Washington, DC — Andrew Natsios, the administrator of the United States Agency for International Development, seldom misses an opportunity to promote the agency's Global Development Alliance (GDA) as the new model for development assistance. In several public speeches in recent weeks, he has argued that the GDA is a response to significant changes in the development assistance environment.
In remarks to gatherings sponsored by the African Wildlife Foundation, the Corporate Council for Africa, the Africa program of the Center for Strategic and International Studies and the Council on Foreign Relations, Natsios has called attention to a fundamental shift, over the past two decades, in the sources of funding for economic development around the world. An arena once dominated by official governmental assistance is now a stage for many actors.
Non-governmental and private-sector institutional - and even individual - capital has assumed an unprecedented importance. By 1999, $36 billion of a $50 billion net total resource flow from the United States to developing countries came from private capital flows and grants.
The official U.S. role in global development financing has also been in flux. During the 1990s, Japan surpassed the United States as the largest donor in absolute dollar amounts. But in 2002, for the first time in 11 years, Washington regained the top spot. That change was partially due to the weakness of the yen, but it also reflected a surge in spending following the September 11, 2001 attacks on the World Trade Center.
Similarly, U.S. government development assistance, as a share of GNP, has dipped to 0.1 per cent, well below its level of a dozen years ago and lower - in relation to the size of their economies - than any other industrialized nation. Now, that long downward spiral in official aid to the poorest countries is being reversed.
In the wake of Bush administration calls for dramatically increased spending for assistance, much of it targeted to fight HIV/Aids, Congress has agreed to spending that would raise the U.S. share to around 1.5 per cent of GDP. Some of that increase, the largest in four decades, will be earmarked for Africa and will flow through the Millennium Challenge Account (MCA), a new structure that requires recipient countries to meet accountability and good-governance standards.
Natsios has strongly supported the MCA. At the same time, he sees an expanding role for the traditional channel of USAID and for the specialized ability of the GDA to work with corporate and public sector organizations. Its mandate is to leverage government funds - and the five decades of own expertise - to facilitate more effective, integrated collaborations among disparate initiatives, as well as to stimulate parallel financing for under-resourced programs. Overall, it shares USAID's strategic objectives of stimulating economic growth, reducing poverty and global threats and promoting democracy and peace.
Natsios says repeatedly that the GDA represents the way the aid agency will do business in the future. And he hails the GDA director, Holly Wise, as the personification of that new era of collaboration, efficiency and the leveraging of limited resources for greater impact. He says she brings "a new, innovative approach" to development assistance
Wise is a career Foreign Service officer who has served in Africa, Asia and the Caribbean. Two recent honors suggest the impression she has made in her latest position. In July, she was a finalist for the 2003 Service to America Medals, a national awards program to reward "groundbreaking achievements" of federal employees. And this fall President Bush approved her selection by a private panel for a Presidential Rank Award, an annual honor recognizing "exceptional long-term accomplishments" by senior public service executives.
In a recent conversation with AllAfrica's Charles Cobb, Wise talked about the Global Development Alliance and its goals.
Could you talk about the business model of the Global Development Alliance?
GDA represents a way that we look at the world now, and a way that we re-think the appropriate role of U.S. foreign assistance in that world. There's been a really interesting shift since I've been working in foreign assistance. In the early 1970s, official flows to developing countries and emerging markets - the places where we do our aid programs - represented about 70% of all the U.S. development money that went to those countries. In other words, public funds - government money - represented 70% of the pie of those resources that went overseas, and 30% of the pie was private money.
That was a function of there not being a lot of other international actors. There were a small number of US NGO's [non-governmental organizations] that worked overseas, but the new wealth foundations that play such a prominent role today didn't exist. The U.S. universities didn't have a robust field of aid or exchange programs.
By contrast, what you see now is that 20% of U.S. flows to the developing world are from official development assistance and 80% are from the private sector, broadly defined, including individuals. These reversals reflect the emergence of the private for-profit sector and the non-governmental, or so-called third, sector, as significant participants in the development process itself.
In actual numbers, in 2002 there was a $70 billion flow of resources. Only about $10 billion of that was official funding.
Why is that?
