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CGD has helped shape the Millennium Challenge Corporation through years of analysis dating back to the creation of its financing mechanism—the Millennium Challenge Account—by President Bush in 2002. Our research has helped guide MCC’s work to reduce poverty through growth and we remain at the forefront of creative thought for how to improve this important lever of US foreign assistance.
This week, Congress passed the African Growth and Opportunity Act and Millennium Challenge Act Modernization Act (H.R. 3445). Once signed, it will give MCC the long-awaited authority needed to pursue regional programming more effectively. The change is a technical one that will permit the agency to have multiple, concurrent compacts with a single country—allowing MCC to pursue both a standard, bilateral compact with a partner, as well as a regionally focused investment with coordinated interventions in neighboring countries. With this authority, MCC will be better placed to address cross-border constraints to growth—which is often critical and potentially very high return in many of the places the agency works.
MCC has been angling for concurrent compact authority for years. The agency first put the idea forth as a legislative priority in 2010, though at that time, it was focused on using the authority to manage pipelines and address unobligated balances. Though concurrent compacts fell down the agency’s legislative priority list for a few years after that, by 2015, MCC had turned back to the idea, this time as a critical tool to enable regionally focused programming. Now that MCC and its partner countries have the green light to think beyond national borders, how can they make the most of it?
Regional programs are much more complicated than bilateral programs, often take longer, and can carry more risk. And MCC’s particular way of doing business—working only with countries that maintain good governance and giving partner countries the lead in program identification and implementation—will add layers of complexity. The agency has undoubtedly started thinking through how it would structure a regionally focused investment using concurrent compacts. As MCC solidifies this thinking and moves to pilot initial programs, there are several questions the agency will need to answer.
How will cross-border investments be identified? Will the agency structure constraints to growth analyses specifically to look at regional issues and/or allow for a regional investment to emerge from the findings of an individual country growth diagnostic? To what extent will MCC seek to support components of pre-existing regional initiatives?
How will regional anchors outside the MCC sphere be taken into account? In most regions, the regional economic powerhouse is not an MCC partner country, due either to its income level (South Africa) or its governance quality (Nigeria), or—in the case of India—its economic size and disinterest in the kind of aid MCC offers. But these countries are likely to play an important role in regional development initiatives and cross-border economic activity. How will the agency incorporate these actors in ways that don’t involve direct funding?
How will MCC deal with suspension or termination of individual countries in a multi-country program? MCC has had to suspend, terminate, or otherwise curtail funds to a number of partner countries whose policy choices became inconsistent with MCC’s good governance requirements. The decision to pull funds is always a difficult one for MCC to make; it would be more challenging if multiple countries are involved. Would MCC suspend/terminate just the activities in the particular country? What if the economic viability of the investment were contingent upon the activities and associated reforms in the suspended/terminated country taking place?
What will the local implementation unit(s) look like? MCC’s bilateral programs are run through local implementing units, typically set up as new government units. Will the units that manage cross-border investments be new multiparty structures, or would existing country units be restructured (and expanded) to take on new roles? What structure will best manage the complexity of multiple stakeholders?
How can MCC best structure incentives across multiple parties when costs and gains are unlikely to be equally shared? In order for MCC investments to yield their expected results, partner country governments must often agree to tackle difficult reforms. These can be tough negotiations even when the gains from the investment would accrue primarily to the country in question. In a cross-border investment, costs and gains may not be equally shared. How can MCC ensure the success of multilateral negotiations when one party may have reduced incentive to undertake necessary but difficult political reforms if the benefits accrue disproportionately to another party?
These questions are complicated, as are many other issues that MCC will undoubtedly grapple with as it moves ahead. But complicated doesn’t mean prohibitive. It just means that MCC would be wise to proceed conservatively, undertaking a small number of pilots with opportunities for learning built in. Sean Cairncross, the nominee to be MCC’s new CEO, recognizes this, pointedly saying that it would be important for the agency to pursue regional investments “carefully” and “in a focused manner.” Sounds like a good plan.
After over a year without top political leadership, the Millennium Challenge Corporation (MCC) may soon have a new CEO. Sean Cairncross, the Trump administration’s nominee to take the helm of the agency, has his Senate hearing tomorrow—where we’ll get an early look at his vision for MCC.
Cairncross is a relative unknown in the development community. As some have pointed out, he has virtually no development (or any sort of international) experience. But, in truth, most of MCC’s previous CEOs came to the position with little development experience, so this isn’t a huge break from the past. What Cairncross would bring to MCC is strong ties to the White House and Congress—positioning that could serve the small agency well.
To be truly effective, however, Cairncross must also demonstrate command of the development issues most relevant to MCC’s work. The hearing should provide an initial glimpse into his understanding of the principal challenges facing the agency.
Over the longer term (if confirmed), part of Cairncross’ success in a new field will come from being willing to trust and rely on MCC’s career staff. He should also seek to ensure the agency’s remaining political leadership positions are filled by strong candidates with relevant expertise.
As Cairncross gets up to speed, here are five big issues that should be on the agenda.
A limited pipeline of future partners: MCC works only with countries that meet its good governance criteria. The problem is that this set of countries changes little on an annual basis. Over the past five years, fewer than one new country a year (on average) has passed MCC’s “scorecard.” To date, MCC has had little difficulty forming new partnerships through a combination of newly passing countries and second compacts with previous partners. But these opportunities will become increasingly limited unless the agency eventually pursues third compacts with select partner countries. This is unquestionably the right way for the agency to go, as I outlined here. But it could prove a tough political sell. How will MCC’s new CEO approach the pipeline constraint, and will he be willing to push for a potentially politically unpopular but ultimately critical approach?
The potential for new regional authority: Congress may grant MCC new authorities, which would enable the agency to undertake regional programming. This would be a welcome step for MCC. Many important constraints to growth are cross-border in nature, and MCC’s bilateral focus has prevented it from taking advantage of potentially high-return regional opportunities, even though the agency often invests in sectors—like infrastructure or energy—with an inherent regional component. That said, regional programs are more complex, riskier, and take longer to put together. If granted the necessary authorities, will MCC’s new CEO commit to proceeding in a limited way at first, allowing the agency to identify risks, manage them, and learn as it goes?
The need to mobilize private capital: Donor agencies around the world are increasingly seeking to use their foreign assistance funds to mobilize private capital in pursuit of development objectives. As a growth-focused agency, this has always been one of MCC’s goals; the question has been how to do it better. In what ways will the new CEO seek to position MCC as a leader in mobilizing private finance for development? And what risks must MCC manage in pursuit of this goal?
