[Senate Hearing 114-727]
[From the U.S. Government Publishing Office]


                                                      S. Hrg. 114-727

               PUBLIC-PRIVATE PARTNERSHIPS IN FOREIGN AID: 
    LEVERAGING U.S. ASSISTANCE FOR GREATER IMPACT AND SUSTAINABILITY

=======================================================================

                                HEARING

                               BEFORE THE

                  SUBCOMMITTEE ON STATE DEPARTMENT AND

                    USAID MANAGEMENT, INTERNATIONAL

                       OPERATIONS, AND BILATERAL

                       INTERNATIONAL DEVELOPMENT

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS

                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION
                               __________

                             JULY 12, 2016

                               __________

       Printed for the use of the Committee on Foreign Relations
       
       
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             COMMITTEE ON FOREIGN RELATIONS               

             BOB CORKER, Tennessee, Chairman              

JAMES E. RISCH, Idaho                BENJAMIN L. CARDIN, Maryland
MARCO RUBIO, Florida                 BARBARA BOXER, California
RON JOHNSON, Wisconsin               ROBERT MENENDEZ, New Jersey
JEFF FLAKE, Arizona                  JEANNE SHAHEEN, New Hampshire
CORY GARDNER, Colorado               CHRISTOPHER A. COONS, Delaware
DAVID PERDUE, Georgia                TOM UDALL, New Mexico
JOHNNY ISAKSON, Georgia              CHRISTOPHER MURPHY, Connecticut
RAND PAUL, Kentucky                  TIM KAINE, Virginia
JOHN BARRASSO, Wyoming               EDWARD J. MARKEY, Massachusetts


               Todd Womack, Staff Director              
         Jessica Lewis, Democratic Staff Director              
           Rob Strayer, Majority Chief Counsel              
         Margaret Taylor, Minority Chief Counsel              
                 John Dutton, Chief Clerk              



                         --------              



      COMMITTEE MEMBERSHIP deg.SUBCOMMITTEE ON STATE DEPARTMENT 
                        AND USAID              
        MANAGEMENT, INTERNATIONAL OPERATIONS, AND              
           BILATERAL INTERNATIONAL DEVELOPMENT              

             DAVID PERDUE, Georgia, Chairman              

JAMES E. RISCH, Idaho                TIM KAINE, Virginia
JOHNNY ISAKSON, Georgia              BARBARA BOXER, California
RON JOHNSON, Wisconsin               CHRISTOPHER A. COONS, Delaware
RAND PAUL, Kentucky                  CHRISTOPHER MURPHY, Connecticut


                              (ii)        


                            C O N T E N T S

                              ----------                              
                                                                   Page

Perdue, Hon. David, U.S. Senator From Georgia....................     1

Kaine, Hon. Tim, U.S. Senator From Maryland......................     2

Postel, Eric G., Associate Administrator, U.S. Agency for 
  International Development (USAID), Washington, DC..............     4
    Prepared statement...........................................     6
    Eric Postel's Response to Questions Submitted by Senator 
      Perdue.....................................................    32
    Eric Postel's Response to Questions Submitted by Senator 
      Kaine......................................................    46

Runde, Daniel F., William A. Schreyer Chair and Director, Project 
  on Prosperity and Development, Center for Strategic and 
  International Studies, Washington, DC..........................     9
    Prepared statement...........................................    11
    Daniel Runde's Response to Questions Submitted by Senator 
      Gardner....................................................    40
    Daniel Runde's Response to Questions Submitted by Senator 
      Kaine......................................................    48

Goltzman, Michael, vice president, International Government 
  Relations and Public Affairs, the Coca-Cola Company, Atlanta, 
  GA.............................................................    16
    Prepared statement...........................................    18




                             (iii) 
                             

 
                     PUBLIC-PRIVATE PARTNERSHIPS IN
                      FOREIGN AID: LEVERAGING U.S.
                         ASSISTANCE FOR GREATER
                       IMPACT AND SUSTAINABILITY

                              ----------                              


                         TUESDAY, JULY 12, 2016

                               U.S. Senate,
        Subcommittee on State Department and USAID 
Management, International Operations, and Bilateral 
                         International Development,
                            Committee on Foreign Relations,
                                                    Washington, DC.
                                                    
    The subcommittee met, pursuant to notice, at 2:30 p.m., in 
Room SD-419, Dirksen Senate Office Building, Hon. David Perdue, 
chairman of the subcommittee, presiding.
    Present: Senators Perdue, Isakson, Kaine, Coons, and 
Murphy.

            OPENING STATEMENT OF HON. DAVID PERDUE,
                   U.S. SENATOR FROM GEORGIA

    Senator Perdue. The committee will come to order. This 
hearing of the Subcommittee on State Department and USAID 
Management, International Operations, and Bilateral 
International Development is entitled ``Public-Private 
Partnerships in Foreign Aid: Leveraging U.S. Assistance for 
Greater Impact and Sustainability.''
    Only in the Senate can we come up with the title for a 
meeting that long, but I think it is very important.
    Senator Kaine and I and Senator Coons and Senator Isakson 
all have a great heart for this, and other members. We have 
talked about this. I am looking forward to the testimony and 
the interaction today.
    I would like to begin by welcoming our witnesses, associate 
administrator Eric Postel of USAID.
    Mr. Postel, I would like to publicly thank you. I know the 
State Department made an accommodation to have a partnership 
conversation today, and it is greatly appreciated. I think it 
is very appropriate. Thank you.
    Daniel Runde of CSIS and Michael Goltzman of Coca-Cola, 
thank you guys for being here. I look forward to your 
testimony.
    We are here today to discuss an issue that I find very 
important, how we can use the private sector and NGOs to serve 
as a force multiplier for limited taxpayer dollars in foreign 
assistance.
    Foreign aid accounts for less than 1 percent of the Federal 
budget of the United States, and official development 
assistance worldwide only makes up 20 percent of resource flows 
into developing countries.
    With that said, as Ranking Member Kaine and I are both 
members of the Budget Committee and the Foreign Relations 
Committee, we have a unique perspective on how our global 
security crisis and our fiscal crisis are intertwined. Even 
though foreign aid is less than 1 percent of the Federal 
budget, I keep that in perspective in the fact that, in our 
current fiscal situation, every dollar we spend on the State 
Department and USAID, technically, in the United States is 
borrowed. So it behooves us to be very responsible about that 
in terms of how we invest it.
    I think this leverage that we get, this natural leverage 
with the partnerships, is extremely important today, given the 
needs around the world.
    That is not to say we should not continue to be more 
philanthropic and more and more philanthropic. We are the most 
philanthropic Nation in the world today. But in an environment 
of limited taxpayer dollars, we have to seek ways to find 
partners to help carry the load.
    That is why our three witnesses are here today to discuss 
public-private partnerships in foreign assistance.
    As a clerical note, I am simply going to refer to public-
private partnerships as partnerships. We have a bet with my 
staff that I cannot say that three times in a row, so we are 
going to call it PPP, and that is not purchasing power parity. 
It is public-private partnerships today, to make it easier on 
all of us.
    But thank you for being here. These partnerships are by no 
stretch a new idea in foreign assistance. We have seen USAID 
and other agencies work with nonprofit NGOs since the early 
1970s. However, in the 21st century, a new world of public-
private engagement in development has emerged, a new model 
marked by common objectives, joint planning, mutual resource 
contributions, and shared risks.
    I am eager to hear from the USAID today as the primary U.S. 
agency promoting international development who has been a 
leader on partnerships for development since the establishment 
of the Office of Global Development Alliance in 2001.
    I also look forward to hearing from Mr. Runde who not only 
served in that very office of GDA in the last administration 
but now studies development issues for the think tank 
perspective at CSIS.
    I also look forward to hearing from Coca-Cola, a company 
with a distinguished history of partnership programs with USAID 
and other partners around the world, also who has launched 
dozens of programs and projects with USAID just since 2002.
    Today, I hope we can get at some critical issues, some of 
which will be brought out by the questions and in your 
testimony, but I hope we will talk about what are the benefits 
to both the business community and to the government of public-
private partnerships, and to the developing countries around 
the world? How can we further leverage these partnerships as we 
go forward? What can businesses do in foreign assistance and 
development that the U.S. Government cannot? How do such 
partnerships benefit the American economy and jobs, as well as 
receiving countries? And how can we ensure appropriate 
congressional oversight of these partnership programs.
    I think, more than anything else, if we look at the State 
Department mission, and so forth, we know that a developing 
world is a safer world. So I think this public-private 
partnership idea is something that we have to continue to get 
better at. You guys are the experts. We look forward to it.
    With that, let me turn it over to the ranking member, 
Senator Tim Kaine.

                  STATEMENT OF HON. TIM KAINE,
                   U.S. SENATOR FROM VIRGINIA

    Senator Kaine. Thank you, Mr. Chairman. Thanks to the 
witnesses and to all who are in attendance.
    I will say to the witnesses one of the great things about 
coming during the summer, especially to testify, is you get a 
chance to inspire altruistic young people. The fellows and 
interns that we have who work in our offices, especially during 
the summer, love hearings like this. And the ones who come are 
the ones who are really interested in this topic. So in 
addition to educating us, we have some folks here in the 
audience who I know are really excited to hear what you have to 
say.
    The world of global development has just changed so 
dramatically probably in the last half-century. Global 
development aid was largely a function of official governmental 
funding. So an overwhelming percentage of aid was direct 
government funding into aid accounts. And yet we have seen a 
tremendous growth both in the philanthropic NGO sector as a 
provider of global aid, but also the private sector through 
foreign direct investment.
    Research materials that we had for this hearing have 
repeated a statistic I have seen a number of times, that 
foreign aid from donors, state donors such as the United 
States, makes up less than 20 percent of the resource flows 
into developing countries in 2014. The remaining 80 percent is 
comprised of foreign direct investment, private grants 
philanthropy, market term flows, and remittances sent by people 
who live abroad who are remitting dollars back home.
    And that is great because it is a way to extend the 
investments that are made to help the developing world be more 
and more successful, but it also poses some challenges, 
challenges of coordination, making sure that we are not 
duplicating efforts in some areas, and then leaving big gaps in 
others.
    In Virginia, I have been a big believer in the public-
private partnership model, where there is kind of an 
intentionality and explicit focus in bringing public and 
private partners together to tackle projects with well-defined 
sort of expectations about what everybody brings to the table. 
We have done that in Virginia in transportation and other 
projects.
    But, certainly, especially in this new world of global 
development aid, there is not any reason that we should not 
explore this model as well. In fact, it is being done in the 
global development world, and the question is how we can help 
it be done better without getting in the way or putting too 
much kind of bureaucratic structure on top of it that would 
make it inflexible or unable to meet the needs that we see all 
over the world.
    We have great witnesses today, and we have a number of 
members of this committee who have been very focused on this, 
because of their own experiences living in the developing 
world, and this matters deeply and personally to a number of 
members of the committee.
    So I thank the chair for calling this hearing, and you for 
participating, and I look forward to asking good questions.
    Senator Perdue. Thank you, Senator Kaine.
    Now I want to introduce our witnesses in the order in which 
they will speak. We would appreciate if you would keep your 
testimony to about 5 minutes.
    Again, just in managing the time, we are going to probably 
have a vote called about 3:30. That is not a hard stop for us, 
but we will be needing to sort of move along.
    First, we have associate administrator for the U.S. Agency 
for International Development, USAID, Eric Postel. Mr. Postel 
was confirmed by the Senate in March 2011 as the assistant 
administrator for the Bureau of Economic Growth, Education, and 
Environment. Since May 2015, he has also served concurrently as 
associate administrator.
    Mr. Postel serves as agency's coordinator for the 
governmentwide Partnership for Growth program. Mr. Postel 
brings more than 25 years of private sector experience working 
in emerging markets to his position at USAID. He previously 
worked as a vice president at Citibank Tokyo.
    Mr. Postel, we look forward to your comments. Thank you for 
being here.

  STATEMENT OF ERIC G. POSTEL, ASSOCIATE ADMINISTRATOR, U.S. 
     AGENCY FOR INTERNATIONAL DEVELOPMENT, WASHINGTON, D.C.

    Mr. Postel. Thank you, Chairman Perdue, Ranking Member 
Kaine, and members of the committee. Thank you very much for 
the opportunity to appear before you today. And I am grateful 
for the tremendous support that you have shown the United 
States Agency for International Development and for this 
opportunity to discuss our approach to these public-private 
partnerships.
    As you alluded to, today, donors such as USAID are 
basically the minority partners in developing countries. In 
addition to the numbers you cited about our share, on top of 
those different categories such as foreign direct investment, 
just the domestic resources of companies in these countries, as 
well as the domestic revenues of the governments, completely 
swamps all of these things.
    Within this shifting landscape, partnerships are central to 
our work and achieving our mission. In fact, it is embedded in 
our mission statement, the second word: We partner to end 
extreme poverty and promote resilient democratic societies 
while advancing our security and prosperity.
    Our role will continue to evolve from that of being a 
funder alone. We are increasingly embracing our role as 
convener, facilitator, risk-mitigator, and empowering new and 
nontraditional partners to join the effort.
    As you know so very well, there is a rich landscape of 
organizations of all shapes and sizes with which we partner to 
enhance our impact and ensure lasting results, whether faith-
based groups, higher education institutions, NGOs, and the 
private sector. We have a long history across multiple 
administrations of engaging the private sector for development.
    We have since the early years worked on private sector 
development in the countries themselves through programs 
designed to improve the business-enabling of environments. But 
in the late 1990s, we began to more proactively engage the 
private sector as true partners.
    Today, we are focusing on those instances where business 
interests and development interests align. When they do not, we 
do not partner. But when they do, that is the opportunity.
    Walmart executives know that educating women and girls is a 
smart investment in their future work force and their future 
customer base, just as we know that investing in girls' 
education has improved development results. When the interests 
do not align, though, then we should not pursue the 
partnerships.
    As always, all of our partnerships adhere to the safeguards 
we have in place to protect against misuse of funds and other 
challenges.
    One of the ways we partner with businesses is to achieve 
impact through the global development alliances, which Dan was 
involved in, in the early days. These alliances are co-
designed, co-funded, and co-managed alongside partners such as 
Coca-Cola so both the risks and rewards of the work are shared.
    Over the past 15 years, we have built more than 1,500 of 
these alliances with more than 3,500 organizations, leveraging 
more than $18 billion in funds outside of U.S. Government 
funding from private-sector sources and public sources.
    Another tool is our Development Credit Authority, which 
allows USAID to use partial credit guarantees to share risks 
and unlock investment in sectors that are important for.
    Through this effort, we used $185 million of taxpayer funds 
to mobilize more than $3.9 billion in credit working through 
340 financial institutions in 74 countries.
    Now, having expanded the use of those, we have begun to 
mobilize entire coalitions of private sector partners to make 
large-scale progress and address challenges at the systems 
level through initiatives that all four of you have supported 
so much, things like Power Africa and Feed the Future.
    For example, more than $10 billion in commitments to invest 
in agriculture-related projects for more than 200 African and 
international businesses were secured in exchange for 
governments making needed reforms or improvements. Of that, 
$2.3 billion has already been invested.
    As a sign of our commitment to this, we have also 
established an Office of Private Capital Microenterprise to 
help systematize this and move this more broadly.
    So while we have made a great deal of progress in the 
partnerships writ large, we think there is more to do, there 
are more opportunities. We have to continue to highlight the 
success, but we have to be honest about the challenges we face.
    I thank you very much for the opportunity to testify this 
afternoon, and I look forward to all of your questions.
    [Mr. Postel's prepared statement follows:]

