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18 July 2007
Expert Discusses MCC’s Eligibility and Selection Process
USINFO Webchat transcript, July 18
Maureen Harrington, vice president for policy and international relations at the Millennium Challenge Corporation (MCC) – answered questions in a July 18 USINFO Webchat on Millennium Challenge Corporation’s annual eligible and threshold country selection process.
Following is the transcript:
(begin transcript)
U.S. DEPARTMENT OF STATE
BUREAU OF INTERNATIONAL INFORMATION PROGRAMS
USINFO Webchat Transcript
The Millennium Challenge Corporation: How Does the MCC Decide Who Qualifies For Assistance?
Guest: Maureen Harrington
Date: July 18, 2007
Time: 8:30 a.m. EDT (1230 GMT)
Moderator: Dear participants. Some of you are asking "where is my question?" Your questions will only appear on this screen after they are answered by today's guest speaker.
We kindly ask that you send in one question at a time. Thank you!
Moderator: Participants, if you would like to introduce yourself to the group, please select the "comment" option and we will post your introduction. However, there is no obligation to do so.
Maureen Harrington: Good morning, thank you for logging-in today. My name is Maureen Harrington and I am the Vice President for Policy and International Relations here at the Millennium Challenge Corporation. Let me start by quickly explaining MCC’s basic mission and principles and my role at the MCC, and then I would be happy to take your questions.
The MCC is an independent U.S. Government agency established with strong bipartisan support by Congress in January 2004 to reduce global poverty through sustainable economic growth.
MCC is based on the principle that there should be accountability with foreign assistance, and that aid is most effective when it reinforces good governance, economic freedom and investments in people. We provide an incentive for policy reforms by rewarding countries with large, transformative grants that complement other U.S. development programs and other donors’ efforts.
That in a nutshell is MCC’s core mission; I will try to explain more about our work and our model as we go along.
Finally, my department has four divisions including Development Policy, Donor and Multilateral Relations, Threshold Programs and Private Sector Initiatives. We manage the annual process to select Compact and Threshold-eligible countries, ensure effective donor coordination, oversee execution of the Threshold Programs, and develop strategies to increase private sector trade and investment partnerships in MCC eligible countries.
Q [Naimat Ullah Khan]: LC Karachi: Does Pakistani Companies & SMEs [Small & Medium Enterprises] could be benefited by this program, & if so, what is the criteria? Is there any proper website for this program? Kindly briefly describe.
Answer [Maureen Harrington]: Yes, the Millennium Challenge Corporation does have a detailed web site available at www.mcc.gov. The web site explains in detail how we operate, so I won’t give lengthy answers here; but the short answer to your question is that in countries where we operate, there is a the potential for great benefits for SMEs.
Once a country is eligible, it can propose a program of investments to MCC. In some countries, these funds have benefited SMEs through investments in vocational training, support for microfinance institutions, and investments in public goods – like roads and power – that make SMEs more competitive. Pakistan is currently not eligible for MCC assistance. For information on procurement opportunities, please visit our website and view the recent procurement outreach meeting posted under “In the News: Watch the “Doing Business with MCC” webcast.”
Q [Naimat Ullah Khan: LC Karachi]: Do those companies which are part of your program must operate with US or they could do their business with world outreached? Kindly explain.
A [Maureen Harrington]: Countries that are eligible for MCC assistance and have a compact are required to conduct their procurements through an open competitive process that meets international standards. The aid is not “tied” – i.e. countries are not required to procure goods or services from American companies. For more information on procurement opportunities and to view the MCC procurement guidelines, please visit the procurement page of the MCC website at: http://www.mcc.gov/procurement/index.php.
Q [Naimat Ullah Khan: LC Karachi]: What are the basic requirements for this program?
A [Maureen Harrington]: MCC’s model is organized around three core principles that form the foundation for the basic requirements of the program. The three core principles are that a good policy environment is key for successful development and the successful use of foreign assistance; that country ownership of projects is a key to success; and that results matter – there must accountability for results. In practice this means that MCC uses a transparent selection process to identify countries that have relatively good policy performance. That is the most important requirement for a country to work with MCC. For a country to be selected as eligible for an MCC assistance program, it must demonstrate a commitment to policies that promote political and economic freedom, investments in education and health, control of corruption, and respect for civil liberties and the rule of law by performing well on 16 different policy indicators. We intend to add new indicators this year that measure natural resource management and land rights and access.
