New US foreign aid reform bill on the way

The U.S. Agency for International Development brought private sector investors together to improve Bugala’s infrastructure, helping connect the island with a new ferry to mainland Uganda. Photo by: Bobby Neptune / USAID / CC BY-NC-ND

A new foreign aid reform bill — the Economic Growth and Development Act — is likely to be introduced in the United States House of Representatives in March.

Authored by Republican Rep. Ted Yoho from Florida, the bill would require President Donald Trump to establish an interagency mechanism to help the private sector participate in U.S. development assistance programs.

A similar bill was proposed in the Senate last year by Georgia Republican Johnny Isakson and was referred to the Foreign Relations Committee. The previous administration’s President’s Global Development Council also recommended a coordinated mechanism for the private sector in an April 2014 report. It called for the creation of a U.S. development finance bank to serve as a “‘one-stop storefront’ that receives business inquiries through a single portal and responds to these opportunities quickly and in a coordinated fashion.”

Currently, development finance is spread across a variety of agencies, including the Overseas Private Investment Corporation, the Export-Import Bank, the Millennium Challenge Corporation, the U.S. Agency for International Development and the U.S. Trade and Development Agency, among others.

Yoho told Devex that the Economic Growth and Opportunity Act would encourage more private-sector driven approaches to development that require buy in from recipient countries. It will recommend that aid be directed in a way that strengthens civic institutions in countries and provides for public accountability, he said.

“This will revolutionize how we give our foreign aid out, and you’ll see more of it transfer or move over to models like OPIC or MCC,” he said. “We’re real excited about that.”

Yoho said he is proposing the bill because of what he believes is a lack of accountability in foreign aid, he told Devex. He would like to see U.S. development assistance guided by clear benchmarks, similar to those used by the Millennium Challenge Corporation to determine which countries are eligible for assistance.

Yoho is the chair of the Congressional Caucus for Effective Foreign Assistance and plans to use that position to pitch the bill to other House members. He said he is confident it will gain bipartisan support.

Stay tuned to Devex for more news and analysis of what the Trump administration means for global development. Read more coverage here and subscribe to The Development Newswire.

About the author

  • Saldiner adva

    Adva Saldinger

    Adva Saldinger is an Associate Editor at Devex, where she covers the intersection of business and international development, as well as U.S. foreign aid policy. From partnerships to trade and social entrepreneurship to impact investing, Adva explores the role the private sector and private capital play in development. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.