“MCC’s Partnerships for Investing in ICT and Development”

MCC CEO Ambassador John Danilovich

Monday, September 22, 2008
Microsoft ICT for Development Conference
Ronald Reagan Building and International Trade Center
Washington, DC

Lunch Keynote

Introduction

Thank you for that kind introduction, Raj [Kumar]. I am delighted to participate in this conference that highlights the incredible power of partnership to scale back development challenges and scale up opportunities for the world’s poorest by mobilizing technology throughout the developing world.

It is a partnership that recognizes the unique assets that

private companies,
NGOs,
and donors

bring to global development. It is a partnership that capitalizes on the

local context,
local realities,
and local capacity

in each partner country. And, it is a partnership that understands the critical role

information,
communication,
and technology—ICT—

can play in reducing poverty and sustaining economic growth.

Public-private partnerships built around developing strong ICT infrastructure in partner countries is what brings us all here today. And, we share a common vision in this regard: innovation. Many of you here are technology pioneers in your field, operating far and beyond the scope of what any one government or NGO can do. Similarly, the Millennium Challenge Corporation—as the U.S. Government’s signature development assistance program designed to help the world’s poorest countries lift themselves out of poverty—is pioneering innovations in the delivery of development assistance. And, we are doing so in an increasingly on-line world.

We are working in countries where there are more cell phones than wells. We are working with farmers, in Central America for example, who are sharing international price information about their crops via text messages and emails. We are working in communities where water and sanitation are lacking, but satellite dishes dot the villages. What we would not have thought technologically possible a decade ago is today the reality on the ground, and this new age requires a new way for engaging our partners—whether countries or companies—in the pursuit of sustainable economic growth and development.

I’d like to share with you what this entails for the Millennium Challenge Corporation by explaining

our model of development,
our ICT investments, and

our engagement with the private sector.

MCC’s development model
MCC offers a

demanding,
different,
and innovative

approach, incorporating the field’s best practices. Many refer to MCC as “smart aid.” In fact, the Indianapolis Star defined MCC as “smart and strategic foreign aid that can earn back the U.S. public’s confidence in our ability to make a meaningful and compassionate response to the world poverty crisis.”

Established by an Act of Congress in January 2004, MCC awards grants—not loans—to achieve one mission: poverty reduction through sustainable economic growth. To date, we have committed over $6.7 billion to 35 countries worldwide to fund country-sourced programs to fight poverty and sustain economic growth. Over $6.2 billion of this total has been awarded to 18 countries in

Africa,
Central America,
Eurasia,
and the Pacific

that have passed our

political,
social, and
economic

eligibility criteria to qualify for our large, five-year compacts. The remainder—in smaller, shorter, time-period grants—has been awarded through MCC’s threshold program to countries that come close to passing and are firmly committed to improving their performance on our eligibility criteria.

ICT investments
Our partner countries—not the U.S. Government or MCC—are responsible for creating and implementing their antipoverty programs. Since we ask countries to consult with their citizens to determine and prioritize their most pressing barriers to growth, development solutions are country-sourced, country-driven. For certain MCC compact and threshold countries, this includes investing in ICT as part of their development.

We see this in Ghana, where the commercial training program for farmer-based organizations in the country’s $547 million compact includes training on technology applications.

We see this in Cape Verde, where part of our $110 million compact expands an e-government procurement and management system to world class standards.

We see this in Albania, where the $14 million threshold program helps upgrade information technology applications that will improve tax collection.
We see this in Zambia, where the $23 million threshold program creates public monitoring and reporting mechanisms to expose corruption and improves trade management by establishing a comprehensive and integrated tariff system that unifies all border-related fees and procedures.

We see this in Kenya, where its $13 million threshold program is working on developing and rolling out an e-procurement system in five key ministries.

We see this in Niger, where part of its $23 million threshold program establishes a national anticorruption information system.

To help countries achieve their development goals—involving ICT and other priorities—MCC delivers assistance very much like an investor would. The factors MCC uses to select which countries make the best partners are the same ones businesses assess to determine where to invest.

Like you, we will not invest our money in countries that

lack the rule of law,
or run rampant with corruption,
or disregard sound

political,
economic,
and social policies.

Rather, we invest in countries dedicated to

good governance,
to their citizens’ health and education,
and to business development.

Our partner countries are making great efforts

to respect the rule of law,
to fight corruption,
to create a predictable

regulatory,
fiscal,
monetary,
and legal environment,

enforce contracts,
protect intellectual property rights,
and safeguard land rights.

We invest in countries willing to take the lead in their own economic development. This helps countries build their capacity to do more for themselves—from applying transparent procurement standards to enforcing anticorruption laws.

We invest in countries committed to maximizing MCC assistance to deliver tangible results. In early results, we already see partner countries

issuing land titles,
increasing farmer incomes through better agriculture techniques and programs,
creating jobs,
increasing market access,
improving infrastructure,
strengthening small-scale fisheries and artisan training,
opening health clinics,
containing the spread of HIV/AIDS,
building and operating “girl-friendly” schools,
expanding vocational training,
strengthening financial services and access to credit,
and improving water and sanitation services.

These investments—which incorporate homegrown priorities—ultimately pave the way for technology investments. The two go hand-in-hand. MCC cannot do what the high-tech sector can and should be doing. Yet, we can

insist on sound policies;
build

roads,
bridges,
wells,
and other large-scale infrastructure projects;

train farmers;
and improve health care.

