US aid agency boosts direct funding to local institutions by 50 percent

The U.S. Agency for International Development managed to cut out the middle man in $745 million of its projects last year – a 50 percent increase from 2010, administrator Rajiv Shah announced Wednesday.

Shah made the comments while unveiling a new report on USAID Forward, an effort launched three years ago to change the agency's approach to development work by emphasizing more collaboration with the private sector, nongovernmental organizations and local governments. The agency is about halfway toward its five-year goal of having 30 percent of its funding support local institutions, Shah said. 

“If the old model was hiring a contractor to build a road, the new model is partnering with engines of American innovation — corporations, foundations, NGOs, and faith-based communities — to help nations build innovation economies and democratic societies connected to our own,” Shah said. 

“That’s why, three years ago, President Obama and Secretary Clinton called for elevating development alongside defense and diplomacy as full partners in our foreign policy. Today, that call that is being carried forward with new passion and leadership by Secretary Kerry. In his first major address as Secretary of State, he put forth a clear and businesslike argument for development as an investment in a stronger, safer America.”

“Far from being irresponsible with American taxpayer funds, this approach creates incentives for our partners to strengthen their own institutions and replace aid with self-sufficiency,” he said. “We also do not assume good policies naturally follow development investment.

“Aid should be conditional on real commitments to reform — including fighting corruption, making market-oriented policies, and collecting more domestic revenue. From the New Alliance for Food Security and Nutrition to the Child Survival Call to Action … from Afghanistan to Egypt, we are demanding mutual accountability.”