Speech

December 12, 2007

As Prepared by

location

Remarks by MCC CEO Ambassador John Danilovich at the Post-Board Public Outreach Meeting

subtitle

Remarks by Ambassador John Danilovich

Washington, DC

December 13, 2007

Welcome

  • Thank you, Matt.
  • Its a pleasure to welcome all of you to the headquarters of the Millennium Challenge Corporation.
  • Thank you for your ongoing interest in MCCs work of reducing poverty through economic growth in partner countries around the world
    • practicing sound policies,
    • taking lead of their own development, and
    • delivering measurable results with the aid they receive.  
  • Id like to update you
    • on MCCs progress since our last public outreach meeting in September and
    • on the decisions our Board of Directors made at yesterdays meeting.

Review of MCC Progress since September

  • Weve been busy in five main areas since our September meeting.

First, REORGANIZATION

  • When I came onboard two years ago, MCC was under tremendous pressure to develop a portfolio of quality compacts.
  • Well, we accomplished that. 
  • Today, we can speak of 16 approved compacts with countries totaling $5.5 billion. 
  • With that body of work in place, it is now time to turn to the business of implementing these compacts.
  • So, we opened this fiscal year by launching a major organizational restructuring to shift MCCs focus to compact implementation.
  • We have adopted key reforms to transition from a compact development agency to a compact implementation agency moving forward. 
  • This means reorganizing our first-class professional team to fully utilize their expertise and experience for program implementation.
  • It means moving more responsibility and authority to resident country directors in all partner countries to give them the latitude to make decisions that will improve the speed and quality of compact implementation.
  • It means combining and restructuring two existing departments, Operations and Accountability, to form two new departmentsone focused on compact development and the other focused on compact implementation.   
    • Darius Mans is our newest Vice President, heading up the Department of Compact Implementation.
    • John Hewko is serving as Vice President for our Department of Compact Development.
    • Chuck Sethness is now serving as our Senior Investment Counselor to advise on maintaining the integrity, consistency of standards, and technical quality of our investments.
    • As Matt McLean, who has been serving as my Chief of Staff, now heads up our Department of Congressional and Public Affairs, Im thrilled that Matt Bohn, who has been serving as a Resident County Director in Nicaragua, is returning to Washington to serve as my Chief of Staff.  Matts valuable insights from the field will serve us all well as he takes on this new assignment, and his on-the-ground experience will prove a valuable asset as we proceed now with compact implementation.
  • MCCs future depends on compact implementation, and we are realigning
    • priorities,
    • functions, and
    • staff

to meet that future and better achieve our mission, without compromising our ongoing commitment

    • to accountability,
    • to our gender policy,
    • to effective monitoring and evaluation, and
    • to social and environment assessments.

Second, a FULL BOARD

  • We now have a full nine member Board. 
  • This is a first in MCCs history.
  • In late October, the Senate confirmed former U.S. Senate Majority Leader Bill Frist and reconfirmed Catholic Relief Services President Ken Hackett to serve on MCCs Board.
  • Both gentlemen attended yesterdays Board meeting and bring valuable expertise and knowledge to the Board. 
  • I appreciate their service.

Third, COMPACTS/THRESHOLD PROGRAMS

  • We have added to the MCC family of compacts and threshold programs.
  • In terms of compacts
    • Our compact with Mongolia was signed at the White House by President Bush and Mongolian President Enkhbayar for $285 million. 
    • This is MCCs 15th signed compact, and the first to be signed at the White House.  
    • The compact will reduce poverty through economic growth by
      • investing in the capacity of Mongolias rail system,
      • improving the ability of Mongolians to register and obtain clear title to their land,
      • improving core technical skills of Mongolian workers, and
      • extending the productive years of the Mongolian workforce by reducing non-communicable diseases and injuries.
    • We anticipate signing our 16th compact with Tanzania in the new year.
  • In terms of threshold programs,
    • We signed a threshold program with So Tom and Principe in early November.
      • This nearly $9 million program will increase revenue collection through improved tax and customs administration and reduce the days and costs required to start a business.
    • And, our Board approved a $35 million threshold program with Peru.
      • This program will bolster immunization and fight corruption.

