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2005

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Center For Global Development Presents Cape Verde's Millennium Challenge Account Compact

July 13, 2005

Transcript

BECKMANN: Good afternoon. Thank you for coming. I'm David Beckmann. I'm the president of Bread for the World, and we're honored to be a co-host of this presentation of the MCA Compact with Cape Verde.

I'm really excited about G-8 commitments to Africa. I think they are historic. I think they're going to help hundreds of millions of people, but form a U.S. perspective, it really comes back to what we're doing today. President Bush has promised to double U.S. aid to Africa by 2010, but the bulk of that commitment is really a recommitment, to take the Millennium Challenge Account from the $1.5 billion that were associated to it for the current fiscal year to the $5 billion a year that the president initially envisioned. That's the bulk of the promised doubling of aid to Africa.

And so if here in the U.S. we're going to do our part to in fact realize promises of the G-8 summit and make sure that they make a difference for people on the ground in Africa, what we need to do is to get the money that the president has promised for poverty-focused development assistance, and especially for the MCA, and then we need to do our part to make sure that the money is used well, that it really does support economic growth and poverty reduction in Africa and other poor parts of the world.

On the question of getting the money, we've got our job to do this year, because the House has already voted to cut virtually all of the president's proposed increase in poverty-focused development assistance, and the Senate is on track to cut something like 60 percent of it. So the decisions are not yet made. They'll be negotiated between the House and the Senate and the administration over the next few months, but people here who want the G-8 promises to be truthful promises, we need to help move Congress to support the funding that the president's requested for the MCA and for other poverty-focused development assistance for next year, 2006.

People here, Washington insiders, can be very active in the appropriations process, as the appropriations decisions are conferenced with the administration. But the other thing I want to mention that's happening in Congress, which I think is a parallel track that opens up opportunities for any citizen in the United States to weigh in on this issue in an effective way, is the Millennium Development Goals Resolution and bill in the Senate. In the House, it's H.Con.Res. 172. The House is calling on the president to be forthcoming at the G-8 summit, at the September meeting of the U.N., at the Doha ministerial, be forthcoming in achieving the MDGs and telling the president that he should commit the U.S. share of the resources needed to meet the MDGs.

It was just introduced in the Senate as S. 1315. It's a bill in the Senate, introduced by Senator Lugar a couple weeks ago. Again, it urges the president to be forthcoming, expresses the sense (ph) of Congress that we can afford doing our part to reach the MDGs, and in the Senate version, it calls for a report back to Congress on how we've done. So both the finishing up the budget appropriations process in a way that moves toward, that supports the president's promises, that supports the fund -- he's asked for $3 billion for the MCA next year -- that supports that request. And then also I think the MDG bill, H.Con.Res. 172 and S. 1315 is another way that we can build support in Congress to be serious about promises that the president has made on our behalf at Gleneagles.

The other part of what we need to do is make sure that these monies are used well, that they're used effectively. And I think civil society has done a good job in helping to shape the MCA. I think it's well designed, the founding legislation is really well designed. Now it's part of our job, civil society in the U.S., also civil society in the MCA countries, to work with our governments, to monitor what's happening, to make sure that these monies do indeed result in economic growth and poverty reduction.

Cape Verde is a country -- Mr. President, we're honored that you are here. You've provided really excellent leadership, the kind of leadership in which the rest of the world can invest. And Paul Applegarth, as the CEO of the MCA, has taken this from a concept, a piece of legislation, to a living institution, an institution that is doing what the MCA was intended to do.

It's now my privilege to introduce Paul Applegarth. Let me just say that I'm especially impressed that Paul has insisted on the principle that MCA compacts should be designed by the MCA countries. That is a different way of doing business, but these countries have been picked as countries that are democratic, that have good economic and social policies, that are managing their own affairs well. And Paul has insisted, then, that we wait to let those governments, in consultation with their people, make their own decisions about where they want this additional money to be spent.

I'm also really pleased that he has kept the MCA on track, focusing it on the kind of economic growth that indeed reduces poverty, and he has let it be known that he's going to resign, but he continues to work 150 percent of his time to get the MCA now, to move it up to scale, so that the MCA is providing additional assistance on the kind of scale that the president envisions.

I'm really honored to introduce the CEO of the Millennium Challenge Corporation, Paul Applegarth.

(APPLAUSE)

APPLEGARTH: Thank you, David, very much.

I'd first like to extend a warm welcome to His Excellency Prime Minister Neves and the delegation from Cape Verde, and to Ambassador Jose Brito, and to express our appreciation for them joining today and or all of the work they have done as our partner to make this compact possible that we're going to discuss today. And also very much like to thank Bread for the World and the Center for Global Development and David Beckmann and Steve Radelet, in particular, for co-hosting today's events and for making today's discussions possible.

And, David, I also very much want to thank you for your kind remarks earlier, both for your support of Millennium Challenge and what we're trying to do and the effort to really make sure we get the appropriations that will allow us to fulfill our mission of poverty reduction and not only providing more aid, but more effective aid.

I just got back from Cape Verde over the weekend, where by signing Millennium Challenge's compact, I had the great fortune to participate in the celebration of the 30th anniversary of Cape Verde's independence. The timing was not a coincidence. Cape Verde asked that we linked the compact signing to their independence day because of the importance of Millennium Challenge to their country.

I was able to see much of Cape Verde in my travels. For those of you who have been there, I have now been to Santo Antao, Sao Vicente, Sal, Sao Tiago, Fogo, Praia, Brava and even Pagoda Fogo (ph). Cape Verde is a beautiful country with much to offer the world as a tourist destination, for sports fishing, but particularly as an example of excellent governance and transparency. But there's also a great need.

