Share

The Millennium Challenge Account (MCA) is a bilateral US development assistance program announced by President Bush in March 2002. This page provides an overview of the MCA including how the MCA is different from—but must coordinate with—other donors, and a summary of MCA funding levels.

See our list of related resources.

How the MCA Is Different

The MCA is intended to be different than other US aid programs in six key ways:

  1. Focus:  The objective of the MCA is to help support economic growth and poverty reduction in the poorest countries in the world. The program is not designed for humanitarian assistance, to help in post-conflict situations, to further security interests, or to reward political allies.
  2. Administration:  The MCA is administered by the Millennium Challenge Corporation (MCC) which is independent of all other agencies that administer US aid. The MCC is governed by a CEO and a board of directors consisting of the Secretaries of State and Treasury, the Administrator of USAID, the US Trade Representative, the CEO of the MCC, and four nongovernmental representatives.
  3. Country selection:  The MCA provides assistance to only a select group of countries that are implementing policies consistent with a strong commitment to economic growth and development—ruling justly, investing in their people, and encouraging economic freedom.  Learn more about MCA country selection.
  4. Country ownership:  Because the MCA selects countries with relatively good governance, it can offer them more flexibility over how funds are used. The MCC works a bit like a foundation, asking eligible countries to submit proposals based on national development priorities. When these proposals are approved, the country government enters into a “ compact” with the MCC that includes program details and clear benchmarks for success. Learn more about compacts on the country pages.
  5. Size:  The MCA was intended to provide very large resources to countries that qualify. The originally proposed $5 billion annual budget would represent a near doubling of the subset of the foreign assistance budget that focuses on development objectives (rather than security, post-conflict or humanitarian goals). The MCA has yet to reach its intended scale because of lower than expected Presidential requests and Congressional allocations. Learn more about the Congress and the MCA.  For more detail on the magnitude of MCA assistance, this chart shows the size of each compact relative to the country's GDP and population, as well as a ranking of the size of the MCA grant compared to other aid commitments/disbursements in compact countries. 
  6. Focus on results:  The MCC places great emphasis on accountability and measurable results and thus requires countries to outline clear benchmarks for success in their compacts. These benchmarks, combined with reliable baseline data on planned outcomes, allow for effective monitoring and evaluation. Learn more about monitoring and evaluation.

MCA Coordination with Other Donors

The MCA is just one tool in the US development assistance toolkit. The US administers aid through the US Agency for International Development (USAID) and a variety of other agencies. To be most effective, the MCA must coordinate its activities with these other US agencies, as well as with other bilateral and multilateral donors. Aid, in turn, is just one policy tool to support development in poor countries. According to CGD’s Commitment to Development Index (CDI), the United States ranks 17th among the 22 richest nations in terms of the development friendliness of its aid, trade, security, investment, technology, migration and environmental policies.

CGD Work on MCA Donor and Policy Coordination

MCA Funding Levels

The MCA was initially intended to reach, by FY2006, an annual allocation of $5 billion over and above existing US development assistance. Thus far, funding levels have fallen short of this goal. To learn more about MCA funding, visit the Congress and the MCA page of CGD’s MCA Monitor website.

Fiscal Year President's Request Congressional Appropriation
2004 $1.3 billion $1.0 billion
2005 $2.5 billion $1.5 billion
2006 $3.0 billion $1.75 billion
2007 $3.0 billion $1.75 billion
2008 $3.0 billion $1.54 billion
2009 $2.2 billion $875 million
2010 $1.4 billion $1.1 billion
2011 $1.3 billion $898 million 
2012 $1.1 billion $898 million 
2013 $898.2 million  

 

Related Resources

The Millennium Challenge Corporation: An Opportunity for the Next President by Lex Rieffel and James W. Fox, Brookings Institution (December 2008)

The MCC Homepage

Congressional Research Service Report for Congress: The Millennium Challenge Account by Curt Tarnoff (updated October 2008)

Congressional Research Service Report for Congress: The Millennium Challenge Account by Curt Tarnoff (August 2006)

Can Foreign Aid Create an Incentive for Good Governance? Evidence from the MCC by Doug Johnson and Tristan Zajonc (April 2006) 

Promoting Economic Prosperity Through the MCA by Brett D. Shaefer, Heritage Foundation (January 2006)

The Millennium Challenge Account: Spur to Democracy? by Elizabeth Spiro Clark, Foreign Service Journal (April 2005)

The Millennium Challenge Account: Moving Toward Smarter Aid by James W. Fox and Lex Rieffel, Brookings Institution (July 2005)

How to Prevent the MCA From Becoming Like Traditional Foreign Aid by Paolo Pasicolan, Heritage Foundation (July 2003)

Making the MCA Work for Africa (pdf) by Lael Brainard and Allison Driscoll, Brookings Institution (September 2003)

Governance Indicators, Aid Allocation and the Millennium Challenge Account by Daniel Kaufmann and Aart Kraay, World Bank (December 2002)

Bread for the World

InterAction