MCC Partner Countries that Completed Compacts in Fiscal Year 2020
Since its founding, MCC and its partner countries have completed 28 compacts, totaling more than $9 billion in total expenditures (Table 1). One country completed its MCC compact in fiscal year 2020.El Salvador
MCC and El Salvador signed a second compact in September 2014 to provide up to $277 million in assistance for regulatory reforms, education, and logistical infrastructure, with the goal of promoting economic growth and private investment in the country through three projects. The first project sought to relieve transportation bottlenecks that led to high conveyance and logistics costs for regional trade, namely congestion at the most trafficked segment of El Salvador’s key coastal corridor and long wait times at a major border crossing with Honduras. The second project helped Salvadorans better meet the demands of a global economy by improving the quality of education and reforming technical and vocational training to match the supply of skills to labor market demands. The third project focused on developing an investment climate to catalyze more profitable business operations for firms in tradable sectors and increased partnerships with the private sector to provide key public services. El Salvador committed to contribute up to $88.2 million in addition to MCC’s funding, for a combined total budget of $365.2 million. The compact closed in September 2020. While COVID-19 heavily impacted implementation and closeout, the compact’s achievements included the launch of the country’s first two public-private partnerships; the construction or upgrading of 36 education centers nationwide; and the training of over 4,500 school teachers and administrators, among others.IMPACT BEYOND THE COMPACT: Building Partner Country Capacity
MCC funds more than infrastructure—it builds partner country capacity and expertise through its partnerships. MCC’s commitment to country ownership means that countries are equal partners in developing compacts and taking the lead in compact implementation. By developing and employing local experts, MCC empowers citizens and builds self-sufficiency. This approach promotes the sustainability of MCC projects and extends the benefits of MCC’s work beyond the five-year term of its compacts.In Liberia, MCC funded technical assistance and training to accompany its infrastructure and institutional projects. At the rehabilitated Mt. Coffee Hydropower Plant and the newly renovated Liberia Electricity Corporation customer service center, MCC trained staff to provide improved operations, maintenance, and customer service. MCC also supported the establishment of, operational and regulatory framework for, and training for Commissioners of the new Liberia Electricity Regulatory Commission. In addition, MCC provided technical assistance to build the operations and maintenance capacity of staff of the public water utility responsible for maintaining the raw water pipeline that, when completed, will deliver improvements to Monrovia’s drinking water supply. MCC also supported the capacity building of the Ministry of Public Works to make data-driven decisions for road maintenance and the utilization of a powerful, cloud-based road asset management system.
In Ghana, MCC supported institutional capacity strengthening of the Electricity Company of Ghana (ECG) to create a more enabling and safe work environment for women. To this end, the compact funded the development of ECG’s Gender and Social Inclusion Policy and Action Plan targeted to increase overall women employment, including in decision-making positions. The compact, in partnership with educational institutions, power utilities, energy-sector institutions, and local organizations, such as the Ghana Women in Engineering Association, provided internship and mentoring opportunities to 232 female science, technology, engineering, and math students and trainees in universities and technical training institutes. MCC partnered with local and donor agencies such as USAID’s Engendering Utilities and West African Energy Program to plan a second Women in Energy Conference. The conference will facilitate the sharing of experiences and lessons learned toward promoting women’s employment and decision-making in the power sector at both national and sub- regional levels. Discussions are underway to explore the possibility for USAID to support continued strengthening of ECG’s institutional capacity post-compact.
In Morocco, MCC is working with the Ministry of Education to build both national and local capacity to improve public secondary education to provide Moroccan youth with the skills needed to obtain high-quality jobs. The compact is piloting a participatory process involving parents, teachers, students, and school administrators, to enable school communities to develop and implement School Improvement Plans that meet their school’s specific needs. The Ministry of Education is supplementing compact funds with a discretionary budget for each school. This program is being piloted in 90 schools across three regions of the country and is building capacity of the central Ministry of Education in areas such as teacher training, school operations and maintenance, and data-driven decision-making through improved technology. MCC is also helping to transform Morocco’s agricultural sector by building capacity of government partners to transfer ownership of collective lands to individual farmers, many of whom have been working the same parcels for generations. This program is formalizing their rights to the land in an inclusive and equitable manner that recognizes the rights of both women and men with links to the land. By combining this legal reform with functional and legal literacy trainings, access to credit and other support, MCC is building the capacity of these farmers to increase their family incomes. Drawing on the success of MCC’s pilot program of approximately 66,000 hectares, the Moroccan government has already announced its intention to cale up to an additional 1 million hectares of collective land, transforming the lives of tens of thousands of Moroccan families.
In El Salvador, MCC worked with the Ministry of Education, Science, and Technology to provide professional development training - including on improving gender equity in the education system -- for over 4,500 teachers, principals, and education specialists in performance monitoring and school management and leadership. The program strengthened the ministry’s technical capacities in education evaluation and its use of national data to improve student learning achievement. The compact also provided comprehensive training in public-private partnerships (PPP) to leaders of key government institutions involved in developing and implementing PPPs. These trainings were consistent with international standards based on the Certified Public-Private Professional Program, a program the World Bank and other multilateral development banks jointly developed.
