Good afternoon to all.
I am pleased to be here at the Powering Africa Summit. Thank you to Energy Net for hosting this important forum. It is an honor to be among the leading voices from government and private enterprise around the world focused on building the energy sector Africa needs to meet the demands of its growing industries and expectations of its hopeful citizens.
Last year, six of the ten fastest growing economies in the world were in Africa. And the continent’s total population is expected to double by 2050 to 2.4 billion people. But with increasing economic growth and bulging demographics, Africa’s economic ambitions continue to be hampered by unreliable, inaccessible and unaffordable power fueled by underinvestment and unsound enabling environments.
That is why at the Millennium Challenge Corporation, known as MCC, we are investing in the power sector in Africa.
MCC is a U.S. Government agency with a singular mission: to reduce poverty through private-sector led economic growth. We provide large-scale grants, called compacts, and smaller grant investments, called threshold programs, to our partner countries to fund projects that will drive growth, improve the business climate, and catalyze new investment to reduce poverty and increase stability and security.
This year, we celebrate our 15th anniversary. And after 15 years, we remain committed to the pillars of our model—a competitive selection process for our country partners, a data-driven approach that focuses on results, country-led solutions and implementation, and a strict five-year investment timeline for our compacts.
We employ a transparent, competitive selection process to select our country partners. Our partners must demonstrate a commitment to good governance, investing in their people, and economic freedoms, as assessed by our country scorecard and based on information collected from independent, third-party sources. This allows for an objective comparison of potential partner countries.
Our country scorecard itself is an incentive for countries to improve their investment environments. Many countries make progress on policy indicators—such as reducing corruption and improving the rule of law—before MCC even spends a dollar, sometimes referred to as the “MCC effect”.
In addition, our project decisions are based on a data-driven approach, using evidence to make investment decisions followed by monitoring and rigorous, independent evaluations. As our analyses have shown that access to affordable, reliable electricity is a significant constraint to economic growth in many of the partner countries we work with in Africa, we have worked alongside our country partners to select power projects that can feasibly be completed in our strict five-year timeline.
We invest in projects across the energy value chain as well as in sector policy and institutional reforms. We often link our infrastructure investments to systemic changes in policies and institutions, supporting reforms that outlive our projects and promote sustainability.
With our country partners engaged in project development and managing program implementation through a local Millennium Challenge Account or MCA, they are accountable for implementing programs under MCC’s oversight and achieving results.
MCC’s unique project implementation model increases country partner capacity, promotes accountable fiscal stewardship and transparent procurement processes, and integrates environmental, social and gender requirements that outlast the timeline of our compact and threshold programs.
We work alongside our U.S. Government Power Africa partners, many of whom join me here today, including OPIC, USADF and USTDA, to help African nations move closer to eliminating energy poverty.
Over the past 15 years, MCC has worked with 26 countries in Africa. Our investments on the continent—from energy and transportation to water and education—account for 70 percent of our portfolio. And in Africa to date, we’ve invested nearly two billion dollars in energy-related projects, in support of the goals of Power Africa.
This past December, we signed the $550 million Senegal Power Compact, a new five-year investment to strengthen the power sector and meet the growing demand for reliable electricity in Senegal.
Though Senegal has a developed energy sector, access to reliable power is limited, particularly in rural areas. Moreover, to achieve the Government of Senegal’s vision of attracting new business and becoming an economic hub in the region, improved electricity reliability and access will be key, particularly for Dakar.
As a show of its commitment to the compact and its sustainability, the Government of Senegal committed $50 million of its own funds to the project investments and agreed to up-front policy and institutional reforms, and payment of public sector arrears to the electric utility.
Last September, MCC closed our $350 million investment in Malawi’s energy sector, which supported the government’s efforts to amend outdated electricity laws, strengthen the operations of its power utility, add distribution capacity, and rehabilitate a hydropower plant.
The compact supported the creation of an Independent Power Producer (IPP) Framework—a policy document for the government, utility and the private sector—which describes the requirements and process for adding new electricity generation through private investment. We’re already seeing results.
