MCC partners with select poor countries committed to good governance, from fighting corruption to respecting democratic rights. One of MCC’s core principles is that aid is most effective in countries with a sound commitment to accountable and democratic governance. This is evident in:

  • MCC’s approach to selecting countries,
  • the compact development and implementation process, and
  • the ongoing success of MCC partner countries.

Selecting Partner Countries Committed to Democratic Rights

MCC uses a transparent selection process to choose partner countries that assesses policy performance in a number of areas, as summarized on MCC’s scorecards of twenty policy performance indicators. In the “Ruling Justly” category, MCC has three indicators that explicitly measure a country’s commitment to democratic principles—Political Rights, Civil Liberties and Freedom of Information—all developed by independent, third-party institutions. In addition, MCC’s “Ruling Justly” category  also measures Rule of Law, Government Effectiveness and Control of Corruption. Good performance in these areas is critical to passing MCC’s scorecard and receiving MCC assistance.

On top of its requirement that countries must pass the Control of Corruption indicator and half of the 20 indicators in order to pass the scorecard overall, in 2012, MCC adopted a “democratic rights” hurdle. Countries must now also pass either the Political Rights or the Civil Liberties indicator in addition to the other requirements in order to pass MCC’s scorecard. This change reflects the weight MCC places on political rights and civil liberties and sends a clear message to potential partner countries on the importance of democracy to good governance.

Principles into Practice

Photo: The Nkula Hydropower Plant will be renovated as part of the Malawi Compact, which was suspended in 2012 ollowing political violence and a clear decline in democratic governance, and reinstated later that year after President Joyce Banda took immediate action after her election to improve the human rights environment and ensure that laws and institutions support democratic rights and processes.

Jake Lyell for MCC

MCC’s Malawi Compact is designed to revitalize the country’s power sector and improve the availability, reliability and quality of the power supply. Under former President Bingu wa Mutharika, MCC suspended Malawi’s $350 million compact in March 2012 following political violence and a clear decline in democratic governance. Upon her election later that year, former President Joyce Banda immediately took action to improve the human rights environment and ensure that laws and institutions support democratic rights and processes. As a result, MCC’s Board of Directors reinstated the Malawi Compact in June 2012. The Nkula Hydropower Plant, pictured, will be renovated as part of the compact.

Deepening Democracy through Compact Development and Implementation

MCC’s approach to reducing poverty—creating incentives for reform and respecting existing domestic actors and processes—contributes to the long-term deepening of already existing democratic institutions.

MCC’s compacts are designed to reduce poverty through economic growth, but they also strengthen democratic institutions and processes in three important ways:

  • Partner countries must maintain a meaningful, public consultative process throughout the development of a compact and its implementation.
  • Compact programs must adhere to domestic legal or constitutional requirements, such as ratifying the compact or notifying the legislature as appropriate, and funds received through the compact must be reflected in the national budget.
  • Compact implementation must be transparent.

Ongoing Progress Toward Democracy

Throughout the life of an MCC partnership, countries are expected to maintain their commitment to democratic rights, as well as other policy areas captured on the MCC scorecard. Many MCC partner countries have undergone successful elections, transfers of power, and expansions of political or civil rights during the course of their partnership with MCC. However, if a country demonstrates a significant policy reversal, MCC may issue a warning, suspend, or terminate eligibility and/or assistance.