Cape Verde suffers from a chronic shortage of water, with more than 80 percent of rain being lost as runoff and evaporation on the few days a year that it rains, and extreme poverty is an unfortunate reality for many Cape Verdeans who suffer day to day to provide for themselves and their families. MCC is proud in providing $110 million in grant funding to Cape Verde over the next five years to help it reduce poverty, promote growth and achieve its objectives of moving from dependency on aid to private sector-led development.

The goal of the compact, which my colleague Maureen Harrington will discuss in more detail in a few minutes, is to address some of the immediate needs of Cape Verdeans through a project that will improve agricultural productivity, replenish the water table and raise the standard of living in rural areas. In the medium term, it will help provide infrastructure to ease access to employment and social services and reduce transportation costs to help make Cape Verde more cost competitive in products and trade. And, over the long term, it will make the private sector more competitive and strengthen government institutions to attract more investment and create jobs.

The program Cape Verde has developed with MCC's help has the potential to help over 60,000 people, give them access to markets, schools, health facilities and better access to water agribusiness development and marketing services and access to credit to over 70,000 people. Cape Verde picked these priorities. That is one of the opportunities that come with the honor of being selected for MCC, the opportunity to tell us what your own priorities for poverty reduction and growth are.

Cape Verde's selection for MCC, and MCA, is an honor and an opportunity and a responsibility. It's an honor because of the recognition that Cape Verde is one of only 17 countries that rank the highest against our criteria that measure a country's commitment to those things necessary to reduce poverty and to help their own people. And it's also because it's one of the first three to complete a compact with MCC. It's an opportunity, and together the people of Cape Verde have met that opportunity well in determining their priorities in developing the proposal.

And now this compact program is Cape Verde's program, and it is what the prime minister refers to as the third challenge of Cape Verde after being selected and developing a program. The third challenge, and the responsibility, is to implement the program, to monitor its progress and to ensure it is successful in meeting the goals that Cape Verde has established for itself.

As most of you know, with the Millennium Challenge Account, the United States has embarked on a new approach to development. We are committed to rewarding countries with good policies to give them the opportunity to set their own priorities and to run their own programs and for holding them accountable for results. And as a need for increased development assistance and a need to end the cycle of poverty and dependency on aid increasingly comes to light at the G-8, at the U.N., at the next Doha development round, the United States has much to be proud of.

MCC alone is working with 30 countries and over 400 million people. It's been not quite 11 months since last August, when we got our first country proposal and we could really begin to work with our partner countries, and in that time, Millennium Challenge has now committed between 600 and $650 million in compact, threshold and pre-compact development funding in nine different countries. And we expect to commit over $1 billion of funding by early fall this year.

But MCC is not simply about writing checks in our mission to reduce poverty. We believe in aid and more effective aid, as David mentioned. MCC is making investments of U.S. taxpayer dollars where it will make the highest returns in terms of poverty reduction and in terms of promoting growth. We believe firmly in the principles in which we were established. We know that aid works best when it goes to countries with policies that promote poverty reduction and promote growth, where countries, not the donors, take the ownership of their own development and feel responsible for results.

These principles are embodied in our partnerships in Africa and elsewhere, where the people themselves are saying more money alone won't tackle poverty if there's corruption in government or if the government is not accountable to the people. By rewarding those countries that are taking the difficult steps and adopting these policies, countries like Cape Verde, we are creating an incentive for countries to tackle corruption and tackle and promote good governance.

Cape Verde's economic and political progress is a good example of what MCC is trying to encourage. Cape Verde's leadership, including the prime minister, has an outstanding track record in governance, transparency and fighting corruption, and it has created a world-class fiscal system. This is in no small part due to the excellent example of Cape Verde's leadership, such as that provided by President Pires and Prime Minister Jose Maria Neves.

During the first year of Cape Verde's independence, Jose Maria Neves was a leader of the group organization of the ruling party, Amilcar Cabral African Youth, and played an important part in the transition to democratization of the political system of Cape Verde. He completed his studies in Brazil, where he attended the Business Administration School of Sao Paulo, EASESP. And he put into practice his expertise in the field of public administration by becoming the pioneer in the process of state reform in Cape Verde and the transition from a colonial state to a modern democratic state.

While mayor of the district of Santa Catarina, his excellency was instrumental in reinforcing the local government in Cape Verde, what has become an important part of Cape Verdean democracy, and I have seen firsthand the involvement of local mayors or local presidents, as they're called, and the people in the local towns and communities in Cape Verdean governance. This is a live and thriving democracy. He has also served as a member of the parliament, elected by the district of Santa Catarina.

The prime minister knows his government is taking a new approach to politics by encouraging greater dialog with the people of Cape Verde, modernizing Cape Verde's judicial system and actively seeking the transformation of the public sector by evaluating the management systems and development of human resources and by developing the service sector and the private sector for citizens and enterprises. With four years of governance, the administration of Jose Maria Neves is creating a sound foundation for sustainable development in Cape Verde, and therefore it's an honor for me to introduce the leader of our newest partner country, and our newest personal partner, His Excellency Prime Minister Jose Maria Neves.

(APPLAUSE)

NEVES (THROUGH TRANSLATOR): Thank you very much. I want to say hello to you and to thank you very much for being here today. I consider the MCA a great model in terms of international cooperation. And I think that MCA will play a very important role in changing the current mechanisms in terms of aid to development. It's a novelty-type program that encourages positive change. First of all, it is so because it's a country (ph) that favors merit performance and success.

We think that success stories and good experiences on the part of the countries must be rewarded. We support good experiences. We have to make it in such a way that they become references in our spread out to the developing world. And that's why we're proposing now that debt forgiveness for the poorest countries should use the same criteria for selection that are used for the MCC.

There are countries that have good governance. There are countries that have proved to do healthy management of public monies. They are honest and serious and transparent about governance. There are countries that improve the lot of their citizens, and we think that all of those characteristics and features must be rewarded.

