House proposal: Bigger private sector voice in US aid

Republican Rep. Steve Chabot of Ohio has penned a proposal calling on the U.S. government to create an interagency mechanism that will coordinate overseas development programs with private investment activities. Photo by: House Committee on Foreign Affairs / CC BY-NC

Pursuing partnerships with the private sector is now a staple activity of many donor agencies. Amid shrinking foreign aid budgets, joint efforts with companies can make development dollars go further.

The U.S. Agency for International Development is no exception. Since 2001, its Global Development Alliance has led to nearly 1,000 public-private partnerships involving more than 1,700 distinct partners and leveraging at least $9 billion in combined public and private resources.

Some U.S. lawmakers believe USAID and other government agencies can do even more to involve the private sector in development programs. In fact, they want U.S. private sector involvement to be integrated in planning the country’s development programs.

Republican Rep. Steve Chabot of Ohio has penned a proposal calling on the U.S. government to create an interagency mechanism that will coordinate overseas development programs with private investment activities. The bill was referred to the House Foreign Affairs Committee July 24.

If passed, the proposal titled “Economic Growth and Development Act” will establish “a single point of contact” for U.S. private sector entities seeking partnership opportunities with the country’s development agencies: Department of State, USAID, Millennium Challenge Corp., Overseas Private Investment Corp., Trade and Development Agency, Inter-American Foundation and African Development Foundation.

The proposal requires these agencies to consult with the private sector when crafting country, sector and global development strategies. The agencies are also required to conduct analyses focusing on growth and investment constraints in developing countries together with U.S. and beneficiary country private sector representatives. The findings of these analyses will be incorporated in strategies.

The bill pleases members of the U.S. development community.

“Both the Obama Administration and the George W. Bush Administration have made positive changes in U.S. global development policy to leverage the private sector’s expertise, resources, and reach, but more needs to be done to fully realize the promise of a closer and better coordinated partnership,” David Beckmann, George Ingram and Jim Kolbe, co-chairmen of the Modernizing Foreign Assistance Networksaid in an Aug. 2 statement. “Congressman Chabot’s bill drives significant progress by calling for the establishment of a centralized point of contact for companies that are working on development issues, while also mandating more consistent engagement on the ground in emerging markets. These steps would remedy problems of coordination and communication that have existed for decades.”

But not everyone may approve, especially advocates for a rights-based and humanitarian approach to aid who want a truly altruistic focus.

The biggest question about this proposal is not whether it has bipartisan support (it has, with co-sponsors belonging to Democratic and Republican parties) or whether the interagency mechanism will have teeth (it might if it will truly involve cross-agency funding), but rather if it will even get passed. The answer is unlikely, given that it’s an election year and there’s no time in the House calendar to bring this bill to a vote independently. Its only chance is to get included in some omnibus bill and only if the House leadership cares enough about it or it’s regarded as a money-saver.

Why then would Chabot and company propose this now, given the time constraints? Bills are regarded as legislators’ vanity projects, “accomplishments” at the House that they can promote to get votes at home. Except for two, all the bill’s sponsors are members of the House Foreign Affairs Committee.

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About the author

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    Eliza Villarino

    Eliza Villarino currently manages one of today’s leading publications on humanitarian aid, global health and international development, the weekly GDB. At Devex, she has helped grow a global newsroom, with talented journalists from major development hubs such as Washington, D.C, London and Brussels. She regularly writes about innovations in global development.