It's partly because FDI [foreign direct investment] is up so much; that's the largest slice of it. Of course FDI doesn't all go to Africa, it isn't all developmental, and it isn't all consistent or predictable. Because FDI can have both positive and negative development impacts, we need to understand those flows and be able to work with firms, both U.S. and global firms, in a much different way.
Another factor is the advent of other actors. The [Bill and Melinda] Gates Foundation gives on par with the U.S. government in health work - and we're the largest single bilateral donor. They're a huge, huge force.
There are also many other foundations that have important - and growing - international giving programs. In addition, U.S. universities and colleges also contribute to international development and give more in foreign scholarships than Austria, Australia, Belgium and a number of other countries, give in foreign aid. That's, of course, in part because we're drawing from a big base.
So when all sources are combined, the United States is the largest bilateral donor in dollar amount globally, but at the same time, in terms of U.S. flows, the public sector portion is the minority shareholder.
What all this suggests is a repositioning of who we are as an assistance agency and how we do our work. That's what this "global alliance" orientation is all about. It's asking: What are the issues? Who else cares about these issues? How can we pull forward the assets of many - such as the creative reach of NGO's, the technology that industry has, the convening authority that lots of civil society players have - and put that together with our own field base presence and technical expertise, and the fact that we are government, which is both an asset and a liability? How can we increase our impact by working collaboratively? This is our orientation.
So it's, in essence, just leveraging money?
No, it's not just leveraging money. Sometimes the most powerful element is the intellectual property or technical expertise that a corporation might own, or their willingness to engage their staff on specific things, or their supplier network or market strength. So it's not just about money, but about being able to leverage resources from others, about leading with ideas and help, as opposed to spending the money Congress gives us and controlling that activity in isolation.
I'd like to hear more about how that works.
Let me tell you about the Foods Resource Bank, which is an NGO [non-governmental organization] that has come forward with a little bit of money from AID and they've matched that with money and all sorts of commodities donated by farmers, agricultural firms, and church groups across the United States.
What I like about this little project is that this outfit has gone to American farmers and talked to them about food security issues in Africa. They've helped them understand what it is that they can be a part of, if they give. They know farmers don't have a lot of cash, and so sometimes they donate land or crops. In addition, they get organizations and companies to donate commodities.
All of this is then monetized - converted into money to fund the food security programs that various faith-based NGOs are doing overseas. What's neat about it is that it's a much different kind of in-reach into the American agricultural community. It allows people and organizations to give what they know and what they can relate to instead of just cash - but then it's converted into cash so that it can be of most use in Africa. It is less expensive to transport the value of those commodities than it is to transport the commodities themselves, and the structure of the project helps people in Africa to grow their own food rather than giving them food.
So, that's one example. This small group has brought together private money, private goodwill, and the wherewithal to focus on some specific food security programs in several African countries. We put in, in the first instance, $500,000, which they have leveraged into much more than that.
You put in $500,000 in cash?
We gave that as grant support to this NGO to allow them to mobilize, and they did their outreach and brought forward the resources to feed into the program overseas. So that's one example, on a small scale, of a different kind of activity that links communities in the United States directly with programs in Africa.
If a corporation puts money into the mix, where does that money go? How is it used?
The story of Chevron Texaco is atypical but interesting. It represents an emerging corporate approach that diverges from more traditional philanthropy.
Over the last several years in Angola, Chevron Texaco has been doing community development activities in Cabinda, the area where they're operating. Basically these are charitable activities that show they're a nice firm and that they care about the communities where they're located. But the programs have not been national level with national impact. And sometimes they're a little hard to sustain, since they're one-off - schools, clinics, orphanage kinds of things. Chevron/Texaco has realized this, and they were asked by the Angolan government to scale up to a larger program. They decided they really wanted to, for a number of reasons. The company has long-range plans for expanding its business, and it faces some major issues in doing so, including the reality that increasing the capacity of the local labor force is more sustainable, over time, than bringing in and maintaining a lot of expatriates.
The question of how to make the company's operations and projects authentically indigenous raises several other questions. How do we obtain what we need, everything from vegetables to manpower? How do we source those things locally? What do we need to be concerned about in terms of the education system in order to develop the labor force and the local economy? How can we be part of a growth path that is going to be a positive one for Angola?
There are also vulnerabilities to be taken into account. Angola is coming out of a long civil war. So the environment is fragile in more ways than one. After studying the options, including what Angolans were saying about their needs, Chevron Texaco decided that their greatest contribution would be in small and medium enterprise development and education - things that directly develop the human resource base and jump-start the economy.
