FY 2014 Agency Financial Report: Ending Extreme Poverty

From the start of his Administration, President Obama envisioned the U.S. Agency for International Development (USAID) as the world’s development leader. By elevating development alongside diplomacy and defense as a core pillar of our foreign policy, he has highlighted the importance of global development to our Nation’s prosperity and security.

Over the past six years, we have answered President Obama’s vision with an ambitious agenda to end extreme poverty—forming new partnerships, adopting critical reforms, and launching landmark initiatives in food security, child survival, and access to energy. These efforts serve as the underpinning of a new model of development that is not only transforming how we work, but our ability to deliver high-impact results.

This approach is embodied in our Agency’s new mission statement: We partner to end extreme poverty and to promote resilient, democratic societies while advancing our security and prosperity. It emphasizes our commitment to harnessing game-changing innovation, local leadership, and public-private partnerships—empowering the world’s most vulnerable people to lift up their own communities.

But no matter where we work across the globe, we always work on behalf of the American people. We unlock flourishing markets for our businesses; connect our young people with global opportunities; and root out threats before they reach our shores. Above all, we always work toward the day when our services will no longer be necessary.


In this constrained budget environment, we are focused on maximizing the value of every American taxpayer dollar. Over the past five years, we have made difficult choices about where our work will have the greatest impact, shifting resources and personnel to better advance our mission of ending extreme poverty around the world.

We are shifting resources to countries in critical need and where our work can make the greatest difference. Since 2010, regional bureaus have reduced the number of program areas from nearly 800 to 458; USAID global health program areas have been phased out of 23 countries; and Feed the Future agriculture programs have been phased out of 30 countries. Today, all our major programs are independently evaluated, and those evaluations are available right now on an iPhone app—an unprecedented level of transparency.

But in a world where great ideas and inspirational leadership come from everywhere, we have to find and support innovative solutions that will lead to sustainable development. Today, we are in the midst of a critical shift in the way we administer our assistance, placing a greater emphasis on direct partnerships with change-agents who have invaluable in-country knowledge, networks, and expertise.

This focus on small and local partners has delivered dramatic results. Last year, we worked with 1,150 local organizations in 74 countries. At the same time, our Agency partnered with more American small businesses than ever before.

At the same time, through our Development Credit Authority, we are leveraging unprecedented resources from the private sector to seed small businesses—$769 million in 2014 alone. Since 1999, we have unlocked $3.8 billion in private capital, with more than half of that in just the last four years alone.


In the past, we articulated the problems and designed the solutions. Today, we’re throwing open the doors of development with a suite of challenges, prizes, and partnerships to source, test, and scale proven solutions.

This year, we launched the U.S. Global Development Lab (Lab)—a historic investment in the power of science and technology to bend the curve of development. It will generate, test, and scale breakthrough solutions to complex development challenges, while attracting private sector investment to improve the sustainability of our efforts.

Working with 20 lead missions around the world, the Lab will focus on nine core areas of work to tackle the challenges of tomorrow, from water security to clean energy. The Lab works alongside 32 cornerstone partners—from Nike to Duke University to CARE— to accelerate success in areas where progress has fallen short of our ambitions.

For example, we’re backing Sproxil, a Boston-based mobile technology company that combats the $600 billion counterfeit goods industry. Today, its accessible short messaging services (SMS)-based system has been used on over 100 million products, by more than 2 million customers—with potential applications in industries from cars to consumer goods. We’re also scaling up chlorhexidine, an antiseptic gel that cuts infant mortality by 23 percent for pennies per dose. In less than two years, it has saved 2,500 children in Nepal from preventable deaths and is being introduced in 15 countries.

The Lab embodies the focus on harnessing science, technology, innovation, and partnership that we’ve had since the start of this Administration. But above all, it is about unlocking the capacity of innovators and entrepreneurs to tackle the challenges of tomorrow. Our Development Innovation Ventures Fund—aimed to find, seed, and scale cost-efficient innovations—has invested in more than 100 ideas across 35 countries, like a $10 device that prevents the leading cause of maternal mortality. We recently took this model to a new level by launching the Global Innovation Fund, an international impact investing partnership that will apply venture capital-style rigor to invest in high-potential development solutions.

