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Millennium Challenge Corporation. Reducing Poverty Through Growth. Millennium Challenge Corporation Reducing Poverty Through Growth. Millennium Challenge Corporation. - PowerPoint PPT Presentation
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Millennium Challenge Corporation
Reducing Poverty Through Growth
Millennium Challenge Corporation
Millennium Challenge CorporationReducing Poverty Through Growth
Fulfillment of Monterrey commitment to “provide greater resources to countries taking greater responsibility for their own development.”
Established in law January 2004.
Mandate is Poverty Reduction Through Economic Growth
Millennium Challenge CorporationReducing Poverty Through Growth
Based on Key Lessons of Based on Key Lessons of AidAid
POLICIES MATTERPOLICIES MATTER
“We want to make decisions ourselves. It is our country, and we have to take on leadership and responsibilities. If you take a look at the last two issues, our vision and country ownership, you will realize why the MCA is so important for us. Here we have a new approach which helps us to implement our vision. We have opportunities to design and implement our own programs.”--Marc Ravalomanana, The President of Madagascar School of Advanced International Studies, Johns Hopkins University, April 19, 2005
COUNTRY OWNERSHIP CRITICALCOUNTRY OWNERSHIP CRITICAL
RESULTS, NOT INPUTS COUNTRESULTS, NOT INPUTS COUNT
Millennium Challenge CorporationReducing Poverty Through Growth
Policies MatterPolicies Matter
Good policies encourage inflows of private Good policies encourage inflows of private capital and increased trade, the real capital and increased trade, the real engines of growth.engines of growth.
Country eligibility based on sixteen Country eligibility based on sixteen independent indicators in three different independent indicators in three different criteriacriteria
Countries are measured against other Countries are measured against other countries of similar income levelcountries of similar income level Ruling JustlyRuling Justly
Investing in PeopleInvesting in People Encouraging Economic FreedomEncouraging Economic Freedom
Policies Matter
Africa
Benin Mali
Burkina Faso Morocco
Cape Verde Mozambique
Gambia Namibia
Ghana Senegal
Lesotho Tanzania
Madagascar
Latin AmericaEurasia
Bolivia Armenia
El Salvador East Timor
Honduras Georgia
Nicaragua Mongolia
Sri Lanka
Vanuatu
Millennium Challenge CorporationReducing Poverty Through Growth
23 Countries Selected by MCC Board in Fiscal Years 2004 - 2006
Burkina Faso’s Threshold Program: Increasing Girls’ Primary School Completion
Through the construction of new schools in provinces that lack sufficient schools, more girls will be able to attend primary school in Burkina Faso. Their Threshold program with MCC aims to enroll 1,650 new female students within the first year.
Millennium Challenge CorporationReducing Poverty Through Growth
Policies MatterPolicies Matter
Threshold ProgramThreshold Program reinforces this objective reinforces this objective Threshold CountriesThreshold Countries
• Close on the indicatorsClose on the indicators• Demonstrated commitment to reformDemonstrated commitment to reform
May propose funding to specifically improve on MCC indicatorsMay propose funding to specifically improve on MCC indicators
MCC eligibility intended as an incentive to improve policiesMCC eligibility intended as an incentive to improve policies
Threshold Countries*Threshold Countries*Africa
Kenya
Malawi
Sấo Tomé and Principe
Uganda
Zambia
Latin America
Guyana
Paraguay
Eurasia
Albania
Indonesia
Kyrgyz Republic
Jordan
Moldova
Philippines
Ukraine
Yemen**
Millennium Challenge CorporationReducing Poverty Through Growth
* Burkina Faso, Tanzania, East Timor moved from Threshold Program to Eligible in FY2006
** Yemen was suspended from the Threshold Program in FY2006
Country Ownership CriticalCountry Ownership Critical Eligible countries submit proposal for MCC Eligible countries submit proposal for MCC
funding, after consulting with civil society funding, after consulting with civil society and private sector. and private sector.
