Savings through success in foreign assistance
By Mark Dybul and Rob Mosbacher | AUGUST 7, 2017
The Senate confirmation last week of our colleague Ambassador Mark Green to be USAID Administrator comes amid the struggle between the president and Congress over the administration’s proposed 30 percent cuts to foreign assistance. In this convergence of events, we see a real opportunity for Congress and the administration to do much more than debate where the burden of potential cuts might fall, and instead make lasting reforms to make our foreign assistance better able to enjoy long-term success and provide savings far beyond next year’s budget. Success will not be easy and will require significant changes to our approach to development.
First, to make the reforms that bring lasting savings will require that we change how we define success, moving away from measuring how much we spend or how much we cut, and instead judging the progress we make towards ultimate success: ending the need for aid entirely.
Reforms should aim to provide greater value over the long term, not just lower costs in the near term, which means achieving savings not because we pull the plug on countries, but because they succeed. Such a success and outcomes-based strategy will require patience for results, as some countries should graduate from aid quickly, while others will require a longer commitment. That investment approach is in our interest. We need to build trading partners for the future to create jobs and income-generation here at home.
Second, changing how we define success will require significant changes in how we do business. Each country has different barriers to growth and success, yet our strategies are more often a collection of programs that together do not form an effective, tailored strategy. While many highly-successful programs and projects – such as the President’s Emergency Plan for AIDS Relief (PEPFAR), the President’s Malaria Initiative (PMI), Feed the Future, housing project of the Oversees Private Investment Corporation (OPIC) and the Millennium Challenge Corporation (MCC) – do great work and deliver results, they don’t necessarily together provide a coherent development strategy for countries or regions.
By setting a development strategy for each country that links private investment, health and education – primary drivers of economic growth – and the entire portfolio with clear benchmarks and outcomes, U.S. investments in development can yield huge dividends to the American taxpayer. Such an approach only works if we support and empower countries – their public and private sectors – to lead their development efforts. Simply cutting budgets absent a guiding strategy is “penny wise and pound (millions of dollars) foolish.”
Third, and as an integral part of country development strategies, we must embrace the fact that private sector-driven economic growth is the only sustainable way to end poverty. Although our continued assistance is critical, the kind of economic growth needed to lift countries out of poverty is simply beyond the scope and scale of traditional aid, which now constitutes only about 9 percent of capital flows from the U.S. to developing countries.
With some straight forward reforms, our tools to drive investment, such as the Overseas Private Investment Corporation (OPIC) and the U.S. Trade and Development Agency (USTDA), can better harness markets to drive poverty alleviation and domestic growth on a scale that dwarfs that of what traditional aid can do. Because it uses market-driven tools and leverages private capital, these “development finance” tools actually return money to the U.S. Treasury – an unusual and welcome difference from traditional, grant-based development assistance.
Fourth, from our experience in government, we know that lasting reform and savings are impossible without real, empowered leadership in certain, critical positions in our government. It’s this fact that makes Green’s confirmation so important, as some of the greatest development successes – PEPFAR, the PMI, and the MCC – owe much of their success to leadership with sufficient authority to truly change the way government does business.
Mark’s experience as an Ambassador in Tanzania gave him a perspective on the great work of individual programs, but also the limitations stemming from the lack of a clear, coordinated development strategy. As a former member of Congress, he has the stature, experience, and knowledge to be the transformational leader we need. With such authority comes responsibility to deliver results as well, allowing Congress and the public a clear line of accountability. To achieve reform, it’s essential for Congress and the White House to empower Administrator Green to make the changes necessary, providing him the authorities he needs and the patience and time frame required for lasting reform to take hold.
Each of these changes has significant political and bureaucratic barriers, but the time for action is as good now as it has been at any time in recent memory. The administration itself has demonstrated a real appetite for reform, and has, in Ambassador Green, a very capable leader. On Capitol Hill, Sens. Todd Young (R-Ind.) and Jeanne Shaheen (D-N.H.) have introduced legislation requiring a regular diplomacy and development strategy that would provide clear objectives to help prioritize funding. Rep. Ted Yoho (R-Fla.) and Adam Smith (D-Wash.), along with Sens. Johnny Isakson (R-Ga.) and Christopher Coons (D-Del.), recently introduced the bipartisan Economic Growth and Development Act that aims to improve coordination and private sector partnership by U.S. Government agencies around driving economic growth. More reform proposals are being developed as well.
These reforms will help provide greater value for the American taxpayer, improved alignment and support for U.S. foreign policy, and much better serve the people in distant lands as we pave the way for significant returns on our investments. In the words of Adam Smith, that’s “enlightened self-interest.” We urge Congress and the administration to seize this opportunity.
Ambassador Mark Dybul serves as the co-chair of the Consensus for Development Reform and is the former Executive Director of the Global Fund to Fight AIDS, Tuberculosis and Malaria, and former U.S. Global HIV/AIDS Coordinator. Rob Mosbacher serves as co-chair of the Consensus for Development Reform and is the former President and CEO of the Overseas Private Investment Corporation.