| Partner Country | Date Compact Signed | Compact Obligations as of September 30, 2020 (in millions of dollars) |
|---|---|---|
| Madagascar | April 18, 2005 | $85.6 |
| Honduras | June 14, 2005 | $204.0 |
| Cabo Verde | July 5, 2005 | $108.5 |
| Nicaragua | July 15, 2005 | $112.7 |
| Georgia | September 12, 2005 | $387.2 |
| Benin | February 22, 2006 | $301.8 |
| Vanuatu | March 2, 2006 | $65.4 |
| Armenia | March 27, 2006 | $176.6 |
| Ghana | August 1, 2006 | $536.3 |
| Mali | November 13, 2006 | $434.3 |
| El Salvador | November 29, 2006 | $449.6 |
| Mozambique | July 13, 2007 | $447.9 |
| Lesotho | July 23, 2007 | $358.0 |
| Morocco | August 31, 2007 | $650.0 |
| Mongolia | October 22, 2007 | $269.0 |
| Tanzania | February 17, 2008 | $694.5 |
| Burkina Faso | July 14, 2008 | $474.7 |
| Namibia | July 28, 2008 | $295.7 |
| Senegal | September 16, 2009 | $433.3 |
| Moldova | January 22, 2010 | $259.4 |
| Philippines | September 23, 2010 | $385.1 |
| Jordan | October 25, 2010 | $272.9 |
| Malawi | April 7, 2011 | $344.8 |
| Indonesia | November 19, 2011 | $474.0 |
| Cabo Verde II | February 10, 2012 | $65.6 |
| Zambia | May 10, 2012 | $332.1 |
| Georgia II | July 26, 2013 | $138.6 |
| El Salvador II | September 30, 2014 | $277.0 |
MCC Partner Countries in Compact Implementation
Six countries in MCC’s portfolio were in compact implementation as of September 30, 2020. Compact implementation begins upon entry-into-force, marking the start of the five-year timeline. The partner country government establishes an accountable entity, generally known as the Millennium Challenge Account (MCA), to manage and implement the compact. Key implementation milestones from fiscal year 2020 are described below.Benin
In Benin, where only a third of the population has access to electricity, MCC and the Beninese government are implementing a second compact to fund countrywide projects in electricity distribution infrastructure, attract private-sector investment in solar power generation, strengthen the country’s national utility through a management services contract, and expand access to electricity in rural areas. The Beninese government decided to move forward with a tariff increase of five percent, in support of the compact’s most difficult reform, while paying the national power utility a subsidy for certain customers excluded from this increase. In 2020 MCC approved increases in the budgets of the Electricity Distribution Project by $32.0 million (for a total cumulative increase of $146 million since the 2015 compact signing) and the Off-Grid Clean Energy Facility Activity by $1.6 million. These changes allowed the accountable entity, MCA-Benin, to sign its largest works contract to date. Benin’s electricity regulator approved five more rural electrification projects that will support off-grid electric power for homes, small-businesses, and public infrastructure with a combination of funding from MCC and the private sector. MCA-Benin signed off-grid electrification co-financing agreements that are expected to leverage $46.3 million in private investment with $31.5 million of compact funding. The compact closes in June 2022.Côte d’Ivoire
The compact aims to support the country’s drive to diversify its economy through projects in skills development and transportation. The Abidjan Transport Project will reduce transport costs and improve efficiencies for businesses by rehabilitating roads in and around the port of Abidjan, while building the Ivorian government’s improved capacity to manage and maintain the road network. The Skills for Employability and Productivity Project will increase access to secondary education, support teacher training, improve access to the education system for girls and women, construct approximately 750 classrooms and two new teacher training colleges, and improve data systems. Under this project, in addition to the Gender Unit that the Ministry of Education launched in 2019, the government also adopted a national gender policy for Côte d’Ivoire’s educational system. Through a new public-private partnership model for technical vocational education and training, the compact will advance development of skills the private sector needs. In June 2020, MCA-Côte d’Ivoire safely conducted community mobilization activities outside of Abidjan, which are critical to identify and select the first group of villages that will receive new secondary schools under the compact. The Ivorian government also signed a decree creating an inter-ministerial teacher training committee, which will strategically advance critical education-sector reforms the compact supports. Despite pandemic risks and political transitions in the Ivorian government, MCA-Côte d’Ivoire was able to organize the committee’s first inaugural meeting in September 2020, which is a prior condition in the Skills for Employability and Productivity Project. In addition, MCA-Côte d’Ivoire finalized the conceptual designs of road transportation systems to reduce congestion on four major roads in Abidjan and has begun the preliminary designs of the road systems. MCA-Côte d’Ivoire also made significant progress in providing capacity building trainings that will allow the Ivorian government improve maintenance of its road network. The scheduled trainings are due to be completed in early 2021. The compact closes in August 2024.Ghana
The compact aims to create a self-sustaining power sector that will meet the current and future needs of households and businesses, spur investment, and help reduce poverty across the country. As a result of the Ghanaian government’s decision in October 2019 to terminate the private concession of its southern power utility, it no longer met the reform condition for $190 million of the original $498 million in compact funding. As a result, MCC’s Board de-obligated that funding. Despite this setback to the compact’s reform efforts, MCC is drawing upon the remaining $308 million to implement the remaining activities in the power sector. These activities focus on strengthening the infrastructure and management of Ghana’s southern distribution network, largely in and around the capital city of Accra, to reduce technical losses and improve the quality and reliability of electricity. Activities include the construction of two bulk supply points, two primary substations and interconnecting circuits; the expansion and extension of low-voltage power lines; the electrification of markets and economic enclaves; the improvement of street lighting; and the implementation of power sector information technology, regulatory strengthening, and energy efficiency programs. The compact closes in September 2021.Liberia
The compact aims to combine infrastructure financing with policy and institutional reforms to modernize the country’s power sector and strengthen its road maintenance systems. The Energy Project includes funding for the rehabilitation of the Mt. Coffee Hydropower Plant. Completed at the end of 2017, Mt. Coffee—the compact’s largest component —now generates up to 88 megawatts of power, effectively doubling Liberia’s generation capacity. Complementary interventions support the electricity utility in becoming operationally, technically, and financially viable, including a management services contract, rehabilitation of the customer service center, and development of a training program for technicians. Other energy sector interventions include the rehabilitation of a raw water pipeline that runs from the hydropower plant site to a water treatment plant and support for the creation of an independent energy sector regulator. Fiscal year 2020 saw significant progress in the rehabilitation and modernization of the Liberia Electricity Corporation’s (LEC) customer service center and construction of the $18 million raw water pipeline. MCC and MCA-Liberia are also facilitating discussions with other donors to fund the LEC Management Services Contract after compact closure in January 2021.Morocco
