Compact

Compact Summary⁸
On July 14, 2008, the Government of Burkina Faso signed a $480.9 million compact with the MCC. There are four components, all focused on the rural poor:

• Rural Land Governance ($59.9 million): This project seeks to increase investment in land and agricultural productivity by ensuring land security and management. It has three main parts:
  • Legal and procedural change and communication: The National Assembly must pass two pieces of legislation—a new land law and a revision of the existing Agrarian and Land Reorganization law before any construction begins.
  • Institutional development and capacity building: Technical assistance and trainings will be provided to improve institutional capacity to deliver land management services and mitigate conflict in rural areas.
  • Site-specific land tenure interventions: A pilot project building municipal buildings will take place in 17 villages to ensure the other two aspects of the program produce the intended benefits. If the pilot is deemed a success, construction and training will expand to 30 other communes.

• Agriculture Development ($141.9 million): This project aims to increase agricultural output and rural income by improving water availability and management, building capacity, and increasing access to markets and information. The project includes three major activities:
  
  
  • Water management and irrigation: This program will focus on improving water availability and management in the Sourou Valley and Comoé Basin. Specific interventions include building new walls at the Léry Dam, expanding land and irrigation systems in Di, and building capacity.
  • Diversified agriculture: This will include technical assistance, business development services, market rehabilitation, and expansion of market information systems.
  • Access to rural finance: This project will increase access to credit in areas around the Sourou Valley and Comoé Basin through building new facilities and improving financial institutions.

• Roads ($194.1 million): The roads project seeks to stimulate economic growth by increasing access to markets and social services in rural communities. There are four main elements:
  
  
  • Development of primary roads: 271 km of road will be built from (1) Sabou to Koudougou to Didyr; (2) Dedougou to Nouna to Mali border; and (3) Banfora to Sindou to increase access to MCC agricultural investments in the Sourou Valley and Comoé Basin.
  • Development of rural roads: 151 km of rural road segments will be developed in the Comoé Basin area.
  • Capacity building and technical assistance: This component will improve the ability of GOBF and private sector institutions to plan and implement road maintenance. Activities will focus on the Incentive Matching Fund for Periodic Road Maintenance (IMFP) project, procurement, management and accounting trainings, and public outreach programs.
  • IMFP: The MCC will match GOBF funds put into the IMFP if GOBF (1) has an annually updated five-year road maintenance plan, (2) improves capacities of management, procurement and implementation, (3) has appropriate financial controls, and (4) meets its share of contributions.

• Girls’ Education ($28.8 million): The BRIGHT 2 program will continue on the efforts of the BRIGHT threshold program to increase girls’ primary school completion rates. The program is composed of six components:
  
  
  • Borehole construction/ rehabilitation and/or water catchment systems: Up to 50 additional boreholes may be constructed for the existing schools.
  • Construction of school complexes: An additional three classrooms will be built, along with three teacher houses and six latrines at each BRIGHT school.
  • Nursery schools (bisongos): 122 bisongos will be built with playground equipment.
  • Take home rations: A daily meal will be provided for students at the bisongos. Take home rations for girls with over a 90 percent attendance rate will continue.
  • Social mobilization campaign: Social mobilizations, along with teacher trainings and teacher prizes will continue in BRIGHT communities.
  • Adult literacy and management of microprojects: Women and mothers will receive literacy courses and learn microproject management for income generating activities.

According to the latest MCC Compact Implementation Status Report (April–June 2009), $2,337,025 has been disbursed to date.⁹ There is much optimism on the part of the GOBF and MCC that their purposeful staging of due-diligence activities and procurement set-up will put them in a position to show faster results and encounter fewer hurdles in program implementation and disbursement.

Many Successes to Date

GOBF has made a tremendous effort to get their compact going in the right direction, especially with national consultations, dedicated leadership, and political commitment. Likewise, the MCC has greatly contributed by applying lessons learned and fostering a strong relationship with MCA-BF staff and GOBF. Successes include the following:

Purposeful Compact Development
The first, unofficial draft of the compact proposal called for funding of about $1 billion. The GOBF team knew this budget was too ambitious and they set to work, whittling down the compact by focusing on existing synergies between projects. The MCC provided consultations on guidelines, format, and standards, and the compact team said the MCC was always available for questions, but was otherwise hands-off. Although GOBF expressed some frustration and disappointment with specific projects they could not pursue due to MCC rules or a lack of funding (a slaughterhouse, opening up land for agricultural production in Comoé Basin, and a number of roads were popular examples), GOBF feels confident that the final compact reflects the priorities of the people and is implementable in the five-year time period. By October 2006, the final compact proposal was submitted at $540 million and the formal due diligence process with the MCC began.

