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.

MCC’s Stage II Threshold Program in Albania Successfully Concludes

Posted on August 18, 2011 by Bruce Kay, Director of Threshold Programs for Europe, Asia, the Pacific, and Latin America

MCC completed its first $13.85 million Threshold Program in Albania in 2008. As a result of the success of the program, MCC approved a $15.7 million Stage II Threshold Program, building upon the accomplishments of the first.

The Stage II Threshold Program in Albania ended last month. The results of the Threshold Program in Albania should be a source of pride for all who worked to make it a success.

Already we can see a number of remarkable achievements that have modernized government operations, cut down on red tape for businesses and entrepreneurs, and strengthened governance and the rule of law in Albania.

Our partners at USAID, the agency administering the program on MCC’s behalf, recently released a series of web videos  that highlight some of the successes of the Stage I and Stage II Threshold Programs. The videos, in Albanian with English subtitles, focus on the establishment of an e-governance system, improvements to tax administration, the new business licensing and registration centers, and engagement with civil society.

These videos reflect Albania’s tremendous progress. Thanks to MCC support under the Threshold Program, Albania now has an integrated e-governance system serving to make public administration more efficient and less susceptible to corruption.

The system’s main features include:

1. A United Nations award-winning e-procurement system, which has expanded competition and reduced costs, and is now used for all government purchases over $4,000 in value;
2. A tax e-filing and e-payment system now used by two-thirds of all taxpayers, which has increased the public revenue while slashing corruption opportunities;
3. A one-stop-shop business registration system, which has decreased economic informality and, according to the World Bank/IFC’s Doing Business magazine (2009, 2010), improved Albania’s business climate by more than 70 places in the global ranking;
4. A single-window licensing system now used by most Albanian professionals and businesses to obtain their licenses; and
5. functioning joint investigative units that are now investigating and prosecuting dozens of organized crime and corruption cases, including one case involving a former deputy Prime Minister. 

The Stage II Threshold Program also developed a National Planning Registry, used now to manage and track building permit applications in five cities. It bolstered civic watchdog groups and helped them hold the Government of Albania accountable for maintaining the reforms ushered in by the Threshold Program.

It also created a myriad of now-functioning institutions that protect the interests of businesses and citizens alike, including a National Registration Center and branch offices in most cities, a National Licensing Center with branch offices, a Public Procurement Advocate, and a Taxpayers Advocate. 

When Albania launched its initial Threshold Program in 2006, it was classified by the World Bank as a low-income country. In a sign of progress, the country jumped to the upper middle-income category in 2010.

Albania’s income status now precludes the country from being a candidate for MCC assistance, but MCC recognizes the tremendous progress made through the two Threshold Programs implemented in Albania.

As noted above, USAID administered the program on MCC’s behalf, with further assistance from the U.S. Department of Justice. USAID/Albania and the Government of Albania were critical partners, and the Department of Justice OPDAT program deserves kudos for its work bolstering law enforcement mechanisms, now used with great effect.

For more information on Albania’s initial and Stage II Threshold Programs, visit MCC’s Albania page.

World Customs Organization Praises Threshold Program

Posted on June 9, 2011 by Bruce Kay , MCC Director for Threshold Programs

The Millennium Challenge Corporation’s (MCC) second (Stage II) threshold program in Paraguay received international recognition last month at the Brussels meeting of the World Customs Organization (WCO). Specifically, Paraguay’s web-based system for imports (referred to by its Spanish acronym, VUI), which was implemented at the Paraguayan Customs Office with support from MCC’s Threshold Program, was recognized and praised in front of 200 country delegates. 
 

This web-based system was designed, developed and implemented in approximately six months, record time for a process that has taken some countries years to develop, and with less success. This state-of-the–art, innovative technology will increase coordination across government agencies and departments; while five institutions currently participate, the goal is to link all nineteen institutions involved in the importation process to the VUI system, thus providing a high degree of efficiency to the system. The short design and implementation phase, and the proactive approach with participating institutions, reflects the high degree of political commitment on the part of the Government of Paraguay, particularly the Customs Director, to this endeavor. 

At the meeting in Brussels, representatives from Paraguay shared their practical experiences and lessons learned in securing and sustaining the political and administrative will that is required to implement the VUI. The VUI was developed as part of the Threshold Program’s customs component, which aims to strengthen the capacity of the customs office in order to reduce tax evasion and corruption.  Since the government launched the VUI in July 2010, the cost and time required to process import permits from government institutions has been reduced, improving competiveness and transparency in customs operations. 

