USAID Impact Photo Credit: USAID and Partners

Archives for Economic Growth

Broadband Partnership of the Americas

Eric Postel is the Assistant Administrator for USAID’s Economic Growth, Agriculture, and Trade Bureau. 

President Obama, while attending the Summit of the Americas in Colombia, announced a new Broadband Partnership of the Americas (BPA), with a focus on expanding access to the Internet.  This Partnership is the first region-wide extension of the Global Broadband and Innovations (GBI) program, originally launched by USAID in the fall of 2010.

Within the international development community there is growing recognition of the value of information and communication technologies (ICTs) in advancing economic growth, and in enhancing the delivery of health, education, agriculture, and other services.  For that reason, ICTs are essential to achieving several of the Millennium Development Goals (MDGs) and MDG Goal 8: Develop a Global Partnership for Development has a target of making available new technologies, especially information and communications. In 2005, the United Nations World Summit on Information Services (WSIS) established ten priority ICT-related targets.  Of these ten targets, “connect villages” is the first.  2010 data show progress against this target with mobile subscriptions reaching just under 70 percent of the population in developing countries, and the Internet reaching just over 20 percent.  Clearly there is more work to be done, however.

A key component for leveraging ICTs within USAID’s development portfolio is expanding access of both mobile and broadband networks.  While much progress has been made, three constraints remain.  First, there is still a rural population of more than one billion people who do not have mobile coverage.  Second, most of the mobile networks put into place during the last decade are capable only of voice and text, but do not support full Internet access.  And third, there is the issue of affordability. Even where networks are available, pricing is often beyond the reach of the lower-income populations that are often the focus of USAID’s programs, especially in rural areas where connection costs are high.

The GBI program is addressing these constraints by providing technical assistance to universal service funds (USFs).  USFs are created from taxes placed on telecommunication carriers for the purpose of supporting rural build-outs.  In addition, the GBI is working with private sector equipment manufacturers and carriers to deploy innovative, affordable and scalable solutions appropriate for small, rural communities.

The most exciting aspect of the new Broadband Partnership of the Americas announced by the President, from my perspective, is the fact that it focuses on the Americas — that is, on countries in our own hemisphere.  It builds on earlier successes and melds the expansion of telecommunications with clean-energy solutions.  BPA also pulls together a rich partnership of local and international public and private sector entities with a specific focus.  This approach, especially in our hemisphere, underscores once again that working together we can make a difference.

We must do better than cash

Cash can stifle economic development.  That might seem counterintuitive.  Aid is critical to ameliorating the plight of poor people living on far less a day than we spend on a latte.  But physical cash can undercut many development objectives the U.S. government works to achieve.  From improving aid effectiveness to shining a light on corruption to unleashing the private sector, cash gets in the way.   If you care about reducing poverty, then you must also care about reducing the reliance on physical cash.

USAID is helping Haiti increase financial inclusion through the advance of mobile money. Photo Credit: USAID

We begin a movement to do just that.  USAID Administrator Rajiv Shah is announcing a broad set of reforms to use USAID’s $22 billion financial footprint as a force for good—as a way to reduce the development industry’s dependence on cash.  This includes integrating new language into USAID contracts and grants to encourage the use of electronic and mobile payments and launching new programs in 10 countries designed to catalyze the scale of innovative payments platforms.  Based on examples in Kenya, Haiti, Mexico and Brazil, we believe that our implementing partners will generate at least 15% efficiency gains in their operations by 2016.

This movement would not have been possible 5 or 10 years ago.  The infrastructure did not exist.  But the rapid rise of the mobile phone—there are now nearly 4.5 billion mobile phones in the developing world—in tandem with electronic cards makes it possible today.   We cannot afford to let this opportunity pass—this movement cannot be a movement of one.  Indeed, USAID’s assistance is a big drop but still a drop in the development bucket.   This must be a movement that crosses sectors and borders—private companies with extensive supply chains and governments with large disbursements must join together to leverage electronic payments platforms.  Here’s why we must do better than cash.

First, cash costs money.  It is ironic, but paying teacher salaries or issuing social transfers is expensive.  You need money to hire couriers to lug big bags of cash around—and leakages are inevitable.  Think of electronic or mobile payments as the functional equivalent of epoxy paste—they seal the cracks in the payment edifice and prevent leakages.

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Harnessing Science, Technology, and Innovation To Promote Global Development

Originally posted on the White House blog

Today at the White House, senior Administration officials announced a series of new initiatives to promote game-changing innovations to solve long-standing development challenges.  Answering President Obama’s call to harness science technology, and innovation to spark global development, the Administration announced initiatives from across the government to generate new development solutions.  Announcements include new partnerships with universities; greater use of scientific breakthroughs through expedited technology transfer of federally-funded inventions; a program to reward inventors who use their patented technologies to address humanitarian needs; and initiatives to leverage advances in Internet and communications technologies to provide new development tools.

