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Updated:4/16/03 |
| Testimony
of Adolfo A. Franco, Assistant Administrator, Bureau for Latin America
and the Caribbean, US Agency for International Development, Senate Foreign
Relations Committee, April 2, 2003 Testimony of Mr.
Adolfo A. Franco, -------------------------------------------------------------------------------- Before the Before
the Senate Committee on Foreign Relations
Mr. Chairman, Members of the Committee, it is a pleasure to appear before the Senate Committee on Foreign Relations to discuss with you how USAID's Bureau for Latin America and the Caribbean (LAC) is promoting the President's vision for the Western Hemisphere. The chairman refers in his letter of invitation to this hearing to the most pressing issues facing Latin America: democracy, good governance, anti-corruption, counternarcotics, and efforts to increase support for trade capacity building. I could not agree more. My testimony will focus on these areas as well as countries of particular concern in the region -- Venezuela, Colombia, Bolivia, Guatemala, and Haiti. President Bush's National Security Strategy reflects the urgent needs of our country following the September 11 terrorist attacks and recognizes the important role of development assistance. It states clearly that the U.S. Government's aim is to help make the world not just a safer place, but a better place. The President has said the future of our Hemisphere depends "on the strength of three commitments: democracy, security and market-based development." At USAID, we work closely with our colleagues in other agencies and departments, from the Department of State to the Office of the U.S. Trade Representative, to promote political and economic freedom for all nations, and particularly among our closest neighbors with whom we have such strong social and cultural ties. Management USAID is proud of its contribution to the broader U.S. Government policy objectives in Latin America and the Caribbean. We have been working assiduously to remold our program to respond to the development challenges in the region and to promote the President's priorities for our Hemisphere. Continuing Challenges The region's GDP shrank by approximately 0.8% in 2002, the worst economic performance since 1983. Inflation has edged up after eight years of steady decline. Mediocre economic performance has caused per capita income in LAC countries to decline significantly since 1998, while poverty has increased. These woes have brought discontent and political turbulence, raised questions about the health of democracy in the region, about investment priorities, social sector policies, and the benefits of a decade of liberal reforms. The effects in the poorest countries, such as Haiti, and even regions within countries with generally solid economic performance, such as northeast Brazil, have been even more disheartening. Still, it is important not to portray the region in a single-minded negative light. LAC's economy overall is expected to recover slightly in 2003. The Argentine economy is expected to grow about 2% this year. Chile, Mexico, Peru, and the Dominican Republic are expected to top the growth league in 2003, with expansion of 3% or more, assuming that the slowdown in the United States abates and strong growth resumes. Countries that have adopted sound fiscal policies and oriented their economies toward foreign investment, and rules-based trade under the World Trade Organization (WTO), have tended to resist the recent downturn. The North American Free Trade Agreement (NAFTA) has resulted in phenomenal growth for all three partners. Since 1993, trade among NAFTA nations has climbed dramatically, and U.S. merchandise exports have nearly doubled. Another area of progress is commitment of LAC countries to good governance as represented by the signing of the Inter-American Democratic Charter and the Inter-American Convention against Corruption of the Organization of American States (OAS). Nicaragua is striving to curb government corruption, and other countries, such as Mexico, have also made important commitments to reduce official corruption. Recent elections in Jamaica, Brazil, Colombia, Bolivia, and Ecuador were all judged to be free and fair. Priorities Democracy and Good
Governance Anti-corruption programs emphasize prevention, citizen oversight, and building the capacity of countries to attack weak governance, entrenched political institutions, and poor public sector management. USAID provides assistance to citizens groups and non-governmental organizations to devise national and local anti-corruption plans and to monitor the dealings of public officials and government agencies. In addition, USAID supports local initiatives to establish special commissions and investigative units to expose and prosecute cases of corruption and fraud by public officials. In Ecuador, the Anti-Corruption Commission has the investigative authority to uncover cases of corruption. In Nicaragua, USAID provides assistance to improve the capacity of the Attorney General's Office to tackle high-profile corruption cases against the former government. USAID is also helping the new Office of Public Ethics in the Nicaraguan Presidency, which will be responsible for setting standards for ethical conduct, training public employees, and monitoring government agencies' compliance with internal control systems. Increasing crime and violence is consistently ranked by citizens as one of their primary concerns. The endemic problems of impunity for violent crime, corruption, money laundering and narcotics crime, undercut social and economic growth in many LAC countries. USAID is responding in more than a dozen countries in the Hemisphere by providing direct assistance for modernization of their justice sectors. New Criminal Procedure Codes and other criminal justice system reforms, developed