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Sarah Rose is a policy fellow at the Center for Global Development. Her work, as part of the Center’s US Development Policy Initiative, focuses on US government aid effectiveness. Areas of research and analysis include the policies and operation of the Millennium Challenge Corporation (MCC), the use of evaluation and evidence to inform programming and policy, the implementation of country ownership principles, and the process of transitioning middle income countries from grant assistance to other development instruments.
Previously, Rose worked for the United States Agency for International Development (USAID) in Mozambique as a specialist in strategic information and monitoring and evaluation. She also worked at MCC, focusing on the agency’s evidence-based country selection process. She holds a Masters degree in public policy and a BS in foreign service, both from Georgetown University.
MCC has long applied rigorous environmental safeguards and standards to its investments in partner countries. And since President Obama’s September 2014 Executive Order on Climate-Resilient International Development, MCC (along with other key USG foreign assistance agencies) has been expanding its efforts to ensure that it considers climate change risk—and, where possible, mechanisms for adaptation—in investment planning and execution. Since MCC invests in countries and sectors that could be hugely impacted by changes in the risk of natural disasters, this is very important.
At MCC’s quarterly board meeting today, the agency presented on current actions and ongoing plans to foster climate-resilient development. It doesn’t appear that anything decisional was lined up for the meeting, but I expect we can look forward to more comprehensive information from MCC about its approaches to take climate change risk now that the board has been briefed.
Taking broader climate risks into consideration makes sense for MCC. After all, the bulk of the agency’s portfolio is made up of transportation infrastructure and agriculture, both sectors in which changing climactic conditions can jeopardize investments. MCC’s road project in the Philippines compact highlights this point. During the design phase, MCC and the Government of the Philippines ended up taking extra steps to “climate-proof” the road, knowing the country’s high risk for typhoons. When Typhoon Haiyan, the most powerful storm ever to make landfall, hit in late 2013 (after road construction had already begun) the portion of road already completed withstood the damage. MCC and the Government of the Philippines made these design decisions before Obama’s executive order on climate change resilience specifically directed the agency to do so. However, to the extent that events like these will become stronger and more frequent (an assertion supported by many climate scientists), it makes sense to systematically include a broader view of these kinds of climactic risks in project planning.
Increased attention to climate change considerations won’t change MCC’s fundamental mission to reduce poverty through economic growth. But it is likely to mean that MCC will more systematically think through how changing climactic conditions (e.g., projected changes in the frequency of things like mega-storms or droughts) could impact its capital investments over a medium- to longer-term horizon. While adaptive design adjustments may come with increased costs, by reducing risk, they may also increase an investment’s projected benefits. This calculus should be considered in the rigorous cost-benefit analysis that MCC and its partner countries do as part of project planning (and, where necessary, making substantial mid-course adjustments). After all, if a road is washed away in a series of strong storms over a number of years, or if medium-term changes to the conditions of a regional watershed reduce the functionality of village boreholes, the benefit side of the balance sheet would certainly suffer.
We’ll look forward to learning more about MCC’s efforts in this area soon.
Register here for the event featuring MCC CEO Dana Hyde on Thursday, February 26.
In the recently released MCC at 10 series, Franck Wiebe and I offered a number of recommendations for how MCC could strengthen the way it implements its model. This model, which is based on key principles of aid effectiveness, is a worthy one and one that MCC has largely implemented well over its first decade. However, there is some room for improvement.
