An Ambassador’s perspective

Posted on March 28, 2013 by Ambassador Adrienne S. O'Neal, United States Ambassador to Cape Verde

I accompanied Cape Verdean Prime Minister Neves on his trip this week to Washington, D.C., where he was invited to meet with President Obama at the White House as part of a delegation of four African leaders, including the presidents of Sierra Leone, Senegal and Malawi. It was an honor to be a part of this delegation of leaders, who set a strong example on good governance and are living proof that democracy does work on a continent that has seen its share of conflict.

Prime Minister Neves recently said, "When a country is as small as Cape Verde, you have to be the best student to get noticed. We have opened up doors for women, set up an e-governance system that is working and are reforming critical policies that will help our country attract investments and improve our systems. We have to be innovative in everything we do or we will be ignored." Cape Verde is a shining example of the "little engine that could." The country has seen rapid development success relative to its peers and performs well on most indicators of economic and democratic governance. Cape Verde is an example for other African countries.

MCC's first compact with Cape Verde was a great success. When I visit various islands, people are still praising the work done during compact I. The impact was huge. Farmers tell me that because of MCC they are now able to think about agribusiness and engage the private sector. With the second compact, the Cape Verdeans decided to tackle tough issues surrounding land as well as water and sanitation. As the prime minister put it, they are tackling things that are vital to Cape Verdean lives, using the compact to make transformative policy reforms in key sectors. For the water, sanitation and hygiene sector, these reforms will help improve the investment climate tremendously. Reforms in land tenure and security will likewise help promote investments, particularly in tourist areas.

Cape Verde is primed for private sector investment. American firms may shy away from investing in Africa because of distance or perceptions of a weak policy environment. Yet, investing in Cape Verde offers an historic opportunity to be part of the momentum of change that continues to build this country. Cape Verdeans are courageous in taking on tough policy reforms and improving the business environment. I invite all firms, especially American ones, to take a look and explore Cape Verde’s potential.

For me personally, it's exciting to be witnessing the transformation with my own eyes. Cape Verde is a model of good governance that continues to push itself toward further growth opportunities.

Recognizing a promising partnership

Posted on March 21, 2013 by Alex Russin, Resident Country Director, Jordan

How does the Millennium Challenge Corporation more than double the value of its investment while helping to ensure years of sustainability? Work closely with government and the private sector through innovative financing as showcased with the successful 2012 build-operate-transfer (BOT) financing deal for expanding the As-Samra Wastewater Treatment Plant in Jordan.

But don’t take my word on this. Last month, MCC and its partners were recognized with an award for innovative financing from the Water and Energy Exchange (WEX), a specialist international water conference for companies that provide products and services in water and energy.

The description of the award-winning project states in part that, “The As-Samra expansion would not have happened without the MCC grant…This BOT transaction is the first project financing of 2012 to have closed in Jordan. It is also the first major project financing in which MCC has ever taken part anywhere in the world. MCC clearly intends to implement this model in other countries.” 

The $223 million As-Samra expansion and refinancing is comprised of $93 million in grant funding from MCC, $20 million from the Government of Jordan and $110 million from private debt and equity sources. The As-Samra expansion will improve Jordan’s environmental conditions by increasing the country’s capacity to treat growing volumes of wastewater from the Amman and Zarqa governorates. The facility will be operated by a private company and will provide much needed, high-quality treated water for agricultural production equivalent to more than 10 percent of Jordan’s total water resources.

Working in conjunction with the private sector to finance environmentally-friendly and sustainable investments, such as the As-Samra expansion, is precisely the kind of economic growth impact MCC wants to deliver.

Shedding light on Tanzania’s breadbasket

Posted on March 7, 2013 by Joseph Hayuni, Millennium Challenge Account,Tanzania

Two colleagues and I took a trip last year to Tanzania’s Iringa, Mbeya and Rukwa regions to visit compact-funded project sites and meet with potential beneficiaries of the roads and power investments. We observed and assessed the progress of project implementation and the activities of groups that received training under Millennium Challenge Account-Tanzania’s Gender Integration Program (GIP). These experiences highlighted the relevance of the work undertaken by MCC in Tanzania and showed promising signs of impact.

Iringa, Mbeya and Rukwa are considered part of Tanzania’s breadbasket, but production constraints often prevent small businesses from reaching their full potential. We spoke with potential beneficiaries about their obstacles to economic growth, such as a lack of education and limited access to electricity and reliable roads. We talked to cattle owners who need electricity to refrigerate milk and share a long-term goal of building a cooling plant. We met farmers who hope for better roads to improve access to markets. Members of Umoja, a group of women specializing in poultry and tomato cultivation, told us that electricity would enable them to store their produce longer and to sell out-of-season crops. These needs reaffirmed to us the goals of our projects and the rationale behind the compact.

Throughout our trip, we visited saw firsthand the investment MCC is making in the energy and transportation sectors. We viewed new power extension and distribution lines in Iringa and Mbeya. We visited transmission and distribution sites in Kihorogota village, where we saw low-voltage lines soon to be energized and provide power to nearby villages. We also viewed road construction, including bridges and culverts, in Mbeya and Rukwa regions.