Fourth, our DEMOCRACY PAPER

  • We unveiled a major research paper on MCCs role in deepening democracy.
  • MCC deepens democracy by creating incentives for policy reforms and by engaging democratic actors and processes already in place in partner countries worldwide.
  • These themes are explained in detail in MCCs democracy policy paper, which is posted to our website at www.mcc.gov and which I invite you to read if you have not already done so.

Fifth, ENGAGEMENT

  • We continue to carry MCC messages to audiences throughout the world. 
  • I had the privilege of attending the Community of Democracies fourth ministerial in Bamako, Mali to discuss democracy and its link to economic growth and development.   
    • The vast majority of MCC countries are also participants in the Community of Democracies. 
  • I then traveled to Mozambique and Lesothotwo countries with which we signed compacts in Julyand saw firsthand how they are ramping up to begin the implementation of their compacts.
  • Meanwhile, MCC sent a delegation to the US-Africa Business Summit in South Africa.
    • MCC has 9 compacts in Africa and another 7 threshold programs throughout the continent. 
    • MCCs new Private Sector Initiatives team is exploring ways to
      • integrate private sector activities into MCC compacts,
      • leverage MCC compacts with the private sector, and
      • stimulate follow-on investments in MCC countries. 
  • We continue our engagement with Congress, and are still awaiting word on our appropriations.  
    • MCC has gathered considerable momentum in recent months with a very full list of compacts now signed and results now starting to come in.
    • We are urging Congress to fund MCC at the House-approved level of $1.8 billion, which allows us to fund our current pipeline of countries taking on the hard work of making reforms and developing compacts.

We have had a very exciting and busy fall

Outcome of Board Meeting

capped by our Boards decisions yesterday on the selection of new compact-eligible and threshold-eligible countries. 

I am pleased to announce that

  • Malawi is now eligible to submit a compact proposal, and  
  • Mauritania is now eligible for our threshold program.

Let me say a few words about some other countries that were considered, but not selected eligible for funding.

  • First, Colombia.  MCC acknowledges Colombias significant reform efforts to promote stability and an environment conducive to economic progress.  We encourage them to continue forward with these efforts. However, because of budgetary limitations, the Board decided not to select any new countries in the lower middle income category at this time.
  • Second, Liberia: MCC recognizes the impressive results President Johnson-Sirleafs government has achieved.  We look to USAID to continue its engagement with Liberia to support that countrys great strides to become eligible to participate in the MCC program.

When our panel convenes, Sherri Kraham will go into more detail on the countries selected and considered, but I wish to highlight three key points about our selection process.

First, MCCs selection process will continue to be based on the rigorous evaluation of a countrys performance on our eligibility indicators, including a commitment to democratic governance.  Providing aid through an objective, indicator-based selection process that measures sound policy performance remains MCCs defining hallmark.

This applies not only to newly selected countries but also to our current compact countries, which must maintain and improve performance.

Maintaining good policy performance supports our reorganization efforts to fully and successfully implement our current compacts and achieve sustainable results among the countries with which we are now working. 

Similarly, we are better defining the factors we take into account to determine which countries are eligible for MCCs threshold program, including

  • the number of policy indicators or areas that must be improved,
  • the range of policy reforms or actions necessary to address those indicators, and
  • the countrys overall commitment to reform.

Second, MCCs selection process has become more competitive. Our selection process is a competition, and this years selection process has reached a heightened and increased level of competition based on higher standards for eligibility.  This is due to a number of factors:

  • the addition of two new indicators that measure natural resource management and land rights and access,
  • rising medians on several indicators, and
  • significant improvements in data quality. 

Third, MCC holds our compact partners accountable for maintaining and improving performance. Should a compact country not meet the eligibility criteria, MCC evaluates its policy performance to determine whether there has been a significant policy reversal.

We distinguish between countries that have a significant policy reversal or a pattern of actions inconsistent with MCCs eligibility criteria, and those countries that do not meet the criteria due to technical reasons or slight changes in performance. 
If a country does not meet the criteriabut is generally maintaining performancewe are willing to allow our current partner countries some time to address the indicator issues. 

However, we believe that there should be consequences for failing performance and significant policy reversals and remain willing to suspend a country for a significant policy reversal.

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

Conclusion

  • With this overview, Ill stop here and would be happy to take your questions before turning the podium back to Matt to introduce the panel.
  • Thank you! Any questions?