Opinion: 4 pragmatic steps to jump-start foreign assistance reform

President Donald Trump and his Secretary of State Rex Tillerson have embarked upon a time-honored tradition for new administrations: A government efficiency review. In the case of the Department of State and U.S. Agency for International Development, Tillerson has brought in outside consultants to conduct wide-ranging interviews with staff, and even produced “word clouds” to help suss out foreign affairs priorities.

The White House, State and USAID reviews have rightly emphasized addressing duplication and inefficiency. But rather than focusing on a State/USAID merger, as has been widely rumored, the administration should look at something that leads to some of the biggest duplications, triplications, and even quadruplications of capacity that exists in the U.S. government: The severe fragmentation of U.S. development assistance.

Writing as former senior officials in two of the government’s largest development agencies — USAID and the Millennium Challenge Corporation — we have seen this fragmentation first-hand. The biggest efficiency gap in the U.S. foreign affairs agencies is not the division between State and USAID — it is the diffusion of U.S. development aid’s goals and roles across twenty-some federal agencies and offices. State and USAID should remain separate and distinct — they have different missions, represent distinct professional disciplines and require different organizational cultures. But the development architecture is long overdue for realignment and consolidation. We have just released a paper laying out a path for doing this — starting with a set of immediately actionable reforms, and moving from there toward a more fundamental reorganization plan.

That is not to say that this will be easy, or that existing efforts are useless. In truth, U.S. development and humanitarian assistance already does a great deal of good around the world at a comparatively low cost, saving and improving millions of lives for cents on the budget dollar. And it contributes to our strategic and diplomatic goals by stabilizing fragile countries, addressing crises and cultivating trading partners.

But it is indisputable that the U.S. global development architecture is now outdated and overly complex and not delivering the strategic value that it could. And in today’s budget environment — where some degree of aid cuts appears likely — reforms that increase effectiveness and efficiency take on increased urgency.

The administration and Congress, along with other partners, should better equip the U.S. to address the big development priorities that will define the next decade and beyond: State fragility, inclusive growth, global health, and humanitarian assistance. In the long run, this will require major changes to the U.S. development apparatus. But a bold reorganization of U.S. development assistance will take time to design and execute. To be sustainable, it will need to be a collaborative process between Congress and the administration. Whether or not that gets off the ground, there are a number of pragmatic steps that could be taken more immediately to jump start reform.

1. Adapt foreign assistance to the realities of operating in fragile states.

The U.S. must adapt as extreme poverty becomes increasingly concentrated in fragile and poorly governed states over the coming decade. By 2030, the share of global poor living in fragile and conflict-affected situations is projected to reach 46 percent. The U.S. government must begin to give its foreign assistance efforts the nimbleness to address rapidly changing situations in fragile states. This means streamlining the procurement process for aid delivery in fragile states by responsibly expanding the use of USAID competition waivers, so that well-targeted development assistance can get there faster. It means allowing funds in the pipeline to be used more flexibly in post-disaster and transitional settings. And it means developing a new USAID mechanism for surging staff toward emergent crises and opportunities. 

2. Focus on inclusive growth as a development objective.

Fostering more inclusive growth is a core development challenge for this decade and beyond, because growth in developing countries does not necessarily help their poorest citizens. Aid is not always the main tool in doing this. In relatively stable developing countries, development engagement should move toward catalyzing private finance and a country’s own domestic resources, rather than financing needs directly. A major step in this direction would be to expand the Overseas Private Investment Corporation into a full-fledged development finance institution, with a toolkit that is better suited to helping developing countries access private investment funds.

We should also embrace a longer-term role for the MCC, which works explicitly to foster economic growth. MCC’s default setting is to complete its engagement on a five-year timeline, which has repeatedly proven too short relative to the development trajectories of well-governed states. Eventual major reforms should expand MCC’s role over time so it has a more prominent leadership and coordinating role in promoting inclusive growth in better governed nations. 

3. Reinforce — and grow — existing global health leadership.

Third, the U.S. should reinforce its recognized leadership in global health as the world’s largest single investor. Programs such as the President's Emergency Plan for AIDS Relief have achieved historic results, attracted bipartisan support, and shaped the global health landscape. But more can be done to align PEPFAR funding streams with U.S. government agencies’ core capacities in conjunction with greater rigor and accountability for results.

In its early years, PEPFAR scaled up rapidly to respond to the urgent HIV/AIDS crisis, and as programming scaled up, an inconsistent division of labor emerged between the main implementing agencies, Centers for Disease Control and USAID. The current division of labor is out of step with the two agencies’ distinct comparative advantages. The government should take a hard look at the roles and responsibilities now that the epidemic is moving to the stage of management and control versus emergency response — and recognize that more of the management, coordination, and day-to-day work should be led by the host countries themselves. 

4. Streamline existing humanitarian aid efforts.

As the world contends with the highest level of displacement and humanitarian need in decades, the U.S. should streamline and enhance its humanitarian aid efforts. The U.S. funds roughly one quarter of the world’s humanitarian relief every year, providing the financial backbone of global crisis response. In 2015, USAID provided lifesaving support to 109 million victims of humanitarian emergencies around the world. But there is room for improvement.

USAID has long had two parallel offices responsible for humanitarian assistance: The Office of U.S. Foreign Disaster Assistance and the Office of Food for Peace. In today’s world, food versus non-food is no longer a meaningful organizing principle for relief aid. To be fully effective, food aid programming depends on integrated water, nutrition, livelihoods, and health programming — and vice versa. These two offices should be merged and elevated. The U.S. should also complete ongoing reforms to how food aid works. The current programs were originally conceived of decades ago, as a way to do some good in the world while enabling the U.S. Department of Agriculture to unload excess U.S. food commodities. But these programs are now principally about fighting hunger and famine, not supporting U.S. agriculture, and should be updated to reflect that reality. An important step would be to move remaining program functions from USDA fully over to USAID, to reduce duplicative bureaucracy and enable U.S. tax dollars to stretch further 

By implementing changes that enable greater value for money, the U.S. will be able to better maximize its impact within a flat or declining resource environment. This is by no means an exhaustive list of the reforms that could be undertaken, but these would be important first steps toward an aid system that is ready to confront present and future challenges.

Join the Devex community and access more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.