USAID Impact Photo Credit: USAID and Partners

Archives for Economic Growth

Facilitating Economic Growth through Infrastructure and Trade

Eric Postel is assistant administrator for the Bureau of Economic Growth, Education and Environment

Sub-Saharan Africa is now home to 11 of the world’s 20 fastest growing economies. Economic growth in the entire region is expected to be strong – between five and six percent – in the next few years, and it will be led by the private sector; foreign direct investment now dwarfs foreign aid in Africa.

Yet, a recent World Bank report noted that regional trade barriers are cost African countries billions of dollars in potential revenue every year. Trade among African countries makes up only 10 percent of the region’s total trade volume. In East Africa, it costs 50 percent more to move freight one kilometer than it does in the United States or Europe, and in landlocked countries transport costs can be as high as 75 percent of the value of the goods they are trying to export.

On March 29, I participated in an economic growth roundtable with the Presidents of Malawi, Senegal, and Sierra Leone and the Prime Minister of Cape Verde to discuss these challenges and to examine ways to strengthen trade and investment, enhance regional integration, and improve the four countries’ business environments.

The four African leaders called attention to a major impediment to trade and investment in Africa: poor infrastructure, which inhibits both regional and global trade.  That is why USAID is working with governments to assess and prioritize critical infrastructure needs.  For example, in South Sudan, USAID helped build a 192-kilometer-long Juba-Nimule Road, the largest infrastructure project ever built in South Sudan, and the young nation’s first paved highway. The road has reduced travel time between Nimule and Juba from eight hours to less than three, linking Juba with Uganda and providing the shortest, most efficient route to the Port of Mombasa in Kenya. The road has generated economic activities along the route, and created employment and training opportunities for South Sudanese communities, thereby enhancing stability.

Meeting with the four leaders allowed me to reaffirm USAID’s commitment to work with both the governments and private sector in all four countries to improve export readiness, and reduce the time and cost to trade.  In Cape Verde, Senegal, and Sierra Leone, USAID has helped establish Resource Centers to assist local businesses take advantage of the provisions of the African Growth and Opportunity Act (AGOA), which offers duty free entry for 6,400 products from qualifying African countries into the United States.

We are also supporting three regional Trade Hubs designed to help sub-Saharan African governments and businesses reduce the time and cost of trade, harmonize trade and regulatory requirements, and work directly with African firms to identify export opportunities. In Malawi, our Southern Africa Trade Hub has helped to streamline customs procedures and develop a national single window system, which allows traders to submit all required data into a single electronic system accessible to all border agencies. Systems like this one significantly reduce the time and cost of moving goods across borders and increase customs revenue.

We have also helped Malawi and Sierra Leone develop export strategies and stand ready to support strategy implementation and the crafting of similar strategies in Senegal and Cape Verde. When developed and implemented in consultation with the private sector, the strategies serve as an invaluable tool to facilitate trade and improve economic growth.

By working to reduce barriers to trade in African markets, USAID supports sustained growth in the region and improves bilateral trade and investment opportunities for both African and U.S. firms.

Water and International Cooperation

Christian Holmes serves as USAID’s Global Water Coordinator. Photo credit: USAID

As we celebrate World Water Day, it is important to consider this: only if we cooperate effectively, can we sustain the supplies of quality water necessary for human life.

The United Nations has set 2013 as the International Year of Water Cooperation. USAID addresses the global challenges of water in close cooperation with non-governmental and civil society organizations that undertake the critical frontline responsibility of developing and implementing water programs. Our partners are advocacy groups that bring both knowledge and passion to the challenge, governments that are dedicated to providing a better life for their citizens, and communities that best understand the challenges and solutions. We have reached out to universities that are creating innovative solutions, to the private sector that can build a new global economy while supporting sustainable development, and to international development and financial institutions that provide essential program development, implementation and financial support.

USAID supports water cooperation at the local, national and regional level. Over last 10 years, we have provided some 50 million people with water and sanitation services.

