MCC
Last week, the Millennium Challenge Corporation (MCC) board met and, among other decisions, approved changes to the selection criteria that it uses to assess candidate countries’ eligibility for MCC funding.
Women in Madagascar who have received land certificates with the help of the MCC.
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It’s not a secret that there are skeptics about aid effectiveness or critics of the US budget for international assistance. That’s why I was pleased to learn about the recent work of the Millennium Challenge Corporation (MCC) which proves that aid can not only be effective, but can also benefit the American economy.
An MCC energy project in Tanzania. Photo credit: Morgana Wingard/ONE.
Last week, I attended a conference hosted by the Modernizing Foreign Assistance Network (MFAN) titled, “On the Cutting Edge of Aid Effectiveness: Best Practices and Lessons Learned from the Millennium Challenge Corporation.” The panel ofspeakers included Gayle Smith, the special assistant to the president and senior director of the National Security Council (you may have seen her tweets from our recent ONE-White House Twitter event), and Sheila Herrling, vice president for policy and evaluation at the MCC. This discussion was led by Jim Kolbe, who is now the co-chair of MFAN.
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This blog post by MCC CEO Daniel Yohannes originally appeared on the White House blog earlier this week.
Earlier this year, President Obama made clear in his State of the Union address that his focus is on winning the future -– getting our economy going after the worst recession since the Great Depression, while laying the foundation for long-term economic growth and job creation.
Some might wonder how an international development agency like the Millennium Challenge Corporation (MCC) fits into this vision. America has always been a generous nation, and our moral leadership is reflected in MCC’s goal of reducing poverty through economic growth in developing countries. But MCC’s investments not only benefit poor people overseas, they are critically important to our future prosperity here at home.
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Last week, Millennium Challenge Corporation (MCC) CEO Daniel Yohannes testified before Congress about the program’s innovative approach to development assistance. MCC has created economic opportunities in countries across the globe, building capacity and offering sustainable solutions to eradicate poverty.
An MCC project in Tanzania aims to stimulate economic growth through targeted investments in transportation, energy, and water.
Congress formed MCC in 2004 as a smarter way to deliver foreign assistance. It operates much like a business, emphasizing accountability to seek the greatest return on US investments. MCC uses 17 indicators of good governance and economic freedom to access eligibility. Those that pass the rigorous selection process are awarded four to five-year compacts for development programs. MCC engages local governments, NGOs, and private sector partners to craft a plan, focusing on economic growth, sustainability, transparency, country ownership and results.
The purpose of MCC compacts isn’t long-term aid — quite the opposite. MCC compacts are designed with a closing date in mind. They generate economic opportunities in developing nations to break the cycle of aid dependency and help them stand on their own. And the results have been encouraging.
Cape Verde is a great example. The first African nation to complete its compact, Cape Verde has shown overwhelming growth at nearly every level. The government developed an electronic service to improve access for entrepreneurs, reducing the time needed to start a business from 52 days to one hour. New bridges were completed, helping riverbeds remain passable every day during heavy rain seasons. Cape Verde has built long-term capacity from the ground up: they’ve provided technical assistance to eight microfinance institutions and are launching the nation’s first private credit bureau. And MCC won’t abandon this work as the compact closes — Cape Verde has qualified to develop a second compact to build on its success.
MCC foresees similar results from those development compacts still underway. The program’s goal of income generation is gaining ground: from the $7.9 billion committed, MCC expects $12.3 billion in increased income for 172 million people — more than a 150 percent increase. But the US can’t let these development successes pass us by. The House’s current CR cuts MCC funding by nearly 30 percent, jeopardizing the program’s ability to deliver sustainable development assistance. At a time when debts and deficits top the list of concerns, the US must ensure that each dollar is spent wisely. We hope Congress will invest in smart policies, like MCC, that encourage growth at home and abroad.
Mr. Yohannes’s full testimony is available here.
If you caught the president’s State of the Union address a couple of nights ago, you’d know a big part of his vision for America was focused on innovation and competitiveness. “Our success in this new and changing world,” Obama said, “will require reform, responsibility, and innovation.” He presented a bold plan to create jobs and grow our economy through reformed education, more efficient government and investment in science and technology. It was an inspiring speech that called upon Americans to “do big things.”
Official White House Photo by Pete Souza
But this talk isn’t new. Throughout government, we’ve been seeing a lot of these principles put in practice by many agencies and programs, including those working on foreign assistance. The State Department, the Millennium Challenge Corporation, and the US Agency for International Development (USAID) have all put a premium on becoming more efficient, effective and transparent in their support for poor nations and are embracing innovative ideas to save money and make a bigger impact.
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On Wednesday, the Millennium Challenge Corporation (MCC) board met and approved a $350 million compact with Malawi. The compact will fund infrastructure development and policy reform in the energy sector, aiming to benefit more than 6 million people in Malawi over the course of the five-year compact.
When the government of Malawi began developing their compact proposals in 2008, they performed a constraints analysis with the World Bank, the African Development Bank and the UK Department for International Development to determine impediments to growth in the country. During this analysis, energy emerged as one of the main constraints to economic growth. Just 9 percent of the country’s population currently has access to power (one of the lowest rates in sub-Saharan Africa), and that number is closer to 2 to 3 percent in rural areas.
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Between Sept. 28 and 29, I’ll be reporting live from the 2010 Global Corporate Citizenship Conference, an annual gathering hosted by the Business Civic Leadership Center (BCLC) at the U.S. Chamber of Commerce.
I just listened to Daniel Yohannes, CEO of the U.S. government’s Millennium Challenge Corporation (MCC), speak about the importance of connecting the private sector with international development.
Yohannes, who has a background in banking and finance, works with MCC to provide developing countries with tools, resources and information necessary to partner with the private sector. In turn, development must play a role in U.S. diplomacy and defense.
“Private enterprise has brought prosperity to the national economy, and it can do the same to economies around the world,” he said. “Economic growth can be used to reduce poverty.”
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