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  • Publications:  MCC@20: The Capstone
  • October 2024

The MCC@20 Vision: Adapting to a changing landscape

MCC will continue to uphold its mission and model to reduce poverty through economic growth by partnering with relatively well-governed lower-income countries that share democratic values. However, as the challenges that partner countries face continue to evolve, MCC’s approach and tools must also adapt so that its programs can remain responsive to country needs. MCC must reinforce its model, broaden its investment approach, strengthen systems and institutions, and equip itself with the tools to meet the needs of the future. The priorities articulated by the MCC@20 policy framework build on the accumulated learning of 20 years of experience and are in response to the needs identified by MCC’s partner countries and the emergent trends in the global development landscape.

MCC policy framework digram.

Priority 1: Reinforce MCC’s Model

The MCC model operationalizes well-recognized aid effectiveness principles in new and creative ways. Each phase of MCC’s program development process is designed to maximize the program’s potential development impact — from the constraints analysis, root cause analysis, and cost-benefit analysis through to country-led implementation, independent evaluation, and the application of lessons learned.

MCC’s decision-making process balances economic analysis against other required investment criteria, such as country ownership, sustainability, and the distribution of benefits across marginalized groups. MCC remains committed to this inter-disciplinary approach to program development. It utilizes matrixed country teams that pull in diverse perspectives from sector technical experts, economists, lawyers, gender and private sector specialists, environmental experts, communications professionals, and more. This provides a balance between the relevant economic and social trade-offs and ensures transparency and rigor in the approach. MCC remains analytically disciplined in its approach and laser focused on promoting economic growth and an equitable distribution of economic benefits.

The foundational aspects of what makes the MCC model highly effective will not change. The principles of competitive selection, country-led solutions, country-led implementation, a strong focus on results, and radical transparency have repeatedly proven they can deliver development impact. Recognizing the success of this proven model, MCC recommits to ensuring analytical rigor, country ownership, and transparency throughout all stages of the program development process.

Uphold country selectivity

MCC is the only bilateral donor to guide its country selection and resource allocations so transparently on publicly available policy performance indicators from third-party data sources. To be considered for a compact, countries must be a candidate country based on its average income, pass MCC’s country scorecard, and demonstrate a commitment to undertaking reforms to reduce poverty and generate economic growth in the country. In addition to compacts, MCC also provides threshold programs, which are smaller programs reserved for countries that come close to meeting MCC’s eligibility criteria and show a firm commitment to improving their policy performance. MCC will continue to employ its data-driven and rules-based country selection process.

MCC’s leadership and staff, Board of Directors, and Congressional stakeholders all take seriously the importance of countries demonstrating an ongoing commitment to MCC’s statutorily mandated eligibility criteria throughout the life of its partnerships. This is codified in MCC’s Suspension and Termination Policy. MCC has ended numerous programs due to democratic backsliding. A few examples include: Tanzania in 2016 due to flawed elections in Zanzibar; the Ethiopia Threshold Program in 2021 due to human rights concerns; and Burkina Faso and Niger due to recent coups. Conversely, MCC is able to renew partnerships with countries taking steps to get back on the right track through MCC’s newly regained “threshold after compact” authority. MCC’s track record is an important signal to partner countries that are backsliding on the principles of good governance and democracy, and MCC will continue to uphold these eligibility criteria.

Elevate country ownership

Country ownership at MCC means that a country’s national government leads the program development process from start to finish. MCC’s partner country counterparts are responsible for guiding the prioritization process, leading program implementation, and ensuring accountability to a broad range of domestic stakeholders. Partner countries first choose the program’s sector based on the constraints to growth analysis. To ensure that decisions reflect a diverse set of views, the analysis includes broad-based consultations with a wide range of stakeholders, including women and excluded groups. Local accountable entities then implement MCC-funded programs and are accountable to domestic stakeholders for their decisions and results. MCC has recently undertaken an ownership review to capture the perspectives, lessons, and experiences of its partners and is considering options to advance the practice of country ownership based on the findings.

