FY 2013 Agency Financial Report: A New Model for Development

Speeches Shim

Over four years ago, President Barack Obama set forth a new vision of a robust and results-oriented U.S. Agency for International Development (USAID) that would lead the world in development. In the years since, we have seized upon this challenge, advancing an ambitious reform effort that is not only transforming the way we work around the world, but also the kind of results we can deliver.

Under the leadership of President Obama, we helped launch new global partnerships to dramatically accelerate and scale up efforts in food security, child survival, and access to energy. Taken together, these high-impact efforts formed the foundation for a new model of development that brings new public-private partnerships, a greater emphasis on innovation, and a relentless focus on results. It is a model that recognizes that the problems we face—from ending extreme poverty to mitigating climate change—are solvable. But solving them requires a meaningful commitment from all parts of our society.

Although most of us work far from home, our work remains first and foremost for our home: for the markets we open to American businesses, the skills of our young people we help build, and the threats to our shores that we help prevent. By advancing broad-based economic growth, democracy, and human progress around the world, we help create new jobs today and better position American companies for the markets of the future. Most important, we never stop working toward the day when our efforts will no longer be needed.


After more than two years, the USAID Forward reform agenda has touched upon every part of our Agency—from budget to talent management. In each area of reform, we set aspirational targets that have established a common language for success, challenged our partners, and encouraged us to step out of our comfort zone.

We re-established our policy bureau and budget capabilities from scratch, giving us greater control over how, when, and where we spend our resources. These decisions allowed us to better focus our efforts where the needs and potential impact are greatest. Since 2010, regional bureaus have reduced program areas by 29 percent; Feed the Future agriculture programs have been phased out of 22 countries; and USAID global health program areas have been phased out of 23 countries.

Since the launch of our evaluation policy, 186 high-quality evaluations were completed for both ongoing and completed programs, and they are available on our Web site or through a mobile app. Half of these evaluations have led to mid-course corrections to increase the development impact and one-third has led to budget changes.

A new emphasis on supporting and strengthening local solutions has enabled us to shift $1.4 billion in funding to local institutions, firms, and organizations in 2012 alone—helping strengthen self-sufficiency. When we partner with developing country institutions, we use sophisticated tools to access their financial management capacity and safeguard U.S. resources.

We continue to mobilize a new generation of innovators and scientists through our Development Innovation Ventures Fund and the Higher Education Solutions Network. In the last three years, we have launched five Grand Challenges for Development to generate game-changing new ideas in maternal and child health, childhood literacy, clean energy, water, and open government. For example, through All Children Reading, nearly three dozen organizations—half of them local—are pioneering a range of novel approaches to education, from helping children in India learn to read with same language subtitling on movies and TV to bringing fully stocked e-readers to rural Ghana.

We are also focusing on working more effectively with a range of partners, from faith-based organizations to private sector companies. A new emphasis on leveraging private sector resources has enabled us to dramatically expand our Development Credit Authority—unlocking a record $525 million last year in commercial capital to empower entrepreneurs around the world. In 2012, we significantly increased our contributions to public-private partnerships, in turn leveraging an additional $383 million in resources from our private sector partners.

We have made great strides in laying a foundation for success and institutionalizing these reforms as a core part of our Agency, but we know a lot of work remains. We continue to work hard to meet serious management and performance challenges across the Agency. As the Statement by the Office of Inspector General reports, we face challenges in six areas, including work in non-permissive environments, sustainability, local solutions, and performance management and reporting.

For example, we face daunting challenges in implementing programs in countries like Afghanistan, Pakistan, Iraq, and Somalia, and we have focused intensely over the past several years on improving our ability to work in these non-permissive environments. As a result, we are launching a new Working Group on non-permissive environments to help us manage risk effectively. Three sub-groups will focus on compiling a compendium of best practices, developing a monitoring toolkit, and preparing training that focuses on our human capital. We look forward to delivering these new tools—which are contingent on funding—to our team in order to strengthen our efforts and better protect our staff, regardless of the environment in which we work.


There is perhaps no better example of our commitment to the bedrock principles of effectiveness and efficiency than the food aid reform package proposed in this past year’s budget request, which would enable us to feed four million more hungry children every year with the same resources, while maintaining the valuable contribution of American agriculture to this mission.

This proposal would increase the flexibility that our Food for Peace program has to respond to emergencies and strengthen food security by enabling us to use a wider range of life-saving tools, including increased local and regional purchase, food vouchers, and transfers. Buying food locally can speed the arrival of aid by as many as 14 weeks. It can also cost much less—as much as 50 percent less for cereals alone. In complex environments, like Syria and Somalia, these flexible tools are invaluable.

