USAID Impact Photo Credit: Nancy Leahy/USAID

Archives for Economic Growth

Microfinance Program Helps South Sudanese Realize Their Dreams

Posted by  on Wednesday, September 28th 2011     

In order to strengthen the financial sector in South Sudan and help provide small entrepreneurs access to credit, USAID is funding the Finance Sudan Limited (FSL) Program, established in 2006 as one of the only microfinance lenders in the country.

In South Sudan, USAID microfinance programs have helped Adam and nearly 10,000 others open new businesses and provide for their families. Economic growth and sustainability will be especially important to the development and stability of the world’s newest country. Photo Credit: FSL

Adam is one of FSL’s beneficiaries in Juba.  In 2007 he earned his living as a driver. After four weeks of training on business management skills and the loan policies, he qualified for his first loan cycle of 1,000 Sudanese pounds, an equivalent of $350 and the maximum amount a new client could receive.

With the loan, he opened his own shop. He was so successful that he was able to finish paying off his first loan in six months.  Now, Mr. Abraham is finishing repayment of a second loan of 2,000 Sudanese pounds ($700) to grow his business and he will be able to access a third loan in the coming months.

“The loan of 2,000 Sudanese pounds I am currently servicing has significantly multiplied my market’s stock and, through FSL, I am also opening another business. Now I am able to feed my family well out of the increased profits of the two businesses.” Adam plans to diversify his business by investing in the transport sector.

New Partnership with Islamic Bank Marks Step Forward for Indonesian Women and USAID

Posted by  on Wednesday, September 7th 2011     

Eid Saeed! This week Muslims around the world have been celebrating Eid ul-Fitr, the holiday that marks the end of Ramadan, the holy month of fasting. And low-income women in Indonesia, the world’s largest Muslim-majority country, have another reason to celebrate.

U.S. Ambassador for Indonesia Scot Marciel (left) and Bank Mulamalat President Director Arviyan Arifin shake hands at the signing ceremony. Photo Credit: USAID/Indonesia

As a result of a new USAID loan guarantee signed on August 23, they can now apply for microfinance loans through Bank Muamalat, the country’s oldest Islamic bank.  This $1.15 million agreement is USAID’s first-ever finance guarantee program with a Islamic financial institution worldwide.

What is Islamic banking?  It means that the bank uses Islamic guidelines for approving financing for applicants with a goal to achieve social and economic justice.  For example, the charging of interest is prohibited by the Koran. So rather than charging profit-motivated interest as a typical bank would, Bank Muamalat’s microloans will be a funding type known as mudaraba, in which the microentrepreneurs and the bank share both the profit and risk.

The loans are available to applicants of any religious affiliation, but the fact that they are compatible with Islamic principles will help reach the low-income women who have been hardest to reach with traditional microfinance programs. Microloans will allow these women to start or expand businesses, helping to increase their incomes and improve living conditions for themselves and their families.

The finance guarantee agreement builds on President Obama’s speech in Cairo , which called for deeper engagement with the Muslim world. It is also a prime example of the type of how USAID partners with established in-country institutions to leverage existing resources and knowledge.

World of Fashion Crosses Paths with Haiti’s Rebuilding Efforts

Posted by  on Thursday, September 1st 2011     

The fashion world and jobs in Haiti aren’t two things you’d normally associate with each other. But an event last week — in Las Vegas of all places — made that connection.

The MAGIC fashion trade event featured a USAID-sponsored “Made in Haiti” exhibit aimed at showcasing Haitian garment manufacturers and creating new business opportunities.

Gina Coles, representing Phenix2, one of the largest Haitian apparel companies, talks to a visitor to the Haiti booth at the MAGIC fashion industry trade show last week in Las Vegas. Photo Credit: Gregor Avril/ADIH

“Our exhibit on Haiti certainly created a lot of buzz as demonstrated by the level of attention our visitors expressed,” said Gregor Avril, executive director of the non-profit Association of Industries of Haiti (ADIH), who was present at MAGIC.

Also on hand to discuss Haiti’s apparel industry were delegates from the country’s largest manufacturing companies, along with representatives from the USAID-supported Haiti Apparel Center, which trains thousands of professionals a year to help meet the need for skilled workers in Haiti’s garment industry.  The Haiti booth showcased shirts, dresses, suits, winter coats, work uniforms, printed T-shirts, blue jeans and even tote bags. The exhibit was part of MAGIC’s Americas Pavilion, hosted by the U.S. Department of Commerce and the Office of the U.S. Trade Representative.