A continued focus on results: Over the course of its 14-year history, MCC has been at the forefront of US government thinking on development results. It remains the only agency to systematically—and largely transparently—apply a range of results tools to its entire portfolio of country compacts, from program development to ex-post evaluation. The agency has also made commendable efforts to demonstrate how it takes lessons that emerge from its results processes and applies them to future programming. How will the new CEO ensure MCC continues to lead—and innovate—with respect to its focus on results?
The need to use data wisely: MCC eligibility centers on countries’ performance on a set of indicators designed to measure various facets of good governance. The trick is, governance quality can be hard to measure with precision. Particularly challenging is understanding how indicators capture (or more often don’t capture) changes in governance over a short period of time. This is something MCC is keen to track for its existing partners since backsliding may be grounds for reevaluating—and sometimes terminating—the partnership. The indicators don’t always track this well, however. And unfortunately, when imprecise data are interpreted too rigidly, it can lead—and has led—to poor decisions that resulted in cutting off, slowing, or downgrading existing partnerships on the basis of data noise rather than an actual decline in governance quality. Will the new CEO recognize that key to making smart, evidence-based decisions is knowing your data, including its limitations? Will he use his position to steer the agency (and its board of directors) toward nuanced, rational use of data in decisions about continuing eligibility for existing partners?
I don’t expect the hearing will touch on all of these areas—a number of them are fairly weedy. If Cairncross is confirmed, however, I’ll be watching for how he steers the agency on these difficult issues from the helm of MCC.
One of the biggest questions donors grapple with is how to balance implementing specific projects with building local capacity to execute similar programming in the future. Indeed, this question is central to the conversation—now active at USAID—about how donors can “work themselves out of a job.” One good example of how this can look comes from the Millennium Challenge Corporation’s (MCC) 2005-2010 partnership with Honduras. In this story, a key part of MCC’s legacy is not about what the agency funded but how it funded it. Through its commitment to country-led implementation, MCC helped set the stage for the government of Honduras to sustain and expand upon the structures and processes put in place to manage the MCC compact. The result: a new—and wholly Honduran—government unit that, over the last decade or so, has built a reputation for sound program management and a solid track record of efficient implementation.
At the origin: MCC’s commitment to country ownership
The idea that country ownership is critical for successful, lasting development programs is a central tenet of MCC’s model. A key way the agency puts this into practice is by giving the partner country the lead role in implementing the agency’s large-scale, five-year grant programs known as compacts. To do so, the partner country sets up and staffs an accountable entity called a Millennium Challenge Account (MCA)—usually as a separate government unit—to manage all aspects of the compact, including coordination with government ministries, procurement, contract management, maintenance of project timelines, and monitoring results. The MCA is overseen by a local board of directors with membership from government ministries, the private sector, and civil society. While MCAs usually wind down or dissolve at the end of a compact, for MCA-Honduras (MCA-H), implementing the compact was just the beginning.*
Expansion to manage other funds
Since the compact concluded in 2010, the government of Honduras has transformed MCA-H into a permanent government structure and expanded it to be the primary platform for managing donor funds in the areas of infrastructure, rural development, and food security. Rebranded as INVEST-Honduras in 2014, the unit has managed over $1 billion in funding from the government of Honduras and donors including the Central American Bank for Economic Integration (CABEI), the Inter-American Development Bank, the World Bank, and USAID.
As part of USAID’s own pledge to increase local partnerships, including government-to-government partnerships (G2G), USAID/Honduras had its eye on INVEST-Honduras, which it had watched develop through the MCC compact. USAID’s own standard pre-G2G procedure risk assessment tool reaffirmed INVEST-Honduras’ reputation for sound program management and relatively low risk. Thus, in 2014, the mission began funding a nutrition, watershed, and agricultural development program through INVEST-Honduras. Still ongoing, the program has expanded from its original $24 million to $60 million, and USAID points to additional benefits of directly funding INVEST-Honduras. Channeling money in this way has leveraged substantial cash contributions from the government of Honduras and better enabled the government to adopt the program as its own and build upon USAID interventions with other sources of funding.
On the front lines against corruption
Late last year, INVEST-Honduras was appointed by the president to chair a commission to liquidate and restructure the government’s road maintenance fund (Fondo Vial) in response to allegations of widespread dysfunction and corruption, including linkages with criminal networks. As of December, INVEST-Honduras is now executing all road maintenance functions, and is empowered to suspend personnel and revoke or renegotiate contracts with irregularities. The expectation is that such a move will close opportunities for corruption present in the previous model and increase the efficiency of contract execution.
Longevity and stability
INVEST-Honduras/MCA-H is now 13 years old. It has survived intact—with the same structure and largely the same staff—through five different governments. A number of factors seem to have contributed to its endurance, including competitive compensation and contracts that give donors a say over changes to key personnel, as well as a broad recognition that what the government was able to implement through the unit is worth preserving.
While MCC had a key role in INVEST-Honduras’ origin story, and other donors—including USAID—deserve credit for supporting its continuation, like all good country ownership stories this one ultimately owes its success to the local actor—in this case, the government of Honduras. And that’s how it should be. At the end of the day, it’s important to recognize that donor funds—in and of themselves—will not “transform” a developing country. The best hope is that a donor seeds something that local actors sustain and build upon. So make no mistake, the credit here goes to the government of Honduras. But let’s give MCC a quiet nod, too.
*While it is not the norm for partner country governments to preserve MCA structures post-compact, Honduras is not the only example. MCAs have also persisted post-compact in Lesotho, Tanzania, Morocco, Burkina Faso, and Ghana.
This week, the Millennium Challenge Corporation (MCC) edged one step closer to securing new authorities that would better position the agency to undertake regional programming. On Wednesday, the House approved the AGOA and MCA Modernization Act (H.R. 3445), sponsored by House Foreign Affairs Committee Chairman Ed Royce (R-CA), which would authorize MCC to pursue concurrent compacts with a single country—allowing for one with the traditional, bilateral focus and one that is regional in nature. House passage tees up the bill for action in the Senate, where the Foreign Relations Committee greenlit a companion measure in October.
Similar provisions were included in fully five bills in the 114th Congress, but none made it over the finish line. Hopefully 2018 will be the year.
Why should MCC focus regionally?
MCC’s singular mission is to reduce poverty through economic growth—and important constraints to growth can be cross-border in nature. MCC also works in regions—like sub-Saharan Africa—that contain many small economies and fragmented markets. In such contexts, some of the highest returns come from facilitating regional connections.