All in all, we offer nearly 30 recommendations, both for MCC and for external stakeholders who are eager to see MCC succeed. Here are some of the key suggestions:
Maintain a transparent, evidence-based system for picking partner countries, but maintain a keen and nuanced understanding of the strengths and limitations of the policy indicator data, especially when interpreting the scorecards of current partner countries. A strict interpretation of imprecise data can lead to irrational decisions. (more detail)
Embrace subsequent compacts as a sensible way to continue to engage the right set of relatively well-governed countries. (more detail)
Enforce the agency’s commitment to investing only in projects that are cost-effective, that is, projects for which the value of projected benefits exceeds the cost of implementation. (more detail)
Improve results reporting by providing a portfolio-wide evaluation strategy that describes which activities are subject to rigorous impact evaluation (and justifies why less rigorous methods are selected for other activities), publishing all evaluation reports (both midterm and ex-post) in a timely manner, and demonstrating how MCC is applying lessons learned from evaluations to current programming. (more detail)
Improve an already strong track record on transparency to increase accountability to US-based and in-country stakeholders. (more detail)
Experiment with outcome-based funding models that further build upon MCC’s locally driven development approach. These models would provide partner governments with the flexibility to find the best ways, within their own local context, to achieve agreed upon targets. (more detail)
What does MCC say about its goals for the next ten years? A number of current priorities are outlined in the agency’s FY2016 budget justification, and include things like exploring regionally focused investments, using its compacts to leverage more private sector investment, and deepening its commitment to sharing and learning from results. But what else is the agency thinking?
Come join us on Thursday (Feb. 26, 9:30–11:00) for an open conversation with MCC’s 4th CEO, Dana J. Hyde. She’ll reflect on MCC’s first ten years and outline a vision for the agency’s future. CGD’s Ben Leo and the Brookings Institute’s Homi Kharas will then join her in a discussion about the challenges and opportunities MCC faces in its next 10 years, after which the floor will be open for questions. Come hear about the future of MCC, and bring your questions for Ms. Hyde, as well.
The President’s FY2016 budget request is out with the biggest ask—$1.25 billion—MCC has seen in five years. This is a nice vote of confidence for MCC, and it suggests that the administration is eager to see the agency strengthen its position now that it’s in its second decade of operations. In the agency’s Congressional Budget Justification (CBJ), I was happy to see that MCC flags a number of important priorities for the coming year. On the other hand, in the context of a potential funding increase, it will be important to watch how some of these goals—especially the one related to developing compacts faster—will play out.
Here’s what I’m happy to see in the request:
Commitment to exploring a regional approach.
The big piece of this is a request for new legislative authority to enter into concurrent compacts. This would be the best way to enable the agency to pilot regionally-focused investments in adjacent countries. Important constraints to growth can be cross-border in nature, and MCC often invests in projects (like infrastructure) that have an inherent regional component. However, MCC often cannot fully exploit this characteristic because neighboring countries are rarely concurrently at the same stage of compact eligibility or design, hampering coordination. There are certainly some practical questions about how MCC would pursue a regional approach in the context of its unique model that focuses on partnering only with well-governed countries, tackling binding constraints to growth, and ensuring investments yield benefits in excess of their costs. But the agency should be given the flexibility it needs to fully articulate and pilot such an approach.
Highlights of how MCC’s work has created private sector opportunities.
The catch phrase in foreign assistance these days is “leveraging the private sector.” Increasing acknowledgement of the limited scope of what foreign aid dollars can be expected to accomplish in terms of generating incomes and growth has increased pressure on lots of agencies, including MCC, to show how their investments are helping improve private sector participation in developing country economies. In fact, MCC’s new CEO has expressed particular interest in this topic. Fortunately for MCC, whose sole mission is to reduce poverty through economic growth, creating conditions for increased private sector activity (the source of the increased incomes that MCC seeks to achieve) is part and parcel of what it does. Sure, there are doubtlessly ways MCC could increase its leverage (and the agency outlines some of its plans to do so), but it’s also nice for MCC to take the opportunity to showcase some of its achievements in this area.
Continued commitment to sharing (and learning from) results.
MCC promises to strengthen its already noteworthy efforts to share its results data, including what will be an increasing stock of evaluation findings. A focus on improving the collection and use of sex-disaggregated data to better inform programming decisions is welcome, as are MCC’s efforts (in partnership with PEPFAR) to help stakeholders in partner countries access and use data for decision-making.
But here’s my big question:
Big pipeline + more money to spend + new emphasis on speed = ?
