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Archives for Economic Growth

Stories From the Field: Iraq

Salah Naeem Hanna was forced to flee his home of 40 years because of the sectarian violence that gripped Baghdad in 2006. With his family of four, he moved back to his childhood hometown in the Nineveh Plains in northern Iraq and became an internally displaced person (IDP).

“We suffered a lot. I could not get a job” said Hanna. “My two children had to drop out of school to find work, but they could only find temporary, low-paying jobs. They were difficult years.”  In 2010, Hanna, a cook by training, opened a small store selling frozen foods using his family’s meager savings.  He named the store, which provided a small improvement in the family’s financial situation, “Al-Hilal Food Supplies.”

Hanna wanted to expand the small business but lacked the money to do so.  In February 2012 he received a loan as part of the USAID-supported Iraqi Vulnerable Groups Support Initiative, which helps IDPs, among many other groups. The program provided Hanna with $12,500 loan through the Mosul Bank, to be paid back in a 24-month period. The loan enabled him to buy new freezers, along with other equipment, and consolidate five neighboring shops into one large storage space. He hired three female workers, in addition to his son and daughter.  His menu of frozen foods increased to 16 different items.

The 50-year-old Hana describes his success. “I started distributing to different areas, even outside Mosul, including Basrah.  My business kept growing. I have two shifts now.  Before taking the loan, I would sell items worth around $80 a day in frozen foods. Now I sell [food] worth $800 a day!” Standing next to his son, he adds, “there is still room for more expansion and we will make it. We have come a long way, but there is still more to do!”

Live at UNGA – Day Three

To see the online conversation at UNGA, visit USAID’s Storify Feed

Day three at UNGA included two marquee events spotlighting progress to date on the Millennium Development Goals (MDGs) and the New Alliance for Food Security and Nutrition.  We also announced a new partnership to expand access to contraception for 27 million women and girls in low-income countries.

With only 15 months until the Millennium Development Goals (MDGs) deadline, USAID partnered on an event with the UK Department for International Development for a second year to draw attention to the importance of the global community working together to reach the MDG targets by 2015.  The event brought to life the enormous development advancements made on the way to achieving the MDGs and featured innovators from across the development community sharing transformative programs and policies.  The world has met two MDG targets ahead of the 2015 deadline – poverty has been cut by 50 percent globally and the proportion of people with no safe drinking water has been cut in half.

That afternoon, Administrator Shah co-hosted with other G8 members the New Alliance: Progress and the Way Forward event.  President Obama announced the New Alliance for Food Security & Nutrition earlier this year, in which G8 nations, African partner countries and private sector partners aim to help lift 50 million people in sub-Saharan Africa out of poverty in the next 10 years by supporting agricultural development. Initially launched in Ethiopia, Ghana, and Tanzania, at the event, representatives from the New Alliance, G8 countries and the private sector announced the expansion to other African countries, including Burkina Faso, Cote d’Ivoire, and Mozambique.

Finally, Administrator Shah took part in the UN Commission on Life-Saving Commodities for Women and Children. Prior to the meeting, Dr. Shah joined the Commission Co-Chairs, Prime Minister Jens Stoltenberg of Norway and President Goodluck Jonathan of Nigeria, alongside former President Bill Clinton, to launch a new partnership to make a safe, effective, long-acting, reversible method of contraception available to more than 27 million women in the world’s poorest nations. Under the agreement, Bayer is reducing by more than half the current 18 USD price of its long-acting, reversible method of contraception, Jadelle, in return for a commitment to assure funding for at least 27 million contraceptive devices over the next six years.  Dr. Shah stated, “The US Agency for International Development is proud to have funded the development of this life-saving product. Today is a major step forward to making this product more accessible to millions of women, empowering them with the ability to make decisions about their health and family.”

As always, follow us live on Twitter to keep up with the latest developments!

The Journey Towards “Cash Light”

Around the world, 2.5 billion people lack access to formal financial services. As a result, most poor households live almost entirely in a cash economy. The Better Than Cash Alliance, a global public-private partnership dedicated to accelerating the use of electronic payments in place of physical cash.  USAID convened the Alliance, which includes forward-thinking partners like the Bill & Melinda Gates Foundation, Citi, the Ford Foundation, Omidyar Network, Visa Inc., and the U.N Capital Development Fund, to move the world toward a more transparent, efficient, inclusive, cash-light society.

