Speech

December 12, 2008

As Prepared by John J. Danilovich, Chief Executive Officer

Washington, DC

Remarks by MCC CEO Ambassador John Danilovich at the Public Outreach Meeting after the Dec. 2008 Board Meeting

Welcome

Thank you, Matt, and let me also welcome you all to the headquarters of the Millennium Challenge Corporation.  The Millennium Challenge Corporation, nearly five years from its establishment, now stands today as an effective and smart tool in America’s toolbox for global engagement and for eradicating one of the most pressing challenges of our times: entrenched, systemic poverty that robs citizens and countries of a share in the opportunities of prosperity and growth. 

With $6.7 billion committed to 35 countries around the world in compact and threshold programs, MCC is making a difference in this fight through country-determined and country-driven antipoverty programs, programs where:

    • More than 55,000 farmers have been trained and more than 5,400 hectares of additional land are under useful production.
    • More than 25,000 hectares of land have been registered through improvements in land titling and leases and the establishment of long-term land use rights for individuals. 
  • More than 3,300 kilometers of roads are under design, and some roads are already built.

And, this is only the beginning—the tip of the iceberg. Through the ongoing implementation of our programs around the world, MCC is accelerating our impact against global poverty.

During this time of change, as power transitions from one administration to another, from one Congress to another, what endures is America’s sense of compassion and generosity to reach out and replace poverty with prosperity for the world’s poorest. We congratulate President-elect Barack Obama and Vice President-elect Joe Biden on their election victory and we will continue to work closely with their transition team as we move into the next administration. We encourage the Obama administration and elected congressional representatives, from both parties, to continue their efforts in the fight to end global poverty. Especially given today’s global economic concerns, we recognize the importance of investing every dollar of taxpayer money wisely.

Poll results released yesterday through the Modernizing Foreign Assistance Network confirm a clear majority—almost 60 percent—believe that foreign assistance and encouraging development in poor countries should become a more important tool for U.S. foreign policy. The poll also showed that 70 percent of engaged opinion elites favor "reforms to improve the effectiveness of foreign aid by shifting aid dollars from less effective programs to programs that help hungry and poor people in developing countries provide for their families.”   They make the case for modernizing foreign assistance by stressing

    • strategy,
    • efficiency, and
    • accountability. 

These are our—MCC—core principles. MCC remains committed to making smart and innovative investments in countries that are focusing on positive policy performance and delivering results in the fight against poverty. 

We are working closely with the Transition Coordinating Council to ensure that a smooth and effective transition takes place at MCC, and that we maintain the continuity of our programs with our partner countries worldwide.

I am proud of the tremendous work we’ve done here:

    • with some of the best and brightest minds in development,
    • with the sound input and advice of so many friends throughout the development community—from both sides of the aisle—many of you right here in this room today,
    • with the expert leadership of our Board of Directors, and
    • in partnership with countries committed to change.

Let me brief you on what we’ve accomplished since the last Board meeting and share with you what the Board decided when it met yesterday.

Progress to Date

It’s been a very busy fall for us, with substantial milestones in our fight against poverty.  Our Board approved a $100 million amendment to Georgia’s existing $295 million compact. This additional amount will complement existing activities.  The projects funded include:

    • the rehabilitation of roads linking Georgia with Armenia and Turkey,
    • water supply and waste water projects outside Tbilisi, and
    • priority energy sector studies. 

MCC was also one of the agencies highlighted at the historic White House Summit for International Development in mid-October.  The summit showcased MCC’s innovations in development assistance.  Several participants—from President Sirleaf to President Bush to Secretary of State Rice—spoke of MCC’s achievements.  Perhaps, Ritu Sharma Fox of Women Thrive Worldwide captured the sense about MCC best when she said: "Given this new economic reality…it is absolutely essential that U.S. assistance is strategic, effective, and transparent. I think that the MCC represents the future of U.S. assistance and not the past…” 

We, of course, agree with Ritu about this!

We also collaborated with Habitat for Humanity to hold an important event here after the elections to discuss "the housing crisis that no one is talking about.” Our partners consistently identify secure and efficient access to land as critical for sustainable economic growth and poverty reduction.   MCC has invested almost $300 million to strengthen the real property rights systems in partner countries worldwide.

