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Strategic Goal 4 - Selected Strategic Priorities and Analyses


Bureau of Resource Management
Report
May 10, 2010

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III. Selected Strategic Priorities and Analyses

TRADE AND INVESTMENT: Promote increased trade and investment worldwide, on both multilateral and bilateral levels, through market-opening international agreements and the further integration of developing countries into the international trading system.

Analysis: The U.S. Government promotes increased trade and investment, a powerful engine for growth, and has negotiated a number of bilateral free trade agreements to open new markets for American goods and services. In Africa, economic trade data shows declining trends, with trade between the United States and sub-Saharan Africa decreasing in FY 2009. Slow growth will impact virtually all sectors of African economies and threatens to erase recent gains in economic growth, living standards, and poverty reduction.

While these far-reaching effects will be difficult to counteract, they elevate the importance of U.S. foreign assistance and diplomatic efforts in helping sub-Saharan countries achieve their development goals. Sub-Saharan Africa needs increased private sector investment, both foreign and domestic, to achieve sustained rates of economic growth necessary to reduce poverty on the continent. At present, the region is largely disconnected from the global marketplace and the benefits that arise from trade. If Africa were to increase its share of world trade by just one percentage point from its current 2% to 3%, it would generate additional export revenues of $70 billion annually, which is nearly three times the amount of annual assistance to sub-Saharan Africa from all donors. U.S. diplomats are working with sub-Saharan countries on policies that promote growth in trade and foster Africa’s integration into the global marketplace.

INFRASTRUCTURE: Promote sustainable improvements in foreign infrastructure by encouraging public-private partnerships, strengthening capacities for oversight and management, and expanding markets for tradable infrastructure services.

Analysis: The U.S. Government supports the creation, improvement, and sustainability of physical infrastructure and related services in both urban and rural areas, to enhance the economic environment and improve economic productivity, including for women. It also promotes sustainable improvements in the governance of infrastructure by utilizing opportunities for public-private partnerships, strengthening capacities for oversight and management, expanding markets for tradable infrastructure services, and promoting clean energy activities. This approach is based on data that shows that countries rich in energy resources but also have efficient markets are more likely to foster transparency, strengthen the rule of law, and ensure that subsequent benefits are enjoyed widely. Dependence on natural resource wealth works to inhibit the political and economic development of a country.

In FY 2009, the United States exceeded its target for increasing access to modern energy services by more than 100%, due in large part to results reported by OUs not included in the initial program target. For example, USAID’s Office of Development Partners (ODP) reported serving an additional 1.85 million people with rural electricity cooperatives in the Philippines, Bangladesh, Sudan, and the Dominican Republic under the Cooperative Development Program. ODP’s results were not included in target planning for FY 2009, but are nonetheless a significant achievement. Target levels for FY 2010 and FY 2011 are reflective of the varying number of countries implementing programs in this area.

ENERGY SECURITY: Enhance U.S. and global energy security by promoting open and transparent, integrated, and diversified energy markets; encouraging appropriate energy sector investments; and developing and sharing clean energy.

Analysis: The Department of State is the lead U.S. Government agency responsible for formulating and implementing U.S. foreign policy relating to energy security, sanctions, and commodities. Because imports supply roughly half of U.S. oil needs and the United States has only 2% of proven world oil reserves, the international aspects of energy with which the Department deals are critical to U.S. national security. A primary focus of the Department of State’s diplomatic efforts in the area of energy security is promoting the development and implementation of policies in foreign governments designed to foster growth in the clean energy sector. Growing availability and use of non-oil energy sources will help the United States and other countries reduce their reliance on oil.

AGRICULTURE: Support increased productivity and growth in the international agriculture sector by promoting expanded agricultural trade and market systems, broadening the application of scientific and technical advances – including biotechnology – and encouraging sustainable natural resource management.