Erich Kieck, the Director of the Capacity Building Directorate at the WCO said, “Paraguay stood out at the conference as an administration that took advantage of the assistance of the MCC. They followed through and implemented the international trade single window, despite many challenges.  By overcoming these challenges, gaining political support and effectively using their resources, this administration demonstrated how important perseverance can be in reaching a goal. This achievement will result in gains for the Paraguayan government and economy and demonstrates how to move from ideas to actions.”
 

Paraguay’s Stage II Threshold Program began in 2009 and will complete all activities in April 2012. The United States Agency for International Development (USAID) is responsible for administering Paraguay’s Threshold Program on MCC’s behalf.  Watch this video to see how MCC and the Government of Paraguay are fighting corruption.

On the ground in Liberia

Posted on July 14, 2010 by Cassandra Butts, MCC Senior Advisor

MCC Senior Advisor Cassandra Butts joins Liberian President Ellen Johnson Sirleaf, Rep. Vern Buchanan (R-FL), Rep. Mike Conaway (R-TX), Rep. Allyson Schwartz (D-PA), Rep. David Dreier (R-CA), and Rep. David Price (D-NC), and Liberian school girls currently receiving education scholarships, at the signing ceremony of MCC’s $15 Threshold Program with Liberia.

Last week I was fortunate to represent MCC at a signing ceremony kicking off MCC’s $15 million Threshold Program with the Government of Liberia.  Liberia’s President Ellen Johnson Sirleaf and a bipartisan U.S. congressional delegation led by Rep. David Price and Rep. David Dreier, representing the U.S. House Democracy Partnership, also attended the signing ceremony, which took place in Monrovia.  We were also pleased to have Rep. Donald Payne participate in the ceremony as a long-time supporter of African development and MCC.

The visit marked my first time back to Liberia since a 1999 trip as a member of a congressional staff delegation reviewing the status of refugees in what was then a conflict-riven region.  What I saw on my recent trip provided considerable hope that Liberia, under the leadership of President Johnson Sirleaf, is well positioned to translate MCC’s Threshold Program investment in land access and policy, girls’ primary education, and trade policy into successfully- implemented programs that will meaningfully contribute to Liberia’s future development.

MCC Senior Advisor Cassandra Butts visits with Liberian school girls in the King Gray community about educational opportunities for both school age youth and older youth who missed traditional schooling because of the country’s conflict.

While all three components of Liberia’s Threshold Program were identified by Liberians as a part of their national development strategy and are designed to improve Liberia’s performance in the policy areas measured by MCC eligibility criteria, the girls’ primary education program has a particular resonance for me as MCC’s point person for the integration of gender equality in the programs we fund.  This is a priority that I share with President Johnson Sirleaf as we, and many others, recognize, without question, that educating girls is crucial to a country’s long-term economic development. 

There is no question that the road ahead will be challenging for Liberia, but the country continues to make significant strides in demonstrating a commitment to policy reform and responsible leadership under President Johnson Sirleaf that made our Threshold Program partnership possible in the first place.  We look forward to working with the Government of Liberia and USAID, the U.S. Government agency that will administer the Threshold Program, to ensure the delivery of results that will improve the policy environment in the targeted sectors and contribute to the long-term growth and prosperity of the people of Liberia.

Guyana Advancing its Business Climate

Posted on February 25, 2010 by Carol Horning, USAID Mission Director

In August 2007, MCC launched a $6.7 million Threshold Program with the Guyanese Government to support the country’s ambitious competitiveness strategy and reform plan focused on overcoming fiscal challenges, strengthening the procurement system, and creating an efficient business registration process. Together with interagency coordination, a focus on aid effectiveness, and Guyana’s commitment to positive reforms, the MCC Threshold Program is delivering lasting and encouraging results.

The MCC-funded Threshold Program, implemented on the ground by USAID, focused on strengthening the Guyana Revenue Authority, strengthening the IT infrastructure, and training key staff to implement reforms. In addition, the customs administration was reformed to conform to global standard operating procedures that strengthen Guyana’s competitiveness and trade opportunities.

Now, at the conclusion of this two-year program, many of Guyana’s fiscal challenges have been tackled, with increased revenue generation and a more efficient business registration process. Guyana can now plan significantly for higher investments, resulting in sustainable development benefitting the country and its people. Meanwhile, strengthening the customs administration through the acquisition of new equipment is bolstering Guyana’s capacity to address smuggling and trafficking activities.