In September 2018, the utility signed a 20-year power purchasing agreement with JCM Capital to develop one of Malawi’s first commercial-scale solar power plants. In a country where less than 10% of the population has access to electricity, our investments have laid the foundation to improve Malawi’s energy future.
Our energy project portfolio also includes our $375 million investment in Benin to expand access to reliable electricity by strengthening the utility, investing in generation and distribution infrastructure, and crowding in commercial finance for off-grid energy solutions.
Our nearly $500 million energy-focused investment in Ghana, where MCC is supporting the government’s efforts to improve the financial and operational health of the utility by bringing in a competitively selected private sector operator. MCC investments, along with those of our Power Africa partners, are expected to help catalyze billions in new private investment and help the Government of Ghana better deliver reliable electricity services to its people.
Through our $257 million investment in Liberia, we have worked alongside other donors to fund the rehabilitation of the Mount Coffee Hydropower Plant – the country’s single largest power source – to bring additional, more affordable power to Liberian households and businesses.
Moreover, in Burkina Faso, we are currently developing a new compact focused on the power sector along with additional investments in energy policy and institutional reform in Sierra Leone and the Gambia.
Looking into our pipeline of potential projects in Africa, MCC’s Board of Directors recently selected Malawi as eligible to develop a new compact and Ethiopia as eligible for a MCC threshold program. These programs are not yet defined to focus on a specific sector. However, for those of you in the private sector, I encourage you to visit our website to learn about opportunities to work with us across our full portfolio of investments.
As MCC celebrates its 15th anniversary, we are also sharpening our toolkit to remain innovative and push the envelope in effective foreign assistance.
The AGOA and MCA Modernization Act, signed by President Trump in April 2018, authorizes MCC to enter into concurrent compacts to promote cross-border economic integration, trade, and collaboration.
This past December, MCC’s Board of Directors directed MCC to explore potential regional investment opportunities in five of its current compact partners in West Africa: Benin, Burkina Faso, Côte d’Ivoire, Ghana, and Niger. While there is no guarantee a country selected as eligible will be granted a concurrent compact, this new opportunity enables MCC to be a more valuable strategic tool for the U.S. to promote trade and investment.
This week, we have deployed a delegation of technical staff to eligible concurrent compact partner countries. We anticipate exploring cross-border investments in power or transport sectors that are critical to increased regional integration and vital to bringing African countries into global value chains.
At a time when national budgets and donor resources are stretched, MCC is also looking to leverage private capital to maximize our impact. Through public-private partnerships and other blended finance approaches, we see the merging of public and private funds as an important tool in global efforts to reduce poverty.
Under the MCC Benin Power Compact, we worked with the Government of Benin, which now plans to launch a request for proposals this year for a solar independent power project with capacity up to 45 megawatts.
We also launched the Off-Grid Clean Energy Facility (OCEF), which co-finances sustainable business models with the private sector. In addition to MCC funds and the equity from businesses, we worked with the African Development Bank to align with a debt facility that is supporting off-grid companies, The Facility for Energy Inclusion’s Off-Grid Energy Access Fund (OGEF). This type of blended finance is the future of development. There is great potential for the private sector to contribute expertise, efficiencies and capital to bring about transformational change in Africa’s energy sector.
For the private sector representatives here today: I encourage you to take a look at our procurement, partnership and investment opportunities on the Work with Us page on our website at www.mcc.gov. Join our efforts to spur economic growth.
Finally, let me leave you with our vision. MCC is committed to its singular mission of reducing poverty through economic growth, and to our model: a competitive selection process, a data-driven approach and focus on results, country-led solutions and implementation, along with a strict five-year investment timeline for our compacts.
Through our mission and model, we are doing our part to transform the energy future for Africa.
As we stay true to our core mission and model, MCC is preparing itself for the future of development: to support regional integration and blended finance, to promote systemic changes with policy and institutional reforms, and to model best practices that can outlast the lifetime of our investments.
We aim to represent the best of effective foreign assistance and help African nations achieve their vision of prosperity to ensure global stability and security here at home.
Thank you all very much.