The MCA program gives credibility to good governance, democracy, it protects in the defense of the rights of citizens, of their freedom, and also economic freedom. That's why we consider MCA as a promoter of positive change in the beneficiary countries. Another very important feature of this program, MCA, is that it's developed through a very strong partnership between the U.S. government and the government of the beneficiary countries.

Of course, the countries must have a clear vision of their own development, a clear vision of their own future and must be in a position to negotiate with the MCC, or the Millennium Challenge Corporation, in order to include all the elements of the program that they will put together within that vision of development, that vision of the future. The MCA, because it's a partnership-type program, it encourages human capacity, the strengthening of institutions, all elements that are very important for the development. And it also promotes competitive tools and elements that are necessary for economic growth.

It's a program that does not give fish to people, but gives them the fishing rod and teaches them how to fish, thus allowing -- the program -- for people to be able to fish for their own consumption and to continue their own development. We think that only growth will allow us to ensure that people have their own necessary income and that will allow us to fight poverty.

The MCA program in Cape Verde will finance projects of modernization of farm techniques, of access to water and enhance farm productivity. It will be helping to fight poverty in the rural areas of our country. And as MCA will finance building roads to give access to the most remote areas of the country, it will in so doing facilitate the transportation of agricultural farm products to the market, fisheries products to the market, improving life in Cape Verde and helping to fight poverty. As MCA will finance the building of a very important port for our economy, it will be thus creating the conditions for roads of the country, for creating employment, for enhancing income for inhabitants, and therefore, again, contributing to fight poverty.

And because of the MCA potential for positive growth, for encouraging profound changes and positive changes in our country, I think Americans should be all very proud of the MCA. And as the head of the Cape Verdean government, I must say I'm proud of my country. I'm proud because it was among the first to be selected to benefit from this program that will be building our future.

I would like, in conclusion, to stress to you all the very important role and the sensibility shown by Paul Applegarth, who, in leading this program, has helped create a very strong partnership, one that will allow for capacity building -- human capacity building, as well as institutional capacity building in our country that will ensure our future growth. And I would like now to thank all friends of Cape Verde, all Cape Verdeans and all Americans, who together have worked to build up this success. I think we should be all very happy and proud of our success.

I thank you very much.

(APPLAUSE)

RADELET: Thank you very much, Mr. Prime Minister. It is really refreshing to hear your remarks and to hear you speak so candidly about the importance of this program and the role of the Millennium Challenge Corporation in helping to put it together.

My name is Steve Radelet. I'm a senior fellow at the Center for Global Development. What we'd like to do now is take a few minutes and have a little bit of discussion with two more of our guests here, and then in a few minutes, we'll open it up to question and answers from you in the audience from these microphones along the side.

I just wanted to say how important this program is to the overall operation of the Millennium Challenge Corporation, as well as, obviously, to Cape Verde itself. And I think it reflects a major change that's happening throughout Africa that is little noticed, even by people who spend a lot of time looking in Africa. There has been a major change in governance, in both political governance and economic governance in Africa over the last 15 years. In 1990, there were four democracies in Africa: Senegal, Botswana, Mauritius and Cape Verde. Now there are close to 20. This is a remarkable change, a remarkable change.

We hear about the problems in Congo and in Zimbabwe and in Somalia and in Liberia and Sierra Leone until recently, and many people have the perception that that's what all of Africa is about, and they're wrong. They're really wrong, and they forget about multiparty democracy, multiparty elections that have taken place now in Ghana, in Nigeria, in South Africa, in Mozambique, in Malawi, in Zambia, most recently in Kenya and the list goes on. And it's a remarkable change.

Cape Verde was in the forefront of that change. It was one of the original democracies and it has paved the way on the political governance side, and it has also paved the way on the economic governance side, because it has been -- again, little noticed -- one of the most successful countries in Africa. Unfortunately, little noticed because it is smaller than most countries, but it has done remarkably well, actually, over the last several decades. So we have with us one of the countries that has really led the way, both economically and politically, in Africa, and I think it's just worth drawing on that and the big change that has come across much of the rest of Africa -- not all of it yet -- but much of it, with Cape Verde and a couple of other countries leading the way.

Now, turning to the specifics of the MCC, I'm quite pleased to have join us two people that have been very much involved in this process from the beginning. First of all, we have Ambassador Brito, who's been the ambassador here in Washington since 2001, and he has left his mark as one of the most important and intelligent and involved ambassadors. He's very highly regarded around Washington. Before his work within the government and the embassy, he spent five years at the UNDP, and before that he was trained as a chemical engineer and spent seven years working in the petroleum industry. So he's well rounded in his experience, both working in the private sector and with UNDP and now with the government. So I just wanted us to have a chance to welcome Ambassador Brito this afternoon.

(APPLAUSE)

Also joining us, on my left, is Maureen Harrington, who's the managing director for Africa at the MCC, responsible for the countries in Anglophone and Lusophone Africa. She's been at the MCC since last year. She was also a special assistant to Mr. Applegarth earlier on, and she comes to the MCC from the State Department, where she was a special assistant in the African Bureau. Before that, she also has some private sector experience working with J.E. Austin & Associates, and worked for several years with the International Republic Institute as well. So we're very pleased to have Maureen Harrington with us as well, since she has been the point person for the MCC on this contact.

(APPLAUSE)

What I wanted to do was just ask each of them a couple of questions, just to get us rolling here, and then, as I say, open the floor up for questions from the audience. Let me start with Maureen to just tell us a little bit more substantively about what's in the compact.

We've heard some important overviews of the process and the importance to Cape Verde, but why don't you tell us a little bit more substantively about the main components in the compact.

HARRINGTON: Thank you, Steve. I'll build on a little bit of what's been said already. The Cape Verde compact is a five-year commitment of approximately $110 million, and the overall goal is really to help support the government's overall development strategy of moving from an economy that's dependent on aid and remittances to an economy that's driven by private sector development.

