Remarks by Paul V. Applegarth at CCFR/Northwestern Dinner with Myles Wickstead, following panel discussion on “Aid, Governance and Development in Africa: Findings of the Commission for Africa Report”

Chicago, Illinois

Thursday, May 12, 2005

Thank you, Sam. I am pleased to be here, although my challenge is triply difficult tonight. It is always a challenge to be between your audience and the door, and I know many of you are anxious to get home. In addition, I am following Myles' thoughtful remarks and what I've heard was a very interesting panel discussion. Finally, many of you are attending the “Aid, Governance, and Development in Africa ” conference at Northwestern tomorrow where I'm speaking, so I run the risk tonight of stealing my own thunder. The good news for you therefore is that tonight my comments will be mercifully short. Those of you who attend tomorrow will do so at your own peril.

Before commenting on the commission report itself, I want to congratulate Prime Minister Blair and his government on their reelection. We in the U.S. and at MCC are very supportive of their focus on Africa, and we at MCC have been actively cooperating with them to promote the effort this year.

As to the report itself, I had a chance to talk to Myles, when he and the Commission for Africa were preparing their report.

They took on a daunting task and did an admirable job, producing a report that is a very thoughtful with excellent analysis of the development challenges facing Africa today. It also addresses head-on many of the issues MCC is tackling today. Indeed, while I'm sure it was unintentional, the key words on the very first page, state succinctly the principles on which MCC is built – “For its part, Africa must accelerate reform. And the developed world must increase and improve its aid.”

MCC and Its Principles

At MCC we are attempting to convert lessons learned from years of development research and practice into real action to reduce poverty in the world's poorest countries.

One lesson is that good policies support growth and poverty reduction and make foreign assistance more effective.

MCC therefore works with poor counties that already demonstrate they perform better than their peers in three broad categories of “ruling justly, investing in their citizens' health and education, and encouraging economic freedom.” These parallel the areas identified in the commission report as key to growth.

Another lesson is that country ownership is crucial to building responsibility and accountability.

MCC therefore lets countries define their own priorities and develop their own programs in consultation with civil society and the private sector. MCC has no preconceived ideas about the best uses for MCC funds. We react to a country proposal based on how well it would address poverty reduction and spur economic growth.

A third lesson is that success is not measured by inputs but by results.

Therefore, each MCA Compact includes measures of success and mechanisms to monitor and evaluate them from the beginning of the program.

The individual approaches are not new, but we've put them into a package designed to give countries an incentive for policy and institutional reform. MCC challenges countries not yet eligible for MCA funding to make the policy changes necessary for obtaining MCA funds in future rounds.

In addition to those three key lessons, there are others built into MCC's decision and operation, and I was particularly struck in reviewing the commission's recommendations, how much of what they recommend parallels what MCC is already doing.

For example, a key theme of the report is that, “Donors must significantly improve the quality of aid and how it is delivered.” And they specifically say, “that means more grants, more predictability, and untied aid, … harmonized with the aid of other donors and better in line with the priorities, procedures, and systems of African governments.”

All MCC aid takes the form of grants, it is predictable – when we enter a compact the program is for 3 to 5 years, fully funded up front; it is untied; it is in light of what other donors are doing, and our partner countries pick the priorities.

The MCA and Africa

To date, 17 countries have qualified to compete for MCA funds based on their policy performance. Nine of these countries are in Africa: Morocco in North Africa and Benin, Cape Verde, Ghana, Lesotho, Madagascar, Mali, Mozambique and Senegal in Sub-Saharan Africa.

We have just signed our first compact and it is with an African country— Madagascar . We expect to see a steady stream of additional compact signings from now on.

The Madagascar Example

Madagascar exemplifies how the MCA works. Madagascar is one of the poorest countries in the world and 80% of its poor live in rural areas. Madagascar's agriculture productivity is among the lowest in the world and, once a rice exporter, it now imports rice.

Therefore, the government, through a consultative process, decided that Madagascar's MCA program would focus on increasing agricultural productivity and rural incomes. It aims to do this through a three pronged effort that provides:

title to land, giving farmers collateral and certainty to enable them to invest in their property;
reform of the financial sector to increase rural access to credit; and
information to farmers on business methods, technology, and markets.

Again, these areas that the Malagasy identified - access to credit, land security, and information about agricultural opportunities - are among the issues the Commission for Africa cites as fundamental needs to address poverty in Africa .

Conclusion

This Compact is a concrete demonstration of how the U.S. government is viewing foreign assistance in a new light. Since 2000, U.S. foreign assistance has increased by about 90% and aid to Africa has almost quadrupled. And this is before the MCC has even begun disbursing money.

Our focus is not just on the amount of aid, however, but its effectiveness. Results are what matter.

We also insist that the implementation of MCC programs be transparent, with high standards for financial management and procurement.

This is still a work in progress, and every day we learn something new about how to do our job better. It is an exciting opportunity, and I welcome your ideas on how to improve the prospects for development in Africa and on how to make aid more effective in supporting this goal, and again, I congratulate Myles and the Commission on their effort.