One of MCC stated priorities is to develop compacts faster. I had some reservations about this goal when I first heard it. After all, MCC’s history contains periods in which efforts to push compacts through in a hurry led to projects that weren’t well focused or fully due diligenced (for instance, in MCC’s early days when there was pressure for the new agency to get its operations underway and around 2006-2007 when MCC was getting a lot of questions from Congress and others about its large unobligated balances). This rush to the finish line was one of the factors that led to the need for mid-course re-structuring of a substantial portion of the early compacts.
Fortunately, it sounds like MCC is bearing all this in mind and focusing on areas that have often taken a long time but aren’t related to the quality of the compact—things like the time it takes to pull a country team together. MCC requires its partner countries to set up a locally staffed unit to develop the compact (in cooperation with MCC) and later implement it. As it turns out, governments don’t always have spare funds immediately accessible for such purposes, so MCC is planning to provide some pre-compact funding to accelerate recruiting and hiring of team members. Other time-saving efforts include things like providing better guidance to country teams and improving coordination. These all sound like smart adjustments.
However, in the context of a large pipeline of 9 countries currently developing compacts, plus a potentially big pot of new money the agency will have to prove it can spend, I hope that the goal of increased speed doesn’t supplant the goal of putting together good compacts that meet MCC’s own stated expectations for cost effectiveness and high-bar standards for environmental protection, gender considerations, etc.
After all, when it comes down to it, the most important measure of MCC’s success is not its top-line budget number, nor how fast it brings countries to the finish line. It’s the results it delivers to beneficiaries and the cost-effectiveness of those results. And these results are predicated on MCC and its partners developing high quality—that is, well targeted and thoroughly-analyzed—programs.
In its first decade, the Millennium Challenge Corporation has set itself apart from other development agencies with its focus on three key pillars: policy performance, results, and country ownership. But has this focus translated into impact? Senior Policy Analyst Sarah Rose and Visiting Fellow Franck Wiebe have just released a suite of policy briefs and papers that evaluates this very question. To hear Sarah and Franck’s take on what MCC has done well and what it can do better in its next decade, tune in to the full podcast.
The Millennium Challenge Corporation (MCC), an independent US foreign assistance agency, was established with broad bipartisan support in January 2004. MCC
has a single objective—reducing poverty through economic growth—which allows it to pursue development objectives in a targeted way. There are
three key pillars that underpin MCC’s model: that policies matter, results matter, and country ownership matters.
Please join us to hear policymakers from inside and outside the US government discuss their experience applying the principle of country ownership, reflecting on its importance as well as its challenges and trade-offs. Forthcoming research from CGD’s US Development Policy Initiative will review progress made in implementing country ownership, identify the constraints the agencies face, and offer recommendations for better execution of a country ownership approach in practice.
The Millennium Challenge Corporation (MCC) was designed to provide large-scale grant funding to poor, well-governed countries. It’s become clear, however, that the (legislated) definition of which countries are “poor” is inadequate. In a
Ctrl+Click or tap to follow the link">new paper, Nancy Birdsall, Anna Diofasi and I discuss the limitations of the current definition (based on GNI per capita with a rigid graduation threshold) and propose a complementary measure (median income or consumption) and a more gradual approach to graduation. Such adjustments would create a candidate pool that much better reflects the significant poverty and development need in potential partner countries.
In some respects, this paper is pushing on an open door. MCC acknowledges that its current definition of candidacy doesn’t fully capture a country’s level of well-being and has expressed interest in working with Congress to review how it defines candidate countries. Congress should be open to such a change. It would represent an improvement – on the margin – in targeting opportunities for poverty reduction. The likely effect would be to expand MCC’s partnership options to include a small handful of middle income countries whose governments are working to remediate years of structural inequalities and/or whose institutions and ability to translate growth into poverty reduction have not developed as rapidly as the economy has grown. It wouldn’t be a big change, but it would go a long way toward creating a more rational set of candidate countries.
For some time, we’ve been cheering MCC’s interest in pursuing approaches that pay for outcomes and encouraging the agency’s stakeholders to get onboard (here and here). Now we can applaud an important step forward. The agency’s new compact with Morocco, which both partners celebrated at an event last Thursday in Rabat, spells out the potential for a results-based financing component—a welcome development.