In the Kisinga trading area, we could see the installation of the area’s first electrical poles. In Mbeya, American company Symbion Power was busy building transmission and distribution lines and re-surveying communities to confirm locations of planned lines.

We were struck by community members’ positive reaction everywhere we went. People in Kisinga and Kihorogota spoke with excitement about the arrival of electricity, and they told us more than 80 Kisinga residents had already registered their interest to be connected.

During our trip, we met with members of Faraja Women Group—one of many skill-based groups (SBG)—who received training under the Gender Integration Program. SBGs are groups organized around specific business like handicrafts, food sales, animal husbandry, or sewing. They usually work together to tap into benefits like credit facilities or training.

The Gender Integration Program helps groups like these in the areas where the compact activities are implemented; the goal is to maximize their return from the compact through targeted training on the expected benefits of the new infrastructure, access to credit and business-related skills. We met with groups involved in diverse activities, including sunflower-oil extraction, timber processing, cow farming, pig farming, and vegetable cultivation.

Many of these groups have adopted innovative approaches to doing business. For example, Ushirika wa Wafugaji is a group of 52 farmers that is raising a herd of 150 cows; each member keeps his or her cows and works with other members to market their milk. The group has built an office where they meet to share experiences and support each other. They also have mandatory group savings and have already purchased a larger piece of land, where they plan to build a milk processing plant. Our team was excited about the increased potential that the new power and transport infrastructure would provide these dynamic groups.

A continuing priority in MCA-Tanzania’s work will be to fully engage and mobilize the energy behind the economic dynamism displayed during our journey. We want to ensure long-term participation in the expanded economic opportunities that we hope our projects will create so that impacts are distributed equitably throughout communities. It is important that we do not miss key steps in encouraging Tanzania’s producers, and these types of field visits and participatory discussions are crucial for identifying and mitigating gaps.

Back in our offices in Dar es Salaam, we are busy reviewing and compiling project data with the monitoring and evaluation team, as well as further refining the GIP training based on what we learned from the field. As we push forward with our efforts to measure and learn from the successes and challenges of the Tanzania Compact, we keep in mind the names and faces of the men and women we visited.

Our hope is that, in addition to introducing electricity and better connecting Tanzania’s breadbasket, our monitoring and evaluation efforts help us to learn and inform future investments for even stronger economic development.

The effects of the MCC Effect

Posted on March 1, 2013 by Andria Hayes-Birchler, Senior Development Policy Officer

In addition to the obvious role MCC’s scorecards play in selecting MCC’s partner countries, many people have suggested the scorecards provide an incentive for countries to reform policies, strengthen institutions and improve data quality in order to become more competitive for MCC assistance. This is referred to as the “MCC Effect.”

But does the MCC Effect really exist? And if so, how influential is it? Are there circumstances where it may be more or less influential?

Brad Parks and Zach Rice at the College of William and Mary explore these questions in a recently released paper entitled “Measuring the Policy Influence of the Millennium Challenge Corporation: A Survey Based Approach.” Parks and Rice present results of their survey of 640 MCC stakeholders, including foreign government officials, U.S. Government officials, contractors, civil society, and private sector members. For those of you disinclined to read the full 128-page report (although you should!), the authors also published a brief synopsis of their findings.

The good news for MCC? Parks and Rice find evidence to support the idea that the prospect of MCC eligibility has served as an effective incentive for policy reform. In fact, 92 percent of respondents stated that the MCC scorecards had an impact on reform efforts (ranging from “marginal impact to few important reform efforts” to “instrumental to many reform efforts”), and respondents identified 67 governments that undertook reforms to improve performance of their country on at least one of the MCC eligibility indicators.

Here’s what else the report found: The MCC Effect seems to be particularly strong in Threshold Program countries, where 68 percent of respondents from these countries reported that the MCC eligibility criteria were either “central to a few important reform efforts” or “instrumental to many important reform efforts.” Among respondents from compact countries, 64 percent reported that the MCC eligibility criteria were either “central to a few important reform efforts” or “instrumental to many important reform efforts.”

And among respondents from candidate countries—which have never received a single dollar in MCC assistance—41 percent reported that the MCC eligibility criteria were either “central to a few important reform efforts” or “instrumental to many important reform efforts.”

According to the paper, development stakeholders recognize the MCC scorecard as an influential policy assessment. When asked to identify the three most influential external assessments of government performance from a list of 18 options, respondents repeatedly identified the Millennium Challenge Account eligibility criteria and the United Nations Millennium Development Goals.

MCC is delighted to see such strong indications of the MCC Effect in the survey data. As the Center for Global Development points out, these findings are based on the perceptions of MCC stakeholders and additional work is needed to ground-truth these perceptions. MCC recently released an issue brief on the MCC Effect , which outlines how MCC defines the MCC effect, highlights additional findings from the Parks and Rice survey and lists illustrative examples of the MCC Effect in action.

We welcome additional examples and empirical research on the topic from MCC stakeholders, independent evaluators and academics; please e-mail me to share or request additional information.