The MCC funds are going to be used to focus on three key areas. It's watershed management and agricultural supports. The second component is infrastructure development and the third component is private sector development, and I'll tell you a little bit about each of those in a bit more detail.

On the watershed management and agriculture side, as Paul mentioned, Cape Verde is challenged by a lack of water, and they lose 85 percent of the rain to runoff and evaporation, and only 10 percent of the land is arable. So MCC is going to be working to provide approximately just under $11 million to fund activities that will help increase the capture, storage and distribution of rainfall water, and this is going to allow poor farmers to irrigate their fields and to increase agricultural productivity.

The project is also going to be designed to mobilize agricultural support activities such as applied research, pest controls, training and extension services, as well as access to credit for farmers. We believe that a more reliable water supply, combined with increases in irrigated land, is going to help Cape Verdean farmers to shift from low-value, rain-fed agriculture to higher value-added crops that require more intensive cultivation. The bottom line is that we hope, and we intend, that the program will help double farmers' household income, and that more than 70,000 people will hopefully benefit through this program.

The second component is related to infrastructure. As most of you know, Cape Verde consists of nine inhabited islands, and the infrastructure needs further development to help link those nine islands. Right now, infrastructure, transportation infrastructure, hinders the development of a common national market, it increases the cost of production and impedes the movement of people and goods among the nine islands. So the MCC infrastructure program is going to be funding two separate projects. The total value is $78.7 million, and the first part of the program is for roads and small bridges. And this project is going to help ensure improved transportation links to social services, employment opportunities, local markets, the ports and the airports. And these roads will provide access to those things for approximately 60,000 people on the islands of Sao Tiago and Santo Antao.

The second infrastructure piece is related to the Port of Praia, where we are going to be funding the increased development of the port. This, along with the privatization of port services, we believe will help increase the efficiency of the ports, will help prevent bottlenecks in growth and will help facilitate the movement of people among the nine islands of Cape Verde.

The final component is related to private sector development, and this project is approximately $7.2 million, and really this project is meant to support Cape Verde's long-term economic transformation strategy. We're going to be working closely with the IFC, the International Financial Corporation, to help identify the constraints to private sector developments in several of Cape Verde's key growth drivers of the economy. So we're looking at areas related to tourism, financial services, transportation services and fisheries. And, essentially, the project is designed to help identify what the constraints to investment in those sectors are, and then to remove those constraints. And so MCC financing could be used to address problems related to human resources or vocational training, to resolve policy issues that may need some technical assistance or financing, to address infrastructure constraints, to potentially work with entrepreneurship or SME development.

So those essentially are the key components of the project, and I would be happy to answer more specific questions if you have any.

RADELET: Thanks.

Now, Mr. Ambassador, I wonder if you could tell us how, in your view, the process has been different from dealing with other donors. You worked with UNDP for many years. You have extensive knowledge of how other donors operate. What precisely is different, and what's good about what's different, maybe what's not so good about what's different? But maybe you could tell us a little bit about the process and its importance. Thanks.

BRITO: Thanks, Steve. Just I would like to acknowledge the presence of all the many -- from some of my colleagues, and I thank you for the hospitality (ph), because it is important. It is about MCA. Now, I think MCC arrived to create an environment, where we as African ambassadors, we discuss about our own experiences.

I have been a participant when Madagascar signed with the African ambassador, discussing about this and learning about Madagascar myself after ending our negotiations, for example (ph), and discussed with some African countries to explain our experiences with MCC. The presence of the ambassador is important to show all of our interests about this program, and our willing to work together and have some solidarity is one aspect (ph). So what is different, because it is not common in the donor community? We have the impression that we work with an organization that there is no real discussion or partnership, and for us it's one of the aspects important of MCC is that we can discuss really and we can develop partnership.

And MCC has developed, for example, a dedicated team for each country. The other donors, we have people in a department, and you don't really know really with who you discuss. By having a dedicated team working with us, after some time, because it was not easy in the beginning, because we are all learning about this process, we arrived to create really a joint team. It was not a Cape Verdean team and MCC team. It was a joint team, working on the same goal, to have as soon as possible this compact.

And it was very important, was when we created this joint team, it was possible for us to go and see what are the concept (ph) that we make with those (ph) reality. And when we have not the capacity, the technical capacity, so we have to support some consulting, arriving (ph), working with us, with our team, to get some reference on the problem out of the area with this and have a better program.

So it is why also we have moved faster. We know that with other donors, between the identification and the signature we have, I think, two years. Here we present our proposal in August and we sign it with particularly (ph) in June with the MCC board at home (ph), the compact. So it is a real achievement, because for a program of this government (ph), because Cape Verde, we never had this kind of support, so providing in 10 months to really put together a program, it is really important. But also because during this process, we have worked with also thinking about the implementation phase.

We have developed a program of monetary and evaluation. We have indicators, very clear, that make sure that we follow to see the impact, the result, of our program. But more than this, that we have been working also in creating some capacity within the government to be able to manage the program. Cape Verde will be one of the first countries where the fiscal agent will be the minister of finance. This is because with the support of the World Bank, we have put together also a management system of our finance. We have more complete transparency, and although as we are going to propose to the MCC team if they want from Washington of accepting our Internet ignored (ph) roughly (ph) all the expenditure made each time for all the government systems will be on the Internet, all the transparency.

But, to build it, also, MCC team helped us and it is in our compact to create this management system by having the computers accelerated (ph), all the technical assistance to build a government (ph) system would be really transparent. So, I can say that it is a process that we feel comfortable by each evolution, and we hope in the next phase of the implementation we will be really able to get the money as soon as possible. That is excited (ph) about, not to sign a compact, but is to have also the money and resolve our problem.

