Remarks by MCC CEO at the Africa Day Public Forum

Ambassador John J. Danilovich, Chief Executive Officer for the Millennium Challenge Corporation, today delivered remarks on “Responsible Partnerships: MCC and Africa” to commemorate Africa Day 2007.

Ambassador Danilovich’s prepared remarks follow:

Good afternoon and welcome to the Millennium Challenge Corporation.  It’s a pleasure to be with you this afternoon to highlight the strong partnerships between MCC and several African countries, committed to their own development, and to the prosperity of their citizens.

There’s an African proverb that says, “Two ants do not fail to pull one grasshopper.”  The image is one of collective strength, of unity of action to accomplish a shared goal, even one that seems insurmountable. The Millennium Challenge Corporation and our African partner countries certainly share—and are working toward—a common purpose: reducing poverty through growth and, as a result, improving the lives of the poor in transformative and sustainable ways.

As I travel to our partner countries throughout Africa, I see firsthand the programs underway that are stimulating growth and lifting communities out of poverty:

In Madagascar, for instance, I handed out land titles, many to women.  I could feel their tremendous pride as well as their profound sense of economic security, dignity, and empowerment. I visited cooperatives that are helping Malagasy farmers plant geranium crops, which will be sold to produce high-value oil for soaps and perfumes.

In Burkina Faso, I visited classrooms where girls, alongside boys, are being educated. The “girl-friendly” schools, made possible through our funding, are enrolling some 13,000 students, with girls making up more than half of the overall student population.

From pineapple farms in Ghana seeking to increase high-value crop production, to anticorruption programs in Kenya and Zambia, to road rehabilitation projects in Cape Verde, to investing in the Bamako airport in Mali to increase its use for regional and international trade, MCC is partnering with African countries to stimulate economic growth and development.

MCC’s approach to development assistance provides substantial grants—not loans—to partner countries: that practice sound policies supporting good governance, investments in the health and education of their citizens, and economic freedom; that are actively engaging in and pursuing their own development; and that demand tangible results.

To date, MCC is working with a total of 40 countries, of which 19 are in Africa.   We have provided a total of $3 billion in grants—through funding agreements we call compacts—to 11 partner countries. Of these 11compacts, 5 are with the African countries of Benin, Cape Verde, Ghana, Madagascar, and Mali.

These 5 compacts alone total over $1.5 billion, meaning that half of what we have awarded so far benefits Africa. Compacts with our African partners range in size from $110 million to our largest so far at $547 million.

Pending Board approval and congressional notification, we hope to sign our next two compacts this summer with Mozambique and Lesotho.  In fact, a large majority of our next compacts are likely to be with African countries, with a projected commitment of $3 billion to the continent in the next 12 months.

In addition, $310 million has been awarded to 13 other countries in Threshold agreements to help those countries address policy weaknesses to push them over the “threshold” to compact eligibility.   Six of these Threshold agreements are with African countries, totaling $91 million.

While the panel convened today will discuss how Compact and Threshold countries are using and leveraging MCC funds, I’d like to briefly outline why the partnership between MCC and Africa matters and why we remain committed to it.

I see three key reasons.

First, the Africa-MCC partnership raises expectations about what can be achieved on the continent.  Secretary of State Rice, who is also Chair of our MCC Board, refers to MCC as “one of our most important tools in changing the conversation about how development takes place, that there is responsibility on behalf of donor countries but there is also responsibility on behalf of those who would receive our aid.”

This new vocabulary of mutual responsibility and accountability creates a partnership of equals.  It is no longer donor and recipient countries interacting, but, rather, co-partners in development charting a course together toward results.

MCC expects our partner countries to practice sound policies, and we currently use 16 objective indicators of social, political, and economic policy performance to determine a country’s eligibility. MCC expects our partner countries to reject corruption.  MCC expects that the aid invested will deliver a return—namely, improvements in the lives of the poor.

