USAID Impact Photo Credit: USAID and Partners

Archives for Economic Growth

La Idea Initiative Seeks Entrepreneurs with Business Partnerships in Latin America

Last month, I sat in front of a crowd of over 240 aspiring entrepreneurs in Bogota, Colombia, to help facilitate a three-hour session on how to apply to start and scale up innovative businesses with the support of La Idea and the La Idea Business Competition. I was thrilled to be joined by our La Idea partners Susan Amat, Founder and CEO of Venture Hive; Arnoldo Reyes, Head of Market Development for Ebay/PayPal for Latin America and the Caribbean region and Paula Cortes of Accion International. We were blown away by the participants’ excitement about La Idea and their spirit of entrepreneurship.

La Idea connects entrepreneurs within the Latin American diaspora throughout the Americas to each other and to local and regional small business support centers, to provide resources and connections to help entrepreneurs take their businesses to the next level. It promotes partnerships between businesses throughout the Americas and launched the La Idea Business Competition, an opportunity for innovative social entrepreneurs with breakthrough ideas to turn their business visions into reality.

Bogota, Colombia is not the only place where La Idea has convened eager entrepreneurs to learn more about its Business Competition. At business advising events it organized throughout the U.S. and Latin America, entrepreneurs have learned about a variety of ways to grow their businesses and partner across borders. Photo credit: La Idea

Entrepreneurs convene in Bogota, Colombia to learn more about its Business Competition and ways to grow their businesses and partner across borders. Photo credit: La Idea

Through the competition, ten businesses—which must represent a collaboration between a U.S.-based entrepreneur and a Latin America-based entrepreneur—will receive a coveted spot in the Finalist Showcase televised by Univision Media, where they will pitch their business ideas live in front of a panel of celebrity judges. Winners will receive a prize of $50,000 and tailored support services to help get their businesses off the ground.

In order to attract even more great business ideas, La Idea recently extended the deadline for applications to 5:00 pm EDT on September 20, 2013. More details on the application process and eligibility are available at www.laidea.co.

In the United States there are over 2.3 million Latino entrepreneurs opening businesses at twice the national rate—making them the fastest growing entrepreneurial segment in the country. Moreover, many countries in Latin America are on the rise. La Idea hopes to unleash the potential of Latino entrepreneurs to promote economic development that transcends borders. By supporting Latino entrepreneurs in the U.S. and throughout the Americas, La Idea aims to translate their knowledge and capital into tangible improvements in Latin America, as well as build on the emerging strength of networks and markets in Latin America.

La Idea is a public-private partnership between the U.S. Department of State, the U.S. Agency for International Development, Boom Financial, Inter-American Development Bank, Overseas Private Investment Corporation, Small Business Administration, Univision News, WellSpace, Accion, and FHI 360. It builds on the unique strength of each of the partners, including the U.S. Department of State and USAID’s experience coordinating similar business competition plans focused around diaspora communities.

These business plan competitions have included the African Diaspora Marketplace (ADM), Caribbean Idea Marketplace, and Libya Diaspora Marketplace (LDM). Each of which tapped the power of diaspora communities in the United States—and their strong ties to their countries of origin or heritage—to develop innovative enterprises that support USAID’s development objectives and grow small and medium-size businesses as drivers of economic growth.

Already, the winners of these competitions are making good on their businesses’ potential for development impact. Sproxil, a winner of the 2011 African Diaspora Marketplace, was recognized by Fast Company earlier this year as the seventh most innovative company of 2013 for its product that fights prescription drug counterfeiting in Africa. I cannot wait to see who wins the La Idea Business Competition and the innovative businesses they will bring us for 2014 and beyond.

To learn more about application and eligibility requirements for the La Idea Business Competition, visit www.laidea.co and join the La Idea community on Facebook

From the Field in Georgia: Collaboration Bears Fruit for Georgian Farmers

I love a sweet, juicy mandarin and I’m lucky to live in a country where these near-perfect citrus fruits are grown. Farmers here in Georgia grow some of the best mandarins in the world. But getting these delicious fruits to market and eventually into the mouths of other mandarin-lovers can be a challenge.

