‘MCC and Africa: A Partnership for Progress’

Remarks by MCC CEO Ambassador John Danilovich

The Africa Society of the National Summit on Africa, Embassy of Ghana
January 29, 2008, as prepared

Introduction

Thank you for that kind introduction, Mr. Ambassador [Bawuah-Edusei], and thank you for graciously opening the doors of the Ghanaian embassy to host us here this evening.

I have had the great privilege of visiting Ghana, and I have enjoyed and benefited greatly from my many, fruitful conversations with President Kufuor, and also with representatives of his government and members of civil society.

The Millennium Challenge Corporation is extremely proud of our partnership with Ghana. The $547 million Ghana-MCC compact reflects the strong will of the Ghanaian people to drive their growth and development to create a better future for themselves and generations to come.

I am honored to participate in the Ambassador Andy Young Lecture Series on Africa, and would like to also extend my gratitude to Bernadette Paolo, President and CEO of The Africa Society of the National Summit on Africa, for inviting me to speak.

Bernadette, many thanks to you and your team for organizing this event. Both the Africa Society and the Millennium Challenge Corporation contribute to the common goal of deepening U.S.-Africa relations through strong partnerships, and I am very happy to be here.

This is an exciting time for the Millennium Challenge Corporation! Tonight, I find myself among friends to discuss the Millennium Challenge Corporation’s work in Africa. Tomorrow morning, we are expecting to meet over 300 supporters of the Millennium Challenge Corporation on Capitol Hill to celebrate our fourth anniversary, and to discuss the enormous progress we have made in realizing our mission of reducing poverty through economic growth in partner countries in Africa and elsewhere around the world. If you can join us tomorrow morning on the Hill, please do. We will be in the Russell Senate Caucus Room beginning at 8:30 a.m.

Distinguished ambassadors, ladies and gentlemen, let there be no mistake about it: The Millennium Challenge Corporation is an essential component of American engagement with Africa to promote economic growth on the continent and to reduce poverty among its people.

Let me share how MCC does this by taking a few moments to talk about

our model for development assistance,

our role in Africa and the strides MCC programs are making throughout the continent,

and our vision for growing African economies and integrating them into the global economy.

MCC’s model for development assistance

The MCC model for development assistance first became a reality in Africa. It is a model that awards development grants—not loans—in partnership with countries:

willing to undertake

political,
economic, and
social policy reforms to

rule justly,
fight corruption,
invest in the health and education of their people,
and promote economic freedom;

willing to build their capacity to lead their sustainable development; and

willing to deliver results where they matter most—in the lives of the poor.

As chair of MCC’s board, Secretary of State Condoleezza Rice refers to MCC as “one of our most important tools in changing the conversation about how development takes place, that there is responsibility on behalf of donor countries but there is also responsibility on behalf of those who would receive our aid.”

By adopting this new way of looking at development, Madagascar signed the first MCC compact in 2005. Africa led the way, and since then, MCC has partnered with 16 of the world’s poorest countries through antipoverty compacts, totaling over $5.5 billion. Threshold programs have been approved for another 18 countries worldwide, totaling $400 million, to help them overcome specific policy weaknesses and cross the “threshold” to compact eligibility.

Africa, as a whole, remains the largest recipient of MCC’s development assistance, both in the number of agreements and in the amount of assistance provided.

Of MCC’s 16 compacts, 9 are with African countries, totaling about $3.8 billion. Our partnerships span the continent, from:

Morocco and Cape Verde to;
Benin, Ghana, and Mali to;
Lesotho, Mozambique, Madagascar, and Tanzania.

And, we anticipate up to two more compacts in Africa by the end of this summer—with Namibia and Burkina Faso.

This means that nearly 70 percent—70 percent!—of what MCC has awarded so far in compacts benefits the people of Africa.

In addition, of MCC’s 18 threshold programs, 7 are in Africa, providing another $100 million to the continent, largely to fight corruption and improve governance.

MCC’s model for development assistance is no longer donor and recipient countries interacting, but, rather, co-partners in development working shoulder to shoulder toward results. MCC provides the funding and technical support, but our partners

develop their proposals,
implement their programs, and
benefit from leading their development efforts that we fund.

MCC supports countries in creating their solutions to their challenges. Ghana’s public sector reform minister confirmed this when he said, “Unlike other traditional development assistance programs where the donor proposes how funds are used, countries selected under the Millennium Challenge Account propose programs to receive funding. Thus, the MCA is designed to allow developing countries to take ownership and responsibility for funds provided by the Millennium Challenge Corporation.”

The MCC model is working, working around the world and working in Africa.
[MCC’s role in Africa and the strides MCC programs are making throughout the continent]
And, we see similarities among African partner countries interested in MCC’s way of approaching development. These countries are:

embracing ongoing reforms to

retain,
maximize, and
leverage MCC funding;

building a culture of transparency by fighting corruption;
engaging all segments of their societies—including women—in defining development priorities and implementing action toward them;
taking steps to build their capacity to fight poverty;
and working to promote healthy business climates so that trade and private enterprise can ignite and serve as the engines of long-term economic growth.

MCC’s investments in Africa’s development are beginning to bear fruit. While many news reporters seem fixated on all that is not working in Africa, I see something much different. Like you, I see opportunity and possibility, reforms and growth. MCC investments reflect this different story—one of

country-led solutions being implemented,
progress being realized, and
the lives of the poor improving.

In many of your countries—working in support of and in partnership with your people—MCC is

building roads;
investing in ports, airports, and energy grids;
expanding social and financial services, including health, education, access to credit, land tenure, and business development initiatives;
improving access to water and sanitation services; and
increasing farmer incomes through better agriculture techniques and programs.

