Country-Led Poverty Reduction

The international community has broadly embraced country ownership as a critical element of effective development cooperation. The U.S. Government’s Millennium Challenge Corporation (MCC) was established in 2004 with a mandate to reduce poverty through economic growth and to implement core operational principles based on decades of experience and evidence from the development community:

  • Aid is most effective in well-governed countries that promote economic freedom and democratic rights;
  • Project design and the monitoring of results should be driven by data and a focus on investment outcomes;
  • Country ownership and country-led development are critical for sustainable development investments; and
  • Aid should be delivered transparently and with accountability for results.

MCC has developed and operationalized internal processes to shift country ownership from a guiding principle to a practical approach – that is, putting . While this effort remains a work in progress, the approach has become more systematized as MCC seeks to operationalize a complex principle.

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

Development investments are more effective and sustainable when they reflect a country’s priorities and strengthen a government’s accountability to its citizens. This is simply the starting point for MCC’s approach to country ownership. MCC’s partner countries exercise ownership when governments take the lead in setting priorities for MCC investments in close consultation with citizens and civil organizations. Locally-led project teams, working under a Millennium Challenge Account, implement MCC-funded programs and are accountable to domestic stakeholders for making decisions and achieving results. This ownership: 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, the Accra Agenda for Action, the Busan Partnership Agreement, and the Nairobi Outcome Document. It has been incorporated into development policy and programming around the world and has been a centerpiece of the U.S. approach to global development for more than a decade. MCC was founded at a time when the principle of country ownership was emerging as an important foundation in 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 approaches include:

  • Selectivity. MCC partners with poor countries that have performed relatively well on policies that support economic growth and the effective use of development assistance. This starting point permits MCC to pursue an ambitious approach to country ownership, giving partner countries significant responsibility in planning and executing projects and being held accountable for results.
  • Focused mandate. MCC’s mandate is clear: to support poverty reduction through economic growth. This defines limits around the country ownership principle. MCC’s partners have significant influence in setting program priorities as long as proposed projects are consistent with MCC standards for cost-effective investments that raise incomes for beneficiaries.
  • Flexibility. By grounding its decisions in evidence and analysis, MCC has the autonomy to support investments and work in sectors that matter most for countries’ economic growth and poverty reduction. These are shared 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. From the outset of a program, MCC partner countries know the level of funding committed, the projects in which it will be invested, and the length of time over which it will be expended. This allows governments to plan their development strategies and budgets. Five-year funding also enables MCC to support partner countries’ priorities for longer-term investments, and provides the time and space necessary to implement tough policy and institutional 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 the economic analyses that inform investment decisions, five-year program budgets, expected results, data on ongoing program progress, and the findings of independent impact evaluations as programs are completed. MCC expects transparency from its partners, who publish 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.