MCC assesses proposals based on: MCC assesses proposals based on: • The contribution to poverty reduction and The contribution to poverty reduction and
growth growth • The quality of the consultative process The quality of the consultative process
and breadth of supportand breadth of support• The ability to measure resultsThe ability to measure results
Millennium Challenge CorporationReducing Poverty Through Growth
Results BasedResults Based Specific objectives and measures of Specific objectives and measures of
success are agreed on from the beginningsuccess are agreed on from the beginning
A monitoring and evaluation plan is an integral A monitoring and evaluation plan is an integral part of each Compactpart of each Compact
Continued funding is contingent on Continued funding is contingent on continued performance on the indicators continued performance on the indicators and meeting agreed benchmarks for and meeting agreed benchmarks for program implementationprogram implementation
Millennium Challenge CorporationReducing Poverty Through Growth
Example: The Madagascar Compact
Signed April 18, 2005
$110 Million over 4 $110 Million over 4 YearsYears
Goal – Goal – Increase Increase investment in rural investment in rural MadagascarMadagascar
Three Integrated Three Integrated ProjectsProjects
1)1) Land TenureLand Tenure2)2) Financial SectorFinancial Sector3)3) Agricultural Business Agricultural Business
InvestmentInvestment
Millennium Challenge CorporationReducing Poverty Through Growth
Land Tenure Project
Financial Sector Project
Agricultural BusinessInvestment Project
ProgramAdministration
Monitoring andEvaluation
Fiscal and ProcurementManagement and Audits
Objectives and Indicators for the Objectives and Indicators for the Madagascar ProgramMadagascar Program
ObjectivesObjectives IndicatorsIndicators
Compact Compact Poverty reduction and Poverty reduction and economic growth in economic growth in targeted rural targeted rural Investment ZonesInvestment Zones
Household income in Household income in targeted Zonestargeted Zones
Land productivity in Land productivity in targeted Zonestargeted Zones
ProgramProgram Increase investment in Increase investment in targeted Zonestargeted Zones
Total amount invested Total amount invested by farms and by farms and businesses in targeted businesses in targeted ZonesZones
Millennium Challenge CorporationReducing Poverty Through Growth
Objectives and Indicators for the Madagascar Objectives and Indicators for the Madagascar ProgramProgram
ObjectivesObjectives IndicatorsIndicators
Land Land Tenure Tenure ProjectProject
Improved land Improved land tenure and land tenure and land securitysecurity
Percentage of Percentage of targeted targeted hectares with a hectares with a land title or land title or certificate certificate
Key Key benchmarksbenchmarks
• Submission, passage, and Submission, passage, and implementation of new land lawimplementation of new land law• Percentage of land documents Percentage of land documents restored and/or digitizedrestored and/or digitized• Percent of targeted land that is Percent of targeted land that is demarcated and ready for demarcated and ready for registrationregistration• Average time and cost required Average time and cost required to carry out property transactionsto carry out property transactions
Millennium Challenge CorporationReducing Poverty Through Growth
Madagascar's central land titling office which stores entirely paper-based titles.
ObjectivesObjectives IndicatorsIndicators
Finance Finance ProjectProject
Increased competition in the Increased competition in the financial sectorfinancial sector
Number and value of new Number and value of new loans and bank accountsloans and bank accounts
KeyKeybenchmarksbenchmarks
• Submission, passage, and implementation of new lawsSubmission, passage, and implementation of new laws• Number of holders of new treasury billsNumber of holders of new treasury bills• Volume of treasury bill holdsVolume of treasury bill holds• Number of treasury bills held outside of AntananarivoNumber of treasury bills held outside of Antananarivo• Check clearing delayCheck clearing delay• Volume of funds in the payment systemVolume of funds in the payment system• Volume of microfinance institution (MFI) lending in the Volume of microfinance institution (MFI) lending in the
targeted zonestargeted zones• MFI portfolio-at-risk delinquency rateMFI portfolio-at-risk delinquency rate• Reporting of credit and payment information to central Reporting of credit and payment information to central
databasedatabase
Objectives and Indicators for the Madagascar Objectives and Indicators for the Madagascar ProgramProgram
Millennium Challenge CorporationReducing Poverty Through Growth
Objectives and Indicators for the Madagascar Objectives and Indicators for the Madagascar ProgramProgram
ObjectivesObjectives IndicatorsIndicators
Agriculture Agriculture Business Business Investment Investment ProjectProject
Improve Improve production production technology and technology and market capacity market capacity in the targeted in the targeted ZonesZones
Number of Number of farmers and farmers and firms that adopt firms that adopt new technologies new technologies or engage in or engage in higher value higher value productionproduction
Key Key benchmarksbenchmarks
• Zones identifiedZones identified• Number of farmers and firms Number of farmers and firms employing technical assistanceemploying technical assistance• Number of farmers and firms Number of farmers and firms receiving or soliciting information receiving or soliciting information on business opportunities identifiedon business opportunities identified
Millennium Challenge CorporationReducing Poverty Through Growth
A family selling produce and grains outside of their home in Mahitsy, Madagascar.
What Have Countries Asked What Have Countries Asked For?For?
Every proposal uniqueEvery proposal unique
No predetermined allocationNo predetermined allocation
Rural development, land titling, Rural development, land titling, infrastructure (roads, ports, airports), infrastructure (roads, ports, airports), improving business environmentimproving business environment
Water and sanitation, but few proposals in Water and sanitation, but few proposals in health and education so farhealth and education so far
Contributing to Aid for Contributing to Aid for TradeTrade
First five Compacts include $640 million in First five Compacts include $640 million in trade related activities (including roads, ports, trade related activities (including roads, ports, and agricultural goods for export markets).and agricultural goods for export markets).
Next three Compacts likely to be signed Next three Compacts likely to be signed include at least $300 million more in such include at least $300 million more in such activities.activities.
