Timor-Leste is one of the newest nations in the world.  For more than four centuries, it was a Portuguese colony.  Portugal’s 1974 revolution was the catalyst for a hasty de-colonization that culminated in a brief civil war between rival political factions from which a pro-independence party emerged victorious.  The victory was short-lived, however, as Indonesia invaded in December 1975, annexing the country as its 27th province.  Observers estimate that Indonesia’s 24-year occupation of Timor-Leste caused more than 200,000 deaths, a quarter of the population.  In 1999, the United Nations (UN) administered a referendum putting Timorese independence from Indonesia to a vote.  The overwhelming majority of Timorese voted for independence.  Mass violence and destruction at the hands of withdrawing Indonesian forces and their proxy militias followed the announcement of the results.  The international community mobilized a peacekeeping operation and after over two years of UN administration, Timor-Leste obtained its independence on May 20, 2002.

USAID/Timor-Leste’s goal for the strategy period is a more prosperous, healthy, and democratic Timor -Leste.  Increasing Timor-Leste’s capacity for development increases the ability of the country to reach its development goals, including long -term, substantive improvements in income, health outcomes, and democratic practices. Achievement of improved capacity for development will be evidenced by improved budget execution, reduced loss of public funding to corruption, higher levels of knowledge in administrative and core technical areas, and improved delivery of public services.  This approach is in keeping with the Paris Declaration on Aid Effectiveness, “capacity to plan, manage, implement, and account for results of policies and programs, is critical for achieving development objectives.” When a country has the capacity for development, it has the sufficient resources available and can deploy those resources in an effective and efficient way, and on a sustainable basis, in pursuit of development goals. 

Goal: A More Prosperous, Healthy, and Democratic Timor-Leste

For USAID investments to have an impact on the overall goal of a more prosperous, healthy, and democratic Timor-Leste, it is critical that the GOTL and other donors remain committed to the country’s development. Achievement of progress toward the goal requires that Timor-Leste’s police and military be able to maintain security and stability throughout the country.  Additionally, the GOTL must make substantial progress in improving basic infrastructure, including roads, electricity, water, and communications.  Other donors will need to continue to support the GOTL in key areas, including strengthening national ministries, improving primary education, reforming the justice sector, and improving budget planning and management.

USAID will support two of the three development pillars that the GOTL believes must be addressed in order to achieve the country’s development aspirations outlined in their strategic Development Plan (SDP).  The third pillar, infrastructure development, is being addressed in large part by the GOTL and other donors.  USAID does not have the resources in Timor-Leste to have a meaningful impact in this third pillar; however, we will continue to coordinate with the U.S. Department of Defense (DOD)-funded engineering projects in areas of commonality such as health facilities and community center renovations.

Institutional and Human Capacity for Development Strengthened to Improve the Lives of Timor-Leste’s Citizens

The most pressing development issue in Timor-Leste now and for the next five years will be achieving the necessary capacity to implement the SDP and effectively and efficiently deliver public services.  Political will exists throughout the GOTL to further development goals and improve governance.  An evaluation of the World Bank’s involvement in Timor-Leste from 2000-2010 reiterated the need to build Timor-Leste’s capacity for development, citing “uneven and weak institutional capacity, as well as scarcity of skills in-country.”   In January 2012, a team of USAID economists conducted a growth diagnostic study that explored the constraints to growth in Timor-Leste and identified key impediments to economic growth across all sectors.  The study identified human capital as a binding constraint to growth in Timor-Leste, leading the team to explore some of the issues directly affecting the labor force and ability of the Timorese population to maximize their development. The study concluded that malnutrition, and more generally poor health, remain a major impediment to educational attainment and labor productivity.

USAID will support the GOTL to increase its capacity for development.  This signifies that USAID will not be seeking to increase capacity for its own sake but with the stated purpose of assisting the GOTL in reaching its development goals.  USAID will focus on capacity development as a process of empowering local agents to change constraining characteristics, or augment enabling ones, to advance reforms and development goals.  Capacity development interventions will lead to an increase in resources available for development, such as finances, human resources, technology, and infrastructure.  In turn, the increased availability and sound deployment of such resources will improve the quality of life for Timorese.

Inclusive Economic Growth Accelerated in the Private Sector

USAID is focused on sustainably reducing poverty and sharing the benefits derived from economic growth across gender and urban-rural divides.  This IR includes two sub-IRs: improved ability of Timor-Leste’s citizens to engage in the private sector (sub-IR 1.1) and increased productivity of selected agriculture value chains (sub-IR 1.2). Results for IR 1 will be achieved by improving the ability of Timorese to engage in the private sector and by increasing productivity in selected value chains.  To date, USAID’s private-sector investments have focused almost exclusively on the agriculture sector—the sector that is widely viewed as key for reducing hunger and poverty in the country.  USAID’s involvement in supporting farmers to supply the domestic market with fresh vegetables has proved to be a successful model, and data indicate there is a large unmet demand.  If opportunities are identified in other economic sectors in which USAID has a comparative advantage and available funding, the Mission will be poised to respond, bearing in mind the need for such programming to demonstrate potential to increase the capacity for development through raising incomes and improving nutritional status.

The country is predominantly an agricultural-based economy--with about 77 percent of the population living and working in the sector.  Agriculture still consists primarily of subsistence farming with limited access to inputs, technical knowledge, and market linkages. There is a heavy reliance on traditional agricultural practices such as slash-and-burn cultivation (primarily in corn), lowland cultivation of rice (both rain-fed and irrigated), household gardens, harvested forest products (including tamarind, candlenut and fuel wood) and livestock production.  The yields for the main crops are consistently very low by international norms, and Timor-Leste currently experiences a significant food deficit that is projected to last until 2020 at a minimum.

Increased Capacity to Deliver Responsive Services at National and Sub-National Levels

USAID will support the GOTL’s SDP, focusing on decentralization of service delivery to local-level institutions.  USAID’s 2012 Democracy, Human Rights and Governance Assessment found that the capacity level of government institutions is a key constraint to effectively implementing decentralized local government.  “A key issue is that of developing sufficient capacity at the proposed municipal level to run local governments effectively.”  USAID will support GOTL’s efforts to strengthen line ministries and administrative agencies to carry out their public mandates to provide a number of basic services, including delivering health care, maintaining the rule of law, and securing land tenure.  In the health sector, USAID will offer interventions such as providing the MOH with technical support for implementation of the National Health Strategic Plan 2011 - 2030.  This support could focus on maternal, neonatal and child health system strengthening, with a particular emphasis on helping district-level health committees to prepare for and support the decentralization of health services.  USAID will also be prepared to support the MOJ’s institutionalization of land tenure reforms.

At the district, sub-district and suco levels, USAID will support capacity development of local government and non-governmental service providers in the areas of health, rule of law, and local governance.  USAID projects will not provide direct service delivery, but will equip local institutions with the improved organizational frameworks, human resources, and technical skills in areas needed to effectively implement the GOTL’s SDP.  Health and governance-related activities under IR 2 will be implemented in alignment with Agency initiatives and priorities, including the Global Health Initiative, Ending Preventable Child and Maternal Deaths, and the National Action Plan on Women, Peace, and Security.  Activities related to Women, Peace, and Security will focus on building the capacity of women leaders to participate in democratic governance.