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Only Private-Sector Investment Can End Extreme Poverty’ Raj Shah Tells CGD
00:20:20
USAID Administrator Raj Shah has called for “massive private and commercial-sector investment” in development as imperative to ending extreme poverty. As he prepares to step down after five years at the helm of America’s...
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- [00:05]
A
Hello and welcome to the CGD podcast with me, Rajesh Merchandani. Today, I'm delighted to say that we're joined by the current head of the US Government, International Development Agency, USAID, Dr. Raj Shah. Great to have you here.
- [00:17]
B
Thank you, Raja.
- [00:19]
A
Now you are stepping down, so this is a good time to cast your eyes back over your tenure and forward to what remains to be done. But let's start with how you've approached this job. Because the mission of USA is to end extreme poverty and promote resilient democratic societies, which kind of covers a lot of things really. So when the mission is so broad, how do you prioritize or how have you prioritized?
- [00:44]
B
Well, our basic intention was to both elevate the role of development in American foreign policy and in how America projects power and leadership around the world. And also to adopt a new model of development that really was less about us trying to do everything on our own and much more about building public private partnerships, investing in science and technology, delivering better results in a more measurable, accountable manner, and being far more transparent. And we have really pursued in the last five, five and a half years an agenda that focuses on both elevation of development and doing it differently. And I think we've seen some early successes.
- [01:24]
A
Well, we'll get into the weeds in a second. But let me ask you, if you had to pick two things that you think have been successes during your five years, what would you say they would be?
- [01:34]
B
Well, I do think that the President today highlighted the success of the fight against Ebola in West Africa. And the reason I think that's an emblematic narrative is it does, it is a story about doing things differently. We focused on science and technology. We built a data based and evidence based system to make sure we could identify cases, isolate cases. Even as we've pursued an aggressive response to a crisis, we have been building local institutional capacity and using local partners to get almost all of the work done. And that has resulted in an extraordinary success story. I mean, when we started this effort in large scale, around September, October, there were hundreds of cases a day of Ebola in West Africa. Today in Liberia, there's less than one. And so that is a critical story, I think. And it just illustrates that when we do things with purpose, with a focus on delivering results, with the willingness to innovate, and with prioritization for local partners, we're able to be very successful.
- [02:40]
A
Do you worry that it's a bit early to be talking about success with Ebola? I mean, Liberia may have just the one case, Sierra Leone, certainly has more than that.
- [02:48]
B
Yeah, you've seen about a 90% reduction in cases in Liberia, about an 80% reduction across the full three country endemic region. And getting to zero is going to take a lot longer, which is why we're not announcing an end of American leadership, but we are transitioning that leadership so that it's far more local and sustainable in the way it's executed in the future.
- [03:11]
A
I think 100 US troops will stay.
- [03:14]
B
But.
- [03:14]
A
But what about rebuilding West African economies that have been affected by Ebola? Because that's almost a bigger problem. They've been shattered.
- [03:22]
B
Well, and that speaks to some of the other things we've tried to do using this new model of development. We created and launched Feed the Future, a major effort to invest in agricultural economic development. And we will aggressively invest in agriculture throughout West Africa through our Feed the Future program. We've prioritized Power Africa, an effort to bring power companies, investors and local governments together to make the reforms necessary to make commercial investment in the power sector more attractive. We will double down on Power Africa and West Africa going forward. As part of building back better, we have invested in creating a US Global Development Lab that allows us to invent new diagnostics, new vaccines, new drugs and new data delivery systems in a way that is much more effective. And we've seen the Global Development Lab make contributions to the fight against Ebola that have been just tremendous at accelerating success. So all of those things will persist. And this is why I just want to come back to this point that this new model of development that really does bring scientists and technologists, innovators, new corporate partners all working together to deliver these outcomes is a far more powerful way of getting our work done than the traditional method of hiring a contractor to build a road.
- [04:44]
A
And so would you say that new model is the other thing? I asked you for two successes. Would that be the other thing, this new model?
- [04:50]
B
Yeah, I think the two successes I do think have been elevating the role of development in American foreign policy. And we could talk about the latest national security strategy, but just how central USAID and our development agenda is around the world to basically everything we do, foreign affairs. And second, it's this new model. And the new model manifests itself in a lot of these kinds of initiatives. Feed the Future, Power Africa, Child Survival. But at its core, it's basically saying if we're going to have an aid and assistance relationship, countries need to make reforms, set goals and be aggressive about delivering results. We need private sector partners making Investment for commercial return, but real investment. And we need governments like the United States government and institutions like USAID being the convener that brings people together to get the job done.
- [05:43]
A
So let's pick up on a couple of those points. Private sector investment and the idea of increased local procurement, country ownership on the private sector investment. If that is the future of development, private public partnerships, then what is the US or what should the US Be calling for when it comes to the Financing for Development conference in Addison and in the summer?
