Millennium Challenge Corporation

FY2018 Funding Recommendation:  
$1 billion

 

Funding History

       Enacted   

       House/Senate FY2017 Request  

       InterAction's FY2018 Recommendation


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Justification

 Key Facts

  • The MCC enables private sector investment. For example, MCC investments in Benin, Ghana, and Jordan totaled nearly $1.1 billion. These investments laid groundwork that helped mobilize an additional $5 billion in private investments.

  • The high standards required by MCC have created the MCC Effect as countries strive to meet MCC standards as a goal for their own reform and development actions.

The Millennium Challenge Corporation (MCC) was created by Congress in 2004 with bipartisan support; it was designed as an innovative, international assistance agency charged with reducing global poverty by enhancing economic growth. The MCC provides program-oriented partnerships with developing countries committed to the principles of good governance, economic freedom, and investmenting in their citizens.

The MCC works with the poorest countries in the world striving for positive development. The MCC signs agreements – known as compacts – with countries competitively selected based on independent, transparent policy indicators. The development agendas are country-led and country-driven; the selected countries identify their priorities for achieving sustainable economic growth and implement their own programs. The MCC also partners with countries that are showing signs of positive development by providing threshold programming that helps those countries take the steps necessary to be fully eligible for a compact. Partner countries value the effects of MCC assistance and the potential for partnership provides incentive for reform. Countries work proactively to increase their levels of transparency, efficiency, and governance capability so that they may become eligible for MCC funding.

With all partners, the MCC sets a high standard for commitment to both sound economic and social policies aimed at reducing domestic poverty levels. Current compacts include projects on:

  • Water, sanitation, and hygiene improvement in Cape Verde;
  • Community-based nutrition and prevention of stunting in Indonesia;
  • Science and technology in higher education and workforce development in Georgia;
  • Agriculture productivity and infrastructure improvements to expand access to markets and services in Senegal; and
  • Water supply, sanitation, and drainage infrastructure in Zambia.

The MCC’s work has produced constructive, sustainable policy changes in both countries implementing compacts and in those seeking to qualify for MCC candidacy. Using rigorous data analysis as the basis for its investment decisions, the MCC is a leader in pioneering many best practices in international development, including transparency, gender integration, and country ownership.

InterAction also supports legislative authority for the MCC to create concurrent, multi-country compacts to further leverage U.S. and international private sector investments in regional infrastructure projects. The regional projects would provide development opportunities where, despite national divides, markets and communities are economically and socially integrated.

In December 2016, the Millennium Challenge Corporation selected Burkina Faso, Sri Lanka and Tunisia as eligible to develop compact proposals. These countries join those countries previously selected for and actively engaged in compact development: Côte d’Ivoire, Mongolia, Nepal, Philippines and Senegal. Kosovo, Togo and Timor-Leste are working to develop proposals for MCC’s Threshold Program. The MCC will need continued robust congressional support to finalize these partnership agreements; if current funding trends continue, the MCC may not have the funds necessary to achieve these countries’ growth potential.

Success Story

Leveraging Private Sector Investment for Infrastructure

Jordan is one of the driest, most water poor countries in the world, and population growth has put a strain on the country’s already limited water resources. MCC’s $275 million Jordan Compact invested in strengthening the country’s water infrastructure, supporting the government of Jordan’s ability to provide much-needed services to its people.

MCC provided $93 million to help the government of Jordan finance the expansion of the As-Samra Wastewater Treatment Plant, which now treats 70 percent of the nation’s wastewater. The expansion was financed through a large-scale public-private partnership that allowed MCC to more than double the impact of its investment by mobilizing $110 million from the private sector and $20 million from the government of Jordan.

As part of the MCC’s investments, more than 40,000 water meters were installed in homes, and more than 1,100 kilometers — the distance from Washington, D.C. to Chicago — of water and wastewater pipelines were constructed. This means more high-quality treated water is now available to farmers for irrigation in the Jordan Valley and more fresh drinking water is available for households and businesses across Jordan.

With limited foreign assistance available, governments around the world are looking for opportunities to partner with the private sector to supply much-needed services like water, sanitation, transportation, power, public health, and more. In Jordan, the partnership has helped make the compact one of MCC’s most successful — transforming a key element of Jordan’s water sector on time and under budget — and will serve as a model as MCC works with its partner countries to mobilize and attract the capital, expertise, and efficiency of the private sector to deliver high-quality development outcomes.

With more than 3 million people across Jordan expected to benefit from MCC’s investments, the people and government of Jordan are well-positioned to build on this progress, improve lives, and create opportunity for years to come.

Photo: MCC: Jordan Compact

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