“The issues that we face today- from chronic poverty and hunger to violent acts of terrorism- require that we work seamlessly toward identifiable goals.” Senator Richard Lugar opened with a strong statement on the importance of aid reform yesterday at a hearing of the Senate Committee on Foreign Relations that I attended called The Case for Reform: Foreign Aid and Development in a New Era. Witnesses at the hearing included Peter McPherson, President of Public and Land Grant Universities and former administrator of USAID, Jeffrey Sachs, Director of the Earth Institute at Columbia University and Rev. David Beckmann, President of ONE partner organization, Bread for the World and Co-Chair of the Modernizing Foreign Assistance Network.

The hearing highlighted a bill written by Senators Kerry, Corker, Menendez and Lugar that seeks to strengthen USAID and thereby strengthen the effectiveness of U.S. foreign assistance. The bill has three main facets:

• To strengthen the monitoring and evaluation program of USAID by creating an “internal evaluation and knowledge center” and reinforce the partnership between USAID and the State Department to make sound decisions relating to development.
• To coordinate all U.S. agencies that have a role in foreign assistance by promoting information sharing and appointing a Mission Director at USAID to coordinate all development and humanitarian assistance within all countries where the U.S. works.
• To create a high-level task force at USAID and increase training within USAID and other U.S. development programs to alleviate the disorganization that has arisen with increased funding and decreased staffing at USAID.

McPherson, Sachs and Beckmann spoke very highly of this bill and were in agreement with the idea that the U.S. must increase their capacity in foreign assistance through higher level leadership and monitoring and evaluation. If these steps are taken, USAID will become an effective long-term development agency rather than the short-term disaster relief organization, which it has evolved to in recent years according to Senator Kerry.

Jeffrey Sachs had many strong words of advice to the United States development community. He stated that the framework of development assistance should focus on agriculture, healthcare, education, infrastructure, small business development and climate change, emphasizing that progress on these issues will promote resources which would in turn reestablish law and order in countries like Kenya where it is lacking.

Rev. Beckmann mentioned that the American people value aid reform and increased resources to developing countries, even in hard economic times. He praised ONE along with other NGOs for reaching out to members to voice these opinions and encourage their representatives to support initiatives such as the Water for the World Act and the Global Food Security Act.

- Leah Moriarty

Washington Post reporter Rajiv Chandrasekaran filed an interesting piece on June 19 documenting past failures of U.S. economic assistance in Afghanistan and how the new Administration is taking a different approach (Obama’s War: Starting Over on Development; U.S. Pursues a New Way to Rebuild in Afghanistan).

Chandrasekaran notes how President Obama’s new team in Afghanistan, led by Richard Holbrooke, is “shifting away from an approach employed during the Bush presidency that focused on generating discrete ‘success stories’ and creating long-term economic sustainability through free-market reform.” Agriculture will be the first sector addressed, with a strong emphasis placed on aiding farmers to increase production. Holbrooke aims “to fix what we inherited.”

All good and necessary. But the Obama Administration also needs to think globally. The foreign aid and development challenges in Afghanistan are present around the world where the United States will spend nearly $30 billion this year addressing poverty reduction, economic growth, reconstruction, and humanitarian crises. If the lessons of reform in Afghanistan are applied globally, the result will be a more modernized and coherent American development program that is better equipped to reduce poverty and disease around the world.

According to the article, the new plan in Afghanistan will use smaller contracts, align more closely with priorities of Afghan development organizations, and channel more funds through Afghan government systems. These measures will help to strengthen country ownership and build capacity, two fundamental principles of effective aid that should be integrated throughout U.S. aid programs.

Chandrasekaran notes that U.S. law obstructed efforts to help re-establish Afghanistan’s cotton production for fear it would compete against American growers. That law, enacted in 1979, is symptomatic of a foreign aid legislative morass based on a statute passed during the first year of the Kennedy Administration that has not been comprehensively reviewed or amended in decades. It is time to re-write the Foreign Assistance Act of 1961 and update related appropriation provisions to establish a rationale, flexible, and accountable legislative structure to guide U.S. foreign aid.

