MCC Approves Largest Compact to Date with Morocco

On August 9 the Board of Directors of the MCC approved a $698 million compact for Morocco (pdf), making it the largest (xls) of the 14 compacts to date (coming in at $151 million more than the next largest compact). Remarkably, however, it is the second smallest compact on a per capita basis.
With the approval of the Morocco compact (and on the heels of signing Lesotho and Mozambique in July), MCC has only around $600-$700 million left in unobligated balances, which makes it harder for Congress to justify cutting the MCA’s FY2008 budget based on its prior (and misleading) assumption that MCC is sitting on piles of unused cash.

The compact includes the following projects:

• An agricultural productivity project that helps move small farms from high water-use, low value crops to low water-use, high value fruit trees;
• A project to modernize small-scale fisheries by constructing and rehabilitating facilities, offering TA and helping to increase monitoring efforts to ensure sustainable practices;
• A project that leverages the links between the artisan sector, tourism and the cultural and architectural assets of the Fez Medina (the cultural and spiritual center of Morocco and a UNESCO World Heritage site) by strengthening literacy and vocational education for artisans (especially women and girls), offering micro-credit, and supporting the design and reconstruction of some historic sites within the Fez Medina;
• A project to broaden and deepen the market-based financial sector, including assisting micro-credit organizations to expand their services;
• A project to encourage an entrepreneurial culture and reduce unemployment among youth.

Though large and complex in its projectized approach, the Morocco compact does seem to stand out from the pack in terms of focusing the majority of its programs on directly opening up growth opportunities for the poor. The extent to which prior compacts directly benefit the poor, as opposed to sharing benefits with the full population, has been a topic of discussion among the NGO community. Morocco, which recently moved up to lower-middle income status, is seeing solid growth (7.3% in 2006, with more modest projections for 2007 and 2008), and the compact helps connect the poor to the opportunities that are coming online.
While the direct linkages to the poor are evident in most of the compact’s projects, the architectural component of the Artisan and Fez Medina project seems to be an exception. The assumption is that the reconstruction of historic sights within the Fez Medina will increase tourism, and thus, presumably, the number of customers for artisans. The success of this particular aspect of the project seems highly dependent on assumed behavioral changes at several levels (that more tourists will come, and that more will buy craftwork). The benefits to the poor are very indirect, and the MCC is relying heavily on induced benefits (which was one of GAO’s criticisms of the MCC-Vanuatu compact), so I wonder whether the MCC is really the right organization to take on this kind of program.
As a final comment on the Morocco compact, we’ve heard some questions about the depth and quality of public consultation in setting priorities and determining projects given that citizens may be reluctant to speak out against the King. We would, as always, love to hear more from folks on the ground.