In Somalia, the School Environment and Education Development for Somalia (SEEDS) provides access to water, sanitation and hygiene facilities on school grounds, promotes hygiene education and trains teachers and government officials. The results thus far: 359 latrines constructed and another 189 rehabilitated in 114 schools; 213 hand-washing facilities installed in 90 schools and five water points completed. All told more than 150,000 people in these communities benefited, and student enrollment increased by more than 32,000. It’s important to note that of those students, 12,666 were girls whose parents would only allow them to attend school with the kind of private, girls-only latrines built as part of this project.

In Nepal, where 66 percent of households experience food shortages each year, USAID’s Nepal Economic Agriculture and Trade (NEAT) program is helping cut input costs and boost crop productivity by installing and rehabilitating irrigation systems and training local technicians to maintain them. That, along with parallel efforts that are part of this project, is expected to directly benefit over 300,000 Nepalese and indirectly impact millions in the country by improving the business environment, facilitating trade flows and strengthening fiscal policy.

We support a wide range of development activities to promote Trans boundary water cooperation. USAID and the University of Colorado Boulder are partnering to assess snow and glacier contributions to water resources originating in the high mountains of Asia that straddle ten countries.  This assessment will be crucial in helping to forecast the future availability and vulnerability of water resources in the region, beginning with accurate assessments of the distinct, separate contributions to river discharge from melting glacier ice and seasonal snow.

In the Asia-Pacific region, USAID has supported the efforts of WaterLinks to build the capacity of Asia’s urban water sector. WaterLinks paired water operators from Asia countries to share best practices to meet the demand for water and sanitation and address related issues like wastewater management and climate change resilience. WaterLinks facilitated more than 60 water operator partnerships, resulting in more than one million people gained improved access to safe water supply and sanitation services.

Also in this region, USAID supports the Mekong River Commission and the riparian countries to plan the sustainable development of water resources in the Lower Mekong Basin (LMB), where 60 million people live and 80 percent of them rely directly on the Mekong river system for their food and livelihoods:  USAID supports projects that seek to improve sediment flows and management; enhance scenario planning approaches and promote sustainable fisheries management

In Africa, to help meet these varied water demands across the Mara River Basin; in 2005  USAID provided funding to launch the Trans boundary Water for Biodiversity and Human Health in the Mara River Basin TWB-MRB project. The project has helped local communities develop new water services, refurbish nonfunctioning water systems, and improve sanitation services.

We also support organizations that will build global partnerships. Last year, USAID joined the Sanitation and Water for All Partnership which brings together governments, donors, civil society organizations, and development partners to achieve sustainable sanitation and drinking water.

As a member of The US Water Partnership (USWP), USAID is part of a national effort to unite American expertise, knowledge, and resources, and mobilize those assets to address water challenges around the globe, especially in the developing world. This week, the USWP recognized thirteen new members, including think tanks, universities, government agencies and for-profit groups willing and ready to join a growing number in this country concerned about global water issues.

While there are multiple ways to cooperate, a constant supply of quality water is the fundamental life force that drives us to work together to safeguard this precious resource.

Lessons of Financial Independence and Self-Sufficiency in Georgia

Working in 85 communities in 10 target municipalities across Georgia, the USAID/New Economic Opportunities (NEO) initiative enables highly vulnerable individuals to be self-sufficient through vocational training.

“Amazing, but I have to put some of my villagers on the waiting list,” smiles Shalva Grigalashvili, plumber and tile-setter from Kvishkheti community in Khashuri municipality. “More and more people in Kvishkheti feel a need to put appropriate tourism infrastructure in place and start to upgrade their houses to attract more visitors,’” explains Shalva. As a popular tourist destination in Georgia, the income of the Kvishkheti population significantly depends on the tourism revenues accrued each summer.

The twenty-two year old Shalva Grigalashvili was one of 20 students who graduated from the USAID-sponsored plumbing/tile-setting vocational training program at the Khidistavi Orienti Vocational College in Gori in September 2012. Along with other top students in his program, the USAID/New Economic Opportunities Initiative (NEO) awarded plumbing and tile-setting toolkits to encourage graduates like Shalva to start their own businesses and support income generation opportunities.