As the largest trade event for the textiles and apparel industry in the United States, MAGIC attracted attendees from well-known companies such as Columbia Sportswear, LL Bean, Jockey, Dickies and Harley-Davidson.

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A Proven Approach to Poverty Reduction

Posted by  on Monday, July 18th 2011     

Eric Postel is the Assistant Administrator of the Bureau for Economic Growth, Agriculture and Trade.

This week, donors and partner governments from around the world are gathering at the World Trade Organization in Geneva for the Third Global Review of Aid for Trade. This session is devoted to examining an important adjunct to trade liberalization, Aid for Trade, which is focused on helping developing countries benefit from fuller integration into global markets. In particular, the Review is focused on showing the results of trade-related assistance. It also offers an opportunity to bring together both trade practitioners and development professionals to advance the Aid for Trade initiative.

Potato farmers in Huambo, Angola, have received USAID help in growing improved potato varieties, increasing their crop production and their incomes. USAID’s TCB evaluation found that TCB projects are a natural complement to agricultural improvement projects, because they increase farmers’ ability to deliver their goods beyond the local market, providing long-term economic sustainability. Photo credit: C. Hamlin/USAID

Aid for Trade, or Trade Capacity Building (TCB), is one of the most successful – and cost-effective – ways of helping entrepreneurs and small farmers in developing countries. TCB streamlines the process of importing and exporting goods and products, linking entrepreneurs and farmers to global markets.

The U.S. government promotes trade and investment through a range of programs. USAID’s TCB database details the scope of TCB projects implemented by all U.S. government entities. Our TCB assistance is not limited to the fastest-growing economies. In 2010, bilateral U.S. government TCB activities targeted 38 Least Developed Countries – 46 percent of all U.S. Aid for Trade.

As the leader of the U.S. delegation to Geneva, I had the opportunity to speak today on a WTO panel and to promote the U.S. government’s approach to TCB, as well as our lessons learned and best practices. USAID is uniquely positioned to offer insights to our partner countries and other donors due to our recently conducted evaluation, From Aid to Trade: Delivering Results (PDF, 2.8MB).

The evaluation consisted of a three-phase, cross-country evaluation of U.S. government TCB, with a special focus on TCB interventions implemented by USAID. A summary of the evaluation (PDF, 440KB) is available, as well as a fact sheet (PDF, 246KB) highlighting the main findings of the evaluation.

Several important lessons emerged from the evaluation.

Critically at a time of scarce resources, the evaluation proved that TCB promotes sustainable development by increasing competiveness and facilitating regional and international trade so that countries can move toward self-sufficient economic growth. The results are clear: each additional dollar invested by USAID in TCB programs is associated with a $42 increase (PDF, 246 KB) in the value of developing country exports two years later.

TCB projects help increase the profits earned by Micro/Small/Medium Enterprises, women and the poor by helping them gain market access for the goods and services they offer or, simply put, helping them sell their products in the global market. Access to new regional and global markets helps generate better profits and therefore reinforces broader poverty reduction efforts among these target groups. The evaluation also found that TCB projects with an explicit focus on women or the poor performed better than the average.

These sessions in Geneva have offered an important dialogue on Aid for Trade. One of the strongest messages coming from all sides is that this is a long-term effort that can continue to yield great benefits as a cost-effective development tool.

New Invasive Species Database: Supports Food Security and Public Health

Posted by  on Monday, July 11th 2011     

By James Hester, Director of USAID’s Office of Natural Resources Management

Witchweed, an invasive species contributing to crop loss in Africa. Photo credit: USDA APHIS PPQ Archive

African farmers lose more than $7 billion in maize crops from the invasive witchweed, according to estimates by the United Nations. Overall, agricultural losses to invasive species may amount to more than $12 billion for Africa’s eight principal crops. African farmers are not alone in this challenge – worldwide, invasive species are among the larger causes of reduced food production and post-harvest losses.

In addition, invasive species can be major vectors for human and animal diseases that were previously not found in a region.  Malaria, West Nile virus, Rift Valley fever, and Lyme disease are just a few of the many diseases that are spreading as the insects that carry them find their way into new regions and countries.

