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Millennium Challenge Corporation. Reducing Poverty Through Growth. Millennium Challenge Corporation Reducing Poverty Through Growth. Millennium Challenge Corporation.

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Millennium challenge corporation

Millennium Challenge Corporation

Reducing Poverty Through Growth


Millennium challenge corporation

Millennium Challenge Corporation

Reducing Poverty Through Growth

Millennium ChallengeCorporation

  • Fulfillment of Monterrey commitment to “provide greater resources to countries taking greater responsibility for their own development.”

  • Established in law January 2004.

  • Mandate is Poverty Reduction Through Economic Growth


Millennium challenge corporation

Millennium Challenge Corporation

Reducing Poverty Through Growth

Based on Key Lessons of Aid

  • POLICIES MATTER

  • COUNTRY OWNERSHIP CRITICAL

  • RESULTS, NOT INPUTS COUNT

“We want to make decisions ourselves. It is our country, and we have to take on leadership and responsibilities. If you take a look at the last two issues, our vision and country ownership, you will realize why the MCA is so important for us. Here we have a new approach which helps us to implement our vision. We have opportunities to design and implement our own programs.”

--Marc Ravalomanana, The President of Madagascar

School of Advanced International Studies, Johns Hopkins University, April 19, 2005


Millennium challenge corporation

Millennium Challenge Corporation

Reducing Poverty Through Growth

Policies Matter

  • Good policies encourage inflows of private capital and increased trade, the real engines of growth.

  • Country eligibility based on sixteen independent indicators in three different criteria

  • Countries are measured against other countries of similar income level

  • Ruling Justly

  • Investing in People

  • Encouraging Economic Freedom


Millennium challenge corporation

Millennium Challenge Corporation

Reducing Poverty Through Growth

Policies Matter

23 Countries Selected by MCC Board in Fiscal Years 2004 - 2006

Africa

BeninMali

Burkina Faso Morocco

Cape VerdeMozambique

GambiaNamibia

GhanaSenegal

LesothoTanzania

Madagascar

Latin AmericaEurasia

BoliviaArmenia

El Salvador East Timor

HondurasGeorgia

NicaraguaMongolia

Sri Lanka

Vanuatu


Millennium challenge corporation

Millennium Challenge Corporation

Reducing Poverty Through Growth

Policies Matter

  • MCC eligibility intended as an incentive to improve policies

  • Threshold Program reinforces this objective

  • Threshold Countries

    • Close on the indicators

    • Demonstrated commitment to reform

  • May propose funding to specifically improve on MCC indicators

Burkina Faso’s Threshold Program: Increasing Girls’ Primary School Completion

Through the construction of new schools in provinces that lack sufficient schools, more girls will be able to attend primary school in Burkina Faso. Their Threshold program with MCC aims to enroll 1,650 new female students within the first year.


Threshold countries

Millennium Challenge Corporation

Reducing Poverty Through Growth

Threshold Countries*

Latin America

Guyana

Paraguay

Eurasia

Albania

Indonesia

Kyrgyz Republic

Jordan

Moldova

Philippines

Ukraine

Yemen**

Africa

Kenya

Malawi

Sấo Tomé and Principe

Uganda

Zambia

* Burkina Faso, Tanzania, East Timor moved from Threshold Program to Eligible in FY2006

** Yemen was suspended from the Threshold Program in FY2006


Country ownership critical

Millennium Challenge Corporation

Reducing Poverty Through Growth

Country Ownership Critical

  • Eligible countries submit proposal for MCC funding, after consulting with civil society and private sector.

  • MCC assesses proposals based on:

    • The contribution to poverty reduction and growth

    • The quality of the consultative process and breadth of support

    • The ability to measure results


Results based

Millennium Challenge Corporation

Reducing Poverty Through Growth

Results Based

  • Specific objectives and measures of success are agreed on from the beginning

    • A monitoring and evaluation plan is an integral part of each Compact

  • Continued funding is contingent on continued performance on the indicators and meeting agreed benchmarks for program implementation


Example the madagascar compact

Millennium Challenge Corporation

Reducing Poverty Through Growth

Example: The Madagascar Compact

  • Signed April 18, 2005

  • $110 Million over 4 Years

  • Goal – Increase investment in rural Madagascar

  • Three Integrated Projects

    • Land Tenure

    • Financial Sector

    • Agricultural Business Investment


Objectives and indicators for the madagascar program

Millennium Challenge Corporation

Reducing Poverty Through Growth

Objectives and Indicators for the Madagascar Program


Objectives and indicators for the madagascar program1

Millennium Challenge Corporation

Reducing Poverty Through Growth

Objectives and Indicators for the Madagascar Program

Madagascar's central land titling office which stores entirely paper-based titles.