In an increasingly globalized world, the Obama Administration recognizes that global development is vital to national security and is a strategic, economic, and moral imperative.  One of the cornerstones of our global development policy is a commitment to investments in game-changing innovations with the potential to solve long-standing development challenges in health, food security, environmental sustainability, and broad-based economic growth.  Innovation can play a key role in building a stable, inclusive global economy with new sources of prosperity, advancing democracy and human rights, and helping us to increase the ranks of prosperous, capable, and democratic states that can be our partners in the decades to come.

Administrator Raj Shah announced that USAID is launching a new partnership with universities and research institutes to define and solve large development challenges.  USAID also announced new commitments to increased utilization of electronic and mobile payments to save on costs and increase financial access; a new effort to make assistance to other governments in telecommunications development more efficient; a new “app store” for development to spur humanitarian apps and software; and new commitments to mobile education technology as part of USAID’s All Children Reading grand challenge for development.

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Can Mobile Money Transform a Country?

Two years after the earthquake, Haiti is rebuilding not just brick by brick, but click by click.

A message confirms the deposit of a new customer who is signing up for Digicel’s Tcho Tcho mobile banking on March 3, 2011, in Port-au-Prince, Haiti. Photo Credit: Kendra Helmer/USAID

The earthquake left behind a government in rubble, an economy in shambles, and a people living in makeshift camps, coping with enormous loss.  Against this backdrop, the possibility of progress lives not just in the resilient spirit of the Haitian people, but also in the simple power of their mobile phones.

In June 2010, USAID and the Bill & Melinda Gates Foundation launched the Haiti Mobile Money Initiative (HMMI)(PDF, 163KB). This program leveraged the private sector and the ubiquity of mobile phones to bring financial services to Haitians, 90 percent of whom didn’t have access to a bank account before the earthquake destroyed nearly one-third of the country’s bank branches, ATMs, and money transfer stations.  Put simply, mobile money gives Haitians access to banking without building a single bank.

It worked.  In January 2011, one year after the earthquake, HMMI awarded Digicel and its partner bank, Scotiabank, a “First to Market” Award of $2.5 million for “Tcho Tcho Mobile.” Five months ago, HMMI awarded mobile operator Voila and their bank partner, Unibank, $1.5 million for “T-Cash.”  While verification is still underway, data reported by the industry indicate that there are nearly 800,000 registered users.  Moreover, there are over 800 agent locations now available to serve clients.  In a country where there are fewer than two bank branches per 100,000 people, this represents a near doubling of accessible financial services.

These numbers are significant, but what do they mean for the people of Haiti?  Why should we care about the growth of mobile money in Haiti and the rest of the developing world? 

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Women Combating Climate Change

Last week I was in Durban, South Africa where I attended the Seventeenth Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP-17). Climate-resilient, low carbon development is sustainable development, so it’s no surprise that many of the issues addressed at COP-17 are crucially important to USAID’s development efforts and to our developing country partners such as adaptation, clean energy technologies, and REDD+ (Reduced Emissions from Deforestation and Forest Degradation).  USAID is emerging as a leader in gender and REDD+ and recently released a report which analyzes the barriers and opportunities for women’s participation in the REDD+ sector in Asia.

One of the issues I came to Durban to discuss is a key topic throughout climate change-related work – the critical role women play in combating climate change and the need to support gender equality across climate issues.

Last Monday, I hosted an event that covered the efforts of USAID’s Central African Regional Program for the Environment to engage civil society in forest conservation and REDD+ programs in the Congo River Basin.  USAID forestry specialists, partners, and local experts described how technology and community-based work are keys to sustainably conserving the second largest tropical rain forest in the world, and a significant carbon sink.  As efforts like Wangari Mathaai’s Greenbelt movement have demonstrated, women play a critical role in forest conservation and reforestation.  Involving local communities in the conservation efforts of course includes incorporating women into all aspects of the program – from design to implementation.

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Taxation and Development – The Key to the End of Aid Dependency

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

Last week at the High Level Forum on Aid Effectiveness in Busan, South Korea, I participated in one of the more interesting events of the conference: the session on “Domestic Resource Mobilization: Taxation and Development.”  If you think that sounds like watching paint dry, you couldn’t be more wrong.  That is because it is the ultimate solution for achieving sustainable development.  When developing countries have enough revenues to pay for their own development, they need no longer  depend on foreign donors.

