USAID Impact Photo Credit: Nancy Leahy/USAID

Archives for Economic Growth

A New Investment Model for Afghanistan

Posted by  on Tuesday, February 12th 2013     

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

This originally featured on the Huffington Post.

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

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

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

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

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

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

The Global Movement of Electronic Payments at the World Economic Forum

Posted by  on Wednesday, January 23rd 2013     

Originally appeared on The Better than Cash Alliance Blog

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

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

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

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

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

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

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

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

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

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

A Record-Breaking Year for Mobilizing Private Capital for Development

Posted by  on Friday, December 21st 2012     

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

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

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

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

Learn more about DCA on our website.

 

Interagency Panel on Economic Statecraft to Create Competitive Foreign Markets

Posted by  on Thursday, December 20th 2012     

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

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

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

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

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

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

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

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

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

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

 

Photo of the Week: Accessing Credit for Food Security

Posted by  on Monday, November 5th 2012     

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

Celebrating Communities of Cooperative Building

Posted by  on Thursday, November 1st 2012     

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

2012 International Year of Cooperatives logoSo what exactly is a cooperative? Believe it or not, you may know about more cooperatives than you think. Cooperatives are businesses with a difference: they are user-owned businesses that aim to satisfy members’ needs, generate profit and increase development within communities. They are a part of everyday life in the U.S. and abroad. We save at credit unions, buy hardware at Ace and True Value, purchase our camping gear from REI, spread Land O’Lakes butter on our potatoes from Maine Potato Growers, drink Welches or Ocean Spray juice, enjoy a Sunkist orange while we snack on Blue Diamond almonds or Sun Maid raisins while reading an Associated Press article.

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

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

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

Photos: Secretary Clinton in Haiti

Posted by  on Wednesday, October 24th 2012     


U.S. Secretary of State Visits USAID sites in Northern Haiti: Secretary of State Hillary Clinton traveled to northern Haiti on October 22. In addition to attending and making remarks at the inauguration of the Caracol Industrial Park, she visited the USAID-funded Caracol EKAM housing site and the USAID-constructed 10 megawatt power facility that will supply electricity to the Caracol Industrial Park and nearby areas. USAID officials in attendance included Deputy Administrator Donald Steinberg, Latin America and Caribbean Assistant Administrator Mark Feierstein, and Latin American and Caribbean Senior Deputy Assistant Administrator Beth Hogan. During her trip, the Secretary also met with President Michel Martelly, Prime Minister Laurent Lamothe, local and national elected officials, investors, and community members. Photos by Kendra Helmer, USAID.

Igniting Africa’s Tech Revolution

Posted by  on Thursday, October 18th 2012     

The recent growth of tech startups in Sub-Saharan Africa is starting to create a buzz.

And what’s not to be excited about? Tech companies created in Africa, by Africans, to address local and global problems have untold potential to change the world.  After judging a recent Global Innovations in Science and Technology boot camp in West Africa, venture capitalist Scott Hartley said “providing guidance for the top 1% of innovators likely improves the lives of the 99%.”

This Ugandan entrepreneur received financing to expand his business thanks to USAID's Development Credit Authority, a sponsor of DEMO Africa. Photo: Morgana Wingard

Personal computer usage in Africa is exceptionally low at 2% and internet penetration is only about 14%.   However, with indications that tech start-ups, tech hubs and internet usage across the continentare rapidly growing, the prospect for growth in the technology sector is significant.

Nonetheless, the hype has begun to overtake the growth.

One central challenge for startup tech companies in Africa is the simple fact that great ideas and viable business plans don’t mean much without access to financing. And financing for startups in Africa, especially in the tech sector, is difficult to come by.

Gaps in the market make it challenging for the tech ecosystem to develop.  Across much of Sub-Saharan Africa, people struggle to access the technological conveniences– broadband internet, reliable power supply, internet availability.  In many African countries, governments are still working to reform regulations and policies to make it easier for investors to reach entrepreneurs.

Additionally, the tech sector in Africa is considered high risk. Everyone speaks of the same example of success (read: M-Pesa), but investors are hungry for additional examples of risk paying off.

To top that off, the tech space is, by its very nature, less tangible to investors compared with brick and mortar businesses that sell traditional goods and services.  While a risk-taking culture has long developed in tech hot spots such as Silicon Valley, investors in sub-Saharan Africa tend to be more conservative and risk-adverse.

To close the gap between investors who are ready to invest but can’t identify startups with viable businesses and the entrepreneurs who are ready to scale up but can’t access financing, USAID partnered with Microsoft, Nokia, DEMO, and the State Department to launch the first-ever DEMO Africa. DEMO Africa, to be held in Nairobi on October 24-26, will feature 40 of the most innovative entrepreneurs from across Africa who will launch their products to a group of world-class investors, businesses, and media.

Through DEMO Africa, USAID is attracting, rather than replacing, private sector financing for economic development in low-income countries.  Entrepreneurs creating tech startups don’t need access to traditional aid, they need access to financing to grow. And to free up financing, we need to sensitize investors – venture capital funds, banks, and nontraditional financial institutions – to the tech sector. We need to create an appetite for investors to start investing.

Turning a great idea into a viable and profitable business model is difficult, but DEMO Africa is helping move Africa’s startup tech sector closer to ignition.

Stories From the Field: Iraq

Posted by  on Wednesday, October 17th 2012     

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).

The USAID-supported Iraqi Vulnerable Groups Support Initiative provided Salah Naeem Hana the opportunity to borrow $12,500 to expand his frozen food business. Photo: USAID Tijara Program

“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

Posted by  on Thursday, September 27th 2012     

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!

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