Promoting our Interests
"… There’s been a debate about pure development—just develop this thing and whatever comes, comes—versus policy and leverage and the other components of this. I get it. What I want to do is work with [USAID] in the smartest way we can together to get the best return on this investment for the American taxpayer that we can get, the most accountable, the most transparent, the most efficient. And in doing so, we are going to advance America’s interests in a way that serves every citizen and all of our interests.â€
Secretary of State and Chair of MCC’s Board of Directors John Kerry, Remarks at USAID Headquarters, February 15, 2013
Advancing the fight against global poverty means innovating the discipline of development through a culture of honest learning and adapting that embraces what works and fixes what does not work. It means challenging ourselves—and others—to think and act differently about the practices we follow. What does this involve? Being true to our values and pursuing our interests through accountability, evidence-based decision making, transparency, and a focus on sustainability.
Accountability
Given our fiduciary responsibility to invest U.S. tax dollars wisely, MCC’s commitment to accountability permeates all that we do, beginning with the selection of partner countries. These poor but well-governed countries also demonstrate their commitment to accountability by taking on the tough work of reform and capacity building to lead and sustain development efforts for the benefit of their people.
Proof of this during fiscal year 2013 included the deeper focus on MCC’s country selection system. In addition to helping our Board of Directors decide where to allocate limited funds, MCC’s selection system has long been touted for its potential to incentivize countries to strengthen institutions, pursue policy reform and improve data quality. In February 2013, two faculty members from the College of William and Mary published a paper on the reach of MCC’s policy influence. They revealed the findings of a survey of 640 MCC stakeholders, including foreign government officials, U.S. Government officials, contractors, civil society, and private sector members.
According to the paper, "Measuring the Policy Influence of the Millennium Challenge Corporation: A Survey Based Approach,†the prospect of MCC eligibility has served as an effective incentive for policy reform. In fact, 92 percent of respondents stated that MCC’s scorecards had an impact on reform efforts, ranging from "marginal impact to few important reform efforts†to "instrumental to many reform efforts.†Respondents identified 67 governments that undertook reforms to improve performance of their country on at least one MCC eligibility indicator.
Among respondents from candidate countries that have never received a single dollar in MCC assistance, 41 percent reported that MCC’s eligibility criteria were either "central to a few important reform efforts†or "instrumental to many important reform efforts.†Cote d’Ivoire, for example, is undertaking initiatives to stem corruption in order to become more competitive for MCC assistance.
When countries are selected and partner with MCC, our commitment to country ownership goes hand-in-hand with accountability. Country-owned development goes well beyond involving just a country’s government to also include citizens, beneficiaries, civil society organizations, and the private sector. We purposely invest in systems to build inclusive country capacity so our partners can drive their own development and hold actors accountable.
A key way of doing this is strengthening the monitoring and evaluation (M&E) capacity in our partner countries. We work closely with MCAs and implementers to make sure they comply with our rigorous M&E standards. In many countries, MCC’s focus on results is a new way of doing business, so the standard M&E budget for all compacts includes funds for M&E training. This is to ensure that project implementers learn about and are able to apply best practices in M&E during and after the compact to deliver an evidence-based accounting. Training materials on economic analysis, impact evaluation and M&E information systems have been developed for all countries. Participants from outside MCAs, like the employees of a partner country’s government, often attend many in-country trainings.
Capacity building efforts during fiscal year 2013 deepened the knowledge of M&E professionals, particularly those servings as project or sector leads. At MCC sector-specific training events on agriculture, land and human capital development, MCC emphasized problem diagnostics, program logic, monitoring, and independent evaluation. In Lesotho, for example, MCA staff and implementers attended a week-long data quality training to learn how to use monitoring data to improve project management. An M&E-focused training in Jordan included more than 30 participants from MCA-Jordan’s staff as well as employees from partner entities such as the Ministry of Water and Irrigation, the Water Authority of Jordan, the Ministry of Planning and International Cooperation, the Department of Statistics, the Government Tenders Department, and USAID.
Practicing our Values
By always learning, practicing excellence and being accountable, MCC is making notable contributions toward improving how the business of international development is conducted.