Shifting to electronic distribution of social benefits, humanitarian aid or payroll payments can advance financial inclusion and help poor people build savings while achieving cost savingsefficiency and transparency.  The Alliance provides expertise and resources needed to make the transition from cash to digital payments to achieve the shared goals of empowering people and growing emerging economies.

Visit Betterthancash.org for more information.

From Conflict to Coping

Tisda, Mercy Corps Program Officer, in Ethiopia. Photo Credit: Erin Gray, Mercy Corps

Last summer, amidst the Horn of Africa’s worst drought in generations, Mercy Corps received encouraging news from local officials in the Somali-Oromiya region of Ethiopia.  In this area – long known for conflict, scarce resources and harsh conditions – communities that had participated in USAID-supported Mercy Corps peacebuilding efforts were reportedly coping better than they had during less severe droughts in the past.

We were intrigued, so we sent out a research team—and the findings were striking: when local conflict had been addressed, people were far better equipped to survive the drought.

To understand why, put yourself in the position of an Ethiopian herder.  When a drought hits, you can cope in several ways.  First, you will sell the weakest animals in your herd, raising cash to meet your family’s short-term needs while reducing grazing pressure on a water-scare environment. You may migrate with the remaining herd to areas where the grazing potential is better.  Along the way, you will rely on sharing access to scarce remaining water resources wherever you go.

Yet conflict can make these coping mechanisms impossible – blocking market access, freedom of movement, and access to shared resources like water. In this part of Ethiopia, population pressure and climate change had strained resources, spurring violence that in 2008-09 resulted in massive loss of lives and assets. In response to that conflict, Mercy Corps initiated a peacebuilding process in 2009 with support from USAID.  We helped participating communities focus on establishing peaceful relations, economic linkages, and joint management of natural resources.

A “resilience” approach to aid focuses on understanding, and improving, how communities cope with drought and other shocks.  Instead of just providing assistance that meets immediate material needs, a resilience approach also focuses on factors that affect a community’s ability to cope.  As Mercy Corps found last summer in Ethiopia, this often means focusing on factors that fall well outside the traditional assistance toolkit.

The program had focused on reducing violence – but our researchers found that it also built resilience along the way. Communities that participated in Mercy Corps’ program reported greater freedom of movement and fewer barriers to accessing resources, markets and public services than did non-participating communities. They identified greater freedom of movement as the single most important factor contributing to their ability to cope and adapt to the severe drought conditions. As one herder from the Wachile community said, “It is very difficult to use or access dry reserves (grazing areas) located in contending communities in a situation where there is no peace…the peace dialogues in the area have improved community interaction and helped us to access these resources.”

Our research report – titled Conflict to Coping – confirmed the important link between conflict and resilience in this region, and demonstrated that effective peacebuilding interventions help build resilience to crises.  Participating communities showed less reliance on distressful coping strategies, especially depletion of productive assets, than other communities. Importantly, the increased peace and security has allowed participating communities to employ more effective livelihood coping strategies, enabling them to better cope with extreme droughts.

Equal Futures Partnership Advances Global Women’s Opportunities

Sarah Mendelson is the Deputy Assistant Administrator for USAID's Bureau for Democracy, Conflict and Humanitarian Assistance. Credit: USAID

I am excited to have just returned from the kick-off of the Equal Futures Partnership to expand women’s opportunities around the world. The event was held in New York City and part of a number of events USAID is participating in during the United Nations General Assembly this week.

The world has made significant strides in expanding opportunity for women and girls; in the U.S., we just celebrated 40 years of Title IX, an act of Congress that changed the lives of many in my generation by enabling girls to have equal access to education playing sports. Equal access to sports in schools, particularly, taught many of us how to be fierce competitors and learn valuable lessons in team building.

