Changing the

Conversation

Innovative U.S. Foreign Assistance

Created to Reduce Poverty
s in Honduras. Port expansion in Cape Verde. Business d

evelopment services in Nicaragua. Assistance to farmers

rmers in Georgia. Upgrading wharfs in Vanuatu. Improve

redit services in Ghana. Providing legal aid in Benin. Wa

on in Cape Verde. Gas pipeline rehabilitation in Georgia.

mprove access to agriculture services in Mali. Enable dev

elopment of water point system in Mozambique. Provide

rop insurance in El Salvador. Teacher training in Mongol

Water supply improvements in Nicaragua. Formalize prop

perty rights in Benin. Improve ferry service in Ghana. Str

Rehabilitate health centers in Lesotho. Port upgrades in 

crease financial services in Morocco. Repair rural roads 

ocational education in El Salvador. Standardizes propert

ights in Mozambique. Promotes irrigation development 

n Ghana. Rural credit assistance to farmers in Armenia. 

Bridge construction in Cape Verde. Standardize land tenu

ure policies in Nicaragua. Water supply and sanitation im

mprovements in Georgia. Improve solid waste disposal in

n Mali. Construct fish landing sites in Morocco. Execute a

pilot wetlands restoration in Lesotho. Improve coconut p

roducers’ products in Mozambique. Introduce a long-te

angeland leasing system in Mongolia. Expand the capac

 water treatment plant in Tanzania. Strategic road main

tenance planning in Armenia. Modernize national interb

ank payment system in Madagascar. Road improvement

armer access to credit in Honduras. Improve credit infor

rmation bureau in Benin. Services to efficiently perform

contracts in Vanuatu. Construct a blood transfusion cent

Millennium Challenge Corporation. Reducing poverty thr
evelopment services in Nicaragua.

s

e

ater

.

velopment

e

lia.

perty

re

Morocco.

 in Tanzania.

ty

 in Ghana. 

ure

mprovements

n

a

producers’

rm

city

tenance

ank

ts 

rmation

ter

rough

Changing the

Conversation

October 1, 2006–September 30, 2007

Who We Are...............................11

MCC’s Mission .............................................................................................12

MCC’s Milestones .......................................................................................13

What We Do.............................23

Good Policy Performance: Selection Process........................25

Country Ownership: Compact Development Process.....34

Country Responsibility: Implementation Process...............38

Why We Do What We Do.....43

Changing the Conversation About Development..............44

Changing Lives: Threshold Programs..........................................52

Changing Lives: Compacts.................................................................55

Changing the Conversation 3
The Mayor of Al Hassa, Rana Hajaya, 

pictured upper-left wearing glasses, is one 

of hundreds of women elected in Jordan. 

4 Changing the Conversation
In some partner countries, specific 

projects advance pluralism, the rule of 

law, government transparency, and the 

protection of private property rights.

Malawi’s threshold program 

supports ongoing anticorruption efforts, expands the work 

of civil society groups, and strengthens 

independent media coverage, including 

training 45 journalists in investigative 

journalism. Anti-money laundering 

legislation has been passed. A Financial 

Intelligence Unit has been created 

to investigate financial crimes. These 

efforts helped Malawi improve its performance on the control of corruption 

indicator—from the 40th percentile in 

fiscal year 2005 to the 54th percentile 

in fiscal year 2008—now making the 

country compact-eligible.

Jordan’s threshold program 

strengthens municipal governance by expanding the participation of its citizens, including women, 

in local elections and local government. 

Under the new municipalities law, 20 

percent of municipal council seats are 

reserved for women. In the last elections, female candidates exceeded this 

quota and won 238 seats. 

MCC invests in countries committed to:

Ruling Justly

Changing the Conversation 5
A woman in Burkina Faso attends school as 

a result of the MCC Threshold Program.

Photo by Liz Bernard.

6 Changing the Conversation
In some partner countries, specific 

projects focus on investments in health, 

education, and skills to expand human 

capabilities. 

El Salvador’s compact contains 

both formal and non-formal 

education and training components to increase employment opportunities for the poor. 

Ghana’s compact will complement agriculture and infrastructure investments in rural communities by providing over 100 new and 

rehabilitated education facilities, 900 

additional water points, and electricity 

to 12 agro-processing facilities. 

Lesotho’s health sector project 

is designed to mitigate the 

negative economic impacts of poor 

maternal health, HIV/AIDS, tuberculosis, 

and other diseases by strengthening 

the country’s health care system. MCC 

funding will support the government’s 

efforts to significantly increase access 

to life-extending antiretroviral therapy 

by providing a sustainable platform to 

deliver this and other essential health 

services. 