Because MCC can only form bilateral agreements, the agency hasn’t been able to exploit potentially high-return regional opportunities, even though a number of MCC projects in sectors like infrastructure and energy have an inherent regional component. For instance, in a number of early compacts—Tanzania, Honduras, and Nicaragua—MCC rehabilitated roads up to a national border and then stopped.
In recent years, MCC has done more to incorporate regional considerations into its bilateral compact development processes, but its ability to address key regional constraints to growth remains limited.
Why is concurrent compact authority important?
Currently, MCC can have just one compact at a time per eligible country. So even where MCC partner countries are adjacent to one another—and have cross-border issues that hamper greater economic activity—the agency hasn’t been able to coordinate programming among them effectively since countries are rarely at the same stage of eligibility or program design at the same time. Consider West Africa. The map below suggests there may be some prospects for regional integration. But because programs began development at different times, the agency was unable to build in a regional lens from the outset.
Current MCC partner countries in West Africa with the year compact development began
With concurrent compact authority, MCC could pursue a regionally focused investment while still advancing separate bilateral programs with one or more of the participating countries on their own timelines.
If MCC does receive authority to pursue concurrent compacts, how should the agency approach regional engagement?
Regional programs are much more complex than bilateral programs, often take longer, and can carry more risk. There will be operational challenges as well, in terms of figuring out how to define regions, how to deal with suspension or termination of individual parties, how to design a multiparty implementation unit, and how to structure incentives across multiple parties when costs and gains are unlikely to be equally shared. These challenges are not insurmountable and should not preclude MCC from the opportunity to expand its impact and generate greater economic returns. In fact, as CGD’s Nancy Birdsall pointed out, MCC has some advantages over other funders of large, cross-border investments. What the list of challenges does suggest is that, if given the opportunity to pursue concurrent compacts, MCC should reiterate its pledge to move slowly and cautiously (e.g., starting with an initial pilot) and reaffirm its long-held commitment to measuring results and learning from the process.
Every December, MCC’s board of directors meets to select the set of countries eligible for MCC’s compact or threshold programs. And each year, before the board meeting, CGD’s US Development Policy Initiative publishes a discussion of the overarching issues expected to impact the decisions alongside its predictions for which countries will be selected. Here’s what to watch for at the upcoming MCC board meeting on December 19.
The Overarching Questions
How might the prospect of a historically low budget constrain decision-making?
Budget uncertainty is an ever-present feature of MCC’s eligibility decisions since—in recent years—the appropriations process has rarely been finalized until well after the December meeting. But while the current appropriations limbo is nothing new, this year MCC is looking at the potential for a budget lower than any the agency has ever seen. The Trump administration’s FY2018 budget request slashed international affairs spending, and though MCC was spared the severe cuts dealt to other development accounts, the request of $800 million—if enacted—would be the agency’s lowest-ever appropriation. It might not end up there. The House Appropriations bill provided the $800 million included in the president’s request, but the Senate came in at $905 million, level funding compared to FY2017.
With up to three compacts expected to be approved in FY2018 and up to four more in the pipeline for subsequent fiscal years, competition for funds will be tight. MCC cannot afford to select all 31 countries that pass the scorecard (nor would all be top choices for reasons of size and policy performance). As always, the board will have to prioritize. The average number of new first or second compact selections in a year is three. This year may see fewer.
How will the new board interpret MCC’s good governance mandate?
This will be the fourth board meeting under the Trump administration, but only the second with political appointees in four of the five public positions (no nominee has been named to lead MCC), and the first to deal with country eligibility. Of course, this isn’t unfamiliar territory for all the board members. USAID Administrator Mark Green served five years on the MCC board in one of the four slots reserved for private members. The two current private members are veterans too. But the two other private sector slots remain unfilled, giving the administration more weight than usual in the board’s decisions.
This year’s selection decisions will require the board to make judgments about one of the core precepts of MCC’s model—that policy performance matters. MCC bases its eligibility criteria on governance quality to reward countries taking responsibility for their own development, create incentives for reform, and (potentially) increase the effectiveness of MCC investments. The eligibility criteria are also intended to depoliticize eligibility decisions, in recognition that blended objectives—supporting geostrategic partners and promoting development—can sometimes muddle development results. In practice, US geopolitical interests have certainly influenced the direction of some eligibility decisions, but rarely—if ever—trumped policy performance. The question at this year’s meeting will be how the MCC board, under the Trump administration, weighs good governance in the spirit of MCC’s founding model against the importance of a bilateral relationship, a factor the agency’s model seeks to downplay.
This year, the board faces decisions about large and/or strategically important countries—for example, the Philippines (the decision to watch this year) and Bangladesh—that come with important concerns about civil liberties and human rights. On the flip side, the board will need to define the next stage of MCC’s relationship with several countries that are already engaged in a threshold program or compact development that are smaller and less strategically important—for example, Lesotho, Timor-Leste, and Togo.
The Trump administration has provided some insight into its broad views on the issues at the heart of these eligibility decisions. For instance, President Trump has been largely silent (and at one point congratulatory) about human rights concerns in the Philippines. And the FY2018 budget request’s gutting of foreign assistance, which included zeroing out development-focused aid for 37 countries, suggests limited appetite for spending scarce development dollars where US strategic and economic interests are weaker. But these clues are well outside the context of MCC, so how the board considers good governance versus bilateral importance for MCC eligibility is unclear.
A Brief Overview of How MCC’s Selection Process Works
Here are four key things to know. For more detail, see MCC’s official document or my short synopsis (section “How the Selection Process Works,” p. 2-4).
MCC’s country scorecards provide a snapshot of a country’s policy performance compared to other low- and lower-middle-income countries. To “pass” the scorecard, a country must meet performance standards on 10 of the 20 indicators, including the Control of Corruption indicator and one of the democracy indicators (Political Rights or Civil Liberties).
The scorecard is only the starting point. The board also considers supplemental information about the policy environment, as well as whether MCC could work effectively in a country, and takes into consideration how much money the agency has.
Once a country is selected as eligible for a compact, it must typically be reselected each year until the compact is approved (usually 2-3 years).
A country can be considered for a second compact if it is within 18 months of completing its current program. In decisions about subsequent compacts, MCC looks for improved scorecard performance and considers the quality of partnership during the first compact.
Countries that Pass MCC’s FY2018 Scorecard Criteria
Low IncomeLower Middle Income
Micronesia, Fed Sts.