MCC’s second compact with Morocco addresses binding constraints to economic growth around two Moroccan government priorities: employability and land productivity. The Education and Training for Employability Project is designed to improve the quality and relevance of secondary education and technical and vocational training. The compact is also assisting in modernizing the labor market observation system, reforming and modernizing the vocational training sector, upgrading student evaluation systems, and testing a results-based financing job insertion model for marginalized youth and women. The Land Productivity Project will help improve access to land and boost individual and business confidence to make long-term land investments by modernizing and improving laws and streamlining time-consuming land access and planning procedures. MCC worked closely with the Government of Morocco on the December 2019 adoption and implementation of legal reforms to land rights that aim to boost women’s economic empowerment. Over the past fiscal year, MCA-Morocco and the Ministry of Industry also launched a public-private partnership call for partners for three compact-supported industrial zones in the Casablanca-Settat region and MCA-Morocco signed nine grant agreements under the Fund for Sustainable Industrial Zones. Morocco is the first MCC partner country formally to pilot a results- based financing mechanism through the Results Based Financing Jobs Fund, for which eight grants have been signed. Despite the pandemic, training and job placement programs began in 2020 for youth and women. The compact closes in June 2022.Niger
The compact aims to increase rural incomes by addressing access to water for productive uses as well as physical and regulatory barriers to markets and trade. The Irrigation and Market Access Project and the Climate-Resilient Communities Project are modernizing irrigation systems to improve agricultural productivity, with a focus on diversifying production and increasing yields; upgrading road networks to facilitate market access, sales, and profits of agricultural products; and reforming policies to enable expansion of private sector services and assistance in the agricultural sector and sustain precious ground water resources. In December 2019, MCC approved a new concept for promotion and installation of small-scale irrigation in the Sia perimeters of the southern Dosso region, which replaced the original large-scale irrigation design. In March 2020, the Nigerien government satisfied the prior condition for roads maintenance reform that allowed MCA-Niger to advance roads construction works contracts valued at over $100 million in compact funds. The compact also facilitated significant progress on the Nigerien government’s fertilizer sector reform agenda, including expansion of commercial importation, distribution of fertilizer products, and demonstration of transparency and traceability of a fertilizer subsidy program using e-vouchers for the most vulnerable farm households. The compact closes in January 2023.| Activity in Fiscal Year 2020 | |||||
|---|---|---|---|---|---|
| Section 609(g) Compact Facilitation Funding | Section 605 Assistance | ||||
| Partner Country | Total Compact Amount at Signing | Obligations | Expenditures | Obligations | Expenditures |
| Benin II | $375.0 | (0.5) | 0.4 | 0.5 | 42.8 |
| Burkina Faso II | $450.0 | 33.4 | - | - | - |
| Côte d’Ivoire | $524.7 | - | 13.9 | - | 1.7 |
| El Salvador II | $277.0 | - | - | - | 115.1 |
| Georgia II | $140.0 | - | - | (1.4) | 2.0 |
| Ghana II | $498.2 | - | - | (190.0) | 80.6 |
| Liberia | $256.7 | - | - | - | 31.7 |
| Malawi | $350.7 | - | - | (1.9) | (1.9) |
| Mongolia II | $350.0 | - | 13.1 | - | - |
| Morocco II | $450.0 | (9.3) | - | 9.3 | 36.4 |
| Nepal | $500.0 | - | 0.5 | - | - |
| Niger | $437.0 | - | - | - | 37.3 |
| Senegal II | $550.0 | - | 3.0 | - | - |
| Partner Country | Obligations (in millions of dollars) | Expenditures (in millions of dollars) |
|---|---|---|
| Mongolia
In July 2018, MCC and the Government of Mongolia signed the $350 million Mongolia Water Compact designed to prevent an imminent water shortage in Ulaanbaatar and support thecountry’s economic growth. MCC’s assistance is expected to provide up to an 80 percent increase in the long-term supply of water to the capital city by adding new groundwater wells, constructing a state-of-the art water purification plant, introducing new technologies for the recycling and reuse of wastewater, and supporting critical legal, regulatory, and institutional reforms to enhance the sector’s sustainability. The Mongolian government has agreed to provide up to $111.8 million of additional funding to support the compact, among the largest contributions by a partner country. MCC and the Mongolian government are currently finalizing preparations to begin implementation in March 2021, such as securing approval of the final designs and procurement strategies for the compact’s major infrastructure projects and formalizing plans to ensure their long-term financial and environmental sustainability. |
$28.1 | $15.6 |
| Nepal
In September 2017, MCC signed a $500 million compact with the Government of Nepal—the agency’s first compact in South Asia. The compact aims to increase the availability of electricity, maintain road quality, and facilitate power trade between Nepal and India. The $389.2 million Electricity Transmission Project aims to increase domestic electricity consumption by improving the availability and reliability of electricity in Nepal through the construction of 300 kilometers of high-voltage electric transmission lines, equivalent to one- third of Nepal’s transmission network, and three substations, which will increase power for further distribution to customers or serve as pooling hubs for generators. The Electricity Transmission Project also includes a cross-border transmission line to facilitate the growth of power exchange between Nepal and India to meet domestic demand in the short-term and allow electricity exports in the long term. The $52.3 million Roads Maintenance Project is expected to fund maintenance of up to 305 kilometers of roads, leading to a reduction in transport costs due to decreased vehicle operating costs and reduced travel time. The compact remains in the preparatory phase while the Nepalese government works to meet key entry-into- force conditions. The Nepalese government also committed an additional $130 million to the compact, for combined total funding of $630 million. |
$40.5 | $9.5 |
| Senegal
The compact is designed to strengthen the power sector by increasing reliability and access to electricity. It aims to help the Government of Senegal establish a modern and efficient foundation upon which the nation’s power system can grow. Compact projects will focus on energy sector policy, institutional and regulatory reform, upgrade of the high-voltage transmission network in and around Dakar, and expansion of rural electricity access through distribution network upgrades and enhancements to consumer-side elements. Ensuring consistent and affordable access to energy in Senegal will allow businesses to grow, catalyze private sector investment, increase productivity and employment, and ultimately support diversification and growth of Senegal’s economy. The compact is expected to enter into force in 2021. |
$37.8 | $3.4 |
| Burkina Faso
The second compact with Burkina Faso aims to modernize the power sector by addressing the high cost, poor quality, and lack of access to electricity. The Strengthening Electricity Sector Effectiveness Project will reduce the cost of service and improve the performance of all sectors by strengthening electricity sector laws, regulations, and institutions as well as improving the capacity of key sector actors. The Cost-Effective and Reliable Electricity Supply Project is expected to address the quality of electricity and its high cost. The project will reduce load shedding and non-distributed energy as well as reduce generation costs while increasing the total supply of cheaper solar energy and reducing the proportion of costly thermal energy in the country’s energy mix. It will do so by constructing an electricity control center, updating the dispatch center, supplying synchronous reserve batteries, and providing technical assistance and transaction advisory support for a new independent power producer transaction. The Grid Development and Access Project is expected to address the low quality of electricity through the construction, rehabilitation, and extension of transmission and distribution lines in the country’s two largest cities, Ouagadougou and Bobo- Dioulasso. This second compact was signed on August 13, 2020. MCC and the Government of Burkina Faso have made significant progress toward establishing the MCA that will be responsible for compact implementation, securing the services of independent fiscal and procurement agents, preparing for key project procurements, and meeting entry-into-forceconditions. The compact is expected to enter into force in 2022. |
$33.4 | $0 |
Compacts in Development as of September 30, 2020
During fiscal year 2020, MCC continued to work with eight countries to develop potential compacts and continued developing potential concurrent compacts with several partner countries in West Africa.Indonesia