In addition, over the last four years, we have launched six Grand Challenges for Development competitions to generate game-changing ideas on issues including maternal and child health, clean energy, childhood literacy, water security, and open government—with half of the submissions coming from the developing world. For example, we recently launched an Ebola Grand Challenge for Development to generate pioneering solutions that help health care workers provide better care—like safer protective gear and point-of-care diagnostics. All told, our Agency’s open competitions have received more than 10 thousand applicants, and nearly 70 percent of them have never worked with us before.



While we have adopted important reforms that make our Agency more accountable, flexible, and evidence-based, much more work remains to be done. We continue to work diligently on important organizational and performance challenges across USAID. As the Statement of Most Serious Manage -ment and Performance Challenges by the Office of Inspector General (OIG) reports, we face challenges in 10 areas, including work in nonpermissive environments, sustainability, and performance data.

For example, we face challenges in collecting high-quality data from our programs, particularly in remote and nonpermissive environments. Over the past year, we’ve taken concrete steps to ensure that our missions are generating reliable and current data—which reduces corruption, increases our impact, and reduces costs. We created robust platforms and training seminars to ensure our data are held to the highest standards of precision, timeliness, and validity. We are also distributing new templates for data quality assessments and holding interactive webinars on data quality, accessible to all of our staff across the world.


Today, our Agency is pioneering a new model of work that taps into talent everywhere to deliver groundbreaking results. While this report focuses on a select group of initiatives, USAID is delivering extraordinary results across several critical issues— from conserving biodiversity, to expanding the use of mobile and electronic payments, to strengthening global education, to opening up international trade opportunities for smallholder farmers.


In his first inaugural address, President Obama committed the full power, ingenuity, and resources of the U.S. Government to ending hunger. As one of his first foreign policy initiatives, the President announced Feed the Future—a global effort designed to end hunger and malnutrition through business, science, and partnership.

Through Feed the Future, we’ve encouraged our partner countries to implement important reforms, increase their agriculture budgets, and open opportunities for businesses to invest in food production. As a result, in 2013 alone, we’ve helped 7 million farmers boost their harvests with new technologies, and improved nutrition for 12.5 million children— tackling one of the leading causes of child death that also undermines global growth.

Far from fleeting, these efforts are paying off in the form of increased yields, higher incomes, and more dynamic economies. Indeed, we are on a path to reduce stunting by 20 percent in Feed the Future countries over the next five years—meaning that 2 million fewer children will suffer the devastating long-term effects of malnutrition.

In Senegal, we introduced a new breed of high-yielding, high-protein rice that tripled yields in a single year. In Tanzania, we helped increase horticulture yields by 44 percent and rice yields by over 50 percent, turning the nation’s fertile south into a breadbasket. In Ethiopia, we helped drive stunting rates down by 9 percent in just three years—resulting in 160 thousand fewer children suffering from one of the most crippling effects of malnutrition.

Two years ago, President Obama elevated food security to the global stage, creating a landmark public-private partnership with the G8 called the New Alliance for Food Security and Nutrition. Since then, the New Alliance has leveraged $10 billion in investment from 200 companies— the majority from local African firms, including farmer-owned businesses. These investments have helped create 37 thousand jobs and opened up new opportunities for nearly 3 million smallholder farmers.


With strong bipartisan support behind us, we are reaching more people than ever with life-saving assistance.

Across West Africa, we are working around the clock to combat the largest Ebola virus epidemic in history. With clinics overwhelmed with new patients, we are providing essential new beds, personal protective equipment, and community care kits. We are working with the World Food Program to provide emergency food supplies to people where markets have dried up, including patients and communities under quarantine.

We are also ensuring that Ebola does not distract our focus from other critical needs—particularly newborn, child, and maternal survival. Instead of trying to work everywhere at once, we’ve already narrowed our focus to the 24 countries that account for more than 70 percent of maternal and child deaths globally.

This past June, at our Acting on the Call event, we announced one of the most significant investments in maternal and child survival in our Agency’s 50-year history. Thanks to a groundbreaking review led by a Blue Ribbon Panel, we are aligning $2.9 billion in the next three years to save the lives of up to half-a-million children in the world’s deadliest places.

