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The Millennium Challenge Corporation (MCC) is charting new territory in the world of U.S. development assistance. It differs from traditional US aid in a number of important ways—selecting countries based on objective criteria, fostering country ownership of program design, working closely with and through partner governments, funding major infrastructure, tackling reforms in tough sectors like land tenure and finance, and creating incentives for policy reform even before money is spent. The MCC is an experiment for the U.S. in improving the effectiveness of aid in a small set of poor but well-governed countries. As with all good experiments, it is useful to gather lessons along the way. In the spirit of learning and contributing to the MCC’s success, this note offers a series of lessons and observations from the MCC’s first years of operations.
These observations are based on visits to seven Millennium Challenge Account (MCA) countries conducted between July 2005 and March 2007 on behalf of the Center for Global Development’s MCA Monitor Program. These visits caught glimpses of different aspects of the MCA experience: compact proposal development (Mozambique, Ghana, and Tanzania); compact implementation (Honduras, Madagascar and Nicaragua); and the Threshold Program (Tanzania and Malawi). Lessons and observations from these countries fall in to four categories:
Successes of the MCC approach
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Changing national mindsets about development
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Making bold and integrated investments
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Raising the bar on transparency
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Learning and applying lessons
Key challenges going forward
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Define and demonstrate results
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Strike the right balance on risk management
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Refine the notion of country ownership
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Cultivate a constituency in Washington
Big-picture lessons on aid-effectiveness
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Meaningful public participation takes time, expertise, and resources
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Donor coordination is essential though specific approaches can vary
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Flexibility in program management structures is good, but parameters must be clear
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Unsexy issues can make or break a program
Specific operational recommendations
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Do not rush entry into force of compacts
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Allow for concurrent and longer-term compacts
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Make more of the MCC/USAID relationship
Each country’s full case story is available on CGD’s MCA Monitor website.2
Footnotes:
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Sarah Lucas was a senior associate for outreach and policy at CGD when this paper was written.
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Reports from the Field (http://www.cgdev.org/section/initiatives/_active/mcamonitor/fieldreports)
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