Analysis: Increased agricultural productivity is an important goal for nearly all the countries in which the United States provides assistance. In FY 2009, producers benefiting from U.S. assistance increased the value of international exports of targeted agricultural commodities by an average of 70.4%, greatly exceeding the targeted 27.23%. The average was impacted by results reported by Serbia (though not included in the original target), due in part to the fact that more agribusinesses were surveyed in 2009 than in 2008. The impact of Serbia’s value was balanced to some degree by negative changes in value in Uganda and Timor-Leste. The value of Timor-Leste’s export of targeted commodities declined by 22% because its principal export commodity, Arabica coffee, undergoes a biennial fluctuation in production, and FY 2009 corresponded to a “down” year. Despite the drop in export volume, participants in coffee value chains still benefited from the sale of coffee cherries due to prior and continuing contributions from the U.S.-funded activity and are expected to do better next season. In FY 2011, activities in this strategic priority will be a core element of the President’s Global Hunger and Food Security Initiative.

ECONOMIC OPPORTUNITY: Support efforts to help people gain access to financial services, build inclusive financial markets, improve the policy environment for micro and small enterprises, strengthen microfinance productivity, and improve economic law and property rights.

Analysis: Economic opportunity includes efforts to help families gain access to financial services, build inclusive financial markets, improve the policy environment for micro and small enterprises, strengthen microfinance institution (MFI) productivity, and improve economic law and property rights. MFIs provide access to financial services to those who would otherwise not have access. Operational sustainability is an important milestone on the road to financial sustainability, the point at which the MFI becomes profitable and can finance its own growth without further need for donor funding. The indicator shown summarizes performance among a mix of MFIs ranging from new to more mature institutions as they progress toward operational sustainability (within three to four years of initial U.S. assistance) and eventual financial sustainability (seven years or less).

In FY 2009, 86% of U.S.-assisted MFIs reached operational sustainability, exceeding the performance target. The larger share of operationally sustainable MFIs may have resulted from a tendency among USAID missions and other partner organizations toward supporting MFIs that have made greater progress toward financial sustainability. Alternatively, it may reflect a general shift within the microfinance industry toward greater emphasis on financial sustainability, or some combination of the two trends.

ENVIRONMENT: Promote partnerships for economic development that reduce greenhouse gas emissions, improve air quality, and create other co-benefits by using and developing markets to improve energy efficiency, enhance conservation and biodiversity, and expand low-carbon energy sources.

Analysis: The United States uses the spatial indicator tracking the number of hectares of biological significance and natural resources under improved management as an appropriate measure of the scale of impact of natural resource and biodiversity interventions. The standard of ‘improved’ management is defined as implementation of best practices and approaches and demonstration of progress and results from a potentially wide range of tailored and relevant interventions.

Ecosystems are becoming impoverished at an alarming rate worldwide, threatening to undermine development by reducing soil productivity, diminishing resilience to climate change, and driving species to extinction. In FY 2009, slightly more than 104 million hectares were under improved natural resource or biodiversity management because of U.S. assistance, falling short of the target of 113.2 million hectares. Targets for FY 2010 and FY 2011 have been adjusted to reflect the closure of some country programs and other changes in programming focus. Beginning in FY 2011, activities in this program area will be central to the President’s Global Climate Change Initiative.

IRAQ – USAID/Tijara Private Sector Development program

USAID/Tijara promotes private sector development by supporting improved access to finance and business development services to micro, small, and medium enterprises (SMEs). The program supports nine indigenous Iraqi MFIs in addition to three international MFIs, which together provide access to credit in all 18 Iraqi provinces. Since 2004, USAID supported MFIs under Tijara and its predecessor program Izdihar have distributed more than 172,690 loans worth over $397 million, and boasts a 98% repayment rate. Tijara also helped to establish the Iraqi Company for Bank Guarantees and the Iraqi Company for Financing SMEs which have enabled nearly $32 million in SME lending by Iraqi private banks to date. SMEs are Iraq’s best source of potential for non-oil private sector growth and employment generation outside of the public sector. For further information, visit http://www.tijara-iraq.com.

 




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