Shalva Grigalashvili, one of USAID/NEO beneficiaries, tiling a guesthouse bathroom in Kvishkheti village of Khashuri municipality. Photo credit: USAID/NEO

Unlike many of his friends and neighbors who travel to work in Tbilisi, Shalva decided to stay in his own village and help other residents improve their living conditions. After completing his training, Shalva started to renovate his neighbors’ houses in Bulbulistsikhe village in Kvishkheti community. Shalva also decided to help a less successful classmate who because of poor performance did not receive a plumber’s toolkit. Through their joint efforts, Shalva gave his friend the opportunity to build upon his training and better master their profession, gain employment and increase his income.  “Hard work,” Shalva admits, “but well worth the effort. It is so rewarding to have such a highly demanded profession that brings you money and respect.”

Shalva is just one of the 254 vulnerable individuals from NEO target communities in the Shida Kartli, Mtskheta-Mtianeti, Racha-Lechkhumi, and Samegrelo-Zemo Svaneti regions of Georgia that benefited from USAID-funded vocational training programs. Within three month of graduation, 168 graduates (66 percent) had already obtained new jobs or improved their employment status. Additional sessions of vocational training for NEO vulnerable beneficiaries in trades such as apparel-making, hair dressing, cooking and construction works are scheduled for early 2013.

Learn more about the USAID/New Economic Opportunities (NEO) initiative in Georgia.

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Q&A with the U.S. Ambassador to El Salvador, Mari Carmen Aponte

U.S. Ambassador to El Salvador, Mari Carmen Aponte. Photo credit: State Department

This afternoon, USAID and five Salvadorian foundations today announced a partnership to combat citizen insecurity and strengthen municipal responses to crime and violence in 50 dangerous communities in El Salvador. This public-private partnership is the largest in USAID history with local partners and ever in Latin America. The Impact Blog Team interviewed U.S. Ambassador to El Salvador, Mari Carmen Aponte, for more information about the partnership and what it means for both American and Latin American citizens. 

Madame Ambassador, we know you are very passionate about crime prevention. How will the new program SolucionES(Solutions) help raise the profile of this issue in El Salvador?

Like people everywhere, Salvadorans want peace and security in their lives and a better future for their children.  I have had the privilege of meeting hundreds of Salvadorans who are working hard to make their country safer and more prosperous, and opening up new economic opportunities for everyone.

I am very proud to see the government, civil society organizations, and the private business sector come together to form the SolucionES alliance to help prevent crime in El Salvador. This new project brings together five leading Salvadoran non-profit organizations and foundations to share their expertise in education, health, research, and community and economic development in order to help prevent crime and violence in El Salvador. These organizations, supported by USAID and the Salvadoran private sector, will implement $42 million dollars in crime and violence prevention programs throughout the country.

Do citizens in El Salvador have an active voice at the crime prevention table?

This project would not possible without the expertise from Salvadoran civil society.  Salvadorans play a vital role in crime prevention and it is in fact their contributions, knowledge, willingness, and most importantly their commitment to crime prevention that give this project its oxygen. The five partners who have formed this alliance have signed up to help implement an ambitious five-year program because they believe it will make a real change in the lives of Salvadoran citizens.

Working closely with municipal councils and local residents, SolucionES will provide assistance for crime prevention plans and activities that include: training for youth and families on conflict prevention, leadership programs for youth, job training and entrepreneurship, after school clubs, and the provision of psychological counseling in schools traumatized by violence.

How does crime and violence in El Salvador affect both Salvadorans and Americans?

Salvadoran citizens are obviously the ones most directly impacted by El Salvador’s crime and insecurity, which is why every Salvadoran citizen has a vested interest in making sure that youth do not join gangs or become involved in criminal activities. The United States recognizes that El Salvador’s gangs and criminal activities have had a negative impact on the country’s ability to grow, while also supporting the growth of gangs in the United States. By implementing crime prevention programs that eliminate the ability for gangs to recruit young people, we not only help El Salvador become a more secure and prosperous country for its own citizens, but we reduce the footprint of transnational gangs in the United States.

As Ambassador to El Salvador, what are your top priorities?

