Interview: A Business-Like Approach to Foreign Aid

A conversation with USAID administrator Rajiv Shah on expanding public-private partnerships and integrating development and emergency intervention.

The son of Indian immigrants from Ann Arbor, Mich., and a graduate of the University of Pennsylvania Medical School and the Wharton School of Business, Rajiv Shah began his career at the Bill and Melinda Gates Foundation, where he ran the organization's agriculture program and went on to serve as chief scientist at the U.S. Department of Agriculture (USDA). In December 2009, at the age of 37, he was sworn in as head of the U.S. Agency for International Development (USAID) -- only days before a devastating earthquake hit Haiti.

In an interview for Foreign Policy, Samuel Loewenberg spoke with Shah about how he is reinventing USAID, an often-embattled agency charged with helping the world's poorest countries develop, while at the same time dealing with crises around the globe.

Foreign Policy: Dr. Shah, you've hopscotched your way into running the U.S. foreign aid agency at a relatively young age after a career at the Gates Foundation. How does your Gates experience shape your approach?

Rajiv Shah: What was great about the opportunity to work with Bill and Melinda Gates and their very talented team was this insistence that when we were making financial commitments to address a problem, we were going to be business-like in ensuring that we literally solved that problem over time. Both at USDA and certainly at USAID, I've tried to bring that business-like rigor and the tendency to ask questions -- some would say I ask far too many questions -- to make sure that when we're spending taxpayer resources, we're doing it with that absolute focus that we are making an investment against generating a result.

FP: Fixing the world is a lot more complicated than fixing Microsoft Windows -- and even that usually doesn't go very well. Foreign aid -- and USAID in particular -- is frequently criticized as doing more harm than good. What did you find when you arrived at the agency?

RS: When I joined, we launched a strategy review of our areas of work. We looked at our education investments, for instance, and decided they were not generating as much results as they could. While we got 39 million additional kids into schools over the last 12 years in sub-Saharan Africa, literacy levels hadn't moved up. In some cases, they had even gone down, as schools got more crowded and the quality of instruction waned. So we built a data tool that allows us to, at a very low cost and very rapidly, assess literacy outcomes at grade level for primary school kids. That's why it is important to measure outcomes and develop strategies focused on results.

FP: The Republican-led House of Representatives has been trying to cut the foreign assistance budget. If I'm a congressman, tell me why it is in America's interest to help people overseas when we have so many problems at home?

RS: President Obama and Secretary [of State] Clinton are elevating development and crisis response as part of our foreign policy. At the end of the day, without stability, you cannot get economic development. At the same time, security is ultimately linked to economic stability. [Former Defense] Secretary Gates was right when he said development is a lot cheaper than sending soldiers. Right now, Americans think that foreign aid is 20 percent of our federal budget, but in fact it is less than 1 percent. And for that 1 percent we are able to generate real concrete results.

FP: USAID frequently gets criticized for wasteful practices and spending millions on U.S. contractors without doing much to help the countries you are ostensibly trying to help.

RS: Under the prior administration we saw a 40 percent decline in our staffing coupled with a 300 percent increase in our programmatic responsibilities, especially in war zones like Iraq and Afghanistan. That led to the problem of outsourcing way too much work to contractors and doing it without enough oversight. We will shift $4 to $6 billion annually to local institutions and small-scale efforts that we can manage and document carefully. These efforts will strengthen the private sector and governments, and reduce the need for aid over time.

FP: Some of the $4 to $6 billion is also going toward "partnerships" with big U.S. corporations like Wal-Mart, Coca-Cola, Chevron, and Monsanto. Why does subsidizing U.S. companies help people who are poor?

RS: One of the big failings in food security in particular has been a lack of working with the private sector effectively. For instance, in Honduras and Guatemala our work with Wal-Mart is reaching more than 15,000 farming families. In that case, the farmers are producing potatoes and onions, and Wal-Mart works with farmers on training and preparation. They also provide guidelines that help farmers determine what to grow and when in order to sell to Wal-Mart. This type of engagement has led to a doubling and tripling of farmers' household incomes. Yet over the last several decades, it's been controversial to have companies like Wal-Mart in the development solution. I think it is the kind of long-term development program that is needed to succeed at scale over time. (Note: Regarding the recent allegations of Wal-Mart's widespread bribery in Mexico in a recent New York Times article, USAID press spokesperson Ann Doyle said, "We will not comment on the ongoing Wal-Mart investigation or how it might affect our partnership.")

FP: So you are saying that the United States can do well by doing good?