At the same time in this process or so, we took advantage of also partnership. For example, the project, the road project, benefits from the work we have done with the World Bank, and, finally, we have a program, a kind of joint program with the World Bank in the road program. We chose (ph) in May (ph) to send a bid, and we are already ready to start immediately the project, and we have only waiting now for the condition of disbursement to be signed, I hope as soon as possible. So we can already bid outside. The same thing for the port project. We benefit about some work already existing, but one application important is that the MCC is fixing up our strategy of development.

So we are working, really, to move from this aid financial for more sustainable economy, so for us it was our objective. And our thinking is not that it's some years ago to say, "How we can really change the situation, reducing our dependency from aid?" And the MCC program arrived and we are able immediately to say, "OK, this is the way it is. Let us take advantage of this." And because of the quality of the dialog, I used to say that one of the problems that the receiver country has with some donors, and you have the impression that we are like students at schools, with grades. So you make the proposal and the professor, the teacher, goes there and says, "OK, you have a D, can improve," and sends you back. And you go back and says maybe C. And with this process, it took a lot of time.

So, now in this process, you then see them working together, so we are able to produce a good product to the board, and I think among other things -- I'm taking too much time -- but I can say about what is different from MCC.

RADELET: A second question, actually, for each of you in turn. We've talked a lot about the difference of the MCC, well, first of all, in the selection process. That's very clear, that the MCC operates very differently from any other donor, really, in the selection process. And we've talked a lot about the difference in terms of the government's ability to set the priorities in consultation with civil society. That's clearly different.

My question now is what about going forward? In terms of implementing the program, in what ways will the MCC program be different from other programs, or will it be similar in these other areas but continue to be different in terms of the consultative process and the inclusion of broader civil society? So, now, going forward, in what ways do you anticipate this to be different from other programs?

Let me start with Maureen, and then the ambassador.

HARRINGTON: Well, I think one of the areas that will look most differently to all of you is that the government of Cape Verde is going to be responsible for implementing this program, not the Millennium Challenge Corporation, not consultants that we hire or procure. It's the government of Cape Verde's program that they designed, and that they will implement, and so I think that's really the critical difference.

I also think, perhaps the ambassador can talk a little bit more about the governance structures that we've set up, but we are structuring in in a very formal way involvement of NGOs and civil society in the governance of this unit. And, really, MCC's job is to ensure that the money is being used well, that we're meeting the milestones, that we're having the impact that was intended, that the money is being audited properly so that we can ensure the folks that provide the money to us, which is all of you and the Congress, that the money is being spent as was promised. But, really, the implementation of the program is the responsibility of the government of Cape Verde, and I think that's the key difference, along with this formal involvement of civil society on an ongoing basis I think is also a critical difference.

One of the other elements I think that's important to note is that through the compact, if you download it -- it's online, it's available on our Web site -- you'll see that there is a monitoring and evaluation plan that was designed with the Cape Verdeans which can tell all of us what the intended outcomes of the program are going to be. So we've set targets, we have baselines and we have an idea of what the impact of the program is going to be. We know that on day one, before we've disbursed a dime, and before in fact we obligated any money. And so I think that's another area that's different, is that throughout the course of implementation, we will have a good sense of whether we're on track. The Cape Verdeans will know whether they're on track, and you all will be able to tell whether we're on track in terms of achieving the outcomes. I think that's also a critical area that makes our program a bit different.

BRITO: Thank you. I'll talk now (ph) that the MCC process, managing the implementation is very complex. It's not easy, so we have to learn with this, because I think in the MCC we have time to do something new, but we need to think the implementation really out for (ph) this aspect of all these metering and evaluation systems that is relatively complex. You can see in the document that we put together.

On the implementation, like we have done in the phase before, on the planning phase, and also because Cape Verde, consultation and participation of the population in Cape Verde is something that began with Cape Verde. I remember one of the partners in Cape Verde on this, and all what we have done to develop the movement at the global area to really participate to the development. And, today, we have the chance to where I can see (ph) some institutionalization of the participation.

So, with MCA, we have not to build something new. We have only to build on what exists. For example, we have a lot of what we call committee of partners, regional partners, in each island, where you have the participation of the civil society. You have government organization, NGOs, participating in this and making decisions how to allocate funds, how to evaluate funds. In this, during the project, meaning (ph) the whole area where we have been developing these associations, implementation has to be done by these associations in general because they have the capability to bring -- they are building roads. They are building reservoirs. They are building a lot of things in the rural areas, and it's not first (ph), but the organization, association of populations are doing this, and in a way, very efficient, I can say.

So we tried that (ph). We will organize (ph) the capacity in the rural areas to do this. At the local (ph) level, we have these management units. We have to put together this management unit, because as I said, it's really complex and we really to have the capacity to manage all of the program. But at the same time, we have a steering committee led by the minister of finance and planning, but with all the administration involved in the project, the representatives of the private sector and representatives of the NGOs. Our platform of NGOs in Cape Verde, we have 200 members, NGOs. So it's, for a small country, a level of participation that we have.

And we have a committee to manage with more people involved in this, representatives of this committee of partners at the regional level, civil society, NGOs, and we hope this committee will support the implementation of this program.

RADELET: Let me ask one more question, and then we'll turn it over to questions from the audience. So, if you have a question for the prime minister, for Mr. Applegarth, for the ambassador, for Maureen, please line up at one of the two microphones.

But my third question here is what would you do differently if you had to do it over again? This is a new program, with a lot of learning, with some different approaches and, going forward, of course, the program is going to evolve and try some new things and modify practices going forward. So my question would be, what have you learned from this process that you would try to change in order to make the process work better the next time around, or in a different country.

You mentioned, Mr. Ambassador, that the process is quite complex in some ways. Does it need to be that complex? Are there ways to simplify it, or are there other ways that we can change it and that other programs can learn from what has happened here so that we can make things work better?

Maureen, why don't you start?

