No, USAID Cannot Afford a 90% Failure Rate

If this post is a little wonky, then my apologies.  But I spent many years working overseas on development projects, specifically in microcredit.  One of the reasons I stuck with it for so long was because in my experience, microcredit for small business owners works – it’s credit, people repay with interest, and there are consequences for nonpayment.  For decades, the average repayment rate globally has been well over 90% on these tiny business loans, which average around a couple hundred bucks.

In a recent article, however, a USAID official stated, that when it comes to grant funding small businesses overseas (i.e. giving away taxpayer money), USAID expects a 90% failure rate.  The article asks, “Is this failure rate acceptable for donor funded projects?”

Well, here’s the “acceptable” failure rate for venture capital funded projects: 33%.

Yeah, I’m no mathematician but even I can tell there’s a big difference between 33% and 90%.  Venture capitalists, of course, care about returns and profit.  The government, of course doesn’t.  And though USAID didn’t fund Solyndra, I suspect the “who-cares-if-it’s-a-failure” attitude permeates the entire US bureaucracy.


About Mystic Cowgirl

I worked overseas in the aid game for longer than I'd like to admit and learned several important things: 1) Third World countries aren't poor because America is rich. They're impoverished due to socialist governments that provide neither rule of law nor basic infrastructures; 2) These socialist governments redistribute wealth from taxpayers to the government workers. There's no benefit to the poor or downtrodden, and certainly not to the general welfare in terms of infrastructure improvements. 3) America is moving toward the Third World model. Rule of law has been subverted because equality under the law is disappearing as special interests carve out exemptions to regulations and special favors under the law. The redistribution of wealth to government began decades ago -- total compensation for government employees now outpaces salaries in the private sector.
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