RS: In the coming years, Africa is going to be a 900 million-plus person common market that is growing three times faster than the global economy. China has been making a big investment in Africa, and we're going to want to make sure that American enterprises are part of the picture as well. Ten of the largest 15 trading partners we have were foreign aid recipients. South Korea was a major recipient of U.S. aid for decades, and today we have more jobs created in the U.S. because of our trade relationship with South Korea than we do with France.

FP: From what I've seen in my reporting, what poor people in places like Kenya, Ethiopia, and Guatemala really need are water and roads to keep them from these recurrent hunger crises. Yet for the last 30 years USAID has largely ignored those issues.

RS: We are now rebalancing and getting back into that, but in a way that's leveraged. We need to partner with the private sector. In our partnership with Pepsi in Ethiopia to reach chickpea farmers, we'll do things like invest in feeder roads, and Pepsi and the Ethiopian government will make parallel investments in things like better technologies and guaranteeing purchase [of chickpeas from Ethiopian farmers]. That helps move 30,000 women-headed households out of poverty. It's those kinds of leveraged partnerships that actually allow us to transform infrastructure. Those aren't things we have the capacity or resourcing to do alone.

FP: In the Horn of Africa last year, you had 13 million people going hungry -- 4 million in Somalia and about 9 million in Kenya and Ethiopia combined. In Somalia, your options to intervene were limited because of the [internal] conflict, but not in Kenya and Ethiopia or in the refugee camps for Somalis in those two countries, which were in woeful shape. You had nearly a year of advance warning about the drought. There were a lot of interventions that could have been done to mitigate the crisis in areas such as water, sanitation, and livelihoods. What happened?

RS: I would argue that a lot of our resources went into these types of activities last year, perhaps not as early as they could have, but they ultimately did, and that's what allowed people to get through the period of hunger. But I agree with you that we can always -- and we should always -- be pushing ourselves to do much better. Part of the challenge is that we are able to use humanitarian resources quickly and aggressively in times of crises, but the core development programs in many of these countries -- and I'm not just speaking about USAID but rather the entire development community -- move on a much different time horizon. To help correct for that, we are making sure that what we call "resilience programs" are being built into core development budgets and are prioritized by both local governments and development partners.

For example, resilience programs are part of national policy in both Kenya and Ethiopia, and without them, last year's crisis would have been far worse. Ethiopia has a program called the Productive Safety Net Program, which USAID has supported since 2005, and that program has effectively kept 7.6 million more people from requiring emergency assistance. Kenya established a Drought Management Authority in 2011, which has helped coordinate efforts to build resilience and has increased funding in its national budget for livestock development and infrastructure in the drylands, which are just the kinds of things that can help protect Kenyans against the next drought. The challenges remain fierce, but we are excited about the momentum we are achieving through our resilience work around the world and with specific countries.

FP: Yet even with those programs in place, the populations in the Horn are already going hungry again; an estimated 8 million people are already food insecure, which is about what it was last year at this time. In total, USAID's famine-monitoring agency projects 13 countries with serious hunger problems this year. Only five of them recently suffered war or natural disaster. Most of the problem is chronic poverty. It seems lots of resources go into dealing with the emergency situation at the last minute and not enough into dealing with the underlying issues. How do we break the cycle?

RS: For too long, development and emergency intervention had been thought of as separate things. We're now working with critical partners like the World Bank and others to create this field of resilience, planning, and investment. For decades, there has been a tendency to think of development as urban industrialization or things of that nature and not recognize that agricultural development, pastoral-community resilience, and building on people's existing risk-management systems are as critical to moving people out of poverty.

FP: If I go back to countries with hunger crises like Kenya and Ethiopia and Guatemala and the Sahel this summer, am I going to see something different than I saw last year and the years before?

RS: I don't want to promise. It wouldn't be honest or realistic to expect the phase of poverty and vulnerability to change in a one-year, two-year time frame. But the track record is that if we stay focused and if we persist with the approach, we have the opportunity to help tens of millions of people move out of that condition of vulnerability.

Look, I wished it happened faster, and I could sit here and guarantee that people won't be worse off next year. But I can't do that. I just have to stay committed to making sure we measure results, we do the things that we believe are correlated with creating the same systems that are effective over time. And that even though it's hard, we bring that kind of business-like approach to this work and do the best we can to help ensure that we're not just putting band-aids on problems but we're actually solving them. Because ultimately, solving them is in our deep national interest.

Brendan Smialowski/Getty Images

Democracy Lab

"Captains Stay with Their Crew"

Most of the Americans charged by Egypt in the NGO affair have since left the country. But one, Robert Becker, decided to stay and face the music.

