USAID Partnership Report 2014-15

 

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USAID's partnership with the private sector achieves the mission: “We partner to end extreme poverty and promote resilient, democratic societies while advancing our security and prosperity.”

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PARTNERING FOR IMPACT: USAID AND THE PRIVATE SECTOR

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OUR MISSION WE PARTNER TO END EXTREME POVERTY AND PROMOTE RESILIENT, DEMOCRATIC SOCIETIES WHILE ADVANCING OUR SECURITY AND PROSPERITY. “ If we’re really going to transform [developing] economies and create opportunity for hundreds of millions of people who live on a dollar a day or below that, we need to engage private companies and reshape what’s possible. ”—Former USAID Administrator Rajiv Shah; Politico: Open Mike Interview, August 1, 2014

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PARTNERING FOR IMPACT: USAID AND THE PRIVATE SECTOR 2014-2015 TABLE OF CONTENTS 04 Foreword from Ricardo Michel 05 Why Private Sector Engagement 06 Partnerships by the Numbers 08 How USAID Partners with the Private Sector 10 Partnerships in Action 10 Agriculture & Food Security 15 Energy Access 18 Education & Youth Development 21 Health 24 Climate Change 27 Water, Sanitation & Hygiene 28 Financial Inclusion & Innovation 30 Innovation & Entrepreneurship 34 Inclusive Development 38 Fostering a Culture of Partnership

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04 PARTNERING FOR IMPACT \ 2014-2015 FOREWORD Engaging the private sector is key to achieving the U.S. Agency for International Development (USAID) development aims, and central to our newly reformulated mission: “We partner to end extreme poverty and promote resilient, democratic societies while advancing our security and prosperity.” Because we recognize that international development and democracy objectives cannot be achieved without a vibrant and robust private sector, USAID is aggressively pursuing a model of development that prioritizes partnerships, and leverages the unique skills and capabilities of the business community. USAID has partnered with the private sector since its founding in 1961. Since that time, our approach to collaborating with the business community has evolved and expanded as the development landscape has shifted. Today, 91 percent of financial flows from the United States to the developing world are from private sources, rather than official development assistance. The private sector is therefore, a critical contributor to development progress, and key partner for USAID. In response to this changing context, we have made partnering with the private sector more central to how we do business. Engagement with the private sector is an integral component of the Administration’s key presidential initiatives, such as Feed the Future and Power Africa. Partnerships are a fundamental tenant of the U.S. Global Development Lab. Launched in 2014, the Lab is leading USAID’s efforts to harness the power of science, technology, innovation and partnerships to accelerate development results. In 2014, USAID engaged in more than 200 partnerships with the private sector. These partnerships have advanced core U.S. development and foreign policy priorities, such as increasing food security, ending preventable child deaths, providing access to power for millions of people in Africa, and advancing literacy in developing countries. As we cannot feature all of this great work, this report highlights some of our most innovative and impactful partnerships from across USAID Bureaus and Missions. As you will read in this report, we are proactively engaging the private sector—tapping into business capabilities to fuel economic growth, innovation and job creation. To date, we have made much progress, but we know there is more work to do. Today, 1.2 billion people still live in extreme poverty. To make a difference, we must all seek opportunities to unite our passion and abilities to tackle complex issues at a larger scale than any of us could take on alone. We are committed to partnering strategically, and grateful to our partners highlighted in this report, and the hundreds of others working with USAID around the world to eradicate extreme poverty—a goal that is within our reach, now more than ever before, but one that will only be accomplished by working together. —Ricardo Michel, Director, Center for Transformational Partnerships, U.S. Global Development Lab, USAID