- [06:04]
B
Well, this Financing for Development conference is hugely important because it's a chance for the whole world to come together and say, if we're going to be serious about ending extreme poverty, we need serious resources for emerging markets, for infrastructure, for health, for power, for agriculture, for financial services. And the only way you're going to get those resources is by unlocking massive amounts of private and commercial investment. Now, we have tried to do that and in some cases have been successful. Power Africa has already mobilized tens of billions of dollars of financial commitments from private investors for African power sector activities. Our new alliance for Food Security, which is really part of Feed the Future, has not only attracted $10 billion of commercial agricultural investment commitments, but we've seen more than a billion already invested in Africa. And those investments have reached more than 2.5 million farm households and moved those households out of poverty. So, you know, we're seeing the seeds of important early success. But the Financing for Development conference is a chance for the whole world to embrace this new model and for us to be much more effective and aggressive at bringing commercial investment to areas like infrastructure where there are huge deficits and needs.
- [07:18]
A
If there's one thing that the US could take to Addis Ababa and say, okay, this is what we're going to offer, this is what we're going to do. I mean, you know, President George Bush announced MCC at a financing conference, didn't he? He created the Millennium Challenge Corporation, some big thing that the Americans could put on the table and say, come on, follow our lead. What might it, or should it be?
- [07:40]
B
Well, others will figure that out in the coming months as we lead up to that conference. But I would point out we're not kind of pursuing leadership by conference here. President Obama took office right away, said that development is going to be a major part of the way I address the world in terms of projecting American power. As the USAID administrator, I have been part of important National Security Council deliberations and my team has been a part of the national security team in a way that has been unprecedented in American foreign policy history. We rebuilt USAID by doubling its foreign service and by building its civil civilian staffing such that we have the capacity to lead major presidential initiatives like Feed the Future and Power Africa. And as you see in the new National Security Strategy, elevating development is a major part of how we address challenges from any extreme poverty to fighting hunger and child survival, to addressing the crisis in the Middle east and around Ukraine. So, you know, I would say that this has been an administration that's been extraordinarily committed to development. Our budgets have been far higher than they were previously. Congress has on a bipartisan basis, supported that robust vision of results oriented development. And we're not waiting for a conference in year seven to kind of make that statement.
- [08:58]
A
Seeing as you brought up the National Security Strategy, let's talk about that. I was going to go and do that a little bit later, but seeing as we're there, how important, how vital do you think it is that the next president maintains this understanding of this indelible link between development and America's own security and prosperity?
- [09:19]
B
Well, you know, if you look at the problems we face around the world today, it is quite clear that development and humanitarian engagement done effectively in a modern and results oriented way is absolutely critical to our own prosperity and national security. You know, we have tens of thousands of young children from Guatemala, Honduras, El Salvador showing up at the US Border looking for a better future. A large part of what drives that are the very high crime rates in those countries that is destabilizing those economies and a lack of human opportunity for those kids. So our investments in crime and building criminal justice systems in Central America, in Feed the Future, programs that offer real economic opportunities, in supporting entrepreneurs that are doing things that create real jobs in those countries is all a part of taking the long view of keeping America safe and secure. Similarly, in Syria, we've spent more than $3 billion in the last several years and protected tens of millions of people who are displaced, who needed to go to school, who didn't otherwise have food or basic support. More than 7 million of them have been inside Syria itself. Our workers and our partners have taken huge personal risks to take shrapnel out of babies inside of Syria, because that's what the humanitarian mission called for, in addition to just being the morally right thing to do. That, coupled with billions of dollars of assistance and support for Jordan and Lebanon and structural support for the region, has helped mitigate the disastrous consequences of the Syrian civil war. So, you know, that's another example of how this type of engagement helps protect our security at home. And I come back to Ebola. I mean, you know, when I came back from West Africa in mid October after surveying and helping to lead that response, you know, folks in my community were nervous. People questioned whether I should go to my kids soccer game and there and this country was, you know, experiencing a lot of politicization, but also a lot of fear related to Ebola. You don't see that anymore today. And you don't see that this didn't magically go away. It went away because men and women that work with USAID and CDC and all of our partners showed courage and perseverance. They went in, they used science and they used excellence and they delivered an extraordinary outcome. And so you can go all around the world. The problems we face today that threaten American security and prosperity fundamentally require elevation of the development mission and an engagement based on using the tools of development diplomacy and humanitarian affairs.
- [12:03]
A
What's not gone so well in the past five years?
- [12:07]
B
Well, we've had lots of things we tried that didn't work. I could go through a very long list, give us a few. But the reality is, you know, I'm just proud of our teams for innovating and taking on big aspirations. I do think how the world functions and funds large scale infrastructure that's required to deliver low cost energy, that's required to allow mobility and reduce transactions costs for businesses in terms of road infrastructure and bridges and rail. Those are all areas where the entire development community, and certainly usaid needs to do more. And we got to figure out new ways of building public private partnerships and getting that done. And until the development community achieves that, it's going to be hard to see how we mobilize lots of additional resources for the things that are most critical to create inclusive growth around the world. Okay, that's just one example.
