USAID Impact Photo Credit: USAID and Partners

Archives for Economic Growth

A Proven Approach to Poverty Reduction

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.

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 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

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

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

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

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.

Measuring the Impact of Sports on Youth Development

USAID’s Office of Development Partners (ODP) and the Bureau for Economic Growth, Agriculture, and Trade (EGAT) sponsored a panel discussion on “Measuring the Impact of Sports on Youth Development” on Tuesday, March 1st.   Over 125 guests and staff heard from NGO leadership who work with sports as a platform for youth development and spoke on the evaluation techniques for measuring the impact of these programs.

“This was a great opportunity for USAID staff and our external stakeholders to discuss how sports impacts the work we do in development,” said Mori Taheripour, Senior Alliance Officer in PSA/ODP, who organized the event. “Our panelists offered perspectives that show not only the impact of the work on the communities that they serve but also helped bridge the gap between observed impact and evidence-based outcomes that continue to challenge this industry.”

The panelists included Paul Teeple from Partners of the Americas: A Ganar Alliance; Maria Bobenreith, of Women Win; Kirk Friederich of Grassroot Soccer; and Brendan Tuohey of Peace Players International. PeacePlayers International and A Ganar are both USAID-funded programs.

Moderated by Kenneth Shropshire, of the Wharton Sports Business Initiative, the panel highlighted the ability for sports to serve as a powerful platform for youth development.  USAID currently operates youth programs in over forty countries around the world and over 280 sports-based programs.

Sports-based youth programs have been used to address a variety of development issues, and the diversity of panelists highlighted represented the unique ability of sport, as a platform for development, to address a broad range of sectors including peace and conflict, gender inequality, health, education and economic development.

Panelists discussed how they use evaluation tools and the challenges that they face in seeking data-driven and rigorous evaluation methodology.  They shared a variety of anecdotal examples that truly capture the essence and “magic” of their work, but continue in many ways to struggle with balancing anecdotal and hard data, not wanting to lose the intangible, less obvious impact of their work.  The discussion explored several issues related to evaluating the impact of sports activities including: how to measure impact over the long-term; how to measure return on investment; and several methods, including the use of interviews to obtain meaningful, unbiased responses. Panelists identified the need to develop better tools for capturing the impact of sports on youth development and noted that USAID could play an important, convening role in this area.

USAID’s Youth Advisor, Erin Mazursky mentioned that the event was the kick-off of a series of youth-focused activities and events that will roll out over the next couple of months. “Focusing on youth is a priority for the agency,” she said.  “The recent events in the Middle East have shown that youth have proven that they are not just the next generation of change-makers, but a generation that is right now very much affecting the course of history.”

Fruit and Faith

Senior Advisor Ari Alexander is in Ghana and highlights one of his field visits to a farm program.

Hello from Ghana where I had the privilege yesterday to observe the fruits of a great development success story in the Eastern Region of Ghana. A faith-based organization conceived, proposed, designed, and implemented a project to introduce fruit trees to smallholder farmers as a path to economic growth and sustainability. USAID through the use of PL480 Title II Food Aid resources supported this concept from 1997 until 2006.  Visiting with these orange and mango farmers five years after USAID’s support ended, the success of our cooperative investment is self-evident. The farmers now sustain themselves and contribute largely to Ghana’s economy.

The Adventist Development Relief Agency (ADRA) brought me to the farms in Somanya, Sikaben, and Akyem Sekyere where, originally, 1-3 acre plots were allotted to 5,424 different farmers in the region. Fourteen years after this program started, these farmers have organized into associations and are selling their fruit to local processing plants. Many of the farmers have expanded to dozens of acres.

Senior Advisor for NGO Partnerships and Global Engagement Ari Alexander meets with Mrs. Grace Mensah, a mango farmer on the ADRA site visit. Photo Credit: Joshua Umahi

The families have become frontline actors in a story of economic growth. More young people are finding farming an attractive possibility for a financially secure future.

I had the opportunity to hear testimonies of a village chief, a member of parliament who accompanied me, and ordinary farmers – men and women- about the transformative work led by ADRA with USAID’s support. The relationships developed and the trust built over many years enabled us to effectively connect smallholder farmers with local small businesses to complete the value chain.