São Tomé and Principe
MCC Eligibility Predictions for FY2018
Below are my predictions for FY2018 MCC eligibility. I don’t cover all 83 countries since around two-thirds of them have low enough scorecard performance to make them unlikely candidates. Instead I restrict my analysis to:
All countries that pass the scorecard criteria, except those not in the running for any kind of eligibility decision. These are Benin, Côte d’Ivoire, Georgia, Ghana, Liberia, Morocco, Nepal, and Niger, all of which are currently implementing compacts and are not within the timeframe for subsequent compact eligibility.
Countries that don’t pass the scorecard but for which a decision about continued eligibility is expected.
Countries that don’t pass the scorecard but come close enough to be considered for threshold eligibility.
Click on any country name to read a brief analysis and rationale for my prediction.
First compact eligibility, new selection
Timor-Leste has a long and complicated history with MCC. It was selected as eligible for a compact in FY2006 but never finalized an agreement for unstated reasons—likely related to political unrest as well as repeatedly failing the Control of Corruption indicator (due mostly to its move from the low-income group to the more competitive lower-middle-income group). Instead, as somewhat of a consolation, MCC moved Timor-Leste to the threshold eligibility in FY2009, and the country implemented a program that concluded in 2014.
Last year, Timor-Leste (once again classified as low income) passed the scorecard for the first time in a decade, and the board selected it for a second threshold program. Now that Timor-Leste passes handily for a second year in a row, the board could opt to move Timor-Leste up to compact eligibility.
It’s not a sure thing, though. First of all, Timor-Leste is small and remote, and it’s hard to tell if the new board will find it appealing to spotlight the tiny half-island nation, especially when there are few other prospective new compact countries to pick this year. Timor-Leste also has a large petroleum sovereign wealth fund, raising questions about the country’s need for grant funding. And on top of that, its per capita income puts it near the threshold separating the low-income category from the more competitive lower-middle-income category. Timor-Leste may well bump into the higher category again soon, and if it does, it will almost certainly fail the scorecard again.
That said, the board also likely recognizes that Timor-Leste is a very poor country, despite the oil wealth that has made it nominally middle income. Nearly half the population lives under $1.90 a day, and its median household income per capita is just $2—on par with countries like Benin, Niger, and Tanzania. Furthermore, a dip in oil prices and declining production has hit Timor-Leste hard and presents risks for future fiscal sustainability. After 12 years of a tumultuous partnership, this might be the year MCC restarts compact eligibility with Timor-Leste.
Second compact eligibility, new selection
Malawi passes the scorecard for the 11th year in a row. When the board meets next week, the country will be nine months out from completing its compact and could be considered for second compact eligibility. While it’s a possible choice, there are a couple of factors that may make the board think twice. First, the last year of compact implementation is often the most intensive, as countries push to complete the program before the five-year time clock runs out. MCC may prefer that Malawi focus its finite capacity on successful implementation, without the distractions that come with developing a new program. In addition, while Malawi has an excellent record of passing the scorecard, second compact eligibility demands a higher bar and the expectation that a country will demonstrate improved scorecard performance, especially in the areas of control of corruption and democratic rights. Here, the case for Malawi is harder to make. Its Control of Corruption score has declined some in recent years, on the heels of a major 2013 corruption scandal that led donors to withhold funds. While this isn’t a statistically significant decline, it is noteworthy that Malawi has dropped over 15 percentage points in rank in the last five years and is now hovering close to the pass/fail threshold. Subsequent scandals have unfolded since 2013, and efforts to investigate them have faced hurdles. Arrests of protestors and treason charges against opposition figures also merit attention, as do the current government’s trumped up charges against a former president. With few contenders for new first or second compacts this year, Malawi may be in the running, but it is not a clear-cut choice.
Zambia passes the scorecard for the 10th year in a row. Its current compact will end in November 2018, almost a full year from next week’s board meeting. While this puts it within the 18-month window for second compact consideration, it’s not an obvious choice this year. MCC may prefer not to distract from the final, intensive year of compact implementation with preparations for a new program. It can also be hard to fully gauge the quality of the partnership, one of the criteria for second compact eligibility, when there is still a (very busy) year to go. Not only that, Zambia may not meet the higher bar for improved scorecard performance. Its Political Rights indicator has shown substantial decline due to a restrictive environment for political opposition before the country’s 2016 general elections, and increased restrictions on freedom of expression and demonstration. Because there are few compact contenders this year, and because Zambia is within the window for second compact selection, it will probably be under serious consideration. However, it seems more likely that MCC will wait to reassess the political environment and the quality of compact implementation after the current compact concludes.
Threshold program, new selection
The Gambia (probably)
MCC picked the Gambia for compact eligibility back in FY2006, but suspended it less than a year later due to concerns about the policy environment. A decade later, MCC and the Gambia seems set for a do-over. This year, the only criteria that keep the Gambia from passing the scorecard is the democracy hurdle. And there is reason to believe this may soon change. The indicators reflect the events and conditions of 2016, a year that culminated in the then president—who had been in power for 22 years—refusing to accept the results of an opposition electoral victory. In January, he finally agreed to leave office, leading to the country’s first transfer of power by popular election. The party of the new president won a sweeping victory in the mid-2017 parliamentary elections, which could facilitate further reforms. With a failing scorecard, the Gambia isn’t a contender for a compact yet, but it could be an attractive country for a threshold program. MCC has a strong presence in West Africa, which it has long been eyeing for regional opportunities. The agency is likely interested in testing how a partnership with the newly democratic Gambia would go, while watching the policy trajectory of the new government.
For seven years running, Bangladesh has either passed (twice) or come very close to passing the scorecard, falling just short on the Control of Corruption indicator. However, MCC has always decided against compact or threshold eligibility for Bangladesh. Its inconsistent passing of the Control of Corruption indicator has made it a risky bet for compact eligibility. And more broadly, MCC undoubtedly has had a watchful eye on constraints to political rights, civil liberties, and press freedom in Bangladesh. There have been no major advances in these areas that would suggest this year presents a particular opportunity for eligibility. Just the opposite, in fact, with a government crackdown on labor protestors earlier this year and reports that press freedom is increasingly under threat. General elections are also due at the end of next year, and Bangladesh has a history of political violence around its electoral cycles.
That said, MCC has been thinking about possible regional approaches in South Asia, and Bangladesh is a major player in the region. The US government may also be particularly interested in supporting Bangladesh at this time, given its role on the front lines of the Rohingya crisis, having received over a million refugees from neighboring Myanmar.