                   Prepared statement Eric G. Postel

    Chairman Perdue, Ranking Member Kaine and members of the 
Subcommittee, thank you for the opportunity to appear before you today. 
I am grateful for the support you have shown the U.S. Agency for 
International Development (USAID) and for this opportunity to discuss 
our approach to public-private partnerships.
    This is a momentous time for global development: Over the last 
thirty years, the number of people living in extreme poverty has been 
cut in half, and now--for the first time in history--ending extreme 
poverty is within reach. It is also a time of complex humanitarian 
crises and great upheaval, so the stakes have never been higher for us 
to obtain maximum development results for each precious taxpayer 
dollar.
    Today, donors such as USAID are the minority partners in developing 
countries. While foreign assistance from donor nations to developing 
countries is about $160 billion per year, private philanthropy is about 
$70 billion, remittances are approximately $440 billion, foreign 
investment is almost $700 billion, and investment by domestic companies 
in their own economies exceeds $3.7 trillion. At the same time that 
development aid is just a small piece of the puzzle, developed and 
developing countries are partnering on bold, but achievable new 
agendas--from the 2030 Agenda for Sustainable Development and 
Sustainable Development Goals to the Addis Ababa Action Agenda--which 
cannot be achieved by one single donor or a combination of donors, 
organizations, or industry working alone.
    With this shifting landscape, partnerships are central to USAID's 
work and achieving our mission, given the potential they offer in terms 
of bringing our work to scale and ensuring long-term sustainability. 
Partnership is even embodied in our mission statement: we partner to 
end extreme poverty and promote resilient, democratic societies while 
advancing our security and prosperity. There is a rich landscape of 
organizations of all shapes and sizes with which we partner across 
nearly every sector and industry to enhance our impact and ensure 
lasting results.
    I recently spent a day in the state of Georgia that perfectly 
illustrates the wide array of partners with whom we are working. I went 
to the home of W. Allen Bell, the Executive Director of the Atlanta 
Resource Foundation, to meet with about twenty Atlanta business leaders 
who, inspired and strengthened by their faith, are spending their 
scarce free time on faith-based development projects in more than 20 
countries, including with USAID in a couple of cases. This group alone 
has probably devoted $5-10 million to helping people lift themselves 
out of extreme poverty in some of the most challenging places in the 
world, from the Democratic Republic of Congo to Central America.
    And this is just one local example. Major faith-based organizations 
like Catholic Relief Services (CRS) and World Vision USA are some of 
our top partners. For example, our partnership with CRS is on the scale 
of hundreds of millions of dollars per year. Last year, CRS, World 
Vision USA, and Islamic Relief joined with USAID and others to launch a 
partnership that supports peacemaking efforts in Central African 
Republic. Through this partnership, USAID's $3.5 million leveraged $4.2 
million of private funding.
    Later in the day, I met with five different Georgian universities. 
They, like so many others around America, are engaged in a wide variety 
of development projects from helping the President's Feed the Future 
initiative to address malnutrition and improve farming around the world 
to partnering with USAID to fight global health challenges. In the case 
of our higher education partnerships, we are leveraging their research 
capabilities as well as training the next generation of development 
leaders. In this new era, achieving development goals requires 
targeted, evidence-based programming, but also galvanizing others to 
action.
    I also visited CARE, an NGO that has been fighting global poverty 
since 1945. Each year, this group harnesses the incredible generosity 
of countless Americans to put more than $200 million to work alongside 
the U.S. Government to respond to disasters, educate girls, improve 
health outcomes and reduce hunger. There are many more examples like 
this. In every region of the world, NGOs are working side by side with 
USAID to meet urgent needs after a disaster strikes, improve equitable 
access to vital natural resources like water and land, and to 
strengthen the rule of law and democratic governance.
    In Atlanta I also spoke to dozens of financial sector professionals 
from across the United States on the investment opportunities in 
Africa. Most business leaders recognize that developing countries are 
home to some of the fastest growing consumer markets on the planet. As 
our longstanding partner Coca-Cola can likely attest, businesses are 
well-positioned to catalyze growth and positive change. Companies 
create jobs, transfer knowledge, and create an enabling environment for 
entrepreneurs essential for growth. In developing countries, businesses 
generate 80 percent of capital flows and 90 percent of jobs, and are 
the primary drivers of GDP growth. They are also critical in 
determining how resilient, inclusive and environmentally sustainable 
that growth will be.
    And increasingly, their business objectives overlap with our 
development objectives. Wal-Mart executives know that educating women 
and girls is a smart investment in their future work force and future 
customer base, just as we know that countries that invest in girls' 
education have reduced maternal and infant deaths, lower rates of HIV/
AIDS, and better child nutrition--an important foundation for economic 
growth.
    So how can our work with businesses accelerate progress toward 
inclusive and sustainable development? USAID has a long history, across 
multiple administrations, of engaging the private sector for 
development, one that continues to grow and evolve. We have, since the 
early years of USAID programming, supported private sector development 
and competitiveness, through programs designed to strengthen local 
business enabling environments and create the conditions for economic 
growth.
    In the late 1990s, we began to more proactively engage the private 
sector as true partners. This was an important shift. Specifically, we 
began to move beyond traditional relationship structures characterized 
by donor-recipient or client-vendor engagements in which organizations 
implemented projects that were conceived, designed and funded by USAID. 
Today, as we partner more, we are focusing on those instances where 
business interests and development objectives align. When they don't 
align, we should not and do not pursue partnerships. And, as always, 
all of our partnerships adhere to all of the safeguards we have in 
place to protect against misuse of funds and other challenges.
    I want to highlight a few of the different ways we partner with 
businesses to achieve impact. One of these ways is through Global 
Development Alliances (GDA), our flagship approach to public-private 
partnerships. GDAs leverage the assets and experiences of the private 
sector--their capital, investments, creativity and access to markets--
to solve complex problems. I am thrilled to be here with Dan Runde, one 
of the early members of the GDA office during the Bush Administration, 
who played a huge role in growing, mainstreaming, and 
institutionalizing the office. GDA has served as a strong foundation as 
our engagement with the private sector has continued to evolve. Over 
time USAID has learned to partner with companies in a variety of ways, 
and companies have also evolved, learning that partnering with USAID 
can help achieve their business objectives, while we achieve our 
development goals.
    Through the GDA model, we partner in industries and geographic 
areas with businesses whose interests align with our development 
objectives. These partnerships are co-designed, co-funded and co-
managed alongside partners, so that both risks and rewards of the work 
are shared. Over the past fifteen years, we have built more than 1,500 
of these alliances with more than 3,500 partner organizations, 
leveraging more than $18 billion in funds from public sources, such as 
host country governments, and private sector sources.
    For example, USAID partners with DuPont to help end world hunger 
and ensure food security by the end of 2020. DuPont Pioneer 
collaborated with USAID and the Government of Ethiopia to advance our 
shared agricultural development and food security goals. This 
collaboration, which is termed the Advanced Maize Seed Adoption 
Program, provides sample seed to demonstration plots and field training 
sessions as well as builds a network of farmer dealers and the current 
cooperatives to advance the utilization and acceptance of high-quality 
inputs and production techniques. DuPont/Pioneer completed construction 
of a state-of-the-art seed facility and more than 30,000 farmers, three 
times the target established for year two, have planted DuPont's high 
yielding seeds. In part due to use of these improved seeds, farmers 
achieved a 300% yield increase over the national average (7 metric tons 
per hectare, as opposed to 2 metric tons per hectare) in the last two 
years.
    In another example of partnership, the U.S. Presidents Emergency 
Plan for AIDS Relief has a long-standing collaboration with USAID to 
combat HIV/AIDS and achieve epidemic control through public-private 
partnerships that support innovation and resources from the private 
sector. These include the Accelerating Children's HIV/AIDS Treatment 
(ACT) initiative, a two-year $200 million public-private partnership 
with the Children's Investment Fund Foundation to double the number of 
children receiving life-saving antiretroviral treatment. PEPFAR and 
USAID also partner on the Determined, Resilient, Empowered, AIDS-free, 
Mentored, and Safe women (DREAMS) initiative, an ambitious $385 million 
public-private partnership with the Bill and Melinda Gates Foundation, 
Girl Effect, Johnson & Johnson, Gilead Sciences, and ViiV Healthcare to 
reduce new HIV infections among adolescent girls and young women. These 
efforts are aligned with the Sustainable Development Goals and 
associated targets and indicators that United Nations member states are 
using to frame their agendas. Member state action and policies will 
impact health, education, gender equality, and inequality, and will 
promote partnerships towards peaceful and inclusive societies.
    The second major tool created to work with the private sector on 
specific projects is our Development Credit Authority (DCA). Through 
DCA we use partial credit guarantees to share risks and unlock 
investment into sectors that are important for development. Through 
this effort, we have leveraged $185 million of taxpayer funds to 
mobilize more than $3.9 billion in credit through 474 loan guarantees 
with more than 340 financial institutions across 74 countries. This 
translates to a leverage ratio of 1:21. In 2015 alone, DCA mobilized 
$695 million toward USAID development objectives.
    For example, in 2015 we partnered with two Bangladeshi banks and 
the Alliance for Bangladesh Worker Safety to enhance worker safety in 
garment factories across the country. Through DCA, we were able to 
mobilize $18 million in lending to help factories make important safety 
changes. And, as the Alliance consists of U.S. brands, a significant 
majority of these factories benefiting from these improvements are 
exporting to U.S. buyers through U.S. apparel companies.
    And now, having really expanded the use of GDAs and the DCA to 
support individual efforts, we have begun to mobilize coalitions of 
private sector partners to work toward large-scale progress and address 
challenges at the systems level. We are putting these new approaches to 
work through initiatives such as Power Africa and Feed the Future.
    The President's global hunger and food security initiative, Feed 
the Future has established relationships with local and regional 
companies in its 19 focus countries, as well as with U.S. and 
multinational companies such as Walmart, DuPont and Syngenta, and with 
Partners in Food Solutions, a nonprofit consortium of leading global 
food companies like General Mills, Cargill, DSM, Buhler, and Hershey. 
These relationships have expanded the initiative's reach into food-
insecure regions and leveraged millions of dollars in private capital 
for inclusive agricultural development and nutrition efforts.
    Feed the Future also serves as the principal vehicle through which 
the United States contributes to the New Alliance for Food Security and 
Nutrition. The New Alliance brings together businesses, donors, civil 
society, and host country governments to unlock investment in African 
agriculture and reduce hunger and poverty by linking private investment 
commitments to policy reforms from host country governments. The New 
Alliance has secured more than $10 billion in commitments from more 
than 200 African and international businesses to invest in Agriculture-
related projects provide governments made needed reforms or 
improvements. So far, $2.3 billion has already been invested.
    Similarly, our efforts to double access to electricity in sub-
Saharan Africa through Power Africa, focused on advancing both on- and 
off-grid electricity transactions, are rooted in public-private 
partnerships. Through Power Africa the U.S. Government and our 
bilateral and multilateral development partners are working with 
African governments to help break down the barriers to private sector 
investment in Africa's energy sector. Through this initiative, the U.S. 
government has committed $7 billion, and to date has leveraged more 
than $31 billion in commitments from over 100 private sector partners 
to invest in power generation and distribution across sub-Saharan 
Africa.
    For example, Power Africa worked with the Kenyan government to 
determine the national electric grid's absorption capacity for wind 
power. This information helped enable one of the first deals signed, 
with Power Africa support, with OPIC providing a guarantee of $250 
million for a 310 MW wind power generation project near Lake Turkana, 
Kenya. This single project will increase Kenya's available electricity 
by 15%.
    No matter the model we use, our partnerships with the private 
sector are critical to achieving transformative development success. As 
a sign of our commitment to building on this work and integrating these 
capacities across the Agency, we established an Office of Private 
Capital and Microenterprise to focus on mobilizing even more private 
capital to support USAID's development objectives. This office works 
with a powerful network of traditional and nontraditional investors to 
catalyze finance for development and increase the scale, impact, and 
sustainability of our programs.
    As all of the different efforts I have described today make clear, 
USAID has been on a multi-year, multi-Administration voyage of 
discovery and leadership to increase the impact of precious taxpayer 
funds. One of the advantages of engaging in partnerships is that they 
offer incredible potential for scale and long-term sustainability 
beyond USAID assistance. And while we have made a great deal of 
progress in partnerships writ large, there is even more we hope to do 
to tap the full potential of this field. We must continue to highlight 
the successes but also be honest about the challenges we face.
    Those of us in the donor community must continue to use our aid in 
innovative ways, to catalyze partnerships to achieve shared goals. We 
are also working to ensure that we are a better partner. We have 
increased our focus on relationship management, ensuring that we 
establish trust and communications with partners, allowing us to engage 
more strategically. And as we engage, we must continue to ask 
ourselves: How can we be catalytic and unleash the power of partners 
and/or markets to advance social and economic development? And, what 
can we do given our unique positioning to bring diverse stakeholders 
together to solve complex problems?
    We know that achieving our ambitious development goals will require 
unprecedented collaboration across sectors. Our role as a donor will 
continue to evolve beyond that of a funder alone; we are increasingly 
embracing our role as a convener, facilitator and risk mitigator, 
empowering new and nontraditional partners to join the effort to end 
extreme poverty and promote resilient, democratic societies. USAID and 
its partners have been fortunate to receive strong support and guidance 
from this Committee over several decades, which have enabled us to 
pursue this important work.
    Thank you for the opportunity to testify this afternoon. I look 
forward to your questions.


    Senator Perdue. Thank you, Mr. Postel.
    Now we will turn to Daniel Runde. Mr. Runde serves as 
director of the Project on Prosperity and Development and holds 
the William A. Schreyer Chair in Global Analysis at the Center 
for Strategic and International Studies, or CSIS. Previously, 
he led the foundation's unit for the Department of Partnerships 
and Advisory Service Operations at the International Financial 
Corporation. His work there facilitated and supported over $20 
million in new funding through partnerships with the Bill and 
Melinda Gates Foundation, the Rockefeller Foundation, Kauffman 
Foundation, and Visa International, among other global private 
and corporate foundations.
    Previously, Mr. Runde was director of Office of Global 
Development Alliances at the U.S. Agency for International 
Development, or USAID. His efforts there leveraged $4.8 billion 
through 100 direct alliances and 300 others through training 
and technical assistance.
    Mr. Runde, we look forward to your testimony. Thank you.

  STATEMENT OF DANIEL F. RUNDE, WILLIAM A. SCHREYER CHAIR AND 
  DIRECTOR, PROJECT ON PROSPERITY AND DEVELOPMENT, CENTER FOR 
     STRATEGIC AND INTERNATIONAL STUDIES, WASHINGTON, D.C.

    Mr. Runde. Thank you very much. It is an honor and 
privilege to be here to speak before this committee. I speak 
before you as someone who has written a series of studies on 
this topic and has worked on these issues for a long time.
    I have three main points for the committee. The first is 
that this is not your grandparents' developing world, that it 
is richer, freer, and more capable. And second, the way in 
which we--and I mean ``we,'' the West, donors, think-tankers, 
policymakers--think about how development happens, we need to 
think differently about it and include a much more central role 
for both the private sector, the for-profit private sector, and 
host country governments because of these changes. And third, 
the U.S. Government and others are adapting to this changed 
world, but we need to go yet further so that our limited 
resources can go further.
    So my bumper sticker would be that we have to think of the 
United States and other aid donors as not the largest wallet in 
the room, but the most catalytic wallet in the room, so there 
is still a very important role for foreign assistance. It 
matters, but we have to think of it in a different way, and we 
have to change our mindset around it.
    So let me start with this issue about the world has changed 
and it is not our grandparents' developing world. So if you 
look at a whole series of measures, many of the countries that 
make up the developing world, let's say there are hundred of 
them, about 80 of them are on a path to being wealthier, freer, 
healthier, and more capable paying for their own health, paying 
for their own education and other public goods that development 
assistance provides. But it is also important to note something 
else that is happening.
    Increasingly, many countries are able to collect a lot more 
taxes. Eric Postel and AID have done a lot of work on this, but 
there are a lot more taxes. The fancy term in our business is 
called a domestic resource mobilization. I wrote a report on 
this. If you have trouble sleeping at night, you can read my 
report on taxes and development, but it is actually very, very 
important. It is a huge force of change.
    So at the same time, I want to highlight one thing. I do 
think there are still 20 or so of the so-called bottom billion 
countries that are really poor, that are fragile and weak 
states. We are still going to have to use a traditional mindset 
of traditional assistance of U.S. Government ODA leading on 
these sorts of problems.
    I also think there are certain kinds of global challenges, 
whether they are pandemics like Ebola or Zika, where the United 
States is going to have to lead. We are going to have to use 
our foreign assistance and we are going to have to lead in that 
way.
    There are roles for partnerships, but it is much more the 
U.S. Government continues to need to have a central role.
    As a result of these changes, if you think about the way 
the U.S. has changed its engagement, if you look at the 1960s, 
70 percent of the resources from the United States to the 
developing world was foreign assistance. Today, it is something 
like 10 percent. You both have cited these statistics.
    But the problem is the following. The systems procurement, 
human resources, incentives, and even our founding legislation 
were set up in an earlier, different era. The mindset from the 
Marshall Plan through the 1980s operates as if the United 
States or the World Bank or the IMF could centrally plan the 
development of these poor countries. It is understandable 
because of the statistics that I have mentioned, so it is not a 
critique of a past era. We just need to evolve and adapt.
    So as a result of this, the role of foreign assistance 
needs to change. Foreign assistance can share financial risk. 
AID and other agencies like the World Bank can convene. They 
can beta test. They can take risks. They can also put forward 
glue money or help force certain kinds of difficult policy 
conversations. AID and others offer world-class and often 
unique capacities and technical and program design expertise.
    So I think they are going to have to, though, work even 
more closely with these larger forces that are out there. These 
forces, by that I mean taxes in developing countries, foreign 
direct investment, local capital markets, because these are 
much harder larger forces, and they dwarf ODA or development 
dollars.
    The other thing is, I think as we think about this changed 
landscape, we want to think about how we work more closely with 
the private sector. We certainly work in partnership, and Eric 
has referenced that.
    I just want to say that public-private partnerships are not 
a Republican thing or a Democratic thing. Secretary Powell and 
my friend Andrew Natsios when he was the head of AID helped 
support getting that off the ground. And then Secretary Clinton 
when she was Secretary of State worked very hard to evangelize 
on partnerships and operated in a multisector partnership way.
    USAID has built partnerships with some of the best 
companies in the world, including Coca-Cola, Chevron, and 
Walmart. And the partnerships have allowed AID to tap into 
supply chains, the ability for foreign direct investment, 
technology, and standards.
    Let me just take 30 more seconds, if I could, Mr. Chair.
    So what would I do in terms of what are the things we could 
do to do more around this sector? I would think about a couple 
things. Focusing on broad-based growth as a central organizing 
principle for U.S. development policy. I think we need to yet 
further align U.S. development instruments with the private 
sector.
    There are some specialized agencies and instruments that 
could use a little bit more money. I think the U.S. Trade and 
Development Agency is a great agency. I would double their 
budget. I think Lee Zak is one of the best leaders in the Obama 
administration. That is a great agency.
    I would increase OPIC's combined statutory ceiling for 
financing and risk insurance and allow OPIC to retain some of 
its profits.
    I would also further emphasize partnerships at AID and 
ensure flexibility to create them. There has been a lot of 
progress there, but there are a lot of workarounds that are 
required.
    Finally, we need to continue to shift the operational 
culture of U.S. Government agencies toward private sector 
engagement.
    With that, I will cede my time. Thank you, Mr. Chair.
    [Mr. Runde's prepared statement follows:]

                 Prepared Statement of Daniel F. Runde

    Chairman Perdue, Ranking Member Kaine, distinguished Members of the 
subcommittee, thank you for asking me to testify before you today. It 
is a privilege and an honor. As an expert on international development, 
I am speaking as someone with extensive experience on the central role 
of the private sector in development, and also having successfully 
created partnerships during my time in the Bush Administration at 
USAID. I have also had past roles in investment banking, commercial 
banking, corporate philanthropy, and with the World Bank Group. I 
currently hold an endowed chair at the Center for Strategic and 
International Studies and in that capacity, I have carried out four 
major studies related to the issues we are going to discuss today.
    My central message to this committee is that rather than having the 
largest wallet, the United States and other aid donors need to 
understand that they are often the most catalytic wallet in the room.
    I have three main points I want to communicate. First, it's not 
your grandparents' developing world any more--most developing countries 
are richer, freer, healthier and more capable than 40 years ago because 
of globalization, an embrace of free (or freer) markets, better public 
policies, and a move towards democratic government and/or more 
``accountable'' governance. Second, the way in which ``we'' (the West 
as official donors, academia, policymakers, and others) understand how 
development ``happens'' has also changed with a much greater role for 
the private sector. Third, the U.S. Government and others are adapting 
to these changes but could go farther so that our limited (but 
important development assistance resources) could achieve greater 
impact and be focused on the things that developing countries want from 
us.
    Let me start with the fact that the world has changed.
    If you look at a whole series of measurements many of the countries 
that make up the developing world are richer, freer, healthier, and 
more capable of paying for their own health, education and other public 
goods. This is a great thing. These wealthier and freer countries can 
often help ``burden share'' on security and other global public goods, 
they trade with us, and engage with us on science and innovation and 
they often buy into a whole series of assumptions about how the world 
should work.
    Of course there are still 20 or so so-called ``Bottom Billion'' 
countries. These Bottom Billion countries are fragile or failed states 
where terrorism is bred and pandemics accelerate. These countries will 
continue to require a mix of traditional foreign assistance and new 
solutions to achieve prosperity and security.
    As a result of these dramatic changes, the U.S.'s economic 
engagement has changed radically in the last 50 years with the 
developing world. Most of our economic engagement and most of our 
allies in Europe and Japans' engagement with the developing world is 
foreign direct investment, global trade, and global capital market 
flows, not foreign aid. These flows dwarf the resources of all official 
development assistance. There are also large donations of philanthropy, 
remittances, and other forms of private charity emanating from the 
United States that when added up are also larger than U.S. official 
development assistance.
    This brings me to our first problem. The systems, procurement, 
human resources, incentives, and even our founding legislations were 
set up in an earlier, different era. The mindset from the Marshall Plan 
through the 1980s operated as if the United States or the World Bank or 
the IMF could centrally plan the ``development'' of these poorer 
countries. It was understandable as to why this was believed. In the 
1960s over 70 percent of resources from the United States to developing 
countries came in the form of aid. This was true, in fact, of most 
wealthy countries during this period. Yet, the assumption remains that 
United States and other donors remain the ``biggest wallet'' in the 
room when, as I have explained above, this is far from the case.
    As the role of aid diminishes in comparison to private capital, aid 
agencies can share financial risk, convene, beta-test, and put forward 
``glue money'' for multi-stakeholder programs and ideas. Agencies like 
USAID offer world class and often unique capacity building, technical 
and program design expertise, and often underestimated convening power. 
Increasingly aid agencies work more closely with these other, larger 
forces.
    Second, the way in which we understand that ``development'' happens 
has changed.
    Let me take a moment to make an important distinction between 
``development'' and U.S. ``development assistance''. In my chapter in a 
recent e-book called ``Choosing to Lead'' I defined these two terms as:


          [Development] assistance does not equal ``development.'' The 
        word development denotes domestically driven economic and 
        social progress encompassing economic growth, political 
        freedom, improvements in health, literacy, education, and other 
        quality-of-life measures. Each society is responsible for its 
        own development, more or less by definition. Development 
        assistance, on the other hand, describes a facet of American 
        foreign policy and that of other wealthier countries. But it is 
        not the only related facet of U.S. policy. Some U.S. government 
        assistance provides emergency humanitarian relief in the face 
        of short-term crises, most often of natural origin (floods, 
        earthquakes, and the like). The U.S. government and associated 
        institutions like the International Red Cross are well regarded 
        and admired for their capabilities as a humanitarian aid 
        provider. Longer-term ``development assistance'' often takes 
        many years to affect systemic problems, if it can do so at all. 
        It overlaps with the U.S. capacity to undertake humanitarian 
        crisis triage, but it has different methods and aims.

