CGD Defends Untied Aid

On Monday, MFAN member Sarah Jane Staats – director of policy outreach at the Center for Global Development – outlined three reasons why Senator Jim Webb’s (D-VA) calls for putting a stop to Millennium Challenge Corporation (MCC) funding to non-U.S. companies in Africa will not solve any of our economic or development problems.  Staats argues:

1. It’s bad development. Restricting overseas development contracts to domestic bidders – so-called “tied aid” – buys political support at home, but often costs more and is less effective.

2. Taxpayers pay more, but get less…Requiring the MCC to use only U.S. companies in regions where they could be more expensive, less effective, or may not exist, unduly constrains our aid dollars and ends up costing American taxpayers more money.

3. The MCC is not ExIm or OPIC. The U.S. Export-Import Bank (ExIm) and theOverseas Private Investment Corporation (OPIC) are designed specifically to help U.S. businesses invest overseas.

Staats reminds us that tying development assistance to U.S. companies is not only bad development, but it goes against the principle of ownership of aid that has popped up in the Obama Administration’s initiatives like Feed the Future and the Global Health Initiative.  Read the full piece here.

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