Land rights bring economic development in Mali

Posted on February 7, 2012 by Jon Anderson , Resident Country Director, Mali

Secure land tenure is a key to poverty reduction. It can improve access to credit, increase incentives for better land management and investment, and allow people the ability to capitalize on their assets.
 

In some African countries, land “grabs” by large companies are a growing concern for small farmers, many of whom lack formal title to the land their families have used for generations.  In the struggle for land resources with big players, poor farmers are often on the losing end.

But in Mali, MCC is helping the government strengthen the land rights of small farmers.
Prior to the MCC-funded Compact in Mali, formal land titling was almost unheard of in rural areas. The Mali Compact’s Alatona Irrigation Project is changing this by employing an integrated approach to agricultural development to bring almost 13,000 acres of intensively irrigated agricultural land into production and provide secure land rights for almost one thousand farming families. 
 

The Project is allocating most of the twelve-acre farms it develops to the people who used or lived on it prior to the Project, with the rest going to small farmers from elsewhere in Mali.  In addition, the Project is providing support to ensure that smallholder farmers have what they need to succeed, from infrastructure like housing, markets, latrines, schools, health centers, and wells for potable water, to services like agricultural training and access to credit. An improved road will also provide local families better access to markets in which products can be bought and sold.
 

The land component of the Project strives to incorporate women into the formal economy partly by providing them with land for market gardens and giving them the chance to be listed as owners on land titles to twelve-acre farms. As a result of this and other efforts to include women in Project activities, women are emerging as a force in the local economy, striving for better lives for their daughters and sons.  Some of the highest yields to date have been produced by women farmers.
The Mali Compact serves to enhance the property rights of local families and communities, thus helping the poor and vulnerable to participate in sustainable economic growth. MCC is proud to support such efforts.

From Paris to Practice: MCC’s Strategy to Stretch Aid Dollars

Posted on December 2, 2011 by Franck Wiebe, Chief Economist, MCC

This blog entry was first posted on Devex.com.

Six years after the signing of the Paris Declaration on Aid Effectiveness, the question of how to enhance aid impact remains highly relevant as most of the largest donors reconvene in Busan.

The Millennium Challenge Corp. is a relative newcomer to the foreign assistance community. Described in principle at Monterrey in 2002 and established by U.S. legislation in 2004, MCC was designed to embody many of the Paris Declaration principles. MCC’s experience of putting these principles into practice suggests three ideas that deserve continued attention: better focus of aid dollars within countries, better assessment of the rationale for aid programs, and stronger commitment to evaluating the impact of aid programs.

Better focus of aid programs within countries

Donors have improved coordination amongst themselves in many countries, reducing overlap and competition, but the pattern of assistance remains scattered and diffused. In most countries, the array of donor activities may be consistent with broad national development plans, but the aggregation of efforts by development agencies only rarely reflects anything close to a strategy.

This approach misses the opportunity to focus on the most important development challenges that need to be tackled first while unintentionally imposing a greater burden on partner country governance structures. The right strategy for any country cannot be to invest in public sector capacity building in every office; rather, a better strategy is for country governments to work with development agencies on a more limited set of well-defined priorities.

Identifying the appropriate priorities remains a challenge, given that country development plans are broad and far-reaching. MCC has found the data-driven “growth diagnostics” framework to be extremely helpful for sifting through the national development plans to laser in on the most critical challenges facing a country. MCC collaborates with country counterparts to ensure that the results are understood and accepted by both parties, and has found that some countries embrace these analyses, using them to prioritize their own strategies well beyond the scope of the MCC compact and to frame their engagement with other donors.

By now, all agree that country partners need to own and drive this prioritization process. Indeed, aid dollars can be successful only when supporting the reform of domestic institutions and policies undertaken by choice by country partners. Consequently, aid programs need to be connected to explicit, public commitments made and owned by our partner governments.

These pieces come together to build a strategy for more effective and more focused aid: Partner countries identify a small set of development priorities (addressing the binding constraint to economic growth usually needs to be one – in most contexts, serious poverty reduction requires growth); partner countries identify a series of commitments to policy and institutional changes to address the existing problem; and only then can aid programs be aligned in a meaningful way in support of these reforms.