    Let's consider ``development'' and how it happens. A series of 
international agreements that form the basic operating system for 
developing countries and aid donors have traced this shift. These 
agreements are divided into three general categories and try to answer 
three questions. The first question is ``What kind of societies do we 
want?'' This question has been first addressed by the Millennium 
Development Goals (MDGs) and now by the Sustainable Development Goals 
(SDGs). The next question considers ``How will we pay for 
development?'' This question has been sought to be answered by a series 
of conferences on Financing for Development organized by the United 
Nations. In shorthand, these are known as ``Monterrey'' (2002), 
``Doha,'' (2008), and ``Addis Ababa'' (2015).
    The final question is ``How does development actually happen?'' A 
series of meetings called theHigh Level Forums on Aid Effectiveness 
organized by the Organization for Economic Co-Operation and Development 
have tried to answer this final question. In shorthand, these are known 
as ``Paris,'' (2005) ``Accra,'' (2008) and ``Busan'' (2011). Busan 
announced a new ``Global Partnership for Effective Development Co-
operation,'' which seeks to monitor the implementation of these 
agreements around improved aid and development effectiveness.
    These three streams of agreements have all been moving towards a 
recognition of the role of country governments and the private sector 
as the key actors in international development, with USAID and other 
bilateral donors as much smaller but catalytic actors. For example, the 
MDGs included a goal on partnerships, but this was almost as an 
afterthought. In contrast, the SDGs put emphasis on partnerships and 
speak of ``revitaliz(ing) the global partnership for sustainable 
development.'' Monterrey, Doha, and Addis Ababa each reference the 
private sector as an important actor in international development, but 
the emphasis has expanded each year. Monterrey's outcomes document 
includes five paragraphs in its ``Domestic and International Private 
Business and Finance'' section, while Doha has seven and Addis Ababa 
has 15. Addis Ababa speaks of ``partnerships'' 28 times, which is more 
than twice the usage of this term in the previous two documents.
    It's very important to note something else that has happened: 
increasingly, many countries are taking control of their own futures 
through their own investments and the taxes they collect. A rising 
global middle class is better able to contribute tax dollars to their 
national and local governments. These citizens are also demanding more 
in terms of good governance, delivery of services, and general quality 
of life. Additionally, foreign companies in these countries are better 
able to join the international development conversation through 
partnership with governments and joint ventures with companies in 
developed countries. As globalization leads companies and other private 
sector actors to broaden their engagement geographically and grow their 
wealth and expertise, there are increased opportunities for new 
partnerships. Accordingly, we need to adapt a different way of thinking 
to remain effective.
    Third, this changing global landscape requires official donors to 
focus their attention on working more closely with the private sector.
    One of the ways in which the United States has responded is to 
think about how we work in partnership with the private sector. In 
2011, I directed a report called ``Seizing the Opportunity in Public-
Private Partnerships'' and we defined partnerships as:

          an approach to solving development problems through a 
        coordinated and concerted effort between government and 
        nongovernment actors, including companies and civil society, 
        leveraging the resources, expertise, or market efforts to 
        achieve greater impact and sustainability in development 
        outcomes.


    The good news is that the U.S. government and the international 
community have sought to work more closely with the private sector. 
This is reflected in the success of the Global Development Alliance at 
USAID. USAID has put together approximately 1,600 partnerships since 
2001. In 2011, a report by the OECD described USAID as a leader in 
public private partnerships. USAID has built partnerships with leading 
U.S. businesses, including Walmart, Chevron, Coca-Cola, and others. 
These partnerships have sought to tap not only the financial 
wherewithal of these companies, but also their unique knowledge and 
skill sets. One example is the Angola Partnership Initiative built with 
Chevron beginning in 2002. Although this is an older example, this 
partnership was not only important in the impact that it had on the 
ground through economic development, but it also opened the eyes of 
other corporations and USAID leadership to the viability of 
partnerships. There are many examples of successful partnerships.
    Public-private partnerships are not a Republican or a Democratic 
concept. The Global Development Alliance initiative was supported 
strongly by former President Bush, then Secretary Powell, and my mentor 
and friend, former USAID Administrator Andrew Natsios. The Global 
Development Alliance was developed and led by a group of civil servants 
and foreign servants, especially Holly Wise and Curt Reintsma. Former 
Secretary of State Hillary Clinton was also a big proponent of 
partnerships during her tenure. She called upon a number of folks 
including Jim Thompson, a civil servant from USAID, and now the 
Director of Innovation at the State Department, to innovate and 
evangelize partnerships within the State Department and across the 
inter-agency.
    However, many systems, rules and instruments still reflect a past 
set of assumptions of how development happens and that seem to ignore 
the central role of the private sector and the catalytic (not central) 
role of aid agencies. These include inflexible instruments, overly 
earmarked money and processes, lack of incentives at leadership and 
middle management levels, outdated procurement rules and stifling 
regulations, and a very aggressive counter-bureaucracy that support the 
United States as the ``largest wallet'' rather than a ``catalytic 
wallet.''
    It is important to note that partnerships are not the solution to 
every global problem, but rather one important approach. Yet they offer 
the promise of collaboration to tackle some of the world's most 
intractable issues; issues that no entity can solve on its own. Some 
challenges will continue to require the U.S. government or other 
governments to lead with development assistance. For example, the 
response to pandemics including Ebola and Zika must be led by 
government, but we have seen that they can never be wholly solved by 
government acting alone. Other challenges, including human rights, 
democracy promotion, and governance issues, do not necessarily lend 
themselves well to partnership approaches.
    Partnerships, however, represent just one facet of how development 
agencies can engage with the private sector. The United States, and 
other bilateral donors, should look to strengthen their existing 
development finance institutions (DFIs); in the case of the U.S. 
government, this means the Overseas Private Investment Corporation 
(OPIC). OPIC and other DFIs offer financing instruments (loans, loan 
guarantees, and risk insurance) to private sector entities seeking to 
make investments in developing countries. This support for the private 
sector is critical in countries where access to finance is limited, but 
demand remains high for investment, and OPIC and other DFIs can help to 
``crowd-in'' private investment.
    The momentum around private sector engagement and partnerships as 
key drivers of international development is growing. Expanding and 
improving partnership policy and mechanisms should a focus of U.S. 
government agencies as they continue to be world leaders in 
international development.
    In closing, I offer the following responses to the Chairman and 
Ranking Member's specific points of inquiry with respect to this 
hearing.
1. Please discuss your views on how the U.S. government partners with 
        the private sector to leverage U.S. taxpayer dollars.
    The United States operates in several kinds of public-private 
partnerships for international development:

          1. Development finance instruments that make use of 
        guarantees and loans to ``crowd in'' the private sector. This 
        approach is led by OPIC and other development finance 
        instruments including the Development Credit Authority (DCA).

   The U.S. government should lift the ceiling on OPIC lending 
        and insurance and allow it to increase its number of full-time 
        employees. The U.S. government should also raise the lending 
        ceiling for DCA instruments.

          2. Mixed finance for large infrastructure projects. While the 
        U.S. government has largely moved away from global 
        infrastructure investment in recent years, U.S. government 
        actors including the Millennium Challenge Corporation (MCC), 
        the U.S. Trade and Development Agency (USTDA) and multilateral 
        organizations including the International Finance Corporation 
        (IFC) invest in infrastructure projects including privatized 
        roads and airports.

          3. Partnerships that bring together a government agency such 
        as USAID or the State Department and one or more private sector 
        actors, including for-profit companies, business associations, 
        NGOs, and others. These are funded by grants and combine public 
        and private assets and resources for a specific development 
        objective.

   USAID has been a world leader in public-private 
        partnerships (PPPs), highlighted by its successful Global 
        Development Alliance (GDA) model. Since it was established in 
        2001, USAID has engaged in over 1,600 PPPs in every region of 
        the world.
2. What are the benefits and challenges of these public-private 
        partnerships?
Benefits:

   PPPs bring needed private sector financing to the table.

   Companies bring their global supply chains, Foreign Direct 
        Investment (FDI), formal jobs, attention to environmental and 
        labor standards, and new technologies.

   Involving companies in a development project can also lead 
        these initiatives to be more effective and efficient. This is 
        especially the case when a company has a clear business 
        interest in the initiative. Long-term business interests in the 
        communities where PPPs are implemented can bring scale and long 
        term engagement.


Challenges:

   Partnerships require that the U.S. government answer a 
        couple of challenging questions that are not present in 
        traditional development projects. The first relates to forming 
        partnerships--``how do you get people to work with you who 
        don't work for you?'' The second relates to durability of the 
        partnership--``how do you keep people working with you who do 
        not work for you?''

   Partnerships are more time-intensive to structure than 
        traditional development projects.

   It can be difficult for companies to work with U.S. 
        government systems.
3. What can businesses do that the U.S. government cannot?
    In addition to providing needed financing, private sector partners 
also bring other important resources to partnerships--technical 
expertise on topics including health, agriculture, and technology; 
innovation; their supply chains.
4. How are the interests of the U.S. government safeguarded when 
        partnering with other entities?

    I will use USAID as a proxy for the answer to this question.
    USAID has sought to balance its fiduciary duty to taxpayers and the 
U.S. Congress and to its beneficiaries with the changing world that I 
described above. There have been several innovations that are within 
the Federal Acquisition Regulations and USAID's policies and 
procedures. These include the release of a partnership ``Annual Program 
Statement'' which explicitly invites outside actors to submit 
statements of interest on potential partnerships that address areas of 
need in developing countries. Second, USAID has developed something 
called the Collaboration Agreement and something else called the Broad 
Agency Announcement which allows USAID to try new approaches to 
engaging with private actors and co-designing projects.
    USAID also engages in various forms of due diligence with various 
new partners.
5. How can we further leverage and multiply the impact of U.S. taxpayer 
        dollars in foreign aid in the future?
    Given that private investment is so central to international 
development, it is important that the U.S. government continue to 
empower the instruments that leverage global private investment. This 
includes:

   Follow through on CSIS's 2013 bi-partisan Development 
        Council recommendations:

                  (1) Make Broad-based Growth the Central Organizing 
                Principle of U.S. Development Policy including shifting 
                $350 million from other foreign-aid accounts to 
                economic-growth activities and promoting 
                entrepreneurship through development finance and 
                technical assistance.

                  (2) Align U.S. Development Instruments with the 
                Private Sector including: Program 25 percent of 
                development agency funds through partnerships, Simplify 
                and streamline partnership formation, coordination, and 
                planning and Leverage U.S. business practices, supply 
                chains, and training

   Doubling USTDA's budget from $60 million to $120 million. 
        USTDA has 30 years of experience in project preparation and 
        documented success in completing highquality infrastructure 
        projects. USTDA Director Lee Zak is an incredibly able leader.

   Increasing OPIC's combined statutory ceiling for financing 
        and risk insurance and allow OPIC to retain some of its 
        profits. This capital can be used to pay for hiring the 
        additional full-time employees that OPIC needs to source and 
        structure deals in the United States and overseas.

   Further emphasizing partnerships and ensuring the 
        flexibility to create them throughout USAID. While partnerships 
        have largely been mainstreamed within USAID, there is 
        opportunity for further emphasis on this throughout the Agency. 
        USAID needs some additional ``centrally managed'' money that 
        USAID missions should be able to access and this money should 
        be managed by USAID's Global Development Lab. USAID should 
        continue building the capacity of its policy and personnel 
        towards more flexibility, more utilization, and more 
        creativity.

   Continuing to shift the operational culture towards private 
        sector engagement. There have been a significant set of 
        cultural and generational changes, including changes in 
        incentives, that have created spaces for innovators within the 
        U.S. government. Partnerships have become much more 
        ``democratized.''

   Reflecting this mindset change. USAID's mission even states 
        that it ``partner to end extreme poverty and promote resilient, 
        democratic societies while advancing our security and 
        prosperity.'' However, there are still some people within the 
        U.S. government with a different theory of change; These folks 
        still view themselves as having the largest wallet in the room, 
        see the private sector as basically bad, have a very hard time 
        accepting that a company might be making a profit in a 
        developing country and view a ``business case for development'' 
        with suspicion. There are a separate set of problems related to 
        success in partnering including several parts of the USG 
        reaching out to the same company or seeing the private sector 
        as ``just a purse'' or another ``funding account.'' The 
        solution is constant messaging and modeling of good partnership 
        practice from senior management at agencies like USAID, State 
        and the MCC.

   Move toward networked multi-stakeholder partnerships. USAID 
        is moving away from smaller, one-time partnerships to these 
        types of coalitions and should continue doing so, while 
        engaging more and more kinds of partners locally. Ultimately, 
        USAID's goal should be to work itself out of a job.


    Senator Perdue. Thank you. We look forward to following up 
on some of that. It is very interesting.
    Our final witness today is Mr. Michael Goltzman of the 
Coca-Cola Company. Welcome.
    Mr. Goltzman has been with the Coca-Cola Company since 1997 
where he has held a number of roles. He worked for more than a 
decade on international public policy and trade policy in 
Coke's D.C. office. He worked in Hong Kong for the company's 
Asia Public Affairs Department. And from 2009 to 2012, he 
served as the director of public affairs and communications for 
the Middle East and North Africa business unit responsible for 
33 countries. In 2012, he was named vice president of 
international government relations and public affairs.
    Prior to joining Coca-Cola, he worked in France with U.S. 
Ambassador Pamela Harriman.
    Mr. Goltzman, we look forward to your testimony. Welcome.

 STATEMENT OF MICHAEL GOLTZMAN, VICE PRESIDENT, INTERNATIONAL 
GOVERNMENT RELATIONS AND PUBLIC AFFAIRS, THE COCA-COLA COMPANY, 
                          ATLANTA, GA

    Mr. Goltzman. Thank you very much, Chairman Perdue and 
Ranking Member Kaine. I am really delighted to be here. As you 
mentioned, I did work in the field for both Coca-Cola as well 
as here in the United States, so I have seen the benefits of 
public-private partnerships firsthand.
    As our CEO Muhtar Kent likes to say, really the best and 
most efficient and sustainable way to address some of the 
global challenges that our societies face is through a Golden 
Triangle partnership model, bringing together the expertise of 
government, business, and civil society.
    And the Coca-Cola Company has been pleased and proud to be 
a partner with the U.S. Government for many years, including 
the U.S. Department of State and USAID, specifically.
    In my written testimony, I mentioned three specific 
partnerships, Project Last Mile, the work we do with USAID, the 
Global Fund and the Bill and Melinda Gates Foundation; our 
water and development alliance with USAID; and the Coca-Cola 
Middle East and North Africa Scholars Program that is in its 
fifth year of partnership with the U.S. Department of State.
    In order to maybe give you a better understanding of the 
true impact that these public-private partnerships can have, I 
thought I would just talk specifically about one of the 
programs, Project Last Mile.
    As I am sure all of you know its background, the Global 
Fund was created in 2002 because the global community decided 
that we needed to help developing countries with the money they 
needed to purchase the critical medicines to treat HIV/AIDS, 
tuberculosis, and malaria. The U.S. Government and other major 
governments were the biggest donors and provided massive 
funding to these countries to purchase the needed medications.
    Through Project Last Mile, we are ensuring that these 
medications truly reach the last mile. We are leveraging Coca-
Cola's supply, distribution, and marketing expertise to help 
build capability in African ministries of health so they can do 
their job better.
    For example, we are using Coca-Cola's route-to-market 
expertise to help governments think about the most effective 
and efficient distribution models. We are benchmarking Coca-
Cola's best practices for tracking how we measure our beverages 
that are out of stock and helping governments think how they 
measure and create better systems to track out of stocks of 
these critical medicines.
    We are sharing our guidelines for how we repair and 
maintain our stock of refrigerators in the market that cool our 
beverages and to help the governments do the same thing for 
their refrigerators that take care of the vaccines.
    And we are sharing our human resource systems and our 
marketing expertise, similarly, with the governments.
    So what impact has all of this work had? When we started 
Project Last Mile at the beginning, out of stocks in Tanzania, 
one out of two times that you went to your local clinic, your 
medicine was not available. Today, eight out of 10 times that 
you go there, your medicine is available.
    Before we started, it took 30 days for a clinic to be 
resupplied with medicine that was out of stock. Today, it takes 
5 days.
    Before, there were no individual objectives for ministry 
employees. Today, using Coca-Cola's performance management 
system, all ministry employees have individual performance 
objectives, and this allows the ministry to develop incentive 
programs to incentivize better performance.
    In terms of third-party suppliers that often are the 
distributors for many governments, before, in Mozambique, there 
was no third-party contract management system. And now, using 
the system that Coca-Cola pioneered for our use of third-party 
contractors, the ministry has a benchmark for doing that and is 
able to measure what they are paying against other private 
sector actors.
    And finally, in terms of refrigeration, prior to us going 
into work with the ministry in Ghana, they were using 80 types 
of refrigerators and had high rates of breakdown for their 
refrigeration systems. Coca-Cola uses less than 10, does 
preventive maintenance on all of its refrigerators. And, 
therefore, we have been able to help them create a benchmark 
for how they could improve their refrigerator uptime.
    All of this means that together USAID, the Global Fund, and 
Coca-Cola are building capability within African governments 
and maximizing the spending that the U.S. Government is already 
allocating by making that spending more efficient, using the 
latest private sector models for distribution, supply chain 
efficiency, and to ensure a steady supply of all of these 
critical medicines.
    I am happy to talk about the other partnerships later on 
and answer any of your questions. Thank you.
    [Mr. Goltzman's prepared statement follows:]

                 Prepared Statement of Michael Goltzman

    Chairman Perdue, Ranking Member Kaine, members of the subcommittee, 
thank you for the opportunity to discuss an important area of the U.S. 
government's work overseas--Public Private Partnerships in Foreign Aid.
    On behalf of the more than 700,000 Coca-Cola system employees 
globally, we are pleased to participate in today's hearing. As our 
Chairman and CEO Muhtar Kent often states, neither business, government 
nor civil society can solve society's greatest challenges on its own. 
It is only through collaboration and creating a ``golden triangle'' of 
partnership that we can make progress toward addressing global 
development challenges and specifically the newSustainable Development 
Goals (SDGs). As someone who has worked for The Coca-Cola Company both 
at our corporate headquarters and also in North and West Africa, I can 
speak from first-hand experience about the positive impact that public-
private partnerships have on local communities.
    The Coca-Cola Company has been a proud partner of the U.S. 
government, and with USAID and the State Department specifically, for 
many years. Although there have been many collaborations between The 
Coca-Cola Company and USAID and the State Department, I would like to 
focus on three that illustrate our belief that we can do more good for 
more people when we act together than we can when working alone:


 1. Project Last Mile, a partnership between the Company, USAID, the 
        Global Fund on HIV/AIDS, Tuberculosis and Malaria and the Bill 
        and Melinda Gates Foundation, to build supply chain and 
        distribution capability in African Ministries of Health; and

 2. The Water and Development Alliance (WADA), a partnership between 
        The Coca-Cola Company and USAID to increase access to clean 
        water and to improve water stewardship in developing countries.

 3. Coca-Cola MENA Scholars program, a partnership between The Coca-
        Cola Company, Indiana University's Kelley School of Business 
        and the U.S. Department of State that brings 100 Arab college 
        students to Bloomington, Indiana for a month of business and 
        social entrepreneurship training.


  (1) Through our work on Project Last Mile, we share Coca-Cola's 
            logistics, supply chain, distribution and marketing 
            expertise to help African governments maximize their own 
            capacity to deliver critical medicines and medical supplies 
            the ``last mile'' to remote African communities. To date 
            Project Last Mile has reached regions within seven 
            countries including: Tanzania, Ghana, Ethiopia, Mozambique, 
            Nigeria, South Africa, and Zambia. This work clearly 
            demonstrates the value of public private partnership 
            because through our joint work we are able to increase 
            significantly the efficiency of the U.S. government's aid 
            that supports the purchase of medications to treat HIV/
            AIDS, tuberculosis and malaria. For example, the U.S. 
            government and other major donors, such as the Global Fund, 
            provide the vast majority of the funding to African 
            governments for the purchase of these critical medicines. 
            Through the Project Last Mile partnership, we ensure that 
            we are sharing the most up-to-date private sector models 
            for distribution, marketing, and supply chain efficiency 
            with African governments. We help establish systems to 
            track out of stock products; create human resource systems 
            that allow governments to track employees' objectives and 
            performance, and benchmark private sector spending on 
            third-party services to ensure optimal use of public funds.