Revaz Kokobinadze is a mandarin grower from the Adjara region in western Georgia. On his own, he only has cash on hand to purchase 60 percent of the materials he needs to grow mandarins on his quarter-hectare orchard. But now that he is part of a farmers’ group established through USAID’s Economic Prosperity Initiative, he and farmers like him are able to obtain interest-free loans to get what they need for successful mandarin production.

Revaz Kokobinadze in his orchard. Kokobinadze is one of the more than 1,000 farmers who will benefit from USAID supported interest-free loans. Photo credit: Deloitte/USAID Economic Prosperity Initiative

Revaz Kokobinadze in his orchard. Kokobinadze is one of the more than 1,000 farmers who will benefit from USAID supported interest-free loans. Photo credit: Deloitte/USAID Economic Prosperity Initiative

USAID has helped establish 50 farmer groups for Georgia’s two leading agricultural exports — mandarins and hazelnuts. Farmers were reluctant to come together at first, but they soon realized the commercial incentives of working together. As the saying goes, sometimes it takes a village. Now, these farmers make decisions together on everything from production and management practices, to the types of treatments to use.

To help these farmer groups succeed, in June 2013 USAID’s Economic Prosperity Initiative developed an interest-free financing scheme, which allows smallholder farmers to buy the agricultural materials they need and conduct soil testing. When farmers join together to make purchases, they can buy in greater volume and get a better price.

USAID then linked the farmer groups to a microfinance organization to provide credit for agricultural materials and laboratory services. The arrangement allows farmers to purchase what they need at rates they could otherwise not afford. The microfinance organization pays the suppliers and the farmers pay back the interest-free loans after the harvest.

More than 1,000 mandarin and hazelnut growers will benefit from these interest-free loans.

Belonging to a farmer group not only enables farmers to afford necessary materials, but also empowers them to improve management practices through consultations with extension specialists as part of USAID’s Economic Prosperity Initiative.

These same groups will see additional benefits of farmer groups during harvests later this year. USAID is helping to establish partnerships with hazelnut processors and mandarin packaging houses. Farmers now have what they need to produce better quality products on a larger scale, and they are more likely to receive a better price for their products.

Because of the loan he received, Revaz anticipates a greater harvest of high-quality fruit this year. “It was a simple procedure,” Revaz says. “A representative of the microfinance organization came to my plot and interviewed me about my farm’s production.” Once he submitted his application, the approval took less than 20 minutes.

By working together, Georgia’s farmers are finding it easier to get their delicious produce to market, and that’s good news for mandarin consumers like me in Georgia and the entire region.

Learn more about the Economic Prosperity Initative.

Fixing A Broken System: A Conversation With Nobel Peace Prize Winner Professor Muhammad Yunus

“Whatever banks did, I did the opposite. If banks lent to the rich I lent to the poor. If banks lent to men, I lent to women. If you had to go to the bank, my bank went to the village.” Maybe these sound like the words of a man who doesn’t know business. But they are in fact the words of one of the world’s greatest social businessmen, Nobel Peace Prize recipient, Congressional Gold Medal winner, and Presidential Medal of Freedom winner Muhammad Yunus.

Dr. Muhammad Yunus, the 2006 recipient of the Nobel Peace Prize visited with USAID staff on July 22, 2013 to discuss how to ‪end extreme poverty‬. Photo credit: Pat Adams, USAID

On July 22, 2013, the USAID community had the privilege of hearing Mr. Yunus speak. He spoke about starting his various businesses, the Grameen Bank in particular, and about the difficulties faced when trying to help those in need. Grameen bank is a microcredit lending bank, founded in 1983 but with origins dating back to 1976.

That year, Yunus went into the poorest rural communities in Bangladesh and saw what he calls “a desperation”; to escape poverty, to escape the violent loan sharks who ruled the areas, a desperation for a better way of life.

Without a thought to the positive global impact that Grameen bank would one day have, he decided he could fix the problem or at least he could make a difference here in this small area. He began using his own money for microcredit loans in these rural regions, taking the place of the loan sharks. He believed that if you used business as a tool to produce more money, not for profit but to continue the cycle of lending then it would help the greatest number of people possible.

Today Grameen bank has branches all over the world, including several in the United States. He has been dubbed one of the greatest global thinkers of our time and there is a lot that can be learned from him and his style of aid.