On Dec. 29, Egyptian security forces raided the offices of 17 pro-democracy groups (domestic as well as foreign). The authorities charged 43 members of the groups with money laundering and running illegal organizations. In a special ruling, an Egyptian court subsequently allowed most of the accused foreigners to leave the country on bail. But one of the Americans, Robert Becker of the Washington-based National Democratic Institute (NDI), opted to stay in Egypt and face the charges.

Though he remains free for the moment, he attended his most recent court hearing on April 10 with a bag containing clothes, toiletries, and a book to read in case the judge ordered his imprisonment. He and his Egyptian co-defendants, following the usual practice in such cases, listened to the proceedings from a cage in the courtroom. (The photo above shows him emerging from the cage after an earlier session in March.) Egyptian journalist Mohamed Fadel Fahmy interviewed Becker in Cairo for Foreign Policy.

Foreign Policy: What is your relationship with NDI now? They paid your bail of $330,000 but you still decided to stay back in Egypt and face the court.

Robert Becker: Since I appeared in court the only communication I've had from NDI and Washington was a letter informing me that, effective end of March, I no longer have a position anymore. I'm no longer getting paid. They're still paying for the lawyer, but they're not paying me. As far as I know, all 10 of the international employees who left are still getting paid.

FP: Why did you decide to stay?

RB: First, I'm not guilty. Second, a couple of the Egyptians who have been charged work directly for me. From the very beginning, I was very clear with my superiors that I wasn't going to leave the country if there were still charges hanging over them. I work with these kids. Captains stay with their crew. It's what leadership's about. There's not any circumstance where I would be comfortably living life in the U.S. while these kids were in a cage. At every turn, when there was pressure to leave, I weighed the options, and the best option for me was to stay with these guys. Some people call me brave, a lot of people call me stupid. But I sleep easy at night.

FP: What is the status of the Egyptians who are accused in the case?

RB: They're facing similar charges to me and the others. It's a tough trial. [It will be] hard for them to find employment because they've got charges hanging over them. It's terrible for their families, and there is no clear indication how long it's going to take.

Right now there are 15 staff members who have been charged: the four Egyptians and me. One of the things our Egyptian staffers were doing was helping me with Arabic, because I don't speak it. We were also teaching them. It was a good job. A lot of our staff have degrees in public policy or political science, and it was an opportunity for them to learn as well. But they were support staff. They would help set up training, interpret conversations. I didn't treat them as assistants. I also talked to them as students.

FP: You attended your last hearing on April 10. How did the last court proceedings go?

RB: We were led to believe they were going to open all the evidence. The offices of 17 organizations were raided. None of that evidence got sealed. It's got to be truckloads: files, computers. The session was supposed to start at 10 a.m. but it didn't convene until noon. There were about 45 minutes of civil complaints. One lawyer wants to charge us with espionage; another wants to bring a suit against the judges who intervened on the travel ban. Then there was a reading of the defendants and a reading of the charges. The judges went into recess, then came back almost two hours later. They announced that the next court date would be on April 18 [later postponed to June 5], and that it would be based on a series of documents requested by the prosecution but that the defense attorneys have never seen.

FP: Explain to me your own experience and the nature of your job as a political trainer who has advised thousands of activists, Islamists, and members of parliament during Egypt's revolution?

RB: At one point there were over 120 new political parties being formed [in a period of two months]. You had a totally new system. So our role was to teach. I worked in politics for 20 years. I worked in multiparty democracy, a very similar set-up to here. So we offered a range of training: how do organize a campaign, how to communicate with voters door to door, advertise. For candidates we did media training: How you give a good interview, a good print interview, a good television interview. We offered this training day in, day out, for any party. My team and I taught three to four thousand political activists all over the country. Pretty much every time we held training we had a wide mix: Al Nour, the Freedom and Justice Party, Wafd, Free Egyptian Youth, Popular Alliance, the April 6 Movement.

FP: Did you contact them or did they contact you?

RB: A little bit of both. Every week we would announce what we were doing that week -- say, a course on door-to-door campaigning -- and they'd say, "We're going to send three people, four people." Some of the parties requested more specific things, so we did a lot of one-on-one training for them.

Some people teach math, some people teach literature. All I can teach is how to run for office, how to run a campaign. And we did.

NDI has been here for six years, since 2005. We run a very transparent operation. We routinely met with the various ministries overseas. We had nothing to hide. In the six months that I was teaching political parties and political activists, I was very well-received. They were very eager to learn.

FP: And later you observed the elections?