At Guyana’s Deeds Registry, company and business registrations have been converted from deteriorating paper documents into a state of the art electronic recording system. So far, over 5,000 company records and 90,000 business registrations have been computerized. The number of days to start a business in Guyana has also been reduced from 46 days to 30, all while anticipated legislation in Guyana is expected to reduce the start-up time even further, from 30 to 12 days. Simplifying and standardizing the registration process will improve the business climate for new investments. Even residents outside Guyana can now download business forms and register companies from anywhere in the world.

Though much of the program focused on training, IT infrastructure for various record systems as well as equipment for customs and policy reform have been critical for creating momentum to produce results. Increased tax revenue and compliance permit Guyana to now plan for greater investments in its own schools, clean water, and many other programs throughout the country that improve the standard of living for the Guyanese people. Working hand in glove, MCC and USAID are collaborating with Guyana to support not only the country’s development but also its future as a partner in eliminating global poverty.

The Right Resources for the Job

Posted on February 12, 2010 by Daniel W. Yohannes, Chief Executive Officer

President Obama’s fiscal year 2011 International Affairs budget includes a $1.28 billion request for MCC.  With so many important domestic and international priorities competing for limited resources during these challenging economic times, we all have to be prepared to make tough choices.  Given limited resources, we will not be able to fund all the projects we would like to, but this is a solid request that allows MCC to continue to contribute to global poverty reduction in a meaningful way.  Secretary of State Hillary Rodham Clinton recently reminded us in her speech on development that helping the world’s poor bolsters America’s own security and prosperity.

I invite you to read our budget justification to Congress, which explains how we intend to add to our portfolio of results moving forward.  With Congress’s support for the President’s MCC budget request, we will be able to pursue partnerships with Malawi, Indonesia, and Zambia, with the hope of signing compacts with each of these countries.  Moreover, the fiscal year 2011 budget request will allow MCC to pursue a second compact with Cape Verde, a first in MCC’s history.

I am looking forward to appearing before the House Appropriations Subcommittee to explain MCC’s progress to date and how support for the fiscal year 2011 budget will allow us to deepen our impact in the fight against global poverty.

MCC progress unfolding in Niger

Posted on June 3, 2009 by Ken Hackett, Member of MCC's Board of Directors and President of Catholic Relief Services

During a recent trip to Niger, I had the opportunity and privilege of meeting with those coordinating this West African country’s MCC Threshold Program. I came away impressed with their energy and dedication as they work in a challenging environment.

Niger is one of the poorest countries in the world, ranking near the bottom of the United Nations’ Human Development Index. It has bounced from drought to coup to famine for centuries. Nonetheless, its people persevere with dignity and fortitude in this country nearly twice the size of Texas.

And the MCC, in partnership with the government and people of Niger, have identified an important way to foster long-term progress and sustainable development: promoting the education of girls. Building upon its innovative program in Burkina Faso, the Niger Threshold Program is funding the IMAGINE (Improve the Education of Girls in Niger) project, which includes the building of 68 ““girl friendly”” schools in seven regions throughout the country. These school complexes will include three-classroom buildings with sufficient desks for all students, separate latrines for boys and girls, a water source, housing for female teachers and a school canteen.

Throughout the developing world, there are many obstacles that prevent children, especially girls, from going to school. Those barriers include long walking distances from school, hunger, early and forced marriages, and time-consuming chores at home. The result is that the cycle of poverty is continued over generations. Conversely, education is a powerful tool in fighting poverty, unleashing the potential of a whole segment of the population unaccustomed to having the opportunity to earn their own livelihoods. Research shows that providing girls one extra year of education beyond the average can boost eventual wages by 10-20 percent.

Over the long term, we believe that these kinds of programs aimed at improving the education of girls will lead to increased food security. This is because girls in school receive the knowledge and develop the skills that will enable them to better manage resources for themselves and their families.

Better education for girls also contributes to improvements in the nutrition, health and education of future generations. This knowledge will bolster other assistance efforts being carried out by organizations like my own, Catholic Relief Services. For example, we are implementing a nationwide effort in Niger to encourage the use of mosquito nets to prevent malaria. Better educated women will be more likely to see the benefits of using the nets and will make sure their families do so.

Eyewitness to Change: The fight against corruption intensifies in Paraguay

Posted on April 17, 2009 by Liliana Ayalde, U.S. Ambassador to Paraguay

The commitment to transparency and the fight against corruption intensified this week in Paraguay. I was honored to witness a milestone moment as the U.S. Government, through the Millennium Challenge Corporation, and the Government of Paraguay signed a $30.3 million Stage II Threshold Program. This second program aims to institutionalize key reforms in public administration and supports anticorruption activities in the judiciary, law enforcement, customs, and healthcare. It builds upon the successes of Paraguay’s first ”“umbral”“ or threshold program.

