U.S. Agency for International Development Administrator Mark Green Panel Discussion on the Launch of USAID's New Private Sector Engagement Policy

For Immediate Release

Wednesday, December 12, 2018
Office of Press Relations
Telephone: +1.202.712.4320 | Email: press@usaid.gov

 
American Enterprise Institute
Washington, DC
December 12, 2018

MODERATOR: All right, Administrator, welcome. I'm glad you could join us.

ADMINISTRATOR GREEN: I'm glad to be with you.

MODERATOR: I would you like to start this by you laying out, what are the new policies you have proposed, what are they going to look like, how do they change the status quo?

ADMINISTRATOR GREEN: Well first off, what you will not hear from me. You will not hear me use the term "public-private partnership."

I despise the term because it's, in my opinion, devoid of meaning. In public-private partnerships, which USAID and others have done for a long time, are largely about contractual grants, contracting. Now, we'll still do contracting and grant-making. But what we're really talking about with public sector engagement is true collaboration. And that's the principle difference here. We have been doing collaborations, interesting collaborations, in recent years. What we're trying to do is make this much more measured and really scaling it up, so it becomes a regular part of our work. And the reasons for it are many. Among other things, I think the relationship between American business and the developing world has fundamentally changed in recent years. You all know the numbers, I think, so when USAID was formed, all the capital flows going from the U.S. to, say, Africa, about 87 percent was traditional development assistance. Now, it's below 10 percent. And the rest is large scale philanthropy, you know, almost call it family philanthropy. We see the good work of parishes and congregations and synagogues around the country. But the largest piece is commerce. America has commercial interest, investment interests, and investment relationships in the developing world; that's a fundamental difference. And if we're going to accomplish all of our goals, we have to tap into that.

Secondly, I would say the reason this is so important, the challenges that we're facing in the development setting and humanitarian setting are as complex and difficult as we've ever known. We were talking about it before we came on. We have 70 million displaced people in the world. We have vast humanitarian challenges in very difficult settings. When our principle humanitarian crisis response institutions were set up at USAID -- OFDA, the Office of Foreign Disaster Assistance, and Food for Peace being the two most notable -- crises were tornadoes, hurricanes, earthquakes. We still respond to those; it's man made, regime-driven crises are dominating our attention span in the humanitarian setting. Also our humanitarian assistance, to be able to work in those settings, to be able to provide some development solutions and offer some hope and vibrancy, we really need the kinds of technology and innovation that private enterprise brings. Government can do a number of things. It moves far too slowly to be able to address these challenges in the ways that we need to address them.

Third, some of you may have heard me say this before, but my own view of development and the work we need to do, I believe the purpose for foreign assistance is ending the need for its existence. I think what we have to do is work with countries that are willing and ready to take on tough challenges. We have to help them on their journey to self-reliance. Self-reliance means that private, enterprise-driven, vibrant economic future. The best way to get there is to tap into private enterprise to create those opportunities.

And then finally, I would say the reason this is so important is the era that we're in. There's a lot of talk about the era of great power competition or competition with authoritarian powers, being China and Russia and others, but China and Russia in particular. Our competitive advantage is not the government largesse that is provided; it is instead the vibrancy of our model. Our enterprise driven model, tapping into markets, which is what people invariably want. They want the dignity of being in charge of their own future. So by tapping into the private sector and private enterprise, that's our advantage. China can't do that. We do that. That's what the world wants. That's what our partners wants. So that's really what's caused us to lay out this policy and it is a policy of collaboration, co-design, co-creation, co-financing, but really having private sector, private enterprise as true collaborators in the process.

MODERATOR: Thank you. First go back to your second point on large, displaced populations, fragile states; in those contexts, the business environment is often not what you would hope for, and the rule of law may be weak --

ADMINISTRATOR GREEN: Challenging.

MODERATOR: Yeah, that's right, so how do you -- how do you think of private sector engagement in those types of environments?