Our work creates a more conducive environment for growth that empowers citizens to more fully reap the benefits of technology.

Engaging with the private sector
MCC assistance—as significant and sizeable of an investment it represents in the field of development assistance—is clearly only the starting point.

Where MCC leads, we invite the private sector to follow. What MCC starts, we invite the private sector to build upon.

Businesses view MCC countries as carrying a “good government seal of approval” that attracts investment because they perform better than their peers on the independent measures of

good governance,
human development,
and economic freedom

that we use at MCC. Our MCC resident country director in Morocco, where we have a $698 million compact, recently conveyed a story that illustrates this. She was chatting with a senior Moroccan official who thinks that the compact has accomplished a great deal, though implementation is only now beginning. In the words of the Moroccan official, it’s because private sector representatives are already visiting his office because they view Morocco as a sound investment opportunity—as a place open for business—drawn to the country by the fact that it passes MCC’s selection criteria.

While the private sector’s

philanthropic,
community development,
and corporate social responsibility activities

in poor countries are very commendable, the truly transformative difference is felt when it actually invests in these countries.

This is what I want the private sector to know in no uncertain terms: You are the true engine of growth, and MCC and our partner countries are open for business. We are ready to work with you.

To do this, we are, first, holding private sector dialogues. We want to engage the

local,
regional,
and international

private sector at the earliest possible opportunity in the process of developing MCC compacts in each partner country. These dialogues

highlight constraints and opportunities for economic growth,
identify trade and investment options,
generate corporate social responsibility collaboration,
and promote creative structures for leveraging and maximizing MCC funds.

In early June, for example, MCC hosted dialogue sessions between the private sector and the teams developing MCC compacts for

Jordan,
Malawi,
Moldova,
and Senegal,

attended by over 150 international investors. Other compact-eligible countries are now planning to hold private sector dialogue sessions of their own.

Second, we are showcasing our new Private Sectors Initiatives Toolkit. This toolkit—a sort of how-to guide—briefs countries on how to leverage MCC funding to attract private sector opportunities and offers valuable

tools,
processes,
and resources

to guide users through the thinking necessary to do so. It illustrates four models of possible private sector engagement:

private financing of infrastructure,
outsourced management,
output-based aid,
and social franchise.

In their unique ways, these models fulfill a shared purpose: to leverage and sustain MCC investments.

And, third, we are highlighting private sector trade and investment opportunities made possible by our large-scale grants. In addition to procurement opportunities that will arise through compact implementation, we are

analyzing,
categorizing,
and communicating

private sector trade and investment opportunities that will continue to surface through MCC investments. It is not enough that a partner country builds a road today with MCC funds; far more critical is the follow-on, private sector investments stimulated by the road that will sustain economic development well into the future.

We invite the private sector to look closely and carefully at MCC investments in our partner countries to see how they can benefit from MCC partnerships. More than just socially responsible investments in the wellbeing of the poor, when businesses invest in partnership with or alongside MCC-funded projects, they are making an enormous contribution to building long-term capacity and encouraging sustainable economic development in these countries.

There is an “MCC effect” when it comes to investment. Motivated by our funding, MCC partners are committed to reform so as to attract not only our attention but also that of the private sector. Our MCC compact countries have experienced higher levels of foreign direct investment growth across diverse sectors more so than the average developing country. In fact, MCC partner countries experienced an average annual foreign direct investment growth rate of more than 17 percent, compared to about 10 percent in other developing countries. All 18 of MCC’s compact partners have recorded positive foreign direct investment growth in recent years. Where MCC invests is where the private sector is also investing, selecting the same high performing countries where our investments can deliver the greatest impact.

And, this positive impact extends to the most precious resource our partner countries possess—their human capital. Creating more

stable,
prosperous,
and growing

societies makes sense not only from a geopolitical and security perspective but also for empowering the next generation of employees and consumers, who will be equipped with the skills and resources they need

to make technology work for them,
to contribute to a productive economy,
and to raise the standard of living of their communities and families.

Working with Microsoft
Microsoft understands its role in this new reality. The private sector can make a tremendous contribution to sustainable development; and, without a doubt, Microsoft is a visionary trailblazer in this regard. And, MCC is proud to partner with this industry giant and development leader in the fight against poverty.

In October of 2007, I had the great pleasure of meeting Microsoft Corporate Vice President Gerri Elliott at the National Press Club, a few blocks from here, to sign a global Memorandum of Understanding that creates a framework for public-private partnerships in the pursuit of common international development goals.
In the true spirit of such public-private partnership, the memorandum MCC signed that day with Microsoft was also signed by two other government agencies: the U.S. Agency for International Development—USAID—and the President's Emergency Plan for AIDS Relief or PEPFAR. This MOU gives us a way to discover synergies and explore opportunities for collaboration on specific projects aimed at breaking the cycle of poverty and disease in the world’s poorest countries. Within this framework, I look forward to deepening MCC’s partnership with Microsoft—in ICT and other sectors—to advance development for the benefit of the poor.

Conclusion
The Millennium Challenge Corporation is dedicated and committed to reducing poverty through growth. Our investor-like approach to development assistance is delivering results, results that have greater impact through our strategic partnerships with the private sector, partnerships that harness the great opportunities for growth in developing countries offered by technology.

The Millennium Challenge Corporation is committed to this way forward, and we commend you as partners in this noble endeavor. Working together, we can make incredible strides toward breaking poverty’s grip and launching a new day of prosperity for the world’s poorest.

Thank you very much.