And for the purposes of your question, it’s important to understand that MCC’s agreements are with other countries. The countries then implement the programs themselves – that is important to us because we believe that country ownership is a key to success.
Another important requirement is that countries must have income levels below a certain level – we are working with relatively poor countries. MCC selects its eligible countries from among the Lower Income Countries and Lower Middle Income Countries as identified by the World Bank – the details on which countries are in these groups are on our web site www.mcc.gov.
Q [ANN2]: HELLO, THIS IS ANNE FROM KUWAIT. I AM DELIGHTED TO BE THE PART OF THIS WEB CHAT.AS THE BUSINESS DEVELOPMENT MANAGER FOR THE COMPANY HERE IN KUWAIT, I WISH TO ESTABLISH AND LONG STANDING RELATION IN THE FIELD OF BUSINESS AND COMMERCE. I WOULD APPRECIATE IF YOU CAN PROVIDE ME THE DETAILS AS TO HOW [MCC] FUNCTION.
A [Maureen Harrington]: MCC is a United States Government foreign assistance program. We provide grant funding specifically to promote poverty reduction through economic growth. As I mentioned in my earlier responses, our basic principles are that a good policy environment, country ownership, and a focus on results are key to success. We work only with countries that perform relatively well on a number of indicators of good policy performance. Eligible countries prepare a proposal for MCC that is developed as part of a broad consultative process with civil society and the private sector. Once a proposal is approved by our Board of Directors, our partner countries are responsible for implementation of the project – which we term a compact – over a five year period. MCC requires rigorous monitoring and evaluations and impact evaluation to determine the results of the investments.
Q [M.Qashou]: Is there Any Branch in Jordan?
A [Maureen Harrington]: MCC has two programs. Our Compact program is a five year program for countries that meet our criteria for good policy performance. The Threshold program is a shorter program for countries that fall short of qualifying for the larger Compact programs because they don’t pass enough of the indicators of policy performance we use in the selection process.
Jordan was declared eligible for a Threshold program in November of 2005, and began its Threshold program this year. Jordan’s program includes projects in the area of customs reform and local governance – in assisting nine municipalities with improving citizen participation and participatory governance. MCC does not have an office in Jordan. USAID oversees the implementation of this Threshold Program.
In November of 2006, Jordan was also declared eligible for a Compact. Jordan is currently in the stage of developing its Compact proposal.
Q [Khawaza Main Uddin]: My name is Khawaza Main Uddin, special correspondent of New Age. I am from Bangladesh, a country which showed certain progress in attaining MDGs but still falls short of the targets in a few areas. Could you tell us how the countries like US can help Bangladesh achieve all [Millennium Development Goals] MDGs? Are you sure developed countries have disbursed aid as per their commitment to meet the MDG targets? Bangladesh has done whatever on its own and now it requires external resources to improve its performance. To be specific, can the USA provide technical and financial assistance to make interventions so that Bangladesh can achieve MDGs by 2015?
A [Maureen Harrington]: MCC requests that our partner countries determine their funding priorities by conducting a broad consultative process involving their civil society and private sector. We find that many of the investments identified will have a direct impact on helping our partner countries achieve the MDGs. For example, we are funding investments in water and sanitation, primary education, immunizations, and health care infrastructure, specifically to mitigate the impacts of poor maternal health, HIV/AIDS, and other diseases.
The MDGs also factor prominently into MCC’s selection process. Several of the quantitative indicators and sub-indicators we use to determine country eligibility directly support the attainment of several of the MDGs –including girls’ primary school completion rates, immunization rates for DPT3 and measles, 1 to 5 child mortality, access to improved water and sanitation, and biome protection, a proxy for eco-region management and environmental sustainability.
