‘MCC and Africa:
Strategic Partnerships for Development and Investment’

Remarks by MCC CEO Ambassador John Danilovich

Africa Roundtable with former Marylan Lieutenant Governor Michael Steele
Washington, DC
April 29, 2008

As prepared

Introduction

Many thanks, Michael, for asking me to participate in today’s discussion on a topic that we at the Millennium Challenge Corporation pursue with great passion and purpose: our strong partnerships with countries throughout Africa that our commitment to

reducing poverty,
stimulating growth,
and furthering individual country efforts to

attract,
sustain,
and benefit from

the enormous power of private sector entrepreneurship and investment.

At MCC, we believe in Africa and in the continent’s tremendous promise and potential. While many news reporters are fixated on what is not working in Africa, I see something far different. Like you here today, I see

opportunity,
reforms,
and growth.

Like you, I see Africa as a vibrant frontier, where new investments can create and shape economic growth. MCC investments reflect this different story—one of

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

As Michael Steele wrote in the Washington Times, “The time is ripe for Africa — and an African renaissance is beginning to emerge across the globe.” We completely agree that a new African reality is at hand that is redefining old perceptions and giving way to new possibilities.

I wish to thank Michael and his team for organizing this event to highlight the tremendous role both the public and private sectors can play in Africa’s development.

Let there be no mistake about where we stand on this: The Millennium Challenge Corporation is an essential component of America’s engagement with Africa to promote economic growth on the continent and to reduce poverty among its people.

The United States is on track to increase total assistance to Africa to $8.7 billion by 2010, double the level of assistance in 2004.

President Bush’s trip to the continent in February emphasized this commitment, where most of the countries he visited are engaged in one form or another with the MCC and where he joined President Kikwete to sign a $700 million MCC compact with Tanzania.

And, we can point to the fact that countries in Africa are the largest recipients of MCC’s development assistance—both in the number of agreements and in the amount of assistance provided—as further proof of our constructive and positive engagement throughout the continent.

MCC’s model for development assistance at work in Africa

Growth is the single most important factor in poverty reduction, and the private sector is the key driver of such growth. As a result, MCC’s mission and private enterprise are inextricably linked, and we know that our approach to development assistance can only be sustained over the long-term if the private sector is engaged in the near-term.

And, we approach development assistance in an entirely different way.

MCC’s model for development assistance—what many call “smart aid”—is one of co-partnership in development -- working shoulder to shoulder to achieve tangible and sustainable results. We support countries in creating their solutions to their challenges.

It is a model that invests in partnerships with well-governed countries

willing to undertake policy reforms;
willing to demonstrate country ownership and to build their capacity to lead their sustainable development; and
willing to deliver tangible results in the lives of the poor.

Of MCC’s 16 grants around the world totaling $5.5 billion—what we call Millennium Challenge compacts—9 are with African countries. These partnerships span the continent and include

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

MCC is proud to partner with African countries like these, which are heading in the right direction and are maximizing their MCC grants to further their own progress and open the door to greater private sector activities. These nine MCC compacts throughout Africa alone total about $3.8 billion. This means that nearly 70 percent—70 percent!—of what MCC has awarded so far in compacts worldwide benefits the people of Africa.

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

When I handed out land titles in Madagascar, many to women, I could sense their tremendous pride. With clear title to their land, the poor are able to use their property as collateral for credit to expand their farming operations.

I talked with Moroccan fishermen, who will benefit from greater market access as they use their MCC grant to improve landing sites and port facilities.

I’ve toured infrastructure projects in Benin, where MCC investments are rehabilitating the port of Cotonou, which will increase market access while lowering operational costs.

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.

Africa-MCC partnerships are bearing fruit as our investments:

build roads;
rehabilitate

ports,
airports,
and energy grids;

expand social and financial services through

health,
education,
access to credit,
land tenure,
and business development initiatives;

improve access to water and sanitation services;
and increase farmer incomes through better agriculture techniques and programs.