As the article points out, Holbrooke and his team have taken control of the reconstruction program from USAID and looked to other agencies to play a greater role in the effort. Some of these measures, at least in the short term, might be necessary to get quick results. But they also highlight the declining capacity that has been allowed to occur for years at USAID, where technical expertise and strategic planning have withered. Turning to the Department of Agriculture for more experts and utilizing National Guard personnel with farm experience may make sense right now. But it is a workaround that does not address the underlying problem of not having a strong, empowered, and adequately staffed development aid agency that can serve as the voice and direction for U.S. global foreign assistance efforts. Do we really want to utilize these highly trained and dedicated National Guardsmen to perform agricultural technical support? Is this the most efficient use of their talents?

Chandrasekaran maintains that during the Bush Administration, the White House and Defense Department favored quick impact, high profile projects in Afghanistan, like roads, schools and health centers. Absent were the long-term, sustainable, but less glamorous programs aimed at building Afghan capacity and addressing country priorities. This will change, according to the new U.S. plan in Afghanistan. But this change needs to happen throughout the entire scope of U.S. development, reconstruction, and humanitarian programs. A global development strategy, a new law, and a strengthened, capable development agency are key ingredients for the successful reform of our outdated foreign aid system. Afghanistan provides some new thinking and hopefully, some good lessons for the broader reform effort.

-Larry Nowels

On Monday, we noted that the Munk debates program would feature a discussion about foreign aid and we encouraged those who watched to post their thoughts and reactions. ONE’s Policy Advisory Board member Paul Collier, along with Stephen Lewis, Dambisa Moyo, and Hernando de Soto talked for almost two hours about the opportunities and challenges of foreign aid. The purpose of the Munk debates is to “enliven and elevate public discussion of the political, social, and cultural issues shaping the course of the world’s events and Canada’s future.” This goal was certainly accomplished – the debate participants engaged in a lively discussion about their thoughts on how and why foreign aid has affected Africa and what are the best ways to reduce reliance on donors to finance programs. Exchanges like this are helpful to educate people about foreign aid and the array of perspectives about it.

While there was disagreement between the two ’sides’, represented by Moyo and de Soto, arguing that aid does more harm than good, and Lewis and Collier, arguing the opposing view, there was common ground. The debate participants agreed that African countries cannot continue to rely on foreign aid to the extent they are now, that strong leadership and good governance are critical to transitioning from aid dependence, and that aid has had mixed results over the past 60 years. There was also agreement on the importance of the private sector in economic growth, through investment and job creation.

The audience voted before and after the debate on whether foreign aid does more harm than good. The outcome? The majority of people do not believe that aid does more harm than good. This means that both before and after the debate, the majority of the audience believes that aid does more good than harm. Before the debate, 61% of the audience voted ‘against’ the principle that aid does more harm than good, compared to 59% of the audience who voted after the debate. The opposing side, who believe aid does more harm than good, had 39% of the votes before the debate and 41% afterwards.

What do you think? Watch the webcast and let us know.

-Lisa Fleisher

The Swedish and Dutch governments announced today that they will suspend $33 million in aid to Zambia following reports about embezzlement in the Ministry of Health. Reports indicate the civil society was calling for the Ministry of Health to publish expenditures, but former President Mwanawasa cancelled the spending reports, which may have led some officials to siphon funds for their own use. In response to concerns that the lack of funding will affect the delivery of health services, the Minister of Finance Musokotwane stated that the Zambian government will develop a plan to fill the gap and investigate the corruption charges.

The transparent publication of spending by donors and governments is a critical component of ensuring money for development is used as effectively as possible. Like the Global Fund to Fight AIDS, TB, and Malaria, the Swedish and Dutch governments’ response to reports of embezzlement in the health sector suggests their support for the idea that well-governed programs are critical to successful development and that aid can help to encourage transparency and accountability.

