A largely overlooked change this week by USAID will have major repercussions for international aid efforts in the future. The gist? USAID no longer has to “buy American”.
Historically, whenever USAID has needed goods it has had to buy them from American companies. This means that if USAID needed thirty pallets of flour for a feeding program in Sudan or a water pump for a health clinic in Haiti, the agency was required by US law to buy it from American companies and ship it over. Buying local goods was only allowed when acquiring items from the US was impractical, and could only be done so after a time-consuming waiver process. The end result was that USAID has been forced to pay much higher prices to buy and import American goods, even when they were readily and cheaply available in the country where the goods were to be used.
Under the new rule, USAID is allowed to buy goods in the country where they are to be used or from other low-income countries if they have competitive prices. Not only does the change allow USAID to buy cheaper goods and get them where they are needed faster, it also means USAID’s procurement process is itself a means to help local businesses where the agency is operating. One of the big complaints against famine relief is that it undermines local markets by flooding them with US food stuffs. By buying local, USAID can help rather than hurt local markets while at the same time buying more “bang” for the buck.
If the goal of aid is to eliminate the need for assistance, the focus of efforts must be on building economic capacity. Doing this is impossible if aid is undermining local markets. For this reason, USAID’s new procurement rule is one big step in the right direction.