Nearly 63% of financing under these eight Nearly 63% of financing under these eight Compacts is aid for trade.Compacts is aid for trade.
Millennium Challenge CorporationReducing Poverty Through Growth
Contributing to Aid for Contributing to Aid for TradeTrade
First five Compacts include $640 million in First five Compacts include $640 million in trade related activities (including roads, ports, trade related activities (including roads, ports, and agricultural goods for export markets).and agricultural goods for export markets).
Next three Compacts likely to be signed Next three Compacts likely to be signed include at least $300 million more in such include at least $300 million more in such activities.activities.
Nearly 63% of financing under these eight Nearly 63% of financing under these eight Compacts is aid for trade.Compacts is aid for trade.
Millennium Challenge CorporationReducing Poverty Through Growth
ImplementationImplementation The Compact defines responsibilities. The The Compact defines responsibilities. The
country is responsible for implementation. country is responsible for implementation.
Each Compact will also define the Each Compact will also define the governance and accountability structure, governance and accountability structure, which will cover processes and entities which will cover processes and entities responsible for managing MCC funds, responsible for managing MCC funds, guidelines governing procurement and guidelines governing procurement and entities responsible for administering entities responsible for administering procurements.procurements.
MCC may have one or two representatives in MCC may have one or two representatives in an MCA country an MCA country
Millennium Challenge CorporationReducing Poverty Through Growth
Principles of Fiscal Principles of Fiscal AccountabilityAccountability
Every country is unique, no single solutionEvery country is unique, no single solution
Find a solution that best serves Compact objectivesFind a solution that best serves Compact objectives
Build upon existing mechanisms when possibleBuild upon existing mechanisms when possible
Leave capacity in place wherever possibleLeave capacity in place wherever possible
Solution must have maximum transparency, Solution must have maximum transparency, integrity, and accountabilityintegrity, and accountability
Millennium Challenge CorporationReducing Poverty Through Growth
MILLENNIUM CHALLENGE CORPORATION
MCC REP
FISCAL AGENTFINANC MGMT
(Finance Ministry)(Donor)
(Accounting Firm)
FISCAL AGENTPROCUREMENT
(Finance Ministry)(Donor)
(Accounting Firm)(1 or more Project Mgr)
BANK ACCOUNT
(Central Bank)(Commercial
Bank)
VENDOR VENDOR VENDOR VENDOR
GOVERNMENT
• Creates, if necessary, and assigns
responsibilities
• Allocate budgets• Approve re-disbursements
• Provide accounting records
• Approve certain contract actions
• Exercises MCC rights
under Compact
• Submit disbursement requests• Provide budget• Provide financial and M&E reports
• Signatories to Compact
MCC Disbursement $$
Re-disbursement $$
• Instruct to issue
payment
• Document obligations• Initiate re-disbursements• Initiate procurement
Audit
FISCAL ACCOUNTABILITY ELEMENTS
PROJECT MANAGER 1
(Govt Ministry)(Donor PIU)(Private Co.)
(NGO)
PROJECT MANAGER 2
(Govt Ministry)(Donor PIU)(Private Co.)
(NGO)
ACCOUNTABLE ENTITY
(Governing Council)(MCC Committee)
(PM Office)
• Administer/certify procurement process
Illustrative Models
Government Non-Government
Accountable Entity– Prime Minister or Cabinet MCC Steering Committee
Fiscal Agent-- Ministry of Finance Accounting Firm
Procurement Agent- Ministry of Finance Private implementer
Bank Account-- Central Bank Commercial Bank
Project Managers-- Line Ministries NGOs
Millennium Challenge CorporationReducing Poverty Through Growth
Common ElementsCommon Elements
Financial and procurement information Financial and procurement information available publicly through a local MCA available publicly through a local MCA Website and advertised in UN Business Website and advertised in UN Business DevelopmentDevelopment
Money will be disbursed in tranchesMoney will be disbursed in tranches
All MCC programs will be subject to All MCC programs will be subject to external auditexternal audit
Role of the MCC Inspector GeneralRole of the MCC Inspector General
Millennium Challenge CorporationReducing Poverty Through Growth
Millennium Challenge Corporation
Compact Development Process
Where is the MCC Today?Where is the MCC Today?
Five Compacts signed – Cape Verde, Georgia, Five Compacts signed – Cape Verde, Georgia, Honduras, Madagascar, Nicaragua; nearly $1 Honduras, Madagascar, Nicaragua; nearly $1 billion committed.billion committed.
Robust pipeline – Armenia, Benin, Vanuatu.Robust pipeline – Armenia, Benin, Vanuatu.
Threshold agreements with Burkina Faso and Threshold agreements with Burkina Faso and Malawi .Malawi .
Congress has appropriated $4.27 billion to date.Congress has appropriated $4.27 billion to date.
Millennium Challenge CorporationReducing Poverty Through Growth