The U.S. Record on Financing for Development in 2009

September 24, 2010

"As for America…our commitment must be measured by more than just the dollars we spend. I’ve pledged substantial increases in our foreign assistance…but the true sign of success is not whether we are a source of perpetual aid that helps people scrape by – it’s whether we are partners in building the capacity for transformational change.” - President Barack Obama, Remarks to the Ghanaian Parliament, July 11, 2009

“Development…is a strategic, economic, and moral imperative – as central to advancing American interests as solving global problems as diplomacy and defense.” - Secretary Hillary Clinton, Remarks to the Center for Global Development, January 6, 2010

The President’s Global Development policy recognizes development as a moral, strategic, and economic imperative for the United States. Development, diplomacy, and defense are components of a comprehensive and integrated approach to the challenges we face today. When we facilitate sustained development in countries, they become more capable partners, contribute to renewed economic prosperity at home and abroad, and are more likely to govern justly and to the benefit of their citizens. In 2009, the United States not only remained the largest bilateral contributor to development initiatives worldwide, but also set a historic record for official development assistance (ODA) while demonstrating an unparalleled cross-sector and comprehensive commitment to development.[1]

Fast Facts: The U.S. Record

  • In 2009, U.S. ODA set a historic high, exceeding ODA amounts for any single donor country ever and breaking its own 2005 record level.
  • U.S. net ODA totaled $28.7 billion in 2009, a $1.8 billion or 7% increase from 2008.
  • Total U.S. ODA contributions to multilateral organizations such as the UN and the Multilateral Development Banks (MDB) was $3.5 billion, a 19% increase since 2008.
  • Total net ODA disbursements increased in every region: Africa, Asia, the Americas, Europe, and Oceania.
  • U.S. bilateral ODA to sub-Saharan Africa increased to $7.5 billion in 2009 from $6.7 billion in 2008.
  • U.S. bilateral ODA to the Least Developed Countries (LDCs) increased to $8.1 billion in 2009 from $7 billion in 2008, a 15.7% increase.
  • The United States has committed itself to disbursing $32 billion in bilateral and multilateral HIV/AIDS, tuberculosis and malaria funding through 2010.
  • The United States provided $4.4 billion in humanitarian assistance in 2009.
  • The United States has committed $7 billion to poverty reduction through Millennium Challenge Corporation (MCC) Compacts in 20 countries worldwide.
  • U.S. imports from developing countries (excluding China) totaled $486 billion in 2009.
  • Foreign Direct Investment (FDI) from the United States to developing countries was $54.2 billion in 2008.

How the United States Contributes:

Secretary Clinton, in her January 6, 2010 development speech, mentioned the need to see foreign assistance as an investment rather than stop-gap emergency aid. Such a strategy requires us to look at new targets for assistance that are based on their potential return in building opportunities for economic growth, social welfare and institutional capacity. U.S. support for developing economies and communities is provided through a wide spectrum of channels and involves close coordination among partner/beneficiary countries, U.S. agencies, multilateral organizations, and the private sector. Recognizing that international development requires both investment and policy reform, the United States continually emphasizes capacity building – at the individual, institutional and policy levels.

USAID is the principal U.S. development agency, disbursing 53% of ODA in 2009 totaling $15.2 billion. These funds were given to support countries that were, for example, recovering from disaster, attempting to generate inclusive growth to reduce poverty, and enacting democratic reforms. In addition to USAID assistance, MCC provides partner countries committed to promoting good governance, economic freedom, and investments in people with large-scale grants to fund country-led solutions for reducing poverty through sustainable economic growth. In 2009, MCC disbursed $535 million in 20 countries.

Both MCC and USAID are supported and complemented by projects, initiatives, and other sources of U.S. funding including the U.S. Department of State ($5 billion in 2009), the Peace Corps ($276 million in 2009), Health and Human Services (HHS) ($2.9 billion in 2009), the Department of Defense (DoD) ($2 billion in 2009), and the Department of Treasury ($1.6 billion in 2009). The policies of these institutions simultaneously promote the interests of developing countries while improving their internal capacity to engage in competitive international trading and attract FDI in their economies.

As part of our overall development efforts, the United States supports multilateral development programs and development initiatives within institutions such as the World Bank, the United Nations, the Global Fund to Fight AIDS, Tuberculosis, and Malaria (GFATM), the regional development banks, the Global Alliance for Vaccines and Immunization (GAVI), and other concerned multi-stakeholder efforts to advance development goals.

