US FY 1999 Congressional Presentation

Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).

SPECIAL INTERESTS

USAID, in carrying out its sustainable development assistance mandate, has long provided funding for a variety of programs that have been supported by the Congress, the Administration, and the American people. These activities -- which range from specific interventions to promote child survival and combat infectious diseases, to providing assistance to the victims of landmine explosions -- embody the generosity of the American people's response in the face of human loss and suffering.

These compelling activities, in conjunction with USAID's strategies to foster economic growth, build democratic institutions, develop human capacity, promote improved health and family planning, protect the environment, and provide humanitarian assistance represent an important part of the agency's integrated approach to building sustainable, long-term solutions to development problems.

The following are some examples of the development activities for which Congress and the Administration have expressed explicit support or concern.

Agriculture

In recognition of increased congressional and administration interest, USAID's planned budget for agricultural activities from all accounts will increase from $283 million in FY 1998 to over $300 million in FY 1999. Of this amount, $127 million will come from the Development Assistance account in FY 1999, up from the $121 million in FY 1998. Within the Development Assistance account, other funding categories also address agricultural issues, reflecting the importance of integrated strategies that address multiple aspects of development issues.

Over the last decade, funding for agricultural development has declined significantly for all major donors. There is now a growing recognition that the funding cuts went too far, and that developing agriculture is one of the best ways to reduce poverty and hunger in low-income countries, where the majority of the poor live in rural areas. There is also increased awareness that malnutrition is a major contributing factor in over 50% of childhood deaths in developing countries. Finally, there is greater recognition that support to long-term agricultural development is a "win-win" situation for the United States. Helping smallholder farmers in developing countries stimulates overall economic growth, which leads to increased imports of U.S. goods and services, such as the high-quality food and feed commodities in which the United States has a comparative advantage. In fact, former recipients of U.S. aid are now some of the biggest importers of American products. In 1996, South Korea and Taiwan alone purchased more agricultural commodities from the United States than the cost of the entire USAID bilateral programs workwide, excluding food aid (about $6.8 billion).

USAID is increasing its attention to the agriculture sector in several ways:

*    Agricultural development has been elevated to the goal level in the agency's new Strategic Plan.

*    USAID's contribution to the International Agricultural Research Centers (CGIAR Institutions) was increased by 16% in FY 1997, and will go up modestly again in FY 1998. The CGIAR funding includes assistance for a new program to more closely link U.S. universities with these international institutions.

*    In FY 1998, USAID will launch the new Africa Food Security Initiative. Food security is the fundamental emphasis area in the Greater Horn of Africa Initiative.

*    USAID's Farmer-to-Farmer Program, which provides voluntary U.S. technical expertise to developing countries, is showing increasingly impressive results and has been a stimulus for
field missions to directly fund similar programs.

*    USAID is working more closely with U.S. agribusiness to develop a stronger public-private partnership that can enhance the development impact of investments from both sides, while helping to gain access to markets for U.S. business.

*    In nutrition, USAID is forging an alliance of public, private and nongovernmental (NGO) groups to combat vitamin A deficiency, a major cause of childhood death and illness.

Worldwide, USAID's agricultural programs are having impressive results. These programs improve agricultural policies so that farmers have the right incentives; they support research that provides new agricultural technology like improved crop varieties and better, more environmentally sustainable farming practices; and they work to strengthen indigenous agricultural institutions and train farmers and researchers.

For example, USAID agricultural programs in Mali have played a major role in helping turn around the country's food security situation, by providing an integrated package of support for market-oriented farm policies, improved farmer incentives, and new technologies. In Albania, USAID is working with the Alabama-based International Fertilizer Development Center to facilitate development of a network of private agricultural input dealers that has been extremely effective in helping local farmers expand production and move toward a market-based agricultural economy.

As USAID seeks ways to reverse past downward funding trends, difficult trade-offs present themselves. A variety of competing administration priorities and congressional directives have left the agency with limited room to increase funding for discretionary areas like agriculture.

Child Survival

The Congress and the American people have continued to provide strong support for child survival efforts. The national resolve to reduce childhood mortality will remain prominent within USAID's broader development program. As evidence of this continued commitment into the second decade of USAID's Child Survival Program, and consistent with Congressional action in the last two foreign operations appropriations bills, the Administration requests a separate Child Survival and Disease Program appropriation for FY 1999 of $502.8 million. Of this amount, $253.6 million is for child survival activities, $98.2 million is for basic education, and $151 million is for AIDS and infectious diseases.

