As the first country to sign a compact with the Millennium Challenge Corporation, Madagascar has been the global guinea pig for the MCA approach. Its early experience offers important lessons for countries following in its path - both about the real challenges of program administration, and the real potential of the MCA as a source of transformation and innovation.
This analysis from CGD's MCA Monitor describes two new indicators of governance and policy performance that determine a country’s eligibility for Millennium Challenge Account (MCA) finance: Natural Resources Management Index and Land Rights & Access. The authors analyze the process that led to their selection and assess the suitability of the indicators for the MCC's use.
The MCC Board of Directors faces many important decisions in the upcoming FY07 selection round. Perhaps the most controversial will be decisions about whether to select Indonesia and Jordan to be eligible this year. The MCA Monitor predicts that it is likely that the Board will select both countries due to a desire to include more predominantly Muslim countries and reward political allies. In this note the authors explain why they do not believe either would be a good choice.
The Millennium Challenge Account (MCA) was intended to complement-not replace-existing aid structures. But there are concerns that increases in MCA funding are diverting funding away from USAID. In this study, the authors find that core development aid targeted specifically at poverty reduction and economic growth has remained stagnant for several years, but that this downturn may be part of a more general trend. They recommend that the Director of Foreign Assistance establish a centralized and comprehensive database to help spur more effective decision making and oversight by the U.S. government and key aid constituencies.
When the MCA was first introduced, many assumed it would deliver some of its funding through general budget support. But so far it has continued funding via traditional project finance. In this paper, Herrling and Radelet review trends in development assistance toward general budget support and propose an option for the MCC to phase in the disbursement of compact funds through increasing levels of budget support to select countries that prove their capacity to manage and monitor them.
Sarah Lucas May 2006 Download the full text version of the field report (PDF, 89KB)
Ghana is expected to sign the largest MCA compact to date--upwards of $500 million over 5 years--by the end of July.
One of the Millennium Challenge Corporation’s (MCC) key innovations is its transparency criteria for country selection. But is the MCC as transparent in its decision-making process, particularly in decisions that are exceptions to rules? This paper argues that the MCC should deepen its transparency agenda, particularly with the consistency and clarity of the country selection decisions and the compact and threshold program development process.