Finally, it is important to note that MCC is only one of several US development agencies. The US has extensive programs in education, infectious diseases, famine prevention, and other MDG focal areas. In Bangladesh specifically, USAID is investing in early childhood education, business training for women, environmental resource management, and HIV/AIDS prevention, all of which will help Bangladesh achieve the MDGs. Bangladesh is not eligible for MCC financing.
Moderator: Welcome to those of you just joining the webchat. Ms. Harrington is reviewing your many questions. We ask for your patience.
Read about America’s International Development Goals Moving Forward in the U.S. State Department’s eJournalUSA online publications series.
Q [Jalloh Amadu Fula2]: What the place of the African countries in this millennium challenge corporation?
A [Maureen Harrington]: To date, we have committed over $3.5 billion in compacts to 12 partner countries. Of these 12 compacts, 6 are with the African countries of Benin, Cape Verde, Ghana, Madagascar, Mali and Mozambique. These 6 compacts alone total over $2 billion, meaning that half of what we have awarded so far benefits Africa. We are signing our 7th agreement with Lesotho next week for approximately $362 M. Compacts with our African partners range in size from $110 million in our very first to our largest so far at $547 million, and are at various stages of implementation. These compacts have entered into force, with the exception of the Mali and Mozambique compacts, and disbursements are underway.
Q [Mjasiri]: Patience granted, it is very interesting to follow all these developments around the world, wonderful chat!
A [Maureen Harrington]: Thank you for participating and we are glad it is useful.
Q [Jaona]: Hello: the following questions are form economist students at the university of Antananarivo (Kardas and Daniel). What is the difference between MCA and MCC?
A [Maureen Harrington]: In 2002, President Bush at the Monterrey Conference acknowledged that donor countries had a responsibility to increase their foreign assistance, but at the same time, recipient countries have responsibilities, too - A responsibility to govern well, invest in their citizens, create a policy environment for growth, to demonstrate results and to own the process of their development.
Out of this, the President and Congress worked together to develop the concept of the MCA, the Millennium Challenge Account, which is the funding mechanism Congress uses to meet this particular goal of sustained poverty reduction through economic growth.
The MCC, or the Millennium Challenge Corporation is the independent federal agency that congress created to administer the MCA. All of MCC’s funding comes from Congress through the MCA.
The reality is that the terms are almost interchangeable for the public, although they mean different things to us.
Additionally, because country ownership of this process is so important, MCC requires each of our partner countries to determine an entity that is accountable for showing progress and results, and that entity is often known as MCA-country X, such as MCA-Armenia.
Q [Hefler]: Can we say that good governance is a warranty for the success of project since nobody sets up a plan without promising good governance, the relationship between the project (ideal) and its accomplishment is always a big issues.
What measures do you take to avoid the difference between what has been planned and what has been achieved?
A [Maureen Harrington]: MCC doesn’t rely on a country’s promise of good governance. Instead, in determining which countries will be eligible for MCC assistance, we review a country’s scores on a number of indicators of good governance that are created by independent third party institutions. These indicators serve are measures of how well a country performs relative to its peers in the following areas: civil liberties, political rights, control of corruption, government effectiveness, rule of the law, and voice and accountability. The countries that are chosen for eligibility in MCC funding are those that score relatively well in these categories compared to their peers; of course this doesn’t guarantee project success – no project anywhere is guaranteed to be successful – but projects in the best performing countries have the best chance of success. Details of how we carry out this selection process are available on our web site www.mcc.gov.
I’m happy to see your second question – it’s a very important one for us. Accountability is one of MCC’s key emphases. We are very focused on results. MCC has requires a rigorous monitoring and evaluation plan and we put a very strong emphasis on impact evaluations to determine the effects of our investments.
Q [Kardas and Daniel]: For Madagascar what are the fields of interests for MCC?
A [Maureen Harrington]: MCC’s grant to Madagascar will support a program designed to raise incomes by bringing the rural population from subsistence agriculture to a market economy. The investment program includes three projects that will work together to help rural Malagasy secure formal property rights to land, access credit and protect savings, and receive training in agricultural production, management and marketing techniques. This integrated three-pronged approach will provide the rural population with the necessary conditions to use the land productively, to build profitable businesses and help ensure environmental sustainability.