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05 PARTNERING FOR IMPACT \ 2014-2015 WHY PRIVATE SECTOR ENGAGEMENT To achieve sustainable solutions to today’s most intractable development challenges, collaboration is essential. Recognizing this, USAID builds partnerships that leverage the combined expertise, assets, and resources of the public, private, and nonprofit sectors to deliver cost-effective and results-oriented development solutions. USAID works with a diverse array of partners— including host country governments, civil society and faith-based organizations, global and local businesses, universities, foundations, non-governmental organizations and diaspora groups—that bring distinct proficiencies and knowledge toward creating sustainable development impact. Among these partners, the private sector has a unique and growing role to play in global problem solving. USAID partners with the private sector where there is strong alignment between business interests and development objectives. In today’s globalized world, there is increasing overlap between these aims, and more opportunities than ever before to work together in areas ranging from promoting sustainable agricultural development, to providing employment opportunities for youth, to increasing access to essential services such as healthcare, power, banking, and water, sanitation and hygiene. For USAID, working with the private sector enables mobilization of private sector resources, bringing expertise and market-based solutions to improve social and economic conditions in developing countries. For the private sector, partnering with USAID provides access to specialized know-how, support, and relationships that help advance business goals, fostering the economic growth and poverty reduction needed to sustain business and industry. Waqas Jawaid

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PARTNERSHIPS BY NUMBERS06 PARTNERING FOR IMPACT \ 2014-2015 THE USAID has over 250 active public-private partnerships... with a combined life-of-project USAID commitment of over $1 billion & with a total combined private sector leverage of over $1.3 billion Since the conception of the Global Development Alliance, USAID has engaged in over 1,500 private sector alliances, leveraging more than $20 billion in public and private funds. $20 billion USAID’s Development Credit Authority has unlocked $3.7 billion in private local capital for entrepreneurs in the developing world In the past year alone, DCA unlocked $769 million for businesses in developing countries

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07 PARTNERING FOR IMPACT \ 2014-2015 Since its launch in 2012, the New Alliance for Food Security and Nutrition secured $10more than billion in commitments and 200more than African and international companies to promote sustainable agriculture across Africa 2012 2013 Responsible private investments have reached 3 million smallholder farmers 2014 Power Africa has leveraged more than $20 billion in commitments from private sector partners 4,000More than Megawatts (MW) worth of transactions for power projects have financially closed as part of Power Africa

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08 PARTNERING FOR IMPACT \ 2014-2015 HOW USAID PARTNERS WITH THE PRIVATE SECTOR USAID works collaboratively with the private sector across nearly every sector and industry to find new solutions to global challenges. Partnerships may focus on achieving shared goals related to encouraging and supporting business growth in developing countries, increasing investment into sectors that are critical to development, or promoting adoption of sustainable and inclusive business practices. In its partnerships, USAID may play a number of roles, including as a co-investor of resources; a convenor of diverse stakeholders to tackle an issue; and as riskmitigator to facilitate investments. Key ways USAID collaborates with the business community include: Building Public-Private Partnerships USAID builds partnerships with local and international companies based on principles of shared interest and shared value—first defining a joint vision for success, and then co-creating a partnership that utilizes the respective strengths of the partners. USAID has learned that the most effective partnerships are founded on strong alignment between core business interests and USAID’s development objectives, with shared resources, risks and responsibilities. The Global Development Alliance is USAID’s flagship model for building public-private partnerships, focused on market-based solutions to deepen USAID’s development impact. Catalyzing Investment Increased private capital flows to developing countries provide an opportunity to leverage private investments alongside traditional development assistance. Working with financial institutions, companies and other financial providers, USAID facilitates greater private investment in support of key development objectives in sectors such as energy, agriculture, and health. The Agency works with partners to tackle barriers to investment, and provide technical expertise and tools. These efforts can have a direct effect on the success of private sector initiatives by helping to overcome investment challenges and integrate development-focused approaches into investment strategies. Starbucks

