Zeeshan Javaid
The saga of mismanagement continues in the ongoing projects of America’s leading donor agency United States Agency for International Development (USAID), as the undercover watchdog body, Office of Inspector General (OIG), detected the management loopholes in the functioning of $89.3 million project implemented by Agri-business Support Fund (ASF). Lahore based local non-governmental organization ASF, which was recently awarded $89.3 million agri-business project funded by USAID, failed to achieve its goals including the creation jobs and facilitating broad based economic growth in Pakistan. 
OIG, in the audit of the project, found that ASF failed to achieve the main goals of the millions of dollars project including creating jobs and facilitating broad-based economic growth in Pakistan. Interestingly, despite the fact that ASF had limited experience in managing such a project, USAID awarded the million dollar projects to its implementation partner, which awarded grants to sub-recipients and beneficiaries on the basis of nepotism. In November 2011, USAID awarded a 5-year, $89.3 million sole-source (or noncompetitive bid) cooperative agreement to ASF, to carry out the Project. Under this agreement, ASF awarded a $5.3 million sub-agreement to Citizens Network for Foreign Affairs (CNFA), a U.S.-based international organization, to provide technical assistance and services. As of December 2012, USAID had obligated approximately $27.3 million and spent $7.8 million for the project. When the NGO received the award, it did not have procurement and finance policies that complied with USAID regulations; so the entire first year was wasted in developing manuals, designing and implementing activities and developing work plans. No system was developed to monitor and track jobs created. 
According to Automated Directives System (ADS) 303.3.9, “Pre-award Responsibility Determination,” states that before making an award, the agreement officer should be satisfied that the applicant could perform the award in compliance with USAID regulations. However, violating its own directives system, it awarded the project to ASF despite knowing the fact that the implementation partner had not enough experience to handle the project goals. OIG during audit job observed that contrary to ADS 303.3.9, USAID did not take the necessary steps to make sure ASF had the capacity to manage funds responsibly. It did not correct deficiencies that it agreed to fix within a certain time frame.
ASF, instead of following the policy to maintain the gender balance, hired the services of 85 percent male staff in the organization to facilitate the favorites, while the remaining 15% female staff worked under stress due to imbalance in hiring proportion. Surprisingly, most of the ASF team members belonged to Khyber Pakhtunkhawa, who established their own writ in the organization and tried to avoid any hiring from other provinces. It could also be judged by OIG observations that In January 2011 the first pre-award assessment identified significant weaknesses in governance, internal controls, accounting, financial management, human resource management, procurement, information technology and agri-business operations, which were improved after nine months of pre-assessment. According to the negotiation memorandum between USAID and ASF, ASF agreed to install an integrated management information system 6 months after receiving the first disbursement for the project. In March 2012 ASF received the first disbursement; however, as of March 2013—12 months later—it had not installed the system.
According to ASF officials, the information system will not be ready until October 2013. USAID officials said that during implementation they realized ASF did not have much experience making grants and that it was not aware of the Agency’s standards. In addition, mission officials maintained that the staff did not have the capacity to prepare environmental assessment forms, which were required at the time of the audit. It was also disclosed that as of February 2013, ASF received deposits from 107 grantees totaling approximately $11,000. The non-refundable application fees were non refundable and were not recorded as income.
The OIG audit report is available with USAID website with a detailed review of the facts mentioned above.
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