and enacted over the last decade with USAID support in Nicaragua, Honduras, Guatemala, El Salvador, Bolivia, Colombia, and the Dominican Republic, are introducing profound changes as countries move from written inquisitorial justice systems toward more oral adversarial systems. The new system of oral trials makes justice more accessible and transparent, whereas the previous system lent itself to corruption and delays and discouraged the average citizen from seeking judicial redress. In Colombia and Guatemala, USAID is expanding access to alternative dispute resolution and other legal services to millions of marginalized citizens through a growing network of community-based centers. As a key element of the justice system, it is essential that the police do their jobs responsibly and that there is trust between the police and the communities in which they work. Section 660 restrictions of the FAA limit our ability to work on critical security issues such as community policing, which is increasingly integral to development in many LAC countries. Specific legislative authorization has allowed USAID to initiate a community policing program in Jamaica and to continue a successful program in El Salvador. The program in El Salvador is part of a larger law enforcement institutional development program conducted in cooperation and collaboration with the Department of State and the International Criminal Investigative Training Assistance Program (ICITAP) of the Department of Justice. The primary justification for the program in Jamaica is summed up in the words of the 1993 National Task Force on Crime in Jamaica, which states, "The inability of the police to control crime has largely been due to the breakdown of the relationship between the police and the citizen." The program in Jamaica is focused on moving the Jamaican Constabulary Force toward a proactive, decentralized model of community policing, reducing police fear of the inner-city communities in which they work, as well as the community's fear of the police, and engaging community stakeholders as a catalyst for change in community development and crime reduction. Similarly the community policing initiative in El Salvador has been a proactive, solution-based, and community driven activity involving extensive community outreach. Increased police presence in communities has improved response to criminal activity and has been key in establishing credibility with people. Reported crime and homicides have dropped by 25% and 30% overall in just one year in the program's target areas. Further, 70% of citizens believe the police force has improved its ability to decrease crime. Based on this early success, the U.S.-supported program is now being replicated by the Government of El Salvador at the national level. USAID-supported training and technical assistance helps strengthen the capacity of national and local governments to demonstrate that responsible leaders can deliver benefits to communities. With the direct election of local mayors and the devolution of authority to municipalities, USAID is helping citizens and elected leaders devise community development plans that respond to local needs and generate growth. In fourteen countries, USAID is helping mayors hold public hearings about annual budgets and allow citizen involvement in public decision-making. Many mayors have established transparent accounting and financial management procedures with USAID assistance to create the framework for greater revenue generation at the local level for roads, schools, health centers, and job creation. In turn, citizens monitor the use of public funds and devise "social audits" in countries such as the Dominican Republic and Bolivia to track spending in accordance with local development plans in order to keep officials accountable to the public. Economic Growth Through support for legal, policy, and regulatory reforms, USAID has been working with LAC countries to strengthen the enabling environment for trade and investment as the twin engines for economic growth and poverty reduction. USAID support for trade capacity building has increased substantially in the last several years. In FY 2001, the LAC Bureau invested $5 million in trade-related activities. This figure climbed to more than $23.5 million in FY 2002. USAID plans to increase support for trade capacity building even more substantially in future years. In August 2002, President Bush signed the Trade Act of 2002. On January 8, 2003, Acting Assistant Secretary Struble and I participated with U.S. Trade Representative Ambassador Robert Zoellick in launching negotiations for the U.S.-Central America Free Trade Agreement (CAFTA). Negotiations continue on track to establish a Free Trade Area of the Americas (FTAA) agreement by January 2005. In response to these opportunities, USAID has been working in partnership with the region's smaller economies to build their capacity to participate effectively in the global trading system by building trade negotiating capacity, developing markets, and providing assistance for business development. In response to requests from country governments, USAID will assist governments to comply with the "rules of trade" such as sanitary/phytosanitary measures, customs reform, and intellectual property rights. Assistance will expand in the area of commercial and contract law and property rights. USAID will continue to promote rural economic diversification and competitiveness, including non-traditional agricultural exports and access to specialty coffee markets. Business development and marketing services will help small and medium farmers and rural enterprises improve competitiveness and tap new markets. Let me highlight some of USAID's trade capacity building programs in the region: In Central America and Mexico, USAID will continue the Opportunity Alliance, a presidential initiative that emphasizes trade-led rural