Evidence-based decision making
Given our mission to reduce poverty, MCC is committed to using independent evaluations to build a body of evidence on how our investments lead to attributable changes in outcomes, particularly household income. What distinguishes MCC from other development agencies is our commitment to using impact evaluations to measure impacts on beneficiary household income. This is key for learning about what instruments are actually driving poverty reduction. Yet measuring changes in household income is generally difficult and challenging, particularly for beneficiary populations with multiple sources of income. MCC continues to explore alternative and improved approaches to measuring household income for ultimate impact, and standardizing this measurement across evaluations.
Toward this effort, MCC published the results of our first five impact evaluations during fiscal year 2013, revealing critical learning on how we can improve our operations and independent evaluations moving forward. For the five activities evaluated, we were very successful in meeting or exceeding our output and outcome targets according to MCA monitoring data. The average completion rate of output and outcome targets specific to the activities covered by these evaluations is: Ghana (103 percent), Armenia (103 percent), Nicaragua (112 percent), El Salvador (131 percent), and Honduras (158 percent). These five impact evaluations provide encouraging news about MCC program successes:
- In El Salvador, the evaluators found that dairy farmers doubled their farm incomes.
- In Ghana, northern region farmers’ annual crop income increased significantly relative to the control group, over and above any impacts recorded in the other zones.
- In Nicaragua, project participants’ farm incomes went up 15 percent to 30 percent after two to three years of project support.
In fact, these evaluations show increases in farm income in three out of the four countries where methodologically sound evaluations were possible. While MCC was successful in meeting or exceeding output and outcome targets and saw increases in farm incomes in these three countries, none of the five evaluations were able to detect changes in household income. This raises interesting questions about the theories of change embedded in the program logic for these and other farmer training programs, traditional assumptions of how program interventions lead to increased household income, as opposed to farm income, and the challenges associated with producing and measuring changes in household income. These evaluations are helping us improve the way we do business, with several major takeaways:
Cautiously monitor and rigorously test traditional approaches. In project design and implementation, we need to consider what project components may require more evidence. The first five evaluations of farmer training programs suggest two findings. First, the delivery of farmer training over longer periods of time is more effective than intensive training programs with limited duration. Second, in-kind contributions (grants and starter and incentive kits) have traditionally been considered fundamental components of farmer training programs, but they may have limited effect on the adoption of new techniques when content fails to reflect regional differences and is seasonal in use. However, because project design and implementation did not allow for variation in exposure time or application of starter-kits, the evaluations are limited in what they can tell us.
Ensure implementation is consistent with the assumptions of the program logic. When one intervention, such as irrigation, is directly linked to another intervention’s theory of change, such as farmer training, properly sequencing the roll-out of the interventions is a key factor in the program logic. In Armenia, one key assumption underlying the farmer training program was that access to a reliable water source was necessary to encourage trained farmers to shift to higher-value agriculture production. However, implementation of the irrigation construction lagged and farmer training proceeded, essentially disconnecting the two interrelated interventions. We must closely monitor construction progress of coordinated interventions and if significant delays are anticipated in connected projects, MCC must be willing to delay or halt implementation of any related project or projects. Yet MCC’s five-year compacts make sequencing particularly challenging.
Ensure that the timing of the evaluation and data collection is consistent with the assumptions of the program logic. The evaluation timeline must be informed by the program logic, particularly to account for the exposure time needed for benefits to accrue. As program and evaluation implementation changes or has challenges, it is important for implementers and evaluators to communicate quickly and often to understand the possible effects of changes on the potential for producing and measuring results. If there are delays or adjustments in program design or implementation that affect program logic, or if the evaluation loses a credible counterfactual, options should be considered to delay or halt the evaluation and data collection. Although there is often significant pressure to demonstrate results quickly, sufficient exposure to treatment based on the program logic is required to measure changes in outcomes. By collecting data too early, evaluations may underestimate the impacts on outcomes or miss important lessons simply because not enough time has passed. However, balance must be struck on how long the evaluation period should be and how long the counterfactual group can be maintained.
Structure evaluations to facilitate learning, not just accountability. The first set of MCC evaluations primarily focused on measuring program effects on household income, the ultimate impact in MCC’s continuum of results. These evaluations were not consistently structured to judge the effectiveness of intervention components, like the training curriculum or in-kind support, or to assess impacts on intermediate outcomes along the continuum to understand why we see what we see. While MCC will continue to use and improve evaluation methods to measure impacts on household income, future evaluations should include a structure for learning, further contributing to the body of evidence on what works, what does not work and why.