  (2) Through the Water and Development Alliance (WADA), Coca-Cola is 
            partnering with USAID to address the lack of access to 
            clean water and sanitation that create a significant drag 
            on communities' development. According to the World Health 
            Organization's Joint Monitoring Program 2015 report, 319 
            million sub-Saharan Africans and 260 million Asians lack 
            access to clean water, and hundreds of millions of people 
            across the developing world lack access to sanitation. Lack 
            of clean water access means that women and girls spend 
            significant amounts of time and energy fetching water for 
            their families, which takes them away from education and 
            productive economic activity as well as creating other 
            obstacles for sustainable local development.

                   In response to the severe clean water 
                access challenges faced in Africa, The Coca-ColaAfrica 
                Foundation (TCCAF) introduced its flagship program, 
                RAIN, in 2009. RAIN is The Coca-Cola Company's (TCCC) 
                contribution to helping Africa achieve the United 
                Nation's Global Sustainable Development Goals on clean 
                water and sanitation access. The program has reached 
                over 2 million people across 37 African countries 
                through 2015. And by the end of 2020, it is estimated 
                that TCCAF and its partners will measurably transform 6 
                million Africans' lives through water-based 
                initiatives, sanitation, and hygiene; economically 
                empower up to 250,000 women and youth; promote health 
                and hygiene in thousands of communities, schools, and 
                health centers; and return up to 18.5 billion liters of 
                water to nature and communities.

                   These programs improve access to safe water 
                in communities reducing the incidence of water-borne 
                diseases and eliminating the dangers of retrieving 
                water from distant and inaccessible sources. USAID and 
                Coca-Cola have partnered on 35 programs in 30 countries 
                across the developing world since WADA's inception in 
                2005, including 30 programs in 20 African countries. 
                With over $39MM of investments to date, the WADA 
                partnership has reached 520,000 people with water, 
                210,000 people with sanitation, and put 400,000 ha 
                under improved watershed management. In June of this 
                year, Coca-Cola and USAID extended the Water and 
                Development Alliance through 2021, with two additional 
                programs in development in Madagascar and Nigeria and 
                many more to come.

  (3) Through the Coca-Cola MENA Scholars program, the Company is 
            delighted to work with theU.S. Department of State to help 
            create the next generation of entrepreneurs across the 
            Middle East, North Africa and the Near East. More than 500 
            college students have participated in the program, 
            including the latest class of scholars which arrived in 
            Indiana two weeks ago to develop business plans for their 
            social or business entrepreneurship ideas. Whereas 
            entrepreneurship is cultivated in many young Americans, 
            most Arab college students are seeking job opportunities 
            with large companies or government bureaucracies. Through 
            this partnership, we have the objective of providing young 
            people with both the skills and confidence to be their own 
            bosses, by developing coherent business plans that can 
            create jobs in their home countries. Many of the scholars 
            have gone on to create small and medium-sized enterprises 
            (SMEs), including public relations firms, restaurants, and 
            NGOs, and we have even hired a few as interns and employees 
            both in the region and in the United States.


    Since Coca-Cola is a local business in every country where we 
operate, our beverages are produced locally, using local ingredients, 
local employees in local factories and distributed through local 
networks to the outlets where consumers purchase them. We pride 
ourselves on being a local business that contributes significantly to 
local employment and economic activity. As a local entity, with a 
strong tradition of community investment over our 130-year history, we 
also feel a responsibility to help address community challenges, such 
as water stewardship, women's economic empowerment and building 
stronger local communities.
    While the United States remains the Company's leading market for 
our beverages, 80% of our sales comes from outside of the United 
States. Partnerships with the USG allow the Company to expand the scope 
and impact of our interventions, to play a positive role in 
contributing to local communities' development and to ensure that our 
work leverages the broader development initiatives financed by the U.S. 
government and other donors. Furthermore, by partnering with the U.S. 
government and others in ways that complement our expertise and 
resources, we can be assured that our development partnerships are as 
impactful as possible. In short, as noted earlier, we are stronger 
together than we are alone.
    Since our overseas sales are so important to the Company's global 
business, much of the work done at our corporate headquarters supports 
our business outside of the United States. In fact, one out of every 6 
jobs at our global headquarters in Atlanta, Georgia is directly tied to 
our international business.
    The most challenging aspect of working on public-private 
partnerships with the U.S. government has been the time it takes to go 
from identifying an opportunity to implementing it on the ground. 
However, the U.S. government is not unique in this respect. When The 
Coca-Cola Company works with other governments around the world, we 
face similar timing challenges. In addition, the U.S. government has 
made improvements that create greater flexibility, speed and 
willingness to collaborate. For example, The Coca-Cola Company works 
both with USAID's dedicated partnership office as well as the USAID 
Innovation Lab, and these efforts have improved the efficiency of our 
interactions.
    In general, governments often have legislative mandates on which 
types of development programs can be used for specific funding sources. 
In the development world, government agencies often refer to these 
legislative mandates as the ``color of the money,'' which limits how 
that money can be spent. For example, some funding could be 
specifically mandated to treat specific diseases, and the rigidity of 
these mandates can make it challenging at times for companies. However, 
to date, we have been able to overcome these challenges in partnership 
with the U.S. government agencies involved.
    As public development assistance funds continue to face budgetary 
hurdles, it is important that the private and public sectors coordinate 
more closely to achieve mutual development goals. Coca-Cola has learned 
that its local business is only as sustainable as the community it 
serves. Programs such as Project Last Mile offer a clear model for 
future collaboration that bases aid in programs valued and supported by 
both business and civil society actors. Our focus is continuous 
improvement, measuring results and capturing lessons that will allow us 
to take these partnerships to even greater scale for shared benefit of 
all.
    Thank you.