The board is almost certainly giving Bangladesh some serious thought this year. Though its governance issues raise questions about its fit with MCC’s good governance mandate, the board could consider the country for threshold program eligibility. A threshold program would allow work to begin on initial phases of a partnership, but afford MCC time to watch how next year’s elections and the broader human rights context unfold. One important consideration, however, is that threshold programs are small (around $20 million over three or so years), and therefore may not get a lot of attention in Bangladesh, which receives over $4 billion in foreign aid each year. So even compact consideration may not be entirely off the table. Either way, Bangladesh isn’t a highly likely pick. But it shouldn’t be ruled out.
First/second compact eligibility, reselection to continue compact development
Burkina Faso (probably)
Burkina Faso was initially selected as eligible for a second compact last year. It passes the scorecard for the seventh year in a row and has been working with MCC on a constraints to growth analysis that will inform the focus of the compact.
Lesotho—which holds the distinction of being the only current candidate country to pass the scorecard every single year since MCC’s inception—was first selected for second compact eligibility in FY2014. It’s had a bit of a rough road since then. For the last two years, the board deferred a reselection decision due to uncertainty surrounding how the country would address serious concerns about the behavior of the military, including allegations that the armed forces had been active in stifling the opposition and those loyal to the prior regime. Just before last year’s selection-focused board meeting, there were early signs of progress in Lesotho, and the board decided to see how well they would be implemented over the coming year. Instability still persists in the mountain kingdom, but the government of Lesotho has taken steps that demonstrate the seriousness with which it is taking the Southern African Development Community (SADC)’s recommendations to address its challenges. It has launched a reform process, and President Thabane recently requested a SADC stabilizing force to provide protection to the government as it implements the regional body’s recommendations to arrest and try military officers and tackle security sector reforms. The board will probably take a positive view of these recent steps and give Lesotho the green light to proceed with compact development.
Since it was first selected for a second compact in FY2015, annual eligibility determinations for Mongolia have been anything but straightforward. In FY2016, Mongolia’s per capita income briefly rose above the ceiling for MCC candidacy, taking it out of the pool of country scorecards. Since it wasn’t a candidate country, the board couldn’t reselect it; however, they did reaffirm the agency’s commitment to continuing to develop a second compact with Mongolia. Last year, Mongolia was back in the candidate pool, but failed the Control of Corruption hurdle. The board wisely reselected it anyway, recognizing that the failure was not indicative of an actual policy decline. There are no such hitches for Mongolia this year, which passes the scorecard once again.
The Philippines (hard to predict, but unlikely)
As I explain in more detail here, the Philippines decision is the one to watch this year. The Philippines, an important strategic ally for the United States, has had a long partnership with MCC. It had a threshold program from 2006 to 2009, a compact from 2011 to 2016, and was selected as eligible for a second compact in FY2015. But since the inauguration of Filipino president Rodrigo Duterte in mid-2016, some serious questions have emerged about whether the Philippines continues to meet MCC’s good governance criteria. In particular, there are concerns about Duterte’s support for the extrajudicial killings of thousands of people suspected of involvement in illicit drug activity. This issue—in addition to the Filipino president’s inflammatory anti-American (and specifically anti-Obama) rhetoric—led the board to defer a decision about whether to reselect the Philippines last year. A vote up or down would have constituted a major foreign policy decision just weeks before the new Trump administration would take office. Over the past year, Presidents Trump and Duterte have developed an amicable relationship. Trump recently returned from a successful trip to the Philippines, and, over the course of his first year in office, he has been largely silent about (or arguably supportive of) the extrajudicial killings.
Another factor the board will have to weigh is that the Philippines doesn’t pass the scorecard this year, failing the critical Control of Corruption indicator. While this might appear important, it should really be less of a concern than the actual, identified human rights issues described above. The decline in the Philippines’ score is slight (not remotely significant), and the country has long ranked near middle of the pack on this indicator, fluctuating above and below the passing threshold. Its failing score is not a signal that it has suddenly become more corrupt. It does, however, offer an “easy out,” giving the board a way to curtail the relationship with the Philippines without being explicit about the human rights concerns the Trump administration has chosen to downplay. While “easy,” it’s not the right rationale. Instead, the board should refer to MCC’s criteria that countries must meet a higher bar on the scorecard for a second compact. The downward movement on the Civil Liberties indicator (reflecting, in part, the drug-related killings) suggests the Philippines probably doesn’t clear that hurdle.
The Philippines is a hard prediction to make. On the one hand, the US government is undoubtedly sensitive about its relationship with an important geostrategic ally whose current leadership has responded to US criticism by threatening American interests and edging closer to China. On the other hand, it’s hard to make the case that the Philippines meets MCC’s good governance standards for a second compact. I’m predicting that the board will ultimately vote not to reselect the Philippines this year. A different outcome would not be surprising. But it would be unfortunate for what it would say about how the current board interprets MCC’s good governance mandate.
Senegal was initially selected as eligible for a second compact in FY2016. It passes the scorecard for the 11th year in a row and has been working with MCC to develop a program in the energy sector.
Sri Lanka (probably)
Sri Lanka was selected for threshold program eligibility in FY2016 and then—before signing a threshold program—for compact eligibility last year. Since then, it’s been developing a compact on an accelerated timeline thanks to the constraints to growth analysis that it conducted as part of threshold program eligibility. The proposed programs will focus on regional transportation and access to land.
Tunisia was initially selected for a compact last year. It passes the scorecard for the second year in a row and has been working with MCC on an updated constraints to growth analysis that will inform the focus of the compact.
Countries that pass the scorecard but are unlikely to be selected
Bhutan, Comoros, Kiribati, Federated States of Micronesia, São Tomé and Principe, Solomon Islands, and Vanuatu
All have passed the scorecard in several prior years but have been passed over for eligibility, presumably because of their small size (all have populations under a million). Though MCC does not have an official minimum size requirement for compact eligibility, the board has demonstrated a preference against the selection of small countries.
Cabo Verde is also small (population 540,000), but, unlike the small countries listed above, it has had a long partnership with MCC, completing its second of two compacts in November this year. If the board were to select Cabo Verde again it would be for a third compact. MCC absolutely should be given the green light to pursue third compacts with select partners. However, because not all MCC stakeholders (including some members of Congress) buy into this idea wholeheartedly, it would be risky for MCC to pick tiny Cabo Verde as the vanguard of a potential new cohort of third compact partners.