Yet more work is needed to tackle the global gender inequality. Last week, I met in London with donors on this very topic where researchers discussed a number of startlingly facts:

  • In 2011, women held only 19 percent of parliamentary seats worldwide, while less than five percent of heads of state and government were women.
  • While in the past 25 years, women have increasingly joined the labor market, the World Bank’s 2012 World Development Report describes “pervasive and persistent gender differences” in productivity and earnings across sectors and jobs.
  • Though women are 43 percent of the agriculture labor force and undertake many unpaid activities, they own just a tiny fraction of land worldwide.

These realities demand an urgent response.

Building on President Obama’s challenge a year ago at UNGA, the United States government has partnered in a new international effort to break down barriers to women’s political participation and economic empowerment. The goal of the Equal Futures Partnership is to realize women’s human rights by expanding opportunity for women and girls to fully participate in public life and drive inclusive economic growth in our countries.

Through this partnership, the countries of Senegal, Benin, Jordan, Indonesia, Bangladesh, Tunisia, Peru, Denmark, Finland, Australia and the European Union are all making new commitments to action, and will consult with national stakeholders inside and outside government, including civil society, multilateral organizations including UN Women and the World Bank, and the private sector, to identify and overcome key barriers to women’s political and economic participation.  This partnership promises to be groundbreaking not only for the countries involved but also for those who are watching its implementation.

USAID and its Center for Excellence on Democracy, Human Rights and Governance stands by to provide assistance to these countries as well as many others throughout the world as they work to advance women’s political participation and economic empowerment.

This is thrilling work that helps make the promise of development real for everyone–not just a privileged few.

Visa Joins Global Partnership

This post originally appeared on the Better Than Cash Blog

Today, Visa joins with six partners from government, the private sector and the international development community to launch the Better Than Cash Alliance. Working together with our other founding members – the United Nations Capital Development Fund, the U.S. Agency for International Development, Citi, the Bill & Melinda Gates Foundation, the Ford Foundation, and Omidyar Network – the Alliance will help bring many of the world’s 2.5 billion unbanked people into the financial mainstream by providing them with resources that are safer and more useful than physical cash.

Around the world, governments, the development community and the private sector are making billions of dollars in cash payments to the poor – in salaries, pensions, emergency relief, social aid and more. Making these payments in physical cash or in-kind goods costs poor people time and money and can be unsafe.

To begin with, people in developing countries often have to travel great distances just to collect cash payments. That can mean days away from work and their families and, worse, the risk of being robbed on the journey back. Delivering cash to poor recipients often involves several couriers – and if any of these intermediaries pocket part of the amount, cash is impossible to track.

For anyone without a bank account, cash also is hard to save. Shifting payments to electronic or mobile payments offers more security and convenience – and, more importantly, an onramp to financial inclusion by providing easier access to accounts they could use to save, get a loan or make payments of their own.

At Visa, we are proud of the work we are doing already around the world to help governments enable the electronic delivery of social benefits and other disbursements. For example, in Mexico, Visa works with the government-owned Bank of National Savings and Financial Savings (Bansefi) to distribute social program benefits via Visa debit and prepaid cards to 6.5 million people, giving recipients opportunities to use financial services to save, budget and improve their lives.

In the Dominican Republic, Visa and the government teamed up to boost the national financial inclusion rate and address theft and delay issues of government benefits by distributing reloadable Visa Solidaridad cards. Today, more than 800,000 people in the Dominican Republic receive their aid via Visa card—which also helps provide customers for local merchants as those citizens use their cards to pay for food, fuel and medicines.

Through this innovative partnership, Visa and our partners in the Alliance aim to provide governments, the development community and the private sector with the inspiration, technical expertise and financial support to commit to making the transition to electronic payments and unleash new potential to reduce poverty and promote economic development.

Learn more by visiting the Better Than Cash Alliance website.

USAID Book Club: A Farewell to Alms

Fall semester @USAID banner image

As part of USAID’s Fall Semester, we will host an online book club for our readers this fall. The Impact Blog will post suggestions from our senior experts at USAID to suggest a book on important issues in international development.  We’ll provide you and your book club with the reading suggestions and discussion questions, and you tell us what you think! Our fall reading list will  explore solutions to the most pressing global challenges in international development—mobile solutions, poverty, hunger, health, economic growth, and agriculture.

