Public Outreach Meeting Transcript
June 16 , 2005
Panelists
Charles Sethness - Moderator
Vice President for Monitoring and Evaluation
Millennium Challenge Corporation
Paul Applegarth
CEO Millennium Challenge Corporation
Ambassador Jose Brito
Cape Verde
Stephen Gaull
Millennium Challenge Corporation
Matt Bohn
Millennium Challenge Corporation
Jolyne Sanjak
Millennium Challenge Corporation
Cassia Carvalho-Pacheco
Millennium Challenge Corporation
Transcript
SETHNESS: I think we'll try to keep this crisply on time. I'm Chuck Sethness, the Vice President for Monitoring and Evaluation at Millennium Challenge Corporation.
It's a great pleasure to welcome you here today to this celebration of our two most recent board approvals of compacts with two more countries. My first act here really is only to introduce our CEO, Paul Applegarth, who will share his perspective on what these compacts are and what they mean to the corporation.
Paul?
APPLEGARTH: Good morning. Thank you all for joining us. We are honored to have His Excellency Ambassador Jose Brito from Cape Verde with us today. And although I haven't seen him yet, we expect to see Mr. Santiago Alvira from the embassy at Nicaragua . And I expect Ambassador Brito will have some remarks, and perhaps Senor Alvira as well.
We're pleased to be able to report significant progress today, and this is really a moment of significant celebration because of the achievements of what happened on Monday.
Before we talk about that, though, there have been some developments overnight that I wanted to let you all know about. I advised the President yesterday and the Secretary of State that I plan to step down as Chief Executive Officer later this year, at a time of mutual convenience. We haven't set a date at all at this point, but it will be some time later in the year.
We're announcing it early to really facilitate a smooth transition, to make sure that there is not a disruption to MCC's operations. It is still business as usual. We had a regular staff meeting this morning, and we've got an investment committee meeting this afternoon, and we've got a vicious travel schedule going forward.
I also want to correct a report that appeared in the New York Times this morning which somehow related this announcement to the comments by five African presidents earlier this week. The Times has it wrong. It is on the record the Times has the story wrong. The timing of this announcement has absolutely nothing to do with the comments by the African presidents earlier this week.
It has a lot to do in terms of timing with what else happened on Monday, which is what we're here to celebrate today, which is the approval of the Nicaragua and Cape Verde compacts and the signing of the Honduras compact. This brings us to four compacts with over $600 million in terms of approvals, and we have a clear pipeline going forward.
My departure, when it occurs, is also very much linked to where we expect to be as an organization in the fall. At that point, we should have well over $1 billion in compacts approved or very close to approval. We have already, and should even more at that point, a visible pipeline for the rest of the compacts with our currently eligible countries.
As many of you know, we exhaust our current funding level sometimes early in the first quarter of next year, but we see the path through that, and assuming favorable action by Congress we'll have funding to keep going for both the compacts we're working on now and some new ones, which hopefully will arise out of our new country selections in November.
In the fall, we should have -- the threshold programs should be firmly established, with a number of programs approved and a number of others close to approval. Our staffing will be even further advanced. We're now over 130. We continue to add new people every day. And they are very professional and it is a good team, strong culture, strong set of values, and very good professionals.
And, last but not least, we are actually now in our new headquarters building, the permanent headquarters. We're out of our startup mode, at least in terms of physical location, although with the hammers and saws and everything else going on right now, you wouldn't believe -- it's the startup mode revisited for those who weren't around initially.
But we will be a fully, I think, mature organization by the fall. And for what was a dream 18 months ago, or 17 months ago when MCC was founded, is now very much a reality.
I do want to address also some of the comments by the African presidents. Three of the five, unfortunately, are not eligible for MCC. And this comes back to the fundamental principles.
Two of them, Botswana and Namibia, are above our per capita income ceiling. There are clearly a lot of poor people in Botswana and Namibia . There are a lot of poor people in a number of the other countries.
Right now, under our legislation, we are designed to be focused on the very poorest countries, with the other countries that have additional resources -- are not the subject focus right now, but some of that will change in November.
The third country, unfortunately -- although I think, quite genuinely, the president, with whom I spent a lot of time on Tuesday, is making serious efforts, generally frustrated that he's not making more progress -- they fail seven of our 16 criteria, including the corruption indicator.
And if you believe that the objective third party criteria which are the basis of MCC's selection are not the way to go, that's fine, but we happen to believe that they are. This is the whole point. These are countries being measured externally by third parties who are fighting corruption. And at some point, hopefully, the efforts of this third country will be recognized.
The other two countries are eligible. Unfortunately, from our perspective, one of the two presidents didn't say anything. I think we've got a good game plan in place for them, and they're moving forward now with a compact.
And the last one is just now putting a full-time team in place for us to work with, in contrast with, say, Madagascar, who has had a full-time team in place since last October, in contrast with Honduras, who had a full-time team in place from last spring sometime.
And that's the difference, you know. MCC can do a lot. We want to work with a lot. At the end of the day, country ownership -- institution building is about country ownership. We need people to work with on the other side of the table.
