Chapter 7: Guidance for Eligible Countries Pursuing Second Compacts

MCC is selective in choosing countries as eligible for second compacts.  Countries must not only pass MCC’s scorecard, but show meaningful progress toward achieving first compact results before being considered for a second compact.  

Building on experience and knowledge gained during first compact implementation, MCC expects to see a maturation of its relationship with countries pursuing second compacts. This includes the commitment of significant country resources towards compact development and implementation; increased emphasis on seeking compact partnerships with the private sector, other donors, and civil society organizations; increased emphasis on ensuring that social and gender analysis is integrated into compact processes; explicit application of lessons learned from first compact implementation; and an emphasis on ensuring that public policies and institutions are supportive of the compact investment.

Country Selection for Second Compacts

MCC’s Board of Directors (the Board) decides which countries will be eligible for MCC assistance on an annual basis.  This determination is based primarily on country performance on MCC’s scorecard, which assesses country commitment to just and democratic governance, investments in people, and economic freedom.  In determining eligibility, the Board also considers the opportunity to reduce poverty and generate economic growth within a country, and the availability of MCC funds.

For countries that are candidates for second compact selection, the Board considers each country’s performance implementing its first compact. To assess first compact implementation performance, the Board considers country performance in three areas:

  • Progress towards achieving compact results, including significant progress relative to the planned compact timeline towards process and output indicators; degree to which compact programs are on track to reach compact targets; and level of commitment to monitoring and evaluation.
  • The nature of the country partnership with MCC, including political will and capacity to implement compact programs, management of implementation challenges, and achievement of policy and institutional reforms associated with compact investments.
  • The degree to which the country has implemented the compact in accordance with MCC’s core policies and standards, including in the areas of preventing fraud and corruption, procurement, environmental performance, gender integration, monitoring and evaluation, and legal provisions in the compact agreement and other supplemental documents.

Compact Development Compact Development Team

Eligible countries will establish a Compact Development Team that will be responsible for compact development.  The Compact Development Team should be distinct from the existing MCA, and in no case can funds from the first compact be directed towards the development of the second compact.  However, as it is important to draw lessons learned from implementation of a first compact and incorporate those lessons into compact development, MCA staff can serve in an advisory capacity regarding second compact development.  For example, the MCA might provide monitoring and evaluation data, share lessons learned from the implementation of projects relevant to second compact development, and provide feedback on proposed projects and implementation approaches based on first compact experiences.
MCC expects second compact country partners to build on their previous experience working with MCC and reflect a clear understanding of MCC’s model and approach.  As a result, MCC expects second compact country partners to quickly mobilize a Compact Development Team, develop strong compact proposals that are a good match to MCC’s model, and explicitly incorporate lessons learned from first compact implementation.

Focus on Results and Performance of the First Compact

Throughout compact development MCC will assess implementation performance information available from the first compact.  MCC's decisions to accept, reject, or refine project proposals will be informed by evidence available from the implementation of the first compact:

  • Concept Papers that propose projects in sectors included in the first compact must include an analysis of lessons learned from the first compact.  Proposals must address how policy and institutional issues, as well as environmental, social, and other risks encountered in the first compact will be mitigated. 
  • In determining proposed project costs, MCC and country partners will include careful analysis of the factors that influenced final project costs during first compact implementation, especially in cases where actual project costs exceeded estimated budgets.
  • As post-compact assessments and impact evaluations become available, MCC and country partners will use this use data to inform project proposal assessment, project design, and implementation approaches.

Compact Development Resources

Country contributions during compact development and implementation are critical to promoting country ownership and demonstrating country commitment to working with MCC. In addition to financially supporting the Compact Development Team, eligible countries must undertake extensive public consultations and conduct a range of economic, technical, social, gender and environmental studies.

MCC will provide support to the compact development process by dedicating technical staff as well as consultants.  MCC may also enter into contracts on behalf of, or make grants for feasibility studies, environmental and social impact analysis, and detailed design work. All countries receiving compact development funding are required to provide, at a minimum, facilities, logistical support, data, and other resources to support the work of MCC’s staff and consultants. 

Compact Resources

All countries pursuing second compact agreements will be expected to commit resources to the total compact amount.  Low-income countries are expected to contribute 7.5% of the total compact amount to meeting compact objectives. Lower-middle income countries are expected to contribute 15% of the total compact amount.

Private Sector Partnerships

Increasing private sector participation in the development and implementation of compact programs is a priority for MCC.  Through the Investment Opportunity Process the Compact Development Team will consult with the private sector and consider whether and how to incorporate private sector participation in compact project proposals.