MCC@20
In 2004, a bipartisan group in Congress created MCC to promote economic growth and eliminate extreme poverty. Over the last 20 years, MCC has evolved from an experiment in aid effectiveness into an example of excellence. The MCC model now exemplifies the international consensus on development cooperation effectiveness and has bolstered U.S. global leadership.
The MCC@20 policy framework was the culmination of MCC’s 20th anniversary celebration in 2024. This milestone presented an opportunity to look back at significant accomplishments, reflect on the agency’s history, and present a strategic vision for the future. Our staff assessed the changing global development landscape and built on lessons learned to ensure MCC remains well equipped to anticipate future challenges and solutions.
Though it has already reached proof of concept, MCC must continue to evolve to meet the moment. The foundational aspects of the MCC model will not change. MCC recommits to ensuring analytical rigor, country ownership, transparency, and accountability throughout all stages of the program lifecycle. MCC is also testing new approaches to promote regional integration, reform and diversify MCC’s pipeline, and implement “threshold after compact” authority. MCC will continue to strengthen partner countries by supporting political and economic institutions, enhancing resilience to shocks, strengthening inclusion and gender equity, preparing the workforce and enhancing digital skills, catalyzing private sector investments, and leveraging partnerships. To prepare for new challenges, MCC will push ongoing internal reforms while equipping MCC’s workforce for the needs of the future.
The MCC@20 policy framework is a vision for the agency’s next chapter. As MCC looks ahead, we are setting a path forward for the agency. The global development landscape will continue to change, and MCC will continue to adapt to deliver even greater development impact.
Candidate Country Pool
MCC’s fiscal year (FY) 2025 Congressional Budget Justification, submitted to Congress in FY 2024, reiterated a key legislative request first made in MCC’s FY 2024 budget request: to reform MCC’s candidate country pool to include countries below the World Bank threshold for initiating the International Bank for Reconstruction and Development (IBRD) graduation process for the fiscal year. Senators Jim Risch (R-ID) and Robert Menendez (D-NJ) introduced the legislation known as the Millennium Challenge Corporation Candidate Country Reform Act (S.1240) in April 2023 to address this important change, and Representatives Young Kim (R-CA) and Joaquin Castro (D-TX) introduced an identical bill in the House (H.R. 3042) a month later. On December 23, 2024, the legislation was signed into law as part of the Servicemember Quality of Life Improvement and National Defense Authorization Act for Fiscal Year 2025 (H.R. 5009).
The change applies MCC’s impactful model to a broader set of countries. The enacted legislation added a total of 33 countries to MCC’s candidate pool. This includes nine additional countries in the Western Hemisphere (including Colombia, Guatemala, Ecuador, and Peru), nine countries in the Eastern Europe/Balkans/Caucuses regions (including Armenia, Albania, North Macedonia, and Moldova) and seven countries in the Asia and Pacific region (including Fiji, Tonga, and Tuvalu), as well as eight countries in the Middle East and Africa.
This reform could significantly enhance MCC’s positive incentive for improved policy performance, often referred to as the MCC Effect. MCC’s scorecards, used by MCC’s Board of Directors (Board) to help select new partner countries, set forth indicators that objectively measure a country’s commitment to ruling justly, promoting economic freedoms, and investing in its people. Since our founding, we have observed this incentivizing effect of MCC’s transparent eligibility criteria, whereby countries pursue specific policy reforms to qualify for, maintain eligibility for, and ultimately compete for MCC assistance.
Inclusion and Gender
MCC recognizes that economic growth must be inclusive to achieve MCC’s poverty reduction mandate, and a high level of exclusion or inequality may constrain economic growth. MCC’s commitment to inclusion and gender is thus firmly grounded in its mission. Since its inception, MCC has worked to elevate inclusion and gender priorities, target reforms addressing gender-based discrimination, and ensure equal access to economic benefits.
Reflecting the agency’s continued ambition on these issues, MCC launched the Inclusion and Gender Strategy in 2022 and a revised Inclusion and Gender Policy in 2024. The 2024 Gender and Inclusion Policy replaces MCC’s Gender Policy, last updated in 2010. The overall goal of the policy is to routinely and systematically expand opportunities for structurally disadvantaged groups to access, participate in, and benefit from MCC investments. The policy also aims to minimize the social risks and unintended negative consequences that can accompany MCC investments. The policy is intended to help MCC and partner country governments work together to develop and execute programs that lead to poverty reduction and more gender-equitable, broad-based economic growth.
Blended Finance
Since its founding, MCC has actively sought opportunities to leverage its high-quality grant funding to catalyze private investment in partner countries to promote economic growth and maximize program impact. Recognizing shifts in the global development landscape and the opportunity to scale up impact, MCC has aimed to increase private investment in and around our programs through blended finance. In recent years, MCC has honed its ability to help partner countries design, strengthen, and harness financial markets through a range of blended finance tools, including project preparation, transaction advisory services, grant facilities, viability gap financing, guarantees, and on-lending support. MCC is currently finalizing new guidance for the economic assessment of blended finance investments to catalyze socially impactful private sector investments in a cost-effective manner.
MCC takes on several key roles in advancing this work. As a builder, we strategically invest in public infrastructure to promote private sector-led development. In our capacity as a catalyst, we support essential policy and institutional reforms that create an enabling environment for private investment. We also provide both financial and technical assistance to develop robust project pipelines filled with investable opportunities. Lastly, as a dealmaker, we establish funds and facilities that offer strategic grant capital to attract commercial financing, along with transaction advisory support to effectively bring projects to market. Together, these efforts enhance MCC’s ability to drive sustainable economic growth in our partner countries.
Climate
MCC recognizes that resilience, poverty, and economic growth are inextricably linked. This challenge directly impacts MCC’s mission to reduce poverty through sustainable economic growth. Climate impacts threaten to reverse significant development gains in developing countries and exacerbate global poverty and inequality. MCC has invested $2.4 billion in programs that support adaptation and resilience from FY 2022 to FY 2024. These initiatives are specifically designed to address systemic challenges while promoting long-term sustainability. Since its inception, MCC has consistently integrated resilience, adaptation, and mitigation into its investment strategies to both further climate goals and to protect taxpayer investments.
As part of its learning culture, MCC constantly develops and evolves its tools to enhance its analytical frameworks and improve its operations. In FY 2024, the agency enhanced and deployed its analytical tools to better strengthen resilience and improve natural resource management. In the last few years, this has included methods to better incorporate environmental impacts, and MCC has developed guidance to incorporate environmental externalities and uncertainties into its cost-benefit analysis. These adaptations are based on the latest evidence and technically relevant approaches proposed by the broader development community. Together, these examples reflect MCC’s commitment to addressing the intertwined challenges of climate and poverty in a comprehensive manner.