For more details, please visit the Madagascar country web page on our website: http://www.mcc.gov/countries/madagascar/index.php.
Brahima: 1) What is the political or diplomatic meaning of the MCC for the U.S.?
2) How are the MCC projects initiated? Are they tailored by U.S. policy or development specialists or by joint-commissions?
3) Burkina Faso is expected to benefit from the MCC, do you see in a near future, a full normalisation of the relations between the U.S and Burkina Faso since the country was once blacklisted by the U.S. for its alledged implication in regional conflicts?
4) Burkina Faso and African cotton producers are affected by turbulent cotton market and the U.S. is often accused of distorting cotton prices because of its subsidies to its 25000 cotton producers, do you think the MCC will one day address the issue since the lives of millions in West and Central Africans depend on cotton production?
A [Maureen Harrington]: I will focus my answer on your second question. Once a country is declared eligible for MCC assistance they can begin to develop a proposal for an investment program (which we refer to as a compact). One of the key lessons of the last fifty years of development experience is that programs that are truly owned by countries have the best chance of success. For this reason MCC doesn’t develop the compact proposal, our partner countries do. As a part of the compact development process, our partner countries are required to conduct an extensive domestic consultation process. Once they have developed a proposal MCC reviews the proposal and conducts due diligence on the proposed investments before a compact is agreed on.
Regarding MCC's relationship with Burkina Faso, a Threshold Program to build girl friendly schools is being implemented. Burkina Faso is also eligible for a Compact and we are working very closely with the Government of Burkina Faso through the Compact development process.
Moderator: Additional information about the Millennium Challenge Account can be found at USINFO’s MCA Homepage.
Q [Mjasiri]: I am a Senior Journalist for The African on Sunday, a local Weekly newspaper here in Dar es Salaam, Tanzania. My names are Jaffar Zein Mjasiri. Please note that all these answers will be published in the weekly paper Diplomatic interview page, of which I am the news editor. Please I submit:
Your Excellency, Maureen Harrington, how often have you been able to visit Africa in your capacity as Vice President for Policy and International Relations for MCC?
2. Did you ever hold discussions with for example with legislators, councilors, chairmen of the Wards, Secretaries, if you ever happened to be in Tanzania?
A [Maureen Harrington]: I have visited Africa many times during my tenure with MCC. In fact, prior to this position, I served as MCC's Managing Director for half of our Compact programs in Africa. I have traveled to Tanzania, Cape Verde, Ghana, Namibia, Mali, Benin, Burkina Faso, Senegal, Madagascar, Kenya, Mozambique, Lesotho, Malawi, and Zambia.
While in Tanzania, we met with a number of National Parliamentarians and local officials, and government officials at all levels have been involved with consultations around program design.
I note that you have submitted a number of questions that we won't have time to answer today. However, we would be happy to arrange an interview. Please write to usinfowebchat@state.gov and they will forward your contact information to me. Alternately, you can visit our website and send an e-mail to the general mailbox.
Q [Miranda]: The MCC has announced that Guyana would be receiving assistance under the Threshold Program. Is freedom of the press a criteria for accessing the Millennium Challenge Account (compact) assistance? How important is freedom of the press on issues of governance in relation to accessing the MCA Compact assistance?
A [Maureen Harrington]: Guyana is not currently eligible for a full MCC compact – i.e. one of large investment programs. MCC has a second program, the Threshold Program, for countries whose policy performance does not quite qualify them for a larger Compact. The Threshold Programs are designed to help countries improve their policy performance in key areas.
In determining eligibility for a compact, MCC considers sixteen indicators of policy performance. (Detailed descriptions of these indicators can be found at http://www.mcc.gov/selection/indicators/indicators_extended_descriptions.pdf; a detailed description of the overall process for selecting eligible countries can be found at www.mcc.gov.). One of the sixteen indicators reflects performance in the area of civil liberties, and this indicator captures information on press freedom as well as number of other aspects of civil liberties.
Q [karim2]: AID is most effective when it reinforces good governance, how do you ensure that money giving to developing countries are properly used in the people?