A substantial portion of the new Morocco compact will seek to increase employment through improvements in education and training as well as a project to support the replication and expansion of successful integrated job placement services. According to the compact agreement, a key component of the latter will involve the use of results-based financing “to catalyze a market for improved employment outcomes.” In contrast with conventional employment programs, which often define results in terms of “number of people trained”, MCC and Morocco are looking to pay for beneficiaries actually placed in jobs.
MCC investments will support and strengthen the Government of Morocco’s existing efforts to link payment to the achievement of independently verified outcomes and strengthen service providers to deliver and manage for results. Results-based financing models shift program risk and align incentives, prioritize evidence, allow for adaptation to keep pace with changing circumstance, and have shown promise in improving service delivery. As we’ve often noted, the idea of paying for success fits well with MCC’s model. Approaches that disburse on the basis of results necessarily require robust measurement of results, and results measurement is an area where MCC has often been ahead of the curve. Moreover, the approach dovetails nicely with MCC’s focus on country ownership since results-based programs provide partner governments and project implementers with increased flexibility to find the best ways, within a specific local context, to reach agreed-upon targets.
Of course, with the compact just getting started, there’s still plenty of work left to do to determine project details. The agency is exploring a range of results-based financing tools, including—as mentioned in the compact agreement—the possibility of a Social Impact Bond (the inspiration for Development Impact Bonds). Ultimately, the devil will be in the details. Many of the advantages expected from pay-for-performance programs fail to materialize if they are simply better-implemented conventional programs. Focusing on paying for measurableoutcomes (including specifying from the outset the desired outcome(s), how it will be measured, and what will be paid per unit achieved) is key to unleashing the innovation and adaptation results-based financing tools promise.
As the compact unfolds, we’ll be watching intently from the sidelines. Among US agencies, MCC has positioned itself on the cutting edge of thinking about results and country ownership. Its exploration of an approach that would pay for outcomes in Morocco demonstrates its interest in staying there.
Over the past decade, the US government has repeatedly committed to incorporate greater country ownership into the way it designs and delivers aid programs. Though a range of factors—including strong domestic pressures—influence foreign assistance, US aid agencies have taken concrete steps to strengthen country ownership in their programs. A new policy paper, The Use and Utility of US Government Approaches to Country Ownership: New Insights from Partner Countries (with AidData co-authors Bradley Parks and Takaaki Masaki), draws upon survey data from government officials and donor staff in 126 developing countries to explore partner country perceptions of 1) how frequently the US government engaged in practices associated both favorably and less favorably with the promotion of country ownership, and 2) how useful each of those practices was.
Previous efforts to measure the implementation of donors’ commitment to aid effectiveness principles, including the promotion of country ownership (notably QuODA and the OECD’s 2011 monitoring survey), have tended to focus on the more easily quantifiable aspects of donor engagement—offering little on how development policymakers and practitioners in partner countries perceive individual donor efforts.
This study provides a useful complement to the existing body of evidence. We explore a range of donor practices—some widely considered to be useful for promoting country ownership (e.g., alignment with country strategies, delivering funds through country procurement or financial management systems), others with a more ambiguous or even unfavorable association with ownership (e.g., the provision of technical assistance, use of parallel implementation units).
Several interesting insights emerge although limitations in the data prevent us from drawing airtight conclusions:
The US government is generally perceived to align its programs with partner country priorities, though there are differences by agency (MCC is perceived to emphasize alignment more frequently than USAID) and partner country characteristics (the US aligns with national strategies more in better governed countries).
The US government relies heavily on professional training and technical assistance (especially international experts), while less frequently adopting practices that make use of in-country systems.
Host country respondents and US government staff disagree on which practices are most useful. Most of the practices that are in principle more favorable for the promotion of country ownership (ensuring alignment, providing budget support, paying for outcomes) are those considered most useful by partner country officials. US government staff favor their more common practices (professional training, the provision of technical assistance).
Practices that let countries lead tend to be underutilized compared to their perceived utility.
These findings support several policy recommendations to improve how the US government can better adhere to its commitment to support country ownership.