Strengthen transparency and accountability

MCC’s evidence-based approach is built around the principles of accountability, transparency, and learning. In July 2024, MCC was ranked the world’s most transparent bilateral donor by the Publish What You Fund’s Aid Transparency Index, for the third Index in a row, and the most transparent USG agency for the ninth consecutive time. These accolades validate and reinforce MCC’s commitment to transparency and accountability, which includes the monthly publication of data to the International Aid Transparency Initiative data standard and quarterly data to foreignassistance.gov. MCC also shares its data through an open data website, data.mcc.gov, and its evidence on the MCC Evidence Platform, evidence.mcc.gov. MCC will continue to hold itself accountable for results, transparently report results data and evaluations while protecting survey respondents’ privacy, and learn from evidence to improve future programs.

Priority 2: Broaden MCC’s Investment Approach

MCC is constantly evolving and updating its investment approach to account for changes in the global development landscape as well as new challenges identified by partner countries. MCC’s programs are guided by a shared understanding of where opportunities exist to relax the constraints to economic growth and by partner countries’ own development plans and priorities. While MCC works across a range of sectors, the core of the MCC model will remain focused on what it has always done well — support the essential building blocks of economies through large-scale investments in transport, power, water and sanitation, access to finance, workforce skills, and much more. By working regionally, diversifying the pipeline, and re-establishing relationships with previous compact partners, MCC is testing new approaches that could widen its scope and extend its impact.

Promote regional integration

Regional investments are among the agency’s most recent areas of innovation and learning. These investments recognize that trade and regional integration are key drivers of economic growth. MCC examines the different potential constraints to regional integration and trade from each country’s unique perspective. This means that potential7 investments are likely to address key challenges that constrain the flow of goods and services in a region and have important regional benefits beyond the MCC partner country’s borders. MCC’s current set of regional programs have incorporated early learning and will continue to evolve as a tool for driving economic impact through the integration of regional markets.

Reform and diversify MCC’s pipeline to extend the impact of the MCC model.

The nature of poverty and the economic challenges facing countries have evolved since MCC’s founding. Many countries that MCC cannot currently consider for partnership face persistent challenges to their economic growth paths, such as rising debt burdens, food insecurity, and increasingly frequent and severe natural disasters. Proposals to reform MCC’s candidate pool seek to include countries up to the International Bank for Reconstruction and Development graduation threshold. MCC’s time-tested and rules-based country eligibility model will remain grounded in a transparent and data-driven process that disciplines where MCC works, and this will not change even as it looks to reform and diversify where it can work. Furthermore, MCC’s focus on poverty reduction and the constraints to economic growth will not change either — rather, the legislative change would allow MCC to apply its impactful model in a broader range of places.

“Threshold after compact” authority

Countries’ development and democratic paths are not linear, and MCC may want to occasionally re-establish relationships with former compact partners that have resumed a path toward reform. With threshold programs, MCC seeks to support countries that may not yet be passing the scorecard but are demonstrating a commitment to reform. MCC previously faced limitations on pursuing threshold programs with prior compact partner countries. However, MCC regained the authority to reengage with prior compact partner countries, allowing MCC to work with countries who demonstrate a commitment to reform after democratic backsliding. MCC’s Board of Directors selected the Philippines and Tanzania in December 2023 for threshold programs. In recognition of their renewed commitments to advancing reforms to strengthen democratic governance, MCC is currently working with them to identify constraints to growth and determine programmatic priorities focused on policy and institutional reforms.

Priority 3: Strengthening Systems and Institutions

Over the last 20 years MCC has learned that it is critical to strengthen the resilience of partner country’s systems and institutions. MCC’s partner countries have increasingly encountered unexpected shocks that can set back economic growth in unpredictable and sudden ways. MCC has responded by supporting partner countries’ political and economic institutions, enhancing their resilience to shocks and stresses, strengthening inclusion and gender equity, preparing the workforce and enhancing digital skills, catalyzing private sector investments, and leveraging partnerships with organizations aligned with MCC’s mission. By strengthening systems and institutions, MCC’s partner countries are better able to cope with unexpected shocks, deliver better public services, and build more resilient economies.