Country Ownership at Every Level
The MCC says “Country ownership of an MCC compact occurs when a country’s na¬tional government controls the prioritization process during compact development, is responsible for implementation, and is accountable to its domestic stakeholders for both decision making and results.” So far, it seems that the spirit of country ownership is playing out in Burkina Faso at all levels.

• At the top: The Prime Minister of Burkina Faso (also the former Ambassador of Burkina Faso to the United States) is in charge of the MCC program, with support from the President and Council of Ministers. Although one of the poorest MCC countries, Burkina Faso contributed $5.9 million of its own money to cover overhead costs for MCA-BF, the consultations, and feasibility studies. GOBF partners are aware of GOBF commitment to the compact and to getting results for the people of Burkina Faso. The MCA-BF team has very strong capacity, led by a dynamic National Coordinator who was in charge of the consultations team. Even the Embassy of Burkina Faso in Washington, D.C., is involved in the process. Sustaining strong leadership and political commitment at the very top will be necessary throughout the life of the compact.
• With the people: The compact was born from an extensive series of consultations with the Burkinabé public. In February 2006, a small team (led by the current MCA-BF National Coordinator) was appointed by the Council of Ministers to carry out the consultations. From May–July 2006, the team visited all 13 regions of Burkina Faso and asked each group the same questions: (1) What are your biggest obstacles to development? and (2) What are your proposals and solutions to solve them? Feedback received during these consultations informed the compact proposal, and the priorities of land tenure, roads and water, and agricultural production were pillars of the final compact. In an effort to include all beneficiaries, consultations included members of NGOs, labor unions, the private sector, political parties, mayors, traditional leaders, civil society, and women’s groups, among others. Overall, a reported 3,115 people participated in the consultations, with 87 percent civil society representatives and 18 percent women. Citizens were informed about the final compact through media campaigns and communication with direct beneficiaries has been ongoing.
• For the people: In addition to conducting extensive consultations with citizens to define compact priorities, communities were also involved in electing representatives for the Stakeholders Committee (known as the Conseil National). The MCA Board (known as COS) also extends past representation of the national government by including members of the private sector and civil society. After observing a board meeting and interviewing several members, it is clear the Board is very independent and feels comfortable giving personal and professional opinions, believing it is their duty to ask questions and offer feedback on contracts.

Applying Lessons Learned
The Burkina compact is a testament that the MCC and, perhaps more importantly, the partner countries themselves are applying lessons learned from earlier compact development experiences in other countries. Some such lessons are identified below:

• Invest substantially in targeted compact readiness: The $9.4 million in 609(g) funding helped cover the costs of the accountable entity staff, mobilized the fiscal and procurement agents, funded preparation activities for the land tenure and roads projects, and helped collect baseline data for monitoring and evaluation. Procurement and fiscal agents, along with the accountable entity (MCA-BF) were established before the compact was signed. In addition, Burkina benefitted from the maximum $16.1 million Compact Implementation Funds to cover operational costs between signing and EIF. Since key staff were already in place, including a carryover of two to three main staff from the consultation process, Burkina could quickly move forward with planning.
• Design a realistic compact: The compact projects ultimately chosen seem reasonable to implement in a five-year period, especially considering the groundwork already accomplished before entry into force. The original draft of the compact proposal requested 11 roads. After road feasibility studies, however, only three primary roads made it into the compact. That said, MCA-BF director of roads said the MCC money for road feasibility studies did not go to waste; the results were turned over to GOBF and they will talk to other donors about the possibility of constructing other key roads left out of the compact.
• Right-balance ownership and partnership: The mutual respect between the MCC and MCA-BF teams is obvious. In Burkina, the MCC has found the right balance between being hands-off and overbearing, an issue that plagued some of the early MCC compact development and implementation efforts. Indeed, the Prime Minister and MCA National Coordinator both feel there is very good coordination with the MCC and praised their lack of prejudice, capacity to listen, and willingness to collaborate.
• Learn from those who preceded you: The National Coordinator visited Benin twice and Ghana once to learn lessons and discover the implementation successes and challenges, in particular what was slowing down their compacts.

How Is the MCC Different?