Because of these expectations, we are seeing our African partners—on their own—enact the often difficult policy reforms necessary not just to qualify for our aid but, even more important, to do what is best for their citizens.

Niger, for example, embodies this commitment to higher expectations. In 2004, Niger was above the median on just 6 of our 16 indicators. By 2007, Niger’s performance improved dramatically—moving above the median on a majority of indicators and only one position away from passing control of corruption.

Niger didn’t just tell MCC it was committed to a policy environment that facilitated growth and poverty reduction, Niger proved it. Our Board recognized this commitment when it selected Niger for the Threshold program.  Prime Minister Hama Amadou continues to express interest in full MCC eligibility and told us directly that his objective is not just to meet MCC criteria but also to make ongoing reforms for the good of Niger as a whole.

Second, the Africa-MCC partnership builds capacity. At MCC we believe success is measured not by our length of stay in an African partner country but, rather, by how quickly and effectively we create sustainable conditions for our partners to help themselves.   Our funding agreements are short—five years for compacts and two years for Threshold programs—and, therefore, from the very start we rely on our  partner countries to command and lead their own development efforts—from designing a proposal for funding based on consultations with all segments of their society through implementation. And, we ask that they work with us to monitor performance and evaluate impact along the way.

These expectations have stretched capabilities in our partner countries and motivated them to develop new capabilities.  It is making them think critically about what policies are needed or what institutions need to be strengthened or created to sustain development.  In short, these expectations are building capacity.

Ghana, for instance, identified a lack of trained procurement specialists as an obstacle to its development. It is using MCC funding for a procurement capacity-building initiative within the government to strengthen various procurement entities in order to help itself overcome this barrier to development.  Procurement capacity creates a more efficient use of Ghana’s public finances and builds business confidence.

Ghana is now applying the lessons learned from working with MCC to approach capital markets to borrow funds for further infrastructure development.  It has tasked its original proposal development team to decide how best to invest those funds to yield a maximum return that benefits the poor.  This is an example of MCC equipping countries to build capacity to fight poverty and stimulate growth on their own, beyond specific MCC programs.

Third, the Africa-MCC partnership delivers results.  Although it is still early, our antipoverty programs are specifically designed to generate growth opportunities that improve the lives of the poor by increasing their incomes.  With more income, the poor have more resources available for better food, better education, better health care, and better housing, all leading to a better quality of life.

The agriculture project in the Ghana-MCC compact, for example, is projected to increase agricultural household incomes between 33 and 142 percent, depending on the region, by enhancing the profitability of staple food and horticulture crops.

For such results to continue transforming individual lives, we are paving the way for increased private sector engagement in our African partner countries, which is the engine of growth and poverty alleviation.  Because MCC demands performance on indicators evaluating fiscal, monetary, regulatory, and trade conditions, including the costs and days required to start a business, we are fostering conditions to attract investment capital and ignite private enterprise. By insisting on good policy performance, by rejecting corruption, and by building capacity, we are helping our partner countries sustain those conditions. Both MCC and our African partner countries want development assistance to be replaced by the self-sustaining economic activity driven by the private sector itself.  Our African partner countries are open for business, and this, ultimately, will drive sustainable growth that will continue delivering results over the long-term.

The partnership between MCC and Africa works well because it is built on new expectations, on strengthening capacities, and on achieving lasting results in individual lives and whole communities.

It thrives on a common effort and mutual respect. As the Secretary General of the United Nations stated when he addressed the Summit of the African Union in Ethiopia earlier this year, “Through unity of purpose, I believe there is no limit to what we can achieve.” Similarly, my colleagues and I at the Millennium Challenge Corporation are proud of our strong partnership with those African countries committed to the hard work of their own transformation.

Moving ahead and moving together, the Africa-MCC partnership will continue to yield results by replacing poverty with prosperity for the poorest beneficiaries of our programs.

Thank you very much for joining us today and for your interest in learning more about this important partnership.