A Snapshot of MCA El Salvador

The $461 million Compact signed by the Government of El Salvador (GOES) has three main components:

  1. Human Development
  2. Productive Development
  3. Connectivity

After completion of a comprehensive consultative process undertaken by the National Committee for Development (CND is the Spanish acronym), the Salvadoran government submitted a proposal targeted at the Northern Zone – an area of the country with the highest poverty levels and which has been traditionally marginalized. The decision to focus on the Northern Zone exclusively was also intended to complement other donor projects – the World Bank in the southeastern portion of the country, IFAD in the central regions, and USAID and IDB throughout the country.

As of March 2008 the status of activities in each of the three components was:

Human Development Project ($95.07 million)

    Education and Training

    recipients carmen regina and sabinela alfaro
  • Formal and non-formal technical vocational education – the first round of scholarships were issued in January to students from several municipalities in the Northern Zone to attend the National Agricultural School (ENA is the Spanish acronym) which is located just outside of San Salvador.

Community Development

  • Access to potable water and sanitation systems: this is targeted at the 62 municipalities of the Northern Zone with the highest levels of poverty to increase access to basic services. FISDL, the ministry that will implement this activity, is in the process of evaluating the project proposals received through an open and transparent process. These proposals will then feed into the terms of reference outlining the phases of work from due diligence to design to work planning and construction.
  • Community infrastructure and rural electrification: will target beneficiaries in all 94 municipalities of the Northern Zone to extend electrification directly to households as well as improve access for health and community centers. The Government of El Salvador has financed the Ministries of FOSEP/MINEC to complete designs for 625 km of transmission lines. The next steps are for Fomilenio to contract a financial advisor (a precondition required for investment). Solar systems and extensions of the current networks are also part of this component, for which terms of reference development is in process.

Productive Development Project ($87.47 million)

Production and Business Services

  • Technical assistance to farmers and business development services: this activity will include a cost-sharing component as criterion for participation and is being designed by the implementing agency Banco Multisectoral de Inversiones (BMI).

Investment Support

  • Capital investment to selected applicants for commercial activities: a pilot plan was launched in March to identify and indicate areas in which this investment can best be put to use. The plan will fund no more than 10 proposals related to at least one of the following productive chains in the Northern Zone: fruits, forestry products, horticultural goods, livestock, artisanal products and tourism. This pilot plan has the potential to foment innovative projects as stakeholders are responsible for identification of needs as well as project design. These projects in turn could provide informative evidence on whether or how lending in the Northern Zone needs to change or adapt to meet the needs of the poor in the region.

Financial Services

  • Credit guarantees and technical assistance for financial institutions: to stimulate lending to rural and agricultural enterprises. Crop insurance for producers in the Northern Zone is another feature of this component. This component is still in the design phase to ensure that implementation and work plans are in accordance with MCC guidelines on meeting environmental, social, and monitoring and evaluation requirements.

Connectivity ($253.26 million)

Connecting El Salvador

Northern Transnational Highway

  • Design, rehabilitation and construction 290 km of roads across the northern corridor from the border with Guatemala to the border with Honduras. It is estimated that approximately 50 km of this two lane transportation corridor will be comprised of new road and bridge construction. Fomilenio is in the process of contracting archaeologists to investigate the impacts of the proposed location of the highway.

Connecting Road Network

  • This activity consists of 240 km of connecting road networks, intended to increase access to social services and markets as well as connect the Northern Zone to the other portions of the national transportation network.

Accountability (formerly Monitoring and Evaluation) ($24.26 million)


  • The monitoring and evaluation plan was finalized in December of 2007; progress towards the development of the required Management Information System (MIS) and development or completion of routine Data Quality Reviews (DQRs) has not been published on the Fomilenio website.

Program Administration and Oversight ($20.59 million)


  • This program component consists of the costs associated with MCC staff in-country and is estimated to be approximately $4 million per year for the 5-year duration of the Compact.

Next Section: Implementation Challenges and Potential Opportunities