This approach is codified in the most transparent maternal and child survival plan we have ever released. For the first time ever, our plan illustrates that the United States can show how—for every dollar we spend on maternal and child survival—we can measure the number of lives we are saving. Most important, we will immediately be able to translate these reforms into results for vulnerable families. They will allow us to save the lives of 15 million kids and 600 thousand mothers over the next five years.


Last year, President Obama launched Power Africa, a public-private partnership that aims to double access to power—and unlock American private sector investment—across sub-Saharan Africa. Its unique transaction-focused approach mobilizes new sources of capital and encourages countries to make energy sector reforms. As a result, it not only facilitates significantly larger pools of funding for energy projects, it also ensures that firms and countries alike abide by international rules on corruption.

Just over a year since launching, over 2,800 megawatts (MW) worth of power projects have financially closed—mostly by private resources— and another 5 thousand MW worth of transactions are in the planning stages. At the recent U.S.-Africa Leaders Summit, President Obama announced that the United States is tripling its goal for Power Africa to 30 thousand MW of new electricity—bringing at least 60 million households and businesses online. That’s equivalent to expanding power to all of California and Texas combined.

In Tanzania, for example, Power Africa is helping build the nation’s first small hydropower facility, bringing energy to more than 10 thousand farmers in Tanzania’s most fertile region. In Kenya, we are working with General Electric to enable the construction of the largest privately-owned wind farm in Sub-Saharan Africa, which will power 150 thousand homes. And in Nigeria, we’re partnering with a local university to build a renewable, off-grid hydropower plant—providing electricity to more than 10 thousand rural students, professors, and members of community, and giving life to countless innovations for generations to come.


Today, we face unprecedented and urgent humanitarian crises that challenge us to work even harder— and move even faster—to save as many lives as possible.

This is the first time in our Agency’s history that we have been called on to manage five large-scale emergencies: Iraq, Syria, South Sudan, the Central African Republic, and West Africa’s Ebola outbreak. In 2013 alone, our office of U.S. Foreign Disaster Assistance responded to 52 disasters in 40 countries. The willingness of our staff and partners to head into the heart of a crisis to save lives—regardless of danger or difficulty—is one of the most profound expressions of who we are as the American people. There are now more than 6.4 million displaced people inside Syria—and approximately 3 million refugees now live in neighboring countries, placing unprecedented stresses on an already fragile region.

In Syria, we’ve vaccinated more than 4 million children for polio, and supported over 300 field hospitals, clinics, and medical points that have treated hundreds of thousands of innocent bystanders. In Jordan, we’re providing emergency education to 100 thousand child refugees— including 60 thousand girls—who have been forced to flee violence. In Lebanon, we installed systems to decontaminate and monitor drinking water in the Bekaa Valley, one of the country’s most important breadbaskets—benefitting nearly 800 thousand people, many who are refugees.

In Iraq, we are working hand-in-hand with local, military, and non-governmental organization (NGO) partners to assist vulnerable communities under assault from the Islamic State of Iraq and the Levant. For example, as extremists threatened to starve thousands of families trapped on Mt. Sinjar, we worked alongside the U.S. military to air-drop 128 thousand ready-to-eat meals and nearly 134 thousand liters of safe drinking water.

In South Sudan, about 5 million people now live in hunger, and tens of thousands of children could die of severe malnutrition this year. We are leading the international community to bring critical assistance to communities on the brink of famine—delivering life-saving food, water, and medicine to families trapped by endemic conflict.


Over the past decade, natural disasters have cost the world an average of 106 thousand lives and $157 billion per year. More than three quarters of global disasters are weather-related events—such as droughts, floods, storms, and heat waves—which are expected to become less predictable, more intense, and more frequent with climate change. While we cannot prevent shocks from happening, we can work more strategically to ensure these disasters do not devastate families or set back hard-won development.

