Innovation in water

Posted on May 9, 2012 by Jonathan Brooks, Managing Director for Europe, Asia, Pacific, and Latin America

The Honduras Compact’s Agricultural Public Goods Grant Facility sought to increase the productivity and business skills of farmers who operate small- and medium-size farms, as well as their employees.

A community irrigation system created with the help of MCC’s compact with Honduras recently received international recognition—the latest example of how MCC’s investments provide a model for sustainable poverty growth in our partner countries.

The Cosechas de Agua rainwater harvesting project, developed through the compact’s Agricultural Public Goods Grant Facility and managed by CHF International, received the Latin American prize for innovative water management projects in the face of climate change at the World Water Forum in Marseille, France, on March 15.

Cosechas de Agua harvests rainwater for use in irrigation in the arid southern municipalities of Nacaome, Langue, Goascorán, and Aramecina. It captures rainwater and then uses a system of hydraulic works, dams and pipelines to store and distribute the water to fields. The project aims to introduce complementary irrigation systems for 188 agricultural producers over 98 hectares of land, intended to increase their income.

Access to irrigation and other support through the compact was intended to allow farmers to diversify their crops, increase their yields and expand their access to new customers nationally, regionally and internationally.

The $50,000 prize—sponsored by the Mexican national water authority Conagua, the FEMSA Foundation, the Inter-American Development Bank, and the Water Center for Latin America and the Caribbean—will be used to develop the project over the next three years. Cosechas de Agua officials will also be invited to present progress on the system's economic, social and environmental impacts at the next World Water Forum in March 2015.

The Agricultural Public Goods Grant Facility was part of the $68 million Rural Development Project, which sought to increase the productivity and business skills of farmers who operate small- and medium-size farms, as well as their employees. The project is expected to help more than 357,000 people over the next 20 years and raise their household incomes by $53 million.

Boosting tourism, increasing incomes in rural Namibia

Posted on February 28, 2012 by Tom Campbell, Senior Director

I served as a panelist today at an event MCC co-hosted with the World Wildlife Fund that focused on strategies, implementation and lessons learned from promoting community-driven approaches to natural resource management and eco-tourism in Namibia. We discussed the ways the Government of Namibia is involving the community in a wide-ranging approach to attract tourists while safeguarding the environment.

MCC hosted this event because of its compact with Namibia: a five-year, $305 million investment that is creating business opportunities and jobs in rural Namibia. Our focus today was the compact’s Tourism Project, which seeks to grow the tourism industry in northern communal areas and increase the income of households living in these communal areas.

To do this, MCC is working closely with Namibia’s Ministry of Environment and Tourism (MET), conservancies and the private sector to improve the management and infrastructure of Etosha National Park, enhance the marketing of Namibian tourism and develop conservancies’ capacity to sustainably manage their natural resources, attract investments in ecotourism and develop tourism skills.

Three examples illustrate our efforts:

Etosha Management and Infrastructure: MCC and MCA-Namibia are working with the Ministry of Environment and Tourism on reforms that will offer tourists a better product, encouraging longer stays and boosting revenues to the ministry and conservancies. MCC is also working with the Government of Namibia to open the western half of Etosha to tourism, which should also help attract additional tourists and revenue.

Conservancy Ecotourism Development: MCC and MCA-Namibia are helping conservancies increase their roles and benefits from tourism, generally through joint ventures with the private sector. MCA-Namibia has contracted with the World Wildlife Fund to provide technical assistance and training to 31 conservancies with high tourism potential. MCC funds are also being used for grants to leverage private sector investment in new tourism businesses. Through these partnerships, conservancies and the private sector develop agreements that lead to increased revenue and employment for the conservancies.

Two community joint venture lodges have already received partial grants, and we hope the compact will lead to as many as seven new lodges.

Marketing Namibian Tourism: To promote Namibia as an attractive tourism destination and to increase the number of tourists to the country, the Namibia Tourism Board has launched a redesigned website. 

The Namibian delegation that attended today’s event are in Washington as part of the marketing campaign focused on increasing the number of American businesses that market vacations to Namibia, as well as increasing the number of tourists from the United States and Canada. This effort is already showing results: More than 120 travel agencies now offer trips to Namibia, up from 106 agencies at the beginning of the compact.

If you visit Namibia, you can be assured that your money is contributing to community-driven approaches that help increase incomes for some of the country’s poorest people.

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.

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.”