The spread of AIDS have been nearly contained like in America, what is the MCC doing to combat its spread in Africa where poverty is visible?
Malaria is the second ailment that kills today in Africa and yet there is no one medication to abrogate its spread and the life it claims in Africa, what's the MCC doing?
A [Maureen Harrington]: Accountability is key area of emphasis for MCC. Holding our partner countries – and ourselves – accountable for good performance is priority for us. We work to ensure that our grants are well used in a number of ways: First, we require that our partner countries conduct an extensive consultative process to get input on the proposed program from different sectors of society before they can submit a proposal to MCC. Second, we continue to monitor a country’s policy performance – not just in the area of governance, but across all our key policy criteria – even after we have selected a country for eligibility as they begin to implement their programs. Third, we insist on very strong monitoring and evaluation programs and impact evaluations to ensure not only that the funds are being used as envisioned, but that they are being effective in bringing about the poverty reduction that was envisioned.
Regarding MCC's programs related to HIV/AIDS - We are signing a Compact tomorrow with the Government of Lesotho that has a very large healthcare component designed to help mitigate the alarming economic fallout from the HIV/AIDS pandemic. Nearly a quarter of the population between the ages of 15 and 49 in Lesotho is HIV/AIDS positive. Leveraging and building upon the work underway by other donors in the country, including the President’s Emergency Plan for AIDS Relief—or PEPFAR—the compact will extend the productive life years of those living not only with HIV/AIDS but also with tuberculosis and other debilitating diseases that take a toll on the country’s economy.
MCC Compacts are designed by the MCC eligible countries and address the needs identified by the country as the most urgent.
Comment [Kardas and Daniel]: There is a saying that "there is never a free gift".
A [Maureen Harrington]: MCC funds aren't free, they are an incentive for nations that show significant commitment to good governance and investments in their citizens. All of our development projects, which are funded by grants not loans, must show an economic rate of return, but the beneficiaries of MCC’s investment are the people of those countries who qualify for MCC's assistance. By reducing poverty through sustainable economic growth in nations committed to good governance, the world will be more prosperous, stable and secure for everyone.
Q [karim2]: guinea was last year rated to be the first corrupt country in Africa and forth in the world. with this status how much does guinea continues to benefit from the MCC.
A [Maureen Harrington]: Guinea is not eligible for assistance from MCC. MCC is designed to provide assistance have demonstrated good policy performance. One of our measures is good policy performance is corruption. Corruption is our only “hard hurdle”. That is, countries that don’t score well relative to their peers in this area are not eligible for MCC’s compacts.
Moderator: Dear participants. Ms. Harrington is continuing to review your questions. We hope you will understand that she has attempted to answer as many as possible during today's chat. She will answer one or two more questions. Please stand by.
Q [IRC Antananarivo]: Greetings from Madagascar. Well, I am a Mirana Francoise RAZAFINDRAMBOA, manager of a travel agency located in Madagascar. As far as I am able to say, the MCA program is still open for NGO's or public sector. Many entrepreneurs are involved in projects in Tourism sector but still the grants are not sufficient. That's why I'd like to ask if there is any possibility for private sectors to benefit the program? Thank you.
A [Maureen Harrington]: Because our Compacts are only five years in duration, we see the growth of the private sector as critical to sustaining the ongoing economic growth that move people out of poverty long after our investment is complete. We have established a new unit at MCC, the Private Sector Initiatives group, to spearhead our efforts to ensure more effective private sector engagement both domestically and internationally.
Maureen Harrington: Thank you very much for participating in this webchat today and for your interest in the Millennium Challenge Corporation. Please feel free to visit our website for additional information - www.mcc.gov. Maureen Harrington
Moderator: We wish to thank Maureen Harrington for joining us today. The webchat is now closed. Please visit our USINFO Webchat Station homepage for more information on upcoming events and a transcript of today’s discussion (posted within one business day).
Comment [marcelo viruez]: thank you for the opportunity.
Comment [Mjasiri]: Thank you too for giving us your precious time. Also, well done moderators. Cheers"
(end transcript)
(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