My priorities in El Salvador are laid out in the Partnership for Growth (PfG) Joint Country Action Plan, which was signed by both governments in 2011. PfG is our joint, five-year strategy for expanding broad-based economic growth in El Salvador under an overarching commitment to democracy, sustainable development, and human rights. The Action Plan identifies insecurity as one of the binding constraints to El Salvador’s productivity and competitiveness. Crime and insecurity have had an incalculable effect on the potential growth of El Salvador’s business sector. They have also negatively affected the legitimacy of El Salvador’s institutions of government. The limitations of the state to combat and prevent crime can erode the confidence of the people and can undermine good governance. Crime and insecurity pose a threat to institutional and development advances and the Government of El Salvador and the Unites States are committed to advancing joint efforts under Partnership for Growth.

We know you constantly praise USAID’s work; do you have a favorite USAID project in El Salvador?

The work USAID does in El Salvador is exceptional. They have a great team of talented individuals who work every day to help countries such as El Salvador become stronger societies. They work hard at making sure every project achieves expected results and they represent the United States so well. All of their programs are incredible—from empowering women, to increasing education and economic opportunities, and preventing crime, they are achieving positive and sustainable results. I recently visited a USAID-sponsored initiative called “Youth Committed—I make a difference,” which is a strategic alliance between employers and is designed to enhance employment opportunities for youth in at-risk communities. The program, so far has 4,498 graduates from all over the country who now have the job skills they need for productive employment. Projects such as these and many others are what we as the United States Government try to achieve through the fantastic work that USAID does here.

A New Investment Model for Afghanistan

Alex Thier serves as assistant to the administrator for Afghanistan and Pakistan

This originally featured on the Huffington Post.

When I imagine the holy grail of sustainable development in a rural Afghan province, it is a cycle of inclusive economic growth and investment which, in turn, finances social development efforts with a high level of community engagement. This dream took a significant step closer to reality this week.

I’m proud to announce that the United States government has signed a memorandum of understanding to establish a new and innovative public-private partnership in Afghanistan with the Aga Khan Foundation. This MOU establishes the framework for USAID’s work with AKDN to create a ground-breaking private sector-led model for development in Afghanistan – a model that focuses on economic growth and sustainably.

Both USAID and AKDN firmly believe that Afghanistan’s development will depend heavily on the Afghan private sector and economic growth. With the support of the Department of State, USAID and AKDN will seek to foster such growth by focusing on private financing of social development. With investments in the Afghan private sector, USAID will turn profits into social development funds, using private sector financing to help solidify the health, education, economic and governance gains made in Afghanistan over the past ten years.

Over a five year period, USAID and AKDN will each commit to investing $30 million to leverage private sector investments into social development projects as well as provide direct social development assistance. Proceeds from USAID’s investments will be invested exclusively inside Afghanistan. Our support will center on economic activities that promote cross border trade and regional integration, especially in agribusiness, governance and civil society, market development, health, energy, extractives and manufacturing.

Our shared goal is to leverage the private sector to advance social development. Creating jobs and business through this project should lead to a “virtuous cycle” where economic development is self-enabling and self-sustaining as these for-profit incubators serve as future funding mechanisms for development efforts.

Alex Thier serves as assistant to the administrator for the Office of Afghanistan and Pakistan. 

The Global Movement of Electronic Payments at the World Economic Forum

Originally appeared on The Better than Cash Alliance Blog

At the World Economic Forum Annual Meeting in Davos, Switzerland, this morning, the Better Than Cash Alliance hosted a roundtable discussion with Juan Jiménez Mayor, Prime Minister, Republic of Peru, Dr. Mauricio Cárdenas, Minister of Finance, Republic of Colombia, Florencio B. Abad, Secretary of Budget and Management, Republic of the Philippines, sponsored by Citi and Visa Inc.

Florencio B. Abad, Secretary of Budget and Management, Republic of the Philippines, Dr. Mauricio Cárdenas, Minister of Finance, Republic of Colombia and Juan Jiménez Mayor, Prime Minister, Republic of Peru speak about the transition from cash to electronic payments. Photo Credit: Better than Cash Alliance

The room was full of over 50 thought leaders from the government, banking, information technology, NGO, agriculture and consumer industries discussing the exciting global movement to shift the world away from cash to electronic payments.

The rich roundtable discussion led by The Economist’s Economics Editor, Zanny Minton Beddoes discussed how the transition from cash to electronic payments has the ability to achieve shared goals in emerging markets of increasing transparency and combating corruption, reducing costs and accelerating financial inclusion as well as stimulating long-term economic growth.