competitiveness through diversification and agricultural niche markets. The Alliance was initiated in FY 2002 in response to a protracted drought, collapse of coffee prices and resulting unemployment of seasonal agricultural workers. An estimated 52% of the population, more than 14 million people, is poor and chronically food-insecure in Guatemala, Nicaragua, El Salvador, and Honduras. USAID activities in FY 2003 and FY 2004 will continue to support democratic governance, trade and employment creation, agricultural production, and sound environmental management. USAID is assisting the Central American countries in their efforts to prepare for the FTAA as well as for negotiation and implementation of CAFTA. As part of this process, USAID worked closely with other institutions such as the Inter-American Development Bank, the Organization of American States, and the Economic Commission for Latin American and the Caribbean to assist each Central American country to prepare a national trade capacity building strategy in support of their participation in the CAFTA process. USAID has added a trade component to the President's Third Border Initiative (TBI) to strengthen trade capacity and competitiveness of Caribbean countries. It will build on modest trade activities underway for several years in a sub-region with many small island economies lacking diverse sources of income. When launched in 2002, TBI aimed to strengthen political, economic and security ties between the U.S. and the nations of the Caribbean. The majority of interventions and bulk of funding thus far have supported USAID's HIV/AIDS program. Working closely with the development assistance community, USAID is now moving quickly to mobilize trade capacity building support to respond to countries' priorities including technical training of government trade officials, developing trade-related databases, implementing trade agreement commitments in such areas as customs reforms and sanitary and phytosanitary measures, providing assistance for small business development, and fostering greater civil society outreach. USAID's Caribbean Regional Program is helping to strengthen Caribbean Community (CARICOM) countries' competitiveness in hemispheric and global trade, and assisting eight CARICOM countries to prepare national trade capacity building strategies under the FTAA Hemispheric Cooperation Program. In the Dominican Republic, USAID supported technical training on trade issues for government trade officials. The Dominican Republic has since offered better market access in recent rounds of negotiations. As a result of a USAID-supported program in Jamaica, which is led by the private sector and provides succinct information to private and public sector leaders on the benefits of free trade, the Jamaican private sector now better understands the potential benefits of free trade and has become a stronger advocate of the FTAA. USAID initiated trade capacity building activities in South America in FY 2002 and is expanding the program for trade within the sub-region in FY 2003. In Peru we have developed an Andean regional trade capacity building program to assist Andean Community countries in addressing "rules of trade" and competitiveness issues, with initial emphasis on providing technical assistance in a variety of trade disciplines including customs reforms, sanitary and phytosanitary measures, and competition policy. At the hemispheric level, USAID has a new "quick response mechanism" to provide greater capacity to address technical assistance and training needs arising from trade negotiations. Through this mechanism, we are also working with FTAA countries, initially in Central America and Brazil, to provide government officials and civil society -- including business leaders -- with information on the benefits of free trade. An important aspect of building trade capacity is broadening the education base for a more productive workforce. USAID will support advancements in secondary education and workforce training to improve the quality of instruction, increase worker productivity, and help youths prepare to enter the workforce. For example, USAID's ESF-funded Training, Internships, Exchanges, and Scholarships program in Mexico will enhance capacity of Mexican scholars and institutions to respond to the objectives and strategies of NAFTA and the U.S.-Mexico Partnership for Prosperity, which together define the emerging U.S.-Mexico Common Development Agenda. Recognizing that remittances constitute a potentially large source of development finance, USAID will continue to support and implement mechanisms for remittance transfer with lower transaction costs. Investing in People The quality and relevance of primary and secondary schooling in LAC countries continue to cause concern. Less than 30% of students in the region complete secondary school, and many of those who do finish lack adequate skills to compete in the workplace. USAID education and training programs aim to improve the poor state of public education systems where the majority of youth attend weak and under-funded schools and fail to acquire basic skills in mathematics, language, and science. USAID will continue to provide support for education reform, enhancing skills of teachers and administrators, and improving training for application in the workforce. USAID will also continue support to the newly launched Centers of Excellence for Teacher Training, an initiative announced by President Bush in April 2001. Three sub-regional training networks established in Peru, Honduras, and Jamaica will improve the cadre of teachers in LAC countries by training 15,000 teachers, benefiting 600,000 students, and advancing education policy reform. Five priority, fragile