This spring, we launched a transformative partnership with the Rockefeller Foundation and Swedish International Development Cooperation Agency, called the Global Resilience Partnership. It will focus on the Horn of Africa, the Sahel, and South and Southeast Asia—all regions known for recurring crises. Through a network of regional hubs, the Global Resilience Partnership will source, test, and scale innovative solutions that are tailored to local needs—like crowd-sourced data collection tools, cutting-edge storm warning systems, and flexible insurance policies for at-risk communities.

We also conducted a groundbreaking exercise with U.S. Special Operations Command to map security threats against human deprivation in the Sahel, home to resurgent extremist groups. What we found was startlingly clear: the migration of people, arms, and illicit drugs mapped perfectly to areas with food insecurity and water shortages. Today, we are using the results from this recent exercise as the foundation for joint civilian-military planning in other areas of crisis.


Around the world, we are strengthening democracy, human rights, and governance with innovative solutions that lay the foundation for enduring stability and prosperity. But doing so does not just mean monitoring elections. It also means fighting corruption and protecting the rights of all citizens, regardless of where they live or who they love.

In Afghanistan, for instance, we created an $175 million incentive fund to hold the Afghan Government accountable to meet standards critical to long-term development—including advancing support for women and girls, fighting corruption, and holding free, fair, and openly observed elections.

And in Ukraine, we are supporting anti-corruption efforts and constitutional reforms that can lead to a more transparent, stable, and responsive government. We also continue to support democratic transitions through President Obama’s Open Government Partnership—a global effort to encourage transparent, effective, and accountable governance. Today, 65 countries—from Kenya to Ukraine—are part of the Open Government Partnership, making more than 1 thousand commitments to improve the governance in countries that are home to more than 2 billion people.

At the core of all these efforts is a focus on investing in women and girls as engines of inclusive development. In Afghanistan, we are continuing to expand PROMOTE—the largest program in our Agency’s history focused on empowering women. It will help 75 thousand women achieve leadership roles in all parts of society—from business to academia to politics.

And in eight countries—from Tanzania to Bangladesh—we launched the SPRING Initiative, which will seed and scale new technologies to improve the economic outcomes of up to 200 thousand girls over the next five years.


The Agency Financial Report (AFR) is our principal report to convey to the President, Congress, and the American people our commitment to sound financial management and stewardship of public funds. USAID remains committed to effective governance and financial integrity and takes seriously the responsibility to which we have been entrusted. To that end, we continue to work to improve our financial management and internal controls.

This year, the auditors did not express an opinion on USAID’s principal financial statements. We acknowledge the conclusions of the audit report issued by the OIG and have prepared a plan to address one material weakness as well as five significant deficiencies identified by the audit. In addition, the auditor concluded in the audit report that the Federal Information Security Management Act (FISMA) significant deficiency related to management’s implementation of its information security policies and procedures represented a lack of substantial compliance with the Federal Financial Management Improvement Act (FFMIA). Recognizing this as an issue, we are actively working to improve our information management systems while pursuing critical national security objectives in non-permissive environments. We will continue to invest resources effectively and efficiently to address these issues and ensure improved oversight of our funds.

We worked with the OIG to ensure that the financial and summary performance data included in this AFR are complete and reliable in accordance with guidance from the Office of Management and Budget. The Independent Auditor’s Report, including the reports on internal control and compliance with laws and regulations, is located in the Financial Section of this report. Issues on internal controls, identified by management, are discussed in the Management Assurances, located in the Management’s Discussion and Analysis (MD&A) section of this report.


Since the dawn of humanity, extreme poverty has crowded at the heels of progress—stifling hopes and undermining growth across the centuries. But today, we stand within reach of a world that was simply once unimaginable: a world without extreme poverty and its most devastating consequences, including chronic hunger and child death.

It is a vision that President Obama has underscored throughout his time in office. As he said recently at the United Nations General Assembly, “America is committed to a development agenda that eradicates extreme poverty by 2030. We will do our part to help people feed themselves, power their economies, and care for their sick. If the world acts together, we can make sure that all of our children enjoy lives of opportunity and dignity.”

Through our work, we are opening up new paths to prosperity, energizing the global economy, and reducing root causes of insecurity. In doing so, we are advancing the values that unite people throughout the world: a belief in the freedom, equality, and the potential of every individual.

Monday, November 17, 2014 - 8:15pm