When asking a wide variety of stakeholders and beneficiaries, there is a general sense that the MCC compact is different from other donor projects. There was much emphasis placed on the fact the MCC model is inclusive of feedback from all levels of society and gives the national government the authority to choose priorities and drive the process. A vast majority felt like the compact accurately captured national priorities unlike other projects where donors force their agendas. MCA-BF staff appreciated the structure of the MCC which balances their need for greater predictability of aid with performance against a set of hard indicators laid out in a five-year plan with a strict timeline to avoid delays.

Another unique element of the MCC is its emphasis on the policy reform and institution building necessary to enhance prospects for sustainability of its investments. The phasing elements of the Burkina compact (passing two land laws, requiring GOBF contributions to the IMFP, etc.) create performance-based incentives for GOBF to reform its policies and build the necessary management capacity, thus laying a deeper foundation for lasting success. GOBF must jump over several major hurdles in order for implementation to begin. For the rural land governance project, the National Assembly must pass two land laws before construction on Phase 1 can begin. For the roads project, GOBF must beef up the existing road maintenance fund and contribute matching funds to the MCC for construction to begin. Although these seem to be on track, the GOBF must come through by set deadlines to receive the MCC money or risk the reallocation of those funds.

Risks and Challenges

So far, it seems the compact is in good shape for entry into force and implementation. That said, the sheer size and complexity of the compact will challenge the capacity of the GOBF in the implementation stage which may ultimately challenge the MCC’s ability to stick to its core standards. The GOBF and the MCC will need to conduct some pretty serious balancing acts throughout the life of the compact:

Balancing MCC Standards with Country Need
Given the mission of the MCC—reducing poverty through economic growth—impacts of proposed programs on income, as measured by economic rate of return, is a core diagnostic. Adherence to this standard is important because it is one of the fundamental issues that distinguish the MCC from other aid programs. It is at the core of the MCC’s ability to select high-quality, high-return economic growth programs in an objective manner that are accountable to both beneficiaries and U.S. taxpayers. In the case of Burkina Faso, the MCC deviated from its stated Economic Rate of Return (ERR) standard (10–15 percent)¹⁰ and approved a road project that carried only a 2 percent ERR¹¹. Several people interviewed claimed that the low ERR was due to a lack of available data and were quick to point out that a road provides benefits well beyond what can quantified. Perhaps that is true, but no publicly available justification for the deviation (a point allowed for in the guidelines) exists. The problem, however, is larger than simply publishing a justification. Each time the MCC deviates from its unique principles and mandate, it gets closer to being “just another aid program.” It is crucial that MCA-BF follow through on baseline and periodic data collection to measure results.

There is also an outstanding disagreement between the MCC and MCA-BF over what ERR criteria to use for the Rural Land Governance project. This issue will be revisited after a land survey is conducted in June 2009.

Balancing Scale with Capacity
$480.9 million is a huge amount of money, especially for one of the world’s poorest countries—$32 per person. Burkina’s compact is also complex, with four different areas of intervention and a long menu of activities. Planning to date has given the compact a strong foundation, but it poses challenges during compact implementation, especially considering the capacity needed to manage contractors and procurements. The MCA-BF team is working around the clock and they should build capacity at the administrative level so they can focus on key issues. They need to sustain this momentum for five years.

Balancing Expectations with Results
Beneficiaries have extremely high expectations of the compact and it is crucial for MCA-BF and GOBF to manage them. The compact got off to a good start, fostering awareness through media coverage during consultations and compact signing, but there has not been as much national coverage over the last year. Communication has been good with direct beneficiaries (at least in the Sourou Valley) due to elections for the Stakeholders Committee, but more needs to be done on a national level so people are aware of progress and do not get discouraged. A communications strategy was recently completed which should help.

Next Section: Next Steps

⁸For a complete copy of the compact, please visit http://www.mcc.gov/documents/compact-burkinafaso.pdf.

⁹The report can be found here.

¹⁰ The MCC typically uses a ‘hurdle rate’ for each country that is set at two times the real GDP for the most recent 3 years for which data is available. In this case, Burkina’s ‘hurdle rate’ would have been 12.8 percent. For more information, go to http://www.mcc.gov/mcc/bm.doc/guidance-economicandbeneficiaryanalysis.pdf.

¹¹Deviating from the standard is not an issue exclusive to Burkina Faso: the Namibia, El Salvador, Lesotho, and Mali (restructuring) compacts also included a component with a very low ERR, and the Sri Lanka, Madagascar, Morocco, and Moldova compacts (to name a few) each contained components of questionable economic quality or additionality.