    Senator Perdue. Thanks to all three of you. In light of the 
time, I am going to be very brief. I will just have one 
question now defer the rest until later and make sure the other 
members get a chance to ask their questions before the vote.
    Today, we have a global situation that is unlike any time 
in my lifetime, maybe in the history of the world, with 65 
million people somewhere in the world having lost their home 
and they are wandering around somewhere. A few months ago, a 
few of us--and all of us have made trips to visit with these 
refugees and so forth. But this is not going to go away.
    Even if we could stop the fighting today, and let's take 
Syria as an example, what would these people go home to?
    So I think you have a growing third class of developing 
country, if you will. You have the first class that is sort of 
developing and it is richer and freer, as you said. Then there 
is this second tier that is just getting started, and you have 
to be kind of traditional in that approach, you said. And now 
there is this third that possibly was a developed country that 
has been torn down by war.
    I would like all three of you, from your different 
perspectives, you have a private player here, a very big one in 
Coca-Cola that can represent other private, and two great 
players from the state participation. How can we look at that 
in this PPP model to come up with possibly a Marshall Plan, if 
you will, for the 21st century relative to some of these 
countries in the Middle East and now in sub-Saharan Africa 
where we have some failed states?
    Senator Coons spent a lot of time, has spent a lot of time 
in Africa, and can speak to this later, too.
    But I am interested in your feedback about how we should be 
thinking about it legislatively up here relative to how we can 
help the PPP model. Can it be a player in this new generation 
of need?
    Mr. Postel. Thank you for your question, Senator.
    For my comments, I would say that one thing that we have 
learned in some of the other postcrisis countries is that there 
is a whole series of stages to this.
    Immediately after a terrible tragedy like this, we have 
seen that big multinational investors may be a lot more 
conservative and will be cautious and say I do not know if it 
is time yet. The first people we see going in to make 
investments and help rebuild the country are often the 
diaspora.
    So one wants to have tools that can encourage them, because 
they often have connections, family connections even, in the 
country. We have seen this in a number of cases.
    Then as time goes by, there is more evolution to maybe 
regional players, and you see certain sectors come in sooner 
than others. For instance, mobile phone companies came in much 
earlier to Afghanistan than certain other people, because you 
can imagine the risk to build a power plant with a 20-year 
payback versus phones.
    So we have to have flexible tools. In the very early days, 
we have to be realistic about who is going to come and in what 
quantities, but have tools to support them and try to 
accelerate them moving in.
    But if we are talking about the scale of Syria, that is 
going to require a lot of work by a lot of us because the scale 
of that is sadly unimaginable almost. Thank you.
    Mr. Runde. Thank you for that very important question. I 
think that is a very good way to classify the problems. I think 
our comments sort of excluded the global refugee crisis, the 
largest since World War II.
    There is a whole series of geostrategic and security 
reasons why we have the global refugee crisis, I would say. We 
have done several things on this. We just did a conference on 
this a couple months ago, and we are going to be coming out 
with a report on the Northern Triangle of Guatemala, Honduras, 
and El Salvador, because I think the U.S. Congress has been 
very generous in making available additional monies to look at 
that, and I think it is also part of the global refugee crisis.
    So my points, I will start with what we ought to do and 
then how you bring in other partners. I think the most 
important thing is fund the emergency. I think we are 
underfunding some of the emergency resources that are needed 
there. Certainly, manage the migration and have a more managed 
migration process.
    I think where you have aid dollars where you can make a 
difference, but it takes a long time, in addition to the 
emergency side, is the issue of the so-called root causes or 
the push factors. I will get back to that in a second.
    I think a fourth point would be, okay, within camps and 
within sort of in between, you have seen some attempts at 
either generating job programs or trying to operate some sort 
of private sector activities in these migration camps. I think 
that is intermediate sort of solution.
    But I think the most important thing we should be thinking 
about is how we deal with the push factors. None of the push 
factors or these root causes are solvable on a 12-month 
timeline or a 36-month timeline. They require political will.
    I will use the Northern Triangle as an example because I 
have been to all three of those countries on separate trips in 
the last 3 months. If you ask them, they are leaving because of 
security issues, their personal security, or they are leaving 
because of economic opportunity issues. So there is a role for 
the private sector in that, in terms of things like we need to 
make it easier for businesses to start and operate in those 
countries. We need those companies to participate and actually 
pay taxes. They have some of the lowest tax-paying in the world 
and tax rates compared to percentage of GNP. There is also 
terrible corruption.
    So we need an improvement in making sure that it is 
attractive to operate as a business in those countries, so they 
can hire people as well as have governments that actually 
deliver and make people feel safe and are not corrupt, and also 
have people reestablish the social contract in these countries.
    That is easy to say in the Northern Triangle, and throw on 
a conflict in some other parts of the world, it makes it even 
worse.
    Mr. Goltzman. I think I would just add, if we look at some 
of the other--for example, the recent tragedies and crisis 
around Ebola, I think that offers us another opportunity to 
look at the opportunities for more partnership.
    Certainly, there is a need for greater coordination and 
creating mechanisms that actually empower the local governments 
to be the ones doing that coordination. Coca-Cola did a lot 
with its local businesses in each of the Ebola countries, and 
we needed to be able to really funnel in and use that crisis as 
a way of creating capability in the local government to manage 
the next crisis that will come as opposed to just coming in and 
doing it for them.
    I think the other thing is really creating that opportunity 
for flexibility in the partnerships, so that all kinds of 
actors, as my colleagues have said, can come in and contribute 
to that in a way it really goes to their expertise and their 
ability to contribute. We do not always have the mechanism for 
people to do that.
    Senator Perdue. Thank you.
    We will move to the ranking member.
    Senator Kaine. If I could, Mr. Chair, I would like to defer 
my questions and swap places with Senator Coons for purposes of 
time.
    Senator Perdue. Absolutely.
    Senator Coons. Thank you, Chairman Perdue, Ranking Member 
Kaine. Thank you for convening this hearing, and thank you for 
your great work in this area, and to my good friend Senator 
Isakson.
    I will just start, Mr. Goltzman, by saying I think I first 
visited a Coca-Cola project, water purity project, in the field 
at the instigation of my good friend Senator Isakson when we 
were in West Africa together 5 years ago. And I got a chance to 
see in 2014 the work you did, and many did, from the private 
sector in the response to Ebola in Liberia and was genuinely 
impressed and grateful for the work of many in the private 
sector in the response to that particular crisis.
    Let me ask three brief questions, if I might, and the other 
two members of the panel might give whatever response you 
choose to these.
    First, I am interested in USAID's Office of Private Capital 
and Microenterprise, in its approach to working with the 
private sector, has performed so well so far and whether the 
ways in which it has worked well might be used as a model for 
partnering with the private sector in solving other development 
challenges.
    Second, a question about OPIC and whether an empowered OPIC 
or U.S. Development Finance Corporation might make a bigger 
difference in deploying private capital.
    And last, Mr. Goltzman, you mentioned engaging the diaspora 
is often an important early stage response mechanism where 
there are countries that are genuinely torn apart by violence, 
as the chairman had suggested, any further thoughts on how to 
more effectively engage the diaspora.
    Given the press of time, if you would just keep your answer 
concise, I would appreciate it.
    Thank you, Mr. Chairman.
    Thank you, Senator Kaine.
    Mr. Postel. Thank you for your question, Senator.
    The private capital group, the staff of that came out of 
prior efforts. They literally were the folks who worked on the 
Feed the Future commitments and the Power Africa commitments. 
So basically what they are trying to do now is to work with the 
rest of the agency to take this to other sectors and other 
country teams and things like that.
    So it is early days, but they are making progress either on 
trying to develop some innovative specific transactions, like 
there is one they have been working on in solar energy, as well 
as more sectoral-wide things.
    Like if you talk to African entrepreneurs, they will agree 
that among the most conservative investors out there are 
African pension funds due to some local rules and regulations 
in those countries. So that office is looking to try to work 
with all those pension funds, marry it up with United States 
experts to try to unlock some of that. It is another source of 
capital.
    Then I will just briefly say that we are very supportive of 
both OPIC and our Development Credit Authority having a little 
more freedom to fly, as it were.
    It is amazing how both of them, they have special OE 
accounts, which the profits from the operations will repay, and 
yet they do not have the flexibility to add even three or four 
more people that can let them do more projects.
    So there are some really simple fixes, and we are really 
supportive of our colleagues at OPIC as well as we see the same 
thing in DCA.
    Thank you.
    Mr. Runde. Thank you. Thank you very much, Senator.
    Just let me start with the issue of OPIC. I have done a lot 
of work on development finance. I have worked at a development 
financial institution. I have had past lives.
    I would just say a couple things. The growth of development 
finance investments catalyzed is growing, if you go back to the 
year 2000 to now, if you look at all the different donor 
countries that have DFIs like OPIC, the amount of investments 
has increased seven times. So from $10 billion to about $77 
billion.
    And then in the same period, ODA, traditional development 
assistance mainly through grants and loans, has gone from about 
$60 billion to $130 billion, so it has increased two times.
    So my thesis is that sometime in the near future, those 
lines are going to cross. So OPIC and DFIs are going to be, 
because of this changed world we are talking about, including 
things like the Development Credit Authority or the Office of 
Private Capital, these are increasingly going to be important 
parts of how the United States engages with the world.
    I will also make a plug. I think Elizabeth Littlefield is a 
great leader of OPIC. I am sorry, I will say that, for the 
record.
    Senator Coons. I will agree.
    Mr. Runde. And I do think, though, that her biggest 
constraints are FTEs, meaning bodies. She has something like 
200 bodies. I think she had to fight to get one person 
overseas.
    I do think that OPIC more or less is the development 
finance institution. I think there are some great ideas from 
some of my colleagues and other think tanks about a development 
finance bank. That may be hard to do, but I think if we could 
get at this in pieces and move this incrementally, so increase 
the number of FTEs, allow OPIC to have some additional 
flexibility.
    The one that is often talked about is equity authority. It 
is a longer conversation, but I would say given the way the 
world is going, we are going to want to use instruments that 
work more closely with foreign direct investment.
    I also think in an era with the Asia Infrastructure 
Investment Bank, I think there is a before and after AIIB. So I 
think we have to think more strategically about how we offer 
developing countries in this first category that the Senator 
was talking about, these countries that are growing. What they 
want from us, oftentimes, is infrastructure.
    So I think we are going to have to think differently about 
infrastructure. That means TDA. That means OPIC. And it means 
certain kinds of technical assistance as well from AID. So we 
are going to have to think strategically about it.
    So I think OPIC should be bigger and is going to be bigger 
because that is the way the world is going.
    Mr. Goltzman. The only thing I would add is with regard to 
your last question about engaging the diaspora, I would just 
note that Coca-Cola is a supporter of a network call the Global 
Shapers that is part of the World Economic Forum. It is for the 
under-30 crowd.
    If we look at what happened after the Nepal earthquake or 
after the earthquake in Ecuador earlier this year, those groups 
were mobilized in their local municipal hubs very quickly.
    So I think there is an opportunity to really use technology 
and the crowdfunding work that is already going on, and to try 
to tap into that and maybe help governments create the 
resources and the platforms that allow the diaspora community 
to really immediately plug in both with their funding and their 
expertise in the event of such a crisis.
    Thank you.
    Senator Perdue. Senator Isakson?
    Senator Isakson. Thank you, Mr. Chairman. I think the 
record should reflect that when Coca-Cola shows up, all the 
Georgia Senators show up. [Laughter.]
    Senator Isakson. With all due respect, Mr. Postel and Mr. 
Runde, that is one of the main reasons both of us came. 
[Laughter.]
    Senator Isakson. I am one of those people who got elected 
to the United States Senate thinking I could balance the budget 
and end the deficit by doing away with foreign assistance. I 
beat my chest on that message in my campaigns, and I came up 
here and realized that foreign assistance was less than 8/10th 
of 1 percent of discretionary appropriations, yet it was 100 
percent of the opportunity to grow America's markets around the 
world for our companies like Coca-Cola and others.
    And I have seen the great difference foreign investment can 
make, and I think USAID does an unbelievably phenomenal job for 
our country and for the world. I am proud to be a big supporter 
of what you do, Mr. Postel.
    But in reference to what Senator Kaine said about our 
interns coming to see examples of marvelous things that can 
happen, I want to tell you a brief story about Coca-Cola and 
what they are doing in Africa. I took Senator Coons with me. He 
has left, but he knows this story.
    But we went to a project in Ghana, actually went to a 
Millennium Challenge Corporation project in Ghana. There was a 
giant 1-acre large refrigeration system to take the shelf life 
of a pineapple from 7 days to 7 weeks, which opened a new 
marketplace for the pineapples grown in Ghana.
    But we also learned that 80 percent of Africa does not have 
potable water and no infrastructure to get potable water. The 
Coca-Cola Company started a program.
    And you correct me if I am wrong, Mr. Goltzman.
    But what they do at Coca-Cola is they go find a village 
that needs water and does not have a source of clean water. 
This particular village we went to, they had a stream running 
through it. It was the nastiest thing I have ever seen. Coke 
took the water out of that stream, put it through an 
ultraviolet ray system, including sand filtration, to purify 
that water in a self-contained system. The residents in the 
village would pay 7 cents a day for 5 gallons of water.
    So Coca-Cola created clean water, 7 cents a day cost, and 
the village all of a sudden that nothing had water and 
enterprise growing, and they became consumers of products that 
we were shipping over there. People ask, why the 7 cents? Why 
don't you just give them the water? Well, 7 cents was the 
sustainability cost so they could maintain that plant for years 
to come.
    I have been back to that site since you saw the picture, 
Mr. Goltzman, when I went there 5 years ago. That plant is 
still working and still operating. It is maintained by the 
revenue of 7 cents a day paid by the villagers who come and get 
their 5 gallons of the water.
    That is what you can do with American ingenuity and the 
investment in the private sector to make a demonstration 
project that does not give somebody something but it is kind of 
like the parable of the fish. If you give a man a fish, he can 
eat for a day. If you teach him to fish, he can eat for a 
lifetime.
    That is what Coca-Cola is doing all over North Africa when 
it comes to water. It is really great tribute to you and your 
company and what you are doing. I have been proud to have been 
there and drank that water and, as I told you, lived to tell 
about it. [Laughter.]
    Senator Isakson. When I saw the water going in that sand 
system, I said I ain't drinking that. Then they had a newspaper 
guy and a USAID guy with a camera there, and I said, well, I 
better drink it or Coca-Cola and Muhtar Kent will find out 
about it. [Laughter.]
    Senator Isakson. I drank the water. Senator Coons and I 
did. The only thing about the water was it was a little bit 
flat but it was safe and as good as it could be. We enjoyed it 
that day, and we appreciate the investment that you all are 
making very much.
    As far as USAID is concerned, for America's business and 
America's place in the world, our job is to be a catalyst for 
countries that do not have what we have, to be able to build 
the infrastructure to get what we have, not because we give it 
to them, but because we show them a way, because we make a down 
payment on an investment in those countries in return for 
getting them to correct some of their ways.
    The Millennium Challenge Corporation has done one great 
thing in Africa aside from putting in a lot of infrastructure. 
It is ending corruption in Swaziland. It is ending corruption 
in Benin. It is ending corruption in Ghana. One of the 
predicates of getting a Millennium Challenge contract is to get 
out of the business of corruption, which is the biggest single 
problem Africa has.
    So not only is it good to make investments and down 
payments, but it is also good for that money to be a catalyst 
for people to do the right thing.
    So I want to compliment you on what you are doing, Mr. 
Postel and Mr. Runde and Mr. Goltzman.
    Tell Muhtar I bragged about Coca-Cola when you go back. I 
do not have any questions, but any comments you want to make 
are welcome.
    Mr. Goltzman. I just wanted to thank you for that.
    We are building these basically mini water treatment plants 
in communities around the continent. They sell the water 
because, as you say, it is meant to be able to cover the 
maintenance and operation costs. Some of those centers are 
selling more than 1 million liters a month, so it is absolutely 
going to the greater sustainability of the village.
    And you get great stories coming out that the local 
hairdresser says she now goes and buys the water from the water 
treatment plant because her customers are actually willing to 
pay more to have their hair washed with clean water.
    Thank you, sir.
    Mr. Postel. Senator, thank you very much for your kind 
comments and your tremendous support including cosponsoring the 
Global Food Security Act and the Global Development Lab. We 
really appreciate your support as well as other members.
    A couple of things. Your description of the Coca-Cola 
projects completely aligns with our views. That is why we have 
done 43 projects with the Coca-Cola Company.
    You heard the tremendous description of their capabilities. 
This is what we are trying to tap into, all this expertise, to 
really get even bigger results because, notwithstanding the 
fact that we are the biggest single bilateral donor, there are 
still literally millions of people that are not being helped 
whose problems we have to help them solve for themselves. As 
you said, teach them how to fish.
    So these partnerships are very key to that, whether it is 
in water where they are the single biggest water user on the 
planet, as you know, to energy where we have 600 million 
Africans who do not have power but we have a lot of power 
companies who could do it if we remove the obstacles.
    So there is a lot to build on and do more of.
    Thank you.
    Mr. Runde. Thank you very much, Senator.
    Nineteen of 20 of our biggest trading partners were once 
aid recipients, so I agree it is enlightened self-interest.
    Foreign assistance is part of ensuring America's place in 
the world. I agree with you, Senator. I think one of the things 
that we have to be aware of though, is, in these developing 
countries, what they often want is our innovation and our 
technology. That is not necessarily in the U.S. Government. 
That is in fine American companies.
    So by partnering, we can bring what they really want, which 
is this innovation and technology.
    The other thing I think we have to remember is as these 
countries have gotten wealthier, I think we have to be aware 
that they can take their business in some ways down the street 
to China. So I think we have to be aware that we have, in 
essence, an emerged or emerging geostrategic soft power 
competitor. I know that is a lot of words but I think you guys 
know what I mean. They can take their business to the Chinese.
    So what we have that other folks do not have are our 
innovation and our technology. That is what they want. Any 
country I go to in the world, whether they are our friend or 
not necessarily our friend, they covet that. They covet our 
innovation and our technology. That is housed in American 
businesses.
    Senator Perdue. Thank you.
    Senator Kaine?
    Senator Kaine. Thank you, Mr. Chairman.
    And thanks to the witnesses. I want to ask you about a part 
of the world--Mr. Runde, you talked about the Northern 
Triangle--because I want to use this as kind of an example. Put 
on your creativity hat with respect to PPP possibilities. I am 
going to ask the question for the record, too, so if you think 
about it after and you have more thoughts.
    The President asked for a billion-dollar investment in the 
Northern Triangle last year and Congress, thanks really to the 
Senate because we put 750 in but the House did not, but we 
conferenced it at 750, so we are making an investment in three 
countries of the Northern Triangle.
    The President has asked that that be repeated. We are 
seeing in these neighboring countries that we are very closely 
connected to--a lot of folks from these areas, their families 
live here. We are seeing the unaccompanied minor outflow to our 
country. We are seeing levels of violence driven to a 
significant degree by the U.S. demand for illegal drugs that 
puts cash into these economies and kind of corrupts them. We 
are seeing rule of law problems. We are seeing economic 
opportunity challenges. So we are seeing a lot of different 
challenges.
    These are three nations that combined have a population of 
about 30 million. It is about the size of Texas, a little bit 
bigger than the size of Texas, from a population standpoint.
    If we are on a path where we might, over the course of 
multiple years, make an investment of this kind, we want the 
metrics to be right. Obviously, we would like to expand the 
power of the investment by not just having it be the 750, but 
having an appropriate coordination with NGO partners, with 
government spending in those three nations, with private 
investment, with private individuals in those nations who often 
decide to invest their money elsewhere because the security 
situation at home is not so great, and bringing those monies 
back and investing them at home.
    So from a kind of public-private partnership standpoint, I 
would love your advice on how we could take an investment of 
the size that we are making and leverage it and expand it 
through using this technique.
    I would love each of you to address it.
    Mr. Runde, since you mentioned the Northern Triangle, why 
don't we start with you?
    Mr. Runde. Thank you. I know it is a region, Senator, close 
to your heart. I know you did public service there.
    I think we have an interconnected future with the Northern 
Triangle, and I think it was very important that the U.S. 
Congress, including the U.S. Senate, put forward this 
additional money because I think, ultimately, this is not going 
to be solved just on our border. It cannot be just about how we 
respond when they show up at our border. It has to be about 
dealing with the root causes.
    But I think we have to have an honest conversation about 
the fact that if we want to fix these problems, because we have 
had a long relationship with these countries--and sometimes we 
have had an ADD relationship. We have only responded when there 
has been a crisis.
    If we are going to do this, we have to think of this in the 
paradigm of like a Plan Colombia, and I think that has been a 
good shorthand in Washington to think of it as a Plan Colombia 
for the Northern Triangle.
    I also visited Colombia, and we are going to be releasing a 
report in October. I am hoping you, Senator, will come and be a 
keynote speaker at it, because I know it is important to you, 
so I am going to come back to your staff about that.
    But I think we need to make a long-term commitment. This is 
a 15-year project. If you look at what happened in Colombia, 
that was a 15-year project. We are going to need a lot of 
political will in those three countries. We do not have, for 
the record, I do not believe we have an Alvaro Uribe or a 
President Santos in any of those three countries.
    There are some capable governments. There are some new 
governments. They are trying. There is very active civil 
society, as you know, that have made changes in those three 
countries. Each of the countries are slightly different. It is 
hard to get to have a Plan Colombia in three different 
countries instead of one.
    I do think you have identified the problems. If you ask the 
children when they leave, they say my biggest concern, at least 
in the countries of Honduras and El Salvador, is security. In 
the case of Guatemala, it is jobs. So I think we need to deal 
with jobs, and we need to deal with security.
    I do think there are several things we have to be thinking 
about. In parts of these countries, the state has never 
existed, as you well know, Senator. I think there are parts of 
the Western Highlands of Guatemala that have never seen--you 
cannot get a high school degree there. You do not have a police 
station. You do not have a hospital. You do not have roads.
    So I do think one of the things we are going to put in our 
report is we need to centralize among the House and the Senate 
and the executive branch a set of metrics that we can all agree 
on. I think it is five or six metrics.
    Certainly, the first one is unaccompanied minors. How are 
we doing? Are people showing up at our border?
    I think the second is, what are we doing about a murder 
rate? Can we get those murder rates down? It is some of the 
most dangerous places in the world, as you know, Senator, more 
dangerous than some combat zones that we can all think of.
    I think the other thing, though, it is very important to 
have an increased economic growth rate, formal economic 
growth--formal economic growth--because we need people to be 
absorbed in the local economy and work in jobs in their own 
countries.
    Fourth, I think part of the social contract with companies 
is about tax rates. These are some of the lowest tax 
collections in the world. And it is scandalous, 8 percent, I 
think, in Guatemala last year. It is shameful. How do you pay 
for police? How do you pay for schools with those kinds of 
numbers?
    But I think we also have to have some humility. Let me go 
back to we are not the largest wallet in the room, even in 
Central America in these three countries. I have been looking 
at the numbers. If you look at the GNP of these three 
countries, what is the percent of GNP of the $750 million? I do 
not know, 0.1 percent, 0.2 percent, 0.3 percent GNP.
    We cannot operate as if we are a couple of hairs on the 
tail of the dog wagging the whole dog. So I think we need to 
use that money to create a compact with governments, with the 
private sector, with civil society. So I think we have to think 
about this and say we are going to make a commitment to you, 
but, in return, you are going to have to do some things.
    One of the things we should do is use that money to 
generate political will. I know Congress has tried to put some 
conditions on it. I know you are going to be waiting to hear 
from the administration about what those metrics look like. But 
I think we are going to have to have some humility. We are 
going to have to take a long view. But I do think we are going 
to have to create almost some sort of a compact with each of 
these three societies.
    Thank you.
    Mr. Postel. Thank you for your question, Senator. A couple 
of quick comments.
    We had the Partnership for Growth with El Salvador, and we 
started using this technique that MCC and USAID use, 
constraints to growth analysis. And what it showed was that 
there was the possibility of growth, but the biggest single 
inhibiting factor won't surprise you but it was violence. Even 
in the private sector, it was in the way.
    In fact, later, as we came to work on this, and we created 
a partnership that had some of the richest and most 
entrepreneurial people in the country working alongside both 
governments, and you would talk to them at dinner after the 
meetings were done and you would ask them what they are doing 
with their investments and you find out that they were 
investing in Colombia or in Virginia or in California and where 
they were not investing is in that area. Those funds are 
greater than these funds that we are thinking about.
    So what we see is that there is a multistep process, and we 
build metrics. I am happy to come to talk offline about where 
we got and where we did not get on that as a model.
    But we created partnerships. We have one, for instance, 
that involves Chevron, Hanes, Starbucks, and local NGOs to 
build alternative community centers and locations to work with 
youth to try to keep them out of the gangs.
    So we can use some of the money to build partnerships with 
others to try to deal with some of the insecurity and the 
gangs. As that comes down, then we can morph from that into 
working on pure economic growth things such as Dan said, but 
leveraging their own money and just removing some of the 
impediments, because there is a lot of money in the system, if 
we can deal with corruption, which is another whole area as 
well as the insecurity.
    Thank you.
    Senator Kaine. Mr. Goltzman?
    Mr. Goltzman. Thank you, Senator. The only three short 
things I would add to that is you want to set, if you are going 
to leverage the private sector in doing some of this work, you 
want to set some ambitious targets. And you have these metrics 
that you are going to come up with for that, so that is a good 
first step.
    If you want the private sector to come in, then the U.S. 
Government also has to have predictable funding so that you can 
actually know that this is a multiyear commitment that a 
company is making and that your partner, the U.S. Government, 
will also be there over multi-years.
    Then I think we need to make sure that we invest in 
sufficient human resources to do the alignment upfront. This is 
always the hardest part of any partnership, making sure that 
all the parties that you bring in are truly aligned on the goal 
that we are trying to achieve and the mechanism that we are 
going to use to achieve that goal.
    That takes a lot of time, and sometimes, as my colleague 
mentioned, you realize you are not aligned, so it cannot 
proceed. But that investment in that time, and the people to 
really make that work, is what allows us to achieve actually 
the results that I talked about earlier.
    Thank you.
    Senator Perdue. Well, we are at about that hour where they 
are about to call the vote, but I do have one other detail 
question, I think for the record.
    In the testimony you had, I think the ratio is about 2.5-
to-1 leverage right now between private investment and public. 
How many U.S. corporations, let's say Fortune 500, what would 
be a percentage of those corporations participating in these 
projects today? Do you have any idea? Does anyone have a number 
on that?
    Mr. Postel. Senator, I do not have the Fortune 500 number, 
although we can get that. We have more than 3,500 total 
partners who work on the Global Development Alliance, which Dan 
helped pioneer.
    In regard to the guarantees, we have more than 350 
financial institutions with whom we are working, both U.S. as 
well as local financial institutions. Then if you go writ large 
on all forms of partnerships, the numbers are in the thousands. 
Feed the Future alone counts, using slightly different 
accounting, about 4,000 different partners.
    Senator Perdue. How do you coordinate with IMF and World 
Bank investments in this area? Do they partner with you at all?
    Mr. Postel. We do partner with them in a lot of different 
spheres. We have an MOU with them, for instance, in Power 
Africa, where we are coordinating carefully.
    Sometimes there are deals that might involve several 
different parties doing different things. For instance, one of 
the first big Power Africa deals is a Lake Turkana wind 
project, 310 megawatts in Kenya. OPIC has a big piece of that.
    But then there is another piece of the project that was 
done by the African Development Bank and a Norwegian 
development agency. Sometimes the deals are so big, we need 
different people sticking to their competencies. But you put 
the pieces together to get the whole.
    Senator Perdue. Understood. Just one last question. I am 
interested in the ratios here.
    You are getting 4-to-1 or better ratios of leverage off 
private partnerships with regard to health and education 
projects. But some of the others, and I was surprised at this, 
water and sanitation and energy are lower, less than 2.
    That is counterintuitive to me. I wonder if there is a 
structural issue there. Lee Kuan Yew talked about the four 
drivers of economic growth in the developing world between 
cheap power, potable water, educated work force, and great 
infrastructure. Well, these are two of the great fundamentals 
here, water and power, and I am really kind of surprised.
    Is that just an anomaly or is there something structural 
there?
    Mr. Postel. Thank you for your question, Senator. The 
energy strikes me as odd as well. It is certainly at odds with 
what we are seeing on Power Africa.
    Senator Perdue. Power Africa, yes, 7-to-1.
    Mr. Postel. We can dive deeper into that. It might be 
apples and oranges.
    The other sectors do not surprise me, Senator. Actually, 
not all sectors are going to be equally ripe for partnership 
with the private sector. I mean, obviously, certain countries 
are not, fragile states are not.
    Democracy rights and governance type work is less ripe for 
that kind of partnership. Water, with the exception of Coca-
Cola and a few others, as a total volume--for instance, 
sanitation, we do not see as many public-private partnerships, 
because it does not align with the core business interests.
    So there are definitely significant differences across 
sectors, both leverage, but also just the total volume of 
engagement.
    The number one ask in the private sector, which we have 
trouble meeting because of all the stovepipes of funding, is 
work force development, for instance. That is in their sweet 
spot, whereas one of our big efforts is just to get kids to 
learn how to read. But for a company, that is 20 years from 
when you are working with them to that person becomes a member 
of the work force. It just does not have the right return for 
them to get engaged.
    So there are definitely discrepancies.
    Senator Perdue. Understood.
    Unless you have anything else, I really appreciate this. We 
have learned a lot today. I think we have exposed quite a bit 
of the successes that you have had and some of the challenges.
    But I want to thank the witnesses. Thank you for your 
testimony and for all your work. It is a great endeavor.
    The record will remain open until Friday close of business 
for anybody up here who wishes to submit a question. I would 
love for you to respond to that.
    And with that, we stand adjourned.
    [Whereupon, at 3:36 p.m., the hearing was adjourned.]


                              ----------                              


              Additional Material Submitted for the Record


    Eric Postel's Response to Questions Submitted by Senator Perdue


    Question 1.  I'd like to follow up on our conversation just before 
the hearing where you mentioned you would be able to give us an 
estimate of the total portion of public-private partnerships worldwide 
that are attributable to the U.S. Would you mind sharing that number 
with me?

    Answer. USAID partners with many organizations\1\--including multi-
national and U.S. companies, both of which are critical to the success 
of our programming. In FY 2015, for example, USAID had partnerships 
with more than 993 partners, 517 of which are private businesses. 
Approximately 40 percent of these private businesses were headquartered 
or with some kind of presence in the United States, such as operations, 
staff, or sales. These companies have committed $3.5 billion to public-
private partnerships with USAID over the life of their projects, 
approximately 55 percent of all non-USG commitments to partnerships in 
that year.
---------------------------------------------------------------------------
    \1\ USAID requests and collects data on public-private partnerships 
from across the Agency's operating units and Missions. However, the 
Agency-wide PPP Database is not comprehensive due to the decentralized 
nature of the Agency. In addition, the Lab rolled up PPPs under the 
same project when there were a large number of PPP activities. Often, 
these PPPs were small in terms of lifetime value. Additionally, the 
PPPs reported into the PPP database are a representative subset of the 
larger PPPs for specific Bureaus with a large number of PPPs. These 
decisions were made to reduce the reporting burden on operating units 
(the PPP data call requires at least 18 points--up to 84 points--of 
information on each partnership).
---------------------------------------------------------------------------
    It is worth noting that local partners are also important in making 
sure our work is effective and sustainable--their understanding of 
local priorities and country contexts, and promoting local ownership 
cannot be underestimated. While many of USAID's high-profile 
partnerships are with multinational companies, USAID also partners with 
national and local businesses in ways that have resulted in unique and 
significant value around the world. In FY 15 alone, 313 local private 
businesses committed to contributing more than $1.7 billion over the 
life of their projects.
    In addition to the above totals, Power Africa, a U.S.-led public-
private initiative that comprises 12 U.S. government agencies and a 
diverse group of foreign governments, international organizations, 
civil society organizations, and private companies, is partnering with 
more than 100 private sector entities to accelerate power transactions 
in sub-Saharan Africa. The United States' initial $7 billion dollar 
commitment to Power Africa has mobilized more than $31 billion in 
commitments from its private sector partners. Approximately 40 percent 
of the $31 billion in commitments are from companies with headquarters 
in the United States.


    Question 2.  I was also curious about the percentage of Fortune 500 
companies that participate in public-private partnerships with the U.S. 
government. Would you be able to supply any data to answer this 
question?

    Answer. USAID engages with a range of private businesses as 
resource partners, including Fortune 500 companies. In FY 15, for 
example, USAID was partnering with at least 42 Fortune 500 companies--
more than 8 percent of the Fortune 500--which included more than five 
partnerships each with Microsoft, Intel, Cisco, Coca-Cola, and Johnson 
& Johnson. These companies have committed to contributing more than 
$807 million to public-private partnerships with USAID. These 
engagements have included working with USAID through both companies' 
philanthropic foundations as well as their corporate arms. When looking 
more broadly at all types of private sector collaboration, including 
those that are not formally public private partnerships,\2\ USAID 
engaged with at least 54 of the Fortune 500 companies (10.8 percent) in 
FY 15 to achieve development objectives.
---------------------------------------------------------------------------
    \2\ A public-private partnership, as defined by USAID, is a 
collaborative working relationship with external, non-governmental 
partners in which the goals, structure, and governance, as well as 
roles and responsibilities, are mutually determined and decision-making 
is shared. Public-private partnerships are rooted in co-creation, co-
design, collaborative implementation and resource mobilization with our 
partners, aimed at achieving jointly defined, mutually beneficial 
objectives. Private sector organizations include private businesses, 
corporate philanthropies, industry organizations, private 
philanthropies, investors, social businesses and cooperatives.
---------------------------------------------------------------------------
    And while multinational corporations have been a key partner in our 
work, it is important to recognize that local partners also play a 
particularly important role in making USAID's work more effective and 
sustainable. While many of USAID's high-profile partnerships are with 
multinational companies, USAID has numerous partnerships with national 
and local businesses that have provided unique and significant value 
around the world. USAID's ``Local Systems: A Framework for Supporting 
Sustained Development'' emphasizes the importance of local solutions to 
achieving and sustaining development outcomes. Local private sector 
actors provide economic growth and opportunity in their countries, and 
serve a critical role in understanding local priorities, local context 
and promoting local ownership.


