Can strengthening country systems ensure more effective aid for everyone?

Tariq Sayed Ahmad is a Researcher with the Aid Effectiveness Team at Oxfam America.

On Wednesday Raj Shah will release USAID’s internal progress report on its “USAID Forward” reform agenda. The report will provide a wealth of aggregate numbers that fill out the broad picture of the changes that have been brewing at USAID over the last half decade.

Here’s one such story of why this matters.

Manuel Dominguez, mayor of Alao in the San Martín region of northern Peru, had been trying for years to access funds from the Peruvian government to deal with the increasing piles of trash in his growing city. While Dominguez was fully committed to using his limited city budget as best as he could to tackle the problem, it was not until USAID began investing in the Ministry of Environment, that Dominguez and his staff succeeded in obtaining significant funds from the national government, working with the Ministry of Economy and Finance. (You can learn more about Dominguez’ story here.)

In Peru, Oxfam America’s own forthcoming research shows that US reforms are enabling USAID staff to find ways to work with those leaders who are doing the right thing, and to enable regional governments like the government of San Martín to respond to local needs.  In 2011 USAID got the chance to use its new risk assessment tool, the Public Financial Management Risk Assessment Framework (PFMRAF) with regional government officials.  As a result, USAID was able to understand and weigh the strengths and weaknesses of San Martin’s systems, and they “did not identify any insurmountable risks that prevent USAID/Peru from moving ahead in utilizing the financial and procurement systems of the regional government.”^[1] The regional government then took the initiative to manage USAID programs directly, enabling the US to provide more funds through Peruvian country systems to help leaders like Mayor Dominguez respond to the needs of his people.

Of course working through country systems can be tricky. Partner governments are not monolithic entities. Rather, they are a mish-mash of institutions, bureaucracies, with a varied array of talent, accountability, and professionalism.  As more capacity assessments have been undertaken under IPR however, USAID is seeing that many local institutions are very effective, and provide great investment opportunities for the US.

“What the USAID partnership allowed us to do was to bring together all these different needs, actors, and resources at national, regional and local levels, which already existed in Peru, to solve a shared problem,” says Rosa Salas, director of the project at the Peruvian Ministry of Environment, who joined forces with Magda Ushiñahua, a counterpart at the Peruvian Ministry of Economy and Finance.

Municipalities like San Martín Alao had been neglected before the decentralization process began and deepened in Peru, giving local civic leaders a greater opportunity to unlock domestic resources to protect the health and well-being of their citizens and the surrounding Amazon. The relationship between USAID and the Ministries is helping mobilize domestic resources in addition to US funds. Peruvian taxpayer money has now been allocated for 127 municipalities to participate, benefitting an expected 5.65 million people.

The success of the USAID’s work in Peru is not that USAID delivered benefits, but that the agency helped Peruvians utilize their own resources.  In 2010, USAID initiated USAID Forward, a series of seven policy reforms intended to change the way USAID does business, including Implementation and Procurement Reform (IPR) and Country Development and Cooperation Strategies (CDCS). USAID Forward changes internal rules and regulations to better utilize country systems to enable local ownership of aid, something for which Oxfam America has long advocated.  These reforms built on previous efforts to rebuild USAID’s staff numbers, to make sure the agency has the professional staff they need to make local investment work.

We’re keen to see what USAID’s report has found. Our research is finding that USAID Forward is identifying local partners where US foreign assistance can be used effectively and allowing the US to look in places they haven’t looked before.

Manuel Dominguez, for one, couldn’t be happier. He says,

“My people and I can stop pollution in our district. We just needed a partner. We know how to get it done.”