Speech

February 26, 2008

As Prepared by John J. Danilovich, Chief Executive Officer

Washington, DC

‘Investment and Outreach Event Surrounding the Tanzania Compact Signing’

Introduction

Thank you for that kind introduction, and many thanks to Stephen Hayes and our friends at the Corporate Council on Africa for partnering with us to make this event possible to celebrate the signing of Tanzania’s MCC compact.

CCA’s tremendous leadership in promoting business and investment throughout Africa complements MCC’s mission of reducing poverty through sustainable economic growth, and we are proud to be associated with you in these efforts.

The extent of America’s commitment to Africa has dominated the headlines recently. And, I consider this meeting today—and your being with us here at MCC headquarters—a celebration of a commitment that

  • benefits Africa,
  • benefits the United States, and
  • reinforces the fact that partners, working together, can help build a better future for their people.

A few short days ago, President Bush and President Kikwete met in Dar es Salaam to sign the nearly $700 million compact between Tanzania and the Millennium Challenge Corporation.  This marks MCC’s 16th compact with a country committed to overcoming its specific barriers to poverty reduction and economic growth and to creating a better life for its people. And, it is MCC’s ninth compact in Africa, confirming the tremendous importance we attach to promoting economic development and growth on the continent.  In fact, nearly 70 percent of what MCC has committed in compacts around the world benefits the people of Africa.

MCC 101

Our 16 compacts throughout

  • Africa,
  • Central America,
  • Eurasia, and
  • the Pacific

invest $5.5 billion to support countries accepting the challenge to be responsible for their own sustainable economic development.

The compact with Tanzania, our largest to date, is further proof that the MCC model is working as Congress intended it to work. Since our establishment in 2004, MCC has been fulfilling our mission of reducing poverty through economic growth by partnering with poor countries around the world committed to

  • good governance,
  • investing in the health and education of their people, and
  • economic freedom.

MCC’s approach has fundamentally changed the way partner countries look at their own development.

  • Countries understand that they have to compete for MCC funding based on their sound
    • political,
    • economic, and
    • social policy performance. 
  • Countries understand that MCC will not do for them what they are unwilling to do for themselves. 
  • Countries understand that funding from MCC works best when they are empowered to create and implement their own specific solutions to their own specific challenges.

As a result, partner countries are undertaking the difficult work of policy reforms and capacity building to take the lead in their development—so as to have a

  • meaningful,
  • tangible, and
  • sustainable

impact on the lives of the poor.   

Overview of Tanzania’s Compact

For Tanzanians, making the promise of poverty reduction and economic growth a reality means making strategic improvements to overcome: 

  • an inadequate transportation network,
  • an insufficient and unre­liable supply of energy, and
  • a shortage of clean and safe water.

The MCC-Tanzania compact makes infrastructure investments in

  • transport,
  • energy, and
  • water,

which, taken as a whole, will 

  • stimulate economic growth,
  • raise household incomes, and
  • improve the quality of life for Tanzanians. 

The compact builds on the national reforms already underway in Tanzania to fight poverty, leading to sustainable economic growth. 

It complements the great progress Tanzania has already made on its MCC threshold program to fight corruption. The $11 million threshold program spans a two-year period and is enabling Tanzania to

  • enhance local capacity to fight corruption,
  • strengthen the rule of law for good governance, and
  • increase oversight of public procurement

—all positive efforts for doing business in that country and for its long-term development. The program trained journalists in investigative journalism techniques and equipped civil society to track public expenditures. These are important tools in Tanzania’s ongoing fight against corruption, which will continue now as it implements its compact.

Private Sector and Tanzania-MCC compact

Ultimately, the compact signed last week creates the conditions necessary for the private sector to expand its engagement and thrive in Tanzania.

  • By improving transport routes,
  • by ensuring uninterrupted electricity service in six cities and Zanzibar, and
  • by overcoming severe water shortages in key areas, including the capital,

industry and businesses will have access to:

  • a more productive labor force, not suffering from water-borne diseases;
  • electricity to run their commercial activities; and
  • improved roads to transport their products to market more efficiently.

These create opportunities for increased private sector activities and investments, which are the true engine of economic growth over the long term. 

Tanzania’s compact envisions, for example, a public-private partnership in the energy sector, with private sector participation in the national electricity system. This is just one of many opportunities for the private sector to build on MCC-funded projects in Tanzania.  Other possibilities also exist in the water sector. We invite and encourage the private sector to take advantage of emerging opportunities in MCC partner countries, including in Tanzania.

Private sector engagement enhances and transforms development assistance and leads to lasting results in the lives of the poor.  We want MCC assistance to help communities prosper and empower the poor to become active participants in a healthy, local economy and, eventually, in the global economy as well. 

How does MCC do this? By insisting on sound

  • fiscal,
  • monetary,
  • regulatory, and
  • trade-capacity building policies,

MCC creates a pro-business and pro-investment environment. As the finance minister of Indonesia stated, the real draw of MCC’s selection process and eligibility is not necessarily the money but as a type of "seal of approval,” which sends a powerful signal to entrepreneurs that conditions are swiftly improving in MCC countries for doing business and investing.

We see this on many levels.

  • MCC investments foster continuing economic activity—whether by a farmer in her field who now invests because she has title to her land or by a local company that invests because of the improved business climate and infrastructure made possible by MCC. 
  • MCC investments enable and encourage other investments that were previously constrained by a lack of
    • a school,
    • or trained workers,
    • or a road,
    • or clean water,
    • or proper sanitation. 
  • MCC investments provide the private sector with a point of entry to initiate or expand their own commercial activities. And, these parallel or complementary investments from the private sector reinforce MCC activities and enhance both the sustainability and the development impact of MCC projects.

And as private enterprise takes root and thrives, MCC’s investments will be succeeded by local economic activity and foreign investment—and we want and welcome that!  MCC grants to developing countries are designed to be transitional and to pave the way to private investment.   We will truly be successful when we see that transition taking place—having provided the right

  • political,
  • economic, and
  • social

conditions to sustain economic growth—and MCC investments are replaced with private sector activities.

Conclusion

MCC’s compact with Tanzania is only a beginning—a starting point—for making the most of this historic investment. Through Tanzania’s proven

  • determination,
  • leadership, and
  • entrepreneurship,

the compact we celebrate today will become a key part of its roadmap to a future of greater opportunity, where poverty is replaced with prosperity.  MCC welcomes our partnership with Tanzania to make this a reality. 

Thank you for your ongoing interest in the work of Millennium Challenge Corporation, including the significant role private enterprise can play in maximizing our partnership with Tanzania.  Tanzania is open for business, and I invite you to explore the opportunities!

I’m pleased to now turn the program over to my friend, His Excellency Ambassador Ombeni Sefue.  Ambassador Sefue began his service in Washington last June.  As a career diplomat, he previously served as his country’s ambassador to Canada.  In addition to his distinguished career in Tanzania’s foreign service, the Ambassador has served in the office of the Tanzanian president as a speechwriter and advisor. Please join me in welcoming Ambassador Sefue to the podium.  Mr. Ambassador…