We can help them, but our model is not to be doing it for the countries, because as one of the African presidents said to me a couple weeks ago, you know, if you do this, we don't learn, if we're really going to build for the future, escape poverty, then we need to do it for ourselves.
I think the press reporting this week is important for a couple reasons, and why the people in this room are so important. A lot of people still do not really understand what MCC is all about. You all get it.
Senator Lugar gets it. Senator Biden gets it. Senator Hagel gets it. Senator Coleman gets it. Senator Feinstein gets it. A number of senators get it. Congressman Kolbe got it. I think Congresswoman Lowey and Congressman Lantos understand what we're trying to do.
But many people, including, I think, probably even the New York Times, still don't get it. Our mission is poverty reduction, helping some of the poorest people in the world escape poverty and escape their dependency on foreign aid through sustainable growth. The only way you can achieve this is with more aid but with more effective aid.
By focusing on country ownership, focusing on good policies, focusing on results, aid can be more effective. And that's what Millennium Challenge is all about. And I firmly believe that when you show results, more aid will come. More appropriations will come.
Americans are generous people. They just don't want their money to be wasted. And the lessons of development are if you simply write checks without regard to effectiveness or results, the money is wasted.
The Times story is, unfortunately, a good metaphor. If you rush to do a story, you get it wrong. It's a good metaphor for foreign aid. If you rush to do it, you do it wrong.
Poverty is a long-term problem, the kinds of problems that we're talking about, and the solutions are not easy. Doing it well takes effort and hard work. That's what MCC and our partner countries are all about.
You all understand this. Get the message out, particularly as the fight for funding this year continues. The president's request for $3 billion is important. It's important for Millennium Challenge. It's important for our partner countries. It's important for the mission we all share, which is poverty reduction. That's how you help fight poverty, and that's how you help us accomplish our mission.
Now, back to what we're really here for today, and that is to celebrate. On Monday, as you know, we signed a compact with Honduras for $215 million, and the board met and approved two more compacts, a five-year, approximately $110 million compact with Cape Verde, and a five-year $175 million with Nicaragua.
Cape Verde's economic and political progress is a good example of what MCC is trying to encourage. Cape Verde has one of the best records in Africa in terms of fighting corruption. They include women in prominent government and private sector positions, and they have one of the most transparent and efficient systems for fiscal management in the developing world.
But Cape Verde relies heavily on large inflows of foreign assistance and remittances, which together represent roughly 25 percent of GNP, foreign aid and remittances. Cape Verde also suffers from a chronic shortage of water, with more that 80 percent of rainfall being lost as water runoff and evaporation.
The compact with Cape Verde will help Cape Verde meet its national development goal to move from an aid-dependent economy to a self-sustaining private-sector-led economy.
The goal is to address some of the immediate needs of the poor of the country now through a project that aims to slow water runoff, capture water and to replenish the water tables, and by increasing agricultural production and aiding tourism, which is the driver for the economy, and also, in the long term, making the business sector more competitive, to attract more investment and create jobs.
In the original conception of MCC, the idea is that we would be transformative. The Cape Verde compact is an example of what a transformative compact can look like.
When I toured the country several months ago, it was easy to see the need, especially outside Praia, the capital city, where people live in terrible conditions, with no access to water, no basic health services, little income because there's little employment nearby, and it takes hours to get where there is employment.
I've spent a lot of my life in emerging markets, in some of the poorest countries of the world. Some of the conditions in parts of Cape Verde are some of the worst I've seen.
The program Cape Verde has developed -- and this is Cape Verde's program -- has developed with our help -- has the potential to provide over 60,000 people access to markets, access to schools, health facilities, and provide better access to water, agribusiness development and marketing services, and access to credit to over 70,000 people.
The MCC compact with the government of Nicaragua is also focused on reducing poverty and promoting sustainable growth by increasing incomes of predominantly poor rural families who own, operate or work on farms and rural enterprises.
The compact targets the northwestern part of the country. This is an important region in Nicaragua . It is one of the poorest in the Western Hemisphere . Yet also it has tremendous potential for growth because of its fertile soil, proximity to ports, and because of its connection to other markets in Central America and the United States .
Despite this potential, for the most part people in the region lack secure, uncontested titles to land and produce mainly low-value agricultural products. As a result, farmers and other producers remain isolated from markets and lack the knowledge and inputs necessary to make the transition to activities that will bring them a higher profit.
The Nicaragua compact will help small and medium producers get secure titles to their land, receive training in better farming techniques and business practices, and provide them with access to markets and social services through better roads.
So this is really about helping poor families in rural communities benefit from the region's resource base and market opportunities. By increasing incomes, creating jobs and transforming the region into an engine for economic growth, this will reduce poverty for thousands of Nicaraguans.
I should add that CAFTA is important to this effort. Nicaragua will benefit on a standalone basis from the MCC compact, but with the benefit of CAFTA and the regional integration it brings in terms of integrating Central America as well as access to the United States market, the value of the compact will be significantly enhanced.