HARRINGTON: OK, great. Paul said earlier that being selected as an MCC country is an honor and opportunity and a responsibility, but I think it's also fair to say that for the 16 countries that were chosen first, it was also a bit of a challenge, because, as you all know, we walked in the door at MCC in February of last year with about seven people and a box of pencils. And we selected countries in May, and so when we went out to visit countries, to be quite honest, we didn't have a lot of guidance and writing in terms of what the requirements were or what we needed.

And I think, I joke with Ambassador Brito about this all the time, that it's kind of a big challenge to be one of the countries that's at the forefront of getting an MCC compact signed, because we really learned together how to do this. We weren't a donor that was saying, "OK, this is exactly how the process is going to work. You need to do X, Y and Z." We sat down with our partners in the government of Cape Verde and said, "OK, how are we going to do that?" And I do think that was hard at the beginning, and I think, moving forward, it will be much easier, because we have a lot more guidance. If you look at our Web site, it's all there. None of that guidance was there in the beginning. It was something that we developed as a team and as partners together, and I think that's one area where MCC can do things better and will do things better in the future. So that's one of the key areas that I think I would change.

BRITO: I would say the same thing as Maureen, because this has been a learning process. For example, it is my impression, if we have before something like we have today, we would have much faster in representing the same (ph), because, if you remember, the first guidelines of MCC was not clear, really, and we lost a lot of time thinking what really they need. But we had the impression that MCC also learned this, because it was not so clear. And, today, for me it is clear, and now I will advise my colleagues.

You can only do sometimes, but doing some aspects, mainly this issue that we have of economic rate of return that we have not understood really in the beginning, and make that clear, I can say. Because development is not only the economic rate of return, and mainly when you win (ph) when you reduce poverty, and as I said, it is not easy to say, "OK, Cape Verde has not a university. I want a university." But how can I do the economic rate of return of a university, for example, is one of the aspects that maybe I would like MCC to see back (ph) these aspects, where some project may be not really seen as immediate return and economic growth, but can be really important to change really the things (ph).

You can see from some project, rural project, for example. If you have to put in Cape Verde the cost of all the infrastructure and do the economic rate of return, you will have problems to find a positive economic rate of return, and I use the case of the Netherlands when I say that if the Dutch at this time were thinking about the economic rate of return, they would never do these boulders (ph) and all these investments they made to have more land. And today they are one of the first countries in Europe on agriculture, because they have not to pay all this investment. And when you take a country like Cape Verde, before producing, you have to create a lot of infrastructure to use after (ph) better the land, for example.

You have to do a lot of watershed management in Cape Verde before to use the water. And watershed management is costly then, also, when you introduce it in this. So there is some aspect that need I think to be seen better, so how to do this. We agree that we need growth, but in some aspects, we have to analyze what is this possibility (ph) really?

RADELET: So, time for questions and answers, but I'd actually like to ask Paul Applegarth that same question, and Prime Minister Neves.

There's a microphone, Paul, just to your left. From what you've learned from this compact and others in this kind of first round, if you will, of compacts -- Madagascar, Nicaragua, Honduras, Cape Verde and Georgia soon to come, apparently -- what have you learned about what could be done differently going forward to make the process work a little better?

APPLEGARTH: I'll try to answer it a little differently, Steve. We're built on the lessons of development. I talked in the past about country ownership, focus on results, good policy, but the learning doesn't stop. There's a lot of lessons, and we try to build in almost continuous learning in what we're trying to do after every important thing: OK, what went well here, what didn't, and so on, the idea of how to improve it.

One thing, I wish we had started two years sooner. I think an amazing job has been done by the MCC team and our partner countries, particularly since we couldn't pick countries until last May and couldn't start getting proposals since August. A lot done in basically those 10, 11 months, but it's three and a half years since Monterey, so I wish we could have gotten started sooner.

I think when you think about it, a lot of us have got a lot of time and experience in emerging markets, not only from those coming in the U.S. government, but academics, NGOs, private sector. But I think early on it would have been helpful for us to get educated. And you have to think about this a little bit different, this is a group of development professionals. It's almost the way a law firm works, in some ways. It's different, and I think it's better understanding upfront about how to cut through some of the things in the federal government would have been very helpful.

Just getting staffed up, procurement. I wish we could have started staffing before we were founded. It happens to be against the law, probably for good reason, but the point is, trying to start a start-up, to edge it out (ph) at the same time you're trying to really deliver on a program, and it's a challenge, no question about it. I think one of the things that's been helpful, and I think we'll do a better job, one, is we now have real-life examples.

If you accept as gospel, as we do, we are not going to go to one of our partner countries and say, "Do it this way." Now, maybe we have some good ideas on how it could work, but we would have not gotten it right. But now, as a result of the accumulated experience, we have examples of a consultative process, of how it works in different places, examples of how to organize as a partner with MCC. But the point is we can now to say to our partner companies coming on now, "This worked in other places. We're not going to tell you to do it this way. Pick and choose, go talk to them. Go talk to Cape Verde, go talk to Madagascar, go talk to Honduras, go talk to Nicaragua. How did they do it?"

One of the sessions we had at the IMF-World Bank spring meetings was the representatives of our partner countries all getting in a room, in a working group, talking about how it was going and what lessons they could take from each other. We now have more of those examples. We can put them out on the Web for them to pick and choose what fits best within their own society and within their own culture, because we all learned how to do this better. The consultative process is new for most of our countries, and it's going to work differently in Armenia or Honduras than it's going to work in Mongolia or in Ghana, or in Senegal.

The point is, those examples of what might work, it's up to our partner countries to pick, not on priorities, but I think given the approach and methodology, the best we can do is do a good job giving them options and alternatives, how to get it out there, pick it, how do you really design programs that really do hit and impact poor people in a way that's beneficial? We spend a lot of time thinking about investing in poverty reduction and growth, what works. We're going to distribute that literature over time as we build that up, but those are the kinds of things that we need over time to be able to do.