The President’s proposal maintains the majority of our emergency food aid funds for the purchase and transport of American commodities. That means we’re going to keep working with soy, wheat, pulse, and rice farmers and processors across America who help feed hungry children from Bangladesh to the Sahel—often in the form of specialized high nutrition products. We made great strides this year toward these reform goals, and we will continue to work with Congress and our partners to achieve the reforms needed to feed millions more vulnerable people around the world.


Across our work, we are moving from a traditional approach of top-down development to a new model that engages talent and innovation everywhere to achieve extraordinary goals. Although this letter only focuses on specific efforts, USAID is delivering meaningful results across a range of priorities, from improving global education, to advancing land tenure rights, to empowering women and girls, to expanding access to mobile and electronic payments for millions of families.


As one of the President’s first foreign policy acts, Feed the Future represented a fundamentally new approach to food security that placed smallholder farmers, especially women, at the center of country-led efforts to transform agriculture and break the vicious cycle of poverty and hunger.

This year, we released the second Feed the Future Progress Report, which highlighted the results of this new approach. We helped 7.5 million farmers adopt improved technologies or management practices. To address the root causes of hunger and undernutrition, we have taken an integrated nutrition approach to reduce stunting by 20 percent in Feed the Future countries—a target that will prevent two million children from suffering the devastating condition of stunting over the next five years. Last year alone, we reached 12 million children through nutrition programs.

In Bangladesh, farmers are using a new fertilizer technique that led to the first-ever rice surplus in the nation’s poorest region. In Haiti, improved planting techniques have helped increase corn yields by 360 percent and rice by almost 120 percent. Far from fleeting, these efforts are quietly and powerfully changing the face of poverty and hunger. Since 2005, we have seen poverty rates fall by an average of 5.6 percent and stunting by an average of 6 percent across all Feed the Future countries.

Last year, the President led global food security efforts to the next stage, introducing the New Alliance for Food Security and Nutrition. Today, it is a $3.75 billion public-private partnership that has encouraged reforms from nine African governments and commitments from more than 70 global and local companies. In Tanzania, Yara International is constructing a fertilizer terminal at the nation’s largest port, and in Ethiopia, Dupont is expanding seed distribution to reach 30,000 smallholder maize farmers and increase productivity by 50 percent.

At the same time, governments have committed to serious market-oriented reforms. Tanzania removed its export ban on staple commodities, Mozambique eliminated permit requirements for inter-district trade, and Ethiopia no longer imposes export quotas on commercial farm outputs and processed goods.


Thanks to strong bipartisan support, we are on track to provide life-saving health assistance to more people than ever before, as we work to achieve the end of preventable child and maternal death and an AIDS-free generation.

Around the world, we are seeing real results of global partnerships to accelerate progress toward these goals. We recently celebrated with Ethiopia as the country successfully achieved Millennium Development Goal 4, reducing child mortality by two-thirds and helping millions more children survive and thrive. In September, the Joint United Nations Programme on HIV/AIDS also reported that new HIV infections among children have fallen 52 percent since 2001, putting us within reach of Millennium Development Goal 6.

To build on this incredible progress, we are aligning our budgets to the areas of greatest need across our global health portfolio. Now, 90 percent of our bilateral maternal and child resources is programmed in the 24 priority countries that account for 70 percent of maternal and child deaths in the developing world. Within those countries, we are realigning our portfolios to help address the highest priority gaps and needs identified in country-owned plans.

Since we helped launch the Child Survival Call to Action in June 2012, more than 175 countries, 200 civil society organizations, and 220 faith-based organizations have pledged to accelerate progress on newborn, child, and maternal survival. We also formed more than half a dozen new partnerships with private sector companies to deepen their engagement in ending preventable child and maternal deaths. At the same time, more than half a dozen countries—including those that have the highest rates of child death—created evidence-based business plans and data-driven report cards to track their progress.


In June, the President announced Power Africa, a new public-private partnership to double access to power on the continent and connect American investors and entrepreneurs to business opportunities abroad. The President announced more than $7 billion toward Power Africa—a commitment that will leverage over $14.5 billion in financing and investment from private sector partners.

With an initial set of six partner countries, Power Africa focuses on completing projects quickly and efficiently, while encouraging countries to make energy sector reforms critical to their success.

In Ethiopia, for example, Power Africa is supporting the first independent power producer geothermal plant in the country, a project that will pave the way for future private sector investment in Ethiopia and provide enough power to reach tens of thousands of people.

In Tanzania, Power Africa is financing the construction of three renewable energy plants, the first phase in a series of biomass and solar mini-grid projects to expand access for the more than 85 percent of Tanzanians that lack access to the grid.