ADMINISTRATOR GREEN: Well, we turn to the private sector, private enterprise, for some of the development solutions. So, as an example, we're partnering with MasterCard in refugee settings in Africa, Uganda, and Kenya, to provide a microgrid electrical power and to provide some internet connectivity. So our goal is to help displaced families sort of connect with the outside world so that, God-willing, one day, the fence comes down, or the gates open; they're connected to the world around them. That's one way. Also partnering with MasterCard and other IT companies to digitize assistance, which helps us to crack down on fraud, waste, and abuse. But also helps to make sure that for some of those poor displaced families they're getting the nutrition and the immunizations and medical care that they need. Again, our goal is to help these people get back into productive, mainstream life. And to be able to deliver those services and help develop those skills, we really need the kinds of interventions that, you know, government is just not very good at doing.

MODERATOR: The -- I think the third -- I don't know if I got the track correctly. The third, I think, principle that you mentioned is that the goal eventually is to end the need for assistance. That's perhaps most salient in places where -- you know, as little as a few years ago, you know, we didn't really think of as developing countries or countries with massive, endemic problems, like Venezuela or Syria or countries in the Northern Triangle, or maybe even a little less so, are those a particular area of focus for you? Those have been for a lot of western governments, of course, scenario to mention because of the large migration flows, as well as (inaudible)?

ADMINISTRATOR GREEN: Well, again, there are sort of two sides to the shop of USAID. There's our humanitarian work, which is a grand tradition of this country. We are the largest humanitarian donor in the world by far. And reaching out compassionately to these poor people who are displaced through no fault of their own, again oftentimes because of tyranny or conflict, and so that is a focus for us. Also, quite frankly, if we don't find ways of helping these poor families reconnect civically with the world around them, and develop some of the skills that they'll need to be able to be productive later on in life, I worry that they get locked into cycles of dependency and conflict and we sow the seeds, or we don't sow the seeds; the seeds are sown of authoritarianism and extremism. So yes, it's a very high priority for this Administration. But on the development side, this notion of self-reliance, you know, I've lived in Africa a couple of times in my life. I began 30 years ago as a teacher, a volunteer teacher, in Kenya, a Kenyan village. And what always struck me, no matter where you went, no matter how poor people might be, people have dignity, and people want to be able to lead themselves.

They want to lead their community; they want to be able to be in charge of their own life. And that's our centerpiece in development, is tapping into that inherent, innate desire to produce development outcomes. It's not us delivering things; it's us incentivizing reform, building capacity, and finding ways to help families, communities, and countries lead themselves. So, we talk about the transitioning, and transitioning isn't walking away. Transitioning is engaging in conversations to help countries at that crossroads of self-reliance. Again, it's almost always enterprise-driven. That's what countries want. They want the vibrant business community that creates employment opportunities and appeals to their young people.

So, that's the other part of the work. So, that isn't simply in the area that you read about, necessarily, in the paper. It can be a Kenya. It can be in many parts of the world. What we try to do is -- we've developed what we call "roadmaps." So, we have 17 independent metrics that we pull together. We measure capacity and commitment in each of the countries where we work or are thinking about working, and we try to look at those opportunities. We have conversations with our country partners and, you know, we don't say that we have all the answers. We say, "Look, this is what experience tells us a country needs to rise. If you're willing to do the tough things, you know, we'll walk with you along the way."

On the other hand, I, personally -- if a country's not willing to do the tough things, a country isn't willing to make choices, I have a little less sympathy. We have limited resources. We don't have as -- we don't have all the money in the world. We can't and shouldn't work everywhere. I know, given a choice, where I'm going to try to prioritize resources, it's going to be towards those countries that are willing to do tough things, big things, who want the same kind of future that we want, and we want for them.

MODERATOR: I see. Before turning to something else, I wanted to, maybe, ask Sarah, how does this approach fit in with what OPIC does? And it -- the federal government effort as a whole, how you think of that? What do you coordinate? Where do you think you guys are better than they are?

MS. GLASS: Sure. And I'll say here that we're really excited about the passing of the BUILD Act and the new U.S. International Development Finance Corporation that will be created, that will bring OPIC together with USAID's Development Credit Authority Program, which provides partial credit guarantees to working with USAID programs around the world. This new U.S. International Development Finance Corporation will bring together much of the work that OPIC does, which brings financial instruments and tools to our work, together with our focus on development programs. And so, it will really bring USAID, and I think our partners -- our private sector partners, our development partners -- access to many more tools to catalyze investment and catalyzing finance that has development outcomes.