In December 2018, MCC’s Board selected Indonesia as eligible to develop a second compact. The selection reflected the strong partnership MCC and Indonesia built during the first compact, their commitment to ensuring that compact’s sustainability, and the progress the country has made on its policy performance. In 2019, the Government of Indonesia and MCC jointly completed an analysis that identified costly and underdeveloped financial intermediation as a binding constraint to medium and long- term economic growth. The analysis also identified gender inequities and the lack of transport and logistics infrastructure as additional factors with negative impacts on economic growth. The Indonesian government and MCC are now developing a program in the priority provinces of North Sulawesi, South Sumatra, and Riau that would focus on access to finance for infrastructure, particularly transport and logistics infrastructure, and access to finance for micro, small, and medium-sized enterprises, particularly those owned by women. MCC anticipates receiving the Indonesian government’s full project proposals for consideration in spring 2021.Kosovo
In September 2017, MCC and the Government of Kosovo signed a $49 million threshold program that addresses the country’s unreliable supply of electricity and real and perceived weakness in rule of law, government accountability, and transparency. In December 2018, MCC’s Board selected Kosovo to develop a compact program in parallel to the ongoing threshold program. MCC and the Kosovo government updated the constraints analysis initially conducted during the development of the country’s threshold program and identified two additional binding constraints to Kosovo’s economic growth: unpredictable energy supply deficits due to the country’s old and unreliable generation infrastructure and excess demand for electricity reflecting insufficient investment in energy efficiency. In August 2020, MCC and the Kosovo government completed prefeasibility studies to assess three proposed projects: the development of Kosovo’s natural gas sector, the creation of energy reserves for power system balancing, and the improvement of electricity distribution. After careful review of the study results, the Kosovo government requested to move forward with gas sector development and energy reserves creation, with a medium-sized baseload generation component. These two projects are expected to form the basis for a compact proposal for MCC’s consideration in summer 2021.Lesotho
MCC is developing a compact with Lesotho that will address the constraint to growth of ineffective government policy planning, coordination, and execution. MCC is studying two potential projects: one that would improve capital investment and crowd-in the private sector in irrigated horticulture and another that would strengthen Lesotho’s health systems. These potential projects aim to support inclusive and equitable private sector growth by enabling the Government of Lesotho to deliver key public goods and services efficiently, as sought by private investors. In order for MCC to present the compact to its Board for consideration, Lesotho must improve its current ranking as a Tier 3 country on the State Department’s annual Trafficking in Persons Report. Should that happen, MCC expects to present the compact to the Board in mid-2021.Malawi
In December 2018, MCC’s Board selected Malawi to develop a second compact. The Board’s decision recognized Malawi’s successful implementation of its first compact (completed in 2018), improved scorecard policy performance, and commitment to further sector reform. MCC is working with its Malawian counterparts to develop two potential projects: an Increased Land Productivity Project to increase land efficiency as a critical production input for economic growth and an Accelerated Growth Corridors Project to increase competitiveness in the agriculture and transport sectors. MCC expects to submit the compact to the Board in mid-2022.Sri Lanka
MCC’s Board selected Sri Lanka for a threshold program in December 2015 and for a compact in December 2016. Following a compact development process that evidenced strong country ownership, MCC and the then-Government of Sri Lanka negotiated a $480 million compact in October 2018 that includes two projects: the Transport Project to upgrade more than 300 kilometers of urban and interprovincial roads, introduce traffic management technologies, and improve bus transportation; and the Land Project, to increase the amount of publicly available land rights information, strengthen land rights and tenure security, and improve the regulatory environment so investors can more easily acquire land. MCC’s Board and the Sri Lankan Cabinet of Ministers approved the proposed compact in April and October 2019, respectively, amidst an aggressive opposition-led disinformation campaign falsely depicting the compact as a U.S. Government ploy to subvert Sri Lankan sovereignty, permanently acquire Sri Lankan land, and construct a U.S. military base within the country. Following his election in November 2019, President Gotabaya Rajapaksa appointed a four-person committee to review the draft compact agreement. The Sri Lankan government disregarded requests from the U.S. Government to provide clarifications during the review process, and, in June 2020, published the committee’s report replete with falsehoods and misinformation. The Sri Lankan government’s posture was inconsistent with the strong demonstrations of country ownership MCC requires from its partner countries and an indication of its unwillingness to be an adequate partner to MCC. MCC’s Board has since voted to discontinue the proposed compact with Sri Lanka.Timor-Leste
In 2013, MCC completed a $10 million threshold program in Timor-Leste that strengthened anti- corruption institutions and improved access to immunizations by building a more effective community health system. MCC’s Board initially selected Timor-Leste to develop a second threshold program in December 2016. Recognizing the Government of Timor-Leste’s continued commitment to good governance and investing in its people and economic freedom as well as its steady performance on the MCC scorecard, the Board decided in December 2017 to select Timor-Leste as eligible to develop a compact. MCC is currently working with the Timorese government to assess the viability of two potential projects for a compact: a water, sanitation, and drainage infrastructure project to reduce the disease burden caused by contaminated water in the capital city of Dili and two municipalities and an education project to train every secondary school teacher and school leader to better equip students with the skills needed to succeed in the job market. MCC is targeting late 2021 for completion of compact development.Tunisia
MCC is developing two projects in the transport, trade, and water sectors. The proposed Transport and Trade Project will reduce the time and cost to businesses of engaging in transport and trade in Tunisia and particularly in its largest and most economically strategic port, the Port of Rades. The proposed Water Demand Management and Productivity Project aims to achieve efficient and sustainable use of scarce groundwater resources in the interior regions of Tunisia. Both projects include activities designed to expand women’s economic opportunities. MCC expects to submit the compact to the Board in mid-2021.Mozambique
After completing the constraints analysis at the end of FY2020, MCC is now exploring and identifying the root causes of two constraints to economic growth in Mozambique. This root cause analysis is part of the second phase of compact development – problem diagnosis – that which examines the “why” of the identified constraints. The constraints analysis concluded with the identification of the following binding constraints to economic growth and poverty alleviation:- poor agricultural policy, legal, and regulatory framework—and implementation of the existing framework—that inhibits the equitable and efficient functioning of input markets (e.g. fertilizer, improved seed, equipment), vertical coordination of value-chains, and input and output market (e.g. crop/product, livestock) competitiveness, and
- poor—and climate vulnerable—secondary and tertiary road infrastructure and low freight transport market competitiveness, which inhibit input (e.g. fertilizer, equipment, seeds) and output (i.e. finished product) market development and access to basic public services.