At the end of the day, said Yunus, the real issue is the system in its entirety, as it produces poverty and unemployment: “Should the system condemn the people and put the people in the trash, or should the people condemn the system and put the system in the trash?”

To remedy this, Yunus believes USAID should invest more in local civil society and less in foreign governments when it comes to aiding native populations. In fact, as Administrator Shah noted, this is one of the many initiatives USAID Forward is taking on.

In addition, Yunus said that although the Agency is dedicated to the betterment of humankind it is still a part of the U.S. government and therefore like most governments, not as adept at innovation as it could be. The more lithe and adaptable the organization, and the less restricted by protocol and procedure, the more effective it will be at producing the necessary change.

 

“Come Back at Night and You Will Understand”

Rajiv Shah serves as Administrator at USAID

This plain-spoken answer—from a father who lived in a village without access to electricity—came in response to the question: What is life like without electrical power?

For most of the world, electricity allows business to flourish, students to study, and clinics to run long after the sun goes down. But for 600 million Africans, these opportunities simply don’t exist.

As a result, a sick child in Nigeria is unable to take antibiotics because the medication has to be refrigerated. A farmer in northern Ghana purchases a cell phone to connect himself with the world, but every other day he has to walk to the nearest electrified village and pay to charge the phone—a waste of time and money.

These difficulties are repeated on a large scale across the continent. Nearly half of all businesses try to cope with frequent power outages by using expensive stand-alone diesel generators that also pollute the environment. These stop-gap measures are no basis on which to build a modern economy.

In order to shape a brighter future, we cannot rely on donors alone. African countries must have transparent, accountable, and streamlined systems that attract private investors and developers. To help shape this environment, the United States, together with African governments and the international business community, is kicking off an initiative to bring more reliable, clean power to Africa. Announced by President Obama in Cape Town, Power Africa will create the conditions needed for long-term investments in energy infrastructure – generators, transmission lines and distribution systems. In ten years, we’ll bring 10,000 megawatts on line – and bring power to millions of African homes and businesses.

At its core, Power Africa represents a new model for development that is beginning to define the way we work around the world. Like the New Alliance for Food Security and Nutrition and the Call to Action in Child Survival, Power Africa harnesses public-private partnerships and demands greater accountability from our partners to deliver incredible results.

On his trip to Africa, the President recognized the profound potential of this new model. “[Power Africa] is representative of my new approach when it comes to development,” President Obama explained in Tanzania. ”I believe the purpose of development should be to build capacity and to help other countries actually stand on their own feet… Instead of perpetual aid, development has to fuel investment and economic growth so that assistance is no longer necessary.”

Through Power Africa, we will help create incentives and reduce risk for American investors in Africa, while working with African governments to modernize inefficient old networks and establish fair and transparent partnerships with the private sector. We will also be working with businesses themselves – American, African, and others. Investment specialists will analyze barriers to investment and then work with all parties to remove those roadblocks.

Once the first Power Africa projects succeed in bringing electrical power to African communities, the impact of those examples will encourage other ventures to follow in their footsteps. Electricity provides the countless opportunities and freedoms that define development.  It will take a great deal of commitment and patience to solve this problem, but today we know it can be solved.

Resource:

Follow @USAIDAfrica on Twitter to learn about our global development work in the continent!

Financing a Clean Energy Future for India

India is just a few years away from becoming the world’s most populous country, but it’s a far cry from the world’s largest energy producer. The government of India has set ambitious targets to meet this demand and its continued economic productivity will hinge on its ability to meet them. The challenge—as well as the opportunity—is significant.

The clean energy investment fund will benefit tens of thousands of Indian families. Photo credit: USAID

For this reason, USAID’s Development Credit Authority (DCA) has pursued an unprecedented new partnership to facilitate a groundbreaking investment in Indian clean energy. Through a DCA loan guarantee, announced by Secretary of State John Kerry yesterday at the start of the fourth annual U.S.-India Strategic Dialogue, our partners Nereus Capital and Northern Lights Capital Group will make a $100 million investment in clean energy production. The partnership is expected to create hundreds of additional megawatts of sustainable energy capacity and will help to advance India’s nascent clean energy industry.