As I mentioned earlier, in the 17 months we've now been in business, MCC has in total approved over $600 million in compacts and over $7 million in pre-compact agreements with at least seven different countries.
The pre-compact agreements are what we call 609(g) funding, to enable countries to complete their compact proposals through the collection of baseline data, so we can measure the impact to proposed programs, provide technical assistance for detailed design and studies related to infrastructure, and identify policy reforms necessary to maximize benefits to proposed programs.
We have such agreements in place now with Georgia, Ghana, Nicaragua, Madagascar, and the latest is with Lesotho . The agreement with Lesotho is an important one, because it's an example of the power of MCC to make positive changes even before dollars flow.
Lesotho's compact proposal, which was developed with the active input of both NGOS and the local business community, is also focused on water. Lesotho's lowland regions, where the capital Maseru lies, lacks a reliable water supply, which prevents its people from accessing safe drinking water and limits the growth of agro industry and business.
This is particularly important, because the rich will always have water. They can pay a higher price to have it brought down from the highland areas. But for the poor, this bio-resource will be less available and more expensive if water becomes more scarce in coming years.
As we work with the government and people of Lesotho, another advantage of MCC's emphasis on country ownership emerged. As the Basotho focused on what benefits they wanted from the project and how they and we were going to measure success, it became clear to them that to maximize the benefits of the compact, some fundamental policy reforms were needed.
We could tell them this, but they had to appreciate it for themselves, and they did because of the country ownership process. Accordingly, for the very first time, we have a cabinet-level agreement with the government to work with us in some key policy reform areas, and that's what the 609(g) funding is about.
Part of the funding under the agreement will help the government draw up and implement policy reforms needed to improve the business and investment climate, such as enhancing property rights, improving commercial law, and developing the skills of small business owners.
These reforms will have a positive effect on most sectors of the economy, but they will have a particularly positive effect on women, who own the majority of small businesses.
The reforms also include some very basic gender equality reforms in terms of access to finance and land ownership, and even some as basic as allowing married women to open bank accounts independently.
As proud as we are of the compacts and of the funding we've approved, I think it's important to reemphasize that you should not measure MCC simply by the old yardstick of dollars disbursed. We are a disburser. We want to disburse more. And we are in the process of doing that. Certainly, the compact approval is important in this regard.
But as you know, MCC is a different and new approach to development assistance, and it's focused on building local capacity to ensure that countries break the cycle of dependency on aid. The old yardstick of dollars disbursed has been the measure of many other programs, and the results of the rush-the-money-out-the-door-at-all-costs mind set speak for themselves.
The compacts we have approved with Madagascar, Honduras, Cape Verde, Nicaragua were designed mainly by the countries themselves, with the input of a broad spectrum of their citizens. We didn't tell them what their priorities were or what they should be, although we did give them support and guidance.
I think that looking at the programs these countries have put together, perhaps some who were of the old mind set, where donors come to a country and say you need this and we will do it for you, we'll give it to you, might be surprised by the degree of sophistication, the comprehensiveness and the integrated nature of these countries' compact programs.
It took time to get it right, so it didn't happen right away, but what's important is that over time it did happen. This is a testament to the commitment of these countries' leaders and to the professionalism of the teams that put together their countries' proposals.
Of course, I cannot overstate the importance of the invaluable guidance, support and the shuttle diplomacy of our MCC transaction teams, who have gone without sleep, without seeing much of their families or friends for months. Many spend at least one-third or one-half of their time in country, not in our country, in the countries they're working in.
People like Matt, Steve, Cassia, Jolyne, all up here, who are seated up here on the panel, meet with their MCA team counterparts and with the NGOS, small farmers, local business leaders, local governments and other donors -- the list goes on -- to make sure that the proposals presented to us reflect the countries' needs and priorities and that the suggested programs will work and be sustainable.
MCC understands the imperative of moving as quickly as possible and is doing all it can to help countries move the process along so we can start getting money on the ground to some of the poorest of the poor.
We believe country ownership, accountability, taking the time to consult and get it right at the front end are absolutely critical to the long-term success of MCC's model and will yield better results and higher appropriations than many past approaches.
With that, I would like to turn it over to Ambassador Brito. Before I do that, I want to thank him publicly for the call this morning from President Pires of Cape Verde . He spoke directly to the U.S. ambassador in Praia to say how much he appreciated the efforts, how proud he is of Cape Verde, how proud he is of the MCC team efforts and of his own team efforts.
And with that, let me turn it over to Ambassador Brito. Thank you.
(APPLAUSE)
BRITO: Thank you, Paul.
I would like to speak with my heart, not as ambassador, maybe more as a specialist of development that I consider I am. Because I'm working in the development role since the independence of Cape Verde in'75, for my country in charge of development assistance and planning. But also the U.N., World Bank and the private sector have done development with oil company from the U.S.
So I can speak about development. And I would say, first, Paul we will miss you, because for my experiences of development [this is the] is the first time that I saw a program like MCA. We presented our proposal in August last year, and we have already, in June, the agreement of the Board. World Bank it is a minimum 18 months generally, normally it is almost two years to have this.