USAID also funds child survival activities from other accounts, including Assistance for Eastern Europe and the Baltic States, FREEDOM Support Act funds for the New Independent States of the former Soviet Union, Economic Support Funds, and International Disaster Assistance. Continued U.S. involvement in the worldwide child survival initiative sends a strong message to the rest of the world: the United States is not willing to let the world's children suffer and die from preventable diseases.

Since its inception in l985, USAID's Child Survival Program has played a vital role in preventing childhood deaths and illness around the globe. As the leading bilateral supporter of the global Child Survival program, USAID programs have helped avert over 25 million deaths in children under age five. Today, nearly 80% of infants are vaccinated by their first birthday, compared with only 44% in l985. Polio has been eradicated in the Western Hemisphere and, with concerted effort, could completely disappear. Even the elimination of measles, the vaccine-preventable childhood disease that takes the most lives, is within reach in the Americas. Oral rehydration therapy programs are preventing deaths from diarrheal dehydration every day, as well as in crises like the cholera epidemic in Latin America two years ago. USAID has supported efforts to preserve breastfeeding as the method of choice for infant feeding and to promote proper breastfeeding practices. Increased and improved breastfeeding potentially can save an additional one to two million lives every year. Research sponsored by USAID
and its partners proved that acute respiratory infections, especially pneumonia -- the disease that kills the largest number of children -- can be treated effectively in community settings to significantly reduce deaths. USAID-supported research also shows that vitamin A supplements could avert a million deaths each year by reducing the devastating effects of diarrhea, measles, and other childhood diseases.

USAID's Child Survival Program has been an integral part of these accomplishments, improving the health of the world's children and saving millions of lives each year. The United States can be proud of the contribution it has made over the past decade to improving the health of the world's children. USAID is committed to sustaining this effort and realizing the goals of the l990 World Summit for Children. Future directions of the program will concentrate on reaching underserved populations, on sustaining progress by institutionalizing the child survival interventions in the regular health programs and budgets of host countries, and finding ways to protect children from emerging problems -- such as the impact of HIV/AIDS and of increasing resistance to affordable antibiotics -- that threaten the gains achieved in their health and survival.

Social and economic conditions such as poverty, malnutrition, lack of education and sanitation, overcrowding and environmental degradation are key underlying contributors to child mortality.
For example, 20% of the population in developing countries can be classified as malnourished, which weakens defenses to diseases and causes other health problems. For the past several years, funding has been severely reduced in the broader development areas which also impact child survival. Thus, while the agency will continue to strongly support direct child survival interventions, USAID is proposing $47 million less in direct funding in the Child Survival and Diseases account, from the FY 1998 enacted level, in order to provide funds to broader activities such as those which provide economic opportunities for families to better support themselves and their children as they move from childhood into adolescence and adulthood.

Infectious Diseases

As part of the overall Child Survival and Disease Program account, the Congress provided an additional $50 million in the FY l998 budget for programs to combat infectious diseases around the world. For FY 1999, the Administration plans to allocate $30 million of the $502.8 million requested for the Child Survival and Disease Program Account.

As a result of this Congressional support, USAID revised the overall strategy to put in place a new objective for reducing the threat of infectious diseases -- tuberculosis, malaria, acute respiratory infections, and other diseases such as yellow fever and diseases that are resistant to antimicrobial drugs.

USAID's approach to the prevention and control of infectious diseases is integrally linked to, and must be supported by, the agency's efforts in other areas to change the social and economic conditions that allow infectious diseases to flourish and spread, such as poverty, malnutrition, lack of education, lack of sanitation, overcrowding and environmental degradation.

The agency's new infectious diseases objective will work in conjunction with ongoing USAID efforts, particularly those relating to reducing the spread of HIV/AIDS and improving child survival and maternal health. In developing the implementation strategy for this objective, USAID is conferring closely with its partners, including the World Health Organization, the National Institutes of Health, the Centers for Disease Control and Prevention and others. As a result of the first technical consultation, USAID has reached agreement with its partners on an infectious diseases initiative based on four key elements:

*    Slowing the emergence and spread of antimicrobial resistance, targeted at the major microbial threats in developing countries: pneumonia, diarrhea, sexually transmitted diseases, tuberculosis and malaria;

*    Testing, improving and implementing options for tuberculosis control;

*    Implementing new and effective disease prevention and treatment strategies focused on malaria and other infectious diseases of major public health importance; and

*    Strengthening surveillance systems by enhancing information systems and data-based decision making and response capacity in developing countries.