I also traveled to Ghana to see implementation progress underway there.  I joined President Kufuor to break ground on a major road project.  Funded through the Ghana-MCC compact, the rehabilitation of this critical transportation route will contribute to reducing poverty by transforming agriculture.  Having pineapples sit on the back of a lorry for three hours on their way to markets wastes time and fuel and shortens the fruit’s shelf-life.

This is why the rehabilitation of this roadway is a linchpin project for achieving the compact’s objective to transform Ghana’s agriculture sector and use it to help fuel sustainable economic growth.  Seeing this road come to life, visiting with mango farmers benefitting from MCC assistance, and touring elementary schools rehabilitated through MCC funds during my brief visit to Ghana gave me firsthand perspective on how this country is using its MCC grant effectively and efficiently to deliver results that matter for the poor. 

When the panel convenes, our Vice President for Compact Implementation Darius Mans will talk more about implementation progress in our compact partner countries.  We will also hear from our Vice President for Compact Development John Hewko on what potential compacts are in development.

Here at home, we’ve also seen very positive developments in Congress this fall to make MCC’s mission even more effective with the introduction of language by Congressman Donald Payne of New Jersey for regional, longer, and concurrent compacts. 

We hope this bill will gain increased traction when the next Congress begins its important work come January.

And, in our ongoing effort to leverage our investments by cooperating with others who share our development goals, MCC signed a memorandum of understanding with the Danish Ministry of Foreign Affairs in early October.  This MOU will increase coordination in countries where both MCC and the Danes are working, such as

    • Benin,
    • Burkina Faso,
    • Ghana,
    • Mali,
    • Mozambique, and
    • Tanzania.

The MOU envisions cooperation in several priority areas including:

    • climate change,
    • gender,
    • impact evaluation,
    • policy environments, and
    • the private sector.

Similarly, in mid-November,  MCC signed a MOU with the French Development Agency.  This MOU identifies practical areas for cooperation in countries where both the United States and France are engaging in poverty reduction programs, countries including

    • Burkina Faso,
    • Benin,
    • Morocco,
    • Mali,
    • Madagascar, and
    • Senegal.

The memorandum provides a solid framework to deepen in-country cooperation between our two agencies in sectors such as microfinance, land tenure, legal and judicial reform, transportation infrastructure, and agriculture.

And, just last week I joined my good friend and a champion for the poor Josette Sheeran to sign a memorandum of understanding between the World Food Program she heads and MCC.  This MOU creates a framework for coordinating our investments to significantly leverage our mutual impact on global economic growth, poverty reduction, and improved food security.  The MoU outlines three areas of cooperation in countries where both the WFP and MCC work: agricultural production, policy and program reforms, and gender integration.  These are all important components for strengthening local markets and achieving food security.

Outcome of Board Meeting

Yesterday our Board met to make selection decisions for FY09. This, as you all know, is the last MCC country selection Board meeting that I will participate in, along with the current

    • Secretary of State,
    • Treasury Secretary,
    • USAID Administrator, and
    • United States Trade Representative. 

I also want to especially acknowledge the important role played by our four private sector Board members—

    • Lorne Craner,
    • Bill Frist,
    • Ken Hackett, and
    • Alan Patricof. 

These private sector Board members offer extremely valuable expertise to inform our decision-making process and their involvement ensures strong continuity and institutional memory that will serve MCC very well moving forward.

The Board voted, and I am pleased to announce that Colombia, Indonesia, and Zambia are now eligible to submit a compact proposal, and Liberia is now eligible for our threshold program. Also, the Board reselected Paraguay as threshold eligible. 

As I wrote in my blog in late October, Paraguay continues to take tangible steps toward rooting out corruption through its initial threshold program.  In recognition of these concrete efforts, MCC invited Paraguay to submit a second, "Stage II,” threshold program, which is currently under review. 

When our panel convenes, Sherri Kraham, our Deputy Vice President for Policy and International Relations, will go into more detail on why specific countries were selected and discuss other country selection decisions, but I wish to highlight three key points about MCC’s selection process.

