Redesign Reaction: Getting to the nitty gritty to make the most of foreign aid

This blog is part of a series responding to the MFAN Co-Chairs’ and other aid architecture proposals. Join the conversation! #RedesignReaction

Based on several decades of work in the foreign assistance field, I have a lot of unanswered questions, but one thing I know for certain:  foreign aid types – proponents and opponents – just love to talk about the really big issues.  How can we end global poverty?  How can foreign aid contribute to national security?  Are any of these reforms really sustainable?  What are the major global threats that we should prioritize?

In that rarified intellectual and moral environment, the Modernizing Foreign Assistance Network (MFAN) has done us a real favor with a recent paper from its Co-Chairs:  A New Foreign Aid Architecture Fit for Purpose.  It has forced us to focus on the nuts and bolts of HOW we organize to effectively reach whatever ultimate goals policymakers set for U.S. foreign aid.  The proposal demands that we think hard about one topic – structural and organizational reform – that we love to avoid.  Thank you, MFAN.  After several decades of incremental tweaks to a foreign aid architecture last seriously visited when many foreign aid field workers were not yet born, it’s about time!

So, my first recommendation to my colleagues is to read what the MFAN Co-Chairs propose carefully; plumb the issues you don’t understand (how many of us really understand how “TDA” works or what a “JIACG” is?); make structural reform a top priority in the foreign aid debate; and then actively engage in the debate.  Perhaps ironically, the Trump Administration’s fixation with dramatically downgrading what it perceives to be a broken foreign assistance system may, in fact, provide the impetus for a structural revitalization of that very system!

Beyond this 50,000-foot perspective, I have a couple of specific observations – some promotional; some cautionary – about the specifics of the MFAN proposal.

First, it’s way past time to create the Development Finance Corporation (DFC) proposed by MFAN, or something very much like it.  Virtually everyone in the international development community now appreciates the enormous role, and even greater potential, of private investment and trade in potentially accelerating human progress abroad.  And, I am convinced that the American business community, as evidenced in numerous public-private partnerships, is ready to step up to the plate and seek synergy between profit-making and positive development impact.  However, our government has long lacked a one-stop-shop with the visibility and heft to serve as a center of excellence in development finance.  MFAN’s proposed DFC fills that gap, and its structural proposal to link bilateral aid to the Corporation at the board level is innovative and useful.

My only caveat or caution with the development finance portion of MFAN’s concept is that the DFC needs to be structured to broaden the incentives for engagement in non-traditional locales for foreign direct investment and trade.  The vast increases in investment and trade in the past several decades have been highly centralized in a relatively small number of countries (the World Bank has good data on this phenomenon).  That is to say, policymakers considering MFAN’s design must think carefully about how to incentivize investment in places like Mauritania and Burkina Faso, as well as in middle income countries.

Secondly, I am a fan of MFAN’s proposal to move beyond a geographical focus at its proposed Global Development Agency (GDA), and focus on categories of countries that share common impediments to prosperity.  In my view, rigid geographical structures are a vestige of “Clipper Ship” thinking, when we had to organize that way because of travel and communications impediments that have been largely overcome by advances in technology.  Simply put, it makes more sense for the USG to design focused, catalytic development interventions that are problem-specific to, say, fragile states, than to rely on geographic organizations.

That having been said, the reality is that the Department of Defense and Department of State – GDA’s top partners – still organize regionally, as do the multilateral financial institutions.  An agency like the proposed GDA that purports to lift development to equal status with diplomacy and defense needs to have structures that allow senior engagement at the policy table, for example at the National Security Council, which itself has historically been organized partially on a geographic basis.  This reality needs to be carefully weighed if geographic management structures are to be downgraded.

Moreover, there is a more practical personnel issue embedded in MFAN’s GDA organizational structure:  with no regional bureaus, Assistant Administrator-level positions, or presumably sub-regional office director positions, to what will senior development professionals at GDA aspire as they seek advancement and promotions?  These organizational personnel considerations, while not rising to the level of global threats, must be addressed to birth a functioning, high-morale USG development agency.

One final caveat, based on day-to-day realities I encountered in management jobs at USAID:  I fear that U.S. Ambassadors will perceive disadvantage in these proposed new structures.  Some may well feel they have lost authority over substantial development resources at their respective embassies in exchange for promised greater coordination at the country level.  These critically important leaders must feel empowered, or at least not disempowered, if MFAN’s excellent proposals are to become reality.

In summary, kudos to MFAN for focusing us on these nitty gritty structural issues.  Kudos for much enhanced alignment between current global development realities and USG organizational constructs.  There is more work to be done, but the draft framework is a great start.  Time to get to Capitol Hill to elevate and accelerate the debate on the way forward.

James Kunder is a member of MFAN’s Executive Committee and former Acting Deputy Administrator of USAID.

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