Then they came to us for help. It took us a while to hear what they were saying and to trust it - to understand that it was more than just corporate social responsibility activities in Cabinda, that they were really willing to make some sort of longer-term national-level commitment. It was also important to realize that their chairman had put someone senior in charge of the initiative. There was real money on the table, and they were serious about this. So we set out to work on our side to find out if there was a common interest.
After a lot relationship building, we signed a memorandum of understanding that described general economic development activities and gave us the go-ahead to get busy. The first activity that is taking place under the memorandum is agricultural revitalization. Prior to this, USAID was planning to fund emergency feeding through a consortium of five NGOs: CARE, Catholic Relief Services, World Vision, Africare and Save the Children. But with additional resources, we could expand the scope of activities to developmental relief, such as seed multiplication, agricultural tools, community development and a little micro-credit, a much more sustainable set of activities than just the emergency feeding.
ChevronTexaco was pleased with our plans for using their resources, so they actually wrote a check to USAID. The money was then put through a USAID process and granted to the NGOs. You should know that Catholic Relief decided not to take the portion that was from Chevron Texaco, and that's kind of an interesting story as well.
Was that for political reasons? I raise the question because oil companies in Africa are often viewed suspiciously as extractive industries that leave behind poverty and pollution for local communities. If I were an oil company executive, I'd want to do something to head off this perception. Is that a factor here? And is it your sense that groups that have been traditionally suspicious of oil companies generally, or of Chevron Texaco in particular? And have suspicions been allayed because of this sort of engagement?
A: It's a very dynamic situation, so I want you to keep your eye on this and continue to talk to me and to others. What you have with several NGOs - and Catholic Relief is one of them - although, of course, I'm not speaking for them officially - is that they did some internal soul-searching and took a decision not to accept the money for several reasons.
Since they do advocacy work as well as program implementation, they did not want to be in a position to have - or to be seen to have - a conflict of interest. They want to be able to continue to be a player in the kind of dialogue generated by the publish-what-you-pay movement [which advocates that multinational corporations make public their transactions with governments to discourage corruption]. They want to be able to engage across the table with extractive-sector representatives without being perceived by their peers, by oil companies, or by anybody else as being on a corporate payroll, or somehow tainted or not objective.
Their other concern was that this happened relatively quickly, and they weren't clear what management structure was going to evolve at the field level. Initially we had talked about the need to set up a governing committee that would include folks from USAID and Chevron Texaco to work on programming for a series of activities. The idea was to develop the programming through an ongoing assessment of needs and opportunities, so we set up a small committee in Luanda that would have representatives from both sides. The concern, and the communication at the beginning was not as clear as probably needed to have been, was that since Chevron Texaco was committing funds for projects, they might become involved in decisions of micro-resource allocation.
Catholic Relief didn't want a big company telling them what to do?
Exactly. My understanding is that they were concerned that they'd be told to this, to do that, do it here, there, and so on. They felt they needed to have more time to assess how it would work. Interestingly, they still wanted to be involved in the consortium at this coordinating level, so they decided to undertake fundraising to make up the difference that would have been provided by Chevron Texaco. I think they're going to bring about $700,000 to the table, so that they can participate in the consortium. But they want to be seen as neutral.
Is this kind of corporate/NGO partnership something that is unique to Angola, or is it happening in other places in Africa?
The Chevron Texaco example is the only one, so far, where we have actually taken money from a corporate partner. We are not about fundraising money from the private sector.
The more common occurrence is that we, along with a variety of others, decide to pool efforts to have a larger impact. We then co-plan and align our resources. The participating parties may put money into a specific NGO, or we may help create a new activity like a global fund and define how that's going to work. We'll have a letter of intent, so that we understand our roles, responsibilities, and separate functions and can work more efficiently.
You're not necessarily talking about an alliance between USAID and some corporation. In this respect, the Angola example is unusual.
It is unusual in that respect.
Typically, is it usually USAID and NGOs, or USAID and religious organizations?
In most cases, you'll see AID making a grant to an NGO who also has brought forward a corporate, foundation, or university partner. So, we are granting to some folks that have traditionally been our implementing partners, and we are also mobilizing new resources and partners.