Assess cost-effectiveness before funding

“Stretching aid dollars” requires a new level of discipline from development agencies and country partners. The practice of benefit-cost analysis fell out of favor – it takes time, data, and technical competence, and unfortunately is vulnerable to political interference (both local counterparts and aid agencies often have agendas of their own) – but needs to be reinstated as an essential tool for assessing trade-offs and opportunity costs. We need to start with the recognition that any good idea has a price at which it is no longer a good idea. Partners should not enter into programs before conducting an objective comparison of the value of benefits to the total cost of delivering them.

MCC has found that such analyses are possible for the vast majority of programs proposed to us by our partner countries. Not surprisingly, we find that some proposed investments cannot be justified given the estimated costs and projected benefits. Such information usually leads to further work on the program design, but sometimes leads to the search for alternative approaches to the same problem or to other priorities that can be tackled in a cost-effective manner. In this way, we have found at MCC that the technical discipline imposed by benefit-cost analysis improves the quality of the portfolio, where quality is explicitly described as delivering measurable results. The principal idea is inescapable: If we wish to enhance aid impact, we need to be willing to scrutinize every significant effort, asking the same fundamental question, is this proposed activity worth the money and effort being invested?

Some may object that such an approach stifles innovation – it need not. Where ideas have never been tried before, development partners can enter into small-scale pilots and rigorous experiments designed to generate information that can be used to assess the potential for scale-up. MCC has built such experimentation into several of its country programs, and the U.S. Agency for International Development’s new Development Innovation Ventures is another promising mechanism. But the current clamor for increased innovation should not serve as an excuse for not conducting proper due diligence, using logic and evidence, to assess whether the new idea has any prior basis for expecting cost-effective results.

Invest in more, and more rigorous, impact evaluations

Just as more analysis is needed before development activities are funded, more analysis is required after they are completed to determine what was accomplished and what was not. MCC has found that establishing high expectations and budgeting appropriately – often in the range of 2-4 percent of the total program budget – creates an environment within which independent evaluations of impact can be conducted as part of the core implementation plan. Collecting baseline data that covers expected beneficiaries and the appropriate control population is possible when it is required.

The cost and effort is substantial, but so is the value. Credible and rigorous impact evaluations – including but not limited to randomized control trials – serve three important functions:

First, they impose a discipline on the program development side. The benefit-cost analysis may describe the anticipated program impacts, but when evaluation is seen as part of the design process, program planners are given the opportunity to assess whether the planned intervention can plausibly be expected to deliver as promised, and if not, what modifications are needed to improve the chances for success.

Second, they are an essential element of a learning agenda that seeks to inform not only future donor programs, but also – and more importantly – future public expenditures and practices by our developing country partners. Moreover, the increasing availability of results from impact evaluations pushes donor agencies and country partners to establish mechanisms that reinforce the learning process.

Third, such evaluations are a necessary part of the transparent accountability process through which all relevant parties assess whether they used scarce resources appropriately. MCC has embraced this responsibility to its funders – the U.S. Congress and American taxpayers – and expects its country partners to commit to the same level of transparency locally. In this way, the evaluation of aid projects can help strengthen the processes through which government actors can inform their citizens about accomplishments and citizens can hold their government officials accountable for prudential use of public resources.

Already a backlash is occurring in some circles, with the term “randomista” sometimes used as a term of criticism. Some critics have written that this “fad” has gone too far. This negative characterization is both untrue and unfortunate. Although MCC funds rigorous independent impact evaluations for close to half of the projects in our portfolio, many other agencies still have few or none. Clearly, there is still room in the development community for greater investments in rigorous evaluations. MCC has found, too, that such “impact evaluation thinking” can inform our less rigorous performance evaluations; we hire credible independent evaluators and ask them to consider the counterfactual and recognize that not all change can be attributed to our programs.

Conclusion

The Paris Declaration created a useful starting framework that describes the processes related to program effectiveness that donors should adopt. But even as we adopt these processes, we need to ensure that we are delivering effective programs – the two are not necessarily synonymous. Busan provides us an opportunity to develop an improved results-focused agenda explicitly aimed at shifting resources from ineffective programs toward the problems that matter most using the most cost-effective delivery mechanisms. Such an agenda goes well beyond “managing for results” rhetoric and establishes a new standard of actually delivering results.