The United States has also played a leading role in multilateral development banks (MDB). In 2009, the United States provided $1.1 billion for the World Bank’s International Development Association (IDA15) replenishment, $150 million for the African Development Fund’s AfDF11 replenishment, and $105 million for the Asian Development Fund’s AsDF10 replenishment, in addition to providing $80 million for the Global Environment Facility and $20 million for the Tropical Forest Conservation Act. These MDBs provide financial support and technical assistance to developing countries to help them reduce poverty and strengthen their economic management. During the global financial crisis, at a time when few institutions were lending, the MDBs took a leading role in global stabilization efforts and provided $222 billion in financial assistance.

Through the efforts of agencies such as the United States Trade Representative (USTR), the United States Trade and Development Agency (USTDA), the U.S. Import-Export Bank (Ex-Im), and the Overseas Private Investment Corporation (OPIC), the United States has created trade and investment policies and practices that address the special needs of developing states: they promote the interests of developing countries in coordination with cross-sector efforts designed to increase these countries trade capacity.

U.S. private contributions constitute a huge component of national support for global development in addition to the United States’ unmatched official contributions. Private contributions include FDI in developing countries (which was $54.2 billion in 2008), remittances (over $96 billion in 2008), and direct charitable contributions (approximately $37.3 billion in 2008).

What the United States Contributes:

• Sustainably Meeting Basic Needs

- Global Health

On May 5th, 2009, President Obama announced that his Administration is committed to spending $63 billion on improving health outcomes in partner countries through strengthened health systems. In addition to robust funding for global efforts to combat HIV/AIDS, malaria, and tuberculosis, there is an increased focus on child and maternal health, nutrition, family planning and reproductive health, neglected tropical diseases (NTDs), and health systems strengthening.

Through the President’s Global Health Initiative (GHI), the U.S. Government is pursuing a comprehensive whole-of-government approach to achieve significant health improvements and create more effective, efficient, and increasingly country-led platforms for the sustainable delivery of essential health care and public health programs.

The President’s Emergency Plan for AIDS Relief (PEPFAR), a key component of the GHI, continues to be the largest commitment by any nation to combat a single disease in history. In FY 2010, the American people invested $6.8 billion in the global fight against HIV/AIDS and TB through PEPFAR, bringing the PEPFAR total since FY 2004 to $32.3 billion. Through PEPFAR, the U.S. Government is the largest single contributor to the Global Fund to Fight AIDS, Tuberculosis, and Malaria (GFATM): the United States has contributed more than $5.1 billion to the fund to date.

Announced in 2005 and expanded in 2008 under the Lantos-Hyde Act, the President's Malaria Initiative (PMI), includes an ambitious target to halve the burden of malaria for 450 million people, representing 70% of the at-risk population in Africa. PMI works with other governments and the private sector in combating malaria by targeting the most vulnerable population—pregnant women and children under five. In the fourth year of implementation, the Initiative disbursed almost $300 million and expanded coverage of four highly effective malaria prevention and treatment measures to the most vulnerable populations in its target countries. In all six PMI countries with paired nationwide household surveys, substantial reductions (ranging from 19 to 36%) in all-cause mortality in children under five years of age have been documented. There is strong and growing evidence that the effects of malaria prevention and treatment are playing a major role in the declines.

- Food Security, Agriculture and Nutrition

Reducing chronic hunger is essential to building a foundation for development investments in health, education, and economic growth. At the G8 Summit in L'Aquila, Italy in July 2009, global leaders committed to "act with the scale and urgency needed to achieve sustainable global food security." President Obama's pledge to spend at least $3.5 billion on agricultural development and food security over three years helped to leverage and align more than $18.5 billion from other donors. In response to this commitment, the U.S. Government launched Feed the Future (FTF), a global hunger and food security initiative that renews our commitment to invest in sustainably reducing hunger and poverty. With Feed the Future, the United States is supporting the efforts of the poorest countries to make progress towards MDG-1 by strengthening agricultural sectors. The United States also partnered with the governments of Canada, Spain, and South Korea, as well as with the Bill and Melinda Gates Foundation, to launch the Global Agriculture and Food Security Program (GAFSP) – a multi-donor trust fund designed to provide an additional source of financing for country-led agricultural development strategies.

