Amid high hopes for peace, USAID scales back Mindanao program

The Philippines’ second-largest bilateral donor, the U.S. Agency for International Development has pumped upward of $500 million in development aid to Mindanao over the past decade — a massive assistance effort that has been part and parcel of the U.S. government’s counterterrorism and stabilization strategy in the Philippines’ conflict-ridden southern region. Against the backdrop of the recent signing of a historic peace agreement between the Philippine government and Mindanao’s largest Muslim insurgency group, the Moro Islamic Liberation Front, USAID Philippines Mission Director Gloria Steele confirmed in a video interview with Devex that the U.S. aid agency has set in motion plans to aggressively scale back its Mindanao program. USAID will now direct only 10 percent of its Philippine budget to Mindanao — a drastic decline from the 60 percent share in previous years. The U.S. aid agency’s decision was first spelled out, but little noticed, in its 2012-2016 country development cooperation strategy for the Philippines. In explaining USAID’s decision to downsize its Mindanao program, Steele stressed that her mission needs more flexibility to align its resources with the Philippine government’s ambitious development agenda. The Aquino administration’s pro-growth and anti-corruption reforms are widely credited with reviving the Philippines’ development prospects. “By having 60 percent of all our resources in one place, and with the budget constraints that we have, there is no way that we will be able to be party to helping make that happen. You can’t make it happen just from Mindanao,” Steele said. USAID Philippines’ budget has grown substantially over the course of the Obama administration — from $80 million in 2008 to $110 million to 2014. The Philippines is now the single-biggest recipient of U.S. development aid in the Asia-Pacific region. Steele further emphasized that USAID’s Mindanao program has already “accomplished a lot” for the region’s development over the years — an assertion that isn’t without basis. A 2012 performance evaluation by U.S.-based consulting firm Social Impact of the recently concluded third phase of USAID’s Growth with Equity or GEM program in Mindanao found that it had achieved most of its targets. USAID’s largest and most prominent initiative in Mindanao to date, the $200 million GEM program (1995-2012) had supported infrastructure development, workforce preparation, business growth and governance improvement programming across all subregions of Mindanao. Going forward, USAID will now focus its much smaller Mindanao program on strengthening local governance and civic engagement in six conflict-affected areas of the region: Northern Basilan and Isabela City, Southern Basilan, Sulu, and the cities of Zamboanga, Marawi and Cotabato. “We didn’t set the 10 percent as a target but it turned out to be 10 percent of the resources that were needed to focus on the most difficult areas in the most needed sectors,” Steele elaborated. Five of the six focus areas — Zamboanga city being the lone exception — are expected to fall under the jurisdiction of the Bangsamoro, a new autonomous political entity that is being created under the terms of the peace agreement between the Philippine government and the MILF. In its performance evaluation of the GEM program, Social Impact had urged USAID to “go deep, rather than wide” in its Mindanao program. USAID first expanded the reach of its Mindanao program to cover all subregions just as the last major peace agreement with Moro insurgents was being hammered out in the mid-1990s. Strikingly, the U.S. aid agency seems keen to move in the opposite direction this time around. Is 10 percent enough? Across the Philippine development community, there is cautious optimism that the long-awaited peace agreement between the Philippine government and the MILF could pave the way for sustainable development progress in resource-rich Mindanao. At the same time, some contend that USAID may be scaling back its Mindanao program by far too much and far too soon. Held back by decades of strife, Mindanao is home to 10 of the Philippines’ 16 poorest provinces. Out of those 10, only three provinces (Sulu, Maguindanao, Lanao del Sur) overlap with USAID’s new focus areas. “I would actually say that reducing it to 10 percent — it’s not adequate,” said Amina Rasul-Bernardo, president of the Philippine Center for Islam and Democracy. “With the focus on Basilan, Sulu, Lanao and Maguindanao, certainly their impact will continue to be felt in the Bangsamoro areas. But outside, it’s unfortunate if they do pull out.” But there are signs that other major donors to the Philippines are eager to fill the gap left by USAID. In July, World Bank President Jim Yong Kim announced a new $119 million infrastructure funding facility for conflict-affected areas of Mindanao. Japan International Cooperation Agency President Akihiko Tanaka, meanwhile, has indicated that the Japanese aid agency — a long-standing supporter of the Mindanao peace process — is mulling “quick impact” development projects in the region. Ronald Mendoza, executive director of the Asian Institute of Management Policy Center in Manila, makes the case that the onus is on the Philippine government to also step up to the plate. “[If] we want [Mindanao] to rapidly catch up with the rest of the country as part of the peace consolidation then the Philippine government should not need a donor to allocate 60 percent of its resources,” Mendoza said. Despite being the poorest of the Philippines’ three island groups, Mindanao is slated for just over a fifth of the Aquino administration’s 2015 budget. Rasul predicts that the administration will increase its expenditure levels in Mindanao once the Philippine Congress ratifies the Bangsamoro Basic Law, a piece of legislation that would institutionalize the Philippine government’s peace agreement with the MILF. Interested in USAID operations in the Philippines? Here are more insights from our video interview with USAID Philippines Mission Director Gloria Steele, and check out our in-depth Philippine case study of USAID’s localization strategy. Check out more insights and analysis provided to hundreds of Executive Members worldwide, and subscribe to Money Matters to receive the latest contract award and shortlist announcements, and procurement and fundraising news.