Africanized bees, fire ants, snakehead fish, kudzu, carp, water hyacinth, and thousands of other species are spreading to countries where they are not native, and in which few or no natural predators exist – creating serious economic and social issues.

To get a handle on this problem, USAID, along with a large group of partners, have collaborated to develop an innovative, international invasive species compendium – a scientific database of invasive species, animal diseases, and affected areas around the world.  This new internet-based system is available for public use at no cost.  It presently contains a bibliographic database of about 1,500 invasive species, along with more than 65,000 records and full text documents, both of which are updated weekly.

This is a living compendium, and it will continue to grow over time. It is structured to help scientists with expertise in invasive species communicate with each other, and to support each other – from across the globe if necessary – as they work to address the problems created by invasive species.  It also includes common names in addition to the Latin taxonomic names, as well as other non-technical materials so the general public can take advantage of the depth of knowledge this new website offers.

The website features a library with sections on the characteristics of invasive species, the way they are dispersed, and the impacts they have on economies, habitats, and societies. It also addresses how to detect, manage, and control invasive species. This video introduces the database and explains how to use it.

USAID, along with USDA and other international donors including the U.K. Department for International Development, the Canadian International Development Agency, and Australian Aid, among others, all helped fund this project. USAID’s partner in developing the technical database was CABI – a private, international organization with 46 member countries dedicated to the generation, accessibility, and use of knowledge for sustainable agriculture, environmental management, and human development.

Rural and Agricultural Finance in the Spotlight at Cracking the Nut Conference

Posted by  on Tuesday, June 28th 2011     

By Shari Berenbach, Director of USAID’s Microenterprise Development Office

Some 600 million agricultural smallholders presently earn less than $2 per day – and the press is on to develop effective service methods that both lead to increased food production and food security.  Yet, we know a lot more about what doesn’t work to reach these households than what does. Last Tuesday and Wednesday, leaders in the field of rural and agricultural development and finance met in Washington for the Cracking the Nut conference to address this challenge. The conference, partially sponsored by USAID and coordinated by Anita Campion of AZMJ, aimed to accelerate the impact of the world’s leading rural and agricultural development and finance leaders, uniting them in a collaborative pursuit of learning, leverage, and large-scale change.

The name of the conference references the obstacles in this field – rural and agricultural finance has long been a tough nut to crack. However, as speakers at the conference emphasized, it doesn’t have to remain that way. The innovative application of new technology and ideas to finance has already opened up many opportunities for rural populations. One of the conference highlights was the discussion of different options for increasing banking services in rural areas.

In Kenya, mobile financial services are one means of reducing the cost of outreach to rural populations. Dr. William Jack of Georgetown University discussed this through the example of Safaricom’s M-Pesa service – M stands for mobile and Pesa means cash – which principally offers payments and money transfers through SMS technology. This method has the advantage of being able to increase coverage to a geographically widespread area at a more rapid pace than microfinance institutions (MFIs). Mobile financial services rely upon a network of agents with broad geographic dispersion, and can usually reach people more quickly. They can also team up with MFI institutions to bring a more complete range of mobile banking services. M-Pesa also has lower costs than other payment methods, making it an appealing choice for those with limited income.

With a focus on Latin America, Paul Davis of Pragma and Jorge Daly of Deloitte discussed how to increase bank outreach to individuals in rural areas. Davis discussed one method currently being used in Colombia: the expansion of branchless banking services. In 2010, 360 million transactions per month were conducted in Colombia using branchless banking. This underscores a shift in the attitudes of bank executives towards potential rural customers – once ignored, they are now seen as a profitable investment.

There is also the bottom-up approach of “nano-credit unions.” In Mali, isolated and rural populations, often dependent on rainfall agriculture and lands of diminishing productivity, have little or no access to financial services. Savings groups can act as credit unions to reach these people, according to Dr. John Ambler and Dr. Jeffrey Ashe of Oxfam. NGOs are a crucial partner in this process, because they can introduce savings groups without the larger capital requirements or the regulatory challenges of the formal financial sector. An added benefit to this method is that it also fosters social capital, especially for women, as it creates space for financial conversations and increased solidarity.