Regional Compact: Benin-Niger (in development)
This potential program will involve rehabilitating portions of the existing transport corridor between Cotonou in Benin and Niamey in Niger, while addressing some of the institutional and market constraints that raise the financial and time costs of transporting goods along this road. This corridor is one of the most heavily traveled north-south corridors in West Africa and improving it has the potential to benefit both countries. In particular, the Benin-Niger border crossing is one of the busiest crossings between any coastal and landlocked country in the region, with an average of approximately 1,000 vehicles per day. This potential regional program would have a clear link to Benin’s first compact involving the Port of Cotonou as well as to the current compact program in Niger focused on agriculture and roads. MCC expects to submit proposed compacts to MCC’s Board in late 2021.Regional Compact: Burkina Faso-Côte d’Ivoire (in development)
MCC will undertake a feasibility study for a potential new high-voltage transmission line from Ferkessedougou in Côte d’Ivoire to Bobo-Dioulasso and continuing to Ouagadougou in Burkina Faso. This line would potentially allow for more power trade between Burkina Faso and Côte d’Ivoire as well as greater control and stability of the interconnected network. MCC intends to engage the West African Power Pool to manage the procurement and performance of the study. MCC has targeted the end of 2020 to finalize the terms of reference for the feasibility study, with a target of presenting proposed compacts to MCC’s Board in mid-2022.Sector Results at a Glance: By the Numbers and Key Policy Reforms
Numbers are cumulative since MCC’s founding in 2004 and current as of September 30, 2020Once the Board selects a country as eligible to develop a compact or threshold program, MCC works with partner country officials to conduct a rigorous joint analysis to identify their most binding constraints to economic growth. This analysis helps MCC to focus its programs on the greatest impediments to private investment and poverty reduction, in areas such as access to credit, governance, electricity, transportation, and education. MCC provides technical expertise and guidance to partner countries throughout the life cycle of compacts: from concept development and project identification to feasibility studies, designs, and implementation. MCC’s expert advice and support throughout project development and implementation helps ensure the specific needs of the country are met. Below are highlights of MCC’s sector programs that have emerged from this analysis.
Power
3,397 miles of electricity lines completedOne of the major obstacles to economic growth is often an inadequate, unreliable, and unaffordable supply of energy. In fiscal year 2020, MCC, together with its partner countries, continued to develop compact programs in Burkina Faso, Nepal, Senegal, and Kosovo and implement energy projects in Benin, Ghana, Kosovo (threshold program), and Liberia. Projects include electricity infrastructure (such as generation facilities and transmission and distribution networks), institutional strengthening and capacity building for utilities and regulators, and reforming practices and restructuring power markets. In Liberia, a management services contractor has worked to improve the performance of Liberia’s power utility while the compact prepares for closeout in January 2021. In Ghana, large-scale construction works have continued despite challenges of the COVID-19 global pandemic, while in Benin upgrades to the distribution system and national dispatch center are underway along with the final negotiations for the country’s first solar power plant with an independent power producer. In Nepal, design, permitting, environmental and social assessments, and arrangements for cross-border power trade with India have progressed, albeit slowly due to the pandemic. Senegal is preparing for the implementation of a compact focused on strengthening the transmission network around the capital city, Dakar; reinforcing and extending the distribution system in rural areas; and reforming the power sector. In August 2020, Burkina Faso signed a compact focused on upgrading its power transmission lines, improving power distribution in the capital city, Ouagadougou, improving network dispatch and control, and reforming the electricity sector. Kosovo is continuing to develop gas-to-power projects with the goal of signing a compact in 2021. Threshold programs that focus on power sector reform in Sierra Leone and energy efficiency in Kosovo are also currently in implementation, with Sierra Leone preparing for closeout in March 2021 and Kosovo continuing through September 2022.