countries Venezuela -- We are deeply concerned about the deteriorating situation in Venezuela. We are concerned about the independent media, and the severe disruptions to the Venezuelan economy, for decades one of the most prosperous nations in the hemisphere. I also know this situation has caused great pain and hardship to the people of Venezuela. The United States had urged all sides to reject violence and intimidation. We have also urged the Government of Venezuela to exercise its constitutional responsibility to respect individual rights and fundamental freedoms, and to adhere to the Inter-American Democratic Charter. Our policy is clear and consistent: We support OAS Secretary General Cesar Gaviria's efforts in Caracas to facilitate a dialogue between government officials and opposition representatives to help achieve a peaceful, democratic, constitutional and electoral solution to Venezuela's crisis, consistent with OAS Permanent Council Resolution 833. We are also actively working with the "Friends" group, which includes the United States, Brazil, Chile, Mexico Spain and Portugal, to help achieve these objectives. USAID supports non-partisan activities aimed at bringing the two sides together, lowering tensions, and bridging divisions among the population. USAID has expanded opportunities for government and opposition forces to meet at the bargaining table and helped them identify common interests. USAID is also providing training in conflict mediation and negotiation techniques to government and opposition representatives involved in the national dialogue. Colombia -- In Colombia, the scourge of narcotics threatens the fabric of society, and poses a threat to the U.S. as well. The lack of state presence in large portions of the country has allowed both the illegal narcotics trade and armed, drug-dealing terrorist organizations to flourish. Events in Colombia affect the entire region, and the threats to its security also threaten the security of its neighbors. Ecuador's northern border is vulnerable, and intensive eradication efforts by the Government of Colombia may create incentives for the narco-trafficking industry to move back into Peru and Bolivia. USAID is working in partnership with Colombia's strong reformist president, Álvaro Uribe Vélez, an invaluable ally in facing down terrorism and the illicit drug trade. President Uribe is actively pursuing policies to fight narco-terrorism and expand the reach of democracy and rule of law in Colombia. In order to provide small farmers a means to abandon illicit crop production permanently, USAID's alternative development program in Colombia seeks to increase licit income opportunities for small producers of opium poppy and coca. The program is on track and progressing well. This program has now benefited approximately 20,000 families and supported cultivation of nearly 16,000 hectares of licit crops such as rubber, cassava, specialty coffee, and cacao in former coca and poppy growing areas. Some of the coca growing areas currently are not suitable for sustainable agriculture for both economic and security reasons. USAID works to create permanent labor opportunities to absorb the pool of people following the coca harvest, thus undermining coca production. USAID also works with the Colombian private sector outside of the coca growing areas to increase licit income opportunities, making coca production unattractive. Infrastructure initiatives are an important component of the program as they provide short-term employment in construction as families make the transition to licit crops, and provide communities with physical access to markets necessary to sustain a viable, licit economy or develop the skills and acquire the funds to move to a more viable economic section of the country. As of mid-February, USAID has completed 208 social infrastructure projects including roads, bridges, schools, and water treatment facilities were completed in Colombia. USAID is successfully implementing a program to strengthen the Colombian criminal justice system, expand access to community-based legal services, promote alternative dispute resolution mechanisms, and strengthen the capacity of justice sector institutions to carry out their functions in a more timely, open, and fair manner. USAID has established 29 community-based centers for alternative dispute resolution and other legal services to increase access to justice for the urban and rural poor. Over the last seven years, the centers have handled 1.5 million cases, the majority of which are related to intra-family violence. Women represent the highest percentage of beneficiaries under the program. As a first step in facilitating Colombia's transition to a modern accusatorial system of justice, USAID has helped establish 19 oral trial courtrooms and trained 6,000 lawyers, judges, and public defenders in oral procedures designed to reduce impunity and quicken the judicial process. USAID is working to improve respect for human rights in Colombia through a three-tiered approach including: prevention of human rights violations by strengthening governmental and civil society human rights institutions; protection of human rights workers, community leaders, journalists, and local elected officials under threat; and the improvement of Government of Colombia response to human rights violations. USAID's transparency and accountability program seeks to harmonize accounting and internal control standards within the Government of Colombia and increase citizen awareness of available instruments to combat corruption. Last year, this program successfully completed a nationwide public awareness anti-corruption campaign that reached six million citizens through radio, newspaper and television messages, and standardized internal control units in five government entities. Colombia has the fourth largest population of internally displaced people (IDPs) in the world and the only IDP population in the Western Hemisphere. USAID's IDP program seeks to provide integrated services and assistance to Colombia's internal