And if we have done it, it's because of the spirit of the MCC was totally different from other donors, where we are mainly a team, a joint-team, walking together for the same objective: to reduce poverty.
This is important to show. MCC shows that it is a learning organization. When we started and we presented our proposal in August, I think the team is not the same that we have today. The team has learned a lot because it is willing, and it has the leadership to learn about development with different spirit of development.
For us, it is very important. This kind of public meeting is not common with most of the donors. Generally, we have the impression that we are a student, we receive a grade from the donor for what you have done or not, but there is not really a joint effort for the same objective that at this moment is to reduce poverty.
I think it is very important to keep it in our mind, because business as usual is very easy to do. And the strength is to push the people who are thinking out of the box to do more than business as usual. And for me, the development assistance has failed because of the way they are doing development assistance; not because of the development assistance, it is the way how to do this.
And I hope that the MCC, with another leadership, will maintain this position.
This position, I need to tell you, Cape Verde is considered the poorest country in Africa . We have no natural resources.
I remember when, 30 years ago, we declared independence, the only hotel we have was a pension with 12 rooms. Today you go to see Cape Verde, with five-star hotels.
The number of high schools was only two and the number of students going out of the high school for higher education was no more than 50. Today we have 3,000.
Today we have hotels in all the parts and today we have high schools on all the islands.
Our basic education is complete, 100 percent. The gender issue is resolved. We are on track with the MDG goals. And we are the poorest country in Africa . This means that good policies, good governance is very important for the use development assistance. It is what MCC is about and I hope you will maintain this position.
When I saw the last decision of the G-8 for debt cancellation. And I remember some of these countries, we have debt cancellation, when I was minister, telling me, "You have to take—to have more debt." And I said, "No, it's not sustainable for my country. I cannot do this."
And we have a sustainable debt, and the service of debt of Cape Verde is today higher than what they are paying for education, that I have no [inaudible] of debt. And this debt cancellation will make a huge difference for Cape Verde .
And this is only to show you that the outside pressure will be very hard to change the rules when you are in the right direction.
So I don't plan to take too much time on this issue, but I would like, clearly, to thank all the team of MCC for the work they have done for us, and mainly for the spirit of real cooperation between the two teams in Cape Verde .
It is because of this spirit, this different mindset of development assistance, that a small country like Cape Verde arrives to go faster than a lot of bigger countries with much more resources than Cape Verde .
So the ownership is important, and it is what it is about. So we have worked for this, and I would like really to thank all the team and his leader, Paul, for everything that you've done for my country. Thank you.
(APPLAUSE)
SETHNESS: Thank you very much, Ambassador Brito. Thanks, Paul.
I think at this point we are going to try to get quick descriptions of some more of the details of the compacts in Cape Verde and Nicaragua .
And the people here on the panel -- I think you can see their names, but Cassia Carvalho-Pacheco is the associate country director for Cape Verde, and Stephen Gaull is the country director from our country programs group responsible for it.
And when we get to Nicaragua, it will be Matt Bohn, who is the associate country director and transaction team leader for Nicaragua, and Jolyne Sanjak, who is our land tenure and parts of agriculture expert.
Why don't we let Stephen go ahead and start, and then, Matt, you pick up as soon as Stephen is done, and then we can both try to leave some time for questions.
GAULL: Thank you, and good morning. I think Ambassador Brito really hit the nail on the head, and Paul did, too. It's been an extraordinary experience for me, and I come from a world element as well. I came from the World Bank, among other things.
But I think MCC has really been the learning team in this case. We really learned from the experts who are our partners and counterparts in Cape Verde .
I learned from Cape Verde just how difficult the economic development challenges are for an archipelago of nine inhabited islands and 450,000 people that lack resources, scale economies, and with its geographic discontinuity the need for redundant infrastructure like ports and airports that just elevate your cost of production.
Basically, in Cape Verde, almost everything is imported. Eighty-five percent of the food is imported, 70 percent in the form of food aid. All of the fuel, et cetera, to generate the economy is all imported. And the Port of Praia is at full capacity.
So these are extraordinary economic challenges that the country is trying to deal with, and the way they're dealing with this is to focus a development strategy around private-sector-led growth in services, focused on tourism, financial services, transportation services and fisheries, and using creatively their development partners like MCC, like Luxembourg, like Iceland, that have a background in these sort of areas.
So despite growing 6 percent a year since independence, the country is confronted by extreme levels of poverty, and so the program is directed to sort of help in the short term the farmers improve their productivity through capture of water resources.
In the medium term, the program is structured around some infrastructure, like the Port of Praia and roads, to help integrate domestic markets and reduce transportation costs.
And in the long term, there's a project to promote private sector development, to work on improving the investment climate and some financial sector reforms to make the private sector more competitive and more efficient.
The program was given to us after a very strong consultative process in which the Cape Verdeans spoke with their society, they spoke to the government, they spoke to the private sector, they spoke to NGOS and identified the obstacles to growth around water, infrastructure, access to finance and a weak private sector.