Too often these stories are hidden under the fruit trees. The next time you’re in France, the UK, the Netherlands or Italy (or Ghana!) I urge you to try the fresh pineapple ginger juice from the farmers and factories of Ghana.

If you have found similar success stories, please share them with us at fbci(at)usaid.gov

Ari Alexander is Director for the Center for Faith-based & Community Initiatives and the Senior Advisor of NGO Partnerships and Global Engagement at USAID

USAID Shows Youth the Benefits of Conserving Energy

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

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.

In Tanzania, most land is untitled and there is no legal framework allowing “movable assets,” such as livestock, to be used as collateral for accessing loans. Typical bank loan models simply do not work here, but in microfinance…collateral is not necessary. PRIDE counts on good-faith and social cohesion for repayment by making group loans that involve 50 people. Group members work out the specific allocation of funds themselves and are responsible individually and jointly for paying the loan back.  This multi-borrower structure values each entrepreneur’s success, incentivizing more successful entrepreneurs to assist struggling peers, and the intra-group transparency promotes fiscal responsibility by each group member, ensuring high levels of repayment.

How well does it work? In Tanzania, 99% of all PRIDE microloans are repaid.

Martha Mpinga is a Tanzanian entrepreneur who purchases small amounts of African textiles from wholesalers and sells them to retail buyers for a profit. “I started with a loan of 50,000 Tanzanian shillings (approximately $35),” she explains. Once the original was repaid, she qualified for a higher microfinance loan. Martha has repeated this cycle several times as her business expanded. “My loans grew…and now I have a loan of 1 million shillings (approximately $650).” At this loan level, sufficient inventory is maintained and it drives a sustainable business. She pulls richly-patterned wax print cloths, used by local woman to make clothing, from her bag and delivers a convincing sales pitch about their high quality and other decorative uses for such beautiful fabric. The Arusha branch manager, who is standing nearby, ribs Martha that she could avoid next week’s trip to the branch by making a second microloan payment today, using the proceeds from this just completed sale. They laugh, both knowing that the regular repayment meetings which bring Martha together with 49 other entrepreneurs, is essential to the microfinance model.

In November 2010, USAID provided its first guarantee for a microfinance bond issued in sub-Saharan Africa. With USAID’s support, PRIDE secured 15.3-billion Tanzanian shillings ($10 million) from the Tanzanian capital markets.  As a result, access to credit will no longer be just a dream for an estimated 10,000 additional Tanzanian entrepreneurs.

Afghan Partnership Opens Modern Carpet Processing Facility

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.

Embracing Innovation in Haiti: USAID’s Haiti Mobile Money Initiative

One of the hallmarks of the U.S. Government’s fresh approach to development in Haiti is making better use of innovative private sector ideas to solve tough development challenges.

So when one third of Haiti’s bank branches were destroyed in the earthquake a year ago, we looked for ways to overcome one of the primary obstacles to economic growth in the country: poor access to affordable financial services.  But instead of building more banks or installing ATMs, the U.S. Agency for International Development partnered with the Bill and Melinda Gates Foundation to set up a $10 million incentive fund to jump start the provision of banking services to Haitians through their mobile phones.

Maarten Boute, CEO of Digicel Haiti (left), is joined at the podium by Scotia Bank’s Maxime Charles. Photo Credit: Kendra Helmer/USAID

In the short term, the Haitian Mobile Money Initiative will enable Haitians, 40% of whom own a mobile phone, to communicate, send, receive and store money on their devices.

The Government of Haiti and the private sector have enthusiastically embraced the mobile money initiative. The Central Bank of Haiti has already issued new directives on mobile banking.  And yesterday, USAID and the Gates Foundation awarded Digicel $2.5 million for being the first telecommunications company to develop a competitive mobile money service in Haiti.

The project has already significantly increased the number of Haitians with access to banking services, and it has the potential to provide universal access thanks to the increasing penetration of cell phones in the country. By helping Haiti leapfrog the limits of the physical infrastructure of banking, mobile banking is putting financial power literally into Haitian hands.

Click here to view photos of the press event.

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