USAID business forecast: Q2 2018

CANBERRA — The second quarter business forecast conference call and question and answer session, released by the United States Agency for International Development on March 29, provides new insight into how the organization is responding to budget insecurity as well as engaging the private sector to support the delivery of the aid program. With the new quarter release, Devex presents insight into how business forecasts have changed since 2015 through our analysis and interactive visualization. While most opportunities are for programs that extend over three to five years, the data enables us to identify peaks and declines in business opportunities by region or sector as well as which areas of funding are performing above or below their average for the past 14 quarters. <iframe width="100%" height="166" scrolling="no" frameborder="no" allow="autoplay" src="https://w.soundcloud.com/player/?url=https%3A//api.soundcloud.com/tracks/425348118&color=%23dcac5c&auto_play=false&hide_related=false&show_comments=true&show_user=true&show_reposts=false&show_teaser=true"></iframe> Comparing quarters The first quarter of this year saw a 12 percent increase in forecast opportunity values compared to the first quarter of 2017 — which was a 20 percent increase from 2016. First quarter values have steadily increased from 2015, but this rate of growth has not been reflected in second quarter values. Quarter two of 2017 saw a massive increase of 61 percent in the maximum value of forecast opportunities, rising from $10.7 billion to $17.2 billion. Quarter two of 2018 did not keep up with the rate of growth and declined by 36 percent to $10.9 billion in opportunities. The value was more in line with quarter two 2015 and 2016 figures, and if trends from these years are repeated, we can expect a boost in business opportunities in quarter three. According to Mark Walther, acting director for the Office of Acquisition and Assistance, USAID has a similar number of transactions for this year compared to the same point last year but “about $1 billion less at this point in the fiscal year on obligations.” “Now that there has been a budget passed for FY [fiscal year] 2018, I anticipate that the obligation amounts associated with new and ongoing transactions will be picking up,” Walther said in the conference call. Regions on the rise Since 2015, opportunities in East Asia and the Pacific have averaged 20 opportunities, worth a maximum of $403 million. 2017 saw this region take a dramatic decline in the opportunities available as well as the funding on offer, reaching a low in quarter three with 11 opportunities valued at up to $188 million. But the past two quarters have seen a revival for East Asia and the Pacific, with the number of opportunities and values exceeding the average. For this quarter, 23 opportunities are available with a value of up to $472 million. The Philippines accounts for $208 million — or 44 percent — of the value of projects in this region. This is a large increase on the quarterly average for the Philippines since 2015, bringing $80 million in forecast opportunities. An education project will offer up to $50 million for business partners to support a new generation of education activities from 2018 to 2022, in line with the education priorities of the government of the Philippines. An additional business opportunity worth up to $50 million will support innovation and strengthening of service platforms supporting family planning and maternal child health. The opportunity is expected to be available to tender for later this year, but will be preceded by an additional family planning and maternal child health program specifically for the Autonomous Region in Muslim Mindanao and worth up to $25 million. While the Philippines is seeing an increase in business opportunities in East Asia and the Pacific, Cambodia is experiencing a decline. Over the past year, opportunities available and values have steadily declined. And in this quarter, no opportunities have been forecast for Cambodia. A range of global health initiatives are seeing southern Africa have a boost in business opportunities after a downward trend in 2017. A $750 million initiative supporting treatment of HIV, tuberculosis, and sexually transmitted infections is the largest opportunity in the region, helping to list South Africa to $1.1 billion on forecast business opportunities this quarter, well above its average of $552 million. South Africa accounts for 60 percent of the $1.9 billion in opportunities forecast for the southern African region this quarter. Madagascar and Zimbabwe are the only other countries in southern Africa operating above average. The value of opportunities have been rising in Madagascar over the past three quarters, reaching a peak of $179 million this quarter — including a $100 million essential health care services program for the island nation. Business opportunities in Zimbabwe have been increasing over the past two quarters, with three opportunities providing up to $129 million currently forecast — including a $100 million HIV prevention initiative. For other countries in the region, opportunities have been declining, while Angola has not had an opportunity listed since 2016. Regions in