We then started to engage in a dialogue with them to look at what they were proposing to us and to work with them. I think one of the major achievements was in the water -- working in three islands, Santo Antao, Fogo and Sao Nicolau, two of which are extremely poor islands, to work with them on infrastructures related to water capture and use of drip irrigation to make the agricultural sector more productive. And we are expecting that this will raise farmers' incomes by doubling them.
One of the important achievements of this program is to help the Cape Verdeans realize that water is an economic resource. There is a cost of delivering water. There is a cost of having their water tables become brackish, which is what's happening in some of the islands. And so the MCC team worked very interactively with the Cape Verdean authorities to put in place a water pricing scheme that recognizes the scarcity of water.
On infrastructure we're, as I mentioned, expanding the Port of Praia and building some roads in the islands of Santiago and Santo Antao to help integrate markets, bring people access to services and education.
And then, in the private sector, as I mentioned, we're working with other donors like the international Finance Corporation to help improve the investment climate and to do some reforms around reducing the—or increasing competition in the primary government securities market, to reduce the interest rate environment, and then to help microfinance institutions become deposit takers.
And this, in turn, will help some of the poor people in the outlying regions to expand their access to deposits, greater interest-earning deposits and access to credit. So that's, in a nutshell, the program.
The government has definitely shown extreme dedication and a strong sense of ownership, including investing a substantial amount of money in cash in some of these areas themselves.
One of the more gratifying comments I got from the process was from the minister of infrastructure and transportation, who said after one of our missions, MCC treated us like bankers. And that was meant in a complimentary fashion, to show how we are changing the vocabulary of development, as Paul Applegarth was saying.
So with that, I would like to turn it over to our colleagues in Nicaragua .
BOHN: Great. Thank you, Steve.
You know, I really appreciate our CEO's remarks about country ownership, about transformation and about sustainable growth and poverty reduction.
Nicaragua truly is a case that fits a lot of the values that MCC tries to propagate in these countries. It's one of the poorest countries in the Western Hemisphere .
However, interestingly enough, the Northwestern region of Nicaragua that includes some of the most extreme poverty also has tremendous growth potential, and it's actually proven growth potential. I congratulate the government of Nicaragua and the various private sector, NGO and other association stakeholders who participated in this process.
It's truly a phenomenal experience to interact with many people on the ground on an almost every-other-day basis, whether it be via phone or actually on the ground in person there. And it's clear that in Nicaragua's case they are truly at a crossroads from a development perspective.
The Northwestern region of Nicaragua benefits from fertile soil, as Mr. Applegarth mentioned, proximity to ports and connections to markets. However, it also includes extreme poverty. The program itself is unique in that it focuses on applying a significant amount of resources in this Northwestern region to accomplish a number of things.
One is to increase investment by strengthening property rights. Two is to reduce transportation costs and improve access to markets and social services. And three is to increase profits and wages of farms and related enterprises in the region.
Together, these two things are not only expected to increase incomes over the five years by tens of millions of dollars, particularly of predominantly poor families, but will also create a region well positioned to take advantage of market opportunities.
The program in Nicaragua developed by the Nicaraguans includes three components. The first is a property regularization project. More than 60 percent of all land in Nicaragua lacks adequate property records.
As you can imagine, this really impedes national and international sources of investment and makes it very difficult for very poor producers to actually borrow against their land and to increase investment in productivity.
The MCC project will actually expand on an existing World Bank project. This is a great example of donor coordination. Our interest in these countries is not to replace or not to crowd out, but actually to work very closely with other donors, and this is a case where we were able to actually see the Nicaraguans work closely with the World Bank to expand a project.
By doing this, it's estimated that approximately 43,000 land parcels will have improved property records. And a particular department in this region will have a modern system of parcel maps and registered land titles.
Number two is with a secure title alone, that clearly is not going to help the Nicaraguans lift themselves out of poverty. Two is approximately 80 percent of the roads in Nicaragua are unpaved. As you can imagine, high transportation costs are a significant constraint, particularly for agriculture and small and medium enterprises.
The project related to transportation actually contemplates upgrading a segment of the Pacific Corridor to better link producers in the northwestern region and also others in Managua to the region itself.
In addition, there is a significant amount of money that will go into upgrading secondary roads, which actually will draw in very poor, rural communities and link them to the primary road network.
And lastly, without sustainable road maintenance, it's very difficult to see long-term impact. The Nicaraguan government requested specifically help in improving the operational capabilities of the Ministry of Transportation and Infrastructure to focus on road maintenance.
Lastly, with the roads and the secure title, Nicaragua, despite its fertile land and proximity to markets, actually suffers from low value agricultural production, deforestation and water supply constraints.
So the third component will actually provide rural business development services to really facilitate higher-profit activities, particularly in agriculture and related activities, and accelerate the region's transformation from subsistence farming to market demand-driven growth.
And lastly, I will say that together the Nicaraguans expect that thousands of farmers will produce higher-value crops. In this case, a poor producer earning approximately $100 per manzana will increase that by at least three to five times after this program.
