CEO Danilovich put some meat on the bones of his vision for the MCC (as well as rather strategically preempting many of the special interests and criticisms from the NGOs present) in a speech delivered to Interaction's annual CEO retreat last week. Danilovich sets forward 5 guiding principles:
"First, MCA is performance-based. As you know, eligibility for receiving assistance is predicated on a country's report card of 16 indicators measuring good governance, economic freedom, and investing in people. MCC seeks to target those countries most dedicated to breaking the cycle of poverty and ensuring our aid dollars have a transformative impact."
For the most part, I think the MCC has done well in implementing a complex process of applying a performance-based measurement system to its decisionmaking process. But there is significant room for improvement in making more transparent the use of Board discretion when the data doesn't show a clear picture. Find our analysis on the MCA Monitor website.
"Second, Millennium Challenge is not for everyone. Country selection will be driven by scores and data, and countries that are bastions of corruption, poor governance, and instability are not suited for the kind of assistance Millennium Challenge will provide."
Hmmm...on this one, the MCC needs to put a little more clarity into what defines a "bastion of corruption," and it needs to defend its choices on selecting countries that fail the corruption hurdle. For example, it would seem to me that a country that fails all six good governance indicators would be a likely candidate for corruption, poor governance and instability. Yet, Kyrgyz Republic, failing all six indicators, was deemed eligible for MCC threshold assistance. And Georgia, failing the corruption hurdle all three years, was deemed eligible and already has a signed compact. On a good note, it is refreshing to see that when a country experiences major performance slippages, the MCC is willing to cut them off, a la Yemen.
"Third, MCC is focused on helping the poor primarily through economic growth, market principles, and private-sector instruments...We will, of course, be careful not to exclude programs that remove impediments to growth and development, such as investments in education and health projects."
I admit that I am a little conflicted on the issue of MCC's niche. The MCC cannot and should not be all things to all people. It should, however, decide exactly what it is going to be, say so, and be willing to defend its choices. To do so, however, the MCC needs to set itself more firmly and strategically within the broader umbrella of U.S. foreign aid. If it is going to stay focused on short-term economic growth investments, it needs to make sure its investments complement the work of other agencies and the recipient government in the longer-term education and health investments. And the MCC absolutely has a responsibility to measure and communicate the poverty and social impact of its investments. It is not enought to simply say that growth is good for the poor.
"A fourth guiding principle is that recipient countries, not the donor, should have primary ownership of the Compact, and it is the recipient country that will conceive, develop, and implement its own program – with MCC oversight and monitoring."
I believe this is a key innovation of the MCC and we need to have the patience to allow this process to be real and to work. We need to be able to measure this process as a success (or failure) of the MCC just as we are so quick to say they are not disbursing money quickly enough. That said, I think the MCC could give a little more guidance to countries as to the scope and type of projects it is most likely to fund to save some time in the iterative process.
"[Fifth,] we must focus on a relatively small number of countries and develop large, transformative Compacts that allocate enough resources to actually make a dent on poverty in those countries."
Yes, yes, yes. And, therefore, adding lower middle income countries to the mix this year was not, in my opinion, a good decision. You can see my views on this in my earlier paper.Sorry for the long posting but I think this speech was very well done (from a communications perspective) and important in terms of having a benchmark from which to measure Danilovich's ability to carry out what he said. As always, I would love to hear some reactions. Best, Sheila
