The Millennium Challenge Corporation was created in 2004 to be a different kind of aid agency, a model that would correct the mistakes of other development agencies and put lessons gleaned from decades of experience into practice. Belief in country ownership—the widely-accepted idea that country-led development is critical to the success of sustainable development—was one of MCC’s founding principles. At an event this fall the acting CEO said, “Country ownership is not just a catchphrase at the Millennium Challenge Corporation. Though it has its share of challenges, it is—and will remain—a guiding principle.”
So why are people close to the organization saying that MCC’s commitment to ownership is eroding?
In the MCC model, a country competes with other countries to be pronounced eligible for funding by showing dedication to growth-oriented policies along 17 different indicators. From there, the country comes up with its own proposal, which should be developed with the input of the country’s citizens, “including women, non-governmental organizations, and the private sector.” The project, which should be “fully implemented, managed and maintained by the country,” must be “able to measure both economic growth and poverty reduction,” and, for the real kicker, must be done in five years.
These guidelines conform to industry best practice. And the five year limit on compacts creates the pressure for countries to focus on the project and show results.
Only problem is, meeting these targets is easier said than done for even the most capable of poor country governments. In theory, five years is enough to finish the projects, but in practice, those five years have at times been whittled away by the time it takes to complete thorough pre-project studies and build the capacity of a brand new agency to guide the process from start to finish.
MCC is also responding to pressure from Congress—which determines the level of funding the organization will receive each year—to get compacts signed and dollars out the door. “We would love to convince people that our constituency is the poor...but we answer to Congress,” said an MCC employee. As a result, some observers say that the agency has shifted from its intended supervisory role to taking on greater participation in program design. The idea is to empower the host country government, said the MCC employee, but “sometimes we had to take the pen and write the terms of reference ourselves.”
Evidence for this shift can be found through the organization’s website, where publicly-posted information on procurements shows that the MCC is acting as counterparty to contracts for firms to work on compact development.
In the past, MCC hired independent engineering firms to provide due diligence and implementation oversight for infrastructure projects. Now, the scope of work allows the MCC to hire firms to work on compact design as well. This seemingly small and easily-overlooked detail actually represents a “fundamental shift in the way we operate,” according to a source with detailed knowledge of the matter.
MCC leadership disagreed with this interpretation of their contracting procedures. “I can assure you that we’re not departing from our full embracing of our concept of host country ownership. I think we have gotten more sophisticated over the last five years in terms of what it looks like,” said Dick Day, Managing Director for Compact Development.
“We have very much learned from our experience,” said Day. “Some countries have sufficient capacity to do it all on their own.... Others need and want us to come alongside them and help them along the way, including during the compact development phase.” MCC’s experience with Senegal, Jordan and Moldova illustrate that country governments have varying levels of capacity to complete project design work in a timely way, he said.
Day described two areas of “evolution” in the way MCC does business. The first is the “overall concept of being more engaged as a partner.” The second is shifting the bulk of the compact design work (feasibility study, environmental impact assessment and some early engineering design work) to the period before the compact is signed with the host country government. This allows the host country governments to take more of the five years to carry out implementation of the project, but it may also give the MCC more latitude to increase their level of engagement in the process of designing the project when required, or - as a skeptic might phrase it less carefully - “do it for them.”
From at least one MCC employee’s perspective, these changes in MCC procedures mean “we are now contracting with engineering firms to do design work that the countries used to do, clear and simple.”