July 9, 2021 (WASHINGTON) – This statement is delivered on behalf of the Modernizing Foreign Assistance Network (MFAN) by Co-Chairs Lester Munson, Larry Nowels and Tessie San Martin.
On July 1, the House Appropriations Committee reported out an extraordinarily strong Fiscal Year 2022 State, Foreign Operations and Related Programs appropriations bill, providing for a $6.7 billion increase (+12.1%) over resources for FY21. The bill represents a significant investment in American support for global development and the Modernizing Foreign Assistance Network applauds the Committee for the robust level of funding as well as important elements that strengthen the effectiveness of US foreign assistance.
In particular, the bill provides $1.46 billion for USAID Operating Expenses (OE), an increase of $78 million over regular FY21 levels. But in light of the recent release of the US COVID-19 Global Response and Recovery Framework, MFAN also urges the Committee to review the operational implications of this funding, and consider further supplementing USAID OE and its workforce capacity to successfully implement the initiative above the $41 million in supplemental funding.
MFAN further applauds the House Committee’s strong report language regarding locally-led development and is pleased to note continuing Committee support for the New Partners Initiative (NPI). Local leadership empowers local communities and the institutions that support their development to be effective leaders to sustainably serve the common good. We strongly support the Committee’s requirement for USAID to report to Congress on funding for programs under the development and disaster assistance accounts implemented directly by local and national NGO entities and how USAID plans to increase these resources in the future. Including this reporting requirement will help elevate the importance of local ownership and provide insight into how USAID envisions supporting and empowering local leadership through their programs.
MFAN also supports funding for USAID workforce diversity, equity and inclusion initiatives and the Committee’s recommendation for the Agency to create a Chief Diversity and Inclusion Officer to oversee these important initiatives. We further agree with the Committee’s requirement for a report on USAID workforce data that specifically includes Locally Employed staff. While the Committee’s statement on workforce diversity focuses largely on American Foreign Service and Civil Service staff, we strongly encourage the Committee to evaluate the continuation of the expanded management and supervisory roles of Foreign Service Nationals during USAID’s COVID-19 response.
The Committee also calls on the Secretary of State and the USAID Administrator to recommit to implement US commitments to the Sustainable Development Goals (SDGs), something MFAN supports.
Regarding the US Development Finance Corporation, MFAN notes the Committee’s requirement for a report on potential scoring alternatives, including a net-present-value method, for DFC equity investments. The BUILD Act significantly strengthened the DFC’s toolbox by authorizing the Corporation to make equity investments. The dollar-for-dollar scoring calculation for such equity deals, however, severely limits the DFC’s ability to effectively utilize this new tool. The report required by the Committee is a good first step in right-sizing the scoring rule of these types of investments. MFAN also notes that in separate legislation – the EAGLE Act – the House Committee on Foreign Affairs during markup adopted a requirement that DFC equity investments shall be considered as a Federal credit program using net-present-value costs. This would substantially reduce the appropriation requirement for this instrument. MFAN is encouraged by movement on the issue by both the appropriation and authorizing committees.
On other DFC-related matters, MFAN encourages the Appropriations Committees to ensure the Corporation maintains a strong focus on the development impact of its investments, especially in low and low-middle income countries. Maintaining strong transparency and evaluation standards is also a priority for MFAN and requiring reports to the Committees on both of these matters would be helpful.
MFAN has consistently advocated for more flexible foreign aid funding mechanisms on the part of Congress that are paired with appropriate and timely accountability on the part of the White House and executive agencies. We believe now is the time to begin serious conversations between the two branches that will restore trust and confidence and lead to more latitude granted to development agency professionals on the ground to adjust funding allocations in order to address local priorities and achieve the greatest development impact. We encourage Congress to consider ways to advance more flexible mechanisms, including further changes to Section 7019 regarding allocation directives.
MFAN has appreciated previous SFOPs report language supporting efforts to strengthen Domestic Resource Mobilization initiatives on the part of USAID and other agencies. Building on these past efforts, we endorse the creation of a clear and comprehensive whole-of-government DRM strategy and call on the Appropriations Committees to include such a requirement as the legislation moves forward.
MFAN also notes the Committee’s decision to rescind $515 million in previously appropriated unobligated balances for the Millennium Challenge Corporation, as proposed by the administration. We understand this action to request the rescission was based largely on MCC’s decision not to proceed with the Sri Lanka compact. While we recognize the need to effectively manage resources and to withdraw funds when it is appropriate, MCC maintains a unique model among US development agencies that is centered around development effectiveness. MFAN is concerned that a rescission of this size could undermine that model. MCC needs to maintain a certain degree of unobligated balances in order to fully fund a new compact when it is signed. Further, a rescission of this magnitude could put pressure on the principles that have made MCC so effective. MCC supports only high-quality, high-return programming in countries that qualify under its rigorous selection process and whose governments demonstrate commitment to the partnership. We are concerned that these principles could be jeopardized if the Corporation risks losing previously appropriated funds if it rejects or cancels a compact of a poor performing partner, as the Board did in the case of Sri Lanka. Furthermore, with a robust pipeline of compacts in development, including the agency’s first regional compacts, MCC may be able to re-purpose some of the funds previously reserved for Sri Lanka to strengthen upcoming agreements. MFAN encourages the Appropriations Committees to take these factors into account as it reviews recommendations to rescind MCC funds and to consider how the MCC might re-purpose some or all of such funds.
MFAN congratulates Chairwoman DeLauro and Subcommittee Chairwoman Lee as well as all members of the Committee on advancing this important legislation. We look forward to continuing to work with the Committee to improve the effectiveness and efficiency of U.S. foreign assistance.