An Alternative Way to Look at Progress on Compact Implementation (If Only We Could…)

The last week of September, the MCC Regional Country Directors (RCDs) and their Deputies were in Washington for several days of meetings. On Wednesday, Sept. 26, the MCC held a public outreach meeting where the RCDs from three compact countries--Honduras (John Wingle), Benin (Randall Wood), and Georgia (Colin Buckley)--discussed the challenges and successes they've experienced working directly with countries as they implement their compacts.

It was refreshing to hear perspectives from folks on the ground about successes achieved and also--importantly--why compacts have been slower to ramp up than anyone, including the MCC, expected. The MCC's slow rate of disbursement is a major point of contention with Congress--a point it is using to justify a low appropriation for FY2008. (As a reminder, MCC must commit all the funds for the lifespan of the compact at signing. The funds are obligated at entry into force, and they are disbursed in performance-based increments when the MCA money sitting in the US Treasury is paid out to the in-country accountable entity.)
MCC has been stating that accountable disbursements--with partner countries running (and learning from) the implementation process--are better than fast disbursements; the RCDs are instrumental in giving that message important (and largely neglected) context. John Wingle, for instance, said that the first big challenge in Honduras was procurement. Since MCC gives responsibility for procurement to the country, there can be delays as processes and structures for transparent procurement are put in place, in many cases for the first time. In Honduras, for instance, the education around conflict of interest avoidance was invaluable and will be applied in all subsequent compact-related procurements (and beyond, one hopes). In addition, MCC held off work on the transportation project in Honduras until mechanisms for sustainability were in place--funding was put on hold until the government met the legislative and financing requirements for a road maintenance fund. And finally, the MCC is raising the bar on resettlement by requiring (and enforcing) that compensation at full market value of the acquired land, including assistance for moving expenses and the restoration of livelihood strategies for affected people, be completed before construction begins. Thus, as the case of Honduras shows, it is MCC's founding principles--country ownership, emphasis on sustainable results, and accountability to all parties (from the partner country implementers and individuals impacted to the US taxpayer)--that are rightfully contributing to initial delays. Many of these are start-up delays, however, that should not persist throughout the compact life-span. Once procurement systems and training are in place, subsequent procurements should go much faster than the first, and once sustainability requirements and social impact issues are resolved, work can begin (with continuous monitoring, of course).
At the end of the session, John Hewko, Vice President of Operations, emphasized that while the amount of money disbursed is one measure of progress, it is not the most important measure. Instead he suggests that the amount committed in contracts for project work is a much better measure, and that these contract commitment numbers show that many MCA compacts are actually progressing very well. Contract commitments may indeed be an important measure of progress, in my own mind for two main reasons: implementation schedule realities and country capacity. On implementation schedule, it is simply a reality that most projects will have minimal initial outlays during the design phase (year one at a minimum) but ramp up considerably in later years (picture a bell curve, more or less). Orientation to the MCA model, contracting for and conducting feasibility studies, project design and impact analyses, and designing the evaluation framework each take several months to complete. On the issue of local capacity, contract commitments are a proxy for a successful country-driven procurement process that met the MCC's standards for transparency and accountability. In that respect, not only is the dollar figure important but so is the fact that the commitment is a measure of impact--the country’s success in meeting a high fiduciary standard associated with implementing MCA programs.
As much as I would love to track and comment on MCC partner countries' progress in completing contracts and committing funds, the MCC does not currently report these figures or publicize examples of "MCA effect" on local capacity building in procurement and otherfiduciary proceedings. To enable a new, more nuanced conversation around MCC's progress in implementing compacts, public presentation of data on commitments would be a good advancement. Including a section on commitments in the monthly public Country Status Reports is one possibility, publishing separate monthly or quarterly reports is another. The Global Fund--which has raised the bar for transparency and accounting--has on its website regularly updated and highly detailed reports on grant commitments and disbursements (which have the added bonus of being in an immediately obvious place for any first-time user). Doing something similar would increase transparency (something the MCC strives toward and what helps set it apart from other foreign assistance programs) and have the potential to influence the discussion of MCC operations in a significant way. The MCC is currently focusing on setting up the systems and structures that enable the best reporting of current and expected commitments. I look forward to seeing those results.