Transportation
1,886 miles of road completedSince 2004, MCC has funded over $3.4 billion in transportation infrastructure projects. In fiscal year 2020, MCC, in collaboration with MCC partner countries, continued to develop programs in Indonesia, Nepal, Malawi, Sri Lanka, and Tunisia and implement projects in Côte d’Ivoire, Niger, El Salvador, Morocco, and Liberia. In El Salvador, under the Coastal Highway Expansion Activity, upgrading and widening of approximately 83% of 27 km of El Salvador’s key coastal corridor was completed, along with design-build tender documents for the improvement and modernization of two major border facilities with Honduras and Guatemala. Completion of the coastal corridor will help relieve congestion in the most heavily trafficked coastal segment of El Salvador. In Niger, the Nigerien government awarded a construction contract to upgrade 51 miles of a key section of the primary national road, RN7. It also launched a procurement to upgrade 116 miles of the national road, RN35, along with select rural roads, in May 2020. MCC continues to make progress on the Benin-Niger Regional Integration Transport Program, including a feasibility-level study from data that local stakeholders in Benin and Niger provided. In Liberia, the government completed implementation of technical assistance and policy reform activities to ensure the country has a long-term, sustainable road maintenance program. In Nepal, MCC has launched a pilot program, building capacity to develop new road maintenance construction techniques that will inform the design of future periodic maintenance works on up to 305 kilometers of roads. MCA-Côte d’Ivoire, is engaging in designs and environmental and social studies for the rehabilitation and upgrade of four major urban corridors in the metropolitan area of Abidjan. In Tunisia, the Transport and Trade Project aims to reduce the time and costs to businesses of engaging in transport and trade in the country, particularly in Tunisia’s largest and most economically strategic port, the Port of Rades. Under the Transport and Trade Project, MCC and the Tunisian government are undertaking a feasibility study and preliminary environmental and social assessment to support capacity increases and operational reforms at the Port of Rades. In addition, MCC continues to engage with partner countries in Malawi and Indonesia to develop second compacts, which are likely to include large transportation infrastructure components.
Water and Sanitation
12,386 people trained in hygiene and sanitary best practices 1,191 water points constructedAccess to clean water and adequate sanitation is fundamental to improving the livelihoods and well-being of the world’s poor. As part of MCC’s commitment to reduce poverty worldwide, the agency has financed $2.2 billion in clean water, sanitation, and natural resource improvement projects in partner countries in Africa, Asia, Europe, and Latin America since 2004. MCC is working with partner countries to develop programs in the water and sanitation sector in Timor-Leste, Tunisia, and Lesotho while continuing to implement programs in Mongolia, Sierra Leone, Niger, and Morocco. In Timor-Leste, MCC is seeking to reduce disease burden through activities in water supply, sanitation, and drainage while also strengthening the legal, regulatory, and institutional framework in the country. MCC’s early engagement with the country on policy and institutional reform led to the Government of Timor-Leste passing legislation to establish an independent national water utility and an independent water regulator, both of which will be operationalized by January 1, 2021. In Tunisia, MCC is pursuing options to achieve efficient and sustainable use of scarce groundwater resources in the interior regions of Tunisia, while in Lesotho MCC has launched feasibility studies related to the development of irrigated horticulture and integrated water resource management. In Mongolia, MCC’s $350 million compact is designed to provide a sustainable supply of water that will stem the impact of an impending water crisis and sustain private sector-led economic growth in the capital city, Ulaanbaatar. The compact’s Water Supply Project will support the construction of new groundwater wells and a state-of-the-art plant for purifying drinking water, the construction of a wastewater recycling plant for industrial reuse, and the development and implementation of policy, legal, regulatory, and institutional reforms to enhance the long-term sustainability of Ulaanbaatar’s water supply. These programs will increase the supply of water to Ulaanbaatar by more than 80 percent. Under the Sierra Leone Threshold Program, MCC has committed $16 million toward a Water Sector Reform Project that aims to improve access to reliable and safe water, sanitation, and hygiene (WASH) services, utility management and efficiency, and WASH practices at the household level. Increased access to safe drinking water, food, and sanitation services is critical to improving children’s nutritional status and preventing environmental enteropathy, which has been associated with growth failure in children.
Agriculture and Irrigation
405,482 farmers trained 504,004 acres under improved irrigationIn July 2016, MCC signed a $437 million compact with Niger focused on strengthening the agricultural sector. Under the compact’s Irrigation and Market Access Project, MCC has supported the Nigerien government’s initiative to improve irrigation and road access in the regions of Dosso and Tahoua. This work includes the rehabilitation of the irrigation system at Konni and the introduction of small-scale irrigation solutions in the Sia area of Dosso. As part of the project, MCC supports farmers and their associations to increase access to markets and post-harvest services while rehabilitating roads critical to market access. The compact also assists the implementation of the Nigerien government’s Fertilizer Sector Reform Plan, which opens up the market for private agrodealers to supply high-quality fertilizer while also realigning subsidy programs to ensure the neediest are able to access inputs to increase their agricultural productivity. Additional projects focused on sustainable development in the sector include support of the national water management plan as well as development of management plans for strengthening property and land rights and building statistical capacity within the Ministry of Agriculture. These activities will increase the production of market-oriented, irrigated agricultural production while building institutional capacity for the sustainable use and maintenance of irrigation and market infrastructure.
Land
320,722 household, commercial, and legal entities granted protected land rightsMCC works with partner countries to improve land governance and administration, strengthen property rights, and stimulate private sector investment for more productive land use. In Morocco, the compact’s $168.8 million Land Productivity Project aims to enable land markets to better respond to investor demand and to strengthen the enabling environment for investment. The Project is testing a more sustainable, market-driven model of industrial zone public-private partnerships in the Casablanca region; piloting an improved process for providing farmers and their families with individual titles to land they have been farming for generations—an initiative covering approximately 66,000 hectares; and developing a national land governance strategy to address obstacles to greater investment and productivity, including improving women’s access to land. In connection with the compact, MCC worked with the Government of Morocco to adopt legislation in fiscal year 2020 to strengthen women’s rights to own and inherit collective land. The Togo Threshold Program, signed in February 2019, includes an $8 million Land Reform to Accelerate Agricultural Productivity (LRAP) Project. The LRAP Project will support the establishment of a regulatory framework to implement the new land code and will field-test cost-effective procedures and technologies for land formalization to provide Togolese farmers with the security necessary to make long-term investments in their land.
