MCC struggles to get off the ground Posted by Max Bergmann

The Millennium Challenge Corporation has broad bipartisan support. Yet the Bush administration has failed to get the MCC rolling. From the New York Times:

The Millennium Challenge Corporation, a federal agency set up almost four years ago to reinvent foreign aid, has taken far longer to help poor, well-governed countries than its supporters expected or its critics say is reasonable.

The agency, a rare Bush administration proposal to be enacted with bipartisan support, has spent only $155 million of the $4.8 billion it has approved for ambitious projects in 15 countries in Africa, Central America and other regions.

Comments

[Ruth]

It is not unusual, undesirable, nor unexpected for the MCC to have disbursed a fraction of the $5.5 billion is has committed to 16 countries (according to the number of Compacts approved), as these programs were designed to run for 5 years each, with disbursements occurring as the projects move forward and as funding is needed. Most of the initial implementation of the Compacts involves extensive planning and setting up controls and procedures for assuring that the money will be spent well and the projects will be sustainable. It is not reasonable nor responsible to suggest that MCC should hand over large checks upfront to outside entities (or Beltway Bandits) who would end up doing work that the country must learn to do itself. Why is the measure of success of a program the amount of money that has been spent? The money has been committed, so it will arrive when it needs to. Ask anyone in the countries involved, it is much more valuable for them to learn how to run their own development programs, however long it takes. Building Capacity, not spending money quickly, should in the end be the goal of the MCC. This is something the American people would appreciate if they ever had a chance to hear this side of the story.

[Ruth]

It is not unusual, undesirable, nor unexpected for the MCC to have disbursed a fraction of the $5.5 billion is has committed to 16 countries (according to the number of Compacts approved), as these programs were designed to run for 5 years each, with disbursements occurring as the projects move forward and as funding is needed. Most of the initial implementation of the Compacts involves extensive planning and setting up controls and procedures for assuring that the money will be spent well and the projects will be sustainable. It is not reasonable nor responsible to suggest that MCC should hand over large checks upfront to outside entities (or Beltway Bandits) who would end up doing work that the country must learn to do itself. Why is the measure of success of a program the amount of money that has been spent? The money has been committed, so it will arrive when it needs to. Ask anyone in the countries involved, it is much more valuable for them to learn how to run their own development programs, however long it takes. Building Capacity, not spending money quickly, should in the end be the goal of the MCC. This is something the American people would appreciate if they ever had a chance to hear this side of the story.

[Aaron]

"Why is the measure of success of a program the amount of money that has been spent?"

As anyone who has planned a large enterprise - indeed, anyone with basic business training - will tell you, that is an indicator that it is behind schedule. This program is poorly managed.

[Ruth]

Poorly managed as compared to what? What precedent is there for this kind of an enterprise? As anyone who has had a course in basic economics will tell you, improving the absorptive capacity of a developing country is not something that can be judged according to a standard business model.

[Doug M.]

"What precedent is there for this kind of an enterprise?"

Forty years of development work by USAID and the World Bank?

MCC is innovative in some ways, but in others it's reinventing the wheel -- and repeating mistakes that the other big donors made years ago.

Doug M.

[Ruth]

Neither USAID nor the World Bank are a precedent for this kind of an enterprise, because MCC asks developing COUNTRIES themselves to both develop AND implement large-scale development programs, called Compact programs. No other development institution operates this way.