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09 PARTNERING FOR IMPACT \ 2014-2015 Mobilizing Local Capital In emerging markets, 8 out of 10 small businesses cannot access the loans they need to grow. USAID’s Development Credit Authority (DCA) uses risk sharing agreements to mobilize local private capital to fill this financing gap. DCA partial credit guarantees incentivize private lenders to extend financing to underserved markets, enabling promising entrepreneurs to obtain working capital, or allowing smallholder farmers to finance their inputs. Through this mechanism, USAID seeks to prove the commercial viability of these underserved markets to encourage additional local lending and investment. Engaging the Private Sector in Policy, Advocacy & Collective Action Business has an important role to play in tackling complex, systemic challenges, such as combatting deforestation, sustainably sourcing agricultural commodities, and accelerating the transition from cash-based to digital economies. USAID convenes multi-stakeholder alliances—bringing together stakeholders from across industries and sectors to work together to solve broad societal challenges that also impact business. The private sector is also a key constituency and voice on many policy issues at the intersection of business and development, and USAID actively engages business in policy and advocacy efforts. Spurring Innovation & Entrepreneurship USAID seeks to harness the ingenuity, technological expertise, and research and development capacity of both large corporations and budding entrepreneurs to drive innovations that enable us to achieve development outcomes more quickly and cost-effectively. USAID does this in a number of ways, such as providing long-term capital to innovators and entrepreneurs through venturecapital style grant competitions; partnering with impact investors, incubators, and accelerators to provide financing and technical assistance to entrepreneurs; and working with corporations and others to take proven innovations to scale. Johnson & Johnson

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10 PARTNERING FOR IMPACT \ 2014-2015 PARTNERSHIPS IN ACTION The following partnership profiles feature examples of USAID’s work to engage the business community as a critical partner in fostering growth and fighting poverty across a range of sectors and geographic contexts. Highlighted are diverse models of partnering that leverage private capital, resources, ideas and technologies to deliver sustainable development impact. AGRICULTURE & FOOD SECURITY Through a host of efforts, such as Feed the Future, USAID is taking a comprehensive approach to strengthening agricultural systems, fighting hunger and strengthening food security at scale. The Agency does this by investing in cutting-edge research to develop stronger seeds and greener fertilizers; helping farmers access capital; producing specialized food products to treat and prevent malnutrition during emergencies; and accelerating access to mobile technologies and content that facilitate learning and access to real-time market information. Partnership Profiles in Agriculture & Food Security Catalyzing Investment in African Agriculture Africa has the world’s youngest and fastest growing population. This rapid growth has put a strain on existing food systems and created an urgent need for expanded economic opportunity. Research shows that investments in labor-intensive sectors such as agriculture are particularly effective at creating jobs and reducing poverty. Unprecedented, coordinated investment in Africa’s agriculture presents an opportunity to bring about transformational change in the continent’s agricultural sector, inclusive of smallholder farmers. Established in 2013, Grow Africa is a key implementing partner of the New Alliance for Food Security and Nutrition that helps catalyze sustainable investment in African agriculture. This partnership platform aims to help encourage Africa’s agricultural potential through private sector investments. The partnership leverages the resources, reach and expertise of the World Economic Forum, the African Union Commission, the New Partnership for Africa’s Development (NEPAD) and multiple companies, financial institutions, civil society organizations and other donors like the Swiss Agency for Development and Cooperation (SDC) and The Sustainable Trade Initiative (IDH) to expand economic opportunity for smallholder farmers. Grow Africa has secured commitments from more than 200 African and multinational organizations and is working closely with African governments to create country-specific actions for mobilizing investment, including reforming land policies, tax laws and trade barriers that impede agricultural investment, and building critical infrastructure like roads, irrigation systems, power plants and storage facilities. This partnership is also producing research and piloting new business models, for engaging smallholder farmers; forging new collaboration between farmers’ groups, companies and governments; and convening panAfrican working groups to address the most complex challenges facing the sector, from extending credit to smallholder farmers to engaging women in key agricultural value chains. In collaboration with the New Alliance for Food Security and Nutrition, Grow Africa has encouraged more than $10 billion in commitments from global and domestic companies, bringing them into the Alliance with host governments, development partners and civil society. It has also established powerful new partnerships between the public and private sectors that reduce risk and maximize the impact of agricultural investments.

