Appendix: Annual Performance Report

Compact Signing Amounts and Key Dates (in millions of $)*

* Please note that the values above are the signed compact amounts and do not reflect lower actual expenditures due to early terminations or funds for a compact not being fully spent. The table on the next page reflects the net obligations/commitments associated with each compact.

Compact Obligations and Commitments

Threshold Program Agreements Signing Amounts (in millions of $)

Results of Recently Closed Compacts

Cabo Verde II

Compact Modifications

MCC employs a risk-based approach to the management of its portfolio and uses a number of mechanisms to manage projects that face potential major modifications, including the following:

• Quarterly portfolio reviews of all compacts, with a focus on high-risk projects and activities;
• Early identification of high-risk projects;
• Close collaboration with partner countries to develop plans to prevent, mitigate and manage project restructuring; and
• Approval of modifications at the appropriate level.

MCC also conducts due diligence on programs in advance of compact signing to increase the reliability of technical, cost, and other estimates. During compact development, MCC makes project design modifications to mitigate potential completion risk, currency fluctuations and the potential for construction cost ovERRuns.

Estimating Compact Beneficiaries and Benefits

Under MCC‘s results framework, beneficiaries are defined as an individual and all members of his or her household who will experience an income gain as a result of MCC interventions. We consider that the entire household will benefit from the income gain and counts are multiplied by the average household size in the area or country. The beneficiary standard makes a distinction between individuals participating in a project and individuals expected to increase their income as a result of the project. Before signing a compact, MCC estimates the expected long-term income gains through a rigorous benefit-cost analysis. MCC may reassess and modify its beneficiary estimates and the present value of benefits when project designs change during implementation.

Post Compact Economic Rates of Return

All MCC projects are independently evaluated, and these independent evaluations often include post compact ERRs. Independently calculated ERRs complement the closeout ERRs that MCC calculates at the end of the compact. Because independent evaluations occur 2-5 years after compact closure, independently calculated ERRs can offer an updated assessment of a project’s costs and benefits post-compact. However, these ERRs are still projections for projects whose benefits are often projected to last up to 20 years. Nonetheless, the independently produced post compact ERRs, which are based upon the best available evidence, complete the accountability loop in a way that is rare among donors. Two examples are below.

Results of the Mozambique Farmer Income Support Project

MCC’s Farmer Income Support Project (FISP) was designed to reduce the damage to the incomes of 1.7 million Mozambican farmers due to Coconut Lethal Yellowing Disease (CLYD).  This was to be accomplished through (i) short term surveillance, control, and mitigation services, prompt eradication of diseased palms, and replanting with the less susceptible Mozambican Green Tall coconut variety, and (ii) Technical advisory services to introduce crop-diversification options.  Given projected benefits to farmers’ incomes and the costs of the program, MCC originally projected the project to have an economic rate of return of 25.1 percent.

An independent evaluation of the FISP project’s impacts found that cutting trees and burning tree stumps in epidemic areas did reduce CLYD prevalence, but not to the degree originally forecast, resulting in lower than expected productivity impacts. Likewise, endemic area alternative crop uptake was lower than expected, likely due to insufficient input and output market linkages. The resulting updated, ex-post ERR estimate was 16.8 percent.  Greater detail on the evaluation and lessons learned are available in MCC’s public evaluation catalogue. 7

Results of the Nicaragua Transportation Project

MCC’s Nicaragua Transportation Project was designed to stimulate economic development and improve access to markets and social services by reducing transportation costs.  It upgraded and rehabilitated 68 km of roads, consisting of two secondary roads and a trunk road.  MCC’s originally estimated an economic return from the project of 13.2 percent based on reduced vehicle operating costs and travel time savings for road users, including those who would travel on the road due to improved road conditions resulting from the project.

The independent evaluation of this project estimated actual impacts using data from 2 years after the roads were completed.  It found that the road roughness, a key indicator of transport costs, decreased 80 percent on average, and traffic increased 12 percent on average over the 2 years to 3,062 vehicles per day.  At the same time, the capital costs for the road works came in on average 2.2 times those estimated prior to implementation.  Given this balance of measured benefits and costs, the resulting “ex-post” ERR fell to 2.1 percent, primarily due to these higher costs.  (Benefits were roughly consistent with ex-ante estimates.) Greater detail on the evaluation and lessons learned are available in MCC’s public evaluation catalogue, 8 and recently published Principles into Practice: Lessons from MCC’s Investments in Roads. 9

Portfolio by Sector

Investments by Sector

Results by Sector as of FY 2017 Q4

Sector Results at a Glance

Numbers are cumulative since the agency’s founding in 2004 and current as of September 2017.