This latest agreement is one more symbol of the friendship between Paraguay and the United States as we work toward the shared goals of prosperity and opportunity. It also reflects the constructive and active engagement that the U.S. Government has with the peoples of the Americas. It involves effective cooperation across a number of U.S. agencies, as USAID will be managing the implementation of this threshold program, with help from the U.S. Department of Justice and the U.S. Department of Treasury Office.

President Fernando Lugo, who participated in the ceremony, signaled strong political will to stamp out corruption by reaffirming his government’s commitment to anticorruption measures. ”[We] will not do business out of corruption and will not dialogue with the mob. But instead will actively promote the destruction of this cancer. So a new country will be born free of illicit dealings because that’s what the people chose on April 20,” referring to Paraguay’s 2008 election day.

It was a standing room only event, with top officials from the Government of Paraguay, representatives from the diplomatic corps, and members of the press in attendance. The people of Paraguay realize that promoting transparency and accountability are keys to fighting corruption and fundamental to job creation and economic growth. Now, through its MCC Stage II Threshold Program, Paraguay has another effective tool to strengthen its institutions against the risk of corruption and to pursue results-oriented programs to reduce poverty and stimulate sustainable economic growth for the good of all Paraguayans.

Helping Make Education a Reality for Girls in Niger

Posted on March 28, 2008 by Rodney Bent, Deputy Chief Executive Officer

Niger is one of the poorest countries in the world, with a per capita income of $260 a person, and a troublesome ranking of just three from the bottom in the UN’s Human Development Index (174 out of 177). Ive just returned from a trip to the country where I represented MCC during the signing of a $23 million threshold agreement. The bulk of the threshold program$18 million or sois to help Niger improve its low rate of girls’ primary school completion. Niger is in the bottom 5 percentile of low income countries and has a bright red score on MCC’s index for this category. Red, in terms of MCC’s “scorecards” of performance, is not good.

The threshold program has been put together with a notion of helping up to 200 schools become more “girl-friendly.” Its one drop in an enormous bucket of educational needs, but the Minister of Education, Monsieur Samba Mamadou, shared with me his excitement about the threshold program. The morning after the signing ceremony, he joined me, the US Ambassador to Niger Bernadette Allen, local USAID representative Mark Wentling, and USAID regional Mission Director Henderson Patrick, who flew up from Accra for the occasion. We set off in a dusty caravan of vehicles for the province of Tillaberi to visit some of these schools and talk to our local partners about their needs and challenges.

We bounced for dozens of kilometers along a mix of paved and sandy roads—a reminder of the overwhelming needs of so many countries where we work. The driver of our car had to flip on the wipers constantly to blow away the dust on the windshield. I asked the Minister of Education about Niger’s education needs during the trip. “Everything” was the short answer to the question, with the most critical component being trained teachers, followed by school buildings, notebooks for students (cahiers), textbooks, blackboards, desks—you name it. We talked at length about the discrepancy between boys’ and girls’ enrollment rates. He cited the reasons as cultural, social, and economic. Many parents need help in hauling water for the families’ use during the day. Other daughters are married when they’re 13 or 14. The minister made it clear that he, like so many others, understands full well the importance of having girls remain in schools and wants to help make it a reality.

After we drove several dozen more kilometers on the western side of the Niger River, we arrived at the first school. The school buildings are one story tall, built of tan bricks. There was no electricity that I could see, but there were dozens and dozens of people, adults, teachers, local officials and three Peace Corps volunteers at this first site. The school rooms I saw were simple, sometimes with a blackboard, but always packed with kids. In one school room, they’re wearing paper hats with Niger-MCC-USA written around the bands. They sang and clapped as we ducked to enter the school room and wish them well. On the black board, in one corner, someone had written the number of garcons and jeunne filles that were in attendance that day. That particular day, in that classroom, the girls outnumbered the boys. This was great news. The governor assured me that the word was getting out to the local officials, tribal leaders and families about the importance of encouraging their daughters to come to school. The need for new classrooms to accommodate the students was evidenced by a lean-to, with a primitive stick roof, that serves as a classroom for 30 or more children, who appeared to be about five or six years-old. There were no chairs and no desks. The head of the school talked to us about the need for latrines, and for places to feed the children. A “cafeteria” would probably be too grand a name for what will likely be a new room for this purpose, possibly with a stove and water. I asked some Peace Corps volunteers, who are working in schools further away from this one, what they needed. Everything again was the simple answer. MCC’s Niger Threshold Program certainly isn’t everything, but it is at least a start.