-Lisa Fleisher

Today in her opening statement before the Senate Appropriations Sub-Committee on Foreign Operations, Secretary Clinton made clear once again the critical need for overseas development assistance for our economic and national security. She began her testimony by stating, “When I appeared before the Senate Appropriations Committee a few weeks ago with Secretary Gates, we both emphasized the need for a comprehensive approach to the challenges on our nation’s agenda…urgent development needs ranging from extreme poverty to pandemic disease that have a direct impact on our own security and prosperity.”

The Secretary also reiterated the administration’s commitment to meet our goal of doubling foreign assistance by 2015, and highlighting in this year’s budget: $525 million for maternal and child health, about $1 billion for education, $1.36 billion to address food insecurity, and $4.1 billion for humanitarian assistance. The Secretary stated, “these initiatives build good will, alleviate suffering, and save lives, but they also make our country safer and our partners stronger.”

Members of the Sub-Committee present at the hearing included Senators Patrick Leahy, Judd Gregg, Arlen Specter, Kit Bond, Barbara Mikulski, Robert Bennett, and Sam Brownback.

Senator Bond talked about the need for smart power, Senator Mikulski asked about better partnering NGOs with USAID, Senator Bennett emphasized the Millennium Challenge Corporation as a model for assistance, and microenterprise as a way of helping the poor, and Senator Brownback spoke on delivering better results with food aid and micronutrients.

-Arjun Mody

Howard Berman (D-CA), Chairman of the House Committee on Foreign Affairs, and Mark Kirk (R-IL) have introduced a bi-partisan bill requiring the President to draft and implement a comprehensive National Strategy for Global Development. The Strategy requirement is one part of H.R. 2139 – Initiating Foreign Assistance Reform Act of 2009 – legislation that also strengthens monitoring and evaluation of US foreign aid programs and mandates greater transparency of aid resources provided by the United States.

With at least 12 departments, 25 different agencies, and nearly 60 government offices involved in US foreign assistance operations, a key element of the Strategy will be its interagency approach to set out a coherent framework to guide US efforts to reduce global poverty and promote broad-based economic growth in the developing world. Ideally, this will be led by the National Security Council, reaching out across all of government. Importantly, the Strategy will go beyond simply development assistance programs and consider broadly US development policies that affect poverty and economic growth in poor countries, including trade, debt relief, climate change and others. The legislation further requires the creation of a process to improve and strengthen coordination among the various departments and agencies engaged in foreign assistance.

With Development as one of the three pillars of US national security, along with Defense and Diplomacy, a National Strategy on Global Development is long over-due. President Obama has committed to a series of important global development actions, including a doubling of foreign assistance and major agriculture, education, and health initiatives. To avoid the existing fragmentation and conflicting purposes of US foreign aid policies, the implementation of a National Strategy will be a significant first step. But a more comprehensive overhaul of aid programs and apparatus is necessary. Chairman Berman promises that this bill is a “down payment” on a much broader and much more difficult task to re-write the Foreign Assistance Act of 1961, an effort he plans for later this year.

-Larry Nowels

Today the Washington Post is running a great op-ed by President Ellen Johnson-Sirleaf of Liberia. In the piece, the President talks about how the financial crisis threatens Africa’s turnaround and she also weighs in on how development assistance – along with stronger African leadership and better governance — has contributed to important progress in Africa over the past ten years.

President Sirleaf’s commentary is directly relevant to the current debate about the value of aid. She makes clear that aid has been an important component in Africa’s recent progress and cutting aid would have negative effects on poverty and stability on the continent. Thus she provides a very different view from that offered in the new book Dead Aid:

While international attention has been understandably focused on events in Darfur, Somalia and Zimbabwe, countries across the continent including Ghana, Tanzania, Mozambique and Liberia have been quietly turning around. Economic growth rates regularly exceed 5 percent in many nations. Since 2000, 34 million more African children are in school. More than 2 million Africans are on lifesaving HIV/AIDS medicines. Malaria deaths have been halved in Rwanda and Ethiopia, and the disease has been virtually eradicated in Zanzibar. Poverty rates are falling fast, from 58 to 51 percent across the continent in just six years, according to the World Bank.

