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Monday, May 17, 2010

New Methods of Delivering Development Assistance

David Ostermeyer, Chief Financial Officer, US Agency for International Development (USAID), described new methods of delivering development assistance. He objected, somewhat, to the subject of his presentation. Mr. Ostermeyer pointed out that USAID has been looking back to the past to learn what has worked.

Mr. Ostermeyer described that peak in staffing during the Vietnam War, with a gradual reduction since. Budgets peaked in the late 90s. The United States government changed strategy after 2001 recognizing the need for development to create government stability. He pointed out that the United States Congress has become very supportive of international aid. He described the importance of funding countries with high corruption to increase stability.

Mr. Ostermeyer described the efforts to gain unqualified audits and to increase transparency. Transparency has become increasingly important for USAID. He described the changes under the Obama administration, such as procurement reform.

The first priority for USAID is to strengthen country systems. Mr. Ostermeyer pointed out that 56% of USAID funds were implementing through country contract systems. This dropped to 3%. There has been concern about the weakness of host country public financial management (PFM) accountability and the reduction of staff levels. Dictators, in the past, were able to pocket US funds directly. USAID learned that direct contracts for specific purposes had faster results than going through government systems. Auditors found that much of the aid did not reach the intended targets. Hence, USAID became very risk adverse.

Mr. Ostermeyer advocates the Accra Agenda for Action (AAA). He believes that USAID needs to do better in using country systems to improve capacity, reduce transaction costs and enhance participation. USAID is building a strategy for sustainable development. He believes that this requires building institutional capacity and encouraging accountability and transparency. He says that Paragraph 15 of the AAA is the key to USAID. Mr. Ostermeyer suggests that donors have the responsibility to assist countries to improve country systems if those systems do not meet quality and accountability standards. He advocated the PEFA framework but cautioned that some donors believes that these assessments are too high level.

Many country systems are being evaluated by donors and USAID. Mr. Ostermeyer described the process of evaluating Ministries in Pakistan. Rwanda undergoing a PEFA assessment. The number one pilot will be Liberia. DFID has been invited to participate. Mr. Ostermeyer sees USAID doing direct Ministry support, not direct budgetary support in the near future.

David Ostermeyer is Chief Financial Officer at the U. S. Agency for International Development (USAID), a position he was appointed to in October 2007. USAID has been the principal U.S. agency to extend assistance to countries recovering from disaster, trying to escape poverty, and engaging in democratic reforms. Mr. Ostermeyer has worked at USAID for more than 32 years in various financial management capacities.

ICGFM David Ostermeyer Keynote New Methods of Delivering Development Assistance

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