Education
844 education facilities constructed or rehabilitated 10,670 instructors trained 291,144 students participating in MCC-supported education activitiesMCC works with partner countries to help students gain the knowledge and skills the private sector needs. In Georgia, the compact supported the development of 38 university programs in technical and vocational education and training (TVET) and the opening of an internationally accredited bachelor’s degree program in science, technology, engineering, and math (STEM) disciplines. By the end of the compact, MCC had trained approximately 15,000 secondary STEM and English teachers in the country in student- centered learning, classroom management, and subject-specific pedagogy. MCA-Georgia distributed TVET grants totaling approximately $12 million and provided technical assistance and public relations activities that substantially reformed the TVET system—and public perception of it—in Georgia. In El Salvador, the recently completed compact focused on reforming the national education system by improving the secondary education curriculum, aligning the country’s TVET system with workforce skills in 36 education centers addressing agriculture, manufacturing, and service industries, and providing continuous professional development for teachers of grades 7 to 12. Each center received new or significantly refurbished facilities as well as new equipment and furnishings intended to improve the quality and capacity of education and training services. In Morocco, MCC initiated implementation of community-led school improvement plans for 90 pilot secondary schools, comprising basic infrastructure repairs, teacher and administrator training, equipment upgrades, and partnerships with non-governmental organizations to improve students’ soft skills and encourage female participation in STEM fields. Under the $100 million grant facility, MCC signed grants for construction and technical assistance for 15 TVET centers to promote private sector-driven vocational training, with accompanying support to policy reforms to strengthen this new TVET model, including support for grantees to develop Gender Action Plans and broader reform efforts aimed at making training more accessible to women. MCC also supported technical assistance and systems upgrades that are helping the Government of Morocco improve its research, collection, and analysis of data in student assessment, labor markets, and employability. In Côte d’Ivoire, MCA-Côte d’Ivoire is working toward supporting new secondary schools, improved teacher training, and demand-driven TVET centers, with an emphasis on increasing access to education among women and other marginalized groups. MCA-Côte d’Ivoire completed selection of the first tranche of 20 communities in two regions, San Pedro and Gbeke, where it will construct secondary schools. MCA-Côte d’Ivoire also completed the development of a national gender policy in education and an action plan that outlines activities to promote gender equality in education. The resulting improved access and quality education will bridge the gender gap of skilled graduates needed for the Ivoirian workforce. In the Guatemala Threshold Program, education activities include the training of over 1500 secondary teachers and principals—with reported participation rates of approximately 80 percent despite having to move to online training in response to the COVID-19 crisis—and the selection of 13 pilot schools for the TVET strengthening program. The program is also supporting the Ministry of Education to develop new tools and strategies to advance the country’s TVET system by designing and implementing new curricula that better meet labor market demand.
Health
1,564 health providers trained on growth monitoring 6,724 service providers trained on community-led total sanitation triggering 17,531 service providers trained on infant and young child feedingMCC’s work with partner countries in electricity and agriculture sectors have health-related benefits. In the Kosovo Threshold Program, MCC is providing $4.3 million toward improving data and public health communication to promote behaviors that reduce the negative health impacts of air pollution. The Water Sector Reform Project in Sierra Leone is improving coordination, commercial practices, and capacity of the sector to improve clean, safe, and reliable distribution of water in Freetown. In Ghana, MCC is funding power infrastructure and institutional capacity to improve power supply reliability to the benefit of key hospitals, clinics, and teaching institutions. Within the Niger Compact, the Irrigation and Market Access Program includes literacy campaigns that have nutrition and sanitation as key curricula items. MCC is also a leader of the U.S. Government Global Nutrition Coordination Plan secretariat and a member of the technical working group that facilitates a stronger whole-of-government approach to global nutrition.
A Results-Based Approach
MCC uses a country-driven, results-based approach in its global programs, ensuring that each compact generates cost-effective impact. MCC is committed to applying its experience, expertise, and flexibility to address evolving challenges in order to achieve economic growth. This means focusing on the following areas:
Gender and Social InclusionGender and social inclusion are essential to achieving MCC’s mission to reduce poverty through economic growth, and MCC integrates inclusion into every phase of its programs. Catalyzing and supporting institutional reforms ensures that the impacts of MCC’s programs extend well beyond the life of a compact. MCC’s Gender Policy, first adopted in 2006, requires that gender inequalities be addressed during country selection, in the development and design of programs, and throughout program implementation and impact evaluations. In 2020, MCC adopted an additional investment criterion on women’s economic empowerment that further reinforces the importance of supporting women’s ability to access workforce and entrepreneurial opportunities. MCC supports women entrepreneurs in Kosovo and Benin by creating opportunities to establish or strengthen their businesses in the energy sector. MCC provides workforce opportunities that allow women to compete for better- paying jobs in nontraditional sectors, such as in energy in Ghana and Kosovo and in construction in El Salvador and Morocco. The Benin and Ghana compacts include policy and process changes within the electrical utilities to increase recruitment, retention, and promotion of women in the energy sector. In parallel with MCC’s programs in education and skills development, MCC works on improving girls’ access to education and completion rates. In El Salvador, MCC supported the development of the Ministry of Education, Science, and Technology’s Gender Policy and Gender Unit, designed to improve gender equality in the country’s educational system. In partnership with San Diego State University (SDSU), MCC designed the Georgia II Compact’s STEM Higher Education Project, to increase women’s participation in STEM degree programs. Specific outreach to and recruitment of women resulted in significant female enrollment in the rogram. Of the 530 students enrolled in the SDSU program, over 36 percent were women, which is a higher proportion of women than in most U.S.