We remain committed to helping the innocent men, women, and children affected by the ongoing crisis in Syria. Today, we provide life-saving aid for 4.2 million people in all 14 governorates across the country, as well as more than two million people who have fled the violence into neighboring countries. While we are primarily focused on emergency medical care and food assistance, we also help provide safe drinking water, shelter repair, and psychosocial support.

We also continue to meet global humanitarian needs around the world. This past summer, we responded quickly to address the humanitarian crises that erupted in South Sudan. By September, nearly 72,000 people had received food and other life-saving emergency assistance. In the Sahel, we reached more than three million people with a range of activities from treating malnutrition to providing food and cash assistance for vulnerable households.


While we remain the world’s leader in humanitarian response, we are increasingly focused on ensuring communities can better withstand and bounce back from shocks—like droughts, floods, and conflict—that push the most vulnerable people into crisis again and again.

In the Horn of Africa and the Sahel, we are at the forefront of international efforts to build resilience in the face of recurrent crises. Although our work is still in the early stages, we are already starting to see results. In Ethiopia, we are using new underground water mapping technology to improve access to water for over 137,000 individuals. In Kenya, 71 vulnerable communities in arid regions have new community-led plans in place to help them on the path from dependence to resilience. All told, we aim to directly benefit 11 million people across both regions.


Across the world, we are strengthening democracy, human rights, and governance (DRG) with a new emphasis on harnessing the power of technology and partnership to catalyze progress. Our efforts are guided by a new strategy we released in June to better elevate and integrate DRG into our broader mission.

In Kenya, for example, we supported a grassroots movement called “Yes Youth Can,” which brought together young people who had witnessed an explosion of violence in their communities after the 2007 election. As the 2013 elections approached, they stood together—one million strong—and helped carry their nation forward in peace.

In partnership with young leaders around the world, we are also helping build the global movement to combat human trafficking. Last year, we launched the Challenge Slavery Tech Contest, which grew an online community of over 2,000 students and invited them to submit innovative solutions.

We continue to work across North Africa and the Middle East to help local citizens realize their democratic aspirations. In Tunisia, we have continued to support civil society and the government to implement the Decree on Associations, one of the most progressive non-governmental organization laws in the region, which was put in place in the wake of the revolution. We are also preparing to support Tunisia’s next round of elections, anticipated for early 2014. And in Yemen, we supported orientation briefings for every delegate to the National Dialogue Conference—including special consultations for female delegates—so they could understand the process and their role within it.


The Agency Financial Report (AFR) is our principal report to convey to the President, Congress, and the American people our commitment to sound financial management and stewardship of public funds. USAID remains committed to effective governance and financial integrity and takes seriously the responsibility to which we have been entrusted. To that end, we continue to work to improve our financial management and internal controls.

This year, USAID received an unmodified audit opinion. We acknowledge the conclusions of the audit report and have prepared a plan to address one material weakness as well as four significant deficiencies identified by the audit. In addition, the auditor concluded that the Federal Information Security Management Act (FISMA) significant deficiency related to management’s implementation of its information security policies and procedures represented a lack of substantial compliance with the Federal Financial Management Improvement Act (FFMIA). Recognizing this as an issue, we are actively working to improve our information management systems while pursuing critical national security objectives in non-permissive environments. We will continue to invest resources effectively and efficiently to address these issues and ensure improved oversight of our funds.

We worked with the Office of Inspector General to ensure that the financial and summary performance data included in this AFR are complete and reliable in accordance with guidance from the Office of Management and Budget. The Independent Auditor’s Report, including the reports on internal control and compliance with laws and regulations, is located in the Financial Section of this report. Issues on internal controls, identified by management, are discussed in the Management Assurances section of this report. I hereby certify that the financial and performance data in the FY 2013 AFR are reliable and complete.


This is an important moment in development. Today, we have new tools and fundamentally new approaches that enable us to achieve progress that was simply unimaginable in the past: the eradication of extreme poverty and its most devastating corollaries, including widespread hunger and preventable child death.

In the 2013 State of the Union address, the President gave voice to this vision when he called upon our Nation to join with the world in ending extreme poverty in the next two decades. “We also know that progress in the most impoverished parts of our world enriches us all—not only because it creates new markets, more stable order in certain regions of the world, but also because it’s the right thing to do,” President Obama told the country.

As we step forward to answer the President’s call with renewed energy and focus, we remain committed to engaging the American people and serving their interests by leading the world to end extreme poverty.

Rajiv Shah Administrator December 16, 2013

Monday, December 16, 2013 - 7:30pm