India regularly passes the scorecard, but neither it nor MCC—not to mention many members of Congress—think a compact is an appropriate tool for the bilateral partnership. India is, after all, the world’s seventh-largest economy and a foreign aid provider, not to mention its over $300 billion in foreign exchange reserves. MCC and India have, however, discussed how they might collaborate on MCC’s programming in South Asia, including in Nepal and Sri Lanka.
Because Indonesia’s compact ends within 18 months, it could be considered for a second compact. It’s an unlikely choice, however. This is only the second year that Indonesia has passed the scorecard (the other time was in FY2009, the year it was selected for its first compact). This makes it a risky bet since it’s far from clear that it would continue to pass with any consistency in the future. In addition, the ability for an MCC compact to affect poverty reduction and growth is relatively limited in the world’s fourth biggest country and 16th largest economy, which gets trillions of dollars of foreign direct investment each year. That said, Indonesia is a strategic partner of the US government. If it continues to pass the scorecard for a few years, a more serious conversation about a second compact might arise in the future. But not this year.
Kosovo passes the scorecard for the second time this year. When it first passed, in FY2016, it was selected for compact eligibility. Last year, however, Kosovo was downgraded to threshold program eligibility due to a failing score on the Control of Corruption indicator. Though MCC cited Kosovo’s troublesome trajectory on the indicator as rationale for the shift, there was zero actual evidence of a real policy decline. The fact that it passes again this year (with its highest score since independence) makes MCC’s end-of-2016 professed dissatisfaction with Kosovo’s indicator performance appear, retrospectively, even more off base. Kosovo just signed a $49 million threshold program (the second largest in MCC history), however, so MCC probably won’t choose it for a compact again this year. But the Kosovo story amplifies the need for MCC to change its approach to the Control of Corruption indicator for reselection decisions.
Tanzania was selected for second compact eligibility in FY2013, but MCC suspended the partnership in 2016 based on the flawed and unrepresentative conduct of a 2015 election in Zanzibar, as well as moves by the government to stifle dissent and control information. There has been no appreciable improvement in these areas, so the board is unlikely to reselect Tanzania this year.
Togo passes the scorecard for the second year in a row. It was selected as eligible for a threshold program in FY2016 and is close to finalizing a program focused on policy reform in the information/communications technology and land sectors. However, at the board meeting in September, MCC flagged concerns with the political rights and civil liberties environment in Togo and indicated that it would not sign the threshold program agreement until there were clear signs of improvement. This suggests that Togo will not be moved up to compact eligibility this year.
On the heels of President Trump’s trip to the Philippines, a bilateral foreign policy question looms. Next month, the Millennium Challenge Corporation’s board of directors will meet to select the set of countries that will be eligible for the agency’s large-scale grant programs. One of the decisions on the table will be whether to continue the partnership with the Philippines. The board needs to formally reselect the country this year for program development to proceed. The Philippines has been a long-term partner for MCC, having completed a threshold program (2006–2009) and a compact (2011–2016). In late 2014, MCC gave the Philippines the green light for the next step, selecting it to start developing a second compact. However, over the last year and a half, questions have emerged about whether the Philippines continues to meet MCC’s good governance criteria. In one month, MCC and its board will have to answer those lingering questions.
For background on MCC’s selection process, visit MCC’s official document or my short synopsis (see section “How the Selection Process Works,” p. 2-4).
The Philippines and the United States have long been strong allies. Close military and security cooperation, substantial trade and investment, and immigration have contributed to what both countries have typically viewed as an overwhelmingly favorable relationship. The inauguration of President Rodrigo Duterte in mid-2016, however, created something of a rift. At the outset of his tenure, Duterte engaged in inflammatory anti-American (and specifically anti-Obama) rhetoric, threatening to “break up with America.” This came largely in response to concerns voiced by President Obama and others over Duterte’s support for the extrajudicial killings of thousands of individuals suspected of involvement in illicit drug activity. When MCC’s board faced the decision last year of whether to give the Philippines the go-ahead to continue working toward a second compact, it deferred, opting to take a wait-and-see stance rather than a forward-leaning foreign policy decision. That decision, which could have been interpreted as either a stamp of approval or a punitive action with respect to a significant ally would have occurred just weeks before the new Trump administration was to take office.
Over the past year, anti-American rhetoric has waned as Presidents Trump and Duterte have forged a more friendly relationship. And Trump has been virtually silent on the human rights concerns expressed by the previous administration—even telling Duterte during an early phone call that he was doing an “unbelievable job on the drug problem.”
This sets up the MCC board for a tough call. Should good governance-focused MCC take a stand on the Philippines’ serious human rights concerns even though the White House has been ambivalent, at best, about the issue? How much will the answer to this question be informed by pressure to treat delicately an important geostrategic ally whose current leadership has responded to US criticism by threatening American interests and edging closer to China?
In making that decision, another important factor will come into play. The Philippines doesn’t pass MCC’s scorecard criteria this year, falling just short on the critical Control of Corruption indicator. In some ways, that may seem convenient. Pointing to a failing Control of Corruption indicator would theoretically give the board cover to pull back MCC’s engagement with the Philippines without having to (a) express concerns about other governance issues and (b) awkwardly put MCC, as opposed to the State Department, at the leading edge of that conversation.
As tempting as that rationale might be, it’s also wrong. The Philippines’ failing score does NOT mean that the country is suddenly much more corrupt. In fact, the change in score is slight and not even close to statistically significant. The simple fact is that the Philippines has always been near the middle of the pack on this indicator, fluctuating above and below the passing threshold (in its eight years as a lower-middle-income country, it’s passed the Control of Corruption indicator three times). Simply put, its measured corruption performance this year is not meaningfully different than the year it was selected.
As I’ve arguedmanytimes, MCC should not necessarily curtail a country’s compact development process just because it fails the Control of Corruption hurdle. For corruption to be a valid justification, MCC should be able to point to a concrete decline in actual policy—not just in score. MCC’s official guidance suggests this is the agency’s approach, as well, noting that the board should use its judgement—informed by its understanding of data limitations—to interpret what the scorecard says about policy performance. Unfortunately, the board’s interpretation of the data has sometimes been more rigid than the indicators’ imprecision allows. For instance, the board decided not to reselect Benin, Sierra Leone (FY2014), and Kosovo (FY2017) for compact eligibility when they narrowly failed the Control of Corruption indicator, even though MCC acknowledged (for the former two at least) there had been no deterioration in policy. Sierra Leone and Kosovo were relegated to MCC’s much smaller threshold program. Benin was reselected for compact eligibility the following year, but only after compact development was slowed by the earlier decision. Earlier this year, I was hopeful that MCC would formalize an approach to corruption that would—for decisions about whether to reselect countries to continue compact development—reduce the need for the board to trade off appearing to “play by the rules” (countries must pass the Control of Corruption hurdle) and the imperative to use data wisely. The current guidance isn’t explicit about this, leaving open the possibility that the board could use the Control of Corruption indicator as an “easy out.” I hope that’s not the route they’ll take.