Support democracies to deliver

MCC is unique in that it makes large grant investments addressing constraints to economic growth but only in relatively well-governed democracies committed to human rights and fundamental freedoms — some of which are experiencing recent democratic transitions. For example, following The Gambia’s historic transition to democracy in 2017, MCC selected the country for a threshold program, which ultimately focused on improving governance of the power sector. As The Gambia continued on the path of democratic reform, it was selected as eligible to develop a compact by MCC’s Board of Directors following free and fair elections in 2021. MCC will continue to utilize its high-quality grant assistance to support democracies to deliver tangible economic benefits to their people. This means improving public services, enhancing the business enabling environment for the private sector, making investments in human capital, and generally providing greater opportunity for their people.

Focus on policy and institutional reform

The MCC model inherently recognizes the strong relationship between institutional quality and economic growth. Policy and institutional reforms (PIRs) involve changes to formal and informal rules that govern organizations and may relate to laws, policies, regulations, procedures, norms, etc. Conditions in program agreements typically include PIRs that are necessary for achieving sustainable outcomes, and these reforms are particularly salient in threshold programs. MCC’s investment criteria require that investments ensure sustainable results — including the PIRs required for success. As a result, over half of MCC projects and all threshold programs include a focus on PIRs. Roughly three quarters of MCC’s portfolio — over $11 billion — supports SDG 16 on Peace, Justice, and Institutions.

Systematically integrate resilience

Building resilient economies is critical to helping countries adapt to extreme weather events, shocks and stresses associated with changing weather patterns, and other environment-related constraints to growth. In response to growing partner country demand to focus on building resilience to these shocks, MCC will continue to integrate these considerations into all stages of program development and implementation. MCC is leading on these issues in several ways, including by promoting low-carbon economic development, integrating resilience across analytical tools and decision-making, catalyzing private capital for climate finance, and pursuing partnerships to share learning and amplify the positive impacts of MCC programs.

Strengthen inclusion and gender equity

Since its inception, MCC has worked to elevate inclusion and gender priorities, target reforms addressing gender-based discrimination, and ensure equal access to economic benefits. MCC launched its Inclusion and Gender Strategy in 2022 and a revised Gender and Inclusion Policy in 2024. The goal is to design programs that address social and gender risks and maximize economic opportunities for excluded groups, particularly women. MCC remains committed to routinely and systematically integrating these issues into its programs through all phases of program development and implementation to advance more equitable outcomes.

Prepare the workforce of the future

MCC takes a systemic approach to education and training that aims to prepare individuals for success in the workplace while meeting the 21st century workforce needs of the private sector. MCC’s programs aim to improve teacher and school quality, enhance curricula and materials, provide access to underserved populations, and improve technical infrastructure and facilities. In Morocco, Timor-Leste, Georgia, Cote d’Ivoire, and Belize, MCC has invested in programs to strengthen the labor market by supporting targeted technical skills, functional numeracy and literacy, digital literacy, and critical thinking. In each program, MCC partners with the government and key stakeholders to undertake critical policy reforms to improve existing institutions and reinforce the long-term sustainability of improvements.

Catalyze private investments

Since its founding, MCC has actively sought opportunities to leverage its high-quality grant funding to catalyze private investment in partner countries to promote economic growth and maximize program impact. MCC has honed its ability to help partner countries design, strengthen, and harness financial markets through a range of blended finance tools, including project preparation, transaction advisory services, grant facilities, viability gap financing, guarantees, and on-lending support. For instance, in the Solomon Islands Threshold Program, MCC is using blended finance to reduce the risk of tourism investments for first movers into the small market by providing letters of credit, loan guarantees, and viability gap funding to reduce initial investment costs. The program is expected to increase private sector investment in an important sector for the future growth of the Solomon Islands. MCC is currently finalizing new guidance for the economic assessment of blended finance investments to catalyze socially impactful private sector investments in a cost-effective manner.

Leverage partnerships

MCC’s partnerships are ideally suited to address long-term, multi-faceted challenges that require learning, innovation, collaboration, and sustained effort. MCC and its partner countries benefit from partnerships that leverage the expertise, capabilities, funding, data, and activities of private sector, civil society, and other public sector entities into its programs. Through partnerships, MCC is developing leading-edge analytical and diagnostic methods and connecting MCC’s programs with other investments to drive greater development impact. MCC is expanding the use of partnerships for program development and implementation, including co-creation, cost sharing, and shared governance structures. This will enable MCC to better partner with local organizations and non-traditional partners who often have stronger local knowledge and ties.