Under the leadership of the State Department and USAID, the FTF Initiative employs strategic coordination among a wide spectrum of U.S. government agencies and stakeholders, including multilateral and bilateral donors, civil society, and the private sector. In the drive to achieve global food security, the United States focuses on improving agricultural productivity, promoting access to markets, facilitating regional trade, investing in global innovation and research, promoting equitable rural economic growth, improving nutrition outcomes in concert with the Global Health Initiative, and focusing on the cross-cutting issues of gender, environment and climate change. In 2009, the United States disbursed $619 million in food security assistance and developmental food aid. MCC and other agencies have also been actively working with partner countries to invest in sustainable, market based solutions to food security to strengthen the agricultural and rural economies in poor countries to promote reliable access to sufficient, safe, and affordable food.

- Humanitarian Aid and Disaster Relief

A nation’s ability to build and sustain a democratic and well-governed state is diminished or lost when affected by conflict or disaster. The U.S. Government leads the international community in responding to the needs of refugees, internally displaced persons (IDPs), victims of conflict and disasters, and vulnerable migrants.

The Department of State and USAID are the primary agencies responsible for disbursing and directing humanitarian funds. In 2009, in coordination with NGOs, they distributed almost $4.4 billion through international organizations like the World Food Program, the United Nations High Commissioner for Refugees, the International Committee of the Red Cross, the International Organization for Migration, and the UN Children’s Fund. Bilateral programs include:

  • International Disaster Assistance (IDA), distributed mainly through USAID’s Office of Foreign Disaster Assistance, which facilitates and coordinates U.S. Government emergency disaster assistance overseas and provides humanitarian assistance to save lives, alleviate human suffering, and reduce the social and economic impact of natural and manmade disasters worldwide;
  • Refugee and Migration Assistance, which is distributed through the Department of State’s Bureau of Population, Refugees, and Migration, and provides life-sustaining humanitarian assistance and protection to people displaced by conflict and persecution and supports solutions to displacement, including refugee’s voluntary return to home communities and refugee’s resettlement in the United States;
  • Food for Peace Title II grants as well as IDA used for emergency food assistance are awarded through USAID’s Office of Food for Peace, which donates food to those who have urgent needs because of natural or man-made disasters. Agricultural goods provided by Food for Peace Title II funds can also be sold or exchanged to help rural communities learn how to produce enough food to meet their own needs and to teach these communities about nutrition and health.

- Water Supply and Sanitation

Water and sanitation are cross-sector developmental issues and important elements of global health, food security, infrastructure strengthening, humanitarian aid, and environmental issues. Access to clean water is not only vital to sustaining life, but also a crucial part of enabling development. However, clean water is becoming scarcer throughout the world. In response, improving access to clean water has become an essential part of U.S. development efforts. In 2009, the United States disbursed over $240 million to support water supply and sanitation, primarily through USAID programs but with significant support from the U.S. Army and DoD. Additionally, MCC is deeply committed to providing access to clean and reliable water. Water, sanitation, and irrigated agriculture have frequently emerged as priorities among MCC partner countries and are viewed as fundamental pillars to improving the livelihoods and wellbeing of the poor. MCC disbursed more than $22 million towards water and sanitation projects in 2009 – and over times has invested over $530 million on water and sanitation related projects in El Salvador, Georgia, and Mozambique in addition to the more than $400 million invested in irrigation to support the agriculture sector.

• Developing Societies

- Fostering Democracy, Good Governance and Rule of Law

The United States recognizes that development can only sustainably occur in countries with a strong rule of law, accountable and transparent governments, and flourishing civil societies. Poor governance can suppress development and often disproportionately affects the poorer or more marginalized populations within a society. In 2009, the United States directly contributed over $5 billion towards promoting democratic principles, strong rule of law systems, and good governance practices within developing nations. These programs and policies are developed through programs and contributions within USAID, Department of State, MCC, DoD, and a wide variety of other U.S. government organizations.

USAID’s Democracy and Governance programs provide technical leadership and strategic support to the promotion sustainable democracy. In 2009, USAID spent over $2.6 billion in developing states on strengthening the rule of law, increasing respect for human rights, promoting more genuine and competitive elections and political processes, empowering politically active civil societies, improving transparency and accountability in governance, and promoting a free and independent media. USAID has supported democratic development for 25 years, providing assistance to over 100 countries with a level of investment of more than $10 billion. Because the concrete effects of these programs are often difficult to quantify, USAID recently launched EDGE (Evaluating Democracy and Governance Effectiveness), a comprehensive, long-term program to measure the impact and effectiveness of various approaches to democratic development and incorporate the findings into USAID policies and programs through outreach, training, and field support.