decline North Africa and the Middle East is a region currently seeing declining opportunities. After peaking in 2016 with 28 opportunities and up to $1.8 billion, this quarter sees 16 opportunities worth up to $563 million. This is well below the average value of opportunities that are up to $828 million. Eight projects supporting initiatives in the West Bank and Gaza Strip account for 44 percent of forecast opportunities in this region, but their $249 million value is a steep decline from quarter three of 2016 where forecast opportunities exceeded $1 billion — led by the Building Foundations projects. But this quarter still sees a range of options for partners supporting economic growth and trade, education, water and sanitation, as well as conflict management. After three quarters of forecast opportunities exceeding the average, Egypt has seen a sharp decline in opportunities this quarter, with just two opportunities worth up to $100 million including the Economic Security, Regional Business, and Trade Development project. This is half the $200 million in opportunities available in quarter four of 2017, but an increase on the $85 million on offer at the same time last year. Jordan, Morocco, and Tunisia, the other countries in the region with opportunities this quarter, are all seeing opportunities well below their average and in decline. Sudan has not had a dedicated opportunity for the region since quarter two or 2017, while Iraq has been missing since 2016. Opportunities in Latin America and the Caribbean have risen slightly up to $590 million from lows in the fourth quarter of 2017. The region has seen a sharp decline in business opportunities since 2016 — a period that saw an increase of funding to support economic growth and institution building in Colombia, El Salvador, Guatemala, Haiti, and Honduras. Honduras has experienced the sharpest decline, going from $350 million in opportunities in 2016 to just $10 million forecast for this quarter for an antiviolence initiative. Colombia has similarly declined from $375 million in 2016 to $25 million for monitoring and evaluation this quarter — but this is an improvement on the $4 million in opportunities available during quarter three last year. Barbados, Brazil, Dominican Republic, Jamaica, Mexico, Nicaragua, and Paraguay have been missing from forecast opportunities for a number of quarters. Despite the declines, El Salvador, Guatemala, and Peru are currently seeing business opportunities exceeding the average for their country. Projects include a citizen security initiative in El Salvador, maternal and child health in Guatemala, and a knowledge and learning platform for the Amazon in Peru. Analyzing trends by sector Of the 11 sectors business forecast data is grouped into, only four have opportunities this quarter exceeding their sector average since 2015 — gender equality and women’s empowerment, global health, management, and the U.S. Global Development Lab. Gender equality and women’s empowerment averages up to $61 million in opportunities each quarter. A single project in Afghanistan, a scholarship endowment project, has seen gender funding reach $100 million this quarter — the highest since the fourth quarter of 2015 where five projects were forecast to provide up to $136 million in business opportunities in the sector. Global health is always a sector with high value projects. Since 2015, the quarterly forecast average of opportunities has been $4.3 billion. The past two quarters have seen opportunities in excess if this average with $5.5 billion on offer this quarter. The management sector has experienced an upturn this quarter — it had been in steady decline after peaking in the same quarter last year. A total of 17 projects are forecasted to bring up to $347 million in opportunities this quarter, including the USAID/Uganda Learning Activity worth up to $100 million. The LASER program, a global initiative listed from the U.S. Global Development Lab, has helped their innovative work increase as a sector priority this quarter. While the U.S. Global Development Lab averages $32 million, this $100 million initiative has seen opportunities this quarter exceed $100 million — an increase of more than 200 percent on their average. But two sectors this quarter have seen a sudden drop following peaks in opportunities and available funding over recent quarters. Agriculture and food security grew rapidly in quarter two of 2017 from a sector worth $488 million to one worth $2.6 billion, boosted by the $1.5 billion Food Systems IDIQ program. This program disappeared from the forecast this quarter after being cancelled, bringing the sector down to a current worth of $642 million with projects including the Agricultural Competitiveness and West Africa Trade Hub and Resilience in the Sahel Enhanced II, each worth up to $100 million. Working in crises and conflict peaked last quarter thanks to the $2.5 billion Support Which Implements Fast Transitions (SWIFT) 5 program, a global initiative to enhance stability, peace, and democracy. The appearance of the program over three quarters boosted the average for the working in crises and conflicts sector to more than $1 billion — and its disappearance this quarter has seen the sector to drop to pre-SWIFT levels