Once a country is selected as eligible to develop a compact or threshold program, the first step in MCC’s process is to work with partner country officials to conduct a rigorous, joint analysis that identifies the most binding constraints to economic growth. These results help prioritize MCC’s investments in the areas that are the biggest impediments to private investment and poverty reduction and may include access to credit, governance, electricity, transportation, or education. Constraints to growth are different for each country and ultimately drive MCC’s investment strategy. Below are highlights of MCC’s sector investments that have emerged from this analysis.

Power

2,683 miles of electricity lines completed
MCC is making major investments in the energy sector to reduce energy poverty in Nepal, Benin, Ghana, Liberia, Malawi and Sierra Leone, while encouraging power sector reforms that complement infrastructure investments. In Liberia, MCC’s compact funds the rehabilitation of a hydropower facility to increase the amount of generated electricity, facilitate lower overall electricity rates, and increase the reliability and adequacy of electricity. In Ghana, the government took significant steps to revitalize its power sector by inviting the private sector to invest in one of its national distribution utility.  Implementation of the compact with Benin continues while significant construction works for large-scale, on-grid generation, transmission and distribution projects are underway in Malawi, as well as smaller-scale, on- and off-grid energy projects in Indonesia. In Sierra Leone, MCC began carrying out its threshold program to build the capacity of the newly established power regulator and power generation and transmission utility.  In Nepal, preparations are underway for the design of the transmission line funded under the compact.  In addition, Kosovo’s threshold program will strengthen the power sector by fostering a market-driven approach to lowering energy costs for households and business, and developing new sources of electricity generation.

Transportation

2,500 miles of road completed
1,000 additional miles of roadway under construction
In May 2016, the Philippines, using MCC compact funding, successfully completed the reconstruction/rehabilitation of 137.9 miles of a road in the Samar and Eastern Samar provinces of the country that will help lower transport costs and travel time and opens up possibilities for new markets. For the Niger Compact, investments were prepared for the upgrading of approximately 198 miles of roads to international standards, and enhancement of both national and regional connectivity. Implementation of technical assistance and policy reform activities that would set Liberia on a long-term path to a sustainable road maintenance were started.  In Nepal, a comprehensive technical assistance program targeting capacity building in road maintenance planning and construction has been launched and includes plans to conduct the periodic maintenance of approximately 300km of roads.  In Cote D’Ivoire, the design of major rehabilitation and upgrading of four (4) major urban corridors in the metropolitan area of Abidjan has been launched.  In El Salvador, the construction tender for a capacity upgrading of the heavily trafficked segment of 18 miles of coastal highway has been completed and construction is scheduled to start in early winter 2018.

Water and Sanitation

12,135 people trained in hygiene and sanitary best practices
1,181 water points constructed
MCC supports capital improvements and policy and institutional reforms to improve the level and quality of water and sanitation services in partner countries. MCC’s five year compact with Jordan, for example, closed in FY 2016 after investing more than $200 million for rehabilitation and construction of water supply and wastewater infrastructure including investment in the As-Samra wastewater treatment plant where treated effluent will be diverted for agricultural use saving precious bulk water supply for this water poor nation. MCC’s compact investment in Zambia is strengthening the main water utility company to improve billings and collections and provide more reliable service to its customers. In Sierra Leone, MCC is partnering with the government on a threshold program to implement policy reforms, build institutional capacity and improve governance in the water sector in Freetown. A comprehensive assessment of the water utility in Guma Valley was conducted to determine the priority areas of assistance for strengthening utility performance but because a cost-benefit analysis is not required for threshold program assistance, the estimated number of beneficiaries above does not include the Sierra Leone beneficiaries.

Agriculture and Irrigation

330,814 farmers trained
504,004 acres (203,963 hectares) under improved irrigation In July 2016, MCC signed a $437 million compact with Niger focused on strengthening the agricultural sector. Through the compact’s Irrigation and the Market Access Project, MCC will work with the Government of Niger to improve irrigation, including the rehabilitation and development of three large-scale irrigation systems in the Dosso and Tahoua regions, to increase crop yields, sustainable fishing and livestock productivity. In addition, the project will reform policies and institutions, including the establishment of a national water resource management plan and natural resource and land use management plans, and create local capacities to increase understanding of best-practices to sustainably use and maintain irrigation and market infrastructure.