Increase flexible spending for USAID. For the US government to be more responsive to country priorities, USAID must have much more flexible spending authorities and greater freedom from earmarks and spending directives. One way to test this could be through a series of “effectiveness pilots” in which—in a small set of countries—directives, earmarks, and other spending requirements are removed or significantly reduced in exchange for greater adherence to more effective aid delivery practices.
Evaluate use of country systems. As the US government increasingly seeks opportunities to channel funds through the public financial management or procurement systems of partner countries, agencies should evaluate and draw lessons from their past experiences to understand whether and under what conditions using country systems helps to strengthen them.
Provide more flexible, results-oriented support to partner country institutions. The US government should encourage innovation, experimentation, and adaptation, allowing local partners to develop the context-specific forms that get results, instead of prescribing the structure of an organization.
Increase funds to the multilateral development banks. MDBs tend to pursue the practices that put countries in the driver’s seat (e.g., paying for results, using country systems) to a greater degree than US agencies. There are many compelling reasons for the US to direct more funds through multilateral channels; increasing support of aid modalities that seek to increase ownership is one.
Stay tuned for more work on country ownership coming soon from CGD’s US Development Policy Initiative. In January, Casey Dunning and Sarah Rose will release an in-depth, agency-level analysis of USAID and MCC’s approaches to country ownership. We reflect on progress made in implementing the principles of country ownership, identify constraints and tradeoffs the agencies face, and offer recommendations for better implementation of a country ownership approach in practice.
The paper draws on data from the 2014 Reform Efforts Survey conducted by the College of William and Mary in partnership with the National Opinion Research Center at the University of Chicago (a full methodological description and topline findings can be found here). The research team identified a sampling frame of nearly 55,000 development policymakers and practitioners who held government or donor staff positions in 126 low- and middle-income countries between 2004 and 2013. The survey consisted of questions about firsthand experiences and observations about international donors and development partner organizations. Our paper analyzes a subsample of 3,256 individuals who responded to questions about practices related to country ownership. When interpreting the results and recommendations, it is important to keep in mind several limitations, including a relatively low response rate (though it is on par for surveys of this type), the nature of perceptions-based data, and the fact that the data do not reflect current perceptions, which may have shifted in more recent years.
Earlier this week, CGD president Nancy Birdsall testified before the Senate Foreign Relations Committee at a hearing on the Millennium Challenge Corporation. A main impetus for the hearing was the introduction this summer of legislation (S. 1605) that would enable MCC to pursue regionally-focused investments with eligible countries. The hearing itself, however, was wide-ranging, covering the “current operations and authority” of MCC.
All in all, I found the hearing to be largely supportive and constructive for the agency. Here’s what I was glad to hear, what I wish I had heard...and what I could have heard less of.
What I was glad to hear:
Support for MCC’s model: Members and witnesses alike articulated what they thought was important about MCC and its model—emphasizing the agency’s focus on poverty reduction and growth; its prioritization of policy performance in selecting partner countries; its commitment to transparency and accountability; its country-led approach; and its focus on results.
A push on results: I was particularly glad to hear members ask about the agency’s record on results, including MCC’s record on projects’ economic rates of return (ERR). Given the agency’s recent desire to hurry the Tanzania compact ahead before analyzing its economic viability, I was glad to hear MCC CEO Dana Hyde reiterate the importance of rigorous economic analysis for accountably identifying growth-focused projects (including for Tanzania). Nancy took a different angle, pushing the agency to further its efforts to adopt pay-for-performance approaches.
Favorable views toward a regional approach: There was broad consensus among the independent witnesses that MCC should be given the authority to invest regionally. Members’ questions were also generally supportive, focused on how MCC would implement such an approach in line with its model of country selectivity, ownership, and accountability for results. My stance has been that while there is a strong economic case for regional compacts—and MCC should be able to tackle cross-border growth constraints—implementation will not be straightforward. So I was also glad to hear Hyde acknowledge the heightened risk and complexity of regional programs and commit MCC to proceeding slowly and cautiously.
