New Country Study Assails USG Aid and Trade Incoherence

STC_logoIn a newly published country study – “Modernizing Foreign Assistance: Insights from Bangladesh” – MFAN partner organization Save the Children highlights a critical disconnect between the United States’ “aid and trade” policies, in particular how the U.S. Government struggles to approach development in a coordinated, whole-of-government fashion.  Instead, it appears our development policies give with one hand, and take with the other.  For example, in 2008, for every $1 in aid the USG provided to Bangladesh, Bangladesh paid $3 in tariffs on goods exported to the U.S.

Here are other key findings from the report:

  • USAID has a clearly articulated and implementable strategy: USAID is pursuing a clearly articulated strategy focused on addressing the social and demographic challenges that threaten the peace, security and development of Bangladesh. This is made possible by the medium size of the USAID program, constructive coordination with the Embassy and the absence of multiple U.S. government agencies or presidential initiatives that might confound the priorities of the overall aid program.
  • The United States’ aid budget for Bangladesh is small in comparison with other donors, which puts a premium on the strategic use of funds: Between 2003 and 2007, the U.S. government was responsible for only 5 percent of the total Official Development Assistance (ODA) to Bangladesh. USAID and other donors see the agency’s role as something of a ‘gap filler’ where its funds are used to strategically leverage its comparative advantage or meet otherwise unfunded needs.
  • The failure to coordinate U.S. trade and aid policies is a critically weak link: The serious lack of coherence between the United States’ aid and trade policies regarding Bangladesh offsets many of the aid’s potential benefits.
  • Pre-programming flexibility to avoid Washington roadblocks: Washington-mandated funding priorities reduce the missions’ ability to respond quickly to changing circumstances or to reprogram funds to new activities. USAID has successfully pre-programmed flexibility into some project design for emergency use of development funds providing useful examples for wider use of this flexibility across other sectors and programs.
  • USAID has effective mechanisms to align its program with the Government of Bangladesh’s poverty reduction strategy in place: USAID negotiates five-year Program Objective Agreements (PROAGs) with the Government of Bangladesh. These PROAGs outline activities and budgets in each of the sectors in which USAID works and are amended each year to indicate updated annual funding and programming commitments.
  • Long-term capacity strengthening of the Government of Bangladesh needs higher priority from USAID: The government’s capacity to manage its development program is perceived by many commentators to be weak as a result of poor fiscal management and civil service reshuffles, among other causes. Instead of working with other donors to address these challenges and to invest in the long-term strengthening of the country’s public financial management and procurement systems, USAID has chosen to focus its efforts in other areas.
  • USAID coordinates with development partners in some areas but needs to do more in others: Given the inadequate governmental leadership over development processes that was noted by many interviewees, it is doubly important that USAID work constructively with other donors.

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