In fiscal year 2018, President Trump proposed some significant cuts – around 33% — to the US foreign assistance budget. For the most part, Congress rejected those cuts. The FY ’19 budget was largely a repeat of FY’18, although the final decisions for this fiscal year have not been made.
That got us thinking – what would be the specific impacts of such cuts? To help answer that question, we did a deep dive into four countries where the US plays a significant development role: Liberia, Senegal, Cambodia, and Nicaragua. We’ll be sharing a short blog on why and how we chose those countries in the near future. In each country we picked a sector that is considered central to that country’s development, and then started our research.
Being from Publish What You Fund, we began by exploring a variety of sources of aid information. This gave us an overview of what was going on. Then we went to each country and talked to a wide range of stakeholders – donors, partner country officials, implementers and civil society groups. While every country has its unique story, there are five lessons that apply across the board:
Significant and sudden cuts can risk instability and reverse gains made through US investments. One of the main principles of USAID Administrator Green’s tenure is to “help partner countries on their own development journey to self-reliance.” While this approach has been applauded by the development community, the “how” and “when” of a proper transition is critical. In Liberia, for example, the US has invested in building democracy and governance capacity following years of civil war. Considerable progress has been made – with the country having just had the first peaceful transition between political parties in 73 years. However, the transfer has left the governance gains in a fragile state – the election resulted in a 60% turnover in the legislature and an overhaul of leadership in the ministries. Further, the economy, growing quickly in 2013, went into a recession in 2016. Against this backdrop, the FY ‘19 budget proposes cutting democracy and governance work by 66%. As we were told, this is precisely the wrong time to reduce this support to Liberia. Not only will it put its governance capacity under serious strain, it risks wasting all of the US investment made to date.
Proposed cuts, even if rejected by Congress, still have a negative impact. The budget uncertainty has made it significantly more difficult to maintain an effective use of funds. Implementers told us of instances where they had to slow down program implementation – with one example saying this went on for six months – thus reducing outputs while maintaining the same running costs. Another program laid off its staff because of funding uncertainty, only to then receive the money.
USAID is a respected leader among donors and cutting programs undermines its leadership role. The US often serves as more than just another donor, providing leadership in its development approach, its focus on the most vulnerable, and its support for democracy. In Cambodia, for example, the US is considered the most influential donor in ensuring the rights of the most vulnerable are not forgotten. The only donor likely to replace the loss of US funding is China, who has different development priorities and will not implement the same kind of poverty reduction work.
The US often fills a unique role that other donors cannot match. The US tends to operate differently than other donors. In Nicaragua – where democracy has been on the downturn for years under the Ortega government – the US is the only donor to operate free from government influence. It uses this position to directly support civil society to build grass roots democracy and accountability and to support women’s rights. The FY’19 budget proposes a 100% cut in USAID’s work with civil society, which will force many organizations to close. As one interviewee stated: “If these cuts are about hurting Ortega, then the strategy is flawed. Aid in Nicaragua is for the people. These cuts will make him stronger.”
Relatively small amounts of US foreign assistance have a significant impact. For many of these countries, the dollar amount is relatively small. In Senegal – a key ally for the US in the region – US assistance for agriculture amounts to 0.1% of all US aid. Those resources are being used to address food insecurity for some of Senegal’s most vulnerable people at the same time as USAID works to support peace building through economic growth. A sudden withdrawal of US agricultural support – and the FY ’19 budget proposes a 56% cut – would not only severely affect food security but could destabilize an already long-running low-level conflict in the poorest part of the country, with potential ramifications for both Senegal and the wider region.
This is just a sample of the lessons we drew from our four case studies. There’s much more in each of the reports – stay tuned for more and read the reports here.