MCC Partner Countries in Compact Implementation
Nine countries continued implementing their MCC compacts during fiscal year 2014.
Senegal: The construction and rehabilitation of road and irrigation systems advanced on schedule. The Ngallenka irrigation project was completed in early 2014; 1,673 farmers were resettled before the growing season, supported with titles they received formalizing their land rights for the first time. The Ndioum Bridge, eagerly awaited since the 1960s, was also completed.
Moldova: The 57-mile road rehabilitation project finished on schedule. Design and construction began on the remaining eight of 10 irrigation systems. This uses a new modular approach that the government, other donors and businesses can easily replicate for future expansion or to cost-effectively build similar systems elsewhere in the country.
Philippines: Through compact investments, 1,519 community structures—or 60 percent of the goal—have been built in 115 municipalities. Because of the compact’s enhanced design standards and heightened attention to environmental impacts from extreme climatic events, these structures, including roads, schools, day-care centers, health stations, and water systems, suffered minimal damage from Typhoon Haiyan. Many served as places of refuge and relief operations during and after the storm.
Jordan: The expansion of the As-Samra wastewater treatment plant is nearly 80 percent complete, and construction of the wastewater network is nearly 50 percent complete. Because of cost savings, more than $16 million was reallocated for the wastewater network project in Zarqa. These savings will be used to build a consolidated administrative and operations building for the Water Authority of Jordan and to construct another 40 miles of wastewater network pipes for the new neighborhood of Princess Haya, benefiting an additional 1,551 households.
Cabo Verde: The Infrastructure Grant Facility was launched to fund infrastructure improvements in the water and sanitation sector. It is also a vehicle for donor coordination on policy and institutional reforms. The Luxembourg Development Agency pledged $1 million to strengthen the facility, and the World Bank committed $235,500 to support the municipalities of Santo Antão and São Nicolau in adopting corporate practices to expand access to water and sanitation. Through one of the partnerships already created through the facility, The Coca-Cola Foundation is investing $400,000 to improve household water and sanitation connections for vulnerable communities.
Indonesia: The Green Prosperity Project launched the Finance Facility in July 2014 to accept grant applications for projects in the cocoa sector. The Community-Based Health and Nutrition to Reduce Stunting Project started training parents and caregivers on adequate nourishment for infants and young children. Activities in villages also began to deepen understanding of the causes and remedies of stunting.
Malawi: Power sector reform and institutional strengthening efforts continued, with the goal of converting ESCOM, Malawi’s electricity utility, into a credit-worthy institution. Reforms include eliminating debt and improving the utility’s financial position, moving toward a cost-reflective electricity tariff to enable ESCOM and others to meet Malawi’s growing energy supply needs, and supporting the Ministry of Energy with negotiations on power purchase agreements with potential independent power producers. Construction designs for infrastructure and related resettlement plans are materializing.
Zambia: Progress was made in forging public-private partnerships to improve access to clean water and sanitation services for Lusaka’s poor. This included launching the Innovation Grant Program in February, 2014, with more than 25 private sector firms as well as civil society and nongovernmental organizations coming together to learn about competing for grants to supplement the compact’s investments. The non-profit organization Water and Sanitation for the Urban Poor signed an agreement with MCA-Zambia and the Lusaka Water and Sewerage Company to provide technical services. And the Public-Private Infrastructure Advisory Facility continues to provide technical assistance to improve the Lusaka Water and Sewerage Company’s commercial viability and strengthen the government’s ability to attract investment in water supply and sanitation infrastructure.
Georgia: To improve the quality of education in science, technology, engineering, and math, the Georgian government signed a 20-year agreement
with San Diego State University in July 2014 to provide bachelor’s degrees in these disciplines in collaboration with Georgian universities. This partnership is the first
of its kind for both San Diego State University and the Government of Georgia, made possible through MCC’s compact investments to boost workforce productivity and employment.
| Partner Country | Obligations (in millions of dollars) | Expenditures (in millions of dollars) |
|---|---|---|
| Senegal | $540 | $216.5 |
| Moldova | $262 | $156 |
| Philippines | $433.9 | $185.3 |
| Jordan | $275.1 | $125.1 |
| Cabo Verde | $66.2 | $8.4 |
| Indonesia | $600 | $37.2 |
| Malawi | $350.7 | $15.3 |
| Zambia | $354.8 | $16.2 |
| Georgia | $140 | $4.8 |
MCC Partner Countries with Completed Compacts
Since our founding, MCC and our partner countries have completed 18 compacts totaling $6.1 billion.