USAID, together with its partners, has structured this initiative to achieve maximum impact on the control and prevention of infectious diseases by focusing on a few particular diseases which are sources of significant mortality. USAID will achieve results in the areas outlined above through provision of technical assistance to developing countries, through applied and other relevant research in strategically critical areas, and through helping to build indigenous capacity to address these issues.

While addressing these underlying social and economic conditions will not have an immediate impact on infectious diseases, serious gaps in these areas will threaten to undermine the focused set of priorities that USAID is funding through the infectious diseases initiative. Thus, to develop a more balanced and sustainable approach, for FY 1999, USAID has requested $20 million less than the FY 1998 directed level for the targeted initiative in order to use these funds to address the underlying conditions that give rise to infectious diseases.

HIV/AIDS Prevention and Care Initiatives

For more than a decade, USAID has made a major commitment of resources -- nearly $l billion -- to counter the spread of HIV/AIDS in the developing world. For FY 1999, the Administration requests $121 million for HIV/AIDS programs, as part of the Child Survival and Disease account. This crucial investment in HIV/AIDS prevention as a key to sustainable development has put the agency in the forefront of the global response to the epidemic.

In FY l999, USAID will maintain its strong focus on preventing sexual transmission -- which is responsible for about 80% of HIV infections -- as the central component of the agency's widespread efforts in service delivery, capacity building, biomedical and behavioral research, and policy formulation. The vast majority of USAID's overall budget for HIV/AIDS will be spent to continue prevention activities through the following approaches: increasing distribution of condoms, changing high-risk behaviors through communication, and improving the diagnosis, treatment and control of sexually transmitted infections.

Uganda is an example of the success of this focus on prevention. Although Uganda has been severely affected by HIV/AIDS since early in the epidemic, recent trend data offers hope that new infections are decreasing. In 1997, 5% to 9% of Ugandan adults were infected, compared to 7%-12% in 1996. This decrease in new infections is most pronounced in younger age groups, confirming behavior studies that young people are adopting safer sexual behavior, including later sexual initiations, fewer partners and increased condom use.

To enhance this prevention agenda, USAID's expanded portfolio will embrace new efforts to mitigate the effect of the epidemic on individual lives and communities through activities such as improving basic care and psychosocial support for people living with HIV/AIDS and their survivors.

Working with the agency's counterparts in the international health community and local partners in more than 75 countries, USAID will continue to promote these effective responses to one of the world's most complex and devastating health crises. In the words of Congresswoman Nancy Pelosi, a leader in the fight for increased attention to the HIV/AIDS pandemic, "The destabilizing effect of HIV/AIDS on the societies and economies of the developing world cannot be underestimated."

Education

Agency programs help build human capacity through education and training.

Basic Education. USAID plans to provide $98.2 million from the Child Survival and Disease Program account for basic education activities in FY 1999, the same level as in FY 1998. USAID's investment in basic education seeks to ensure that developing countries give every child access to an effective primary education. The agency addresses basic education assistance in countries where substantial need exists for primary education and where governments and other partners are committed to universal access and improved quality, efficiency and equity.

USAID basic education programs continue to build national primary education systems in nine African countries. With USAID assistance, Benin, Ethiopia, Guinea, Malawi and Uganda have increased the share of the education budget going for primary education and raised the non-salary share of the education budget. In Uganda, primary teacher salaries have increased sevenfold over the past three years. Benin, Ghana and Mali have decentralized their finance and budgeting systems to empower regions to make their own budgetary decisions. In Guinea, teachers who were at the secondary level now serve primary schools, with a 7% increase in enrollment in 1996 alone. Community schools in Mali increased gross enrollment from 22% in 1989 to 33% in 1997, and similar trends are evident in Benin and Guinea. USAID helped nongovernmental organizations to pioneer new instructional materials and methods in South Africa, which the government is now promoting in schools nationwide. USAID support to regional institutions is resulting in dynamic dialogue and capacity building within and between African countries.

USAID assistance to countries in Asia and the Near East concentrates on girls and women in Egypt, India, Morocco and Nepal. In Egypt, the Ministry of Education adopted several USAID-supported policy reforms that contribute to increased participation of girls. For example, the permissible age for entry to primary school was increased from eight to nine years.