    Question 3.  During our discussion about how public-private 
partnerships could serve as a model for reconstruction in Syria, you 
mentioned that some ``simple fixes'' could go a long way in terms of 
increasing flexibility for USAID and corporations as they implement the 
partnership. Could you elaborate on what kind of ``simple fixes'' you 
feel would be helpful?

    Answer. Because USAID assistance in Syria is administered in an 
environment subject to various restrictions, including sanctions 
administered by the U.S. Department of the Treasury's Office of Foreign 
Assets Control, it is not one of the countries where USAID employs 
public private partnerships and there are no flexibilities USAID 
currently seeks in relation to partnerships related to Syria 
reconstruction efforts.
    However, USAID initiatives in country are consciously laying the 
groundwork for local councils to be the future ``public'' in public 
private partnerships. USAID's assistance within opposition areas of 
Syria is intended to maintain and augment a basic quality of life and 
lay a foundation for post-conflict economic and political development.
    In just one example, USAID's Syria Essential Services (SES) 
restores essential services through the provision of technical and 
material assistance, including engineering expertise and small cash 
grants to communities. Projects focus mainly on electricity, water for 
drinking and irrigation, rehabilitation of schools and hospitals, and 
municipal waste. Solar energy was introduced as an efficient 
alternative to prohibitively expensive diesel fuel. SES is also making 
investments in agriculture to sustain livelihoods and contribute to 
food security, possibly reducing or alleviating the need for 
humanitarian assistance.
    SES has worked closely with local councils to develop their 
administrative, financial, and community outreach capacities to improve 
and sustain the delivery of services. In many communities, sustaining 
essential services means relying on the diaspora for contributions to 
offset operating cost such as fuel or spare parts. As we have seen in 
other post crisis countries, the diaspora will be the first to make 
investments and help rebuild the country. Cultivating these connections 
is extremely important. Over time this may extend to regional players 
who will invest in key sectors. Several Jordanian firms are suppliers 
of materials like pipes and solar panels and are poised to be investors 
in future Syrian industries. However, given the scale of destruction 
and complex security concerns we have to be realistic about who is 
going to come, on what timeline, and with what intentions.


    Question 4.  In your (written) testimony you state that USAID has 
learned to partner with companies in a variety of different ways, and 
your approach to public-private partnerships has evolved over time.


   What are some of the challenges involved with establishing 
        these public-private partnerships?

    Answer. We have made a great deal of progress in the partnerships 
field, but there is more to be done to tap the full potential of our 
partnerships and make them more effective. For example, one of the 
advantages of private sector partnerships in development is that they 
offer greater potential for long-term sustainability beyond USAID 
assistance and greater potential for scale. While this is indeed true 
in some partnerships, many others have struggled to scale beyond a 
pilot or sustain impact after an initial period of commitment. We are 
investing in research to learn why that is the case so we can better 
integrate the conditions for scale and sustainability into the design 
of partnerships from the very beginning.
    Multi-stakeholder alliances, such as the Feed the Future New 
Alliance or Power Africa, can be the most complex and labor-intensive 
to design, manage, and implement. We plan to continue to develop ways 
to increase the impact and reduce the transaction costs of multi-
stakeholder models-for instance, by promoting governance models that 
encourage streamlined decision making and operating and funding models 
that enable multiple capabilities and funding sources to be combined 
effectively. In addition to interagency partnerships working groups and 
events, like Global Partnerships Week (co-hosted with the State 
Department), to exchange knowledge, lessons learned and best practices 
with our counterparts across the USG, the Global Development Lab--in 
conjunction with other parts of the Agency--has engaged in a number of 
studies aimed at exploring the nature of partnership models, 
understanding the role of the private sector in sustaining activities 
or results, and studying what has and has not worked in these types of 
public-private engagements.
    Additionally, much like all of our development activities, we need 
to improve monitoring and evaluation of partnerships. We need better 
data on partnerships, to determine which partnership models have 
delivered the most effective development impact and to help us 
understand how to replicate that success.
    Finally, because companies are often not structured in the same 
ways as USAID--with different funding timeframes, transaction 
mechanisms and internal processes--it can be challenging to align from 
a process standpoint. We are constantly working to innovate our 
processes to obligate government dollars more quickly and with more 
flexibility, with the goal of working more easily across sectors and 
geographies where business interests and development objectives align.


   Can you elaborate on how USAID's approach to public-private 
        partnerships has evolved over time, and what are the lessons 
        learned on how to make these partnerships more successful?

    Answer. USAID has a long history of working with and through the 
private sector, and we partner with a wide range of companies and 
organizations. We have, since the early years of USAID programming, 
supported private sector development and competitiveness, through 
programs designed to strengthen local business enabling environments 
and create the conditions for economic growth.
    In the 1990s, we began to more proactively engage the private 
sector as business partners. We have been moving beyond traditional 
relationship structures characterized by donor-recipient or client-
vendor engagements in which organizations were implementing projects 
conceived, designed and funded by USAID. One of the two main ways we 
started doing this has been through so-called ``Global Development 
Alliances'' (GDAs). Through GDAs, we partner in industries and 
geographic areas with businesses whose interests align with our 
development objectives. These partnerships are co-designed, co-funded 
and co-managed alongside partners, so that risks and rewards of the 
work are shared.
    The second main way we started working with the private sector as 
business partners was by working with local banks and international 
investors through our Development Credit Authority (DCA). DCA uses 
partial credit guarantees to share risks and unlock investment into 
sectors that are important for development. Since 1999, DCA has 
mobilized more than $3.9 billion in credit through 474 loan guarantees 
with more than 340 financial institutions across 74 countries.
    And now, as we build on our successes, navigate budget constraints, 
and participate in a changing development landscape, partnerships and 
private sector engagement remain steadfastly ingrained as a critical 
component of our work across sectors and geographies and integrated 
into the fabric of the Agency and how we do business. We incorporate 
this approach into key Presidential initiatives and multi-stakeholder 
alliances, like Power Africa and Feed the Future, with the goal of 
mobilizing coalitions of private sector partners to work toward large 
scale progress and address challenges at the systems level and build 
onto these commitments so that the work can continue long after USAID 
funding. Also, we recently established a new Office of Private Capital 
and Microenterprise (PCM) focused on mobilizing private capital to 
support USAID's development objectives by working with a powerful 
network of investors to catalyze finance for development and increase 
the scale, impact, and sustainability of our programs.
    Additionally, we have implemented new practices and developed new 
tools that allow us to foster more strategic engagements. For example, 
the USAID Forward--announced in 2010--reform agenda aims to embed 
partnerships with both local and global actors more deeply into how we 
conduct business. We have since established a network of relationship 
managers to improve how we engage with the private sector. We also 
provide training and technical assistance on, and a range of tools to 
support, public-private partnerships and private sector engagement 
across the Agency. These include multi-sector alliance assessment tools 
that help operating units prioritize partnership opportunities, as well 
as landscape analyses and sector guides to partnering within specific 
industries.


   Are there any things we can do here in Congress to help you 
        in this endeavor or to streamline the process?

    Answer. We are grateful for the support that Congress has afforded 
our work with the private sector--it has been, and will continue to be, 
essential to improving how we conduct partnerships.
    Members of Congress are uniquely positioned to continue 
highlighting public-private partnerships that deliver results, 
highlight the benefits, best practices and lessons learned. We would 
appreciate working with you and your colleagues to build greater 
flexibility in the way our funding can enable USAID to more easily work 
across sectors and geographies, where business interests and 
development objectives align. At the moment, current USG funding 
practices don't align well with the timeframes and opportunities of 
business.
    Congress can also be supportive of hiring mechanisms that allow 
USAID to bring in staff with the requisite skills to communicate with 
the private sector on the benefits of partnering, and the skills to 
then create and implement both individual partnership activities, and 
broader, more overarching relationships with companies. For example, 
the Global Development Lab Act would help USAID streamline the process 
for bringing in short-term, specialized experts, reducing overhead 
costs.
    Lastly, the Development Credit Authority (DCA) needs more operating 
expense funding to keep pace with its growing portfolio: its overall 
portfolio has doubled over the past 5 years and yet, staffing head 
counts have only increased by 20 percent. The office is currently 
funded at $8.1 million per year. The FY17 request calls for an increase 
to $10 million, which would allow DCA to maintain its strong portfolio 
quality, while accommodating continued growth. Without additional 
funds, DCA will need to begin limiting the number of transactions it 
processes exactly at a time when demand by USAID missions for the use 
of the guarantee is an historic high, and rising.


    Question 5.  What benefits does State and USAID gain from these 
public-private partnerships? What can the private sector do that USAID 
and State cannot?

    Answer. USAID firmly believes that great ideas come from anywhere; 
development challenges are complex and cross-sectoral and require more 
resources and expertise than any one organization alone can offer. We 
recognize that we need to enlist the resources and expertise of a range 
of partners in order to meet our development objectives, to ensure 
better business and development outcomes.
    The private sector is critical to ensuring we improve the reach, 
effectiveness and efficiency, and sustainability of our programming. 
Businesses act as employers, buyers, suppliers, and investors--
increasing jobs and income; purchasing locally produced materials, from 
raw materials and agricultural outputs to manufactured and processed 
goods; increasing access to products, services and technology for many 
of our beneficiaries; and improving private investment in mutually 
beneficial public goods and local markets.
    Public-private partnerships allow USAID to leverage companies' 
global supply chains, expertise, technologies, brands, customer bases 
and resources, ensuring that we can expand our reach and get aid to the 
areas that need it most.
    We also share risk such as through Development Credit Authority 
(DCA) guarantees, which catalyze lending from local banks and other 
financial institutions and incentivize private investment that would 
otherwise not occur. This allows us to stretch the impact of our 
funding and ensure sustainability of activities long after our 
programming ends.
    We mobilize private sector investment commitments and engage the 
voice of business for policy reforms as part of multi-stakeholder 
initiatives, such as Power Africa, in which we link private sector 
investment, industry tools, solutions and expertise to advance energy 
sector transactions, host country policy reforms and improve the 
investment, policy and enabling environments for business and 
government.


    Question 6.  While the benefits of public-private partnerships is 
indisputable with regard to the technology, networks, and skills 
leveraged by the private sector, could you enumerate the cost savings 
achieved by public-private partnerships?

    Answer. USAID's engagements with the private sector are essential 
to improving the reach, effectiveness, efficiency, and sustainability 
of our development work.
    Therefore, USAID measures the funding leveraged or mobilized and 
the impact achieved through a public-private partnership. This number 
tells us what additional funding, assets, skills, and unique resources 
USAID's public-private partnerships are bringing to development--
enabling USAID to achieve results that would not have been possible 
otherwise.
    From 2001 through the end of FY15, USAID has been involved in more 
than 1,650 public-private partnerships \3\ worldwide in which we are 
jointly committing assets and resources to a given activity, with USAID 
contributing $5.3 billion and non-USG resource partners (including both 
private sector and foreign governments) contributing $16.1 billion to 
these public-private partnerships over the life of the partnership. 
When looking at all of these public-private partnerships together, 
USAID is leveraging about $3 from non-USG partners for every $1 of U.S. 
taxpayer money.
---------------------------------------------------------------------------
    \3\ The Agency-wide PPP Database is not comprehensive of all ways 
in which USAID works with the private sector. The database does not 
include all USAID and interagency engagements and initiatives including 
Power Africa, the Development Credit Authority, and Feed the Future and 
other Agency programs due to different reporting requirements.
---------------------------------------------------------------------------
    As such, through partnering with private actors, U.S. taxpayers 
obtained results at only one-third of the costs of the U.S. government 
solely funding such initiatives.
    Similarly, through the Development Credit Authority, USAID has 
leveraged $185 million of taxpayer funds to mobilize more than $3.9 
billion in credit. This translates to a leverage ratio of $1:$21.


   Do public-private partnerships take more staff time to 
        negotiate or adequately monitor public-private partnerships 
        compared to more traditional forms of aid implementation? If 
        so, are these costs reflected in the leverage ratios?

    Answer. Building partnerships requires upfront work to identify 
areas of shared interest with private sector partners and to ``co-
create'' solutions, which leverage the capabilities of both partners. 
This requires a different approach, mindset, and set of skills than 
other kinds of programming. It does not require more staff time in all 
cases, but it does require different skills, and it can in some cases 
be more labor-intensive when the partnership is complex or the partners 
involved are new to working with USAID.
    In terms of timescales, typical partnerships take between 6-12 
months to develop, which is in line with traditional procurement 
processes. This duration varies based on a variety of factors, 
including the scope of work, USAID and company timelines, and due 
diligence processes.
    Because all procurements by USAID are governed by USAID procurement 
regulations, all activities must meet similar requirements for 
monitoring and evaluation, including partnerships with a private sector 
partner.
    Our leverage ratios do not account for USG staff time and other 
resources utilized in the negotiation process. They are instead 
comprised of resources contributed solely to the implementation of the 
public-private partnership to achieve development results or 
establishment of partnership structures, such as a backbone 
organization for multi-stakeholder alliances. The amount of resources 
leveraged from non-USG partners may account for staff time and other 
non-monetary contributions to the implementation of public-private 
partnerships but not the partnership negotiation. But as the costs of 
staff time are typically small relative to the size of the 
partnerships, we are confident that were USG staff time included, 
leverage ratios would remain very robust.


    Question 7.  One criticism I've heard of public-private 
partnerships is that they may pose challenges to Congressional control 
and oversight of development assistance activities.


   How can we ensure that the proper lines of oversight are 
        maintained?


    Answer. The U.S. Agency for International Development remains 
committed to transparency, recognizing that accurate, timely 
information helps us manage and monitor aid resources more effectively. 
USAID employs comprehensive processes, subject to Congressional 
oversight, to ensure that USAID-funded activities are effective.
    While it is true that USAID's award provisions do not apply to our 
private sector partner's use of private funding, the USAID-funded 
development activities in a partnership are fully subject to USAID 
provisions that apply restrictions, reporting, and oversight on the use 
of USAID funds, as well as remedies for the misuse of such funds. All 
activities that are funded with government dollars go through our 
standard review and notification processes, regardless of whether there 
is a private sector resource partner.
    Additionally, USAID selects partners whose objectives align with 
USAID development objectives, and conducts rigorous due diligence on 
prospective private sector partners, which we use to identify and 
preclude organizations whose activities or operations may engage in 
waste, fraud, or abuse--for both USAID funds and private funds. 
Effective due diligence reveals whether a prospective partner has a 
proven and recognized commitment to principled business practices, and 
is designed to give USAID information to judge whether to rely on a 
private sector partner's non-binding commitment to provide resource 
support for an activity. For example, for Global Development Alliances 
(GDA), USAID undertakes a due diligence process to evaluate the 
reputational risks and benefits of working with a potential private 
sector partner, focusing on five essential areas of investigation: 
corporate image, social responsibility, environmental accountability, 
financial soundness, and policy compatibility. Furthermore, these 
alliances are co-designed, co-funded, and co-managed alongside partners 
so both the risks and rewards of the work are shared.


   How are the interests of the State Department and USAID 
        safeguarded when partnering with other entities?

    Answer. When considering engagement with a prospective partner, 
USAID is driven by the strategic diplomatic, development and security 
priorities of the U.S. government. We aim to work with organizations at 
the intersection of business interests and our development objectives, 
engaging in early conversations with prospective partners to ensure 
that we pursue engagements that will help us meet our development 
objectives most efficiently and effectively while also protecting USG 
interests.
    All organizations that receive funding from USAID must comply with 
USAID and USG requirements, regardless of whether the activity involves 
a private sector partner.
    As mentioned in part (a), effective due diligence reveals whether a 
prospective partner has a proven and recognized commitment to 
principled business practices, and should give USAID information to 
judge whether to rely on a private sector partner's non-binding 
commitment to provide resource support for an activity. The process 
typically begins as soon as negotiations progress beyond the 
introductory stage and are ongoing for as long as the relationship 
exists. We also use a memorandum of understanding (MOU) to formalize 
our partnerships, ensure that all parties are in agreement on roles, 
activities and decision-making processes, decreasing the risk of 
misunderstandings and future conflicts.
    And different types of engagement require further relevant 
considerations when conducting due diligence. As part of its credit 
guarantee authority, for example, USAID's Development Credit Authority 
conducts extensive due diligence on every partner financial institution 
before entering into a guarantee agreement. It reviews potential 
partners' financial records, portfolio quality, internal controls, 
management capacity and market reputation. This due diligence is then 
presented to an independent Credit Review Board which makes a final 
decision on whether the Agency will enter into any new DCA-supported 
partnership.


   How are broader U.S. national security objectives upheld in 
        USAID's work with private partners?

    Answer. USAID only undertakes partnerships if they align with our 
priorities and strategies. We partner with private organizations on 
multiple issues, including issues that have national security 
implications for the United States. These areas include crime and 
violence prevention, infrastructure and energy, job creation and 
workforce skills development, pandemic health threats, climate change, 
and natural resources management. These issues, if left unaddressed, 
can de-stabilize communities and weaken other nations' ability to 
commit to a rules-based international order, thus impacting U.S. 
national security.
    Engaging the local private sector has increasingly become an 
important factor to ensuring community buy-in and sustainability of 
these kinds of development projects in places like Central America, 
whose geographic proximity and social and cultural ties impact U.S. 
national security.
    For example, one-third of USAID's public-private partnerships in 
Central America (in FY15) specifically focus on crime and violence 
prevention programming to address one of the underlying causes of 
migration to the United States, insecurity. These public-private 
partnerships are active in Northern Triangle countries, Nicaragua, as 
well as Mexico. For example, six of USAID's public-private partnerships 
in FY15 were specifically focused on crime and violence prevention. Our 
work is focused on at-risk youth and municipalities in-country to 
provide skills development, recreation and job opportunities, so that 
fewer people will turn to violence and crime, and fewer refugees will 
exist, and governments can maintain the rule of law and the provision 
of public services to prevent the destabilization of regional security.
    USAID engages companies such as Salvadoran conglomerate Grupo 
Agrisal as well as multinational companies like PriceSmart, Tigo, 
Claro, Cisco and Microsoft to provide educational, training, and 
economic opportunities for at-risk youth across the region. USAID 
supports more than 200 outreach centers in some of the toughest 
neighborhoods in the region. In El Salvador alone, 123 outreach centers 
reach 25,000 at-risk children and youth annually. Some of our most 
successful partnerships with the private sector have focused on this 
crime and violence prevention work targeted at the community level in 
Central America.


   Do public-private partnership opportunities ever dictate 
        decisions of what types of projects get funded? Do public-
        private partnerships ever lead to a distortion of our 
        development priorities?