refugees after short-term emergency relief has expired. As of mid-February, the program has assisted 635,000 IDPs by providing health services, shelter, income generation opportunities, education, and community infrastructure. As most IDPs are women and children, aid has been targeted specifically towards female heads of household. USAID continues to develop significant partnerships with the private sector that either support IDP activities or offer to employ IDPs in their new communities. In addition, USAID assists demobilized child combatants by supporting psychological counseling, vocational training, and educational opportunities, with the goal of re-integrating them into society. More than 600 former child combatants and at-risk children have been aided through this program. Bolivia -- In Bolivia, the twin poisons of illicit drugs and poverty are weakening democracy and undermining prosperity. Bolivia remains a strategic ally of the U.S. in Andean counter-drug efforts and played a leading role in South America in democratic reform and trade liberalization. Its current economic difficulties are largely a result of external factors. In February, President Sanchez de Lozada's introduction of budgetary austerity measures touched off weeks of protests, rioting and looting. Bilateral and multilateral donors were asked to contribute additional funds so that Sanchez de Lozada's government might reconfigure his budget and allow for more spending in the social sector. President Sanchez de Lozada requested immediate support from the U.S. and other donors. The IMF indicated it would consider a more flexible term for a standby arrangement, provided that additional donor funding became available immediately to meet the financing gap. In consultation with the inter-agency process and the Congress, USAID redirected $10 million in Economic Support Funds (ESF) to support the government in a time of crisis. This assistance will be used by the Government of Bolivia for payment of multilateral development debt and will leverage additional bilateral and multilateral contributions. New grant assistance has been pledged by other bilateral donors. The IMF board will meet to make a decision regarding a standby arrangement on April 2. Due to the success of counternarcotics efforts, coca production declined 70% between 1998 and 2001 at a cost of $200 million to the Bolivian economy. The loss of this illicit income was felt most by the small-scale farmer. There is also concern that the country's economic problems, coupled with the intensive aerial eradication program in Colombia, will translate into pressure from the narcotics industry for new production in Bolivia. These concerns and the violence in early February have heightened the importance of and the need for USAID's alternative development program in Bolivia. Working in partnership with the Government of Bolivia, USAID's alternative development program is bringing the benefits of Bolivia's anti-narcotics strategy to communities. USAID is working to eliminate illegal and excess coca from Bolivia by: establishing sustainable, farm-level production capacity and market linkages for licit crops; increasing licit net household income; and improving municipal planning capacity, social infrastructure and public health in targeted communities. In the coca-producing Chapare and Yungas regions, assistance for high-priority projects such as road improvement and bridges, which are defined by the communities and contingent on coca reduction, are providing links to markets for licit crops. In the Yungas region, USAID is introducing improved agricultural technologies for selected products to improve competitiveness and encouraging adoption of low-cost forestry and agro-forestry practices to improve soil fertility and increase crop yields. USAID's support for criminal justice system reforms through implementation of the new Code of Criminal Procedures complements the alternative development program. The new Code makes justice more accessible and transparent through use of an oral system and citizen judges. The previous written, inquisitorial system lent itself to corruption and delays and discouraged the average citizen from seeking judicial redress. Improved court processes have reduced case processing time by two-thirds. Guatemala -- As the members of this Committee are well aware, Guatemala is of continuing concern because of lack of cooperation with U.S. anti-narcotics efforts. I recently traveled to Guatemala and expressed my concern to the Guatemalan Vice President and Chief Justice of the Supreme Court. In addition, corruption, organized crime, weak enforcement of the rule of law, and lack of political will under the current administration have made it difficult to promote democracy effectively. Use of death threats and kidnapping to manipulate government officials, increasing human rights violations, continued growth in crime, and concerns about citizen security all suggest that progress toward democracy has stalled in Guatemala. Nonetheless, pressure from the international community and civil society has positively influenced the government to take some significant actions that lay the groundwork for greater inclusiveness and responsiveness in Guatemala's democratic system. USAID has been helping the judicial sector make institutional reforms to strengthen its ability to combat corruption. USAID also helped establish an autonomous, professional public defender service throughout the country. Today, 27 USAID-assisted "justice centers" help local communities, churches and governments connect with police, prosecutors, judges and public defenders to fight crime, ensure respect for human rights, and mediate disputes. Case file and information management system reforms are significantly improving efficiency while reducing the potential for corruption. The time to locate case files has dropped from hours