MODERATOR: I see. So, when you -- and this question goes -- actually, before this, I didn't say this in my introduction, but I thought it was implicitly accepted. Please turn off your cell phones or computers -- the noisier parts of it. The -- what we will hear from, you know, people more on the libertarian side of things is that OPIC's efforts at -- you know, also these more private sector, engagement-focused development that (inaudible) you guys -- what they do is they end up picking winners and losers and they field the playing field in a way that is unfair and perhaps even counterproductive. How do you respond to that?

ADMINISTRATOR GREEN: Well, there shouldn't be winners and losers. We should not pick winners and losers, and that's not what we do. What we try to do is reach out and tap into the private sector for ingenuity and innovation. So, with some of the offerings that we have, we simply turn to the private sector and say, "Give us your best idea. Whatever you've got, let's see it." And when we try to put together the most innovative ideas and the most effective ideas, you know, using our development measurement impact tools, and that's how we make our decisions. And also, you know, I will say, as a conservative -- a former conservative member of Congress, let's be under no illusion about how the world is working these days. China, which is not a libertarian country that bleeds into the private sector, is in just about every country in the world. And what they are doing, I don't classify as "development." It's predatory financing, and what they are seeking to do is to lock up strategic assets and strategic resources, not necessarily in ways that are in the interests of the United States of America and our close allies and partners. We're in a time of competition. Our force and advantage is in tapping into private enterprise and tapping into markets. So, we don't pick winners and losers. We do try to harness the energy of private enterprise. We do that, I'm not worried about the competition.

MODERATOR: So, let's think of concrete ways in which that can be done. Will, then, you give us a few of your favorite examples of success in the (inaudible) do you want to expand -- sort of concrete ways in which you think of this new policy as being --

ADMINISTRATOR GREEN: Well, there are lots of them. So, one, for example, is the development impact on -- that we've put forward in one of the states in India. It was actually interesting; as I was getting ready to come on stage, I saw a guy had an old book about development assistance in India. It wasn't that long ago we were actually doing true development work and food distribution in India. You know, of course, now they would be rightly insulted if we talked about such things today. Instead, what we're trying to do is catalyze investment, which is what they want, produces outcomes, and you know, and again, is in our own interest.

So, a state in India, we work with the UBS Optimus Foundation. And we're the development -- again, world's first maternal health Development Impact Bond -- and we don't have to put any money up front. They put -- the foundation puts the money up front. We only pay, you know, if measurable outcomes are reached, and it's regarding -- I think it's 400 health centers in a particular state. And we have these very tough standards we put forward. It's great for the American taxpayer, because there's literally no risk with the money we've put forward.

But what we do is we incentivize market-driven efficiencies and effectiveness in the programming. They'll get the results better than we could possibly do with a traditional development program. And the Government of India has already said, if this works as we believe it will, they want to take it nationwide. So, we're seeing something. We're getting some of the development outcomes that we hoped to see, but we're also creating a vibrancy in a particular sector of challenge in India; that's a case.

We just signed an MOU with Corteva, the new agribusiness -- American agribusiness giant, and what we're doing with them is to apply some of their seed and cold storage technologies to small farmer challenges in Africa, particularly in places like Kenya and Uganda. And so, what we do for them is we did de-risk some of the investments. What we get from our side is those farmers get access to the technology that our farmers have had for a long time. Corteva will make a buck; we actually think that's a good thing that they make a dollar from this process. We achieve our development outcomes because these farmers have access to the seeds that my father-in-law has been using for years in the Midwest, and we think it's a great partnership. And again, it is our competitive advantage. So, that's another case. But there are really lots of them. Feed the Future is largely private sector driven, our food security program. Power Africa, is private sector driven. What we're trying to do is take what we've learned in those settings and apply it to a broader range of development challenges.

MODERATOR: Sarah, do you have a favorite?

MS. GLASS: I have several favorites. One of the things we ask in the policy is, you know, if business can do this alone, and they will do it alone, then USAID should get out of the way. But in many cases, there are investments that we want to see happen in order to deliver development outcomes that are not happening because they are too risky for a business to make on their own. And so -- and there's an example I really like from Power Africa, where USAID put up a grant of about 1.5 million, and that catalyzed in 10 times as much investment in equity and debt investment, some of which came from OPIC, actually, but most of which came from private investors, all of which on the equity side. And then, when those investors are paid back their principal, USAID will actually receive our grant back, plus a capped return. So, we've used our grant money to catalyze an investment that would not have otherwise happened, in order to see energy be expanded to communities that don't have access to power. But we've also structured it in a way that looks like a private sector investment and really makes the best use of taxpayer dollars for the U.S. taxpayer.

