Part I: A Snapshot of MCA Madagascar

Madagascar's MCA compact totals $110 million over four years. The MCAM program focuses on laying the groundwork, or creating an "enabling environment," for the country to promote economic growth and poverty reduction by transitioning from subsistence to market-oriented agriculture. This process entails national level policy reform and program interventions in five target zones around the country. The MCAM program has three focus areas: land tenure reform, financial sector reform, and agricultural business development. The land tenure component focuses on both macro and micro level reforms. For example, it strives to modernize national land tenure administration at the central level while facilitating the acquisition of land certificates for small farmers at the community level. The finance component also works on both levels. For example, it invests at the central level to streamline the national payments system while working at the regional level to increase the capacity of micro-finance institutions to reach the rural poor. The agriculture component is exclusively focused at the micro level. This component strives to link small producers to viable markets for their products, and through coordination with the other program components, to ensure that farmers also benefit from more secure land holdings and increased access to credit. (For much more detail on the MCA Madagascar program, see the MCC's summary of the Madagascar compact. [pdf])

Madagascar sees this compact as just the first phase in its MCA experience. If all goes as MCAM plans, a second phase will consist of a larger compact that overlaps with the final years of the first compact (though concurrent compacts are currently prohibited under the MCA authorizing legislation [1]). While phase one focuses on creating an "enabling environment," the MCAM expects the phase-two compact to fund more tangible investments (such as infrastructure) that build on and benefit from the improved policy and legal environment from phase one.

1. Program Milestones

While the first year of MCAM has focused on the "invisible" interventions of getting systems in place, by August 2006 the MCAM had made some initial strides in each of the three program areas.

Land tenure reform: The first steps in modernizing the land tenure administration are underway. The MCAM is supporting an inventory of existing land titles in the five zones and at the central level. This is a tedious process of wading through stacks of maps and titles that are in complete disarray and have rendered the countries' 29 land administration offices capable of granting only 330,000 land titles over the last century. Once inventoried, the titles and maps will be restored as needed, catalogued and digitized. At the community level, the first MCA-supported land tenure office ("guichet foncier") was established in the small town of Faratsiho in May and had granted approximately 300 land certificates by August.

Financial sector reform: The MCA has conducted background studies for the largest piece of the finance component, improvement of the national payment system (which accounts for approximately 60% of the finance component's budget). The MCAM is also working with the Commission for Supervision of Banking and Finance on ongoing reforms in new microfinance and banking laws.

Agribusiness development: The nucleus of the agribusiness component is a network of Agricultural Business Centers (ABCs). The MCAM has established these ABCs in the first two zones, and identified ABC sites in the other three zones. The MCAM is working with all five regions to identify priority areas for business development and investment that are consistent with each region's existing development plan. Investment plans range from agricultural production, (such as dairy, rice, and legumes) to fisheries, handicrafts, and ethanol production. As of August, the MCAM had started implementing agriculture activities in one zone, where MCAM field workers are supporting farmers in forming cooperatives and negotiating agreements with private sector firms. MCAM support helps farmers meet quality standards, negotiate favorable terms with the firms, and is planning to help the cooperative secure credit for productivity-enhancing investments.

Disbursement against targets: According to a June 2006 MCC status report on Madagascar (pdf), the disbursement target for the first year of the program (ending July 27, 2006) was $26.7 million, while actual disbursement at that time was $9.65 million. The MCAM has revised its disbursement goals downward to account for the fact that the first period after "entry into force" was dedicated to establishing core systems, rather than disbursing program funds. The current goal is $15 million disbursed and $30 million in the pipeline by December 2006.

2. Process Milestones

At the time of compact signing MCAM had very few staff and no office space of its own. The good news is that the MCAM now has all its core structures in place, and has reached several important milestones in establishing program systems. But had these steps been taken before the compact "entered into force," the compact period could be fully dedicated to reaching program goals.

Baseline survey: Using MCA 609g funds, USAID conducted a nationwide baseline survey on behalf of the MCAM. The survey captured information on household income, land productivity, and levels of investment in order to provide benchmarks against which to evaluate MCAM program success. Technically the survey was right on time because, as stipulated by the compact, it was conducted within the first ten months of the compact period. Ideally the survey would have occurred before the compact entered into force so that the data might have been used to help set program goals and feed into a Monitoring and Evaluation (M&E) framework.

Identification of five zones: At the time of the compact signing, only two zones had been identified, and without much consultation with civil society. Since signing, the MCAM has engaged in an exhaustive nation-wide participatory process to select the remaining three zones. The sequencing of this process certainly saved compact time, and allowed for program targets and an M&E framework to be in place at the start of the compact. But if the zone selection is seen as a key part of the MCAM's ownership of the program, an opportunity to solicit broad public input and a means of assessing where MCA resources can have a substantial impact on growth and poverty reduction, the entire process should precede compact signature. The bottom line is that a decision of this sort must be made with explicit awareness about the implications for timeline and progress in program goals.

MCAM Structures: The MCAM office is now staffed with approximately 65 Malagasy professional. The MCC also has two resident mission staff. The German development agency, GTZ, is serving as the fiscal and procurement agent. The MCAM has established both a Steering Committee (SC) charged with general oversight and accountability of the program, and an Advisory Counsel (AC) designed to represent the interests of civil society and regional governments. The MCAM has begun signing collaborative agreements with numerous development partners, including NGOs, multilateral donors and private sector firms.

Monitoring and evaluation: MCAM made public an initial monitoring and evaluation (M&E) plan at the time of compact signing, but it only included specific goals associated with the first two target zones and notional compact-wide goals. The comprehensive M&E plan is in the final stages of revision and is likely to be made public by January 2007. Some of the revisions are based on lessons learned in the first year (see below). These should be allowed, indeed encouraged through the life of the compact, because they stem from a conscientious and deliberate assessment of program progress. But other significant revisions are being made at this late stage partly because of the timing of the baseline survey and the selection of final target zones. The MCC should to do a better job of having the comprehensive M&E framework designed and made public when the compact period begins. Most importantly, it should be transparent about how it weighs tradeoffs between this goal, and other country-specific priorities such as the timing and pace of zone selection in Madagascar.

Second compact: By August, Madagascar was already beginning to design a phase-two compact proposal and planning a participatory process to solicit input into compact development. The MCAM team submitted a concept paper to the MCC in mid December 2006. An important snag in this plan is that the MCA authorization legislation currently prohibits the MCC from having concurrent compacts with a country. If this regulation is not revised, the MCAM will either have to wait until the end of the first compact to sign a second compact and receive additional funds from the MCC, or as the MCAM officials argue, they can solicit support from other donors for the phase-two investment plan.

While MCAM had achieved a fair bit in its first year, many of the accomplishments were invisible to the broader public (both in Madagascar and the U.S.). Most of them should probably have occurred before the compact entered into force. Partly because of this, the vast majority of people interviewed for this report lamented the slow pace of MCA process in Madagascar.

Next: Part II: The Pace of Progress

U.S. Assistance