I hope that instead, the board gives greater scrutiny to other aspects of the Philippines’ scorecard data. For eligibility for a second compact, MCC is clear that there is a higher “good governance” bar. The agency looks not just for a passing scorecard, but for improved performance during the course of the previous compact. In the past, I’ve highlighted why this can sometimes be an impractical criterion, but for the Philippines, there are some signals the board should heed. Notably, while the Philippines still easily passes the Civil Liberties indicator, Freedom House (the indicator’s source) gave the Philippines a “downward trend arrow” due to the extrajudicial killings associated with the war on drugs, as well as threats against civil society activists. The Philippines also fails the Rule of Law indicator (which covers events of 2016 and earlier). The decline is slight, and, given its longstanding middle-of-the-pack rank, it has failed this indicator before. But it will be useful for MCC and the board to understand what is behind the decline and how assessments have changed over the past year.
All this makes the Philippines the decision to watch at MCC’s upcoming December board meeting. In the balance are not only the fate of the Philippines’ compact, but also important questions of how the new board under the Trump administration interprets MCC’s good governance mandate and whether it will use data wisely.
Note (December 4, 2017): The data in this blog present the first release of DRM-coded data in the OECD’s Creditor Reporting Service. Please keep in mind the following caveats. The Addis Tax Initiative—and by extension the OECD data—focus on domestic revenue mobilization; the data don’t capture everything within the broader category of domestic resource mobilization (e.g., strengthening and borrowing from domestic capital markets). Furthermore, because this is a relatively new data classification, the comprehensiveness and accuracy of the data are evolving. There are some known gaps in the data presented below. Bottom line, however, we’re pleased a framework now exists to track US (and other donor) investments in DRM; we hope those reporting data will contribute to quality improvements going forward.
Domestic revenue mobilization (DRM) seems set to be a priority area for the US Agency for International Development (USAID) under Administrator Mark Green. In line with emerging international and domestic consensus on the importance of DRM, Administrator Green hasrepeatedly highlighted the importance of helping countries mobilize their own domestic resources. Furthermore, DRM, which aims to help partner countries better self-finance their own development priorities, is a promising tool for helping select middle-income countries transition away from USAID’s grant-based assistance, another statedpriority for Administrator Green (stay tuned for forthcoming research on transition from Sarah Rose and Erin Collinson).
DRM, which supports strengthened tax policy and administration, is not a new objective for US foreign assistance. For many years, USAID, the Millennium Challenge Corporation (MCC), and the Treasury Department’s Office of Technical Assistance (OTA) have been working with countries to improve tax collection, customs capacity, public financial management, and the like.
The challenge has been in tracking US (and other donors’) support for DRM activities. Historically, there has been very little data on the amount of assistance going to DRM, but this is starting to change. The 2015 Addis Tax Initiative (ATI) provided the first framework to track donors’ support for DRM activities in a systematic manner through the OECD’s Creditor Reporting Service. ATI used this data in its first Monitoring Report, released in July. While the data only covers projects in 2015 so far, it contributes to a better understanding of what US aid agencies are doing in the DRM space and where they are working. If the United States is looking to step up assistance in this area, it will be instructive to understand the landscape of current efforts.
The United States is the second-largest donor to DRM
The United States is the second-largest donor to DRM, behind the United Kingdom. Other major donors include Germany, the World Bank’s International Development Association (IDA), and Norway.
USAID leads US DRM efforts
In 2015, the United States delivered $37 million in DRM-focused assistance in 32 countries. USAID contributed the most, disbursing nearly $25 million, followed by MCC ($8.2 million), Treasury ($3.7 million), and the US Trade and Development Agency (a single $8,000 feasibility study in Pakistan).
The type of engagement varies by agency. MCC funded comparatively larger projects, with an average project size of $2.1 million across four projects. On the other end of the spectrum, the average size of the 40 Treasury projects was around $9,000. USAID’s 37 projects had an average cost of $671,000.
The majority of US assistance to DRM (66 percent) is delivered as project-type interventions—for example, training officials, modernizing IT and other equipment, supporting public awareness campaigns and taxpayer outreach, and modernizing tax collection infrastructure. Another 27 percent of DRM funds support US advisors to deliver in-country technical assistance (mostly through Treasury). Additionally, USAID contributed a small fraction (under $1 million) of assistance to multilateral institutions.
The Philippines and Afghanistan are top recipients of US DRM assistance
The United States provided DRM assistance to 32 countries in 2015. Of the total US spending on DRM that year, 40 percent went to low-income countries, 44 percent to lower-middle-income countries, and 6 percent to upper-middle-income countries—which broadly tracks the distribution of the US government’s overall development aid allocation by income category.
Consistent with the models of each agency, the MCC is the most focused of the agencies. In 2015, MCC’s DRM projects were limited to only two countries, with one, the Philippines, dominating. By contrast, the work led by USAID and OTA was dispersed more widely. USAID worked in 14 countries, spending an average of $1.8 million per country. Treasury worked in 19 countries, spending an average of only $197,000 per country.
Recipients of US aid to DRM, 2015
Considerations for expanding US contributions to DRM
As the United States seeks to refine and possibly ramp up its approach to DRM, this analysis points to several considerations that US foreign assistance agencies should think through:
What is the role of US aid agencies vis-à-vis other donors? The United States is a significant donor to DRM efforts—but it’s not the largest. Given the substantial efforts of many other bilateral and multilateral donors—including the IMF’s Tax Policy and Administration Topical Trust Fund and the OECD’s Tax Inspectors Without Borders—the United States should a) identify how best to support multilateral efforts, and b) establish its comparative advantage in this area vis-à-vis other actors in the space.
How can US agencies better coordinate DRM efforts to maximize effect? Each of the three agencies contributing to DRM efforts has its own approach. MCC funds substantial partner country-identified interventions in a small number of countries. OTA sends financial advisors to work in partner country governments on revenue policy and administration and/or budget and financial accountability. USAID covers a wide array of goals and instruments, generally focused on strengthening revenue administration, assisting on tax reform, and encouraging a culture of tax compliance, and often covers a wide range of smaller interventions. The agencies do coordinate with one another; both MCC and USAID fund OTA’s work, for example. Continued focus on coordination will remain necessary to maximize effectiveness.