The ideas, connections, and impetus for improvement spurred by this conference will continue to develop, as donors, development practitioners, and financiers work to bring services to greater numbers of people and tap into potential markets. Cracking the Nut was one important step in that direction.

Mobile Money in Haiti: More than Just a Concept, a New Way of Life

Posted by  on Wednesday, May 25th 2011     

In early 2011, USAID, in partnership with Mercy Corps, began making payments for emergency food supplies via cell phone-based “mobile money”.   The Kenbe-La e-cash program is assisting more than 5,500 beneficiaries in the St. Marc region of Haiti.  Working with one of the largest cell phone companies in Haiti, Voila, and Unibank, Kenbe-La provides low-cost cell phones to beneficiaries and trains them to use e-cash for their food purchases.  Each month the Haitian recipients receive $50 (US) via SMS (text) message.  The money can be used at more than 50 local businesses to buy four staple products- rice, beans, oil and maize.

Haitians are learning new and innovative banking techniques. Photo Credit: USAID/Haiti

In addition to receiving the e-cash payments, Haitians are learning new and innovative banking techniques: the beneficiaries of the Kenbe-La program are trained on how to save money, make efficient use of their staple foods, and use cell phones as a financial tool.

The Kenbe-La program also works with the vendors to train them to do business using mobile money. They are able to accept e-cash for their products via cell phone and obtain hard cash at a Unibank branch.  Using their e-cash register and a unique pin-code, local business owners are seeing significantly increased sales and profits.

This past Monday, I met store owner Dona Fifi in her shop.  Dona Fifi was one of the first vendors to accept e-cash as tender and reports that besides increased sales she appreciates the fact that she is no longer at risk carrying cash to the bank.  She is currently one of the only e-cash vendors in her community and hopes that her continued participation in the program will only serve to broaden her client base.  Dona Fifi serves as a role model to other small business entrepreneurs and knows the first-hand benefits of USAID’s use of mobile money payments.

While a complete cost-benefit analysis is unfinished, Mercy Corps believes that this program is reducing the amount of labor it takes for them to process payments in these sort of emergency feeding programs.  It also enables participants to avoid spending large amounts of time traveling to the Mercy Corps’ office, waiting in line to receive payment, etc.

Meanwhile, USAID and the Gates Foundation are working to expand mobile banking to the entire country.  By creating a series of “prizes,” our two organizations have spurred the two major cell phone companies in Haiti to invest millions in mobile banking infrastructure, training and marketing.   We visited a Digicell office to watch as company staff enrolled Haitians in the mobile banking program.  More than 100,000 mobile money transactions have already been completed with many more likely in the months ahead.  This will enable “banking services” to be provided to the remotest of areas in Haiti, reduce chances of robbery of cash held by individuals, and reduce transaction costs.  Both the use of technology and the methods of encouraging its use are illustrations of the “new” USAID at work.

USAID Shows Youth the Benefits of Conserving Energy

Posted by  on Monday, January 31st 2011     

By: Olha Myrtsalo, USAID/Ukraine

Saving energy is key to any country’s solid economic future and to its future as an independent country.  Teaching this generation of youth to take ownership over energy-saving best practices proves paramount in ensuring Ukraine’s sustainable energy future. Ukraine’s dependence on imports from Russia for most of its energy supply makes energy conservation especially important. In the country, where 70 percent of heat from the apartment buildings escapes through windows, walls doors and bad heating systems, USAID believes that that every Ukrainian can contribute to saving heat by taking just small steps toward reducing their energy footprint.

USAID’s Municipal Heating Reform project, together with the Ministry of Housing and Communal Services and Ukrainian celebrities, announced the Energy Efficiency Season to make energy efficiency fashionable and inspire Ukrainian youth to demonstrate responsible attitudes toward energy consumption.

Throughout the course of the Energy Efficiency Season campaign, four gala-concerts and TV programs (all incorporating the word “teplo” or “heat” in Ukrainian): Teplo Fashion, Teplo Feng Shui, Teplo City and Teplo Ukraine will feature tips on how to get warm and keep warm with simple and low-cost energy saving measures. The events will promote heating efficiency through fashion events and give celebrities a platform from which they can share ideas on energy conservation drawing from their personal experience.