In addition to that, thousands of jobs will be created, and a significant amount of currently arid land will have improved water supply. So with secure property rights, with access to markets and social services through an upgraded road network, and lastly, higher value agricultural production, thousands of Nicaraguans will be able to lift themselves out of poverty.
And the transformational effect will happen by allowing this region to become an important region for economic growth. And with that, I will turn it back to, I guess, everybody here for questions and answers.
SETHNESS: We have a microphone set up down here for those that have questions. We'd appreciate your coming to the mike if you -- oh, actually, we have two microphones set up, one on either side.
(UNKNOWN): OK. I beg you excuse me for this very pragmatic question. My name is (inaudible) and I represent the Embassy of Spain here today and the question is will the contracts resulting from these compacts be open to all international firms?
And the second question is where will the procurement notices be published and -- so that we can, you know, see them in time? Thank you.
SETHNESS: The first one I can answer. The second one I can't. This is untied support, because the implementation and execution of both services and works for MCC projects are going to be managed by the countries rather than by MCC, which is another one of the distinguishing features of this approach to things.
Where the notices are going to be published -- probably it's going to vary country by country, but we are going to have essentially World Bank procurement standards and, in each country, very careful procurement supervision to make sure that we're complying with international best practices.
Do you have a more specific answer?
GAULL: Yes. I do. What we are encouraging the government of Cape Verde to do is put all the procurement notices online. As a matter of fact, Cape Verdeans even anticipated that by putting their proposal online. It's the first government to do so.
The interesting thing about Cape Verde -- I mean, this is a segue-way to their development strategy, to help overcome the fact that they have nine islands that are discontinuous. One advantage that they have is excellent telecommunications, and so they're using e-government services to help integrate the country, including using e-procurement services.
So Cape Verde has the ability, with some strengthening, with some support from MCC, to build out this e-procurement system so that any procurements are basically known throughout the country, at the different levels of government, and this will -- through this Web-based management system, in fact, they will achieve something that the U.S. government hasn't been able to achieve.
It's quite extraordinary. So using the Web and their excellent Web site to -- use for procurement announcements as well.
BOHN: Just very quickly, in Nicaragua's case, I'll answer your first question. One of the principles we've really tried to encourage these countries is to have competitive bidding processes.
So while we do not -- or legislation does not require us to use, for example, certain firms here, there will be open, competitive procurement processes in which local, international firms can participate, and that will certainly be the case in Nicaragua.
SETHNESS: Yes, please.
O'CONNELL: Hi. I'm Nora O'Connell with the Women's Edge Coalition, and first I want to...
SETHNESS: Hi, Nora.
O'CONNELL: Hi. Good to see many of you again. First, I want to congratulate both the ambassador and the MCC teams for getting to this point today. I know the tremendous amount of work that has gone into it and just want to, you know, give my congratulations to that.
I have a question that's a little bit like an MCC compact. It's a vertically integrated question. I specifically am interested in, both in Cape Verde and Nicaragua, hearing a little bit more about the agricultural production pieces and the role of gender in that, about the role of women in agricultural production in those countries, and how you see women benefitting directly from the MCC interventions, and about your due diligence process in looking at the implementation plans, because we know that business as usual doesn't usually reach women, and so what gave you the confidence in sort of the capacity of the implementation to make sure that women are directly benefitting from those parts? Thank you very much.
SETHNESS: I think this is a natural for Jolyne to take a first crack at it, anyway.
SANJAK: Thank you. That's a good question.
SETHNESS: A woman in agriculture.
SANJAK: Thank you. Well, in Nicaragua both the property project and the rural business development project will have a focus on gender and ensuring that women are included.
Women in Leon and Chinandega comprise 22 percent of the farm production community, and therefore they're important that we make sure that they're not biased against or somehow left out of the benefits of this program.
They have been participating in the consultation process and will be continuing to participate. We have budgeted for and the Nicaraguans have spelled out a plan in which during the ramp up of this project a gender specialist will be brought on board for the first, I think, four to six months to ensure that in all of the phases of going from a broad design, which the compact represents, to very specific implementation plans and practices, there will be specific measures to ensure that women are included.
And also, our monitoring and evaluation plan across the board requires reporting disaggregated for gender so that we can keep track and keep them accountable to what they've committed.
The property project also is, I think, a very good story. Under the World Bank project, the project management has already commissioned a gender strategy design that is in draft. It is not finalized.
It's very comprehensive, from the vision of why women's land rights are important to how each of the agencies that has a part in regularizing property rights, whether it's the mapping entity or the property registry, have or have not incorporated gender into their institutional visions, and down to the very bottom line, who's out there doing the mapping and giving the titles -- do they have good procedures and practices that enable them effectively to reach women.
We're giving them money to finalize that and to take that into action in the location that we're investing in.
CARVALHO-PACHECO: Yes, in the case of Cape Verde, in the agricultural component, we have three specific projects. The first one is the water management and soil conservation. We have a business development services and access to credit.
Two of those projects, business development services and access to credit -- in designing those, we looked at what is the distribution of labor in Cape Verde and what specific economic activities are women engaged in.