Consideration of the need to redefine “poor”: Both Nancy and Hyde noted that the current, legislated definition of candidate countries excludes lots of countries that are, by most reasonable assessments, still very poor. Other metrics, like median income, could create a more sensible pool of candidates that better reflects the significant poverty and development need in potential partner countries. Any change to the existing definition would require congressional action, so it was encouraging to see receptivity to the points raised.
A nuanced view of the selection indicators: It was nice to hear real discussion of the strengths and limitations of the indicators MCC uses to assess countries’ policy performance—especially the Control of Corruption indicator. Congress is rightly concerned about corruption in MCC partner countries, but, as I’ve repeatedly argued (here and here, too), there are negative consequences to strict interpretation of an imprecise measure. I was glad to hear constructive questions about the data and possible alternatives rather than simple admonitions to be tougher on corruption.
What I wish I heard more of:
Discussion about (and support for) subsequent compacts: One of the key points in Nancy’s testimony was that Congress should support MCC’s involvement in a single country over a longer time horizon. Development takes far longer than 5 years, even with a great partnership. As such, second compacts—and potentially beyond—should not be automatic but should be welcomed where warranted. This topic wasn’t covered outside of Nancy’s testimony, but—to the extent that some members of Congress are still reluctant about this approach—the hearing could have been a nice opportunity to talk about why it’s a smart way forward for MCC.
What I could have heard less of:
The “MCC Effect”: Perhaps because the agency does not yet have a robust catalog of results, when asked about its impact, the agency regularly points to how its scorecards have incentivized countries to make policy changes to secure MCC eligibility before a single dollar is spent. There are some real, concrete examples of MCC’s country selection system contributing in some way to reform conversations (for example, here and here). But for MCC really to call itself effective, the so called “MCC Effect” cannot be the totality of its impact. I was glad to hear Hyde talk about MCC’s end-of-project rates of return, and even its limited (and mixed) evaluation record (in response to Perdue’s (R-GA) pointed question, “what’s been the poverty reduction” of MCC’s compacts?). I think much greater focus on these metrics, as well as the ways MCC programing influences sector-specific reforms, is warranted.
State’s heavy hand in MCC eligibility decisions: MCC’s record on selection simply does not bear this out as a major concern. The cases referenced—Georgia and Jordan (the latter not mentioned by name, but strongly alluded to)—are old news. They reflect decisions made 12 and 9 years ago, respectively (Georgia was selected despite not passing the scorecard; Jordan did pass but was not a democracy, a factor the board has always weighed heavily, even before making democracy an official “hard hurdle”). In fact, a review of the agency’s overall country selection record suggests that policy performance has indeed been the main criterion for eligibility. A few eligibility decisions have appeared to support broader US government political and diplomatic interests in a way that is not entirely consistent with the spirit of MCC’s criteria, but most of these choices were in the agency’s early days and/or were for the smaller threshold program.
I applaud SFRC for holding a hearing on MCC. It was an excellent opportunity to hear a variety of perspectives on some of the key issues the agency is facing in its second decade. In case you missed the excitement, a video is available.
In December, MCC’s Board of Directors will meet to determine which countries will be eligible for FY2015 funding. While the agency’s annual country scorecards won’t be ready for a few months, updated corruption and democracy data are available now. These are the big “hard hurdle” indicators that countries must pass to meet MCC’s scorecard criteria for eligibility. An advance look at the data gives some insights into a few big issues that the Board will likely grapple with this year, such as:
What should MCC do about a country that falls just short on the corruption indicator (again this year), but has been developing a compact proposal?
Could a country that passes the democracy criteria for the first time be a new contender for compact eligibility?
As a refresher, MCC provides funding only to relatively well-governed countries. To identify those countries, MCC relies heavily on country scorecards that show developing countries’ performance on 20 policy indicators. This is one of the MCC Board’s primary considerations for deciding which countries should be eligible for a compact or threshold program. As part of MCC’s criteria, there are two specific indicators that a country must pass (i.e., hard hurdles). A country must (1) score above the median on the Control of Corruption indicator (compared to its income group peers); and (2) score above a set threshold on at least one of two democracy indicators (either the Political Rights or the Civil Liberties indicator).