We're not seeking companies as direct recipients of U.S. government money. What we're doing is trying to find entities, whether corporate or NGO, who might be interested, for example, in secondary education in Africa, or who focus on food security issues, so that maybe we can do something more by working together than we been able to do separately.
In the past, to work on something like building trade capacity, we would hire consultants and we would work with the recipient-country government on rules and sub-regulations, and we would coordinate with the World Bank and the IMF, and we would be involved in the public sector part of this. And we might have some activities that work in the indigenous sector, like a trade association, but we wouldn't necessarily be working directly with large, private companies.
Now what you find under the new free-trade regimes is that there are a whole variety of companies, global companies as well as local companies, that are very concerned with things like labor issues and sourcing issues and supply chain issues and who want to be part of a solution. They want not only to help their companies or their suppliers succeed, but also to help the countries be able to succeed in a global trading environment. These companies are stepping forward and trying to be a part of development activities.
Do you think that in the future it will typically be a corporation volunteering to be a part of the process, whether it's a manufacturing or extractive industry, as Chevron/Texaco did in Angola? Or will it be an NGO bringing a corporation to the table?
I think that you'll find more of the latter, but we hope for a few of the former. Not a lot of companies are feeling that they have much financial headroom right now.
On the other hand, some oil companies feel both very much at risk and also that they have some resources to try different approaches. The extractive sector folks are paying particular attention to the possibilities for more effective development work, because they can't leave. They sometimes have to be in very difficult places, they're very exposed, and they're going to be there for a very long time. They have to make it work. They don't have a choice of moving their labor somewhere else or closing their factory. They have to be there.
They have to have a level of community support that they never had to before?
Exactly. If they don't do it right, they lose their "social license to operate." So, for example, a company might spend millions in a country on community development activities, really trying to do the right thing. But there isn't a workable contract with the community, and the do lose their social license, it can cost them more millions in disruption to their business operations. There's something inherently unsustainable about putting money into what you perceive to be good activities but not having the kind of community engagement that keeps you able to operate, that keeps you safe, and keeps the community feeling as though they are benefiting from your presence.
So, everybody is trying to figure this out together. Before, companies were trying to figure it out by themselves; now they're coming forward and saying, "You development guys, can we do this better?" They're also going to NGOs and asking how they can do things differently.
They're joining convenings like the Voluntary Principles for Human Rights and Security, which brings together extractive sector companies, who have to hire and mobilize their own security forces in places like Nigeria, into the room with Amnesty International, Human Rights Watch, and other groups that are concerned about these issues. Together, they figured out what these voluntary principles should be. Companies are voluntarily working on that, and it gives civil society groups the opportunity to see companies operate, to see how things can be done differently, how they can be done better.
Is everyone at the table equal? A company presumably has resources that an NGO, even a large NGO like CARE, doesn't have. The question seems pertinent to decision making about projects and transparency. How does that work here?
In the particular instance I mentioned, everyone has a voice, a seat at the table. This is not so much an alliance-building forum as a trust-building forum, it's a way of engaging.
Nor is it a question of NGOs deciding how companies allocate their resources, their new product development, or where they go. It's a question of the companies being fully willing to disclose what they're doing, and whether they're willing to have a third party verify what they say they're doing and whether it's consistent with the agreed upon ways of acting in these environments. It also gives corporations the opportunity to seek counsel from their peers in a non-threatening way. Sometimes companies have a harder time calling each other up on the phone than coming to a meeting held by a third party.
Where there is a project, what is the typical model?
What my activities are about, and what the agency is trying to promote, is building partnerships that are operational. We bring forward resources, they bring forward resources, and we focus on specific things.
For example, in West Africa, we have an alliance of industry, government and other organizations that was built, initially, because of the concern - largely on the part of U.S. and European industry - about the concentration of cocoa sourcing from several West African countries. There was concern about how the crop is picked, how it's stored, how it's shipped, to insure that the best quality cocoa was coming forward. That was an agriculture activity with implications for the local producing communities.
Out of those issues arose the participation and growing involvement of cocoa buyers, of research groups in Africa and elsewhere, of the governments where the cocoa is being produced and of NGOs. Then, when the issue of child labor and child trafficking for cocoa harvesting came up, there was an existing platform to deal with it, because relationships of trust had been built among the parties.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
What they did was to quickly decide that they needed to better understand the issue, so they did a rigorous assessment of the child labor situation and took the results public. They decided they needed to focus on the income and poverty issues that were driving the movements of kids across borders.
