Busan, South Korea
Private Sector Remarks by MCC CEO Daniel Yohannes at 4th High Level Forum on Aid Effectiveness
Making the Business of Aid More Business-Like
As the CEO of the U.S. Government’s Millennium Challenge Corporation, I see each day how our mission of poverty reduction through economic growth is transforming families, communities and countries. We empower a select and targeted group of poor, but well-governed, countries to become more capable, accountable and self-sufficient by investing in their homegrown strategies to raise the incomes of their poor.
A big part of this means embracing the private sector as a partner in development. So, MCC is making the business of aid more business-like. We accomplish this in four key ways.
First, MCC is investing in a foundation for private sector investment. MCC fosters an enabling environment in our partner countries for private sector growth and expansion.
We do this by assessing constraints to growth, investing in public goods and correcting market failures.
We also do this by getting the policy environment right for the private sector to do well. Our partner countries are making policy and institutional changes that will catalyze growth. A clear example is El Salvador, which forged ahead with the legal framework to attract a private concessionaire to operate its new port at La Union. We consider a country’s track record on corruption, for example, which is an impediment to investment. We also seek policy changes to fully integrate gender.
Second, like the private sector, MCC invests with an eye on return. MCC treats aid as a sound investment, and we expect a return.
That’s why we provide ongoing technical support and oversight during implementation.
That’s why we invest so heavily in monitoring and evaluation.
That’s why we also calculate economic rates of return to compare a project’s costs and benefits.
Third, MCC works to include the private sector in development. Our country partnerships create formal and disciplined points of interaction with the private sector during program design and implementation. To attract the private sector to our partner countries—and also promote homegrown entrepreneurship—we look for ways to include the private sector in the decision-making process as early as possible. Often times, the private sector is the first to recognize and understand the constraints to growth and investment. Early and frequent consultations with the private sector can better help MCC partner countries analyze these constraints, learn best practices and discuss financing opportunities. The ultimate key to development effectiveness is linking private investments to aid investments.
Finally, MCC invites the private sector to fair and open competition. At a time when many governments around the world are looking for ways to bolster their own domestic economies, they also face pressures to tie aid to their own companies. MCC was purposefully built around the principles of aid effectiveness, including the efficiency gained from fair and open competition.
We practice that principle and invite local, international and American private sector firms to compete. With competition, we have seen both the private sector and development effectiveness win by generating business opportunities, fostering local entrepreneurship, creating jobs, supporting competitive pricing, and sustaining impact.
And we have seen that American companies are competing and winning a significant amount of business. They often partner with local and international firms to enhance their on-the-ground knowledge and effectiveness. For example, Symbion Power and its partners won MCC contracts to improve Tanzania’s energy sector. Symbion has since expanded its business, becoming one of the major privately-owned energy producers in Tanzania.
By making the business of aid more business-like, MCC is leading a fundamental shift in thinking.
Development can do a world of good when we create an enabling environment for private sector investment; focus on economic returns; include the private sector in program design and implementation; and foster competition.
We are committed to this course moving ahead. As private sector companies grow their bottom lines in emerging markets, more and more families will move above the poverty line and toward prosperity. And, this benefits all of us in our global marketplace.
Thank you so much.