ADMINISTRATOR GREEN: Something to add. There's also an inherently public sector role in a lot of this work. So what we help to do through our framework and our diplomatic relations is to create the enabling environment for American business. So in one of my previous organizations that I helped to lead, its purpose was to foster American investment in Africa. Why doesn't American investment go into African countries? You open the newspaper, and everyone understands those are growing markets, so why aren't all businesses flocking there? Well, rule of law oftentimes, regulatory capacity oftentimes. So we can help create the policy framework that opens the door of a private business to go in. And, you know, when the State Department and USAID meet with our host country partners, it's on a diplomatic peer basis, and they listen, and it's good work. If a private company goes to a head of state and says, "Yeah, we'd like to change things (inaudible) best," it doesn't get as far. That is an inherently public sector role where we're doing value-add to private enterprise.

MODERATOR: (inaudible) from the perspective of the private sector a little bit as well. So what are the opportunities that are involved, the offers for America, and also for -- you know, for (inaudible) in engagement, the project that you --

ADMINISTRATOR GREEN: Well, and again, there is -- it's almost unlimited. So what I find most exciting are -- what we get from small business -- there are countless small businesses with cool technologies that don't have necessarily the ability to go and invest by themselves in the developing world. But they've got these cool technologies. And, for example, we've been learning about an interesting small company that is a growing company and is working in Rwanda and is able to deliver blood anywhere in Rwanda in like 45 minutes. That's cool.

And that helps take on some of the things that we care about, not because we have a fleet of drones, God forbid, but instead because the drones are already there; the private enterprise expertise exists; we can help steer. Again, the public sector, we can help steer the foreign policy in American interests. What we want to do is understand the relative capacities of the public sector, the relative capacities of the private sector, bring them together in ways that produce development outcomes, advance American leadership, and maybe even create economic opportunities for our businesses.

MODERATOR: You mentioned China a couple times; Russia once, I think. Can you talk a little bit about how their initiative differs from, you know -- beyond the focus on the private sector, how you think that the USAID's (inaudible) geopolitical framework and why you think that makes important and why you think those countries should be more welcoming to your efforts and to those of the government? I always -- whenever I see the words --

ADMINISTRATOR GREEN: One Belt, One Road?

MODERATOR: One Road. I always feel like this must be mistranslated. But how do you think it's -- how you think those initiatives --

ADMINISTRATOR GREEN: Well, you know, again, I don't view what China does as development assistance; it's predatory financing. We should be very, very clear about it. I served as ambassador in Tanzania, a country which has long (inaudible) ties to China and has for a long time. The Southern Railroad was built by the Chinese. And I'll be honest, when I was ambassador, we tried to get China to come to the table to help us with humanitarian challenges, to help us with development challenges and couldn't really get them to engage because they didn't define it as being in their interest.

What we offer that is different is the outcome. We offer self-reliance. We want to help countries move from being recipients to partners to builders. That's our model. It's a long road in some places. It's a really long road in some places. But we're hoping that each country where we work, that's the ultimate and that's what they think through.

With Chinese financing, it's the opposite. They want dependence. They don't want a country to become self-reliant. They want a country to be in a sphere of influence.

And it's funny; I met with some American business leaders who were doing work in Central America, and they said a term I had not heard before. They said that they, in the businesses, refer to Chinese financing as "loan to own," because they said, going in, there's no pretense here. This is unsustainable debt in many cases. So it is -- and it's not even long term in some cases. It isn't very long before the defaults occur and then you see a port in Djibouti that is suddenly taken over by Chinese interests. So we have to understand what that is.

The other significant difference, everything that we do is transparent. All of our assistance -- you can go to foreignassistance.gov and you can see where USG assistance is. In the case of the Chinese and other authoritarian financing, it's always done in secret. And the interesting thing is the fine print only emerges later on.