Now, the group has created a foundation and blended resources to start programming and addressing the issues that cause kids to move from one place to another to work on cocoa. The goal of creating a sustainable, socially sensitive and profitable community of suppliers of high-quality cocoa is being addressed in multiple ways. That's a nice example of something operational.
How do you actually reach a decision about what to do? How are the voices of NGOs, corporations, community groups etc. weighted at the table? If you come to the table with a bucket full of money, doesn't that give you more say-so then a community participator?
I guess I'd have to say that it's an art that's still developing. This is what interesting development work is about right now; this is what I wake up excited about in the morning.
The focus on the process is as important as the end decision that you make. We know a lot about participation, about trying to give a voice to communities and the importance of structuring these decision-making bodies in a fair way, but there's a lot of art about how you help folks in a community figure out who speaks for them, how you help them come forward with a voice that can be heard, how you insure that a process - even if it is fair - is perceived to be fair, perceived to be participatory. How do you communicate out from the body that's making the decisions.
So, we're dealing with all the formal structure, and then there's the informal, of how do you relate to the press? How do you tell your stories? How do you realize that part of your job is telling your stories and not just doing your work?
We as development professionals, that's anti-cultural for us. We believe that we're there to do good work and others will intuitively understand that. Now we've realized that that's not necessarily the case.
So, in this West Africa example, there has evolved a very thoughtful structure of how this group is organized, who's represented on it, how they make their decisions, who pays for what. I think that you can continue to be concerned about whether money turns decisions, and I wouldn't tell you you're entirely wrong. But companies increasingly realize that check writing won't solve the problem, and that if they're not perceived to be a part of the solution, it's going to bring them down. They can't afford in these communities not to be perceived as doing the right thing.
In the case of the chocolate manufacturers, if you think about a group like Cadbury in the UK, they have a heavily value-based history and orientation, so even the suggestion that they could have slave labor working on their chocolate really hit them hard.
Similarly, Hershey's in the United States has a history of supporting orphans and the institutions that care for them - they're all about chocolate being a happy thing. For them, their product was at stake with the notion that they weren't doing something right about children in the supply chain. They, as others have, could say all they want that they don't own those farms, or that they can't trace their inputs, but it's not going to work. They realize they have to be part of what happens at the farm or factory level, even if it's not their farm or factory.
This process you describe - of international firms responding to social concerns - might work for companies that need certain growing conditions for a commodity, or even more for oil companies and mineral companies that have to operate in particular places. Diamonds also come to mind here, of course. Diamond traders and manufacturers had to become engaged with the issue of "conflict diamonds" fueling wars in places like Angola and Sierra Leone. But is the same true for other kinds of industries? Do manufacturing companies have more flexibility not to deal with these issues in the same way?
Well, not necessarily. Why did Nike and GAP not simply close their operations in Asia when they were painted with the sweatshop issue?
It's not that easy to move, to develop facilities, to find equally trained labor forces. Part of it is that these large companies need to maintain a somewhat diversified base of sourcing. Another part is that these issues will follow them wherever they go. So manufacturers, too, are realizing that they need to be involved in broader issues that have to do with workforce development and community activities and general economic growth and health, because they need stability, and because even if they go somewhere else, it will follow them.
The shift from corporate philanthropy to strategic investment is happening when a manufacturing company realizes that they don't want to be helpful about the HIV/Aids crisis just because it's a nice thing to do and it's such a sad issue. What it's also about it is having employees to make their products and having living consumers to buy them.
So, companies have reason to become more deeply engaged because they're concerned about profitability and the viability of the investments they've made. To use this particular example, our interest is: to the extent that they understand that and are concerned about that, we want to help them become more understanding or concerned. And then we want to assist in bringing the assets and resources that they have together with NGOs, and our own interests and concerns, to develop better HIV/AIDS programs with more reach and sustainability than has traditionally been the model.
This is new work for us and our partners - and hard work. Roles are shifting and conventional models are being revised. But it's an exciting time, too, to be working in development. I really feel honored to be part of it, and I'm proud of the alliances the GDA model has been able to forge.