The tools described above are known and available to donors and their country counterparts, and their use could dramatically improve our performance. Developing countries should demand that donors increasingly apply these tools; we should demand no less of ourselves.

Heavy equipment donation means hands-on training for Mongolian students

Posted on November 22, 2011 by Robert Reid, Mongolia Resident Country Director

Earlier this month, seven technical and vocational schools in Mongolia received donations of more than $1.7 million in heavy equipment from the Department of Defense. In return, the students will be trained on usage, maintenance and repair to better prepare them to find jobs. This was the first time Mongolia has received equipment through the program.

MCC’s five-year compact with Mongolia includes $47 million to improve the country’s vocational education system. To leverage these investments, MCA-Mongolia signed a memorandum of understanding in March with the U.S. Department of Defense Excess Property Program, which allows for the donation of non-lethal, excess property to countries that contribute to the U.S. Government’s efforts to promote democratic development and regional stability.

The schools, which often cannot afford to purchase expensive machinery, received 18 pieces of donated machinery frequently used in the mining, road, construction, and agriculture industries.

Donated items include cranes, graders, tractors and scoop loaders. Hands-on training will better prepare students to find jobs after school.

MCC is helping improve Mongolia’s technical and vocational education system through policy reforms, professional development for instructors, the establishment of a labor market information system, and the provision of essential equipment. An estimated 170,000 people are expected to benefit from the project over the next 20 years.

Deepening MCC’s Commitment to Gender Equality

Posted on November 18, 2011 by Cassandra Butts, MCC Senior Advisor

When the Millennium Challenge Corporation released its hallmark policy scorecards last week, the occasion marked several firsts for us. In addition to transitioning to a new scorecard system, gender equality is elevated now as a key indicator in determining country eligibility and selection for MCC investments.

MCC remains at the forefront of prioritizing gender equality as key to effective development. Our success to date has been in first recognizing gender inequality as a constraint to economic growth and then integrating and operationalizing gender analyses in our work to maximize the effectiveness and sustainability of our investments to reduce poverty through growth. The new “Gender in the Economy” indicator takes this work to another level.

The “Gender in the Economy” indicator, one of eight indicators on the MCC scorecard measuring economic freedom, assesses a government’s commitment to promoting gender equality by providing women and men with the same legal ability to interact with the private and public sectors. Specifically, the indicator measures the legal capacity of married and unmarried women to execute 10 economic activities: get a job, register a business, sign a contract, open a bank account, choose where to live, get passports, travel domestically and abroad, pass citizenship on to their children, and become heads of households. The International Finance Corporation’s Women, Business and the Law report is the source for the information included in this indicator.

MCC’s own work in advancing gender equality provides a striking example of the progress that can be made by linking a similar set of rights to our compact process. In 2006, MCC worked with the Government of Lesotho to ensure that the minority legal status of women, which had created similar economic inequalities, was removed in law before compact signing. As a result of the government’s embrace of this policy reform and other efforts, Lesotho now ranks in the world’s top ten in closing its economic gender gap according to the World Economic Forum’s most recent Global Gender Gap Index. 

The “Gender in the Economy” indicator builds on MCC’s groundbreaking Gender Policy by recognizing the relationship among growth, poverty reduction and gender equality. Quite simply, the indicator identifies legally sanctioned gender inequality as negatively impacting a country’s economic growth because it prevents a large portion of the population from fully participating in the economy. What is exciting about the indicator is its potential to generate greater awareness of this critical issue while creating a powerful incentive for improved policy performance in partner countries and other developing countries seeking MCC investment. 

As the U.S. Government continues to further its commitment to gender equality and to improving the economic rights of women and men around the world, we at MCC are proud to deepen our efforts through this emphasis on gender equality in our country selection process. And with this focus, we look forward to realizing even greater development achievements. 