And business development services will be targeting female economic activities, primarily female activities -- for example, small co-ops, small business units that do transformation of agricultural commodities into marmalades and to different types of commodities, so we will be providing them with technical assistance.
We will also be providing access to credit, and we will also look for implementation into specific strategies to outreach women. For example, one of the delivery mechanisms could be NGOS.
There's one in particular, MORABI, that specifically targets women. So they will be, I'm sure, competing for the delivery of the financial services and be proposing to us specific strategies to incorporate women into the access to these services.
And as in the case of Nicaragua, we will be tracking these indicators outreach to women and disaggregating that data.
SETHNESS: I should probably add quickly, for Nora's benefit, that Women's Edge has been very helpful in bringing gender sensitivity to MCC, and it's conducted a couple of sessions, brown bag training sessions, for our M&E people and more broadly through the organization.
And since we keep telling you how much we've grown, it's probably time to re-join that conversation about coming back and doing it again for a larger and new group of people that have joined us.
Yes, ma'am.
(UNKNOWN): Thank you, sir.
SETHNESS: Ah, thanks, Kristen.
(UNKNOWN): Thank you and I want to echo the congratulations to both countries and to MCC for being able to go forward in this process. I just wanted to ask about-- Mr. Applegarth mentioned the 609g funding, and he mentioned Nicaragua has gotten some part of that. I wonder if you can tell us a little bit about what the project involved, and anything else about it. [inaudible] Cape Verde, and what the other countries were. Thank you.
BOHN: Sure, you bet. For those of -- 609(g) funding allows us to disburse some funds to help in the process, pre-compact signing. In Nicaragua's case, we had a very, very unique opportunity fall, frankly, it was a matter of timing and another example of donor coordination.
There is a living standards measurement survey that is set to kick off and has already kicked off this month. It's a multi-donor effort, and it made a lot of sense for us to join that effort, add some questions that were specific and relevant to Nicaragua's program, and so the funds are going to be used to join in that and use that as a baseline for the program data.
SETHNESS: The Nicaraguan one is a relatively small piece. It's about $120,000, to do this slightly beefed up survey. But the -- this pre-compact support funding for other countries has tended to be larger.
We're doing baseline surveys in Madagascar, which will end up accelerating the time at which we can start some of the activities, and we're putting something like $1.3 million into baseline survey work there.
In Lesotho, as was mentioned, we're going to be looking at policy reform and pre-feasibility and feasibility studies and environmental impact for water management. The issue and the basis for making the decision is-- are these things that can be done to increase the speed at which we will be able to bring effective poverty reduction into play?
Yes, there's a question there.
ZIMI (ph): Hi. I'm Tara Zimi (ph). I'm representing the Embassy of Canada. Matt, you mentioned this, but I was just wondering to what extent the MCC, and particularly the Nicaragua project, will be working with other bilateral donors and collaborating and coordinating with the World Bank, but specifically just with bilateral donors.
BOHN: That's a great question. Thanks for asking that. Obviously, in the country they do have donor roundtables, and there's an active participation among donors. What we do, in the case of the property regularization piece of this program, the Nicaraguans have a chance to work very closely with the World Bank.
And it's our expectation that -- you know, when the government of Nicaragua presented this proposal, they really were building on their national development plan, which looks at what we like to call the donor mosaic, and looks at the public investment program, and tries to get a feeling for where the comparative advantages are of the various donors.
So in the case of Nicaragua, really, as we've been out and talked to a lot of the other bilateral donors, it's been very nice to see that what we're doing is, in fact, very complementary to their efforts. So, you know, I would expect that we'll have continuing ongoing coordination.
In the case of USAID, for example, on the rural business side, they have a couple of very specific activities that are going to be very complementary to what we're doing there. And so it will be ongoing conversations, close coordination with these donors and participating in the efforts to make sure that we can build off each other's work in the country.
SETHNESS: I know you just asked about Nicaragua, but we can't resist adding on the donor coordination story from Cape Verde as well.
GAULL: There's an excellent story in donor coordination. I think I had mentioned in my opening remarks the cleverness with which Cape Verde has sought out their bilateral support.
I think I mentioned Luxembourg and Iceland . Those are not typically donors that we conjure up in our day-to-day thinking, but there's been a lot of building on lessons learned of USAID and other bilateral donors in the agriculture sector.
In terms of the multilateral donors, we're parallel financing a World Bank road sector support project. We worked very closely with the World Bank in the due diligence process and leveraging off of some of the institutional development work that they're doing for long-term sustainability.
We're working with IFC in the private sector development component and working to complement some of the efforts of the Africa Capacity Building Foundation to strengthen the capability of public sector officials in policy making.
In addition, we're harmonizing some of the policy reform efforts around privatization of the port system in Cape Verde with the World Bank, and so this program could not have succeeded and won't succeed without close coordination of donors.
And this is also part of, I would say, the treasury's perspective, if you want to call it as such, for how Cape Verde has been able to use the donor assistance, whether it's bilateral or multilateral, very effectively. And that's really been one of the hallmarks of Cape Verde's success since 1975.
SETHNESS: There was a question in the back row back there, Kristen.
