In addition to the base request of $1.0 billion, the Administration is proposing $350 million in resources for MCC as part of the $56 billion Opportunity, Growth and Security Initiative (OGSI) included in the FY 2015 President’s Budget.
The initiative includes additional resources for MCC because of the agency’s strong commitment to evidence and evaluation and impact-based budgeting. These supplemental funds will focus on bolstering MCC’s key role in establishing enabling environments overseas where U.S. and other businesses can compete and win. MCC works with partner countries to reform laws, policies and institutions so as to create a pro-business climate, while investing in projects such as transportation infrastructure and vocational training to enhance workforce skills that will have the greatest impact on economic development and poverty reduction. In addition, MCC’s compact procurements are fair and open, without geographic preferences, thus ensuring a level playing field for U.S. companies seeking a foothold in fast-growing markets overseas.
The resources in the initiative will enable MCC to increase support for the President’s Power Africa Initiative through additional compact investment opportunities in Ghana, Liberia, and Tanzania , including the potential to pilot a pay-for-performance and/or cash-on-delivery component. If the additional funds are appropriated, MCC plans to make the targeted compact investments detailed below.
Liberia | Estimated $50 million
The Liberia Compact will focus on two critical constraints to growth – inadequate power and inadequate roads outside of the capital region. In road transport, supplemental initiative resources could support equipment imports and local contracting to improve frequently neglected maintenance. In the power system, initiative resources will expand access in poorer communities through on- and off-grid business models, establish market-oriented policies and standards in the power sector, and improve the operational performance and commercial viability of the power utility, making it a viable partner for private sector investors and operators interested in opportunities in power generation.
Ghana | Estimated $125 million
The Ghana Compact is anticipated to focus on reform of and catalytic investment in the power sector, identified as one of the key constraints to private-sector-led growth. MCC’s program will enable private investment in gas supply and generation, while MCC’s funding will target improvements in distribution, enabling private operation and investment, and extending access to poor urban and rural consumers and producers.
The additional resources could accelerate and deepen policy reforms and private investment through pay-for-performance incentives, allowing the government to address strategic issues such as reform of the electric utility through performance improvement and restructuring. Expanded funding could also support pilots in different business models, leading to more effective investments by the power utility and public-private partnerships in the power sector supply chain. Although the compact is expected to be signed before the initiative’s resources would become available, the compact could be amended to use the additional funds.
Tanzania | Estimated $125 million
Tanzania has identified the lack of reliable, inexpensive electric power as one of the most critical constraints to long-term economic growth. The Tanzania Compact will likely focus on reforms in the national power utility, Tanesco, a root cause of the problem. MCC’s program will target fundamental restructuring and reform of Tanesco to improve performance, enhance operations and maintenance and build a commercially viable base for investment, while also extending the reach of the electric power transmission and distribution network. This will complement existing interest from private investors.
The additional resources would allow additional access to electric power in poor rural communities through competitively developed rural mini-grids, small off-grid renewable energy schemes and support to small entrepreneurs and agribusinesses for adopting electric power in ways that increase productivity. This could enhance the poverty reduction impact and strengthen political support for tough reform measures. The funding could also go toward providing the critical keystone for developing offshore gas reserves and gas exports.
609(g)/Due Diligence | Estimated $50 million
Consistent with how 609(g) and due diligence resources estimated in MCC’s base budget support base compact investments, $50 million will support the development and oversight of the initiative’s additional compact resources.