NEVES (THROUGH TRANSLATOR): I think that MCA is a process, it's a new process, and a process that brings novelty to this idea. At the beginning, they had to define criteria for selecting countries. After that, ideas had to be thought of, how to develop the programs themselves. Therefore, I think that it has been a learning process for everybody, and a comprehensive learning process, involving many elements.

After selecting the countries, for instance, the features and elements of the programs had to be defined and thought out, and MCC, for instance, the corporation was created at the same time as all these ideas were defined. And these criteria were defined all at the same time, so I think it was a very enriching experience for us, and an experience that has brought as a result new criteria and new ideas in terms of international cooperation for development.

I think that today, based on the experience that we have accumulated, we could say for instance that the program could have been developed faster, that disbursements could have started earlier than they did. But, however, we had to start from scratch. We had to define new ideas, new elements of the program, new criteria, as I said before. I think that the whole process required a lot of creativity, a lot of invention, and at the same time as MCC was being put in place and developed, we came up with new ideas and new criteria, as I said, to the program.

And I think that in the end, it was pretty fast. I mean, the process that led to the development of the program itself was very, very fast. Now, I just want to say one more thing and that deals with the implementation of the program. Once we signed the compact on July 4th in the city of Praia in Cape Verde, I've been talking ever since with prime ministers, with presidents of other countries, who have been selected but who have not yet put together their own programs. And they asked me, they asked me, "Well, what should we change? I mean, what are the ideas that we have to bring to the table? How did you do it, how did you achieve that?" they asked us.

So, therefore, I think it has been very positive, because it shows that there is a willingness towards change, changing ideas, changing institutions in all these countries, ideas that of course will advance not only the putting together, the thinking of the program, but also its implementation. So I think it's been, all in all, a very productive process, a learning process that will benefit not only the selected countries, but also those who are responsible for managing aid programs.

RADELET: Any questions? Please make your way to the microphone. Please start by introducing yourself and make your question short and to the point, and, if you can, aim it at one particular person, if you can.

Bob, please introduce yourself and start.

BERG: Thanks, Steve. I'm Bob Berg, senior adviser to the U.N. Economic Commission for Africa, and I think this question is inspired by my sitting next to Jim Michael (ph), who had one of the most distinguished tenures as chair of the Development Assistance Committee of OECD. It's on the question of aid coordination.

If this were a normal announcement by the normal donors, they would say, "Well, here is $110 million. It's part of a package that includes $100 million from other donors and $100 million of domestically mobilized finance and so forth." But the theory here is different. The theory is: This goes into a total, and it's managed as a total. And so I'd like to know whether in fact this package, Mr. Prime Minister, has moved it to be easier to manage the total going into infrastructure and watershed management and private sector? And whether there has been any response by other donors, either positive or not so positive, in their moving with you in this direction, to be a more unified and coordinated management from your side?

NEVES (THROUGH TRANSLATOR): I think that what I'm going to talk about is an important element or feature of MCA, if you want, because we submitted our program to MCC, a program that had been put together and developed according to the great options that we had made for our own development. One of the features of our options for development is that of institutional changes that will lead, in turn, to better management of public finances.

So, at the same time as we were undertaking those changes, aiming at submitting our programs to MCC and also integrating ourselves, being part of the MCA, the same changes that were made then for that purpose have helped us improve our cooperation with the World Bank, the European Union and the Netherlands. And, as a matter of fact, we already signed a budget support program with each of these three countries and institutions I mentioned.

Also, as part of our infrastructure program, an important part of it is building roads, and for that program of infrastructure, building roads will have $25 million from MCA, $15 million from the World Bank and $7 million from the OPEC fund. And this, all together, then reflects a package option that we have for development, which is, of course, to build roads, to have access to faraway communities within our country and access to all islands of our country.

So, what's important here is that you need to have a clear vision and a clear strategy for development, and with that you'll get together with all your partners and establish a common basis, a common foundation for financing and also for implementing development programs in our country. That's it.

APPLEGARTH: May I? I'd like to comment.

First, I actually think this was not discussed much here today, but there is a lot of underlying donor coordination in this program, and the third component -- ISE (ph) is doing the first piece that Maureen mentioned, we're doing the second and I think the private sector comes in and does the third. In the road component, we've had very close cooperation and support with the World Bank. They're doing pieces, we're doing pieces, as the prime minister mentioned, so I think underneath it all there's a very good story.

But I would differentiate another way today in terms of your comment. Today is different in it's not the donor agency doing most of the talking. It is the recipient, or our partner country, doing a lot of the talking, and, more important, it's the leadership. The prime minister is here today, talking in detail about the program and how it's going to work, and what's the importance of the program. You saw the same thing with President Maduro in Honduras or Ravalomanana in Madagascar.

The leadership of the countries recognize this is their program. It's MCC's money, but it's their program, and understanding how it really promotes the country, how to pull the policy together. To me, the fact that it is the leaders who see the importance of this, who are really focused on taking MCC money to really make an impact in terms of poverty reduction, in terms of growth, is one of the key distinguishing features of the Millennium Challenge. We are fortunate. We get to pick, we get to work with some of the best emerging market leaders in the world who have a stake in their countries, and today is an example of that.

HALL: Yes, thank you. My name is Steven Hall. I'm with a company called CTP in Alexandria, Virginia, and thank you very much for having this event go on.

My question deals with how does, now, a U.S. company, if they have certain expertise and certain skills, how would we then fit on this? What is the next step? If our company does things like what you're looking for, tell me what we do. You mentioned, Maureen -- and I guess this is directed to you, to Mr. Applegarth and Maureen -- Maureen had mentioned that the actual implementation of this is done through the government of Cape Verde. Is that the organization that we should be dealing with? Should we be dealing with the MCC? What's our next step?

