Country-Led Poverty Reduction

Country ownership has been broadly embraced by the international donor community as a critical element of international development aid. The U.S. Government’s Millennium Challenge Corporation (MCC) was established in 2004 with three core principles based on lessons previously learned by the development community:

  • sound policies matter for economic growth,
  • “country ownership” (country-led development) is critical to sustainable development, and
  • aid should be delivered with accountability for results.

MCC has developed and institutionalized internal processes that can help shift country ownership from a guiding principle to a practical approach. While this effort remains a work in progress, the approach has become more systematic and it represents progress towards operationalizing a complex principle.

In Principle: MCC’s Approach to ‘Country Ownership’

Development investments are more effective and sustainable when they reflect countries’ own priorities and strengthen governments’ accountability to its citizens. This is the starting point for MCC’s approach to country ownership. To MCC, however, country ownership is more than this. Country ownership is embodied in partnership. MCC’s partner countries exercise ownership when, in close consultation with citizens, governments take the lead in setting priorities for MCC investments, implementing MCC-funded programs, and being accountable to domestic stakeholders for making decisions and achieving results. This ownership is implemented in partnership with MCC: It takes place within the framework of MCC’s focused mandate; must be consistent with MCC’s standards for accountability, transparency and impact; and draws on MCC’s support and guidance.

In Practice: MCC’s Approach to ‘Country Ownership’

Country ownership is not a new concept. It is a core tenet of the aid effectiveness agenda promoted through the Paris Declaration and the Accra Agenda for Action. It has been incorporated into donor policy and programming globally for years, and is a centerpiece of the Obama administration’s Global Development Policy. MCC was founded at a time when the country ownership principle was emerging as central to the global dialogue on aid effectiveness. MCC’s founders explicitly built into its model authorities and approaches to enhance strong and mutually accountable partnerships with compact countries. These include:

  • Selectivity. MCC partners with poor countries that have a proven track record in good governance and policies that support economic growth and effective use of development assistance. With this as a starting point, MCC can pursue a fairly aggressive approach to country ownership, giving partner countries significant responsibility in prioritizing investments, implementing programs, and being accountable for results.
  • Focused mandate. MCC’s mandate is clear: to support poverty reduction through economic growth. This puts clear parameters around the country ownership principle. MCC’s partners have significant influence in setting priorities for MCC investments, provided that proposed projects are consistent with MCC standards for cost-effective investments that raise incomes for beneficiaries.
  • Flexibility. MCC is not subject to sector earmarks or directives. This means that MCC has the freedom to work in sectors that matter most for countries’ growth and poverty reduction, and to support investments that are priorities for partner country governments, citizens, civil society, and the private sector, and promise the best returns in terms of increased incomes for beneficiaries.
  • Five-year funding. MCC has the authority to commit five years of funding up front. This is important for country ownership because it makes funding predictable. At the outset, MCC partner countries know how much funding is committed, for what purposes, and what period of time, so governments can better plan their own development strategies and budgets. Five-year funding also enables MCC to support partner countries’ priorities for long-term growth investments, and gives local politi­cians the time and political courage necessary to implement tough policy reforms that support impact and sustainability.
  • Transparency. For partner country governments and citizens to really “own” development investments, they need information about what donors are doing. For all compact programs, MCC publishes economic analyses that inform investment decisions, five-year budgets, expected results, data on ongoing program progress, and findings of independent impact evaluations as programs complete. MCC expects transparency from its partners as well, and each publishes information on implemen­tation progress and procurement opportunities. This transparency empowers citi­zens to hold governments and donors accountable for how development resources are used and what results they achieve.