It’s the second time this year that we’ve analyzed USAID local spending, and it’s the second time we’ve found it going in the wrong direction. Take a look at our breakdown of the agency’s $5.5 billion contract budget.
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Shrinking contracting
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We’ve spoken many times in this newsletter about the target laid down by USAID Administrator Samantha Power, who says she wants her organization to spend 25% of its funds with local organizations.
Data has repeatedly shown that this is a tall order. Earlier this year, my colleague Miguel Antonio Tamonan tracked a significant fall in grant spending with local organizations in the fiscal year 2021 — preceding Power's time in office. Now Miguel has analyzed data for contract spending and found the same trend. Total spending on locally led organizations fell from $146.5 million to just $95 million in the fiscal year 2021.
This means that while USAID contract spending as a whole fell by 9% in 2021, local spending fell by 35%.
The data also shows that contracting is very centralized indeed. Companies in other high-income countries such as the United Kingdom and in the EU are struggling to participate. Of total contract spending, almost $5.4 billion out of $5.5 billion goes to American bidders.
USAID: How funding for local contractors fell in 2021 (Pro)
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Funding activity
ADB. $5M to help boost electricity, water, and wastewater in Palau.
DFC. $83M for the development, expansion, and operation of data centers in South Africa.
EU. $218M (€218M) to support agricultural producers in Bulgaria.
USAID. $29.5M to protect vulnerable populations from food insecurity in Lebanon.
Doing business with the bank
Coming soon: Devex is developing an in-depth guide on how to do business with the World Bank, as part of our work to make sure we offer as much value as possible to new and existing Funding Platform users. We’ll be developing guides to other funders as we bolster our work on funding data in the coming months.
As part of our research for the guide, I spoke with sources close to the World Bank about best practices in procurement. Read on for this sneak peek into their advice.
Top tips: How to win contracts with the World Bank (Pro)
Letting the grants grow
Speaking of our Funding Platform, I have been using it since the start of the war in Ukraine to record money flowing to the country. In the last six weeks, grant funding has more than doubled to $17.6 billion, largely down to a single $4.5 billion grant from the U.S. Loan funding has also grown.
These figures come with a number of caveats, not least that there is no consistent format for recording funding, and most states have a penchant for announcing new money several times. Grant funding flowing to the country has also changed. Rather than being primarily humanitarian, it is now going toward maintaining existing services.
Funding tracker: Who’s sending aid to Ukraine
Food first
Oxfam GB has had to make radical changes to its strategy to respond to this year’s food crisis in Africa, particularly in the Horn. Parvin Ngala, director in the region, talks about how the lack of food is having knock-on effects on other programs, such as those tackling violence and women’s empowerment.
Q&A: Oxfam pivots to tackle the food crisis in Africa (Pro)
+ This Q&A is the first in a Devex Pro series on how organizations are responding to the global food crisis. Start your 15-day free trial of Devex Pro to read this piece and access essential analysis, data-driven funding insights, and the world’s largest global development job board.
A growing tribe
We’ve covered a number of mergers and acquisitions among development contractors this year, but our latest tale has a couple of wrinkles that make it interesting.
Featured Opportunity: Flows into Jordan
EBRD and Jordan’s Microfund for Women have signed a $2 million deal to lend money to micro-, small-, and medium-sized enterprises in Jordan, in order to support the green economy.
The Green Economy Financing Facility is mostly funded by the EU Initiative for Financial Inclusion, but it includes $500,000 of funding from the Green Climate Fund. An additional €225,000 ($224,000) will be available as grants to adopt climate-friendly technology and services from the EU Neighbourhood Investment Platform.
It involves WWC, a consultancy which is better known for defense work but does around $20 million of business with USAID.
The company has been bought out by Command Holdings, which is owned by the Mashantucket Pequots, a federally recognized Native American tribe in southeastern Connecticut and very much a new player in the global development space.
The U.S. tribal nations have not historically been known for investing in government contracting, but Command’s case for doing so is clear. Its previous investments had been in hospitality and gaming, which were potentially lucrative but have uncertain income streams, and it sees federal contracts as a reliable, steady source of income, which relatively few companies can win.
If other investors view government business the same way, this has the potential to open up new sources of capital for the relatively small number of development service providers.
New player: A tribal nation moves into development with WWC Global acquisition (Pro)
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About the author
David Ainsworth@daveainsworth4
David Ainsworth is business editor at Devex, where he writes about finance and funding issues for development institutions. He was previously a senior writer and editor for magazines specializing in nonprofits in the U.K. and worked as a policy and communications specialist in the nonprofit sector for a number of years. His team specializes in understanding reports and data and what it teaches us about how development functions.