Objectives and indicators for the madagascar program2

Millennium Challenge Corporation

Reducing Poverty Through Growth

Objectives and Indicators for the Madagascar Program


Objectives and indicators for the madagascar program3

Millennium Challenge Corporation

Reducing Poverty Through Growth

Objectives and Indicators for the Madagascar Program

A family selling produce and grains outside of their home in Mahitsy, Madagascar.


What have countries asked for

What Have Countries Asked For?

  • Every proposal unique

  • No predetermined allocation

  • Rural development, land titling, infrastructure (roads, ports, airports), improving business environment

  • Water and sanitation, but few proposals in health and education so far


Contributing to aid for trade

Millennium Challenge Corporation

Reducing Poverty Through Growth

Contributing to Aid for Trade

  • First five Compacts include $640 million in trade related activities (including roads, ports, and agricultural goods for export markets).

  • Next three Compacts likely to be signed include at least $300 million more in such activities.

  • Nearly 63% of financing under these eight Compacts is aid for trade.


Contributing to aid for trade1

Millennium Challenge Corporation

Reducing Poverty Through Growth

Contributing to Aid for Trade

  • First five Compacts include $640 million in trade related activities (including roads, ports, and agricultural goods for export markets).

  • Next three Compacts likely to be signed include at least $300 million more in such activities.

  • Nearly 63% of financing under these eight Compacts is aid for trade.


Implementation

Millennium Challenge Corporation

Reducing Poverty Through Growth

Implementation

  • The Compact defines responsibilities. The country is responsible for implementation.

  • Each Compact will also define the governance and accountability structure, which will cover processes and entities responsible for managing MCC funds, guidelines governing procurement and entities responsible for administering procurements.

  • MCC may have one or two representatives in an MCA country


Principles of fiscal accountability

Millennium Challenge Corporation

Reducing Poverty Through Growth

Principles of Fiscal Accountability

  • Every country is unique, no single solution

  • Find a solution that best serves Compact objectives

  • Build upon existing mechanisms when possible

  • Leave capacity in place wherever possible

  • Solution must have maximum transparency, integrity, and accountability


Millennium challenge corporation

FISCAL ACCOUNTABILITY ELEMENTS

Audit

MILLENNIUM CHALLENGE CORPORATION

MCC Disbursement $$

  • Signatories to Compact

GOVERNMENT

  • Submit disbursement

  • requests

  • Provide budget

  • Provide financial and

  • M&E reports

  • Creates, if

  • necessary, and assigns responsibilities

FISCAL AGENT

FINANC MGMT

(Finance Ministry)

(Donor)

(Accounting Firm)

  • Exercises MCC rights under Compact

  • Allocate budgets

  • Approve re-disbursements

  • Instruct to issue payment

ACCOUNTABLE ENTITY

(Governing Council)

(MCC Committee)

(PM Office)

MCC REP

  • Provide accounting records

BANK ACCOUNT

(Central Bank)

(Commercial Bank)

FISCAL AGENT

PROCUREMENT

(Finance Ministry)

(Donor)

(Accounting Firm)

(1 or more Project Mgr)

  • Approve certain contract actions

  • Document obligations

  • Initiate re-disbursements

  • Initiate procurement

PROJECT MANAGER 1

(Govt Ministry)

(Donor PIU)

(Private Co.)

(NGO)

PROJECT MANAGER 2

(Govt Ministry)

(Donor PIU)

(Private Co.)

(NGO)

  • Administer/certify procurement process

VENDOR

VENDOR

VENDOR

VENDOR

Re-disbursement $$


Millennium challenge corporation

Millennium Challenge Corporation

Reducing Poverty Through Growth

Illustrative Models

GovernmentNon-Government

Accountable Entity– Prime Minister or Cabinet MCC Steering Committee

Fiscal Agent-- Ministry of Finance Accounting Firm

Procurement Agent- Ministry of Finance Private implementer

Bank Account-- Central Bank Commercial Bank

Project Managers-- Line Ministries NGOs


Common elements

Millennium Challenge Corporation

Reducing Poverty Through Growth

Common Elements

  • Financial and procurement information available publicly through a local MCA Website and advertised in UN Business Development

  • Money will be disbursed in tranches

  • All MCC programs will be subject to external audit

  • Role of the MCC Inspector General


Millennium challenge corporation

Millennium Challenge Corporation

Compact Development Process


Where is the mcc today

Millennium Challenge Corporation

Reducing Poverty Through Growth

Where is the MCC Today?

  • Five Compacts signed – Cape Verde, Georgia, Honduras, Madagascar, Nicaragua; nearly $1 billion committed.

  • Robust pipeline – Armenia, Benin, Vanuatu.

  • Threshold agreements with Burkina Faso and Malawi .

  • Congress has appropriated $4.27 billion to date.


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