A Need for USAID Reform?


NEW YORK — USAID receives 1 percent of the national budget, or $33 billion. With a relatively small budget, the agency must focus on cost effective methods of development, especially when billions of people worldwide suffer from poverty.

USAID does use its funding effectively, but the things for which they use the funding do not always positively impact impoverished populations in developing nations. In some cases, USAID budget functions more effectively to serve the needs of politicians in the United States.

According to Bloomberg Businessweek, foreign aid is often used as a “vehicle for pork barrel spending,” or using government funds to aid a politician’s district. Pork barrel spending improves a politician’s chance of reelection. Rather than benefitting the country’s the agency is attempting to aid, USAID funding is often diverted to benefit solely the U.S.

Every year, USAID uses $1 billion to purchase crops from the U.S., instead of investing in agricultural development in developing nations. Purchasing crops in the U.S. leads to an additional $1 billion cost to ship the crops to another country.

This is over 5 percent of USAID’s budget spent to benefit American agriculture rather than the agricultural development in impoverished nations.

Following the 2010 earthquake in Haiti, only about 1 percent of contractors were Haitian. Instead, U.S. companies received most contracts. More specifically, Chemonics and Development Alternatives Inc. received the most funding.

In the short term, this is helpful to the U.S. economy, but in the long term, this stunts business development in Haiti, which will limit the growth of the American economy in the long term.

More than serving the needs of politicians, USAID has used funds in ways that fail to positively or, potentially, negatively affect the population.

In providing aid for Haiti, Chemonics failed to comply with safety procedures, and both companies had limited transparency in their hiring practices. The Center for Economic and Policy Research notes that their hiring practices, “[increased]the risk of corruption or favoritism.”

In early 2014, USAID spent $1.6 million attempting to provoke democracy in Cuba. The agency created a social network, ZunZuneo, to create political unrest amongst younger populations. The attempted movement failed and received significant criticism.

ZunZuneo was intended to provoke resistance against the communist-led government. The Cuban government heavily restricts communications, which USAID was attempting to challenge.

This year, the Cuban government cut major social benefits funding, though over a fourth of the population is impoverished. More than alleviating the high rates of poverty, USAID’s actions could negatively affect the Cuban population.

Vice News reported that “attempts by the U.S. government to control information risk delegitimizing those Cubans already voicing their dissent at great risks to themselves.”

USAID, though, has made some significant improvements since Dr. Rajiv Shah became the administrator. According to the New York Times, USAID funding of American contractors has fallen by $400 million from 2010 to 2013. Instead, there is a greater focus on contracting local businesses.

USAID is also funding the U.S. Global Development Lab, which aims to find innovative ways to reduce global poverty. Though the agency is working with scientists from major companies such as Wal-mart, Nike and Microsoft, new ideas are also coming from foreign sources.

The actions of USAID under Shah reveal a new direction for USAID, but the situations in Haiti and Cuba suggest that significant steps could be taken to increase the efficiency and impact of foreign aid from the U.S.

Tara Wilson

Sources: Bloomberg Businessweek, Center For Economic and Policy Research, USAID, Miami Herald, Vice, New York Times, Economist
Photo: USAID


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