In Latin America and the Caribbean, programs in Ecuador, El Salvador, Guatemala, Haiti, and Honduras concentrated on educational reforms to improve educational quality and address issues of equity in primary schooling. USAID's assistance to Honduras for teacher training and curriculum development led to gains in efficiency. As a result, the number of primary school children completing school rose by 3% between 1995 and 1996. In El Salvador, USAID supported the procurement and distribution of newly designed sixth grade textbooks and curriculum guides for language and mathematics, which led to an increase in achievement scores in mathematics.

Higher Education. USAID funds a variety of partnerships with higher education institutions. Broadly speaking, these fall into two groups.

First, USAID resources provide a catalyst for linkages between U.S. colleges and universities and counterpart institutions in developing countries. Through programs like the University Development Linkages project, USAID funding leverages substantial additional resources and provides the stimulus for lasting partnerships that can greatly strengthen developing country institutions. For example, with USAID funding, the University of Florida has worked actively with Makerere University in Uganda to develop a very successful Human Rights and Peace Center. In India, Iowa's Sinclair Community College used a USAID grant to transform a vocational education center into a proactive, self-sufficient training institution.

Second, U.S. colleges and universities are important partners in implementing USAID's development programs in several sectors. In agriculture, health, population and other sectors, the technical depth and institutional strength of the U.S. higher education community is a valuable asset in implementing foreign assistance programs.

Microenterprise

In launching its Microenterprise Initiative in 1994 with broad and bipartisan Congressional support, and renewing it in 1997, USAID affirmed that support for microentrepreneurs would be one of the main aspects of its approach to economic growth. USAID's microenterprise programs, which provide very small loans to individual entrepreneurs, stress increasing the economic participation of the poor and people in transitioning economies. It is an approach that is capable of reaching many people. In 1996, USAID's programs reached over one million households.

The overall trend in USAID microenterprise funding shows a persistent increase during the past decade. Congress has stated its preference for an overall funding level of $130 million to $135 million for the microenterprise program. USAID intends to meet the $135 million level of funding in FY 1999. In meeting this level, USAID also must remain cognizant of the limited absorptive capacity of this relatively new development endeavor.

Congressional interest has focused not only on the amount of money spent on microenterprise programs but also how it is spent. Some important statistics, based on the latest available data, are:

*    66% of loan clients were women.

*    89% of the total number of loans were "poverty lending" loans.

*    Africa had the smallest average loan size of $130. Europe and the New Independent States of the former Soviet Union had the largest -- $1,014.

*    Of the total funds committed to microcredit programs, 58% was provided to poverty lending programs.

USAID's biggest challenge in the coming years is to help more of its partners achieve financial sustainability. As is the goal of all of America's foreign assistance programs. the ideal is to nurture institutions that are self-supporting. With respect to microenterprise, USAID cannot, and should not, manage these programs from Washington. In fact, the USAID countries that have been most successful in developing a vital local microenterprise development "industry" are precisely those that have strong in-country staff who are able to nurture these programs.

Private and Voluntary Organizations

Private and voluntary organizations (PVOs) and cooperatives are key partners in USAID development and humanitarian efforts abroad. USAID, PVOs and cooperatives share similar values and objectives. Over the past three decades, USAID and the PVOs have developed a strong working relationship consonant with the important contributions made by these organizations to international relief and development efforts and the changing priorities, structures and capacities of the U.S. foreign assistance program. U.S. PVOs and cooperatives have substantive advantages that complement and are compatible with USAID's areas of program concentration.

The Congress has long supported the USAID-PVO partnership and has urged the USAID Administrator to draw on the resources of the PVOs and cooperatives to plan and carry out development activities. In 1995 at the United Nations World Summit for Social Development, Vice President Al Gore announced a New Partnerships Initiative, which emphasizes the strategic value of a strong and vibrant civil society and looks to strategic partnering among nongovernmental organizations (NGOs), the business community, and institutions of local democratic governance to help break the dependence of developing countries on external support. The Vice President also announced the goal of increasing the funding for NGOs to 40 percent of development assistance. The most recent data available shows over 30% of the Development Assistance budget alone was directed to PVOs and cooperatives, and
we plan to continue to channel significant amounts of funding through these key development partners.