Here at the Development Credit Authority, this is the first time that we’ve partnered with a clean energy investment fund. We’re eagerly pushing the envelope to find new ways to stretch our investment even farther and for greater impact. While DCA averages an already incredibly high $28 leverage ratio for every dollar we invest—in this deal, we will secure a leverage rate that is exponentially higher. Through a comparatively tiny investment, we can catalyze four to five medium-scale clean energy projects directly and up to ten to twelve indirectly in sectors such as wind, water, solar, or biomass.

This investment could eventually create as much as 300 – 400 additional megawatts of sustainable energy capacity, which is equivalent to lighting the homes of tens of thousands of Indian families. These projects will serve a variety of customers, including both households that get by on just few dollars a day as well as larger or even multi-national companies.  Through reliable access to power, these companies will be better equipped to create jobs, make large-scale investments, and contribute to economic growth.

Incredibly, we can do all of this at virtually no cost to the American taxpayer.

By thinking creatively about how we partner with private sector actors, we’re continuing to use our resources and capacity more smartly and efficiently. We’re helping to ensure that U.S. financial institutions can securely invest in this market and build a clean energy future for India.

On the Front Lines in Africa

Nowhere is development such an important part of U.S. engagement as it is in Africa. In anticipation of the President’s trip next week, we thought we’d share some of our favorite FrontLines stories about our work in Africa. President Obama’s strategies on global development and Africa have laid the foundation for a new approach that focus on sustainable development and a new operational model for assistance. We look forward to the opportunities that this visit will bring.

Our Favorites include:

Food Security

Child Survival

Innovation

Women and Development

Conflict Mitigation and Prevention

  • Ethiopia: Peace Brokers: USAID-sponsored reconciliation efforts usher in historic truce accord in Ethiopia’s pastoral south.

Democracy, Human Rights, and Government

Humanitarian Assistance

Resilience

  • Niger: Niger’s Tree of Life: In the face of recurring food insecurity and acute malnutrition, USAID is promoting the cultivation of hardy, vitamin-packed moringa as one way to build resilience in communities in the drought-prone Sahel.

Follow @USAID and @rajshah on Twitter for updates on the trip and to learn more about our work in Africa. Join the conversation using #USAIDAfrica.

Announcing the National Impact Initiative at the UK’s G8 Social Impact Investing Forum

This originally appeared on the White House Blog.

Yesterday, at the UK’s G8 Social Impact Investing Forum in London, the Administration launched the National Impact Initiative (NII) to expand the use of impact investing as an element of the Administration’s strategies for economic growth and global development. In London, 150 top government officials, business executives, social entrepreneurs, philanthropists and academics who have been leaders in the burgeoning field of impact investing will discuss how to increase impact investing in order to both accelerate economic growth and job creation in G8 nations as well as leverage new capital flows toward the Millennium Development Goals. The U.S. has been at the forefront of this field.

Impact Investing is the practice of channeling capital toward businesses that intentionally generate economic return and public benefit. Such businesses openly track and measure social, environmental, and governance (ESG) considerations alongside their financial returns. These firms often are described as creating models of shared value or sometimes referred to as social enterprises. Impact investing often encompasses support for firms operating in target geographies, specific sectors, or employing specific populations.

Over the past four years, President Obama has worked to support impact investing with a series of domestic and international policies and programs including:

  • The Regional Innovation Clusters funded by the Department of Commerce and the U.S. Small Business Administration (SBA) to spur innovation and job creation. In addition, as part of Start-Up America, the SBA also launched a $1 billion Impact Investment Fund and a $1 billion Early Stage Fund through its Small Business Investment Company (SBIC) Program;
  • The Freshworks Fund invested in by the Treasury Department in 2011 as part of a strategy to invest in market-based models to tackle food deserts;
  • The Overseas Private Investment Corporation (OPIC) has a long history of transforming private capital into solutions for common social and environmental challenges around the world and today is a leading impact investor in the U.S. Government, with $333 million committed to impact investing in 2012 in sectors including healthcare, education, renewable resources and water; and
  • The Accelerating Market-Driven Partnerships initiative launched by the State Department in 2012, a public-private partnership that mobilizes innovation and investment around critical global challenges.

These efforts and dozens of others are part of the NII and will help the government to partner with business and to drive better results for citizens in the U.S. and around the world. Such a coordinated approach will create good jobs, drive sound financial returns and support positive societal outcomes.