So, what jumps out this year? We ran the numbers and found several things that will certainly be key considerations of the Board.
Control of Corruption
First of all, no countries pass the Control of Corruption indicator for the first time. Nonetheless, it’s particularly relevant to consider performance for several groups of countries.
Countries Developing Compacts: It generally takes multiple years to develop an MCC compact, and the agency requires that countries be considered for re-selection each year until a compact is signed.
Last year, the Board made a controversial and unprecedented decision not to reselect two countries, Benin and Sierra Leone, whose Control of Corruption scores had dipped just below passing, even though MCC acknowledged there was no discernible decline in either country’s anti-corruption policy environment. The thing is, the Control of Corruption indicator doesn’t precisely measure small differences between countries or small changes over time (as explained here, here, and here). I have argued extensively that this decision was problematic for MCC (see here and here), making it seem like an unreasonable and unpredictable development partner. Nevertheless, the Board proclaimed they would not sign a compact with either country unless they passed the scorecard. So, how do these two countries fare this year?
Benin passes the corruption hurdle this year. In fact, Benin has passed this indicator for nine of MCC’s 12 selection cycles (see below: green=passed, red=failed). Looking at Benin’s passing record over time really highlights that periodic small dips below the median do not necessarily signify—and should not be interpreted as—alarming trends of deteriorating governance. Benin’s compact was nearly ready to go last year when the Board decided not to reselect it. The question this year is whether the Board will give it the green light to proceed.
On the other hand, Sierra Leone fails the corruption hurdle again. However, as shown below, its absolute score is actually slightly higher than it was last year. And yet again, its score is not statistically lower than it was when Sierra Leone was first selected for compact eligibility in FY2013. The Board will likely spend the next couple of months learning more about the government’s recent efforts to control corruption and discussing how to weigh this kind of qualitative, supplemental information against the stark “fail” determination made with respect to a very fuzzy indicator.
The other five countries that are currently developing compacts—Lesotho, Liberia, Morocco, Niger, and Tanzania—all pass the corruption hurdle.
Second Compact Contenders: As a reminder, MCC may consider for eligibility for a second compact those countries that have completed their first compact or will do so within the next 18 months. Currently, there are 12 countries in this category. All but two of them—Honduras and Moldova—pass the Control of Corruption indicator. What’s especially noteworthy this year is that the Philippines—which will be around 18 months out from completing its compact in December—passes the Control of Corruption indicator for the first time since it moved from the low income country group to the more difficult lower middle income country competition in FY2010. This may be a country to watch for a possible second compact at some point.
Currently implementing a compactCurrently developing a compact
Democracy (Political Rights/Civil Liberties)
First, all existing MCC partner countries pass the democracy hurdle. This is unsurprising since MCC has, throughout its history, almost exclusively selected democratic countries. New this year, however, is that Cote d’Ivoire passes the democracy hurdle for the first time. Since it’s also passed the corruption hurdle for two years in a row, it may pass the overall scorecard requirements for the first time this year making it a country to watch. Of course, a passing scorecard doesn’t necessarily guarantee eligibility. The Board must also consider the current pipeline of countries and weigh the prospects of a possible partnership with Cote d’Ivoire against that of other strong contenders.
Currently implementing a compactCurrently developing a compact
Watch This Space
As always, in early December, the MCC Monitor will provide: (1) deeper analysis of countries’ scorecard performance; (2) a discussion of other big MCC selection issues; and (3) our annual predictions of which countries will be selected at the Board’s mid-December meeting. So please watch this space. It’s going to be an interesting year for country eligibility decisions.
For over a decade, donors and developing countries alike have embraced the notion that “country ownership” should be central to the way aid is designed and delivered. Ownership is widely considered critical for achieving and sustaining program results, building local capacity to help countries transition from aid, and strengthening the citizen-state compact by shifting accountability for results to the partner government.