Transparency
Publish What You Fund Aid Transparency Index (2012)
MCC: Ranked first among U.S. Government agencies on transparency
Publish What You Fund Aid Transparency Index (2013)
MCC: Ranked first worldwide among 67 donors on transparency
Transparency is not just a core value for MCC, but also one that we actively put into practice as we constantly seek to make more high-quality information available to our stakeholders. The 2012 Publish What You Fund Aid Transparency Index recognized our leadership on transparency, ranking MCC first among U.S. Government agencies on transparency, and ninth among 72 donors worldwide. We improved our ranking to first place worldwide among 67 donors in the October 2013 release of the Aid Transparency Index.
Our commitment is evident in several ways:
- MCC has improved our quarterly reporting of spending and results, making full information available both on our website and on the U.S. Foreign Assistance Dashboard. Within 30 days of the close of each quarter, complete information on spending and progress toward program goals is published in various machine-readable formats and visualized on the dashboard, alongside information from other U.S. agencies engaged in foreign assistance.
- MCC is developing a new disclosure policy to provide clear guidance to staff on sharing information produced in the course of MCC business. This will ensure that the results of economic and social analyses and independent evaluations are more widely disseminated, providing a broader public good that supports economic growth and private investment in partner countries.
- In October 2012, we disclosed the results from our first set of completed impact evaluations that added to the body of evidence about what works and does not work in development. This set a new standard for transparency, as MCC shared both successes and shortcomings of prior projects, creating a platform for learning that has informed best practices in development and improved the design of our future programs.
- We developed and launched data.mcc.gov, a new open data catalog where MCC’s financial, performance and selection data are made freely available to the public in various machine- readable formats, including CSV, IATI, XML, and JSON. In the future, this data will drive automated visualizations on MCC’s website, unlocking and interpreting a wealth of rich content to increase the accessibility of the information we are now providing.
- Building on our tradition of conducting rigorous independent evaluations of our programs, MCC established an evaluations data catalog in April 2013, which eventually will house all of the survey data and supporting information from independent evaluations conducted worldwide. Specifically, the catalog contains all of the information that documents and describes MCC-financed independent evaluations, including information on evaluation questions, the types of surveys conducted for the evaluation and the population of interest, questionnaires, sampling methods, and descriptive statistics for household- and individual-level data. We created a Disclosure Review Board for the purpose of reviewing data sets and ensuring MCC’s data releases are consistent with legal and ethical standards. By hosting public-use datasets and statistical analyses files for replicating an independent evaluator’s results or conducting separate analysis, the catalog creates another accountability check on us and our partner governments.
MCC is sharing our data because it is the right thing to do: Taxpayers in the United States and partner countries deserve to see how their public resources are being spent. They deserve to understand the impact of those public investments too. MCC is also sharing our data because it is the smart thing to do: Information and data are tremendous strategic assets for advancing learning and effectiveness. They help us enhance policies and practices to more fully contribute to economic growth, strengthen democratic institutions, improve the impact of our work, and inspire entrepreneurship, innovation and scientific discovery in the field of development and beyond.
Learning from One Another
In May 2013, MCC unveiled its Knowledge and Innovation Network (KIN) Journal, a technical publication featuring lessons, innovations, ideas, and thinking behind our poverty reduction investments around the world. Through peer-reviewed case studies, technical notes, graphics, and photographs, the KIN Journal fosters knowledge sharing, where best practices, state-of-the-art techniques, challenges, and opportunities are communicated among MCC staff, implementing partners and the broader development community. Together with MCC’s rigorous independent impact evaluations and monitoring and evaluation practices, the KIN Journal positions MCC to actively learn within and across the projects we finance. This improves our own ability—and that of others—to deliver development approaches that work.