Ukrainian singer Alyosha, who represented Ukraine at the 2010 Eurovision Song Contest, explains why she decided to join USAID’s Energy Efficiency Season campaign. Photo Credit: USAID Municipal Heating Project

Sarah Wines, the USAID Acting Mission Director, observed, “If each of us begins to make small changes in our lives, we will all contribute to saving energy. And if each of us tells our friends, our parents, our brothers and sisters that they too can make a difference by just changing their habits, we will help this country achieve energy independence and make it a leader in the world and in Europe on how to live in a new era of lower energy consumption and clean energy.”]

According to Olga Romanyuk, the Deputy Minister of Housing and Communal Services, decreasing Ukraine’s dependency on imported fuel is a key task for the Ukrainian Government.  She said that this can only be achieved by implementing energy saving technologies and educating the youth on how to conserve energy.

Microfinance Empowers Entrepreneurs in Tanzania

Posted by  on Tuesday, January 25th 2011     

By Gregg Rapaport, Development Outreach and Communications Program

In a packed and conversation-filled room in northern Tanzania, the wheels of microfinance are spinning – quietly and efficiently, yet furiously. Every week, this group of people owning and running small businesses worth less than $700 comes together in Arusha to make payments on microloans received from Promotion of Rural Initiatives and Development Enterprises Limited (PRIDE), a Tanzanian microfinance institution. Each also deposits earnings into a savings account, in fulfillment of the requirement that borrowers incrementally strengthen their financial position. The U.S. Agency for International Development (USAID), through a 75% bond guarantee, has helped PRIDE maintain and increase microcredit activities.

Microfinance Empowers Entrepreneurs in Tanzania Photo credit: Gregg Rapaport/USAID

When called to the front of the room, borrowers push a small pile of well-worn Tanzanian bills across a table toward three employees. The first counts the money, the second makes a notation or two on a printed spreadsheet, and the third slides change back across the table. These transactions, happening one after another, are banal to watch but breathtaking to consider. This is innovative thinking – applied to small lending – at work. Entrepreneurial but poor Tanzanians, who are shut out of traditional sources of credit, are being empowered (through microcredit loans up to $650) to realize all manner of small business dreams, and lift themselves and their families out of poverty.

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Afghan Partnership Opens Modern Carpet Processing Facility

Posted by  on Friday, January 14th 2011     

By: Robert Sauers, USAID Afghanistan.
Originally posted in DipNote the U.S. Department of State Official Blog

Afghan carpet seller

Afghan carpet seller watches pedestrians as he waits for customers in Kabul. October 21, 2007. AP File

The Paiman Atlas Group celebrated the opening of its new modernized carpet processing facility yesterday in Dasht-e Barchi, Kabul. Supported by a public-private partnership facilitated by USAID’s Afghanistan Small and Medium Enterprise Development (ASMED) project, Paiman can now produce up to 100 square meters of carpet per day, a 120 percent increase from its previous capacity.

With revenues of more than $150 million in 2009, carpets are Afghanistan’s leading export. However, the current lack of large-scale processing facilities in Afghanistan results in more than 80 percent of Afghan carpets being shipped to Pakistan for finishing. These carpets are then exported with “Made in Pakistan” labels, resulting in a loss of opportunity for Afghans to capture the full value of their products. With the new machinery, Paiman’s processing complex will enable Afghan carpet producers and traders to export their products directly under the “Made in Afghanistan” label.

Paiman is a partnership of six Afghan carpet producers and exporters whose vision is to create domestic processing and finishing services for Afghan carpets. The new carpet finishing complex will help Paiman export Afghan carpets directly through Turkey to U.S. and European Union customers and will encourage other Afghan producers and exporters to explore direct export opportunities.

Speaking at the event, Deputy Minister of Commerce Ailaqi remarked that Afghanistan’s “carpet industry is the outcome of hard work, creativity and art of Afghans with endless dedication and a rich history that creates jobs for more than two million men and women. It is a great source of income for people and for the country.” Paiman Chief Executive Officer Hasmatullah Haidar, and representatives from the Afghanistan Investment Support Agency, Export Promotion Agency of Afghanistan, Afghanistan Chamber of Commerce and Industry, and the Afghan Carpet Exports Guild also attended the opening celebration.

Through its ASMED project, USAID seeks to improve private sector productivity and increase employment opportunities in Afghanistan. The project encourages the development of Afghan businesses through support for capacity building, technology transfer, and investment, including public-private partnerships.

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