This week’s choice comes from: USAID Administrator Rajiv Shah

Dr. Rajiv Shah serves as the 16th Administrator of USAID and leads the efforts of more than 8,000 professionals in 80 missions around the world.

Dr. Rajiv Shah serves as the 16th Administrator of USAID and leads the efforts of more than 8,000 professionals in 80 missions around the world.

Book: A Farewell to Alms: A Brief Economic History of the World, by Gregory Clark

Synopsis: The source of human progress has long been a subject of debate. What makes rich countries rich, and poor countries poor? In the this book,  University of California, Davis, Economist Gregory Clark offers a provocative take on the age-old question, arguing that it was culture—rather than geography, natural resources or centuries of exploitation—that left some parts of the globe behind.

According to Clark, relative stability and effective workforces enabled certain societies to take better advantage of the Industrial Revolution’s new technologies and opportunities. Those countries with lax systems or undisciplined workers lost ground, and stayed there.

Clark’s book is skeptical of whether the poorest parts of the world will ever achieve real progress. For development professionals, it offers up a challenge to the belief that outside intervention can help bridge the vast economic divide between rich and poor.

Review:  This book impacted me because it shows how for hundreds, or even thousands, of years basic economic progress was largely stagnant. You didn’t have rapid compound increases in living standards until the Industrial Revolution when some countries and some societies got on a pathway towards growth – towards better health, longer life expectancy, higher income per person and more investment in education. Others remained on a slower-moving pathway.

That great divergence, and the study of it, is at the core of development. It is that divergence that we try to learn from and correct for. We define success in development as helping communities and countries get on that pathway towards improved health and education, and greater wealth creation.

I didn’t choose this book because I think it is the definitive story on development, but rather because I share its focus on core economic growth as the driver of divergence.

I disagree where Clark concludes that some societies failed to take advantage of the availability of modern technology because their cultures were antagonistic to development. With the right conditions in place, you can unlock a formidable work ethic from a range of different cultures and communities. The last 50 years have shown us that. By investing in local capacity and local institutions, we can leave a legacy of economic infrastructure, strong and capable leadership, and transparent, effective public and private sector institutions.

USAID’s partnerships in Latin America helped country after country develop strong institutions. The same can be said for South Korea. Unfortunately, there have been examples where aid and assistance have been provided in a manner that was not as sensitive to building lasting local capacity and institutions. This is true for all partners, not just our Agency. That’s why we’ve launched a program called USAID Forward, to refocus on working in a way that will create durable and sustained progress.

Administrator Shah is on Twitter at @rajshah. You  can also “Ask the Administrator” your questions on Crowdhall

Discussion Questions

1. Do you agree with Clark that some societies failed to take advantage of the availability of modern technology because their cultures were antagonistic to development?

2. The Nobel prize-winning economist Robert Solow has said Clark does not take into account how institutional factors, such as cronyism, inequitable taxation and ineffectual government cripple development. What role do you think these institutional factors play?

3. Clark challenges how effective outside intervention can be in helping poor nations progress. Do you agree?

4. Regardless of why some nations have fallen behind, how do you think they can bridge that gap today?

5. Has your world view changed after reading this book and how?

Get Involved: Use the comments section of this blog post to share your answers, or tweet them to us at #fallsemester

Taking PRIDE in Putting Local Wealth to Work

On a crowded street in the Kariakoo District of Dar es Salaam it is easy to overlook the unassuming building that houses PRIDE Tanzania’s local branch. Nestled among endless shops and lost amongst the excitement of the day’s activity, the largest of PRIDE’s 58 branches is modest and nondescript. It isn’t until you step inside the orange stucco walls that you are able to understand what makes this building more remarkable then the rest.

In the branch’s waiting area, you are immediately hit with an atmosphere of activity. Hundreds of Tanzanian entrepreneurs have come for their weekly check-in with one of the country’s most effective and innovative microfinance institutions, PRIDE Tanzania. PRIDE, which stands for Promotion of Rural Initiatives and Development Enterprises Limited, also happens to be supported by a USAID credit guarantee which has helped it maintain and increase microcredit activities.