-based science and engineering bachelor’s degree programs.Environment, Health, and SafetyMCC recognizes that economic growth must be environmentally and socially sustainable. MCC works with its partner countries to integrate principles of environmental and social sustainability into the design and implementation of MCC-funded programs. The MCC Environmental Guidelines set forth a process for the review of environmental and social impacts to ensure that MCC-funded projects are environmentally sound, are designed to operate in compliance with applicable regulatory requirements, and are not likely to cause significant environmental, health, or safety hazards. MCC adheres to the International Finance Corporation’s Performance Standards on Environmental and Social Sustainability (“Performance Standards”) as part of its approach to risk management, promoting sound environmental and social performance and improving how MCC puts the Environmental Guidelines into practice at an operational level. The Performance Standards include requirements for identifying and managing environmental and social risks and impacts and identifying opportunities to enhance benefits at the project level.In Liberia, MCC identified early-on the importance and value of including a new water intake and pipeline from Mt. Coffee to the White Plains Water Treatment Plant as a complementary activity to the Mount Coffee Hydropower Rehabilitation Project. The inclusion of this activity helped ensure that the hydropower project does not harm Monrovia’s primary water supply, provides the opportunity for long-term expansion, and saves the Government of Liberia almost $1 million in costs each year since it no longer has to pay to pump water from the Paul River. In Morocco, under the Industrial Land Activity, MCC is piloting a market-driven, public-private partnership approach to developing industrial land zones for private sector investment. Outside of the targeted industrial development zone at Had Soualem, MCC identified an illegal dumpsite that presented a significant health hazard and risk to the program. Through MCC’s oversight model for environmental management, MCC was successful at leveraging $4 million from the Government of Morocco, resulting in the construction of a new landfill that complies with Morocco’s laws and regulations for waste management. In Solomon Islands, MCC identified natural resource management as a major binding constraint. In response, MCC worked in partnership with the Government of Solomon Islands to develop a program that seeks to provide communities with economically viable alternatives to extractive forest management. In Sierra Leone, the threshold program is supporting the development and passage of a National Resettlement Policy, whereby the Government of Sierra Leone is adopting resettlement standards consistent with MCC’s Environmental Guidelines for all public and privately funded investments moving forward. In fiscal year 2020, MCC worked with private sector partners to establish stronger tools and approaches to integrating climate considerations and ecosystem services into program design. |
MCC Threshold Programs: Results Through Reforms
MCC’s threshold program assists promising candidate countries to become eligible for a compact by offering them the opportunity to demonstrate their commitment to democratic governance, economic freedom, and investments in their people. By advancing policy reforms and strengthening institutions to address the most binding constraints to economic growth, threshold programs help MCC assess the opportunity for an impactful and cost-effective partnership before committing to a larger compact. MCC uses the same rigorous, evidence-based approach in threshold programs as it does in compacts, leading to high-quality programs that maximize potential systemic impact and lay the foundation for a higher level of assistance.In fiscal year 2020, MCC partnered to develop or implement threshold programs with Ethiopia, The Gambia, Guatemala, Kenya, Kosovo, Sierra Leone, Solomon Islands, and Togo.
Ethiopia
In 2020, MCC worked closely with the Government of Ethiopia to develop a $53 million threshold program focused on addressing the country’s uncompetitive trade and export policies. Since updating MCC’s Board on the proposed Trade Enhancement Project in June 2020, the MCC country team has continued to conduct due diligence on the business and regulatory environment and further develop project activities.The Gambia
MCC’s Board selected The Gambia as eligible to develop a threshold program in December 2017. Program development continued into 2019 with a focus on the unreliable and inadequate supply of electricity within the country. The Gambia became ineligible to receive assistance in fiscal year 2020 due to its designation as a Tier 3 country on the U.S. Department of State’s annual Trafficking in Persons (TIP) Report. Following an upgrade to the Tier 2 Watch List in the June 2020 TIP Report, MCC has restarted program development with the goal of bringing a final program to the Board in 2021.Guatemala
MCC and the Government of Guatemala are partnering to complete implementation of a $28 million threshold program to improve the quality of secondary education, mobilize financial resources through reforms in customs and tax administration, and structure public-private partnerships for infrastructure. In response to the COVID-19 pandemic, the program developed alternative means of teacher training and 1,517 secondary school teachers and principals were able to complete the four-semester course. The program also completed activities to support a new teacher hiring process that would require teachers to pass a basic competency test in the subject they would teach. Implementation of the hiring process is pending a government decree. The program is funding the U.S. Department of the Treasury’s Office of Technical Assistance and a team of 10 local consultants to help the Guatemalan customs and tax authority to automate customs processes and improve data management and risk modeling.Kenya
Selected in December 2019, Kenya is eligible for a second threshold program. Following the MCC Chief Executive Officer’s initial visit to Nairobi in January 2020, MCC conducted an assessment of the economic, private sector, and gender and social inclusion context despite challenges related to the evolving COVID-19 pandemic, including restrictions on travel. Program development will continue to explore constraints to economic growth presented by limited urban connectivity, the crowding out of private sector financing, and other issues.Kosovo
MCC and the Government of Kosovo continue to implement a $49 million threshold program that entered into force in 2017. The program aims to foster a market-driven approach to lowering energy costs for households and businesses, encouraging energy efficiency and developing new sources of electricity generation. The program also supports the Kosovo government’s efforts to improve decision-making and accountability by increasing the accessibility and use of judicial, environmental, and labor force data. Despite delays due to COVID-19, the two largest activities to pilot incentives for energy efficiency and metering are poised to begin small works in early 2021. Women scholarship recipients studying energy-related fields began their second year of studies in the United States. Small works to improve air quality data collection were completed in 2020 and an app and web portal providing air quality data and health information is now online.Solomon Islands
MCC’s Board selected Solomon Islands as eligible to develop a threshold program in December 2018. Despite COVID-19 challenges, MCC engaged with the Government of Solomon Islands to develop a $23 million program. The program consists of two projects to address land access and investment facilitation issues that have prevented Solomon Islands from realizing its potential in tourism and to help the country generate more reliable and sustainable benefits from its forest resources.Sierra Leone
MCC and the Government of Sierra Leone signed a $44.4 million threshold program grant agreement in November 2015 to improve access to clean water and reliable electricity. In 2020, the MCA completed an innovative results-based financing activity that provided performance incentives to utilities in the electricity and water sectors. Additionally, the program started the installation of new pipes, meters, and water kiosks to improve water delivery in a pilot area of Freetown. Completion of the program is scheduled for March 2021.Togo
The $35 million MCC threshold program with Togo is focused on addressing critical constraints in the country’s information and communications technology (ICT) and land sectors. The program will support the Government of Togo to improve citizens’ access to high-quality and affordable ICT services by encouraging private sector investments, supporting the implementation of a universal service fund, and strengthening an independent regulatory body. In the land sector, the program will expand access to formalized land titles through the recognition and protection of legitimate land rights, to accelerate agricultural productivity.| For More
→Visit www.mcc.gov for the latest progress on each MCC partner country, including financial data, results, and donor coordination efforts. →Review MCC’s Fiscal Year 2020 Agency Financial Report for financial statements and the independent auditor’s report. |