SEHGAL: Hi, I'm Mona Sehgal with GAO. I had two questions. One is for both Nicaragua and Cape Verde . There are some economic rates of return posted on your Web site. If you could explain what that is, how it was calculated.
The second relates to the threshold country program. By when do you expect some of the programs to be signed and which those countries would be? Thank you.
SETHNESS: Let me take the second question first while people gather their "how did we calculate the economic rates of return" thoughts. The threshold program -- we're just starting to receive fundable proposals. We've been through the concept paper stage and are starting to see the first of the papers.
I don't know how quickly we will have something signed up, but in a couple of cases it may be within a month. It does require board approval, so at this point the administrative mechanics of getting something agreed may take as much time as the substantive stuff.
Do you want to talk about ERRs?
SANJAK: I'll take the question about the E.R. for Nicaragua . Just to make a rather kind of sophisticated methodology simple for you, basically the process starts from the design of the project and then works upward from the implementation progress, so what steps have been taken spending MCC money to take the actions in the project, such as doing the mapping, doing the land titling, to the outcomes of that, and then trying to find ways to take those outcomes, such as the number of titles that are in the registry, the number of disputes that are resolved, and translate them into quantifiable measures of things like, in the specific case of the property project, the expected increase in farm investment, such as coffee drying patios, improvements to the soil structures and improvements to housing in urban areas.
In the specific case of Nicaragua, we had the fortune, which doesn't exist everywhere in the world but did exist in Central America, that the World Bank, the E.U. and USAID funded over the last many years several studies particularly on these questions, and so there are fairly good estimates that are not specific to the project reason but that do tell you a projection, how does a titled property have a different level of investment than a non-titled property.
So we used those to have a sort of conservative -- and we took the conservative of those estimates and then said that's what we expect, number of properties times that expected translation, and also looking at sort of savings in transactions costs.
One of biggest things this project will do is make the registry more affordable, more accessible and therefore more efficient. So, you know, the World Bank has us doing business number of days and cost to do a property transaction. We have their report on what it costs today, and we have some case studies and things that will show us, you know, step by step what you expect in terms of the changes in processes and what they'll imply.
And you can translate those into cost estimates, and that's rolled up, then, multiplied by the number of beneficiaries, to the overall economic rate of return.
On the rural business project, similar kind of methodology but very different aspect, so the Nicaraguans basically looked at some of the real possibilities for expanded rural business, such as cashew production, organic sesame, some other horticultural crops, and some tree crops in the northern highland, and really tried to project out what is a realistic estimate of how many farmers could make a transition to that with the help of this project, what would be the expected increase in their earnings from the yield to expected market prices, and calculated out what they project as the income growth.
And then you multiply that by the number of expected beneficiaries. It's a little bit simplified, but basically that's the attempt, is to go from the ground level and work your way up through a logical process to the ultimate -- what's going to be the change in impact -- in income.
SETHNESS: And on the road project, we're using a basic World Bank methodology of international roughness index and time savings.
GAULL: Yes, that's right. In the case of Cape Verde, for the roads projects, we're looking at reduction in vehicle cost, for vehicle operating costs.
We're always looking for an incremental sort of with minus without project, so some of these estimates are more of an art than a science at times, because you're also having to capture some of the externalities that are not necessarily so easy.
With a financial rate of return, it's really quite straightforward. With economic rates of return, it's a little bit harder.
In the case of some of the agriculture investments, what we're really looking at is the increased income and value added to the farmer from being able to move from sort of grains and beans into higher value-added horticultural products.
In the case of the port, we're looking at avoiding a bottleneck situation that could constrain the growth of the tourism sector, among other things, which is one of the main drivers of growth in the economy.
In some of the financial sector, interventions that we're looking at -- there are published elasticities -- sorry to use some economics terms, but you deepen the financial sector and with the increase in monetization there are published econometric elasticities that show the impact on GDP growth. So we're using a combination of elements.
SETHNESS: Are there any other questions or issues that people want to raise? Ah, one more.
MACK (ph): My name is Andrew Mack. Hello? My name is Andrew Mack, and I wanted also to compliment both countries on what sound like very, very exciting programs going forward. We in the audience are obviously very interested in MCC and in its future.
Now that these two have accelerated the pace, I was wondering if you might be able to enlighten us about what other projects you are expecting will be closing by the end of this calendar year.
SETHNESS: I think I'll leave the names off and just say that we're hopeful that we will be having another meeting like this in a month or two, and then another two or three before the end of the year.
You can look at the names of the countries and try to make your own guesses on who that's going to be. Well, one thing that the process does show, particularly when you're being driven by country proposals and large, complex, time-consuming evaluation processes, is that surprises happen and things that were supposed to happen next month in fact happen now or four months from now, so that's the only reason I'm ducking as much as I am.
But we do expect to see, certainly, a couple more and maybe as many as four more before the end of the year.
Anything else? Thank you all very much for coming. We appreciate the continued interest in MCC and are delighted that we're having a two-handed celebration today. Congratulations to you guys, too.
(APPLAUSE)
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