Land

321,508 household, commercial, and legal entities gained protected land rights
MCC works with partner countries to improve land governance and administration, strengthen property rights, and stimulate private-sector investment for more productive land use. In Cabo Verde, MCC has invested to reduce the time required to register property rights and establish more conclusive land records in areas with high development potential. MCC funding was used under a pilot activity to complete surveys for 100 percent of land parcels on the island of Sal, which are now being registered. This activity led to the passage of a legal amendment in August 2016 that streamlined the land survey and registration process. MCC is now funding the survey and registration of an additional 22,824 parcels on the islands of Boa Vista, Maio, and Sao Vicente. In Indonesia, MCC’s investment in natural resource management and renewable energy includes development of a methodology for community-based participatory mapping of village boundaries and cultural and natural resources. Following this methodology, villages are able to produce legally recognized village maps to enhance land use plans. As of September 30, 2016, MCC funding had assisted 114 communities in defining and demarcating the boundaries of their villages. Land and natural resource information systems were being installed in government offices in 35 districts across 10 provinces to provide decision-makers with the information they need to encourage investment while effectively supporting the management of their land and other natural resources.

Education

772 education facilities constructed or rehabilitated
4,716 instructors trained
215,607 students participating in MCC-supported education activities
MCC works with partner countries to ensure that students obtain the knowledge and skills demanded by the private sector. In FY 2016, El Salvador officially announced its commitment to reform the technical and vocational education and training (TVET) system, identifying four transformative industries to target. The Salvadorians are establishing Skills Sector Committees for each of these four industries to define demand-driven training programs to feed into the overall technical and vocational educating training system. In Georgia, 26 schools have been completed, with another 3 on track to be completed by December 2017 and hundreds of students will be able to move into highly improved learning environments. Also in Georgia, more than 1,600 principals have been trained. The MCA-Georgia TVET Facility has awarded its first round of grants totaling approximately $12 million, slated to be disbursed in 2018. In September 2016, construction tenders were successfully launched for rehabilitation of pilot schools for MCC’s Morocco Compact. Also in Morocco, preparations are underway to field test an innovative Integrated School Improvement Model that will eventually be implemented in approximately 100 secondary schools, and planning advanced significantly for a TVET Grant Facility as well as a results-based financing component of the compact that aims to improve job placement for women and at-risk youth.  In Cote D’Ivoire, MCC signed a Compact with the government in November 2017.  The Compact includes an education project with investments in both secondary education and TVET.  The secondary education activity will increase access to and the quality of education for students, while the TVET activity will introduce a demand-driven model of skills development with private sector governance.  Further, the Guatemala threshold program now includes a TVET component.

Health

1,564 health providers trained on growth monitoring
6,857 service providers trained on community-led total sanitation triggering
16,797 service providers trained on infant and young child feeding
MCC works with partner countries to integrate sanitation, maternal and child health, and nutrition interventions to reduce stunting and increase household income. In Indonesia, MCC has committed more than $130 million to improve nutrition and health. MCC’s Indonesia Compact includes a partnership with the World Bank using incentives-based community grants to increase the demand for health, nutrition and education services and improves the health sector’s capacity to respond to increased demand at the facility and community level. In Sierra Leone, MCC has committed $5 million to improve access to reliable and safe water and sanitation (WASH) services, and to promote WASH practices at the household level. Increased access to safe drinking water, food, and sanitation services is critical to improving children’s nutritional status and preventing environmental enteropathy, which has been associated with growth failure in children.

Common Indicators

Agriculture and Irrigation (all common indicators data as of September 10, 2017)

All program data are as of September 10, 2017. Data are preliminary and subject to adjustment. Grey shading indicates closed-out Compacts; data revision is not expected for these Compacts. Indicators in this Results Framework may be added, removed, or modified as MCC‘s investments in education evolve over time. All MCC education programs have as their long-term end goal an increase in individual or household income and a corresponding decrease in poverty.

* Gender totals may not match overall totals due to lack of gender counting in earlier compacts.

Education

All program data are as of September 10, 2017. Data are preliminary and subject to adjustment. Grey shading indicates closed-out Compacts; data revision is not expected for these Compacts. Indicators in this Results Framework may be added, removed, or modified as MCC‘s investments in education evolve over time. All MCC education programs have as their long-term end goal an increase in individual or household income and a corresponding decrease in poverty.

* Gender totals may not match overall totals due to lack of gender counting in earlier compacts.
** (E-5) Number decreased from 30 to 26 because it was misreported in the previous quarter.

Land

All program data are as of September 10, 2017. Data are preliminary and subject to adjustment. Grey shading indicates closed-out Compacts; data revision is not expected for these Compacts. Indicators in this Results Framework may be added, removed, or modified as MCC‘s investments in education evolve over time. All MCC education programs have as their long-term end goal an increase in individual or household income and a corresponding decrease in poverty.

* Gender and location totals may not match overall totals due to lack of counting by gender and location in earlier compacts.