The key to this progress is stronger African leadership and more accountable governance. Today, more than 20 African countries are democracies, up from just three in the 1980s; they have competitive elections and improved human rights, and their news media are much freer. These efforts have been supported by increasingly effective development assistance from the United States and other partners.

The citizens and leaders of donor nations should recognize how important their assistance has been to the new leadership in Africa and how appreciative most Africans are for this partnership. Critics say that African economies are shrinking, that poverty is rising and that failing aid is the culprit. But this argument is at least a decade out of date. Africa’s turnaround is real, the evidence indisputable. Africans themselves have been the key to this reversal, but more effective aid has played an important role. Reducing aid would slow private-sector growth, stall poverty reduction, and undermine peace and stability in countries that are struggling to become part of the global economy.

-Kathy McKiernan

On Wednesday April 9th, the European Commission launched its yearly update on how EU donor countries are helping to meet the MDGs. This year President Barroso and Commissioner for Development Louis Michel used the opportunity to make some key announcements on advancing crucial development assistance for African countries. It’s fantastic that the leadership of the Commission is putting development matters so high on his political agenda. Less than a week after the London Summit, the Commission outlined three main ways it would act to help developing countries combat the effects of this economic crash:

1. Pushing EU governments to meet their aid promises and ensuring the highest degree of aid effectiveness possible. Development Commissioner Louis Michel’s message was: “We know what we must do: meet our aid targets, advance our money to have an impact when it is most needed, refocus our existing programmes to tackle the crisis and then make every Euro count”.
2. The EU is proposing spending more cash for the poorest countries to help fill some of the financing gaps created by the economic downturn. The €1billion Food Facility was intended to be spent over 3 years- now the Commission have promised to spend €800m of it by the end of the year to inject much-needed cash into the agricultural sectors of countries most in need of support for farmers. A whopping €3billion will be brought forward for African, Caribbean and Pacific country governments and another €500m for spending on health, education and other vital social spending.
3. Thirdly aid effectiveness is the Commission’s priority. When Louis Michel spoke of ‘making every euro count’ he was alluding to some research he had commissioned which showed that just by working together more effectively, the European Commission and the 27 governments could save a huge €7billion a year which could be freed up to save lives in this downturn. The Commission wants more coordination between donors- it’s common sense that not every donor should work on every sector in one country, and we should be seeing more of donor countries playing to their strengths and taking the lead amongst donors in their specialist areas.

All in all the announcement yesterday was a very positive step- it shows the EU has not just read the G20 communique and agreed- it is doing that rare thing of acting quickly upon agreements. We hope it will convince other G20 countries to do the same, and fast- we’re particularly looking toward the Spring Meetings of the World Bank and IMF to raise more funding for Africa in grant form. Any loans that are given we will argue should be extremely concessional so they don’t spark another debt crisis. There are of course some concerns about the announcements yesterday– Will governments replenish those funds when there’s not enough in the pot next year? Ironically, if the EU alone kept to its 2010 promises, that would mean another €20 billion on overall assistance over the next two years. So the message is simple- we welcome these announcements, on the condition that EU governments stick to their ODA promises.

-Eloise Todd

Recently I attended a U.S. House Committee on Foreign Affairs hearing: “Striking the Appropriate Balance: The Defense Department’s Expanding Role in Foreign Assistance.” There is ongoing debate about the imbalance among the three Ds of U.S foreign policy: Defense, Diplomacy and Development, and how a lack of capacity and resources in other agencies has DoD taking on development activities that traditionally fell under the purview of the State Department and USAID. With the increasing attention on aid reform, the question of who should implement non-military U.S. foreign assistance is a key issue.