“Electronic payments are a powerful tool in development,” said Prime Minister Mayor. With Florencio B. Abad, Secretary of Budget and Management, Republic of the Philippines adding that “digitization of government promotes transparency.”

Insightful thoughts about the benefits and challenges of making this transition were shared by Bill Sheedy, Group President, Americas, Visa Inc., Ertharin Cousin, Executive Director, United Nations World Food Programme, Neal Keny-Guyer, Chief Executive Officer, Mercy Corps, Yawar Shah, Chairman of the Board of Directors, SWIFT and Marc Bichler, Executive Director of UNCDF  and many others.

In response to an audience question about the role of governments in accelerating the pace of change, Minister Dr. Mauricio Cárdenas, Minister of Finance and Public Credit, Republic of Colombia said, “Sometimes governments get in the way,” and shared Colombia’s plan to reduce transaction taxes and promote smart regulation to achieve their vision.

We know that partnerships are critical to our success. Together, with our founding organizations, the Bill & Melinda Gates Foundation, Citi, Ford Foundation, Omidyar Network, UNCDF, USAID and Visa Inc., we are pleased to welcome even more partners to the Alliance that are dedicated to making this transition a reality.

Our newest partner is the government of Afghanistan who will join the governments of Colombia, Kenya, Peru and the Philippines in a commitment to transition from cash to electronic payments. We hope many of our colleagues from the World Economic Forum will join us too.

Sharing the mission of the Better Than Cash Alliance with many of the attendees at the World Economic Forum has created even more momentum behind the movement to transition to electronic payments. With 2.5 billion adults—more than a third of the world’s population—excluded from the formal financial sector, we are determined to quickly move this transition forward making real progress in the year ahead.

A Record-Breaking Year for Mobilizing Private Capital for Development

Credit guarantees are a cost-effective way to get local, private financing into the hands of creditworthy borrowers. From low-income Haitians seeking to rebuild in Port-au-Prince, to women-owned small businesses in Kabul, to solar companies in Uganda, USAID is enabling private markets in the developing world to provide financing to the people who need it most.

USAID’s Development Credit Authority (DCA) worked with 45 financial institutions in 23 countries in 2012 to unlock up to $525 million in private capital for underserved entrepreneurs in developing countries. The financing, made available through 34 partial credit guarantees, is the most USAID has mobilized in a single year.

Putting Local Wealth to Work: Development Credit Authority 2012 Portfolio. Photo Credit: USAID.

An additional 39,000 small businesses will soon be able to access local financing because of the new USAID credit guarantees, reflecting the Agency’s drive to leverage private sector resources for international development. Thanks to increased employment and other benefits for the families of these small business owners and their workers, these loans will translate into more than a million people whose lives have been improved by increased access to finance.

Learn more about DCA on our website.

 

Interagency Panel on Economic Statecraft to Create Competitive Foreign Markets

Eric Postel is assistant administrator for the Bureau of Economic Growth, Education and Environment.

Last Monday, December 10, I had the opportunity to speak at an interagency panel on the topic of Economic Statecraft and Developing Partnerships with the Private Sector.

Spearheaded by Secretary of State Hillary Clinton, Economic Statecraft is a positioning of economics and market forces at the forefront of U.S. foreign policy. The Secretary has stressed that emerging nations are increasingly dealing in economic power rather than military might as their primary means of exercising influence, and the U.S. must be at the forefront, or risk being left behind.

Our USAID Administrator, Dr. Rajiv Shah, opened the event at the Woodrow Wilson Center, with remarks emphasizing the innovative work of USAID in this area – work which may not be as well-known as those in the areas of Global Health, Education and Food Security.

The panelists speak at the Economic Statecraft event. Photo Credit: Pat Adams, USAID.

USAID plays a central role in helping to create foreign markets that are competitive, transparent and integrated into the rules-based global trading system. The Agency has been successful in spearheading pro-business reforms in the last decade in six of the top 10 performers in the World Bank’s Doing Business Index. Technical assistance and support has been provided to numerous countries including Georgia, Columbia and Vietnam with reforming their laws and regulations. While a direct correlation is perhaps not possible to make, imports increased four-fold in Vietnam following the course of six years of U.S. assistance with business climate reforms.

