USAID's local spending: 3 key country-level trends

As the U.S. Agency for International Development pivots to the mantra of “100 percent sustainability,” early this week, a Devex feature analysis found that the world’s biggest bilateral donor agency seems off track on its target to channel 30 percent of mission program funding to local organizations by fiscal 2015. That target, which agency officials now refer to as “aspirational,” was a key goal post of then-USAID Administrator Rajiv Shah’s USAID Forward reform drive. USAID’s just released data reveals that the agency directed 16.9 percent of mission program funding to local organizations in fiscal 2014, well below its 30 percent local spending target the following year. USAID’s local spending share in fiscal 2014 fell slightly from 17.9 percent in fiscal 2013 — the first time that that the agency has recorded a drop in its local spending share since USAID began reporting that figure. While the latest data suggests that USAID’s 30 percent local spending target may be out of reach at least in fiscal 2015, deeper analysis of the country-level data reveals significant variation in how the agency’s missions worldwide performed on the 30 percent target. Here are three key trends we uncovered over the course of our analysis. Strategic partners exceed 30 percent target, with one notable exception As Devex first reported last year, U.S. foreign policy considerations seem to be as much of a driver of where USAID goes local the furthest as host country readiness. USAID’s fiscal 2014 data suggests that still holds true. Afghanistan, Pakistan, Jordan — three of Washington’s closest strategic allies and biggest recipients of U.S. foreign aid — were among only 12 USAID missions to exceed the 30 percent target that year. Fiscal 2014 was the first year USAID Jordan met this goal post since USAID began reporting local spending figures. Between fiscal 2013 and fiscal 2014, USAID’s local spending share in Jordan grew tenfold from 7.3 percent to 73.6 percent. USAID’s mission in Egypt, another major U.S. strategic partner, on the other hand, did not fare well against the 30 percent target in fiscal 2014. Amid uncertainty in the U.S.-Egypt relationship at the time, USAID’s Egypt mission saw its local spending share plummet to 5.7 percent, down from 65.5 percent in fiscal 2013. Recipients of direct U.S. aid even prior to USAID Forward, Afghanistan, Pakistan, Jordan and Egypt have historically received the bulk of their U.S. local spending in the form of government-to-government assistance. Strikingly, USAID’s missions in the four countries are only among 10 around the world to channel the bulk of their local spending as government-to-government assistance in fiscal 2014; 47 of 70 USAID missions reporting local spending in fiscal 2014 channeled this funding principally through nonprofit organizations. Higher-income countries lead the pack, far ahead of fragile states At the same time, USAID missions in higher-income countries, which are arguably more capable of sustaining development outcomes without the presence of American implementers, generally performed much better on the 30 percent local spending target than missions in lower-income countries and fragile states. Among the 12 USAID missions to exceed the 30 percent target in fiscal 2014, all but one — Afghanistan — are in either middle or high-income countries. This roster also includes major U.S. aid recipients South Africa, Georgia, El Salvador and India. South Africa was the only USAID mission in sub-Saharan Africa to meet the 30 percent target in fiscal 2014. For the second year running, Paraguay claimed the highest local spending share among USAID partner countries across the globe — 91.1 percent in fiscal 2014. USAID’s country development cooperation strategy for Paraguay suggests local partner utilization was a high-level priority for the agency’s mission there: “Sufficient local capacity currently exists in Paraguay and continued development of local partners will be an important focus of sustainability.” Meanwhile, USAID missions in some of the poorest and most fragile states, as might be expected, recorded local spending figures well below the global figure of 16.9 percent. USAID missions in Guinea, South Sudan, Iraq, Myanmar and Yemen all recorded a local spending figure of below 1 percent in fiscal 2014. USAID missions in Ethiopia, East Timor, Sudan, Zimbabwe, Malawi, the Democratic Republic of the Congo and Mali recorded local spending figures of below 5 percent. USAID’s missions in Haiti and Liberia, however were two bright spots among fragile states. In fiscal 2014, USAID Haiti’s local spending share rose more than fivefold to 11.1 percent. The same figure for USAID Liberia meanwhile hit 17.2 percent in fiscal 2014, up from 13.7 percent the year before. A mixed bag for country-level targets While USAID committed to the 30 percent local spending goal as a global aggregate target, a previous Devex analysis also found that a handful of missions — South Africa, the Philippines, Senegal and Georgia — have set their own country-level local spending targets for fiscal 2015. How do these four major USAID missions stack up against their country-level local spending targets? The answer, thus far, is a mixed bag. Rather impressively, USAID South Africa achieved its highly ambitious 65 percent local spending target in fiscal 2014, one year ahead of the deadline. USAID South Africa has recorded steady progress in its local spending share since fiscal 2012, a trend which may also be explained by the U.S. President’s Emergency for AIDS Relief’s aggressive transition to local ownership in that country. Meanwhile, USAID Georgia’s local spending share topped 41.8 percent in fiscal 2014, which seems to already exceed the mission’s fiscal 2015 local spending targets — 10 percent through local implementing partners and 10 percent through the host government. It’s worth noting that USAID had already been channeling massive U.S. government-to-government assistance to Georgia following the country’s 2008 war with Russia. On the other hand, USAID missions in the Philippines and Senegal seem to be far behind in their 40 percent and 30 percent local spending targets for fiscal 2015. In fiscal 2014, USAID Philippines recorded a 10.6 percent local spending share, while USAID Senegal posted 9.3 percent. Late last year, USAID Philippines Mission Director Gloria Steele told Devex that she still expected her mission to come fairly close to its 40 percent local spending target in fiscal 2015. 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