Where should the United States focus increased assistance? US agencies operate DRM projects in a range of countries, from upper-middle-income countries like Tunisia to fragile, low-income countries like South Sudan. For countries at the higher-income end of the spectrum, DRM could be particularly useful as part of a strategy to transition partners away from traditional, grant-based foreign assistance by building their capacity to self-finance their development objectives. For small, fragile states, DRM assistance can lay the groundwork for other reforms, like state-building. In all cases, DRM efforts must be undertaken with due attention to the risks of overburdening poor people. A study in the Democratic Republic of the Congo found that the real tax rate on low-income Congolese is 40 percent of their wealth. And CGD non-resident fellow Nora Lustig found that the extreme poverty headcount ratio may actually be higher after taxes and transfers in some countries than before.
The very same week that USAID and the Department of State submitted a joint redesign plan to the Office of Management and Budget, the coauthors of four recent reform proposals packed the CGD stage for a timely debate. With each proposal unique in approach and substance, moderator and senior policy fellow Cindy Huang had the tough task of keeping the event to a strict timeline. Thankfully, with help from a terrific panel—comprising Erol Yayboke and Nilmini Rubin representing the Center for Strategic and International Studies (CSIS), CGD senior policy fellow Jeremy Konyndyk, Jim Roberts of Heritage, and George Ingram representing the Modernizing Foreign Assistance Network—the event featured an engaging discussion and covered a lot of ground in just 90 minutes. Here are a few of the big questions that panel members grappled with as they authored their reports, including areas of consensus and divergence (USAID/State transition teams—and other administration officials—take note!):
Fragmentation: “Form should follow function,” but how ambitious should we be in reorganization?
The panel was unified on the idea that the current system is deeply fragmented, but members took different approaches when specifying the level of reorganization needed to increase efficiency and effectiveness to achieve US development goals. For Rubin, “bigger isn’t always better.” To consolidate and streamline, Yayboke advocated for the USAID administrator act as coordinator of foreign assistance, ultimately deciding which agencies should implement new US development programs. Ingram took this a step further, outlining a vision for the creation of a “bigger and more powerful” new development agency (while leaving development finance functions distinct), bringing the best practices and the main instruments of the wide range of existing agencies together under a single director of foreign assistance with cabinet status.
Inclusive economic growth: How can we better harness tools for catalyzing private investment and economic growth?
One of the more controversial subjects the panel broached was how to approach the roles and tools of the Millennium Challenge Corporation (MCC) and the Overseas Private Investment Corporation (OPIC). Roberts called for the breakup of USAID, the elimination of OPIC, and the shifting of development functions—outside of global health programs—to an outsized MCC. For Roberts, this was driven by a vision that US foreign assistance agencies should be focused primarily on strategies to help improve economic growth, with a greatly diminished focus on non-growth objectives. This was met with resistance from some of his fellow panelists. In response to the idea of an “MCC on steroids,” Rubin countered with the metaphor of the evening, noting that her minivan is great for shuttling her kids to school and activities but would make a terrible lawnmower. In other words, while the small, growth-focused MCC can operate very effectively in certain contexts, that doesn’t necessarily mean the agency is the right choice to take on a very different mission. Most of the proposals envision market-driven, private sector investment as critical to realizing development progress well into the future. Ingram emphasized the need to modernize OPIC to help crowd in the private sector in frontier markets—an idea also championed in the CSIS and CGD reports.
Humanitarian assistance and fragile states: Given a lack of proven methods and tools, how do we develop the systems we need to engage effectively in post-conflict environments?
Speaking from his experience at USAID’s Office of US Foreign Disaster Assistance, Konyndyk noted it was time to apply lessons from US humanitarian response to US development programs in post-crisis contexts. He outlined steps that would allow programming to be more responsive and agile: more aggressive use of competition waiver authority within USAID in certain transitional and insecure environments, a dedicated surge staff mechanism for development surge or post-crisis surge capacity, and earmark flexibility for missions in transition settings. The proposal from CSIS aimed to increase effectiveness and streamline assistance by consolidating programming under USAID, such as the Bureau of Conflict and Stabilization Operations, while keeping policy functions at State. Ingram observed that while these specific suggestions are important, what was missing from all the proposals was an overarching instrument in dealing with state fragility that effectively engages the “three Ds”: development, diplomacy, and defense.
Global health: How can we continue to build on past success?
US global health programs have some of the greatest evidence of effectiveness, so the question is often framed around how to improve coordination and build on existing progress. On the structural side, Yayboke recommended transferring PEPFAR to USAID’s Global Health Bureau to better help address what he sees as the changing face of tackling the HIV/AIDS crisis—one that is less of an emergency initiative and more focused on management and long-term sustainability. Konyndyk focused instead on the haphazard division of labor between PEPFAR’s implementing agencies, USAID and the Centers for Disease Control and Prevention. The current arrangement, which he sees as inefficiently maintaining parallel capabilities at both agencies, is not a functionally driven way to manage a multibillion-dollar aid program. We should move toward a deliberate arrangement where engagement plays to the comparative advantages of each agency. Roberts identified global health as an element of US development assistance worth preserving, but his view is that global health programs should be consolidated under the State Department and sit alongside US humanitarian functions.
Country graduation: How can we better match instruments and programs with country needs?
The panelists agreed that the United States requires a range of tools to address distinct development challenges, and that a broad aim should be to help countries transition away from traditional grant-based foreign assistance over time. USAID Administrator Mark Green has consistently suggested that developing models for strategic country transition will be a top priority during his tenure at the agency. Ingram highlighted the need for a transition strategy with benchmarks and plans to ensure sustainable engagement even after the United States is no longer providing traditional assistance. In a similar vein, Konyndyk highlighted the need for an updated toolkit to leverage private sector engagement and encourage domestic revenue mobilization in partner countries. Yayboke echoed this, and suggested the United States take a hard look at programs and missions that are not central to a newly crafted foreign assistance strategy, with a particular eye toward middle-income countries. Roberts reinforced that countries should be thinking about transition “all the time.”
This event was a great chance to learn more about the motivating factors behind elements of the reform proposals—and an opportunity to identify common ground.
If you missed the conversation, you can still watch the webcast here. And be sure to visit the proposals themselves: