Raj Shah’s Opportunity

So the long wait for Barack Obama to nominate America’s international development czar is over. Congratulations to Raj Shah, who should breeze through the confirmation process to become head of US AID, having already been approved for his current post in the Department of Agriculture. Shah, who is just 36, takes on this crucial job at a time when international aid policy is the subject of more intense debate than ever before. Although some people regard him as very much a second choice – they would have preferred a visionary such as Paul Farmer – there are several reasons why there may be no one better suited than Shah to make the most of this opportunity.

The Obama administration is currently undertaking at least two fundamental reviews of international development policy, one from a national security prespective, the other led by the State Department, of which USAID is a part. There had been rumours that, having originally talked about turning USAID into a stand alone division of government separate from the diplomatic wing of foreign policy, much like Britain’s Department for International Development, Team Obama was leaning towards scrapping USAID altogether. Shah’s nomination lays that idea to rest, and now he will be looked to for big ideas on how to improve the effectiveness of international aid.

USAID’s record is under attack from all sides, from those such as Bill Easterly and Dambisa Moyo, who have argued powerfully that aid harms the world’s poorest countries by breeding corruption and dependency, to the likes of Senator John Kerry, who want aid to play a bigger role in winning the “battle of hearts and minds” in places where America’s enemies currently flourish. Shah’s task will be to develop an aid policy that works on both fronts.

Shah is no Paul Farmer, who is widely regarded as a saint for his pioneering work on providing health care for the extreme poor in places such as Haiti and Rwanda. Yet running US AID is no place for a saint (which is not to cast any aspersions on the character of Shah!). There are real questions about the ability to scale up Farmer’s high-touch, resource intensive approach to health. Shah, by contrast, was until recently in a senior role at the Gates Foundation where, among other things, he was immersed in practical questions about how to improve food supply chains so that small farmers in poor countries can earn a decent living. Hopefully that will have taught him that job creation so poor people can help themselves should be at the heart of aid policy – and few people will understand better than him the practical requirements of such an aid regime.

Hopefully that will be only one of the lessons he brings from his years in one of the power centres of philanthrocapitalism, the Gates Foundation, where he was one of the more creative thinkers. Indeed, he is one half of a philanthrocapitalist power couple occupying two key jobs in the Obama administration: his wife, another Gates alumnus, has a leading role in driving innovation in the Department of Education, where partnerships with philanthropists are crucial to achieving the goal of dramtically improving the quality of education in America’s schools. The power of the Bill Gates Empire continues to grow…

One thing Shah should do is contact his old boss to form an advisory group made up of philanthropists who are focused on international development, to give them a formal role in the shaping of US government policy. Currently, both government and private aid initiatives are far too uncoordinated, and suffer badly from that. Shah should also read the excellent recent paper by Owen Bader on creating a market for aid, that we reported on recently.

In particular, there is a huge opportunity for Shah to increase the impact of aid and of philanthrocapitalism by investing in measuring properly the impact of all this money being deployed abroad, and of publicising this data so everyone can get a much better idea of what really works. Here there is potential for partnering with the Hewlett Foundation’s promising 3ie initiative, for example.

One bold move would be to invite proposals from philanthropists and businesses to improve the effectiveness of US aid spending, and to commit to implementing at least the best five ideas. Another would be to set aside part of the aid budget for scaling up successful philanthrocapitalistic initiatives in the developing world. He might even set a leverage target, for how much of the aid budget must be deployed in partnership with private funds.

Two recent initiatives to encourage for-profit approaches to development could also be accelerated with some help from USAID. One is GIIN, the Global Impact Investing Network. Another is ANDE, the Aspen Network of Development Entrepreneurs.

Last, but by no means least, there is a huge opportunity is to deepen the public’s commitment to international aid and at the same time tap into the wisdom of crowds, supporting the small donations of ordinary Americans by announcing that a certain percentage of the aid budget will be available to match gifts through innovative internet sites such as and GlobalGiving.

We have no idea what Shah thinks of any of these ideas: the last time Matthew spoke to him was in January, before he left the Gates Foundation. But we do know he is a fan of Philanthrocapitalism, as he signed up to our facebook fansite. We are excited to see what he can do with this important new role. Watch this space!