And as we've all seen from newspapers and television reports in recent months, when the citizens of those countries actually seek the fine print, A, sometimes it's too late. But, B, they don't react well because they realize that what's happened is they've lost control of their birthright; again, strategic resources and assets. So that's a very different piece to it. One final thought. Everything that we do in the U.S. Government, the work we do, is designed to be citizen centered, citizen responsive. I mean, that's what it is that we try to foster. Those are fundamental American values. The other model is Beijing-centric.

MODERATOR: So there is a bit of a tradeoff there, right? There's some -- obviously, some governments aren't governments you necessarily want to work with, they still run countries. Do you -- you know, you may want to skip over those countries, and in many cases, it will be harder to start projects or to engage with the private sector in --

ADMINISTRATOR GREEN: We have to be selective, and we have to be opportunistic. Our assistance is voluntary. No one is required to take it. And when I was ambassador, I would occasionally have somebody push back and say, "Oh, you've got tough conditions and tough turrets."

MCC, Millennium Challenge Corporation, we crafted that compact, the largest compact in history. But yeah,it's voluntary. Nobody has to take the money. But we do because this is an expression of American policy and American values.

Yeah, there's certain things that we expect when partnering with us. That means that we are not able to work or want to work everywhere. But what we do want to do is take those willing countries, those partners, and help them to realize their dreams, their own version of the American dream. And, you know, we think that that's what people inherently want, and that's part of American leadership.

MODERATOR: So as you choose areas of focus, how explicitly do you (inaudible) thing against China, Russia, and (inaudible)? Is that --

ADMINISTRATOR GREEN: Well, again, what we do is we express the difference in the models over and over again, what it is that we offer. And again, you know, to me, it's self-reliance; it's human dignity; it is those values that we all view as fundamental, and that's what we offer. And we try to be clear and help countries understand, in some of the complex transactions that -- authoritarian projects or programs we offer, what we see objectively as the consequences. And again, I -- the story is telling itself, quite frankly, right now. And it's unfortunate because some of the countries are seeing debt levels that are staggering.

You know, it was interesting to me, you know, we're about 20 years after the Pope's jubilee agenda. And I remember, I was in Congress at the time, debt relief. And I remember we had notable leaders coming and saying, you know, "It's not possible for Africa to rise with these levels of debt." And so the U.S. and others -- but really, it was the George Bush administration that led the charge -- provided debt relief so that countries could actually reclaim their future and start to rise.

As I look around the world right now, we're seeing those same debt levels reemerge. And almost all the debt's in one place. And so, you know, it's something I think that we should be talking about, those of us who care about quality of life and opportunities and development. There's once again time for debt relief and moving to something that is about opportunity.

MODERATOR: So now we have two Popes, so that should make it easier. Organizationally, how do you implement the shifts in emphasis?

ADMINISTRATOR GREEN: Well, so we have been undertaking a redesign -- we actually call it Transformation now -- which is a reshaping of our entire agency, around this notion of the journey to self-reliance. And since private sector engagement is the ultimate goal in every country where we're working, it's at the heart of what we do. And so you'll see, we have a private sector engagement team, but it really is going to be something that we look at with every area, in every program. We reach out looking for the best ideas that we can find, the best technologies. We want those dollars; you know, we'll never have all the money we would like (inaudible) challenge, so we guard those resources carefully. But with each of the programs and offerings that we have, we want them to go as far as they possibly can. Sometimes it may be a nonprofit, or it may be a for-profit; it may be blended. But we're asking our teams around the world to constantly think about the opportunities for how we can partner with the private sector. And you know, not every sector necessarily lends itself, but we want to make sure that we're having those conversations. And we want them to come in the door and help us design the programs from the beginning.

So I began by saying how much I dislike the term "public-private partnership," and that's really because, as I was first getting involved in the sector, what it actually meant, well-intended, was that development agencies, not just USAID but others, would design a program, you know, all the details, spell it all out, and then come to the private enterprise and say, "Will you please take care of this for us?" And businesses would say, "No, no. If you'd actually talked to us, we might have been able to, you know, harness some of the things that we're doing." So what we're trying to do is say, "Okay, from day one, we want to have those conversations. Maybe there's not a match. Okay, fair enough. But where there is, we can do some things we would not be able to do otherwise."

MS. GLASS: And even when there's not a match, just that exchange of information, to better inform our strategies, and also our partner strategies, is often very, very valuable.

ADMINISTRATOR GREEN: And you learn a lot.

Last updated: April 01, 2019

Share This Page