Since 2010, the U.S. Agency for International Development (USAID) has shifted its approach to development assistance, emphasizing public-private partnerships, channeling funds to local governments and organizations with knowledge and expertise to create sustainable change, and expanding its partner base to include philanthropies, academia, faith-based groups and diaspora, said Rajiv Shah, the agency’s administrator.

“If the old model was hiring a contractor to build a road, the new model is partnering with engines of American innovation … to help nations build innovation economies and democratic societies connected to our own,” Shah said at the March 20 launch of the USAID Forward Progress Report at the American Enterprise Institute, a Washington policy research group.

The report details region by region USAID’s performance, using measures that tracked agency efforts to rebuild its capacity and strengthen its impact, Shah said.

He said that today, private capital flows “vastly exceed” official aid and that companies in all sectors and entrepreneurs, “seek a foothold at the intersection of emerging markets and social good.”

USAID’s new results-oriented approach requires “tough choices about where our work will have the greatest impact,” Shah said, adding that those choices included cutting 22 program areas and pulling out of 38 countries since 2010.

At the same time, USAID has increased its support for local institutions by 50 percent. In 2012, USAID awarded nearly $750 million to local institutions in 73 countries, Shah said.
 

USAID projects help create the conditions necessary for people like her to make a living.
He said USAID also has greatly expanded its Development Credit Authority, using loan guarantees to unlock large sources of local capital for small businesses. In 2012, he said, the agency approved 38 credit guarantees to mobilize a record $700 million in commercial capital, or $500 million more than it did in 2011. This capital will empower more than 1 million entrepreneurs and 140,000 businesses, he added.

USAID’s new development approach incorporates best practices used by other agencies, Shad said. He pointed to Peace Corps, which engages young volunteers to implement development projects, and to the Overseas Private Investment Corporation, which mobilizes private capital to help solve development challenges. Another example is the Millennium Challenge Corporation, which conditions aid on a country’s willingness to govern justly, promote a free market economy and invest in its people.

Similarly, Shah said, development investments should be conditioned on countries’ efforts to fight corruption and collect more domestic revenue.

USAID has launched four Grand Challenges for Development grant competitions and a Development Innovation Ventures competition fund, designed to focus the world’s brightest minds on development’s toughest challenges. Young people working at USAID’s seven development innovation labs at leading U.S. and international universities are developing innovative solutions to global development challenges.

Shah urges patience when evaluating development. “You will always be able to find a dirt road that’s unpaved or a farmer who’s not using the latest technology. We know that the arc of progress is not measured by a single success or setback.”

“Development is not achieved in a day,” he said.