    Answer. At USAID, partnership opportunities do not distort our 
priorities; rather, they are only undertaken if they address one or 
more development priorities and needs, and are in line with U.S. 
Government strategies in given countries or sectors, with an eye toward 
how these engagements enable us to more efficiently and effectively 
achieve those priorities. We work collectively and cohesively across 
the Agency and inter-agency on initiatives like Power Africa or Feed 
the Future, and our projects and programs are driven by our Mission 
priorities.
    We are working to end extreme poverty and enable resilient, 
democratic societies to realize their potential, and we know that we 
can only do that by engaging strategically with the private sector, 
where there is strong alignment between our development objectives and 
business interests. Many obstacles businesses face are also symptoms of 
the social and economic development challenges we are working to 
address in developing countries--from customer outreach and supply 
chain stability to community investment and workforce development.
    USAID Missions use the Country Development Cooperation Strategy 
(CDCS) process, a country-specific planning tool, to make strategic 
choices and encourage innovative approaches to achieving development 
results. These five-year country strategies enable us to stay focused 
on each Mission's priorities and set the foundation for project design, 
planning, and resource allocation while also making clear to the public 
and potential partners where opportunities for engagement exist. The 
CDCS development process requires active engagement with stakeholders, 
which includes the private sector when appropriate.
    The project design process defines how USAID will operationalize 
the CDCS. In designing projects to achieve a specific development 
result, USAID considers a range of implementation approaches, including 
PPPs, when appropriate. PPPs are often the most efficient way to 
address a specific development challenge in the context of the 
project's objective. USAID seeks to ensure that public-private 
partnerships are aligned to advancing the development objectives 
established in our Missions' CDCSs and as such, ensure these 
partnerships support, rather than distort, the core development 
priorities that USG has established with our host country government 
partners.


    Question 8.  Between FY2000-FY2014, 89 percent of bilateral public-
private partnership funds have gone to USAID-led partnerships, and 
roughly 10 percent have gone to State Department-led partnerships.


   Can you comment on what accounts for this disparity?

    Answer. senior leadership and working staff levels--to create 
strategic goals and objectives, and coordinate the programs and 
activities designed to achieve them. USAID is sometimes considered more 
``operational'' than State, with large-scale development programs that 
provide opportunities for on-the-ground partnerships. We make 
investments in conjunction with the Department of State, enabling us to 
meet our development objectives and advance U.S. security and 
prosperity abroad.
    With regard to the State Department, foreign assistance funding for 
public-private partnerships does not account for the full scope of 
State Department-led partnerships. This figure also may not account for 
public-private partnerships for educational and cultural exchanges or 
in the realm of Public Diplomacy, which are supported with ECE and PD 
funding, respectively. The Bureau of Educational and Cultural Affairs 
(ECE funding) uses public-private partnerships to expand the scale and 
impact of exchange programs and public affairs sections at U.S. 
Missions routinely use public-private partnerships, albeit often on a 
smaller scale, to expand the reach and impact of Public Diplomacy 
activities (PD funding). Further, this figure also may not account for 
State Department-led partnerships that are carried out without the need 
to use appropriated funding.


   I understand that the State Department has an office of the 
        Global Partnership Initiative at State, led by a Special 
        Representative for Global Partnerships. Should State be working 
        to expand their public-private partnership efforts?

    Answer. The Secretary of State's Office of Global Partnerships (S/
GP) office is the entry point for collaboration between the U.S. 
Department of State, the public and private sectors, and civil society. 
The Office S/GP builds partnerships that address the Secretary's top 
policy priorities, provides advice and policy guidance internally on 
how to develop partnerships, and oversees the Department's due 
diligence process and vetting of private sector partners.
    S/GP employs partnerships to advance the Joint Strategic Goal to 
modernize the way we do diplomacy and development. S/GP uses 
partnerships in innovative ways to add integral value to the Department 
of State's mission, by strengthening U.S. diplomacy and development 
around the world, tapping new networks and technologies, and leveraging 
specialized expertise.
    S/GP has institutionalized public-private partnerships within State 
as effective tools to advance the Department's goals. The issues at the 
heart of Secretary Kerry's top priorities are too complex to be solved 
by USG action alone. Secretary Kerry prioritizes partnerships as a 
foreign policy tool because they help leverage the best of public and 
private sector resources to create impactful, practical solutions to 
advance foreign policy objectives. With no foreign assistance resources 
from its launch in 2009 to 2011, S/GP successfully proved the value of 
public-private partnerships by leveraging $283 million. Limited funding 
in subsequent years allowed S/GP to considerably increase its ability 
to leverage private sector resources, while aligning its programmatic 
activity more closely with the principles of selectivity, focus, and 
integration highlighted in the Quadrennial Diplomacy and Development 
Review (QDDR) and the Presidential Policy Directive on Global 
Development (PPD-6).
    To expand public-private partnership efforts within the rest of the 
Department, S/GP created an internal funding opportunity in 2015 called 
the Leveraging, Engaging, and Accelerating Partnerships (LEAP) Fund to 
incentivize other bureaus and missions to leverage public-private 
partnerships and scale the impact of their work. LEAP incubates new 
partnerships and scales up existing partnerships that directly advance 
the Secretary's top policy priorities, such as climate change, 
countering violent extremism, and global health. Not only does LEAP 
enable S/GP to help other operating units leverage private sector 
resources--just $550,000 helped six other operating units leverage 
nearly $2.8 million in private sector commitments in FY15--but it 
enables S/GP to socialize and institutionalize within the Department 
the model of using partnerships to do diplomacy and development in 
direct support of the State-USAID Joint Strategic Goal Framework.
    Finally, S/GP is also expanding public-private partnership efforts 
in State by offering more training opportunities for Department staff 
on how to do public-private partnerships, including working with 
regional bureaus to identify public-private partnership training needs 
for at-post colleagues. As a result, in 2016 S/GP conducted its first 
overseas training for Foreign Service Officers and locally engaged 
staff in consultation with the Bureau of European and Eurasian Affairs. 
S/GP is working with the other regional bureaus to conduct similar 
trainings for at-post colleagues in other regions later this year and 
in 2017.
    The partnerships teams at USAID and the State Department work very 
closely together on a number of initiatives and major events such as 
Global Partnerships Week, Global Diaspora Week, and the Global 
Entrepreneurship Summit, which bring together actors from public, 
private and NGO communities.
    Both Agencies, for example, have also worked together to launch the 
International diaspora Engagement Alliance (IdEA). IdEA harnesses the 
resources of diaspora communities to promote sustainable development 
and diplomacy in their countries of heritage. By supporting programs 
around entrepreneurship and investment, volunteerism, philanthropy, and 
innovation, IdEA provides a platform to leverage diaspora resources and 
collaborate across sectors. The State Department amplified the 
visibility of IdEA by 1) leveraging its network to recruit members to 
IdEA, 2) hosting events in Washington, and 3) engaging Secretaries 
Clinton and Kerry to bring high-level support to the effort.
    This coordination extends beyond just our partnerships teams. USAID 
technical and regional bureaus also coordinate with State Department 
counterparts for joint management of large multi-stakeholder 
interagency partnerships, such as the Tropical Forest Alliance (TFA 
2020).
                               __________

     Dan Runde's Responses to Questions Submitted by Senator Perdue


    Question 1.  During our discussion about how public-private 
partnerships could serve as a model for reconstruction in Syria, you 
mentioned the idea of an international ``development assistance bank.'' 
How would a bank focused purely on development assistance differ from 
how OPIC seeks to mobilize funding from international sources for 
projects in developing nations? How would a development bank compare to 
the function of the Millennium Challenge Corporation (MCC)? How would a 
development bank work with the International Monetary Fund and the 
World Bank?

    Answer. I am in favor of strengthening the use of ``development 
finance'' institutions and instruments. I think that a ``Development 
Bank'' is a nice idea but perhaps something for down the road. There 
are a number of steps that can be taken with existing institutions 
before creating a new one.
    Regarding the global refugee crisis, I do think is that we should 
strengthen and fund existing institutions to fully respond to this 
crisis, of which Syria is a part. This crisis is partially a function 
of national security indecisions and non-decisions at the global level, 
conflicts specific to a number of regions, a lack of a sense of 
personal security, and a lack of economic opportunities in a number of 
states around the world.
    As you know, there are currently 65.3 million forcibly displaced 
people worldwide. UNHCR says this is the highest level on record and 
certainly the highest since World War II. International agencies must 
meet this emergency response fully, but UNHCR faced a 58 percent gap in 
funding all of its appeals as of the third quarter of 2015. For the 
Syria crisis specifically, the funding gap is currently 70 percent--the 
agency needs approximately $3.2 billion more to meet the needs of the 
crisis. These gaps are something for Congress to consider.
    It is important that the United States government consider the 
foreign and national security implications of the refugee crisis, and 
look to address the root causes of the crisis in its funding and work. 
Some of these causes are not solvable with development assistance and 
soft power and require various forms of military power. Deep and 
structural societal challenges can often take twenty years or longer to 
address even with foreign assistance from outside. This has been the 
case in countries such as Colombia and Afghanistan, where sustained 
conflict has required long-term strategies by the international 
community. There is a limited role for the private sector and a larger 
role for aid agencies and countries such as the United States.


    Question 2.  You also mentioned the era of the Asian International 
Investment Bank (AIIB) and how the development of this banking entity 
should cause us to think ``more strategically'' about the kind of 
development funds that struggling countries want. Would you elaborate 
on this idea?
    It is important to note that fifty-seven countries signed up in a 
short period of time to join the Asian Infrastructure and Investment 
Bank (AIIB). The list of members includes well-respected traditional 
donor countries including Sweden, Norway, and Germany.
    Three things to consider: First, the Obama Administration's 
explicit decision to not finance coal and to deemphasize fossil fuel 
projects in general and a decades long de-emphasis of infrastructure 
investments created a large opening for China to exploit. One only has 
to review the extensive plans for coal projects in Asia to realize that 
coal will be a part of the mix of developing countries. Renewable 
energy financing as the de facto product available is not realistic. 
Some decisions by the Obama Administration at EX-IM Bank, or its 
policies towards the World Bank and the regional development banks can 
only be interpreted as playing cheap domestic politics.
    Second, it is important for Congress to understand that the AIIB is 
also much a result of the dithering by the United States on 
International Monetary Fund (IMF) quota reform. I want to recognize the 
very significant responsibility of the Obama Administration in not 
coming to an agreement with the U.S. Congress. Although it may seem 
unconnected, the inability of Congress and the executive branch to come 
to an agreement on IMF quota reform funding caused the reform to be 
delayed by more than five years, and the United States was by far the 
last of the G20 members to approve this reform. This provided China 
with great political cover and an opening to build new institutions, 
including the AIIB. There is a perception in the U.S. Congress that 
delaying funding to multilaterals is consequence free; these conflicts 
and these delays create problems beyond our borders, and the AIIB is 
one of these consequences.
    Third, there is a very real global infrastructure gap, estimated at 
$1 trillion annually, which for a variety of reasons we cannot fix with 
foreign assistance alone. The AIIB will make a small but meaningful 
contribution with its investments in Asia. (When AIIB is fully 
operational it is expected to invest $10-$15 billion per year--compared 
to the $1 trillion infrastructure deficit this is a drop in the 
bucket). Most stakeholders agree that the issue is not money--it is a 
lack of ``bankable projects'' that incentivize investment from the 
private sector, as well as process issues with public and multilateral 
actors. At CSIS we've done significant work on this topic, publishing 
two reports in the past year--Barriers to Bankable Infrastructure: 
Incentivizing Private Investment to Close the Global Infrastructure Gap 
and Global Infrastructure Development: A Strategic Approach to U.S. 
Leadership--that examine how to strengthen U.S. public sector actors 
and the multilateral development banks to prepare and carry out 
projects to meet this gap.
    Finally, related to the topic of offering infrastructure that 
competes with China, one key topic for the United States to consider 
with infrastructure is public sector procurement. Although this seems 
quite obscure, it is quite important to the United States: If we want 
developing countries to purchase or invest in infrastructure along the 
lines of the standards of the World Bank, we have to look at the fact 
that most public sector procurement offices do not have great capacity. 
They have been trained (if at all) to make decisions on the basis of 
the ``lowest bidder.'' The United States and others want developing 
countries to move to a more complex system of ``life cycle costs'' 
where factors other than the lowest costs are considered. This is a 
good thing to do but someone (likely us, our allies and the 
multilateral development banks) are going to have to foot the multi-
billion dollar bill to train hundreds of thousands of public sector 
officials to meet this new life cycle cost standard.


    Question 3.  You also mentioned that we need to find more ways to 
provide infrastructure in developing countries, because ``that's what 
they want.'' Besides the idea of a development bank, what other ideas 
would you suggest, in addition to MCC and OPIC, for finding new ways to 
mobilize global funds for particular countries and projects?

    Answer. The development bank is an interesting idea, but in the 
medium term it is best to invest in our existing institutions. This 
includes the multilateral development banks, including the World Bank 
and Asian Development Bank. Additionally, our reports on infrastructure 
have called for the following reforms for U.S. government actors:


   Develop a long-term strategy for infrastructure development.

   Provide long-term congressional authorizations for critical 
        agencies.

   Provide greater support to specialized U.S. development agencies 
        such as TDA, OPIC and EXIM.

   Prioritize infrastructure support at the country level with our 
        foreign assistance including through USAID.

   Examine existing initiatives for money that can support 
        infrastructure development.

   Seek to reduce the time for multilateral loan approval to a maximum 
        of two years and no longer require guarantees from developing 
        country recipient governments in all cases. In response to the 
        AIIB, JICA, the Japanese Aid Agency and JBIC, an agency akin to 
        OPIC, have committed to no more than 9 months ``door to door'' 
        on loan approvals.

   Provide technical training and knowledge transfers to developing 
        countries in each infrastructure project.

   Finally, and most important in my mind, launch a major new 
        initiative in collaboration with Japan and other allies to grow 
        and strengthen the Asian Development Bank (ADB).


    In the context of infrastructure, the U.S. Trade and Development 
Agency (USTDA) is an especially important instrument and should be 
given greater levels of funding to do its good work. USAID has largely 
gotten out of infrastructure since the early 1970s. Perhaps considering 
creating a new, small group of engineers at USAID would be a good 
start. I do not believe there are more than 20 engineers left at USAID. 
Moving forward, the U.S. government should also look at what pieces of 
the infrastructure portfolio USAID would best be able to take on. One 
area that is a good fit with USAID's current capacities and strengths 
is to take on this very important function of training developing 
country procurement professionals in how to procure more complex 
projects using techniques such as life cycle costs. The Millennium 
Challenge Corporation (MCC) could also play a greater role in training 
officials in reviewing contracts and meeting other infrastructure 
process requirements in compact and pre-compact countries.
    With improved funding for more personnel among other possible 
policies, OPIC could also do greater infrastructure financing. I also 
think OPIC needs to remove its so-called ``carbon cap'' put in place in 
the Bush Administration. It was a mistake for the Bush Administration 
to do this and no other G-7 development finance institution has a so-
called ``carbon cap.''
    It is important to note that the MCC has become a sort of de facto 
financier of infrastructure in the last ten years. According to its 
most recent financial statement, MCC committed $2.4 billion to roads as 
of June 30 in fiscal year 2015, or 73 percent of the value of its 
signed contracts. I understand that there have been some movements 
towards more creative financial arrangements at MCC in the last couple 
of years under CEO Dana Hyde. I am encouraged by these changes. These 
arrangements would mean MCC is better able to leverage its funding so 
it's not just buying infrastructure projects with grant money, but 
rather catalyzing other funds for correctly designed and well-financed 
projects that countries need. These initiatives should be continued and 
supported.


    Question 4.  In your testimony you note that the game has changed 
significantly for those who are interested in development assistance--
particularly on how much our U.S. official development assistance 
contributes to resource flows in the developing world. As you 
testified, in the 1960s, over 70 percent of resources from the U.S. to 
developing countries came in the form of foreign aid. Today, official 
assistance dollars make up less than 20% of resource flows into 
developing countries.


   How can USAID and the State Department adjust to this new 
        reality? Does this mean a fundamental reprioritization of our 
        foreign aid?

    Answer. The acquisition and human resource policies of USAID and 
the State Department, which act as incentives, are set up for a world 
that prioritizes ODA. It's important to understand the declining role 
of ODA and set up new incentives for this reality.
    Developing countries are seeing ODA play less and less a role 
compared to other resources, including tax revenue and private sector 
investment. Honduras, a lower middle income country as classified by 
the World Bank, financed just 12.7 percent of its budget with ODA in 
2014. Tanzania, a low-income economy as classified by the World Bank, 
financed 68 percent of its healthcare needs with means other than ODA 
in 2013-2014. A 2008 report on the business of healthcare in Africa by 
McKinsey and the International Finance Corporation highlighted that 
private sources finance 60 percent of health care in Africa and private 
providers receive 50 percent of total health expenditure. In Sub-
Saharan Africa, a largely impoverished region, 50 percent of total 
health expenditure is out-of-pocket payments. That is not to say that 
our ODA is not important, including in the global health arena--it has 
been very important--but what it does mean is that we have to think 
differently about what is our role and what is our contribution.
    The theory of change around what the international development 
community can contribute and what difference we can make must adjust to 
this reality. In many ways, U.S. actors such as the State Department 
and USAID are responding by pivoting more towards the private sector, 
but we can do more. In especially the aid advocacy community, the way 
that our contributions are thought of reflects an earlier mindset--that 
the United States will write a check and pay for all of the healthcare 
in a country, but this is in most cases not reality--taxes, other 
donors, and much of healthcare, even in Africa, is paid for ``out of 
pocket.'' We must think differently, encourage private sector 
investment, and build the capacity of states at the national and 
subnational level to deliver services for their people. This will 
require sharing risk, providing training, and contributing to 
innovations in direct service delivery that ultimately empower 
countries to lead these efforts on their own.


   What can businesses do that the U.S. government cannot when 
        it comes to foreign aid and development? Why is it important to 
        partner with the private sector? How do PPPs benefit business?

    Answer. It is important to first note that ODA is still very 
necessary--I am in favor of maintaining current ODA levels. Certain 
topics lend themselves best to being addressed by ODA--democracy 
promotion, human rights, and improving the rule of law and governance. 
Private companies do not have the expertise to deal with these. It is 
important that ODA also lead responses to the refugee crisis and 
pandemics.
    However, on many other topics--agriculture and agribusiness, 
vocational tech, certain kinds of health programming, and others--
companies can play a key role. Companies offer technology, supply chain 
buying power, other technical expertise, and grant money that can be 
leveraged to deliver solutions to challenges in developing countries. 
In addition to resources, products, and expertise, companies can assist 
with training and capacity building in developing countries through 
corporate Volunteerism and there have been important innovations in the 
last 10 years in the corporate volunteerism sector.
    PPPs almost always involve shared value for both the corporation 
and the public actor. Businesses contribute to social impact while also 
addressing a challenge in their business operating environment, 
building better relations with communities, or empowering their 
workforce.


   How can we further leverage and multiply the impact of U.S. 
        taxpayer dollars in foreign assistance in the future?

    Answer. According to a database USAID released in the fall of 2014 
and updated in 2015, it had conducted 1,421 PPPs from 2001-2014. A 2016 
report by George Ingram, Anne, Johnson, and Helen Moser for the 
Brookings Institution found that these PPPs were financed by $4.7 
billion in USAID funding and $11.5 billion in leveraged private sector 
funding. While these are large numbers, it is important to note that 
since 2007, USAID PPP investments have made up only 1-2 percent of 
overall USAID managed and partially managed funding.
    As CSIS made the case in our 2013 Our Shared Opportunity report, 
USAID should consider committing 25 percent of its funding to 
partnerships--a radical increase from the de facto 1-2% of all projects 
currently carried out on a partnership basis. While the objective 
should not be partnerships for partnerships' sake, in the context of 
the changing world USAID should be thinking more creatively and 
leveraging further resources of the private sector for development 
outcomes. More partnerships would especially be valuable in the 
agriculture, workforce training, and higher education spaces. They are 
also especially important in middle incomes country contexts where 
USAID is reducing its presence and the private sector is active.


    Question 5.  You testified that the U.S. government and others are 
adapting to the changing world and environment for development 
assistance, but that we could go further so our limited resources can 
achieve greater impact.


   What changes should State and USAID implement to make 
        limited resources achieve greater impact?

    Answer. Please refer to my answers above.


   What changes can we implement here in Congress to help 
        State and USAID achieve this objective?

