|(in millions of $)||FY 2022||FY 2023||FY 2024|
MCC is requesting $51 million for threshold program assistance in FY 2024 to provide for new country selections to be made in December 2023. This is an increase from previous years that would allow up to two threshold selections, in light of Congressional action in the FY 2023 appropriations bill to remove the legal restriction on MCC’s ability to pursue threshold programs with countries that have previously received a compact. This authority allows MCC to assist and incentivize countries that are demonstrating a strengthened commitment to democratic governance and expands the number of countries MCC can consider for threshold programs.
MCC’s threshold program has proven to be an effective tool to incentivize improved performance on MCC’s eligibility criteria in MCC candidate countries and to support positive policy and institutional reforms to address binding constraints to economic growth in selected partner countries. The MCC Board of Director’s selection of additional threshold programs or the transition of existing threshold programs under development to compact assistance may lead to future shifting of funds to/from this budget line item.
MCC’s threshold programs are a powerful tool to support policy and institutional reforms that address binding constraints to economic growth and advance MCC’s core mission. By focusing on policy reforms and strengthening institutions in critical sectors, threshold programs complement the “MCC Effect” created by MCC’s eligibility criteria, including the scorecard, and allow partner countries to demonstrate, and MCC to assess, the opportunity for an impactful and cost-effective partnership. Because MCC uses the same rigorous, evidence-based approach in threshold programs as it does in compacts, these programs are designed to maximize potential systemic impact and lay the foundation for larger investments. While countries selected for threshold program assistance are not guaranteed compact eligibility, successful engagement in the development and implementation of a threshold program can yield significant advantages for a potential future compact. In the event that a country does not become compact eligible, a threshold program can help create the conditions for additional investment from the private sector or by other donors.
Implementing Threshold Programs
MCC currently has three implementing threshold programs – The Gambia, Solomon Islands, and Togo. The $25 million Gambia threshold program is supporting efforts to achieve universal energy access by 2025, by reducing the frequency and duration of outages by improving the governance and operational management of the national electricity utility. MCC’s $20 million threshold program in the Solomon Islands will promote sustainable economic development by strengthening the government’s capacity to manage inclusive tourism projects and potentially lead to entrepreneurship opportunities for women, as well as provide communities with economically viable alternatives to logging. The $35 million Togo threshold program is designed to improve citizens’ access to high quality and affordable Information and Communications Technology (ICT) services—both mobile phone services and Internet—by encouraging private sector investment, developing an independent regulatory regime, expanding service to underserved areas, and increasing the use of ICT among women and small businesses. This threshold program will also seek to expand access to formalized land through the recognition and protection of legitimate land rights in five pilot areas across the country and to develop a regulatory framework to implement the proposed new land code.
New and Developing Threshold Programs
In March 2022, the MCC Board of Directors approved a $60 million threshold program with Kenya. The program will seek to improve urban connectivity in Nairobi and includes projects to support integrated transport planning, non-motorized transport, land use policy, and blended finance for the bus rapid transit system. To support greater inclusivity in the Nairobi transport system, the program will seek to substantially improve the mobility and safety of pedestrians, who represent both the largest and the poorest segment of Nairobi’s commuters, and to create safer and more visible transportation choices for women in an environment of pervasive sexual harassment. MCC expects to sign a grant agreement in FY 2023.
The Pacific Islands country of Kiribati was selected to develop a threshold program in December 2020. MCC is working with the Government of Kiribati to develop a program that would improve the ability of the government to provide its citizens access to inclusive and decent work opportunities. MCC expects to complete design of the program and submit it to its Board for consideration in June 2023.
The MCC Board selected Mauritania to develop a threshold program in December 2022. MCC is working with the government to identify the country’s constraints to growth to determine the focus of the program.
The funding request for FY 2024 will support programs with countries that may be selected by MCC’s Board in December 2023. The average program size for threshold programs is approximately $31 million, and the requested funding will support up to two threshold programs with new countries should promising candidates emerge in the annual selection process.