In fiscal year 2014, the compact term ended in both Burkina Faso and Namibia.
- Through integrated projects to improve agriculture, roads and land registration, Burkina Faso’s compact put family farmers on the path from local growers to regional exporters. Our investment increased the volume of yields and encouraged producers to grow higher-value crops and breeds of livestock. Larger yields, better varieties and improved access to markets enabled beneficiary farmers to export tomatoes and onions grown in the Dî perimeter to domestic and international markets, including Côte d’Ivoire, Ghana and Togo. Additionally, our investment helped to increase girls’ primary school enrollment, attendance and completion rates. As a result, girls enrolled in BRIGHT schools, which are built in rural communities where girls historically have been least likely to attend school, scored nearly 3 percentage points above the average on standardized tests in the 10 BRIGHT provinces. In total, about 1.2 million Burkinabé are expected to benefit from the compact.
- Namibia’s compact invested in tourism, agriculture and education and is expected to benefit more than 1 million Namibians. It promoted natural conservation and ecotourism—a key driver of economic growth—to create jobs, mobilize investment and fight poverty. This included improving the management and infrastructure of Etosha National Park and working with conservancy communities to more effectively manage their national resources, attract investment and achieve financial sustainability. As a result, annual revenue for conservancies is up 27 percent, and at least 43 additional North American tourism businesses are now offering tourism packages to Namibia. The compact also helped improve livelihoods in the country’s impoverished northern communities by expanding opportunities for farming families. It strengthened the land tenure system, improved rangeland and livestock management practices and expanded animal health services and livestock marketing efficiencies, giving farmers the chance to export to foreign markets for the first time. The education sector also benefited from new school buildings, policy reforms, institutional strengthening, and technical assistance.
Even after compacts close, countries continue to use what they have learned through the MCC partnership.
- The local construction company in Lesotho that designed, constructed, expanded, and renovated 51 health centers and 14 out-patient departments had to follow certain employee safety standards required by the compact. These included addressing unsafe practices and conditions, using proper personal protective equipment and raising awareness of human trafficking and HIV/AIDS. At the project’s conclusion, the construction company noted a significant decrease in work-related incidents and accidents. As a result, it decided to adopt MCC’s standards for construction projects for all its other projects.
- Morocco’s Ministry of Handicrafts partnered with artisan vocational training centers around the country to implement critical school governance reforms, including school-level strategic plans, results-based management tools and an expanded model for career guidance. These efforts, which build on literacy and vocational training initially funded through Morocco’s MCC compact, increase critical support for Moroccan artisans who are often among the economy’s poorest.
- Mongolia’s compact played a major role in shifting the focus of technical vocational education and training from a top-down, state-driven approach to a more employer-driven, private sector-oriented approach. It facilitated the creation of public-private partnerships to provide vocational education, including supplying modern equipment for hands-on practical training in various trades. Since the compact’s end, other donors, like the European Union and the Asian Development Bank, are continuing work in the sector.
| Partner Country | Obligations (in millions of dollars) | Expenditures (in millions of dollars) |
|---|---|---|
| Madagascar | $85.6 | $85.6 |
| Honduras | $204 | $204 |
| Cabo Verde (first compact) | $108.5 | $108.5 |
| Georgia (first compact) | $387.2 | $387.2 |
| Vanuatu | $65.4 | $65.4 |
| Nicaragua | $112.7 | $112.7 |
| Armenia | $176.6 | $176.6 |
| Benin | $301.8 | $301.8 |
| Ghana (first compact) | $536.3 | $536.3 |
| El Salvador (first compact) | $449.6 | $449.6 |
| Mali | $435.6 | $435.6 |
| Morocco | $650.2 | $649.4 |
| Lesotho | $358 | $358 |
| Mozambique | $447.9 | $447.9 |
| Tanzania | $694.5 | $694.5 |
| Mongolia | $269 | $269 |
| Burkina Faso (Compact completed during fiscal year 2014) | $480.9 | $448 |
| Namibia (Compact completed during fiscal year 2014) | $304.5 | $278 |
| Partner Country (with compact amount in millions of dollars) | Obligations (in millions of dollars) | Expenditures (in millions of dollars) |
|---|---|---|
| Ghana ($498.2) Signed August 5, 2014 This compact aims to transform Ghana’s power sector. It takes a system-wide approach to providing access to safe, reliable energy and to reforming the laws and regulations needed for a self-sustaining power sector capable of meeting the needs of households and businesses and of catalyzing private sector investment. | $28.9 | $0 |
| El Salvador ($277.0) Signed September 30, 2014 This compact seeks to improve El Salvador’s competitiveness and productivity in international markets. First, it is designed to enhance the country’s investment climate by streamlining regulations and implementing a new public-private partnership law. Second, it will improve courses and teacher training to equip the country’s workforce with the skills needed by companies. Third, it will invest in heavily used sections of roads along the coastal highway and at the border crossing with Honduras to reduce transportation and logistics costs. | $10 | $0 |
Compacts in Development
MCC is working with seven countries, all in Africa, on developing potential compacts:
- Lesotho was selected during fiscal year 2014 as eligible to develop a potential subsequent compact. The analysis is underway to determine the binding constraints to growth.
