USAID Impact Photo Credit: USAID and Partners

Archives for Economic Growth

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.

World of Fashion Crosses Paths with Haiti’s Rebuilding Efforts

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

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

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

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

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

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

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A Proven Approach to Poverty Reduction

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.

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