This particular branch services over 2,000 clients a day, some of whom travel for hours to meet with their lending groups and pay back the next installment of their loans.

Gertrude used a local microfinance loan, made possible thanks to a USAID guarantee, to open a second clothing and shoe store in Tanzania. Photo credit: Mike Muldoon, USAID

As someone lucky enough to engage with these entrepreneurs, I was immediately struck by the drive and charisma with which they approach their businesses (in addition of course to the charm that all Tanzanians naturally possess). While intrigued by their visitor and more than willing to share their stories, they are clearly anxious to complete their meeting and get back to what brought them here in the first place – their businesses.

Just a short distance down the road I was able to visit some of these businesses firsthand, starting at Fatema’s print shop. A client of PRIDE for over six years, Fatema started her business as a one-person operation with a $3,000 loan. Fatema now has four employees, was able to buy a plot of land for her home and can afford to send her children to school. Recently becoming an agent for the popular M-PESA mobile banking service, Fatema’s business continues to grow, as evidenced by the $11,400 loan she recently received.

Deeper into the Kariakoo market, I met Gertrude, the owner of two local clothing and shoe stores. Formerly on her own, Gertrude recently opened her second store, employs four employees and is able to source her products from suppliers throughout the region – greatly reducing her input costs and boosting her profits.

This trend continues for the rest of the afternoon, for Fatema and Gertrude are just two of the thousands of entrepreneurs that PRIDE supports through its micro-loan products.

One of the things that makes PRIDE special is its relationship with USAID’s Development Credit Authority (DCA). DCA uses risk-sharing agreements known as credit guarantees to mobilize local financing in developing countries.

In 2010, PRIDE utilized a guarantee from DCA to support a bond offering, the first of its kind for a microfinance institution in Tanzania. The guaranteed bond enabled PRIDE to raise $10,000,000 from local capital markets. As a result, PRIDE vastly expanded its portfolio and the number of borrowers it supports. This activity is part of a much wider effort by the U.S. Government to stimulate local capital markets in Tanzania.

Meeting these individuals firsthand, both the borrowers and the staff of PRIDE, reinvigorated my drive to provide them with the local capital they desperately need to grow their businesses, provide for their families and develop an economy that is supported entirely by the local community.

Fly-Tying Deals Bring Sweet Success

I grew up along the swampy shores of Lake Victoria in Western Kenya, where fish is our favorite meal.

When I travel home to my village, over 300 miles from Nairobi, I enjoy watching rural family members hook worms or other insects to a fishing line before casting it out into a local stream and reeling in tilapia, trout, catfish, mudfish, and more.

But around Lake Victoria, villagers fish for food and income—not for fun. It amuses them to think that people might fish as a hobby.

At a recent USAID event though, I met an entrepreneur named Carol Mbutura who showed me that some Kenyans also make a good living from this hobby—supplying lures to the leisure-fishing industry. Carol was showing off a large display of dainty, hand-tied fishing flies created in Kenya and destined for overseas markets.

I knew there was a story here: Fly-tying is not a traditional Kenyan craft.  How on earth did Carol get into the fly-tying business?

She told me the cottage industry dates from the 1930s when a young Englishman came to Kenya to recover from a broken back. Mad about fishing, he taught some local Kenyans to tie fishing lures. They then started selling to British settlers—for catching trout imported from Britain, which still inhabit highland streams today.

More recently, an American company called Flydeal began buying flies from Kenya.  Carol Mbutura had developed a shipping company based in Nairobi—and Flydeal hired her to send the products to the United States.

Keeping up quality and production numbers from 10,000 miles away, however, proved increasingly difficult. So four years ago, the Flydeal asked Carol to step in, manage production, and become a business partner.

USAID has helped Mbutura and other African entrepreneurs take advantage of the African Growth and Opportunity Act (AGOA), which allows duty-free imports of some African products to the United States. In 2011, training provided by USAID AGOA Resource Centers has sparked millions of dollars in new trade deals, which benefit both U.S. and African businesses and spur economic growth.

With Carol to supervise, sales have grown several times; Flydeal now provides jobs for approximately100 full-time and 50 part-time Kenyan workers in ten factories around Nairobi.  Together they produce 7,000-8,000 dozen of lures a month. The company sells mainly online and exports worldwide, though United States is the primary market.