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11 PARTNERING FOR IMPACT \ 2014-2015 Coffee Leaf Rust Photos by Root Captial Building Coffee Farmer Resilience Since 2012, a fungal disease known as coffee leaf rust has devastated crops and stunted coffee yields throughout much of Latin America. While the disease has existed in coffee producing countries for decades and is present in some areas every growing season, it has spread to new areas and altitudes never seen before. The negative economic impact of coffee leaf rust is estimated to be more than $1 billion. The outbreak has been particularly devastating for the region’s smallholder farmers dependent on coffee growing. In 2014, USAID entered into a partnership with Root Capital, a nonprofit agricultural lender, and leading coffee companies including Cooperative Coffees, Equal Exchange, Keurig Green Mountain, and Starbucks to help smallholder coffee farmers combat coffee leaf rust. Together, the partners created the Coffee Farmer Resilience Initiative to extend critical support to more than 40,000 coffee farmers in Latin America. Through this initiative, Root Capital provides much-needed loans to farmer cooperatives so that their members can rehabilitate or renovate diseased fields and continue earning income. At the Initiative’s start, USAID backed Root Capital with a $15 million credit enhancement from the Development Credit Authority. Through this credit enhancement, USAID assumes 50 percent of the risk in the Coffee Farmer Resilience Initiative’s loans to coffee cooperatives. Keurig Green Mountain, meanwhile, is covering the Fund’s first $400,000 in potential losses. By limiting the risk other investors face, USAID and Keurig Green Mountain are lowering barriers to mobilize new private sector investment for Latin America’s coffee farmers. Since launching the Initiative, Root Capital has already raised $8 million in additional capital from the Ford Foundation and Starbucks. “ Responding to complex issues in agriculture requires precompetitive, pathological collaboration among all partners in the supply chain—successfully doing so is good for farmers who depend on coffee for life, ”for companies that rely on high-quality coffee to sustain their businesses, and for consumers who are unwilling to witness the extinction of their morning Joe. —Willy Foote, Founder and CEO, Root Capital

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12 PARTNERING FOR IMPACT \ 2014-2015 Empowering Women Farmers Agriculture is a major source of income for many in the developing world, and women typically play a central role in the production of food for both their families’ survival and income. Yet women are often excluded from key financial resources, land ownership and knowledge of new agricultural practices. Walmart—a major customer of produce from smallholder farms around the world—is working to increase its sourcing from women-owned businesses and to help farmers and women access modern supply chains, increase their incomes and, in turn, contribute to the economic development of their communities. USAID seeks to improve the lives and livelihoods of farmers in developing countries, and Walmart aims to train one million farmers, at least 50 percent of whom will be women, by 2015. This creates a unique opportunity to collaborate and work toward shared goals and shared interests.

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13 PARTNERING FOR IMPACT \ 2014-2015 USAID’s Bureau for Food Security, country missions and select Feed the Future implementers are partnering with Walmart to train more than 200,000 farmers in Rwanda, Zambia, Kenya, Ghana and Bangladesh. Through a $5 million contribution, Walmart is funding trainings on agricultural best practices and market linkages with a focus on reducing gender inequality in the sector and transforming farming into a key driver of economic growth. For example, the partnership is supporting One Acre Fund, a local social enterprise, in helping 40,000 small farmers in Kenya—28,000 of whom are women—improve their practices and market access, doubling farm incomes from approximately $135 to $270 in one planting season. The Women’s Improved Marketing and Asset Control project is empowering more than 22,500 women farmers in Zambia by teaching improved production and post-harvest practices, building leadership skills, and facilitating market linkages between buyers, suppliers and service providers. Established in 2013, this USAID-Walmart partnership is targeting 135,000 farmers in Africa, including 85,000 women, and 40,000 women farmers in Bangladesh. “ By fostering partnerships and promoting innovation, we can help unlock the potential of small-scale farmers and catalyze broad-based economic growth and trade to advance global ”food security. —Tjada McKenna, Deputy Coordinator for Development, Feed the Future Fintrac Inc.

