour of the city’s Metro system, rightly touted as a model of urban transit which, along with participatory budgeting and social programs that have brought parks, schools and libraries into the poorest neighborhoods, has helped to decrease violence and increase social equity in Medellín.

Despite my rare (as our guide was at pains to make clear) and unnerving experience, WUF’s host city serves as an example of an unlikely urban transformation—proof that committed reform, community participation, and wise investments in urban infrastructure and service delivery can mean drastically better city life for the 3.5 billion people living in cities today.

With an additional 2 billion more people projected to be developing world urbanites by 2050, this is of no small importance.

Kenya's notoriously dangerous city buses, or matatus.

Kenya’s notoriously dangerous city buses, or matatus / Elinrei

This was the seventh session of WUF, an event hosted by U.N. Habitat every two years to discuss the impact of rapid urbanization on communities, economies, climate change, and governments.

For USAID, WUF was an opportunity to showcase our new policy on Sustainable Urban Service Delivery, [pdf] to advance our thinking on how to put the policy into practice, and to hear from experts and officials around the world about their approaches to urban development challenges.

At the heart of USAID’s new policy lies this fundamental principle: Growing cities can help to drive inclusive development; but local governments, organizations and communities must work together to ensure that urban growth does not overwhelm local capacity to deliver basic services, and that the benefits of urbanization are felt by society’s most vulnerable.

The policy ensures that we are able to support cities to deliver transparent, accountable and inclusive services to the urban poor in ways that are politically and financially sustainable, promote resilience and support multi-stakeholder partnerships.

For example, our Climate Resilient Infrastructure Services [pdf] program is working to build the sustainability of five coastal and low-lying cities—Nacala, Mozambique; Piura and Trujillo, Peru; Hue, Vietnam; and Santo Domingo, Dominican Republic—by helping them understand their climate vulnerabilities; develop and test techniques that can rapidly increase the climate resilience of water, transportation and other services; and better protect residents while preventing future development in high-risk areas. Together, the urban areas targeted by the program are home to more than 2.6 million people.

Paving an erosion-prone road in Nacala.

Paving an erosion-prone road in Nacala / Nora Ferm, USAID

In Nacala, Mozambique, which is prone to heavy rains and landslides, we are helping the city create a database that maps vulnerable areas and provide technicians with a better understanding of how weather and climate impact infrastructure services. This work will help to ensure that Nacala and other cities in Mozambique — projected to be the fourth most urbanized country in southern Africa by 2025 — can continue to serve as the country’s economic hubs and drivers of development.

Southern downtown section of Hue. Photo: Spencer Reeder, Cascadia Consulting

Southern downtown section of Hue / Spencer Reeder, Cascadia Consulting

In Hue, Vietnam we are helping urban planners customize and apply a tailored software tool that anticipates the effects of climate change on newly urbanizing areas and critical infrastructure. This work will help lessen the impact of events like the 2006 flood that submerged the city of 340,000 under 6 feet of flood water, paralyzing it for days. Planners have already used the tool to adjust master plans for three zones outside of the city of Hue that are expected to urbanize quickly in the coming years.

And in Afghanistan, through the Regional Afghan Municipalities Program for Urban Populations (RAMP-UP), we are working to strengthen municipalities that have long suffered from underinvestment, limited support, low revenues, and weak institutional capacity. Some of the many successes of the four regionally based projects include implementation of solid waste collection and management programs; the establishment of public-private partnerships to generate revenue and to promote economic growth; support for female entrepreneurs through business training and local craft exhibitions; and increased revenue in some municipalities by as much as 26 percent.

The many debates and conversations at WUF made clear that the work we are doing in cities like Nacala, Hue, and throughout Afghanistan and elsewhere contributes to a mounting global urban agenda that promotes equity, inclusiveness, and the participation of communities, local and national governments, and the private sector.

Cities are growing by 70 million people each year, adding urgency to our efforts. Because cities are engines of growth, if we are successful in helping to build stronger and more resilient cities, we will also be helping to bring about a world without extreme poverty.

ABOUT THE AUTHOR

Jeff Szuchman is a USAID AAAS Science and Technology Policy Fellow working on USAID’s policy on Sustainable Urban Service Delivery and the Post-2015 Development Agenda.

Development Financing “Sea Change” Drives Real Change

farm in East Africa

This farm in East Africa received local financing thanks to a USAID guarantee with a local bank. / Morgana Wingard, USAID.

Earlier this month, Bloomberg News published an article explaining how USAID is undergoing a transformation – attracting private capital, rather than U.S. tax dollars, to finance development:

It’s a sea change for an agency that for years simply gave out money. The program, called the Development Credit Authority, was begun in 1999 [...] with authority from Congress to provide loan guarantees, but in the 10 years before 2011 it backed $2.2 billion in credit. Since 2011, the authority has issued $1 billion in guarantees.