with forecast delivering $403 million in business opportunities. The $300 million Syria Humanitarian Assistance Consortium tops opportunities in the sector this quarter. Business opportunities associated with economic trade and growth have reached their lowest point since 2015 — $836 million. While this is still a large sector for opportunities, it is a sector that was nearing $3 billion in business opportunities in 2016 and 2017. A sector in recovery may be education. This quarter, forecast opportunities in education exactly match the quarterly average since 2015 — $642.3 million. Opportunities in education have slowly been in decline since 2016 after passing $1 billion. But the past two quarters have seen education as a sector growing once again as a business opportunity. USAID’s Read to Learn Activity in Bangladesh is the leading opportunity for the sector, worth up to $100 million for implementing partners, with other programs including Let’s Read Zambia and Positive Youth Engagement for West Bank and Gaza Strip. Piloting a small business program in USAID missions The focus on expanding partnerships includes engaging small businesses. And in 2018, USAID is introducing a new initiative to support greater engagement of small businesses within mission. Called the Mission Small Business Goaling Program, it will support 16 missions across the world — Bangladesh, Bosnia and Herzegovina, Ghana, Guatemala, Honduras, Jordan, Liberia, Morocco, Pakistan, Peru, Philippines, Tanzania, Uganda, Ukraine, Vietnam, and Zambia. “We plan to expand the program to another 15 next year, and by FY 2020 we plan to have it with all the missions,” Mauricio Vera, director of USAID’s Office of Small and Disadvantaged Business Utilization, explained in the conference call. “That is about 60 of them around the world that have acquisition obligations over $5 million. We’re confident that this program will serve as an opportunity to showcase the expertise of entrepreneurs, and enhance the capacity of our country partners as well.” Opportunities will begin this month, starting with a monitoring and evaluation project from the Jordan mission which will be a total small business set-aside, which Vera said USAID are “very excited about”. Guatemala’s Policy Education and Youth Project and Morocco’s Performance Evaluation of the Reading for Success Project are additional opportunities expected to listed as total small business set-asides. Insights into USAID operations The conference call and question and answer session for this quarter provide valuable insights into how USAID is progressing with its agenda to provide greater transparency into business opportunities. Cancelled business opportunities are usually listed for a quarter before being removed from the forecast. But this quarter has seen opportunities disappear from the forecast without notice. “Our guidance to A&A [acquisition and assistance] staff is to keep cancelled opportunities on the business forecast for at least the following quarter before removing them,” USAID said. “We will continue to reinforce this message.” Business partners also expressed frustration with opportunities listed as new or with the same changes over multiple quarters and that opportunities were only listed close to the quarter call rather than as soon as information is available for release, and changed to be small business set asides upon release. USAID explained that information associated with opportunities are manually incorporated and updated by staff — and educating them on the new process is an ongoing process. And continuing to support the needs of business partners will be a growing priority moving forward as USAID looks to expand the diversity of partners that help them to deliver their aid program. By September 2019, USAID aims to have increased their use of collaborative partnering methods and co-creation within new awards and will be comparing results to FY 2018. “We are often challenged in trying to attract new development partners to our work,” Randy Tift, senior adviser for the Office of Acquisition and Assistance, explained during the conference call. “These new partners can play either a critical niche role in multisector or large-scale programs, or play a lead role in designing and implementing programs — either US and international partners or local partners. These potential development partners can’t break through, often, because USAID procurement processes are too challenging.” “We want to address these issues by diversifying the partnering approaches we are using, including solicitation methods that rely on collaboration and co-creation, which will also have the effect of diversifying our partner base to a broader range of organizations. We also hope to prioritize partner-driven innovative solutions, leverage private development assistance, and move more countries toward sustainable transitions and ultimately greater self-reliance in meeting its own development challenges. “By doing this, we will better focus on strengthening local organizations’ capacity and commitment so that they are leading in addressing the development challenges of their country.” For more insights into USAID’s forecast business opportunities, engage with the data through our interactive visualization.