In Madagascar, for instance, I handed out land titles, many to women. I could feel the tremendous pride in each of these individuals, with their newfound sense of economic security, dignity, and empowerment. With clear title to their land, the poor are able to use their property as collateral for credit to expand their farming operations.

I visited cooperatives where Malagasy farmers are learning new techniques and accessing new markets to make a successful transition to higher profit/ greater income crops like geraniums, which are being marketed and sold to produce high-value oil for use in soaps and perfumes.

I’ve toured infrastructure projects in Benin, which are increasing market access. MCC investments in rehabilitating the port of Cotonou will lower operational costs and increase merchandise traffic.

I’ve attended classes in one of 132 “girl-friendly” schools that MCC funding is making possible in Burkina Faso. As I sat next to these third graders, I saw firsthand what our partnership is achieving in Burkina Faso, and the schools are a joy to behold.

MCC’s commitment to Africa’s development is evident in Lesotho, where the compact supports efforts to counter the spread of HIV/AIDS and to improve the reliability of water supply and sanitation for industrial and residential uses.

It is evident in:

Cape Verde, where MCC funds are being used to improve roads and small bridges that will strengthen transportation links, making it easier to commute to work or move goods to local and export markets.

In Mali, where Malians are improving irrigation systems in the Niger River Delta and modernizing the Bamako Airport that will boost agricultural productivity and expand access to markets and trade.

In Mozambique, where Mozambicans are improving access to water and sanitation in eight cities and towns and 600 rural villages. MCC investments are also rehabilitating Mozambique’s national transportation network and helping coconut farmers prevent the collapse of their industry.

In Ghana, where the compact complements agriculture and infrastructure investments in rural communities by providing over 100 new and rehabilitated education facilities, 900 additional water points, and electricity to 12 agro-processing facilities.

It is evident in the threshold program in Malawi that supports anticorruption efforts, including training 45 journalists in investigative journalism to expose corruption. These efforts helped Malawi improve its performance on the control of corruption indicator, now making the country compact-eligible.

Each of these programs underway in Africa creates a firm foundation for reducing poverty and stimulating growth and development.

MCC’s vision for growing African economies and integrating them into the global economy

For African economies to grow and integrate with the global economy they must build upon this foundation for the future. This requires, in our view at MCC, three fundamental ingredients:

the right policies,
capacity, and
private enterprise.

First, for economies to grow, African partner countries must continue building the right policy framework. With our 17 policy indicators, MCC measures commitment to:

good governance,
economic freedoms,
investments in education and health,
control of corruption,
a regulatory and fiscal climate favorable to business development,
civil liberties,
the rule of law,
land rights, and
the protection of natural resources.

We are seeing our African partners enact the often difficult policy reforms necessary not just to qualify for and remain eligible for MCC aid but, even more important, to do what is best for their citizens and to stimulate private sector activities.
Second, for economies to grow, African partner countries must continue building their capacity. Our funding agreements are short—five years for compacts and two years for threshold programs.

Success at MCC is not measured by our length of stay in an African partner country but, rather, by how effectively we help create sustainable conditions for our partners to lead their development agendas—from designing a proposal for funding based on consultations with all segments of their society through implementation. These are demanding expectations, but our partner countries are meeting the challenge and are motivated to develop new capabilities. They know what policies are critical or what institutions need to be strengthened or created to sustain development.

For example, Ghana itself identified the lack of adequately trained procurement specialists as one of its obstacles to successful development. Ghana applies part of its MCC investment toward a procurement capacity-building initiative designed to strengthen the effectiveness of procurement entities to help overcome this particular barrier to development. Now, the training of procurement professionals across the country is underway.

And, third, for economies to grow, African partner countries must engage the private sector. Because MCC demands performance on indicators evaluating

fiscal,
monetary,
regulatory, and
trade factors, including the costs and days required to start a business,

we are fostering conditions to

expand trade and commerce,
promote local entrepreneurship,
attract investment capital, and
ignite private enterprise.

By insisting on good policy performance and by building capacity, we are helping our partner countries sustain those conditions. Both MCC and our African partner countries want development assistance to be replaced by the self-sustaining economic activity driven by the private sector itself, which is the true engine of growth and poverty alleviation.

Our African partner countries are open for business, and this, ultimately, will drive sustainable growth that will deliver results for the poor. I invite those of you here this evening from the business community to look closely at MCC investments in our African partner countries to see what opportunities are being created for complementary or parallel investments of your own. MCC’s significant investments to

build infrastructure,
increase agricultural productivity, and
improve the business climate

create opportunities for the private sector to grow. As the finance minister of Indonesia says, the real draw of being an MCC partner is receiving the MCC “good housekeeping seal of approval,” which sends a powerful signal to private investors that conditions are swiftly improving in MCC countries for investing and doing business.

By leveraging MCC assistance

to promote sound policy performance,
to build capacity, and
to create a jumping-off point for private enterprise,

African partner countries are equipping themselves to escape poverty and compete effectively in a global economy of opportunity.

Conclusion

Ultimately, we share a common goal. MCC invests resources in African countries committed to this shared vision of economic success.

Through the innovation of the MCC model,
through the MCC programs underway throughout Africa today, and
through MCC’s ways of helping African economies connect to the global economy by insisting on

good policies,
strong capacity, and
private enterprise,

we are making the promise of poverty reduction through economic growth a reality in Africa.

The Millennium Challenge Corporation and our African partner countries will continue to work toward our common purpose: reducing poverty through sustainable economic growth and, as a result, improving the lives of the poor in concrete ways.
I want to thank you again for inviting me here this evening and for your ongoing interest in, and support for, the Millennium Challenge Corporation’s significant work in Africa. I look forward to continuing our dialogue, and would be happy to take your questions.