to less than 15 minutes and cases are randomly assigned to judges. Due process has improved because information on time required for various stages of court procedure is now available. The Supreme Court is using statistics on workload, productivity, case intake, and bottlenecks to improve efficiency and identify problems. A major reform of Guatemala's principal law school has been completed and the new curriculum instituted for the first year. The complete revamping of the curriculum and admissions standards, an indigenous law program, and an expanding internship program will all improve the quality of personnel entering the justice system. After several months of intensive training and planning sponsored by USAID, eight civil society coalitions are now actively combating ethnic discrimination, promoting transparency and anticorruption, improving congressional oversight, and enhancing public security. Over the last few months, the Alliance for Transparency (a coalition of the Chamber of Commerce and two regional organizations) developed a model profile, selection criteria, and procedures to elect the new Comptroller General and focused public attention on this process for the first time. A coalition engaged in preventing crime is bringing together gang members, the media, citizens, and police in working to reduce crime in six target areas. A civil society group drafted new legislation to address domestic violence and promoted understanding and application of current laws. For the first time, local human rights organizations played an important role in the selection by the Congress of a new Human Rights Ombudsman. Haiti -- I would now like to shift to the continuing challenge presented by Haiti, where a decade of poor governance and economic mismanagement has brought the country to a near standstill, threatening another wave of illegal migration to the Dominican Republic, the Bahamas, and the United States. A pernicious drought in the country's Northwest and Central Plateau regions has made things even worse and placed additional strains on our humanitarian relief efforts in the country. We are responding with an additional $3.5 million in Title II emergency food for direct distribution to affected groups. The growing authoritarianism of President Aristide and his Fanmi Lavalas party frustrated USAID's efforts to bolster the Haitian judiciary and national police in the late 1990s. Consequently, we shifted our emphasis to helping civil society resist the growing authoritarianism of the Haitian government. Recently we have added activities to strengthen political parties and the independent media. The country's direction now depends on whether the government can establish a climate for free and fair elections in 2003 and secure the participation of Haiti's opposition parties, many of which boycotted the election of President Aristide in November 2000. We also keep in close contact with the Haitian human rights community and incorporate these groups whenever possible into our activities. Last, but not least, we are actively engaged with the Haitian Diaspora, seeking ways to help them foster democracy in Haiti. In addition to our work with civil society, USAID's programs in Haiti are designed to meet essential humanitarian needs and generate employment in a difficult economic environment. The FY 2003 funding level for Haiti is $58.5 million (including $24.9 million in non-emergency food aid). The P.L. 480 Title II food program is a key element of USAID's support for humanitarian needs in Haiti. Some food is distributed outright through school feeding programs but principally through maternal-child health care facilities in remote areas. This approach ensures that U.S. food aid is reaching the neediest and most vulnerable Haitians -- rural children under five and nursing and/or pregnant mothers. The bulk of the Title II food commodities are sold to local millers and the proceeds used to finance projects in health care (including assistance to orphans), primary education, and food production. Alliances Several examples of GDA-type partnerships are just getting underway in the region. USAID's Central America Regional program plans to leverage significant private sector contributions for its quality coffee and regional diversification programs. Two recently-signed agreements exemplify the emphasis on alliance building and counterpart contributions: one with the Coffee Quality Institute to develop a volunteer-based technical assistance program, and one with Green Mountain Coffee Roasters designed to generate new resources. Of the 18 partnerships between U.S. and Mexican colleges and universities recently approved for USAID's new educational exchange program in Mexico, 15 exhibit greater than one to one funding matches from higher education institutions and the private sector. The 18 agreements total about $10 million, with USAID providing approximately $4 million and non-USG public and private partners contributing $6 million. USAID's Development Credit Authority (DCA) offers an opportunity to mobilize local capital to fund development initiatives. Through DCA, USAID/Mexico provided guarantees to two Mexican microfinance institutions. The programs were designed to allow both institutions to leverage the guarantee by capturing savings, especially longer, fixed-term savings, which are an important source of loan capital. Both programs have greatly exceeded expectations, with the banks increasing total deposits by $4.8 million and $5.7 million respectively. In Guatemala, investment efforts in market towns also exceeded expectations. The Non-Traditional Exporters Guild was directly responsible for promoting $4.25 million worth of new investments in the Peace Zone and the BANCAFE Development Credit Authority mechanism leveraged an additional $4.7 million for microlending. Conclusion |
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