As part of the NII, we announced important new initiatives at this week’s meeting in London:

  • Global Development Innovation Ventures (GDIV): A joint initiative of the U.S. Agency for International Development (USAID) and the UK’s Department for International Development that will strengthen the impact investment pipeline by piloting, rigorously testing, and scaling cost-effective development solutions with the potential to reach millions of people without long-term donor support. GDIV builds on the cutting-edge Development Innovation Ventures program launched by USAID in 2010, adding even greater funding, flexibility, and reach.  You can learn more here.
  • Small Business Investment Company (SBIC) Early Stage Fund: Today, the SBA announced a new round of solicitation for the SBIC Early Stage Investment Fund that will increase the amount available for investment from $150 million to $200 million annually. In addition, the SBA announced that it has raised the amount of SBIC leverage from $80 million to $150 million that Impact Investing Funds can receive and recently expanded the definition of impact investing to include rural communities. You can learn more here.

Looking ahead, the Obama Administration will continue to expand the NII by advocating policies that support the continued growth of impact investment and social enterprises. Such efforts will be guided by a clear set of principles that combine a market-oriented approach with a strong focus on the public interest:

  • Align incentives to catalyze impact investing;
  • Create enabling regulatory frameworks for impact investing;
  • Engage private institutions and stakeholders in active dialog around impact investing issues;
  • Promote impact investing standards, transparency, and learning; and
  • Allow impact investing to complement policy objectives.

Elizabeth Littlefield is President and CEO of the Overseas Private Investment Corporation (OPIC); Karen G. Mills is the Administrator of the U.S. Small Business Administration (SBA); and Rajiv Shah is the Administrator of the U.S. Agency for International Development (USAID).

Advancing Food Security by Opening Markets

This originally appeared on the UnitedStates Trade Representative Blog.

Ambassador Isi Siddiqui attended The Chicago Council’s Global Agricultural Development Initiative’s fourth annual Global Security Symposium yesterday in Washington, D.C. The symposium was on “Capitalizing on the Power of Science, Trade, and Business to End Hunger and Poverty: A New Agenda for Food Security.” As chief agricultural negotiator in the Office of the U.S. Trade Representative, Ambassador Siddiqui is responsible for bilateral and multilateral negotiations and policy coordination regarding food and agricultural trade.

We face dual challenges in food security: We need to get food to the people who need it today and grow more for the people who will need it tomorrow. Open, well-functioning markets can help.

Global markets are an essential element of food security. Open markets for agricultural commodities, agricultural inputs, and food products help to efficiently move these goods from those who develop and produce them to those who need them, benefiting both producers and consumers.

Markets that allow businesses and countries to share technologies help producers increase yields and output, reduce post-harvest losses, and adapt to climate change, while preserving the incentives for future innovation and transfer that are critically important to improving food security.

Rural chicken farmers like Sagnol Salimata, pictured here, have received technical training and barn-construction support through agricultural development projects. Photo credit: Jake Lyell.

The U.S. Government’s global hunger and food security initiative, Feed the Future, is driving a new model for development that, among other activities, integrates trade. Trade policies that promote open markets enable job creation, and can sustain and accelerate economic growth around the world.

The Office of the U.S. Trade Representative (USTR) lends our expertise and broader global work—increasing the transparency, predictability, and openness of agricultural trade through bilateral and multilateral exchanges—to the initiative’s goals of reducing global hunger, poverty, and undernutrition.

At the World Trade Organization (WTO), for example, we’ve put forth proposals in the area of trade facilitation that would go a long way toward removing barriers to agricultural trade by cutting and reducing border delays. Reducing delays for import clearances is particularly important for perishable food and agricultural products to help ensure that quality products reach consumers.

We’re also working closely with our partners at the Asia-Pacific Economic Cooperation (APEC) on the APEC action plan on food security to continue progress toward our shared goal of free and open trade by 2020. Trade agreements, such as the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), and ongoing negotiations like the Trans-Pacific Partnership (TPP) are also important tools to facilitate trade, provide reliable market access, and establish dependable distribution systems and supply chains.

Recognizing that agricultural production needs to substantially increase to meet growing global demand for food, USTR promotes science-based, transparent, and predictable regulatory approaches that foster innovation, including in agricultural biotechnologies. These types of approaches contribute significantly to a safe and reliable global food supply as the world’s population grows, and they help producers adapt to climate change.