In the last 10 years, USAID has formed more than 1,600 partnerships with over 3,000 private sector players, leveraging approximately $19 billion in public and private resources, expertise and technologies. In 2012, USAID’s Development Credit Authority was designed to use loan guarantees to unlock large sources of local capital, and approved 38 new partial credit guarantees to mobilize a record $700 million in commercial capital in 23 countries. In practice, this means that 140,000 small scale businesses will be able to access local finance – impacting more than a million people.

One of USAID’s goals is to create opportunities and economic expansion in developing countries. This approach is increasingly becoming a new model for the Obama Administration, and is one that engages far more broadly with the private sector, delivers more dividends after foreign aid is removed, and demands more transparency and good practices overall.

Our work in this area demonstrates the need to work closer than ever with our interagency partners, several of whom were also my co-panelists at the Economic Statecraft event: the Department of State, the Overseas Private Investment Corporation (OPIC), the United States Trade and Development Agency (USTDA) and the Millennium Challenge Corporation (MCC). As one example of our interagency coordination, this past Fall, USAID entered into a new global agreement with USTDA. The agreement will enable our missions around the world to perform feasibility studies of energy, transportation, and information and technology projects. Mission Columbia is the first buy-in under the agreement, supporting a feasibility study focusing on smart-grid technologies for large power systems. I anticipate many more partnerships between both the private sector and government, as well as within the government itself in moving forward in this undertaking.

More information can be found on the Wilson Center’s website.

 

Photo of the Week: Accessing Credit for Food Security

Despite the importance of the agriculture sector in Ethiopia, access to credit is limited. USAID uses its Development Credit Authority to share risk with local banks, thus opening financing for underserved but credit-worthy borrowers. Photo Credit: Morgana Wingard

Celebrating Communities of Cooperative Building

As we come to the end of the Year of the Cooperatives, we celebrate our very own USAID Cooperative Development Program (CDP). By helping to solve governance, management and technical challenges, USAID and our partners aid cooperatives in their efforts to create lasting impacts for their members, their communities and their nation.

So what exactly is a cooperative? Believe it or not, you may know about more cooperatives than you think. Cooperatives are businesses with a difference: they are user-owned businesses that aim to satisfy members’ needs, generate profit and increase development within communities. They are a part of everyday life in the U.S. and abroad. We save at credit unions, buy hardware at Ace and True Value, purchase our camping gear from REI, spread Land O’Lakes butter on our potatoes from Maine Potato Growers, drink Welches or Ocean Spray juice, enjoy a Sunkist orange while we snack on Blue Diamond almonds or Sun Maid raisins while reading an Associated Press article.

But more importantly, Cooperatives directly benefit the livelihoods of hundreds of millions of people around the world with millions of jobs, 20 percent of them being international businesses. To support enduring cooperatives, USAID, between 1998 and 2010, funded 184 agricultural projects to strengthen agricultural value networks that included cooperatives, associations, groups and collective action organizations.

Cooperatives impact and improve lives at every socio-economic level, and promote gender equality. In Paraguay, where it is common for women to be economically exploited and not receive pay for their labor and where male family members routinely are credited with the actual labor a woman expends, ultimately marginalizing the impact of support for their families. However, Claudina Portillo rose above these challenges and initiated her own woman-owned cooperative. The Guaaiibi Poty Cooperative exports bananas and pineapple to Argentina. To assist Claudina and the women in the cooperative, USAID’s Cooperative Development Program (CDP) partnered with ACDI/VOCA and trained members of 15 cooperatives, including Portillo’s, on how to overcome gender issues and fight poverty. Session after session, with interest in her cooperative membership growing, Portillo established a youth subcommittee cooperative addressing the need for future farmers. With USAID’s CDP program, gender barriers were eroded; the cooperatives’ membership increased and Portillo’s dream of establishing a family-oriented cooperative to support the community became a reality.

However, cooperative development doesn’t end here. As we come to an end to the Year of Cooperatives, we will continue to increase awareness about the various cooperative development projects being implemented nationwide . We look forward to having many more years of developing and implementing sustainable cooperative programs across the world. View more stories about cooperatives or watch the video.

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