HARRINGTON: The point of contact for all procurements on this project will be the government of Cape Verde and the management unit that Ambassador Brito told you about earlier. Essentially, all of the procurements will be available online, information will be available online about the procurements. And the idea is that we have open tenders. There are no preferences. So Cape Verdean firms can win the tenders, American firms can win the tenders. There isn't a country preference. The idea sit that we are meant to have international, open procurements.

I also think it might be interesting for Ambassador Brito just to tell you a little bit about the procurement systems of the government of Cape Verde, because it is a little bit different from what we're doing in other counties and I think something that we're quite excited about.

BRITO: Thank you, Maureen. It will be really an open process, and you will be able even from here to have access to the Internet to all the elements for the tenders. So we would like really to be transparent, and for this reason we are working very closely with MCC team to help us to have a better procurement system. And so you will see we'll have an Internet site. We have to be open, I think, soon -- it's quite ready now -- where all the information that you need to compete will be online, and this is very important because the transparency will be here, to be ensured here.

HARRINGTON: And I would just add one thing to that, which is that the government of Cape Verde is also establishing a procurement review commission to ensure that there's an internal process that's checking the decisions to make sure that they're made fairly and transparently. So there are several layers of organization there to ensure that everyone has an equal chance to access the funds.

HALL: OK, so you've told us that there's a Web site. Can you tell us what it is? We'd like to know that.

BRITO: www.mca.cv.

HALL: Dot-what?

BRITO: CV.

HALL: Thank you.

RADELET: OK, well, great. One last question?

ALMEIDA: My name is Ray Almeida, I've worked for Bread for the World and I'm a Cape Verdean American, and I thought that it would be useful to elaborate for a moment on the dynamic that Cape Verde has very special assets in this country and around the world and an international diaspora that's unique in that perhaps two-thirds of its population lives in this international diaspora. The word remittances was used once from the dais, and then we quickly went on to other things, but the immigrant communities understand that they have a very real stake and increasingly an economic stake in the day-to-day evolution of development in Cape Verde.

If my good brethren in the Beltway banditry community can have the microphone, I thought that I would need to raise the issue of what are the plans, the concrete plans, of the government to engage the immigration as partners? And, more importantly, what are the concrete plans of the government to really move with civil society? Civil society has only recently become more forthcoming, if you will, organized civil society, and it's one thing that we've gotten this far, but how is the government going to continue to concretely pull out the private sector, the resources that are there, the resources that are being invested in Portugal and France and all over the place?

Also, this is our moment in the sun, in this very funny sun we have in Washington, and I've been an observer of Cape Verdean-American affairs for 30 years, and this moment may never come again and I have very little confidence in the fact that they're going to be on everyone's policy screen five years from now. But we've got the money, and we did win this race this far, and I think in the last analysis the role of the immigration and the friends of Cape Verde is going to count for a whole heck of a lot more importance than we've said here so far. And I really would like to hear the prime minister elaborate on what plans he has in order (ph) to milk the resources that we really can count on, which is us?

NEVES (THROUGH TRANSLATOR): Thank you, Ray Almeida.

TRANSLATOR: The minister started responding to this in Cape Verdean Creole, because we speak several languages here, today when he was answering to one of his compatriots. So he forgot to speak Portuguese.

But what he was saying was that the role of the diaspora is indeed very important to Cape Verde.

NEVES (THROUGH TRANSLATOR): Cape Verde has developed a great deal in terms of democracy, freedom and its economy, thanks to the contributions of Cape Verdeans who live all over the world. We say in Cape Verde that our country is not just the islands in the Atlantic Ocean that we all know, but many, many islands, all over the world, are also in part Cape Verde.

We say that we expect the expatriate community has been not only a factor for the democratization of the country and the promotion of the good image of Cape Verde throughout the world, but it has also been an important factor for growth and development in the country. So, as I was saying before, the expatriates contributed to the growth of the country, but also to managing, to administrating, the country itself. And we want now to make a very important qualitative jump in terms of the participation of the expat community in Cape Verde in terms of really being involved in conducting the business of the country itself.

We don't want immigrants to limit themselves to send remittances to our country. We want our expats to invest in the country, to open new businesses and companies, to really be an integral part of the development of the country, of this new phase of Cape Verde's development. So, very soon, we'll pass what we call the statute for expatriate investors in Cape Verde, because we want them to come, open business in Cape Verde, be active communities, although they don't live there, in the management, in the life of the country itself.

But, as of now, right now, all companies owned by Cape Verdeans anywhere in the world that they may be, could participate in these open tenders and bid for public work businesses, for other types of public endeavors in the country, because everything is done through open bidding and international open competition. So, we now are also creating the public university of Cape Verde, and we want all university professors, Cape Verdean, that is, university professors spread out through the diaspora around the world, and Cape Verdean students as well throughout the world, to contribute to help us create this great public University of Cape Verde and to really bring together this idea of a global Cape Verde.

RADELET: Maureen just wanted to add one quick comment to that.

HARRINGTON: Well, there's one other very tangible way that the expat community could get involved, and that is MCC is recruiting for a mission director to represent us in Cape Verde, and I wouldn't want to miss this opportunity to do some recruiting. And so if there are individuals that are interested in working with us, we'd be delighted to hear from you.

RADELET: Ray, you looking for a job? A little bidding war, open bidding contract here, for Ray's services.

Well, let me thank every one of you for being here today. Let me congratulate the prime minister, Paul Applegarth, Ambassador Brito, Maureen Harrington, for completing the initial phase of the compact, that is, to complete the negotiations. And I think everyone here would wish them the best of luck as they go into the harder stage of implementing the project and assure them that they have the support of all of us as they go forward. So thank you very much to everyone who's here, and have a good afternoon.

(UNKNOWN): Thank you, thank you. Excellent.

 

END