Lately this has been a widely discussed issue among donors, civil society organizations and developing countries at the conference – aid dependency and aid effectiveness.  It is also critical to the course of development.  Several keynote speakers in Busan mentioned the issue.

Other panelists included the President of the African Development Bank, the Secretary General of the OECD as well as ministers from several other countries.  During the session, we explored creative ways for developing countries to generate domestic resources to finance their own development — specifically through innovations in tax administration, IT system modernization and, economic policies that foster stronger government accountability.

Several countries have made great strides in this area, and were able to share their experience with the participants and attendees.

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Building Bridges to the Oecusse Exclave

Just weeks into my new assignment in Timor-Leste, I was thrilled to be traveling with a group of colleagues to the country’s remote exclave of Oecusse.  By catching a ride on a UN helicopter, our team was able to cut out nearly a day of travel, including clearing the four border checkpoints required to make the trip overland.  Located geographically within the borders of Indonesia, the district is separated from the rest of Timor-Leste not only spatially, but culturally and linguistically as well.  Throughout our visit we would often need two translators, one between the local language (Baikeno) and the national language (Tetum), and a second translator between Tetum and English.

After arriving in the district capital of Pante Makassar, our team immediately jumped into vehicles and set out on our mission to see several of USAID’s projects.  As we drove through the district, bouncing along dirt roads, winding through hills, and scuttling across dry river beds, it was plain to see how many of the already difficult-to-reach villages become completely inaccessible during the rainy season.  Contributing to the district’s isolation is its poor infrastructure, with few all-weather roads, underdeveloped networks for water and sewage, and an insufficient electrical grid.  Even the district capital receives only 12 hours of electricity per day, punctuated by frequent power outages.  As the Economic Growth Team Leader at USAID Timor-Leste seeing the district for the first time, my thoughts immediately turn to the enormous challenge of trying to link the people of these remote areas with the rest of their country, let alone the world economy. Yet USAID is helping to do just that.

In the town of Pune, our team met with several farmers who participate in USAID’s cattle fattening project.  Through a cooperative association, these small farmers are able to receive veterinary medicine from the Timorese government and husbandry advice for the cattle they raise.  Without the project these farmers would be unable to import their own medicines and would be vulnerable to price fluctuations in distant markets. Through the cooperative, these farmers are given a pre-negotiated price for their cattle so that they know in advance that they will be able to reap the benefits of their hard work.

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Turning Impossible Challenges into Solvable Problems

Recently, USAID Administrator Dr. Rajiv Shah delivered an address at the TED annual conference where he noted that “… scientific and technological breakthroughs do more than address specific technical challenges; they inspire collective action by turning impossible challenges into solvable problems”.

In my remarks on “Turning Impossible Challenges into Solvable Problems” at the University of North Carolina’s Water Institute on October 5, 2011, I shared some of the elements of an approach which we are taking to turn impossible challenges into solvable problems, particularly those that relate to the water sector.

In addressing these challenges, we see three approaches as being central to this effort – focusing on policies, programs, and partnerships. These approaches deal with:

  • developing and implementing policies within the USG which will lead to significant global development  impact;
  • developing programs to support economic development which stress sustainability and program and  policy integration; and
  • creating partnerships to achieve breakthroughs in science and technology, as well as novel business or organizational models, operational or production processes.

Regarding breakthroughs, building on the USAID Forward emphasis on innovation, I emphasized USAID’s recent launch of WASH for Life with co-funding from the Bill and Melinda Gates Foundation. Over the next four years, this $17 million partnership will use USAID’s Development Innovation Ventures (DIV) program to identify, test, and transition to scale evidence-based approaches for achieving cost-effective and sustained Water, Sanitation and Hygiene (WASH) services in developing countries. Although projects addressing problems in any WASH area or any country may apply, WASH for Life is particularly interested in interventions that:  operate in Bangladesh, Ethiopia, Ghana, Haiti, India, Kenya, and Nigeria; address issues in the sanitation and hygiene sectors in particular; and target beneficiaries earning under $2 a day.

The successful implementation of USG development assistance policies, the emphasis on sustainability and program integration and the development of partnerships which effectively deliver assistance and those which lead to scientific and technological breakthroughs will play a critical role in meeting water supply, hygiene and sanitation needs. In so doing, these approaches will also contribute to increasing food productivity, adapting to climate change, and improving human health in a number of areas, directly or indirectly related to water borne disease. This will in turn significantly help the world move from impossible problems to solvable solutions.

Microfinance Program Helps South Sudanese Realize Their Dreams

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

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.

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