Last week the US Development Policy Initiative (DPI) launched new research (plus a brief) that explores how two key US foreign assistance agencies—USAID and MCC—conceptualize country ownership and implement the principle in practice. The new paper, Implementing Ownership at USAID and MCC: A US Agency-Level Perspective, complements our earlier quantitative look at perceptions of US approaches to country ownership practices. The paper finds strong commitment to ownership by both MCC and USAID. It also identifies several challenges with implementing the principle, including balancing country priorities with other agency needs and weighing tradeoffs between ownership and programmatic/fiduciary risk. We propose several recommendations for how the two agencies might build on their existing practices to focus on country ownership, as they do, generate a body of evidence around the results of ownership-oriented practices.
To amplify the discussion on country ownership, we convened a panel of high-level policymakers from inside and outside the US government to talk about their experience applying the principle, reflect on its importance, and discuss challenges and trade-offs. Much of the conversation echoed—and added to—the findings in the paper. Here are three key messages I heard from the expert panelists:
The United States has made great strides incorporating ownership. Patricia Rader from USAID highlighted the evolution of the agency’s approach to ownership. USAID starting with a heavy focus on providing inputs (channeling money through local organizations and institutions), but is now fostering a more holistic approach by working with country partners to identify priorities, design and implement programs, and put local resources toward them. MCC, whose foundational model underscores the importance of country ownership, applied lessons from its early days to develop an approach to partnership that emphasizes the leadership role of partner countries in a more structured and constructive way. As Scott Morris noted, the fact that the US government has made such progress incorporating ownership highlights its value to stakeholders in US foreign assistance, especially since ownership runs counter to two core political tendencies in foreign assistance—the desire by donors to dictate how aid money is spent and the instinct to tightly control fiduciary risk.
Ownership is a balancing act. While ownership is seen as a necessary condition for aid effectiveness, it’s not the only thing that donors need or want to pursue. For instance, Kyeh Kim from MCC acknowledged the tradeoff between building capacity of local implementers and getting things done quickly. While MCC staff understand that their job is “not to do, it’s to teach, facilitate, and mentor,” Kim recognized competing pressure to ensure MCC’s large scale investment programs are fully executed within a fixed timeline. Antoinette Sayeh, a distinguished visiting fellow at CGD, highlighted the complexities of ownership in donors’ policy reform efforts, especially in the face of resistance from local vested interests. Drawing on her years of experience at the International Monetary Fund and her time as Minister of Finance in Liberia, she cautioned against equating ownership with preservation of the status quo and noted the important role donors can play in supporting reformist leaders. Recognizing the additional risks associated with direct local partnerships, USAID’s Rader suggested that these risks should ideally be weighed against the purported benefits (e.g., strengthened capacity, more sustainable results) on a case-by-case basis to decide when local partnerships are the right approach. However, she acknowledged that assessing the benefit streams of local partnerships is challenging since hard evidence on the additive value of ownership approaches is currently scarce.
Incorporating ownership remains a work in progress: USAID has brand new operational guidance that advances the agency’s ownership efforts, but the agency will need a shift in organizational culture and the right incentives for staff to work in a new way. MCC, which built in a focus on ownership from the outset, is still learning what works and what doesn’t (and in what contexts) in locally-led program design and implementation. It will fall to the new administration to build on this positive momentum around ownership and make US foreign assistance more effective as a result.
Yesterday, the Senate confirmed the nomination of MCC CEO Daniel Yohannes to represent the United States in the Organization for Economic Cooperation and Development. Yohannes’ impending departure from MCC leaves a big gap in the agency’s top leadership until the Senate confirms the White House nominee, Dana Hyde, as new CEO.
Hyde, whose nomination hearing back in November was smooth and uncontroversial, is on the White House’s list of priority nominees, but so far the Senate has not hinted when they might get around to signing off on her. Let’s hope they do so before they leave town for their upcoming two-week recess, so MCC can have as smooth a transition as possible. Plus, MCC is doing some interesting strategic thinking these days—taking stock of lessons learned from its first decade of operations, gearing up for a new strategic plan, and exploring some innovative financing methods (including COD Aid). It will need its top leadership in place to move these things forward.