Power

All program data are as of September 10, 2017. Data are preliminary and subject to adjustment. Grey shading indicates closed-out Compacts; data revision is not expected for these Compacts.
*Gender totals may not match overall totals due to lack of gender counting in earlier compacts.
** This is a monitoring indicator and cannot be attributed solely to MCC investment.
*** Not all common indicator data for Liberia were included for this quarter as the data are still being verified.
****In Ghana II there are two utilities who report different SAIDI and SAIFI numbers. P-21 – ECG: 24.02, NEDCo: 35 P-22 – ECG: 23.57, NEDCo: 39.5

Power (continued)

All program data are as of September 10, 2017. Data are preliminary and subject to adjustment. Grey shading indicates closed-out Compacts; data revision is not expected for these Compacts.
*Gender totals may not match overall totals due to lack of gender counting in earlier compacts.
** This is a monitoring indicator and cannot be attributed solely to MCC investment.
*** Not all common indicator data for Liberia was included for this quarter as the data is still being verified.
****In Ghana II there are two utilities who report different SAIDI and SAIFI numbers. P-21 – ECG: 24.02,
NEDCo: 35 P-22 – ECG: 23.57, NEDCo: 39.5

Roads

All program data are as of September 10, 2017. Data are preliminary and subject to adjustment. Grey shading indicates closed-out Compacts; data revision is not expected for these Compacts.
*Gender and road type totals may not match overall totals due to lack of counting by gender and road type in earlier Compacts.
** The kilometers of roads completed for Mozambique is provisional data. Subject to change after verification of takeover certificates.
*** According to the Common Indicator definition, a road is completed when official certificates are handed over and approved. In Senegal, this was taken to mean final acceptance of the road works, which typically happens after the end of the 1 year defects liability period which starts when the construction is completed and the roads are provisionally accepted. As part of its Compact, Senegal intended to rehabilitate 372 kilometers of national roads. By September 2015, when the Senegal Compact closed, no roads had achieved final acceptance, and therefore were not officially completed, per the common indicator definition. However, by the end of the Compact, 185km of roads had been fully rehabilitated and had received provisional acceptance. An additional 72km were provisionally accepted in November 2015, and the remaining 116km are anticipated to be provisionally accepted with the support of the Government of Senegal by mid-2016.

Water Supply, Sanitation, and Hygiene

All program data are as of September 10, 2017. Data are preliminary and subject to adjustment. Grey shading indicates closed-out Compacts; data revision is not expected for these Compacts.
*Gender totals may not match overall totals due to lack of gender counting in earlier compacts.
** This is a monitoring indicator; any change over baseline data represents the current trend and does not represent the direct impact of the MCC‐investment.
*** Jordan’s M&E Plan has, throughout the life of the compact, defined hours of supply as hours/week. As such all documentation is in this form. The value here has been divided by 7 here to accurately reflect supply hours per day.
****(WS-8): In Cabo Verde II the utility is in transition and during this period it has experienced challenges with its billing system and low collection rates, which accounts for some of the high rates of Non revenue water.
****(WS-5): Number decreased due to a correction in previously recorded data in Cabo Verde II.
*****The current unit for volume of water produced has a discrepancy. MCC M&E is in the process of revising this common indicator to clarify and align with current industry standards.

Water Supply, Sanitation, and Hygiene (continued)

All program data are as of September 10, 2017. Data are preliminary and subject to adjustment. Grey shading indicates closed-out Compacts; data revision is not expected for these Compacts.
*Gender totals may not match overall totals due to lack of gender counting in earlier compacts.
** This is a monitoring indicator; any change over baseline data represents the current trend and does not represent the direct impact of the MCC‐investment.
*** Jordan’s M&E Plan has, throughout the life of the compact, defined hours of supply as hours/week. As such all documentation is in this form. The value here has been divided by 7 here to accurately reflect supply hours per day.
****(WS-8): In Cabo Verde II the utility is in transition and during this period it has experienced challenges with its billing system and low collection rates, which accounts for some of the high rates of Non revenue water.
****(WS-5): Number decreased due to a correction in previously recorded data in Cabo Verde II.
*****The current unit for volume of water produced has a discrepancy. MCC M&E is in the process of revising this common indicator to clarify and align with current industry standards.

FY 2018 Corporate Goals

For FY 2018, MCC management established four specific goals to guide agency planning and performance for the year. These goals build on MCC’s current strategic plan, NEXT, as the agency awaits incoming political leadership. As in past years, these corporate goals are the starting point for annual department and division goal-setting, from which staff develop their individual performance plans. Below you will find MCC’s FY 2018 corporate goals with a brief description of MCC’s progress to date.