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14 PARTNERING FOR IMPACT \ 2014-2015 Cold Chain Alliance Strengthening Bangladesh’s Agricultural Supply Chain Nearly half of all people in Bangladesh depend on agriculture for their livelihoods, with most practicing subsistence farming on small plots, selling little surplus and consuming the remainder. Most high-value agricultural products grown in Bangladesh, including vegetables, meat and fish are sold directly to consumers without proper handling, packaging or refrigeration. This results in post-harvest loss rates of more than 40 percent; products that do reach market are of low quality and farmers earn lower prices on damaged goods. USAID, together with Winrock International and the Bangladeshi food processing company Golden Harvest, is building Bangladesh’s first integrated “cold chain.” This network of refrigerated trucks and cold storage holding centers is helping rural farmers deliver their crops to market before they spoil. This Cold Chain Bangladesh Alliance (CCBA) is a simple intervention that will go a long way. USAID expects that the partnership will raise the incomes of more than 18,000 farmers in just three years, while increasing the availability of healthy, locally-produced food in stores and restaurants across the country. The partnership’s principal funder, Golden Harvest, is investing a minimum of $10 million in refrigeration units and storage facilities around the country, while USAID and Winrock have connected the company to the Global Cold Chain Alliance, an industry association that is providing valuable technical expertise and support in establishing and maintaining the cold chain. Meanwhile, Winrock International provides farmbased trainings to participating farmers to help them increase their yields and minimize post-harvest losses. While still in its early stages, Golden Harvest has already established 20 cold storage units at collection centers in four locations and has contributed nearly 7,000 freezers and 30 refrigerated trucks. The project has created nearly 600 full-time jobs and increased the cumulative sales of participating farmers from $334,761 to $1,218,330 at the end of 2014, benefiting approximately 4,750 rural households.

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15 PARTNERING FOR IMPACT \ 2014-2015 ENERGY ACCESS Expanding access to modern energy services is essential to USAID’s goal of powering economic and social development. The Agency has focused its efforts on supporting the construction and rehabilitation of critical infrastructure; enhancing operational and commercial performance of related institutions, including utilities; promoting increased energy trade and regional power tools; and helping countries reduce carbon emissions and address climate change through clean energy projects. Partnership Profiles in Energy Access Powering Agriculture The United Nations estimates that the world will need to produce 70 percent more food by 2050 to feed the world’s growing population, but many current agricultural systems are not able to support this level of production without inflicting serious harm on the environment. To address this critical issue, USAID, the government of Sweden, the government of Germany, Duke Energy Corporation, and the Overseas Private Investment Corporation (OPIC) have combined resources to create Powering Agriculture: An Energy Grand Challenge for Development (PAEGC). PAEGC challenges participants to submit solutions that integrate clean energy technologies and innovative business models, while stimulating low carbon growth within the agricultural sector of developing countries. In 2013, more than 475 organizations from 80 countries submitted ideas to the first round of the competition, and 11 finalists received between $800,000 and $1.5 million in funding to grow their concepts. One of the winning innovations proposed a village industrial power plant that produces energy from biomass waste to power irrigation, purify water and pasteurize milk. PAEGC anticipates this solution will help more than 5,000 farming families in rural Tanzania and Benin. PAEGC will award new funding to its second cohort in 2015. To ensure these kinds of innovations reach farmers throughout the developing world, PAEGC is developing an online platform to document lessons learned, promote effective technologies and business models, and foster continued engagement among stakeholders. PAEGC is also developing partnerships with public and private sector organizations to bring its energy and agriculture innovations to commercial scale and to integrate them into agricultural production and food security programs. Megan Johnson | USAID

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