As one of the newest employees of USAID’s Development Credit Authority, I recently had the opportunity to see the impact of this major shift.

I traveled just outside of Dar es Salaam, Tanzania, on my first overseas trip with USAID to visit one of the 140,000 entrepreneurs USAID has helped access local capital from a private entity. As a new portfolio manager for DCA’s guarantees, I wanted verification that a difference was being made here, on this farm, in this entrepreneur’s life.

The farm belongs to Alex, a local farmer that started his business 13 years ago with three pigs and a $30 microloan. His ultimate goal: to rebuild his father’s house and improve the lives of his family members. After his father’s death, his role as the eldest son changed. His drive to succeed is fueled by responsibility toward his family and his will to secure them a better future. He is proud and he is kind. He smiles through the entire visit and is generous and joking, eager to tell his story.

It is a story heavy with reference to microfinance, small loans he was able to secure, and how those first loans gave him the leg up he needed.

Here’s how it works:

  • Access to financing enabled him to grow the farm from three pigs to 30.  The loan also helped him acquire more than 1,000 chickens, two cows, and a side business renting rooms.
  • Today, he owns land, his children are in school, and his dream of rebuilding his father’s house has been realized. But it almost never happened. “It was difficult,” he says, “I did not have any collateral.”
  • Things fell into place for Alex in part thanks to a 2010 partnership between USAID and the local microfinance institution PRIDE Tanzania. With a DCA loan guarantee, PRIDE was able to offer the first ever bond of its type in Sub-Saharan Africa.
Farms like this one, in East Africa, depend on financing to grow. USAID helped this farm access local credit by sharing risk with a local bank. / Morgana Wingard/USAID

Farms like this one, in East Africa, depend on financing to grow. USAID helped this farm access local credit by sharing risk with a local bank. / Morgana Wingard, USAID

Through the bond, PRIDE raised $10 million from private investors, allowing the MFI to open 18 new branch offices offering loans to micro and small entrepreneurs. This opened the door to credit financing not only for Alex, but for 60,000 other entrepreneurs, many of them poor farmers who previously lacked the collateral to qualify for loans.

Through DCA, USAID partners with financial institutions like PRIDE to guarantee loans or bond issuances targeting underserved sectors. The guarantees help to change the perception of creditworthiness of those potential entrepreneurs generally ignored by banks. With the help of a USAID/Tanzania guarantee, Alex was given a chance. Now his financing is growing: in 2013 he secured a loan with PRIDE worth $3,200.

Small businesses are economic drivers. And all small businesses are run by entrepreneurs with big ideas. But ideas cost money, and money is hard to find.

In places like rural Tanzania, the demands of daily necessity can stifle a dream before it begins. Even a $30 loan can be life-changing. And that’s why I work in development: to be a part of some seemingly small but life-changing moment in someone’s life.

10 Ways the U.S. Government is Fighting Global Climate Change (that you’ve never heard about)

Photo Credit: Daniel Byers, SkyShip Films 2011

Nepals Imja Lake / Daniel Byers, SkyShip Films 2011

1. In Nepal, rapidly expanding glacial lakes are often unstable and prone to burst their banks, washing out communities below. USAID is working with high-mountain communities to help measure the impact of melting glaciers on Imja Lake, not far from Mount Everest base camp.

Read about how we’re helping bring Andean expertise to Nepal’s glacial lake region.


Wheat farmers in Kazakhstan are learning about the expected climate change impacts on their crop.

Wheat farmers in Kazakhstan are learning about the expected climate change impacts on their crop. / USAID

2. In Kazakhstan, Central Asia’s breadbasket, USAID is working with the government to ensure wheat farmers get better weather and climate forecasts to make better planting and harvest decisions. A severe drought in 2012 slashed Kazakhstan wheat harvests by half, contributing to a worldwide food shortage that led the World Bank to issue a global hunger warning.

Read more about how we’re helping to preserve “Asia’s breadbasket.”


Ethiopian Sheep

Ethiopian Sheep / Nena Terrell, USAID

3. Cows, camels, goats and sheep are the lifeblood of pastoralist farmers in Kenya and Ethiopia. But these poor farmers live with the constant threat that a severe drought, like the one in 2009, could decimate herds and flocks. USAID is working with locals to develop livestock insurance, new water conservation practices and other measures so pastoralists can survive and bounce back from severe droughts.

Read more about how East Africa’s dryland herders are taking out a policy on survival.