Former U.S. Ambassador to Tanzania Charles Stith summarized the impact of MCC’s work in Africa in a February op-ed in the Boston Globe, when he wrote, “While the Millennium Challenge might not be familiar to the average American, in Africa this program is recognized as one of this country's most important initiatives to encourage democracy through development…To date, the proposals presented for support have included plans to build

bridges,
roads,
ports,
hospitals,
and schools.

The projects are more than bricks and mortar. They are monuments to hope and symbols that America cares.”

MCC’s role in helping African economies engage with the private sector

MCC is proud of how our African partners are benefiting from our grants; yet, for African economies to grow, they must leverage and build upon these investments.

The number one way to do this is to engage the private sector.

MCC is a gateway to private enterprise development in Africa—as in all our partner countries—in three fundamental ways that are at the very core of MCC’s “smart aid” model:

by insisting on the right policies,
by building capacity, and
by generating private sector opportunities.

First, for the private sector to thrive, 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, monetary, 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.

Our partners want to compete—through the innovative MCC selection process—and send a powerful signal to entrepreneurs that conditions are swiftly improving in their countries for doing business and investing.

Second, for the private sector to thrive, African partner countries must continue building their capacity. 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 their capabilities.

And, third, for the private sector to thrive, African partner countries must seize the opportunities at hand. Because of the policy reforms and capacity-building measures underway, our African partner are fostering conditions to

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

The World Bank’s Doing Business 2007 report places Africa among the top three regions committed to private sector reform. Of the 175 economies surveyed, Ghana and Tanzania—both MCC partner countries—ranked ninth and tenth in terms of breadth and depth of reform.

We see private sector opportunities on many levels.

MCC investments provide the private sector with a point of entry to initiate or expand their own commercial activities, which reinforce MCC activities and enhance both the sustainability and the impact of our projects.

MCC investments foster continuing economic activity—whether by a farmer in her field who now invests because she has title to her land or by a local company that invests because of the improved business climate and infrastructure made possible by MCC.

MCC investments enable and encourage other investments that were previously constrained by a lack of

a school,
or trained workers,
or a road,
or clean water,
or proper sanitation.

To more closely explore the convergence of

poverty reduction,
development,
and the private sector,

I created our Private Sector Initiatives team at MCC. This falls under the purview of our Vice President for Policy and International Relations Maureen Harrington. Maureen and my Vice President for Congressional and Public Affairs Matt McLean will be here throughout most of the sessions to participate in the discussion.

MCC’s Private Sector Initiatives team strives

to weave the private sector into the fabric of MCC compacts from the very beginning of the process; this early conversation is key to accelerating the

jobs,
technology,
and know-how the private sector can bring;

and to create a comprehensive roadmap of private sector opportunities that are expected as a result of MCC’s investments. We want to make the private sector aware of upcoming procurement opportunities as well as opportunities to partner with MCC countries in MCC or MCC-related investments.

Our African partner countries are open for business. I invite those of you here today from the business community to look closely and carefully at MCC investments in Africa to see what opportunities are being created for investments of your own. MCC’s significant investments to

build infrastructure,
increase agricultural productivity,
and improve the business climate offer real opportunities for the private sector to grow further.

Conclusion

Through the innovation of the MCC “smart aid” model,
through MCC programs underway throughout Africa,
and through MCC’s ways of helping African economies prosper by

supporting good policies,
building strong country capacity,
and expanding private enterprise opportunities

we are furthering the progress already underway in Africa.

In a recent piece in AllAfrica.com, Julius Coles, the president of Africare, wrote: “There's an African proverb that says "No matter how long the night, the day is sure to come." I have lived and worked in Africa for more than 46 years and have never felt more hopeful about its future. I believe a new day is dawning across the continent.”

We couldn’t agree more with this assessment.

The Millennium Challenge Corporation and our African partner countries will continue moving toward this new day as we work to reduce poverty through sustainable economic growth in cooperation with the private sector and, as a result, better the lives of the poor in meaningful and lasting ways.

I want to thank you again for inviting me here today and for your ongoing interest in, and support for, the Millennium Challenge Corporation’s partnerships in Africa. I look forward to continuing our dialogue, and would be happy to take your questions.