MCC also maintains a strong focus on democracy, governance, and the rule of law. The selection process for MCC’s partner countries is competitive and relies heavily on independent, third party, and transparent indicators; the “Ruling Justly” category includes democracy, governance, and rule of law indicators, with a particular emphasis on the control of corruption. These criteria provide a positive incentive for countries to improve their performances in these areas. While, MCC’s compacts are designed to reduce poverty through economic growth, they also contribute to strengthening democratic institutions by promoting civil participation, transparency, and adherence to domestic legal processes. Additionally, MCC’s Threshold grant programs focus on policy improvement, and since 2005, MCC has invested $264 million in anti-corruption work in 14 countries across Latin America, Africa, Europe, and Asia.

- Education

Education is not only a basic need, it is foundational to effective economic growth, democratic governance, and improved health outcomes and central to building the institutional capacity of developing states. Competitive economies require inclusive and high-quality education systems so that citizens have increased opportunities for employment, especially in critical areas such as science and technology, law and governance, and business. The United States is dedicated to helping developing countries improve their sustainable education systems, disbursing over $861 million towards these goals in 2009.

USAID is the largest U.S. contributor to educational initiatives in developing states, disbursing over $666 million to support improvements in pre-primary, primary, and secondary levels of education as well as a wide variety of training, workforce development, and higher education programs.

In addition to USAID programs, the United States supports sustainable education through, the Africa Education Initiative (AEI), a U.S. G8 commitment to provide increased basic education support to sub-Saharan partner countries. In addition, the U.S. Peace Corps makes substantive training contributions to education, currently the agency’s largest program sector.

• Economic Investment, Growth and Reform

- Economic Capacity-Building

Sustained and well-managed economic growth is a critical driver of development and enables states to meet their citizens’ basic needs as well as provide responsive and participatory governance. This growth depends upon local initiative, private markets, trade and investment, and an enabling economic infrastructure, including the rule of law, good business policies, and energy and transportation. Sustainable economic growth also requires enlightened environmental stewardship. In 2009, the United States dedicated over $2.2 billion to supporting economic infrastructure and services in developing countries, and a combined $1.3 billion to supporting production sectors including agriculture, mining and construction, tourism, and trade policies and regulations.

Both USAID and MCC have made direct contributions in this area. In 2009, USAID disbursed over $1.1 billion through three program approaches: developing well-functioning markets; enhancing access to productive activities, and strengthening the international framework of policies, institutions and public goods. USAID has helped grow enterprises, increase competitiveness, strengthen economic policy, support microfinance activities, and build trade capacity. MCC programs are founded on the premise that poverty is reduced through sustainable economic growth, and in 2009 disbursed over $328 million to support infrastructure, energy, and business and financial services programs.

- Trade

Trade is a powerful anti-poverty tool, spurring economic growth, increasing opportunity, and creating new and better paying jobs. In recognition of this fact, the U.S. Government has promoted the Monterrey Consensus and led by example in promoting trade with developing countries. The United States imported $486 billion from developing countries (excluding China) in 2009, creating jobs for millions of people. The United States is also supporting the expansion of trade opportunities among developing countries through the negotiation of an ambitious and balanced WTO Doha Round agreement that results in the global market opening necessary to stimulate market-led growth and lift national income levels. Through preference programs including the African Growth and Opportunity Act, the Caribbean Basin Initiative, the Andean Trade Preference Act, and the Generalized System of Preferences, many developing country goods receive zero-tariff access to the U.S. market. The United States is also a leader in “trade capacity building” programs (also known as “Aid for Trade”), created to allow developing nations to better integrate into and benefit from the global trading system and also building the competence of trade partners for effective environmental and labor protection. The United States has contributed $12 billion since 1999. In FY 2009 alone, the U.S. Government supplied $1.8 billion in trade capacity building assistance.

- Environmental Sustainability

Environmental protection is an issue that crosses across many sectors and affects development projects across the board. President Obama and Secretary Clinton have made it clear that the United States is fully committed to addressing the climate crisis and have proposed substantial increases for emissions reduction and climate change adaptation and mitigation. U.S. development finance and export credit agencies are on track to provide more than $700 million in 2010 and forecast providing nearly $900 million in 2011 in financial instruments that help American firms and investors, with their foreign partners, to deploy clean energy technologies in developing countries.

The United States contributes to multilateral efforts to improve environmental sustainability. The United Stated recently doubled its commitment to the Global Environment Facility, pledging $575 million for 2010-2014 to achieve global environmental benefits in climate, biodiversity, land degradation, chemicals, and international waters. The United States also contributes over $18 million per year to the UN and other organizations to build developing country capacity in environmental protection.