Through Trade and Investment Framework Agreements (TIFAs), we engage countries in discussions on trade and investment policy reform. We have TIFAs with Feed the Future focus countries like Ghana, Rwanda, Liberia, and key regional economic organizations like the Common Market for Eastern and Southern Africa (COMESA), to name just a few.

In East Africa in particular, there is great opportunity for spurring growth by ensuring Feed the Future and the U.S.-East African Community (EAC) Trade and Investment Partnership (TIP) synergies. The EAC and the United States have taken important steps to advance the TIP, which supports regional integration of the EAC and recognizes the importance that trade and investment play in economic and social development, including in agriculture. Through this partnership, we’re focusing on trade facilitation, a regional investment agreement, stronger private sector linkages, and capacity building.

USTR, the U.S. Department of Agriculture, the U.S. Department of State, and the U.S. Agency for International Development work collaboratively to help countries move from aid to trade.

Together, our efforts to create transparent, efficient global markets help advance global food security.

Follow USTR on Twitter @USTradeRep and read more on the USTR blog. Join USTR and other U.S. Government trade agencies on Twitter every Thursday this May for #TradeChat

Optimized Lending Procedures Improve Access to Agricultural Loans

Banks in Azerbaijan in general have cumbersome lending process. Lengthy application forms often require information that is not crucial or needed for granting small or medium-sized loans. Collateral requirements are also onerous requiring additional forms and information. Banks grant loans based on collateral, applicant’s and co-signer’s income rather than taking lending risk. For agricultural lending this means that the time may not be worth the hassle to even apply for a loan. USAID worked with DemirBank to change their lending practices and improve farmers’ access to loans.

DemirBank is one of the leading banks in Azerbaijan with 23 years of operation. The bank has been one of the most active beneficiaries of the USAID assistance. Through its Azerbaijan Competitiveness and Trade (ACT) project, USAID has trained 212 loan officers and managers throughout the bank’s network on a variety of topics including risk-based agricultural lending, sales techniques, early fraud alert systems, etc. The trainings also built the skills and knowledge of the bank’s in-house trainers so that they can provide training from time to time.

An international expert trains the bank officers on new loan approval templates. Photo credit: Vasif Badalov, USAID ACT project

In addition to the intensive training, USAID experts also worked with the bank’s management to improve the bank’s agricultural lending approach by revising and simplifying the credit application forms, lending policies and procedures. The revised consolidated loan application forms have several advantages. They a) link a client’s credit history with the loan value, for which the customer is eligible to borrow; b) include credit scores, a memorandum and committee decision; c) save time by offering “check the right answer” options; d) provide color coding that flag risks; and e) facilitate decisions based on scores. This shortens the time it takes to approve a loan and provides a better evaluation of the borrower in terms of risk.

DemirBank’s management deemed the pilot testing of the consolidated application form in Guba and Gusar branches to be very successful. These branches issued 141 micro-loans between May and November of 2012 using the new forms.

“We are very satisfied with the new approach and its contribution to simplifying the loan application process and improving client outreach,” said Mr. Seymour Imanov, Manager of the Gusar Branch.

Following the success of the pilot test, DemirBank introduced new procedures at all their branches and consolidated all lending operations below 3,000 AZN (3,825 USD) under one system, that will use simplified loan procedures developed with USAID support. To ensure that all branches adopt the new forms in their lending operations, USAID is assisting the bank to train all credit managers in implementing the new procedures.

As part of this effort to streamline the credit application process, DemirBank intends to buy new software, so that it can track all loan approval procedures and processes as well as expand its outreach, facilitate collection of information in the field, accelerate disbursements, and increase productivity.

Pounds of Prevention – Focus on Money & Microfinance

What does having access to savings and credit have to do with disaster risk reduction? What does having access to savings and credit have to do with disaster risk reduction?In this next installment of the USAID Pounds of Prevention series (PDF), we discuss the important role that financial services play in reducing vulnerability to disasters and facilitating post-disaster recovery. We travel to Africa, Asia and Latin America and the Caribbean where USAID supports a number of efforts that increase people’s access to finance and also strengthens the preparedness capacity of the providers themselves. Photo by USAID.

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