|Compact Development and Oversight (in millions of $)
|FY 2015 Enacted
|FY 2016 Enacted
|FY 2017 Request
For FY 2017, MCC plans to use $22.0 million for assistance under section 609(g) of MCC’s authorizing statute and $82.0 million for due diligence to support programmatic oversight, quality control, and other support for compacts in development and implementation, as well as post-completion work, such as data collection and evaluation. A detailed focus on pre-compact planning, program oversight, and post-compact evaluation is critical to the success of MCC program investments and to ensuring that MCC, partner countries, and the development community are able to take advantage of the learning opportunities inherent in MCC programs.
The higher funding level will be used to support compact development with existing partners as well as with the new partners selected in FY 2016: Côte d’Ivoire, Kosovo, and Senegal. It will also be used for oversight and monitoring of compacts in implementation, the number of which is growing, and for monitoring and evaluation activities around the Jordan Compact closeout in FY 2017.
The funding also will support MCC’s oversight of threshold programs in implementation and the development of threshold programs with the new partners selected in December 2015, Sri Lanka and Togo, and partners that will be selected in December 2016.
Although assistance provided under section 609(g) of MCC’s authorizing statute represents less than three percent of MCC’s overall request, this assistance is critical for compacts to succeed and for MCC to fulfill its goal of developing high-quality compacts more quickly. MCC uses 609(g) assistance for key project preparation work such as feasibility and environmental impact studies, engineering designs, baseline surveys, financial management and procurement technical assistance, and other specialized analysis to help MCC determine investment suitability, scope, costs, implementation risks, and necessary risk mitigation measures. Such analysis also enables partner countries to develop projects that will provide returns on MCC’s investment and can be implemented within the fixed five-year timeframe.
Due diligence funds allow MCC to obtain sufficient information to evaluate, assess, and appraise projects during compact development, effectively oversee and monitor compact implementation, and evaluate the results of a compact project once complete.
Due diligence funds also enable MCC to continue to operate on a lean administrative budget relative to the size and diversity of its investment portfolio. Rather than permanently hiring technical experts whose services might be underutilized depending on the mix of projects in MCC’s portfolio at a given time, MCC uses due diligence funds to procure technical expertise needed to support compacts in development and implementation.
Due diligence funds support MCC’s independent impact evaluations that use rigorous statistical methods to measure changes in beneficiary income related to MCC activities. In addition to offering valuable lessons on how MCC can improve, the impact evaluations provide encouraging news about program successes.
Due diligence funds also support the data and some of the technical expertise for calculating economic rates of return for compact investments. Economic modeling done after compact closeout helps to assess the cost effectiveness of MCC investments. Through pre-investment economic modeling of expected economic rates of return, MCC chooses which investments are most likely to generate benefits (increased income for program beneficiaries). MCC also estimates expected return rates at project closeout.