In April 2009, President Obama launched the Major Economies Forum on Energy and Climate (MEF), establishing an enhanced dialogue among 17 developed and developing economies representing 80% of global carbon dioxide emissions to help support the multilateral negotiating process and to devise new ways to advance the development and deployment of clean energy technologies. Experts from these countries have since developed action plans covering ten key technologies.

The United States announced in Copenhagen that it would increase U.S. climate-related assistance to ensure a fast start to post-Copenhagen efforts, contributing its share of the $30 billion financing from developed countries for FY 2010-2011. As a result, appropriated climate-related finance tripled to $1.3 billion in FY 2010, and the Administration has requested $1.9 billion in climate-related appropriations for FY 2011 to promote clean energy in developing countries and help the most vulnerable countries prepare for and respond to the impacts of climate change. These funds include support for the Administration’s announcement in Copenhagen to dedicate $1 billion for Reducing Emissions from Deforestation and Degradation (REDD+) from FY 2010-2012.

U.S. investments in a multitude of conservation initiatives worldwide – from the Coral Triangle Initiative to the Congo Basin Forest Partnership – play pivotal roles in building local capacity and providing support, training, and expertise to developing countries. Under the Tropical Forest Conservation Act, there was a major forgiveness and redirection of loan principal and interest to a conservation trust fund in Indonesia as well as redirection of interest payments to conservation trust funds in 12 other countries.

- Debt forgiveness

The Heavily Indebted Poor Countries (HIPC) initiative was launched in 1996 by the IMF and World Bank, with the aim of ensuring that no poor country faces a debt burden it cannot manage. At the G8 summit in 2005, the United States led efforts to obtain G8 approval of the Multilateral Debt Relief Initiative (MDRI). The initiative called for 100% cancellation of heavily indebted poor countries’ eligible debt obligations to the World Bank, African Development Bank, and the IMF.

To date, debt reduction packages under the HIPC initiative have been approved for 36 countries, 30 of them in Africa, providing $72 billion in debt-service relief over time. Four additional countries are potentially eligible for HIPC initiative assistance. Before the HIPC initiative, eligible countries were, on average, spending more on debt service than on health and education combined. Now, they have markedly increased their expenditures in health, education, and other social services.

In addition, the United States, the International Financial Institutions (IFIs), and other donors recently eliminated the total debt stock that Haiti owed to the IFIs at the time of the January earthquake, completing one of the fastest complete IFI debt reductions in history. The U.S.-led effort not only achieved full cancellation of debt, but also increased resources available for Haiti's recovery over the near and long term.

- Public-Private Partnerships (PPPs)

In April 2009, Secretary Clinton announced the Global Partnership Initiative at the State Department to lead and facilitate the overall U.S. engagement with foundations, nongovernmental organizations, the private sector, faith-based groups, and Diaspora in order to achieve our smart power objectives. Both President Obama and Secretary Clinton have articulated a vision of global partnerships working together to revitalize the world economy.

Through USAID’s Global Development Alliance business model, USAID has cultivated over 900 public-private partnerships with more than 1,800 local and multi-national businesses, foundations and others to address development issues that are of mutual strategic interest. These partnerships have leveraged over $9.6 billion in partner resources. OPIC, U.S. Export-Import Bank, U.S. Trade and Development Agency, MCC, and the Office of the Global AIDS Coordinator, as well as many USAID headquarters and field offices also engage in public-private alliances, implementing programs for example that increase access to potable water and provide technology for sustainable environmental protection among the world’s poor.

- Private Flows of Capital

Individuals and organizations in the United States contribute to international development through a wide range of channels beyond U.S. ODA including charitable contributions, direct investment, trade, and remittances. U.S. private contributions to development abroad are vast and constitute a considerable proportion of overall U.S. giving. Despite widespread financial hardship in 2008, the Hudson Institute estimates that private U.S. foundations, corporations, religious organizations, individuals, and other private sources gave $37.3 billion to developing countries - over $10 billion more than the aid provided through official government channels that year. In 2008, FDI to developing countries was $54 billion, creating more economic opportunities within recipient states around the globe. Remittances sent from individuals, families, and associations in 2008 totaled over $96 billion – more than three times U.S. ODA contributions. State is working with USAID and OPIC to develop and support partnerships with strong and reliable in-country financial institutions in order to maximize the development impact of remittance flows from the United States’ as well as to help establish strong foundations for sustainable, inclusive, and transformational economic growth.

[1] All 2009 ODA data cited are preliminary figures. Final 2009 ODA data will be released in November.