First, sound policies matter. Our selection process has always begun and will always begin with policy performance—on how countries perform on the 17 indicators we use to assess if they are

    • ruling justly,
    • investing in health and education,
    • fighting corruption, and
      promoting economic freedoms.

Regardless of the outcome—regardless of which countries are selected—we should not overlook that our Board takes policy performance very seriously in selecting suitable partners.

Second, polices matter in context. I’d remind you that our Board, in keeping with MCC’s legislation, looks at indicator performance as the primary factor in the selection process.  But, the Board also looks at the opportunity to reduce poverty and generate economic growth within a country.  In addition, we have to see how much funds are available.  To gauge opportunities to impact growth and poverty reduction, our Board considers a number of factors, such as

    • development and political context,
    • size and economic context, as well as
    • political will. 

We take a holistic approach, rooted in sound policy performance.

And, third, there needs to be a constant commitment to improving policies.  Once a country is selected, we expect it to continue its reform process and work to maintain and improve its overall policy performance on the indicators. We expect that, should a country not meet the criteria in a given year, it will work toward improving by developing and implementing a policy improvement plan to address outstanding concerns and demonstrate its firm commitment to meeting the eligibility criteria.

Again, Sherri will go into more details about MCC’s selection process when the panel convenes.

Also, the Board discussed developments in Nicaragua.  The political conditions leading up to, during, and following the November 9th elections in Nicaragua are inconsistent with MCC’s eligibility requirements for assistance. They are also inconsistent with MCC’s core principles based on aid with accountability and good governance. As a result, our Board made the difficult decision yesterday to suspend assistance for new activities under Nicaragua’s $175 million MCC compact. MCC will not approve disbursements for activities not already contracted by MCA-Nicaragua, the entity that implements the program.

The Board called on Nicaragua to develop and implement a comprehensive set of measures to address concerns regarding the government’s commitment to democratic principles. And, the Board will determine subsequent actions at its next meeting in March 2009, based on the government’s response.

Through the MCC compact, hundreds of thousands of poor Nicaraguans stand to benefit because of

    • better roads,
    • property titles, and
    • agricultural business support.

The poor of the country recognize these benefits, and they deserve nothing less than the realization of the full potential of their country’s MCC compact. It is our sincere hope that the Nicaraguan government recommits to the principles of democracy and the rule of law so that MCC can reestablish what has been an effective partnership.

Conclusion

With this overview, I’ll stop here.Our panel will provide greater detail on our latest selection process as well as compacts in implementation and development. As this is my last public outreach meeting following a Board meeting, I want to express what an enormous pleasure it has been to contribute to MCC’s innovative, visionary work to transform development assistance and make a difference in the lives of the poor.

It is noble work that would not have been possible without

    • the commitment of our partner countries,
    • the support of our friends in Congress,
    • the invaluable insights of the NGO community—many of you here today—and, of course,
    • the tireless efforts of my colleagues and staff here at MCC.

Together, we’ve made incredible strides in the fight against global poverty.  As I return to the private sector after the inauguration, I will forever remain a friend, an advocate, a champion of MCC and of its important mission to reduce poverty through sustainable economic growth.I have seen the difference MCC is making in the lives of countries and in the lives of the world’s poor, and we must continue to build on these successes to date.

Toward this, please indulge me for a moment and allow me to take this opportunity to say a few words about Rodney Bent. The skilled management of our very capable Deputy CEO has proven extremely valuable during this transition period and will continue to be of great benefit to MCC following my departure.  I have worked very closely with Rodney since joining MCC in November of 2005. His knowledgeable counsel and sage advice have served me and this organization greatly. And, I know his expertise will continue to be a guiding light of efficiency and effectiveness in briefing and welcoming the new leadership to MCC to further MCC’s work of lifting the poor worldwide out of poverty. Thank you, Rodney, for your service.

MCC’s best days are ahead, and I’ll be watching and following developments with great excitement as this organization sets a new standard for winning the fight against global poverty.   

With that, I’d be happy to answer a few questions now before I turn the program back to Rodney so that we can hear from our panel. Any questions? Thank you again for your ongoing interest in the mission of the Millennium Challenge Corporation.  Rodney…