- In both Liberia and Tanzania, power and road infrastructure emerged as primary constraints to growth. These partners are developing energy sector concepts for future compacts within the framework of Power Africa.
- In Morocco, compact concepts are being developed to address constraints to growth through improvements in three areas: the link between education and private sector-demand for skilled workers, judicial performance and land governance.
- MCC’s potential compact with Niger addresses such constraints to growth as access to water for agriculture and livestock, institutional and regulatory barriers to trade and government regulation of business.
- The development of compacts with Benin and Sierra Leone continues on a limited basis. Identified constraints to growth in Benin include agribusiness-related infrastructure and policy reform. In Sierra Leone, they center on power, water and sanitation.
Sector Results at a Glance: By the Numbers and by Key Policy Reforms
Numbers are cumulative over the past decade as of September 2014, with the exception of latest available totals from Burkina Faso, which are from June 2014, that fed into these cumulative numbers.
Infrastructure
1,519 miles of roads completed, with an
additional 927 miles under construction
MCC works with partner countries not only to build roads but also to maintain them well into the future. Through its compact, Burkina Faso created the Incentive Matching Fund for Periodic Maintenance, an innovative partnership requiring the government to match investments for maintenance works. This resulted in the maintenance of 186.4 miles of roads during this fiscal year.
Water and Sanitation
680,459 people can now access clean water from 1,181 new or rehabilitated water sources
MCC works with partner countries to push reforms that expand access to clean water and sanitation. Because of reforms at the Lusaka Water and Sewerage Company to meet compact goals, the Zambian government paid more than $15 million in arrears to the utility and also installed more than 200 pre-paid water meters at government agencies. The private sector is now doing the same. This helps Zambians monitor usage of and conserve water, while also improving the utility’s ability to collect payments. The Zambia National Water Supply and Sanitation Council recognized the Lusaka Water and Sewerage Company as the most-improved commercial utility in 2014.
Power
2,720 miles of electricity lines completed
Ghana Finance and Economic Planning Minister Seth Terkper and MCC CEO Dana J. Hyde shake hands after signing the $498.2 million Ghana Power Compact on August 5, 2014. Behind them are Ghana President John Dramani Mahma, left, and U.S. Secretary of State John Kerry.
MCC works with partner countries to implement the necessary reforms to improve their power sectors and put them on a path to profitability and sustainability. During the first year of implementing its compact, Malawi made significant progress in designing and executing targeted technical assistance programs. These programs build the capacity of sector institutions to improve financial and operational performance. Ghana, too, demonstrated a strong commitment to transforming its power sector by adopting a series of institutional reforms prior to signing its compact. This involved agreeing to recommendations for helping the utility companies improve their management and credit-worthiness, developing a plan for paying off the debt owed by the Ghanaian government to the distribution utility companies, adjusting electricity tariffs to make them more cost-reflective, and taking necessary steps to ensure a reliable gas supply for power generation plants.
Agriculture and Irrigation
271,650 farmers trained
296,682 acres under improved irrigation
$87.8 million in agricultural and rural loans
MCC works with partner countries on policies and procedures to better manage water resources used for agricultural production. Without appropriate water resource management, crops are subject to both floods and droughts, resulting in drastic price fluctuations. Through its compact, Burkina Faso established two basin-wide water management plans that help balance local and regional water needs and ensure their integration into the overall national water resource management strategy.
