MCC Picks Record Number of FY13 Countries

Liberia, Sierra Leone and Niger are the Millennium Challenge Corporation (MCC)'s newest eligible partners. The MCC board selected these three new countries--plus two new countries eligible for second compacts and four countries already developing compact proposals--as eligible for FY13 assistance. We predicted 8 of the 9 picks. The outlier? Morocco. The big takeaway: MCC is putting competition back into the compact proposal process.Here are the decisions:

• Liberia, Niger and Sierra Leone are eligible for MCC compacts for the first time ever.
• Tanzania and Morocco are newly eligible to begin developing second compacts.
• Benin, El Salvador, Georgia and Ghana were all reselected which allows them to continue developing compact proposals.
• Guatemala was selected as eligible for the revised MCC threshold program.

We discuss the debates around selecting Liberia, Niger and Sierra Leone for MCC eligibility in our MCA Monitor analysis. There are still some risks in each of the countries, but they've made significant policy reforms, pass the MCC indicators and are being rewarded in the year they show improvements. Tanzania was also expected to be reselected for a second compact because the first compact has been well-implemented, Tanzania continues to pass the indicators and the MCC leads the US Partnership for Growth constraints analysis and energy effort in the country.In the case of Morocco, we expected there to be pressure to select it for a second compact but would not have selected it this year for a couple of reasons: it narrowly passes the indicators (fails the political rights indicator and only passes the civil liberties indicator by three points); it has a complex $698 million compact that doesn't end until September 2013 that will take time and attention to finish well; and Morocco's high income and relatively low poverty headcount (2.52 percent) and low number of people living under $1.25 a day (813,279) signal it should be ready to move beyond MCC and foreign assistance on to other forms of engagement such as trade and private investment. The MCC's rationale is that the time for serious work on economic development in Morocco is now. I sympathize that there is a need for US government support for smart economic development at the right time and that MCC has some of the best thinking on that right now. But the MCC purist in me worries that the choice seems more politically driven (something the MCC is designed to avoid) rather than based on a sense that it would be the best use of scarce MCC resources.While I'm thrilled our predictions were spot on in almost all cases, it's even more important that we raise the right issues. The biggest issue this year was how the MCC would deal with a record number of countries that pass the indicators test and could be eligible for MCC assistance even though the budget is expected to be small (roughly $900 million if all goes well). The MCC came out in the same place we did and decided to reward countries this year that show progress and remind their partners that competition is part of the MCC selection and compact proposal process. Stay tuned to see which of the MCC's new or continuing partners develops the best compacts for FY13 funds.