Enhance digital skills and the use of technology

MCC is investing more in the areas of digital infrastructure, the enabling environment, and digital skills in response to the needs identified by partner countries. MCC is also building out its digital expertise and its use of technology. For instance, MCC is using geospatial information to inform and accelerate its work by identifying binding constraints, evaluating programmatic alternatives, and monitoring and evaluating impacts. As part of this effort, MCC partnered with NASA, RTI International, and Mathematica during the pandemic to use high-resolution drone imagery to identify crops to monitor and evaluate the impacts of irrigation infrastructure and land restoration investments. MCC will continue to collaborate with other USG agencies, reach out to cutting edge technology startups and companies, and work across MCC to take advantage of digital opportunities with partner countries.

Priority 4. Equip MCC with the Tools to Meet the Needs of the Future

MCC is constantly making improvements to become more effective. MCC has undertaken reforms to accelerate compact development timelines while balancing risks related to unfinished projects. MCC is evolving its tools to incorporate new innovations, stay current with new research and thinking, and improve its operations in response to new learning. MCC continues to invest in its staff through new positions and more competitive compensation and seeks to improve its organizational health to enable staff to be more productive and efficient. To prepare for new challenges, MCC will continue to push ahead on ongoing internal reforms while equipping MCC’s workforce for the needs of the future.


Accelerate compact development

MCC has long observed that more efficient compact development could accelerate its economic impact. This comes into sharper focus when alternative sources of development finance may be available sooner — yet often contribute to unsustainable debt. However, rushed compacts can result in numerous amendments or unfinished projects. To balance these risks, MCC launched a reform initiative in 2021 to accelerate compact development. MCC now allocates the full, upfront budget of compact development funding shortly after selection, which streamlines the congressional notification process and enables a more rapid formation of the compact development team. MCC also recently established new strategic contracting vehicles to boost MCA recruitment efforts and bolster contracting capacity in early stages. Together with other initiatives, these adjustments have accelerated program development and reduced MCC’s unobligated budget balances to very low levels. This has also introduced uncertainty regarding MCC’s ability to predictably fund its programs in a timely way. While MCC is now better equipped to develop critical economic infrastructure more quickly, it also has a greater need for upfront budget resources.

Develop and evolve innovative tools

As part of its learning culture, MCC constantly develops and evolves its tools to enhance its analytical frameworks and improve its operations. These adaptations are based on the latest evidence and technically relevant approaches proposed by the broader development community. In the last few years, this has included methods to better incorporate gender and social inclusion and environmental impacts. MCC’s constraints analysis now routinely incorporates insights from the gender and social inclusion perspective, and MCC has developed guidance to incorporate environmental externalities and uncertainties into its cost-benefit analysis. MCC also recently developed new contracting mechanisms to help partner countries implement high quality procurement, fiscal, recruiting, and technology solutions. MCC will continue to innovate and evolve in response to new evidence and ideas.

Invest in people

In response to anonymized staff feedback provided through the annual Employee Viewpoint Survey (EVS) administered by the Office of Personnel and Management, MCC created an agency-wide EVS Response Plan to address challenges related to increasing workloads and to help improve work-life balance. After many years of a flat-lined administrative budget, MCC garnered external stakeholder support for increasing the administrative expense budget cap by more than one third over the past four fiscal years. This enabled MCC to hire new federal and contract staff to balance workloads. As part of a broader effort related to pay equity, MCC also reformed its performance-based pay bands by aligning minimums with the pay scales of the federal General Schedule and increasing the competitiveness of MCC pay and compensation. MCC will continue to invest in its people to ensure its workforce can continue to deliver on MCC’s mission.

Improve organizational health

MCC values and supports a work environment where employees can create, innovate, and thrive. As a global organization, MCC also recognizes the value of diversity in ideas and cultures. MCC established a senior-level position focused on workplace culture, and a dedicated group of career staff formed a voluntary council to develop and implement a corporate-level strategy to institutionalize inclusive practices and more broadly improve organizational health. MCC has also made efforts to bolster equal employment opportunity and anti-harassment capacity and has built a new labor relations function to build a constructive working relationship with MCC’s new union. MCC will strive to create a collaborative working environment that ensures the inclusion of staff at all levels in the workplace culture.