Forest measurement demonstration near Lae by staff of Forest Research Institute, Papua New Guinea.

Forest measurement demonstration near Lae by staff of Forest Research Institute, Papua New Guinea. Photo: Low Emission Asia Forests project / USAID, RDMA

4. Worldwide, forest destruction generates more greenhouse gas emissions each year than do all the trains, planes and cars on the planet. Worldwide, 50 soccer fields of forest are lost every minute of every day, and forests in Southeast Asia are being cleared faster than almost anywhere on earth. In Papua New Guinea, USAID is working to teach forest carbon measurement techniques so that local people and communities can show the progress they are making conserving tropical forest.


multispectral imagery of the Nzoia River basin

The Nzoia River basin lies entirely within the Lake Victoria basin in Kenya. The SERVIR-Africa team captured multispectral imagery of the Nzoia River basin from the NASA’s EO-1 satellite on August 23, 2008 to provide baseline imagery of this frequently flooded area for future analysis. / NASA, EO-1

5. Fighting climate change requires good data. USAID and NASA partner to provide satellite-based Earth observation data and science applications to help developing nations improve their environmental decision-making as well as monitor other issues like famines, floods and disease outbreaks. We are currently working with Tanzania’s weather agency to use satellite data to map climate and weather risks and to create early warning systems, including for malaria outbreaks.

Read more about how USAID uses data to better manage land resources.


The Russian boreal forest

The Russian boreal forest / Vladimir Savchenko

6. What happens when anyone can become a forest ranger? USAID is supporting World Resources Institute with the Global Forest Watch interactive global forest mapping tool. The online tool allows people to access – or upload – near real-time information about what is happening on the ground in forests around the world.


Southern downtown section of Hue. Photo: Spencer Reeder, Cascadia Consulting

Southern downtown section of Hue. / Spencer Reeder, Cascadia Consulting

7. In 2006, the Vietnamese city of Hue was paralyzed for days, submerged under more than six feet of floodwater after a large rain. USAID today helps Hue and other at-risk coastal cities anticipate and address the repeated flooding and other climate impacts on roads and energy systems by helping them plan smarter cities that can weather climate events. In Hue, we are helping urban planners customize and apply a tailored software tool that anticipates the effects of climate change on critical infrastructure.

Read more about how USAID is helping build a climate-smart Vietnam.


Asma Molla with her husband Jalal, their five sons, and their two solar lamps.

Asma Molla with her husband Jalal, their five sons, and their two solar lamps. / Souradeep Ghosh, Arc Finance

8. Worldwide, more than 1.4 billion people lack access to electricity, and 2.8 billion lack access to modern cooking fuels and devices. In Uganda, India and Haiti, USAID is helping low-income people buy devices that improve their incomes and quality of life, and reduce carbon emissions at the same time by expanding the availability of consumer financing for clean energy products. We are also helping 13 companies develop and test business models that will make it easier for tens of thousands of poor people to purchase clean energy products such as solar lanterns and clean cookstoves.

Check out how USAID’s Renewable Energy Microfinance and Microenterprise Program is improving the quality of life of low-income populations while at the same time helping USAID partners to reduce carbon emissions.

Read more about how the Renewable Energy Microfinance and Microenterprise Program is bringing clean energy to people who live most of their lives in the dark.


Fish market in Gizo, Solomon Islands

Fish market in Gizo, Solomon Islands / USAID CTSP, Tory Read

9. Ever hear of the Coral Triangle? This  massive swath of ocean in between Indonesia, Malaysia, Papua New Guinea, the Philippines, Solomon Islands and Timor-Leste is not only likely where your seafood dinner came from – it’s reefs also buffer shorelines against waves, storms and floods, helping to prevent loss of life, property damage and land erosion. But today, as much as 90 percent of Coral Triangle reefs (and the 360 million people that depend on them) are threatened by overfishing, population growth, development, pollution and the impacts of climate change. USAID helps protect this “amazon of the seas” by helping the six Coral Triangle nations better manage the most biodiverse and productive ocean region in the world.

Read more about how the Coral Triangle Initiative is helping protect this unique marine wonder and check out this photostory.


A Cofan shaman.

Strengthening their organizations has enabled the indigenous Cofan people to preserve their cultural identity and ancient knowledge / Thomas J. Müller

10. Deforestation is a major contributor to climate change. Several studies show that deforestation and illegal trafficking of species are significantly lower in indigenous territories, even when compared with natural protected areas, such as national parks and reserves. USAID is equipping indigenous populations to become active guardians of the Amazon biome in Colombia, Ecuador and Peru, and is investing in youth who will continue the fight to preserve the native culture and territory as future scientists, lawyers, doctors and political leaders.

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