A Tribute to Process: The Port of Cotonou

Posted on August 22, 2011 by Valeria R. McFarren , Implementation Communications Officer

The Port of Cotonou is often described as the lungs of Benin: It breathes in revenue that gives life to Benin’s economy. In fact, 50 percent of Benin’s state income and 85 percent of all customs income originates there.

The port is also a gateway to landlocked West African countries. Ninety percent of all imports arrive through the port, with approximately 54 percent of them destined for hinterland countries such as Burkina Faso, Mali, and Niger. However, high shipping costs, low efficiency, and poor logistical facilities have limited the Port of Cotonou from becoming an even more important trade route, affecting its competitiveness as a springboard to neighboring countries. In 2006, the Millennium Challenge Corporation (MCC) and the Government of Benin, in recognition that an efficient port is a driver of GDP growth, embarked on an investment program of $188 million in port improvements. This $188 million project is part of Benin’s $307 million MCC compact.

I was in Benin two weeks ago visiting the port, and was impressed by the size and magnitude of this MCC/MCA-Benin project. To design and implement major infrastructure improvements and tackle institutional reform in Benin’s only port – within MCC’s five-year timeline – is a significant undertaking.

As the project concludes, port improvements will surely be visible, but all the sweat, tears, and hard work behind it may be forgotten.  This is my tribute to process: a behind-the-scenes look at the Port of Cotonou. 

• According to independent reports from the International Finance Corporation, around 450 people were employed for port reconstruction over the last two years.• 360,000 tons of rocks were hauled in to extend the jetty, a structure used to prevent the build-up of sediment in the port, by 300 meters.  This barrier significantly reduces the amount of sand in the port entrance channel area, reducing maintenance costs for dredging of the port. Construction was completed in December 2010, six months ahead of schedule. 
• The railway from Cotonou to Parakou, which had been non-functional for six years, was put back to work bringing rocks for construction to the port. This required approximately 30 trips. 
• Most of the rocks were supplied by truck. Approximately 100 to 120 trucks per day were loaded with rocks, each weighing one to three tons, and made the 150-kilometer trip from the quarry to the port.
• Three teams of trained divers were brought in to install scour protection at the base of the new quay wall. This protects the sea floor from forming destabilizing holes and ensures that more boats can continue using the port.
• One and half months of construction took place underwater.
• Rigorous safety protocols and environmental safeguards were in place—several months of staff time were dedicated to providing educational briefings about construction safety hazards and HIV/AIDS awareness. 
• Approximately 150,000 tons of concrete were used to build the three-foot-thick quay walls, parking areas, and over five kilometers of roads, including a three-kilometer road around the port.
• In coordination with the MCC/MCA-Benin project, the Government of Benin successfully negotiated a concession agreement with the French company Bolloré, who will manage a new container terminal at the port’s new quay for 25 years after the compact ends. The agreement includes $200 million in concession fees during the first eight years of operation, and investment in operating equipment and civil works of $256 million over the life of the concession.
• Dredging the port is almost complete. This project will increase the depth of the port basin from 12 meters to 15 meters, allowing up to 250-meter-long container vessels access to the new quay berth. Bigger boats mean more containers per boat, increasing volume of imports and exports.

MCC always operates with the bottom line in mind: How does this port contribute to economic growth? The answer is that a more efficient, higher capacity, and safer port reduces ships’ waiting time at anchor, waiting time at berth, and customs clearance times, which reduces shipping costs. For imports, this reduces the cost of goods to Benin and its neighbors. For exports, the reduction in shipping costs and time makes Benin – and its neighbors using the port -- more competitive and spurs their growth.

According to Henning Stehli, the port advisor hired by MCA-Benin, approximately 50,000 people earn a living off the port, both directly and indirectly. A few examples include fishermen, truckers, longshoremen, those buying and selling goods, and those involved in insurance and security. For instance, the dockers tend to be responsible not only for their immediate families but also those who live with them: children, parents, siblings, and extended families. Each docker’s income maintains a household of an average of 10 people. Even being conservative with figures, Henning sees at least half a million Beninese depending on the port for survival on a daily basis.
Henning sums it up nicely: “The MCC gift came to the right place... It is having and will have a great impact. However, excellent management is needed – the Government of Benin must gift its people back by making sure they take care and make good use of this investment.”