The delicate but tough, hand-made lures resemble little creatures that fish might eat: flies of course, but also frogs, tiny fish, baby mice, cockroaches, grasshoppers, butterflies, mosquitos… Recently, the factories have begun making jewelry, too, from the feathers, beads, and wires used for lures.

Carol’s advice for other would-be entrepreneurs:  “With your own work you must have patience, perseverance and tolerance; don’t ever quit if someone lets you down, be it a customer or supplier.”

Next time I visit home, I’m going to bring some Flydeal flies with me. I want to see if Kenyan fish go for them—and what my cousins say about using these artsy artifacts instead of an old-fashioned worm.

Developers for Development: The Evolution of the Food Security Open Data Challenge

Geeks, Coders, Hackers, Developers, Computer Scientists, Technologists- whichever term you choose, people with technical acumen have proven to be some of the most prolific volunteers for social good.  It is not hyperbole to state that on any given weekend, in nearly every major city around the world, volunteers can be found gathering together to create products that benefit education, security, economic, and other social interests. Participants cobble together the vision, team, the code, and the experts over 48 hours, and present themselves for judging by Sunday evening.  These gatherings are dubbed “hackathons,” “codeathons” or “codesprints” and they have found success: out of the Disrupt Hackathon, which is hosted by TechCrunch and connects developers and entrepreneurs, the Docracy team formed to make legal and business documents more free and accessible, and went on to raise $650,000 over the next year to expand its operations.  StartupWeekend, a hackathon targeting entrepreneurs, claims hundreds of new startups including Reddit, a widely popular user-generated news aggregator.  In 2010, the State Department and iHub launched the Apps4Africa challenge  to connect local developers and global mentors to local NGOs to learn and solve local problems.  The winner, iCow,  is a successful mobile-phone application that tracks cows’ hormone cycles to inform better breeding, milk production, and nutrition information to Kenyan dairy farmers.

Indian woman arranges a display of grains and seeds at Millet Fest 2012, in Hyderabad on March 24, 2012. The three day event aims to promote use and increase knowledge of the nutritional benefits of millet seeds when used as part of a daily diet. Photo Credit: AFP

If you’re not familiar with the hackathon model, you’re not alone.  Government engagement with the tech community, though expanding, is limited.  And though hackathons bring together widely diverse communities to contribute their time and expertise to solve problems, they are not a flawless solution.  Rare is the startup that can convene and be commercially viable in 48 hours.  To increase the impact of the products of these hackathons, and ensure that those volunteering their time are doing so wisely, we have to improve on the existing model.

Enter White House Chief Technology Officer Todd Park, and his bold concept for public sector improvement of the hackathon model to connect developers directly to the people who will ultimately use their product, and to incubate solutions to be attractive to investors.  Under his model, weekend sessions are stretched across at least ninety days and buttress the hackathon with brainstorming and planning session weeks prior and an incubation period of the successful products for weeks following.  He outlines this model as an endeavor of the White House’s “Open Data Initiative” and, following on the successful implementation at HHS, has taken it to various other agencies including the Department of Energy, Department of Veterans Affairs, Department of Education, and USAID. Through his leadership, each agency has taken up the mantle of instituting their own open data initiatives.

USAID is  building its first data initiative around food security, and I encourage anyone who is curious to get involved.  All backgrounds and interests are welcome; participants need not be an expert in food security nor in software, a willingness to contribute to the efforts of innovative solutions and commercially viable products is all that’s required.  Writers, designers, networkers, and creative thinkers from all walks are welcome.  As access to information increases globally, so does the potential for innovation and great ideas to be borne and fomented across borders.  USAID is convening a global community to engage more directly with those who are willing to volunteer their time and expertise to the cause of development, and who want to work together to “hack” new and creative solutions to long-standing development priorities.  Just yesterday, Secretary Clinton observed “Data not only measures progress, it inspires it.” At USAID we want to build and support the platform for those who are inspired to create and sustain lasting progress.

For more information and to participate, visit agrilinks.org/openagdata and contact OpenAgData@USAID.Gov

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