Land
304,662 households now have legal protections for their land
MCC partners with countries to implement complex policy reforms in the land sector, often providing people with rights to their land for the first time and opening up possibilities for private sector investment. Through its compact, Cabo Verde is improving the investment climate by assessing the legal, institutional and procedural environment in the land sector, developing and implementing a new land information management system and clarifying parcel rights and boundaries while strengthening the protection of land rights on targeted islands with high-investment potential. Cabo Verde adopted over 20 different policy reforms and six laws and decrees this fiscal year.
Education
745 schools built or rehabilitated
228,693 students participating in classes or training to learn new skills
MCC works with partner countries to implement reforms that ensure technical and vocational education and training systems are financially sustainable and responsive to the local labor market. In fiscal year 2014, MCC and the Government of Namibia, for example, launched a new National Training Fund, which allows potential employers to fund programs based on the skills needed. MCC also works with partner countries to improve the physical learning environment for students. In Namibia, school conditions were identified as a reason why students repeated grades and performed poorly. In addition to rehabilitating 48 schools, Namibia’s compact improved the school maintenance policy, specifically outlining local and national responsibilities for maintaining school infrastructure and equipment.
Impact across all these sectors stems from MCC’s country-driven, results-focused approach. Knowing how to apply our experience, expertise and flexibility to evolving challenges and to achieving economic growth reflects MCC’s unique approach to development. This means incorporating:
- Gender equality: MCC recognizes that advancing gender equality is a critical element of sustained economic growth. The addition of a gender in the economy indicator on MCC’s country policy scorecard shows the premium we place on empowering women as agents of economic change. Social and gender assessments conducted early in the compact development process inform program selection and design in ways that address issues of gender inequality. Within our monitoring and evaluation plans, MCC is proud of our efforts to collect gender-disaggregated data.
- Responsible resettlement: Understanding that involuntary resettlement—unless properly managed—can result in long-term hardship for those affected, MCC follows internationally recognized best practices when dealing with resettlement. This ensures the affected people are consulted and have opportunities to participate in resettlement planning and implementation, which ultimately helps them improve their livelihoods and living standards.
- Climate change considerations: MCC recognizes that investing in sustainable economic development and addressing the effects of climate change are mutually reinforcing. We build roads that can withstand more frequent and extreme storm events. We help farmers adapt to changing rainfall patterns. And we help governments better manage water supplies.
Before the Compact: Results through Reforms
MCC uses objective, third-party policy performance data summarized on individual country scorecards to select partners. This process inspires countries to pursue ongoing reforms to improve their economic and social policies even before MCC invests a single dollar. Many call this phenomenon the “MCC effect.”
- In an attempt to qualify for MCC assistance, Côte d’Ivoire undertook reforms that helped it to pass nine of MCC’s 20 indicators in fiscal year 2014, including control of corruption, up from only five indicators in fiscal years 2012 and 2013. The National Committee for MCC Eligibility is spearheading specific reforms to reduce corruption and improve democratic rights, the ease of doing business and gender equality. These efforts include passage of a new family code giving women the same rights as men to choose where they live, apply for a passport, pursue a job or profession, and become head of household. Reforms were tied to suggestions from MCC and the International Finance Corporation, resulting in Côte d’Ivoire now passing MCC’s gender in the economy indicator.
- The Government of Togo formed a Committee for MCC Eligibility that has updated data and created an action plan for policy reform. This includes modernizing the family code to ensure equal rights for women and changing the penal code to fight corruption. The World Bank recognized Togo’s efforts to increase transparency in budgeting through the Open Budget Portal, another step the government is taking to control corruption.
Results through MCC’s Threshold Program
MCC’s Threshold Program focuses on policy and institutional reform to give candidate countries the opportunity to demonstrate that they would be good compact partners. These programs are developed through a structured diagnostic and design process, beginning with a rigorous analysis of the constraints to economic growth and the policy and institutional underpinnings of those constraints. As our partners implement their threshold programs, they give us critical information about their commitment and capacity to undertake the types of reforms and investments that would have the greatest impact on growth. The Threshold Program portfolio currently includes Honduras, Guatemala and Nepal.
While Guatemala and Nepal are designing their respective threshold programs, Honduras is implementing a $15.65 million program that supports reforms to improve government effectiveness in two areas identified as critical barriers to faster economic growth and poverty reduction: public financial management and the transparency and efficiency of public-private partnerships. Honduras’ program will provide support for implementing road concessions, technical advice on how to structure electricity concessions and assistance to the Supreme Audit Institution on conducting performance audits.