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.
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.
MCC in Action: A primer on the MCC model
MCC’s way of doing business is referred to as the “MCC model” and is widely
recognized as an exemplar of development cooperation effectiveness. The MCC model operationalizes the following
principles:
Competitive selection: MCC produces country scorecards
comprised of 20 independent policy performance indicators. MCC’s Board of Directors then selects countries based
on strict standards for good
governance, democratic rights, and control of corruption.
Country-led solutions: MCC works in close partnership with
its partner countries to identify priorities and develop programs in consultation with civil society and the
private sector.
Country-led implementation: Partner countries typically
establish a local accountable entity responsible for program implementation, often referred to as a Millennium
Challenge Account (MCA).
Focus on results: MCC is committed to producing and
measuring results to ensure the American people are receiving a strong return on their investment. MCC employs
technically rigorous and transparent methods of projecting, tracking, and independently evaluating programmatic
impacts.
Transparency: MCC provides comprehensive access to data
and evaluations for all projects.
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 in Action: MCC country scorecards and the MCC Effect
MCC’s annual country scorecards are used to measure and evaluate a
country’s commitment to the eligibility criteria of good governance, economic freedom, and investing in people.
The term “MCC Effect” is shorthand for the incentivizing effect of the eligibility criteria and associated focus
on policy performance. MCC’s eligibility criteria encourage countries to undertake policy reform, strengthen
institutions, and improve data quality to strengthen their policy performance. Many countries have implemented
reforms in the hopes of qualifying for an MCC program. In many cases, country governments have engaged in reform
efforts before a single MCC program dollar has been spent.
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.
MCC in Action: Mutual respect and honest conversations at the leadership level
MCC regularly convenes its partner country counterparts on a variety of
issues to share experiences and learn from each other. For example, MCC periodically convenes MCC Leadership Conferences , where leaders from partner countries join MCC leadership to discuss operational
issues, including their relationship with MCC. During recent leadership discussions, partner country attendees
advocated for more country ownership throughout the compact life cycle, enhanced decision-making authority, and
improved locally led stakeholder consultation to better reflect their people’s needs.
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.
MCC in Action: MCC continues to improve its evaluation policy and practice
In September 2023, MCC announced major changes to its Monitoring and Evaluation (M&E) Policy . Since its last update six years prior, MCC completed 85 evaluations
covering 25 countries, and the revised policy builds on acquired lessons learned. The policy paints a clear
picture of high-quality M&E and helps MCC staff and partner countries work together to uphold MCC’s commitment
to evidence-based decision-making to improve development effectiveness.
MCC’s Evidence Platform exemplifies the commitment to
transparently assessing and reporting results and encourages public engagement. MCC publishes evaluations for
every program, and they are regularly used internally to learn from past projects to realize improvements in the
future. By sharing over 600 reports and data packages from programs in 35 countries, MCC invites the wider
development community to actively engage with the learning from its experience and results.
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.
Making Headway: MCC’s first regional investment
In December 2022, MCC and Benin’s President Talon signed the first regional
program during the U.S.-Africa Leaders Summit. The Benin Regional Transport Compact will
strengthen regional trade by rehabilitating a crucial trade corridor to allow goods to flow faster and more
efficiently.
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.
Making Headway: Nature-based solutions in Mozambique
As part of the Mozambique Connectivity and Coastal Resilience Compact , the Coastal Livelihoods and Climate Resilience Project will use nature-based solutions to
restore mangroves, improve the management of fisheries, and boost incomes from fisheries while building coastal
communities’ resilience. MCC and the Government of Mozambique co-created the project with Biofund and ProAzul –
Mozambican organizations focused on biodiversity and the blue economy, respectively.
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.
Making Headway: Inclusion aspects of the Indonesia Compact
The access to finance project in the Indonesia Infrastructure and Finance Compact will provide financial assistance, digital and financial literacy training, and
business development training to woman-owned micro, small and medium-sized businesses. The project will also
support women-friendly workspaces with childcare options and encourage the formalization of informal enterprises.
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.
Making Headway: Cutting-edge partnerships to assess labor markets in Morocco
MCA-Morocco partnered with the Mohammed VI Polytechnic
University, OCP Solutions, Atlas Cloud Services, and Morocco’s Ministry of Labor to develop a platform to compile
labor market information. They used big data and artificial intelligence to cover a range of industries and
geographies, and insights from the platform can be used by the public to identify real-time trends. MCA-Morocco
also partnered with MIT’s Jameel Poverty Action Lab (J-PAL) and Harvard’s Evidence for Policy Design to build
expertise in evidence-based policy design concerning employment. The partnership intended to maximize the
effectiveness of government policy by sharing research findings with decision-makers to support the creation of
new jobs, particularly for youth.
MCC in Action: MCC’s values are CLEAR
MCC’s values form the foundation of its workplace culture. They guide how MCC makes decisions, sets priorities, addresses challenges, manages tradeoffs, recruits and develops staff, and works together with partner countries and stakeholders. Though the values were identified through a staff-led process in 2012, they remain just as relevant today. MCC’s values are CLEAR:
Embrace Collaboration: MCC works together toward clear, common goals with a spirit of creativity and teamwork. Having diverse perspectives at the table leads to finding the best solutions.
Always Learn: MCC questions assumptions and seeks to understand what works, what doesn’t, and why. Failing to reach a goal can be an important source of learning to apply and share broadly.
Practice Excellence: MCC is a leader, and it has high standards for itself, its partner countries, and its investments. MCC brings out the best in itself and in others.
Be Accountable: MCC owns its actions, is honest about its limits and missteps, and holds itself and others responsible for good performance. MCC is transparent and explains its decisions.
Respect Individuals and Ideas: MCC is inclusive, acts with humility, and values diverse ideas. MCC listens and fosters strong relationships with its colleagues and partners.
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.
MCC in Action: Procurement reforms for more efficient program development and implementation
Procurement reforms introduced as part of Procurement@20
have led to faster timelines by reducing
approval times, streamlining bid challenges, and facilitating more efficient technical evaluation panels. New
tools
improve MCC’s ability to meet the needs of its partners, such as time and material contracts and sustainable
procurement practices. Expanded use of grants has allowed MCC to work better with local organizations and
non-traditional stakeholders who often have greater local knowledge and relationships. For instance, MCC issued a
$17 million grant in 2023 to the American Councils for International Education to run youth skills camps for
secondary school students from Kiribati.
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.