Sustainability
"… [South Africa, Rwanda, and Namibia] are helping to lead the charge to define a new model for U.S. assistance … It’s one that empowers and emphasizes co-investment, collaboration, and true partnership. And none of these things can work if it isn’t transformed into sustainability, if it doesn’t become, really, a country’s own initiative.†Secretary of State and Chair of MCC’s Board of Directors John Kerry, from his remarks at a global health event with partner countries on the sidelines of the United Nations General Assembly, New York City, September 25, 2013
From how we select partner countries, to how we ask countries to manage their MCC-funded development projects, to how we engage the private sector, MCC understands the importance of sustainability. Because resources are limited and key stakeholders demand that we find ways of doing more with less, we are challenged to increase the value of every dollar we spend on development by ensuring that the results from our projects endure and raise the incomes of the poor in ways that ultimately limit or altogether end their need for development assistance.
At MCC, the sustainability of our investments revolves around working with our partner countries as collaborators in reducing poverty and generating lasting economic growth. MCC’s country-driven approach to achieve and increase sustainability means:
Partner countries reform their policies to qualify. MCC’s focus on sound policy reforms—quantified in scorecards centering on a country’s commitment to ruling justly, investing in their people and promoting economic freedoms—incentivizes political, economic and social reforms vital for sustainable economic growth, including changes in existing laws and institutions or the creation of new ones. Right from the start, we select countries that demonstrate a commitment to pursuing policies and undertaking initiatives that raise their overall level of development, which in turn improves their chances to successfully sustain our investments and their economic growth.
Partner countries build their capacity to deliver and measure development impact. Putting countries in charge of their own development requires that they first consult with all segments of their society to design their own economic growth programs. Together, we calculate economic rates of return to make sure that we are investing our development resources in those programs with the most cost-effective solutions for breaking through a country’s barriers to growth. Locally staffed MCAs are then in charge of implementing, monitoring and maintaining the results of the projects we fund. This often requires that partner countries learn new skills, including accounting for gender equality, responsibly compensating for resettlement when necessary and mitigating the risks of climate change. We know that socially and environmentally sound investments contribute holistically to the sustainability of project results. We also expect our partners to help us conduct independent impact evaluations that go out well past the end of compacts to assess if we have indeed raised the income of project beneficiaries in sustainable ways. Evaluations help us learn more about how our investments actually work and deliver the anticipated impact or why they failed to do so.
Partner countries collaborate with the private sector to drive growth. Partner countries are engaging the private sector at every stage of our process: at the beginning to help identify, develop and target our financial commitments and program activities as well as during implementation to leverage our capital, build on existing foundations and sustain the benefits provided by our investments once our programs have ended. We support our partner countries in establishing market-oriented policies and developing capacity to implement investment opportunities with the private sector. MCC grants and technical support help prepare and negotiate transactions with the private sector, as well as monitor the performance of private sector-funded projects in infrastructure, health care, education, and other areas that are identified as binding constraints to economic growth. For example, as part of El Salvador’s second MCC compact, which was approved by MCC’s Board of Directors in September 2013, we are working with the government to establish a jointly funded grant facility to identify private investments in the international trade sector. We expect our proposed contribution of $25 million to leverage over $125 million of matching investments from the government and the private sector. In Benin, MCC’s $188 million port expansion project facilitated a follow-on 25-year operator’s concession that brought another $256 million in private investment. In Jordan, MCC’s investment and transaction support catalyzed $110 million in private capital that will complete a $223 million build-operate-transfer deal to expand the As-Samra Wastewater Treatment Plant. In February 2013, the Water and Energy Exchange recognized this transaction with an award for innovative financing.
Making Sustainability Part of the Process
In June 2013, MCC launched a Sustainability Workshop Series that focuses on how to take both internal and external lessons and integrate them into future sustainability planning. We are taking a careful and comprehensive approach to this process, listening to staff throughout MCC and consulting experts from other organizations. The series aims to incorporate sustainability planning into the compact lifespan, from development to implementation, closure and beyond.
MCC’s country-centric approach to sustainability works to empower partners to be leaders of their own economic development and growth. We place as much value on strengthening institutions, policies and practices to make a lasting difference in the lives of the poor as we do on our actual investments that provide near-term, tangible benefits. Our approach attracts greater private sector activity as a way to leverage our intellectual and financial capital to optimize investments and sustain their impact. And this approach is ultimately building an enduring foundation for poverty reduction, economic growth and inclusive prosperity now and well into the future.