    Answer. There are a few specific reforms that Congress can pursue 
to assist State and USAID in achieving greater development impact 
through increased partnerships:


   As former USAID Administrator Andrew Natsios wrote in Public-
        Private Alliances Transform Aid for the Stanford Social 
        Innovation Review in 2009, it is important to ``remove barriers 
        to cross-sector cooperation-including low risk tolerance, 
        excessive bureaucracy, and narrow notions of possible partners- 
        [and] also create the right incentives for building 
        alliances.'' To support these objectives, Congress should at 
        root avoid enacting complicated legislation that ultimately 
        restricts PPP creation.

   To incentivize PPP creation, Congress can break the allocation of 
        resources, or the pledge of resources, by functional account. 
        Congress can further fund partnership accounts, leverage 
        accounts, or multisector accounts to leverage future 
        partnerships. This would move the focus beyond what USAID and 
        State are already doing to enable greater creativity and 
        partnership creation. Congress should seek to enable further 
        incentives for partnerships by creating a series of awards for 
        PPPs that further U.S. national interests and global 
        development objectives with strong and measurable impact. This 
        would create positive competition among agencies and 
        incentivize the private sector to commit more of their 
        resources in partnership.

   Congress should call for better data in the form of an online index 
        of USAID's and State's partnerships, so that stakeholders can 
        track all PPPs across USAID and State in a simple way. While 
        USAID made a positive step in releasing the first public 
        dataset on its partnerships in fall 2014, there is opportunity 
        to build on this. The index should include disaggregated 
        spending on partnerships by partner and the impact our outcome 
        of each completed PPP, where possible. This index should then 
        lead to a bi-annual report to Congress showing PPPs' progress 
        and making recommendations for program improvements.


    Question 6.  In your written testimony, you state that many 
systems, rules, and instruments within State and USAID still reflect a 
past set of assumptions on how development happens--at the expense of 
the role of the private sector in this development. As you have worked 
in the private sector, at USAID in the Office of Global Development 
Alliance, and now are working on development issues in a think tank 
role, I would certainly appreciate your unique perspective.


   Can you discuss the challenges and obstacles to using PPPs 
        in development assistance?

    Answer. I mentioned these challenges in my written testimony and 
will reiterate and elaborate on them here:


   Partnerships require that the U.S. government answer a couple of 
        challenging questions that are not present in traditional 
        development projects. The first relates to forming 
        partnerships--``how do you get people to work with you who 
        don't work for you.'' The second relates to sustaining the 
        partnership--``how do you keep people working with you who do 
        not work for you.'' Getting companies and the U.S. government 
        to think about shared value together and get on the same page 
        can be the primary barrier to partnership formation.

   Partnerships can be more time-intensive to structure than 
        traditional development projects.

   It may be difficult for companies to work around U.S. government 
        systems. The U.S. government is sometimes criticized by 
        companies of being too bureaucratic; of being inflexible with 
        changing circumstances; and demonstrating lack of efficiency on 
        making decisions. It is important to note that these challenges 
        can also be present within corporations. Agreeing on joint 
        processes and desired outcomes before a partnership begins is 
        critical to its success.


   How can we in Congress work to improve these challenges, or 
        encourage positive change?

    Answer. Congress can set the tone for the overall U.S. government 
by embracing the power of partnerships and recognizing that when 
companies and the private sector work together on common goals in 
developing countries, all parties can benefit. Partnerships can lead to 
greater scale and sustainability of successful approaches in developing 
countries. It is in the interest of Congress to support partnerships 
and enable flexible financing mechanisms around them.


   How do we achieve the proper balance in foreign assistance 
        between PPPs and strictly government assistance?

    Answer. As CSIS made the case in our 2013 Our Shared Opportunity 
report, USAID should commit 25 percent of its funding to partnerships. 
I think that this number acknowledges that partnerships are an 
important part of the U.S. government's tool kit, bringing the benefit 
of additional leveraged resources and potentially greater scale and 
sustainability through business involvement. However, they are not the 
only tool.


   Is there a strict set of guidelines for when PPPs are not 
        appropriate for solving development problems?

    Answer. As I mentioned in my written testimony, some challenges 
will continue to require the U.S. government or other governments to 
lead with development assistance. For example, the response to 
pandemics including Ebola and Zika must be led by government, but we 
have seen that they can never be wholly solved by government acting 
alone. Other challenges, including human rights, democracy promotion, 
and governance issues, do not necessarily lend themselves well to 
partnership approaches.


    Question 7.  A new development at USAID since your departure from 
the Agency has been the creation of the U.S. Global Development Lab in 
2014, whose goal is to bring diverse partners together to solve global 
development problems.


   What is your opinion of the Global Development Lab? Will 
        initiatives like this help spur more rapid and prolific PPPs?

    Answer. In 2007, the HELP Commission called for a DARPA for 
development which refers to DARPA--The military's very flexible and 
creative organization that has financed and supported all kinds of 
innovations, including the internet. The Global Development Lab is 
indirectly or directly a response to this call, and an acknowledgment 
that many global development challenges have been solved through leaps 
in technology--the increase in prevalence of cellphone telephony, the 
development of oral rehydration salts (ORS), and the introduction of 
mobile money platforms including M-Pesa, to name only some. As these 
demonstrate, the idea of contributing funding and resources towards 
innovation for development is an interesting and useful idea.
    To the extent that the Global Development Lab is funding these 
types of innovations through its Grand Challenges and Development 
Innovation Ventures (DIV) programs, it is doing good and important 
work. The Lab also plays the role of convening USAID's PPPs, an 
important role that could be expanded, as I have discussed.
    However, one of the key challenges is taking a new innovation to 
scale. Given USAID's systems and approaches, the work of the Lab is not 
always mainstreamed throughout the day to day work of USAID, and this 
can inhibit scale up. There are various solutions for this structural 
challenge, many of which I think USAID is aware of or already pursuing.
    Something that is missing from the discussion on innovation and 
technology is that both adversaries and friends of the United States 
covet technology and innovation, especially as they move towards middle 
income status. CSIS wrote about this topic in partnership with the 
Japan International Cooperation Agency Research Institute in our May 
2016 report ``Transformative Innovation for International 
Development.'' Countries understand that they need access to innovation 
in their economies to continue progressing toward prosperity. 
Accordingly, USAID has to think about how it enables and delivers 
innovation and technology, not only to governments but also to 
companies and research institutions. USAID should be thinking more 
about enabling innovation ecosystems, including how to provide venture 
capital and other private sector finance to enable innovative SMEs and 
local innovations. I would like to see USAID and the rest of the U.S. 
Government thinking more strategically about this important issue


    Question 8.  Some development experts have expressed concern that 
the type of private capital flows that have spurred modern PPPs are 
concentrated in the more advanced developing countries. They assert 
that the emphasis on leveraging these flows through PPPs could steer 
more aid resources to these countries at the expense of the world's 
poorest countries, where opportunities for such partnerships may be 
limited.


   Do you believe this assessment is correct?

    Answer. That concern has literally never crossed my mind--there are 
so many political drivers around the weakest states. I have worked on 
partnerships for the last fifteen years in a structured way, and this 
has not happened in my experience. Given the significant challenges and 
worries that the United States must address in foreign policy and 
development, this is the last on my list.


   How can we ensure that an emphasis on PPPs doesn't steer 
        aid away from the world's most vulnerable countries?

    Answer. Most national security problems, as well as pandemics and 
other emergencies, are accelerated in weak and fragile states. This has 
been apparent in the global refugee crisis, the growth and movement of 
gangs, transnational terrorists, cycles of state fragility, and the 
expansion of pandemics (as recent experiences with Ebola and Zika have 
demonstrated). The United States has been given the responsibility of 
contributing to addressing the root causes and results of challenges in 
the so-called ``Bottom Billion'' countries.
     I believe that the international development and security 
communities understand the issue--the problems in these countries can 
become our problems. It is important to leverage all forms of American 
power in addressing the challenges in these states, while putting a 
hard conditionality on foreign assistance to these locations. The 
United States should make decisions first on what is important to us as 
a country and then decide how we approach the problems abroad. 
Partnership is one tool. In many cases these countries may require a 
more traditional approach to international development.
    My belief is that partnerships are a tool and approach; they are 
not a panacea and should not be the only tool in the toolkit.


                               __________

     Eric Postel's Response to Questions Submitted by Senator Kaine


    Question.  At the end of 2015, the U.S. faced an enormous wave of 
immigration, to include vast populations of unaccompanied minors, 
originating from the Northern Triangle countries of Guatemala, 
Honduras, and El Salvador. Responding to this crisis, the U.S. 
Administration requested $1 billion for assistance to the Northern 
Triangle to support the U.S. Strategy for Engagement in Central 
America. Thanks largely to the Senate, during the conference process, 
Congress approved $750 million. This funding is an important 
investment--neighboring countries that we are closely connected to with 
many people and families now living in the United States. The President 
has asked that this investment be repeated--- request I would like to 
see happen.
    The Northern Triangle countries are facing very significant 
challenges including: unaccompanied minor outflow to our country, 
violence driven to a significant degree by the U.S. demand for illegal 
drugs, rule of law problems and significant economic opportunity 
challenges. The path of investment that we started last year needs to 
be supported by appropriate metrics. This should include a metric to 
ensure we can expand the power of the investment by pairing the $750 
million with appropriate coordination between NGO partners, government 
spending, private investment and private individuals in those own 
nations who often decide to invest those monies elsewhere due to 
security concerns.


   From a public-private partnership standpoint and in your 
        professional opinion, how can the U.S. government best leverage 
        significant investments like this and expand it through this 
        cooperation?

    Answer. Engaging the local private sector\1\ has increasingly 
become an important factor to ensuring community buy-in and 
sustainability of USAID development projects in Central America. Since 
2012, USAID has leveraged approximately $146 million in private sector 
and non-USG resources for public-private partnerships (PPPs) in Central 
America. This means that for every USAID dollar spent since 2012 on 
partnerships ($91 million total), the private sector has contributed 
approximately 1.6 times the amount through USAID's Global Development 
Alliances (GDA), Development Credit Authority (DCA) guarantees, and 
other PPPs.
---------------------------------------------------------------------------
    \1\ According to USAID's GDA Annual Program Statement, `` `private 
sector' refers to the following: private for-profit entities such as a 
business, corporation, or private firm; private equity or private 
financial institutions, including private investment firms, mutual 
funds, or insurance companies; private investors (individuals or 
groups); private business or industry associations, including but not 
limited to chambers of commerce and related types of entities; private 
grant-making foundations or philanthropic entities; or private 
individuals and philanthropists.''
---------------------------------------------------------------------------
    Some of our most successful partnerships with the private sector 
have focused on crime and violence prevention work targeted at the 
community level in Central America. USAID engages companies such as 
Salvadoran conglomerate Grupo Agrisal as well as multinational 
companies like PriceSmart, Tigo, Claro, Cisco and Microsoft to provide 
educational, training, and economic opportunities for at-risk youth 
across Central America. USAID supports more than 200 outreach centers 
in some of the toughest neighborhoods in the region. In El Salvador 
alone, 123 outreach centers reach 25,000 at-risk children and youth 
annually.


   In El Salvador, our SolucionES activity partners with five 
        Salvadoran foundations to combat citizen insecurity and 
        strengthen municipal responses to crime and violence in 50 
        dangerous communities. This activity works closely with mayors, 
        municipal councils and local residents on designing prevention 
        plans tailored to the needs of each community. Activities 
        include training youth and families in conflict prevention, 
        youth leadership programs, and job training and 
        entrepreneurship. School-based prevention activities provide 
        training to teachers in violence prevention, support to parent-
        teacher associations and psychological counseling in schools 
        traumatized by violence. USAID's $20 million is exceeded by the 
        private sector's $22 million contribution. At $42 million in 
        combined resources, El Salvador has established the largest 
        USAID public-private partnership with local private sector in 
        Latin America and the Caribbean.

   In El Salvador, Microsoft has trained over 10,000 youth in USAID's 
        outreach centers on software and information technology, with a 
        goal of reaching 25,000 at-risk youth. Along with local private 
        sector, USAID and Microsoft also partner to support 
        ``Superate'' (Get Ahead!) centers, which train underprivileged 
        youth in English, computer proficiency, and life skills to 
        become the next leaders of El Salvador. The ``Superate'' 
        centers continue to receive free Microsoft software, preparing 
        youth to move on more effectively to secondary education and 
        the workforce. Given the success of this partnership, other 
        companies in El Salvador established centers and the model has 
        been replicated in Panama and Nicaragua.

   In Honduras, USAID continues to expand our partnership with the 
        telecommunications company, Tigo, which provides free internet 
        coverage for over 5,000 at-risk youth. As a result, youth 
        benefit from computer and vocational training classes, reducing 
        their vulnerability to gang recruitment. Between 2012 and 2015 
        alone, USAID doubled the number of youth outreach centers to 46 
        with Tigo's expansion of free internet coverage in Honduras. 
        Also in Honduras, PriceSmart, an American company and the 
        largest membership wholesale chain in Central America, recently 
        sponsored the establishment of one of USAID's largest youth 
        outreach centers located outside of San Pedro Sula, Honduras.

   To improve food security, connect farmers to market, and move 
        150,000 rural Hondurans out of poverty, USAID partners with 
        Walmart and various local and multinational companies. USAID 
        has developed over 41 partnerships with companies to provide 
        training and technical assistance to small-scale farmers, 
        improve the efficiency of key value chains, and increase 
        incomes. These partnerships have been a critical component in 
        increasing incomes of more than 24,000 people by 267 percent in 
        2014.

   In Guatemala, USAID mobilized $26 million in matching funds from 
        the private sector, non-governmental organizations, and 
        municipalities to support violence prevention interventions 
        between 2010 and 2014. For example, by working with a local 
        bank, USAID pooled some of these resources to improve working 
        conditions and services of five police stations, thereby 
        allowing the police to better perform their jobs with greater 
        dignity in their communities.

   USAID also partners with the private sector at a regional level to 
        increase access to finance across Central America. In response 
        to the worst outbreak of coffee rust in 30 years, USAID 
        partnered with Root Capital, Keurig Green Mountain Coffee, and 
        Starbucks and other partners to leverage $15 million in 
        financing for coffee value chain and agriculture cooperatives 
        in Honduras, Guatemala, El Salvador, and Nicaragua, among other 
        countries. Agriculture financing is complemented by an 
        additional $4 million in funds from the private sector to 
        support agronomic and resilience training for approximately 
        40,000 farmers in the region. The partnership began in 2014 and 
        ends in 2026.


    USAID employs a range of approaches to best harness the private 
sector's resources, business expertise, technology and marketing 
channels. Two highly-effective models are:
1. Co-funding and co-creation partnerships.
    USAID engages the local and international private sector in co-
funding and co-designing projects and partnerships to improve the 
communities in which they operate, advance USAID's local development 
goals, and expand services and opportunities available to local 
communities through the Global Development Alliance (GDA) model. This 
is a method to jointly design, fund, and implement a project with USAID 
to advance our development objectives while addressing the private 
sector's business interests. Companies we partner with through GDAs, 
such as PriceSmart and Lady Lee in Honduras, or Grupo Agrisal in El 
Salvador, are companies deeply committed to improving local conditions 
and contributing to efforts to combat crime and reduce violence in the 
communities in which they operate. In all efforts to garner private 
support in Central America, USAID partners with the private sector when 
business interests align with our development objectives outlined in 
each USAID country strategy.
    Often these partnerships are structured with the corporate social 
responsibility outfits of large companies. For instance, Microsoft 
developed the ``YouthSpark Initiative'' to train and attract young 
talent across the globe. In partnership with USAID in El Salvador, 
Microsoft is outfitting USAID-supported youth outreach centers with 
computers and educational software, as well as training via the 
YouthSpark Initiative model. In Honduras, we are working with 
PriceSmart through its Aprender y Crecer (Learn and Grow) Program, a 
program educating youth across the region.
2. Unlocking affordable credit/finance for investments in development.
    Through USAID's Development Credit Authority, we are using risk-
sharing to get working capital to promising entrepreneurs and financing 
to small farmers.
    USAID's Development Credit Authority (DCA) remains a powerful tool 
in the region. The tool enables local financial institutions to invest 
in productive economic activities such as small business growth, 
agriculture, and even municipal infrastructure. Since 1999, USAID has 
guaranteed $163 million dollars from local banks and local lenders in 
Guatemala, Honduras, El Salvador, and Nicaragua with $6.4 million in 
USAID program funds, which are set aside in the U.S. Treasury as a 
contingent liability (numbers do not include global partners such as 
Root Capital). To date, lenders have reached 12,982 borrowers in those 
countries, whose livelihoods have improved as a result of receiving 
critical business loans. Of those loans made, only $312,000 has been 
repaid in claims by USAID to those lenders. Therefore, the real cost of 
leveraging DCA guarantees over the past 16 years in those four 
countries was $312,000, yielding a leverage ratio of 1:380 (for every 1 
dollar USAID spent, 380 dollars were lent by private local lenders). Of 
the $6.4 million originally set aside in the U.S. Treasury, $6.1 
million remains.
    In the Root Capital example mentioned above, USAID leveraged $15 
million for coffee rust. In Guatemala, through USAID's Development 
Credit Authority, the Agency leveraged $12 million in financing from 
Guatemalan bank Banrural to support community-based forestry 
concessions, associations, and micro-, small- and medium-sized 
enterprises within certified value chains in the Maya Biosphere Reserve 
of Guatemala.
    Evidence from USAID's partnerships globally demonstrates that 
alliances work best and have the greatest development impact when they 
are premised on the notions of shared interests, shared value, and 
shared risks and rewards. USAID seeks to partner with companies that 
are committed to shared value; such companies recognize there is a 
competitive advantage to creating business innovations that address 
society's needs and challenges. By forming strategic partnerships with 
USAID, companies can share the risks of investing in key emerging 
markets like Central America, while contributing to improved social and 
economic outcomes in the communities where they operate. USAID will 
continue to serve as a catalyst for private sector and non-USG 
investments leveraging the significant support the USG is making in 
Central America.


                               __________

    Daniel Runde's Response to Questions Submitted by Senator Kaine


    Question.  From a public-private partnership standpoint and in your 
professional opinion, how can the U.S. government best leverage 
significant investments like this and expand it through this 
cooperation?

    Answer. Our assistance should aim to catalyze the political will 
needed to spark real change that otherwise might not occur without our 
persistent and focused diplomatic engagement.
    One of the most important things the United States can do in the 
Northern Triangle with its limited foreign assistance is to support 
policies and activities that encourage higher levels of formal economic 
growth. These countries need to grow at 2 or 3 percentage points more 
than they currently do in order to absorb the young people that join 
the workforce each year. If these young people are not absorbed into 
the formal workforce, they are at a higher risk of joining a gang or 
relocating to make a living. Our assistance packages are going to be no 
more than $200 million per country and far less than 1% of the GNP of 
each of the three countries. We cannot change their economies on our 
own. We should take advice from and partner with the local private 
sectors and local chambers of commerce. We should use our assistance 
dollars to support reformers within government-both at a sub-national 
and national level. Each of these countries has leaders in its civil 
society and faith-based sectors who have impactful ideas about ways to 
encourage alternatives to violence-ridden lifestyles.
    But this won't happen if these countries do not tackle the serious 
corruption and security issues they suffer from; our assistance dollars 
can help with these challenges.
    We should use these resources to focus on addressing the root 
causes that lead people to leave the region. These issues are extremely 
high levels of violence and low levels of formal economic opportunity. 
Combatting these fundamental issues requires strategically investing 
resources over the long-term to improve public administration, tax 
collection, and governance.
    Private sector investors rely on stable governments and capable 
administrations when investing; the United States can help to build 
this environment. If the United States wants to enable an environment 
for private financing, it should make a multi-year commitment of its 
own to work on the ins and outs of good governance that will set the 
stage for later growth. In order to measure and demonstrate progress in 
these areas, a set of metrics between the different branches of 
government on issues such as unaccompanied minors, tax collection, and 
murder should be centralized. This will allow for a common 
understanding of progress and challenges that remain, which will also 
give investors a more realistic picture of opportunities in the region.


                               __________


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