[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
__________
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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
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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
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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
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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.]
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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.
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\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).
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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.
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\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.
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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.
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\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.
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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.
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\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.''
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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.
__________
[all]