- [13:02]
A
All right, but I'm going to go back to that question. Tell us about the things that haven't gone well. Let me. We talked about some of the initiatives that you have pioneered and championed in the five years. One of the things that I think your tenure has been noted for is, is the growth in the number of initiatives. A lot more initiatives. Do you think that comes with any issues, any problems? I mean, some of the things that you could say are that more initiatives mean that funds are directed. There's less flexibility on the ground for people in the field to say, well, we can respond to local needs here.
- [13:39]
B
So there's no question we have increased the centralization of decision making and created systems that can aggregate measured outcomes and deliver aggregated results across a range of countries and programs.
- [13:53]
A
Has that been without problems?
- [13:54]
B
That's how the future works. That has been controversial. It has been with lots of problems and it's been with some trade offs. But I am convinced that if we're going to have the kind of success we've had rebuilding the agency, reconstituting our budget and policy functions, having budgets that, that have been not only robust by presidential determination, but also Congress, each of the last several years has given us even more resources than the President has asked for. In these major efforts, we have to be able to demonstrate and document these aggregate results. And that does require a greater degree of centralization and a sharper focus on managing variation across settings. So I do think that's a trade off. You know, we used to be more decentralized and the cost there was. You didn't have best practices transmitted from country to country as effectively. And you had a very hard time sort of saying, okay, this is how we do Feed the Future programs. Here's what the aggregate results are.7 million farmers reach 12.5 million kids no longer hungry because of improved agricultural productivity. You couldn't document and aggregate those results. Now you can. But the cost is our missions have fewer areas of work and they have more engagement with Washington and with these initiatives as they execute on those areas of work.
- [15:17]
A
And would you say that's a good or a bad thing?
- [15:20]
B
I think it's a trade off I made. So I think it's the right direction at the time. And in that context, there are some areas, like when we program democracy, rights and governance funding, where I do think it still makes a lot of sense to have a more decentralized, very locally adaptive approach. But in general, for large developmental efforts, I think you have to be able to bring an accountability that's consistent across setting and that requires a more initiative like approach.
- [15:55]
A
You talked a lot about Feed the Future. It's an initiative that has been regarded as being a success, possibly because it had really strong leadership from you. The Global Health Initiative, on the other hand, didn't have that leadership and it sort of fizzled out. So what did you learn from that?
- [16:12]
B
So I've learned that big collaborative interagency processes can be highly successful if there's strong leadership. And you know, Feed the Future has had the benefit of Jada McKenna has also been an outstanding leader in that project. Secretary Tom Vilsack has been very committed. Both Secretaries of State I've worked with Clinton And Kerry have been very committed and the President's been very directly involved. So a lot of high level leadership can help create the basis for real success. And we've seen more than quadrupling of America's investments in agricultural development. And we've seen real concrete results as a result of that, including really rapid reductions in stunting and child malnutrition in country after country. And much more data is going to come in this year on that in particular. So, you know, it just shows you what can be done. The other thing it shows you is that Congress can get behind those kinds of efforts, right. On a bipartisan basis. The House of Representatives passed Feed the Future legislation off the floor. I think that has the opportunity to be passed into law this year if the Senate catches up to them. So I just think there's a lot of potential. And it's not just food and agriculture and Water for the World passed both the House and the Senate signed into law. We've seen food aid reform passed both the House and Senate in the farm bill signed into law the most significant flexibilities in American food assistance in 60 years. So those are the kinds of things we can do together. If we're very results oriented, very focused on this new model of development, and if we kind of communicate and bring Republicans and Democrats into the mission together.
- [17:49]
A
What's left undone?
- [17:52]
B
Well, the fight to end extreme poverty and the fight to make sure that American leadership around the world is truly inclusive of and elevating the mission of development is always going to be a work in progress. And it's always going to require new innovations that can get more resources into the sector. I think in particular, some of the things we all need to learn together are how do we improve institutional capacity in fragile states, in particular Ebola, Haiti, the transition in Afghanistan. These are national security challenges in large part because they take place in extraordinarily poor and extraordinarily fragile settings. So we all as a community can get better at helping fragile states be less fragile. Build resilience, build institutional capacity, strengthen political leadership and deliver success.
- [18:50]
A
And if there's one thing that you a piece of advice that you'd like to pass on to your successor, whoever that may be, what would it be?
- [18:56]
B
Well, it's to listen to everybody with open ears, with a genuine desire to learn and to recognize that to be successful at elevating the role of development, you have to honor and bring into the mission a lot of different types of people that might have different points of view. Their faith may bring them to this work, or their scientific expertise may bring them to this work, or their personal experiences might bring them to this work. Whatever it is that motivates people to be a part of this mission, if you listen to them and embrace their desire to contribute, I think we can build the kind of big tent politics that can continue the trajectory of elevating usaid, elevating development in our national security decision making, and helping leaders see and execute on the reality that the fight against extreme poverty is in our core national security and in our core economic interest.
- [19:57]
A
Administrator Shah, we thank you for your time today and over the last five years, and we wish you the very best. Thanks for joining us.
- [20:03]
B
Thank you very much.