RB: Yes, all three rounds. We filed reports on what we saw, more or less certifying that these were open and free and fair elections. Thirty million people voted, shattering the turnout at past elections. The run up to the election was a little bit disorganized, but I give the Egyptian voters credit: They were very well-organized, disciplined, patiently waiting in lines to cast their votes. Our international observers were members of parliament from other countries, former ministers from all over the world. We had Indonesians, Malaysians, European leaders, U.S. leaders -- a very wide mix.

FP: Where were you when the security forces raided your offices?

RB: I was actually home that day. I kind of felt guilty about not being there, because my team was held at bay for five or six hours by guys with guns.

There was a round of interrogations in January, and then I was added to the no-fly list. Later I found out that I was one of the 43 charged. I decided right then and there that I wasn't going to seek sanctuary -- mainly because my teammates, the Egyptian staffers, couldn't seek sanctuary. And I've never felt unsafe in Cairo.

I was interrogated once. They asked questions about USAID grant money and how the funding works. I honestly had no idea, since it wasn't my job. My job was to teach.

They wanted to know how we contacted political parties and where we got the maps. We created maps that divided up the parliamentary election districts by color according to which round of the elections they were participating in. Most of the information came from the High Election Commission website.

FP: And what about the cash they found in your office during the raid? It was rumored to be a million Egyptian pounds.

RB: No, I don't think it was that much. We had 25 to 30 international election witnesses flying in from around the world. The institute pays travel, lodging, and per diems. Most of that money was supposed to pay for food for people who had volunteered to come from Asia or Europe or the U.S. or Africa to spend four days in Egypt, participating in a historic election.

FP: What kind of problems do you face on the streets? Do people see you as a spy?

RB: Well, I've never had any problem on the street. I get a lot of praise for staying. I didn't do this for pay. I don't do a lot of interviews and stuff like that. I get a lot of credit for respecting the system and sticking with my guts. The street has quieted down about it. There hasn't been a lot of chatter. I'm happy to talk to any Egyptian. Like I said, we were very transparent about what we did. I run into people quite often who came into classes that we taught and now have nothing but good things to say about what they learned.

I'm charged with managing an illegal NGO and illegally receiving foreign funds. I didn't do either one.

FP: Have there been any threats against you? When you were leaving court the other day, there were people yelling at you, saying that you should be exchanged for Egyptians imprisoned in the U.S.

RB: They wanted to trade me for the Blind Sheikh [Omar Abdel Rahman]. But that's not going to happen.

FP: And who protected you?

RB: It was actually a couple of members of the Al-Nour Party, people who had come to several of the trainings I had run. When I came out of the cage the first time they were right there and walked me out. We don't agree on much politically but we respect each other. I gave them the same level of teaching and expertise I would give to any other party. I think it's just a respect thing.

FP: How does this issue affect the future of NGOs in Egypt?

RB: There are a lot of things that are priorities in this country: jobs, combating poverty, better education, security. Transitions are difficult, they take time. You can't pass every new law you need at once. NGOs, whether they be those that teach democracy or deal with human rights, or those that work at the local level to combat illiteracy or improve healthcare conditions, play a vital role. You don't have to be a big, international group. Almost every time you read a report coming out of Syria about civilian casualties, those reports are usually coming from foreign NGOs that are there right in the middle of the combat, running hospitals and clinics, on the frontlines. It's not the Syrian government that was reporting that 52 civilians were killed yesterday, it was a European NGO. I think this does hurt the future of non-government organizations. In a vibrant society you need NGOs to advocate for the people. If Egypt is going to move forward, it's going to take time, but you're going to need those citizen groups, whether their funding is foreign or local.

FP: The government seems to be very upset about the active role Egyptians played in your work.

RB: Were people in the government upset that some political parties sprang up and ran some good campaigns? I don't know; I've never heard that. Our operation dealt with the Islamists, the nationalists, the ex-NDP parties, the liberals, the socialists.

I know that we sent Egyptians to observation missions to Nigeria to cover the elections last summer, and we have also embedded them in campaigns in other parts of the world so that they can see firsthand how political campaigns work.

NDI has operated in 120 countries around the world. We've done a lot of election observation. We draw from a wide array of people that we've dealt with in other countries.

FP: So why did you bring a bag with you to the cage?

RB: One of the defendants had lived in the UK, and there's a saying that if you bring your umbrella, it never rains, so we all decided that if we packed a bag, we wouldn't be detained overnight. And so a few days ago I packed a bag. A few change of clothes, towels, some toiletries and a book to read. I'm not a very superstitious person, but it's worked so far.