There were four witnesses representing different backgrounds, who provided testimony: General Michael Hagee (former commandant, Marine Corps), Nancy Lindborg (President, Mercy Corps), Ruben Brigety (Director of the Sustainable Security Program, Center for American Progress Action Fund), and Philip Christenson (former Assistant Administrator, USAID).

As background, the agencies traditionally charged with development efforts are severely understaffed and underfunded. In 2007, David J. Kilcullen, then a senior advisor to Gen. David Petraeus, remarked, “… the Department of Defense is about 210 times larger than USAID and State combined—there are substantially more people employed as musicians in Defense bands than in the entire foreign service.” Moreover, the total budget for USAID and State has never been over $40 billion (a paltry 6% of the $700 billion spent last year by the military). Recently, DoD has been taking on traditional civilian activities, including establishing institutions of governance, reviving market activity, and rebuilding infrastructure. Between 2002-2005, the percent of U.S. official development assistance (ODA) – which excludes the supply or financing of military equipment or services and use of military personnel to control civil disobedience – directed through the Pentagon surged from just under 6 percent to nearly 22 percent, and now accounts for about 16% of ODA.

In his introductory remarks, Chairman Berman noted, “… critics have argued that DoD’s role erases the distinction between military personnel and civilians carrying out similar development activities, ignores development best practices such as sustainability and effectiveness, and puts a military face on inherently civilian programs.” Nancy Lindborg seconded this idea, stating that military led efforts could be focused on short-term security objectives rather than long-term development strategies. Proponents of increased military involvement in foreign assistance cite DoD’s well-funded mandate, logistical assets, and global deployment as strengths that make them able to respond effectively.

Another issue was that of “non-permissive” environments, where the safety of civilian actors is of concern (ie: war zones). There was general agreement that that the military is best suited for on-the-ground support for these missions; Philip Christenson lamented the holing up of civilian actors in military zones where they were unable to perform the development work they were tasked with. However, the question of who should lead development efforts in more peaceful environments remained unsettled.

-Rena Pacheco-Theard

Each year in early April, the OECD’s Development Assistance Committee (DAC) releases preliminary figures for what each large donor country spent on official development assistance the year before. This morning, the DAC released the figures for 2008. There is some good and bad news in there. Though we will post much more analysis later in the day, here is a quick summary of ODA for sub-Saharan Africa.

A few notes for accountants, seasoned advocates and others who follow the DAC and their processes. These are preliminary figures for 2008 ODA. They are net of debt relief, reported in 2008 US dollars, and do impute contributions through multilateral organizations to sub-Saharan Africa. SSA below means sub-Saharan Africa.

• OVERALL DAC donors: ODA to SSA was $36.661 billion, an increase of 11% over 2007
• G7: ODA to SSA was $25.165 billion, an increase of 14% over 2007
• Canada: Significant increases in bilateral ODA (47% over 2007) multilateral ODA (up by 63% over 2007) drove ODA to SSA up to $1.911 billion, up by 52% over 2007
• France: A decline in bilateral ODA to SSA drive decreases in ODA to SSA to $3.54 billion in 2008, down by 15% from 2007
• Germany: Germany’s ODA to SSA was $3.897 billion, up by 15% – $513 million – over 2007
• Italy: ODA to SSA in 2008 is $1.43 billion, down by 4% or $55 million largely due to falls in Italy’s multilateral contribution
• Japan: 2008 ODA to SSA is $2.6 billion, an increase of 56%, up by $938 million including large increases in multilateral (up 89% over 2007) and bilateral (up 31% over 2007) ODA
• United States: Large increases in bilateral ODA sent total ODA to SSA up by 26% over 2007 figures to $7.75 billion in 2008
• United Kingdom: ODA to SSA was $4.02 billion, a increase of 3% – or $100 million – over 2007 figures

More reactions to come shortly.

-Josh Lozman, Deputy Policy Director