USAID, through the Office of Private Voluntary Cooperation (PVC), supports activities which increase the capabilities of PVOs and cooperatives to deliver development services at the grass-roots level. In addition to these PVC programs which strengthen the organizational capacity and programs, the agency's central, regional and country programs have fully integrated funding for PVO activities into their strategies. U.S. PVOs have played an important role in stimulating the growth and vitality of indigenous NGOs in many countries. There has been a worldwide expansion in the level of voluntary activity and in the number and variety of indigenous NGOs.

The Advisory Committee on Voluntary Foreign Aid (ACVFA) was established after World War II by Presidential directive to serve as a link between the U.S. Government and PVOs active in humanitarian assistance and development work overseas. Through this committee, USAID consults with these organizations about topics of general interest, including overall agency policies and strategies. The ACVFA meetings serve as fora for information exchange between the public and private sectors. The Committee brings together USAID and PVO officials and representatives of universities, international NGOs, the business community, and other government, multilateral, and private organizations to foster understanding, communication, and cooperation among those involved in international development.

Non-Project Assistance

The Joint Explanatory Statement of the Committee of Conference on the FY 1998 Foreign Operations Appropriations bill expressed concern that "large non-project assistance programs ... could perpetuate aid dependencies," and requested that USAID undertake a thorough review of such assistance programs and report on the results of the review by March 1, 1998. USAID's experience with NPA in Africa will be fully elaborated in the March report.

Non-project assistance (NPA) consists of both cash transfers and commodity import programs. Initially funded only through the Economic Support Fund (ESF), beginning in FY 1989 the Congress authorized the use of the Development Fund for Africa (DFA) for such purposes. Support for East European Democracy (SEED) funds and FREEDOM Support Act funds in the New Independent States (NIS) also have been used recently, as described below.

The first table following this narrative shows NPA obligations by geographic bureau during the period FY 1988 through FY 1998. In FY 1997, of the $1.8 billion obligated for NPA, $1.5 billion was for Israel and Egypt; another $120.2 million was for Bosnia. The remainder was for three LAC countries (Bolivia, Haiti, Guatemala) four African countries (Ethiopia, Ghana, Malawi, Uganda), Ireland, Turkey and the South Pacific Tuna Treaty.

The second table provides 1999 estimates of potential non-project assistance, by country, which could change in some cases if certain conditions are not met.

Except for Israel and Egypt, NPA has been declining in recent years, but has served as a useful tool providing both short-term and long-term benefits -- cash for budget support, foreign exchange or repaying debt, while at the same time leveraging change in a country's policies that lead to sustainable development.

In Africa, non-project assistance is a critically important tool for long-term capacity and institution building. It is the most effective way to support African-led reform efforts. USAID's NPA programs in Africa, which are always in the form of sector assistance and accompanied by project assistance (PA), provide the up-front investment necessary for a host country partner to initiate and implement much needed sector reform. USAID has been a leader in supporting sector reform, and all donors are now increasingly directing their NPA and project assistance resources to support African-led sector programs. Through the agency's NPA and PA hybrid mechanism, USAID's sector reform programs
help: to ensure budgetary room to undertake reform, and to build long-term, sustainable approaches to development; to build technical know-how and the institutional base for reform; to facilitate participatory policy deliberation and decision-making; and to build nongovernmental and private sector capacity to actively play a role in the reform process at the local, regional and national levels. The end result is a strengthened, African owned and led sustainable development process.

USAID has undertaken very few cash transfers in Latin America and the Caribbean in recent years. Exceptions are the immediate post-intervention period in the Haiti program and the first year of the Guatemala Peace Program. Both of these countries faced very low levels of tax revenues in relation to gross domestic produce (GDP), together with very high commitments for public sector services. Both NPA programs provided local currencies to sustain government services while the host government took actions which increased their respective levels of tax efforts. The result in both cases was that essential services, including in the case of Haiti, police services, were maintained and the tax effort was increased, although less rapidly in both cases than had been expected.

In the Europe and NIS region, USAID has supported balance-of-payments requirements and encouraged economic policy reform in Turkey through ESF-funded cash transfers; these ended in FY 1997. The International Fund for Ireland is supported through ESF-funded grants to help promote economic regeneration, community involvement and social reconciliation through investments in activities which create jobs and help reconstruct disadvantaged areas. In Bosnia, SEED funds have supported the Dayton Peace Accords through reconstruction and economic recovery programs which generate employment and provide balance-of-payments support; this program will continue in FY 1999. In Russia, in FY 1994, FREEDOM Support Act funds were used for a commodity import
program to finance importation of U.S. equipment important to increased energy efficiency and environmental improvements; this program is completed.

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