What does Todd Really Do?

An interesting article was just published about the Agency I work for, USAID and in particular my unit, the Global Development Alliances. Enjoy...


Has USAID Anything to Offer US Companies?By Dr. Michael Hopkins
The United States Agency for International Development (USAID) is the biggest development agency in the world in terms of foreign assistance spending. According to the Organisation for Economic Cooperation and Development (OECD), the largest donors in 2008, by volume, were the United States, Germany, the United Kingdom, France, and Japan.

In 2008, net official development assistance (ODA) by the United States was $26 billion, of which USAID managed around $14 billion. To deliver this package in 2008, the total number of USAID staff was approximately 8,000 individuals – of whom 2,500 were permanent staff members. There is, currently, an overall goal to double these staffing numbers by 2012.
USAID delivers foreign assistance programs in the areas of economic growth, agriculture, education, health, food security, and good democratic governance, mainly through its 88 missions in developing countries. A main private sector focus has been to increase the capacity of financial institutions to lend to small businesses – totaling $1.5 billion in FY 2008.

The relation between USAID and the private sector has always been strong, particularly for its work in developing markets. It normally has a key component to promote the private sector, particularly SMEs (small and medium-sized enterprises), and to improve infrastructure and reduce cumbersome rules that harm private sector development. This does not mean that it does not also address the public sector and the need for it to deliver public goods.

In 2001, USAID launched its program to enhance cooperation with the corporate sector in emerging markets, and U.S.-based corporations in particular. Known as the Global Development Alliance (GDA), this initiative has resulted in more than 900 alliances with 1,700 unique partners. Examples of its alliances include Chevron's Angola Partnership Initiative, Coca Cola's Community Watershed Partnerships Program, and Cisco's Network Academy Program and e-Quality programs.

One example of GDA's work is Telecenter-in-a-Box in rural Sri Lanka in Easy-Seva Centers. Through an alliance between USAID, Synergy Strategies Groups (SSG), QUALCOMM, Dialog Telekom, and Microsoft Corporation, the model is a franchise where local entrepreneurs receive a package with all the elements needed for a successful business. Included in the box are a business plan, business training, access to working capital financing, equipment leasing information, technical support, and marketing materials. The idea is to expand Wi-Fi services to areas not previously reached through small-scale entrepreneurs.

The Easy Seva centers provide customers with wireless Internet access, personal computer usage, and broadband telephone services such as Skype (owned by eBay). In addition, some centers provide online training opportunities and a place where residents can receive micro loans and other banking services. Partners see the project as an opportunity to provide wireless access in a sustainable way.

The initiative represents a new approach to delivering development assistance by partnering with the private sector in a mutually beneficial venture. "The project is not about charity, it's about value-added service," said Steve Schmida, president of SSG, and the developer of the Telecenter-in-a-Box concept. "We're bringing the Internet everywhere because it's the 'right' thing to do, but we're also presenting it as a business venture: there is a high demand for the services our partners are providing."

The Telecenter-in-a-Box concept has been so successful, Dialog Telekom, Sri Lanka's largest mobile phone operator, is now taking over the business model. The company plans to open 400 centers across Sri Lanka by the end of 2010.

All ventures in emerging markets are risky and USAID knows that its initiatives are not perfect. To help ensure effectiveness, it conducts independent evaluations of its work, including GDA. The latest GDA evaluation was done in 2008 by Development Alternatives International (DAI) and Business for Social Responsibility (BSR). It involved interviews with corporations working alongside it as well as beneficiaries. Some of the findings of the evaluation were revealing and refreshingly honest:

The amount of time that elapses from initial contact to operation was too long - but does reflect the increased accountability that the public sector faces compared with private
Lack of flexible budget of a public agency at the local level
Lack of a "one-stop shop" for corporations or local business beneficiaries to contact the right person either in Washington DC or at the country level
Poor monitoring and evaluation -- a tedious, but essential, process that must be built-in from the beginning of a project activity (but rarely is)
Lack of a centralized system to document all the on-going alliances
Despite these hiccups, business partners value USAID's matching funds, local knowledge, and assistance in scaling up of what are often seen as one-off local projects to wider applicability. Business partners felt that working with local USAID missions on alliances offered credibility and opened doors to collaborate with government officials and agencies in host countries.

In this author's own work with USAID, he was highly pleased with the competence and in-depth knowledge of local staff. When he worked for the Economist Intelligence Unit, the first point of call was always the technical staff of USAID (and US embassy). In conclusion, USAID has found that those alliances that focus on strategic business partnerships work better than purely philanthropic pursuits. Alliances with a compelling business case were found to have the most impact and sustainability. So, for US companies wishing to assist development efforts while ensuring that their efforts are linked to business opportunities, the USAID GDA program is a good start.

Does USAID offer anything to U.S. companies? Most certainly for their corporate social investments -- often part of their corporate social responsibility operations – and, more indirectly (e.g. improving infrastructure, reducing corruption, improving governance) for their direct investments in emerging markets. As USAID itself notes, "being business driven is not the problem, it's the point!"

BCLC will cover partnerships with USAID as well as other development practices during the Annual Conference on Global Corporate Citizenship, October 1-2 in Washington, DC. For more information visit BCLC's website.

~ Dr. Michael Hopkins is Senior Advisor, Global Corporate Citizenship