Burkina Faso’s threshold 

program opens 132 new “girlfriendly” school complexes. 

Over 18,000 children—half of whom are 

girls—are attending school who would 

not have been able to otherwise. Over 

250 literacy centers are open, and thousands have received literacy training. 

MCC invests in countries committed to:

Investing in the health and 

education of their citizens

Changing the Conversation 7
In some partner countries, specific 

projects focus on maximizing business 

development and investment opportunities, the true engines of economic 

growth.

Benin’s access to markets project will increase competitiveness at the Port of Cotonou by 

reducing transport costs through systems and infrastructure improvements, 

increasing the volume of merchandise 

traffic through the port. 

Honduras’s compact has begun training 

800 farmers to grow and sell horticultural products and will train more than 

8,000 during the life of the program. 

Morocco’s financial services 

project will increase financial 

services for micro-enterprises 

by addressing key constraints to the 

development of a broader, deeper, and 

market-based financial sector. 

Paraguay’s threshold program 

reduced the cost to start a 

business, from $750 to $250, 

and cut the number of days required to 

do so in half to 36. 

MCC invests in countries committed to:

Promoting economic freedom

8 Changing the Conversation
Benin’s compact increases the volume of imports and exports at the 

Port of Contonou by reducing delays and improving operations and 

infrastructure, providing greater access to markets for the Beninese. 

Changing the Conversation 9

Who We Are

11
MCC’s Mission 

The Millennium Challenge Account (MCA) is a development assistance program whose 

mission is to reduce poverty through sustainable economic growth in some of the world’s 

poorest countries that create and maintain sound policy environments. The program 

supports American security and foreign policy objectives and is true to America’s commit‐

ment to working toward a safer and more prosperous world. The Millennium Challenge 

Corporation (MCC) is an independent U.S. government corporation established by an act 

of Congress in 2004 to administer the MCA. 

Reducing poverty through economic growth

Justine Rasoamanahirana, like most of the rural population in 

Madagascar, inherited her land from her parents. Read how MCC’s 

Madagascar compact is helping Justine at www.mcc.gov/success.
MCC’s Milestones

As of the end of fiscal year 2007, MCC signed 14 compacts, totaling nearly $4.55 billion. 

MCC also signed threshold programs with 14 countries, totaling about $316 million. 

Compacts in Signing Order

Country

Award

(in millions) Signing Date Entry Into Force

Madagascar $109.8 April 18, 2005 July 27, 2005

Honduras $215.0 June 13, 2005 September 29, 2005

Cape Verde $110.0 July 4, 2005 October 17, 2005

Nicaragua $175.1 July 14, 2005 May 26, 2006

Georgia $295.3 September 12, 2005 April 7, 2006

Benin $307.3 February 22, 2006 October 6, 2006

Vanuatu $65.7 March 2, 2006 April 28, 2006

Armenia $235.7 March 27, 2006 September 29, 2006

Ghana $547.0 August 1, 2006 February 16, 2007

Mali $460.8 November 13, 2006 September 17, 2007

Changing the Conversation 13
Country

Award

(in millions) Signing Date Entry Into Force

El Salvador $461.0 November 29, 2006 September 20, 2007

Mozambique $506.9 July 13, 2007 Estimated Entry into Force 

projected for Autumn 2008

Lesotho $362.6 July 23, 2007 Estimated Entry into Force 

projected for Autumn 2008

Morocco $697.5 August 31, 2007 Estimated Entry into Force 

projected for Autumn 2008

Entry into Force

After compact signing, entry into force is the point at which funds are obligated and the full implementation 

of compact programs begins. 

Compact

A compact is a multi-year agreement between MCC and an eligible country to fund specific programs aimed 

at reducing poverty and stimulating economic growth. It is a mutual promise between the U.S. government 

and a partner country, each with specific responsibilities to fulfill.

Threshold Program

The Threshold Program is designed to assist countries that are on the “threshold,” meaning they have not 

yet qualified for MCA Compact funding, but have demonstrated a significant commitment to improve their 

performance on the policy indicators.

14 Changing the Conversation
Threshold Programs in Signing Order

Country

Amount

(in millions) Signing Date

Burkina Faso $12.9 July 22, 2005

Malawi $20.9 September 23, 2005

Albania $13.9 April 3, 2006

Tanzania $11.2 May 3, 2006

Paraguay $34.6 May 8, 2006

Zambia $22.7 May 22, 2006

The Philippines $20.7 July 26, 2006

Jordan $25.0 October 17, 2006

Indonesia $55.0 November 17, 2006

Ukraine $45.0 December 4, 2006

Moldova $24.7 December 15, 2006

Kenya $12.7 March 23, 2007

Uganda $10.4 March 29, 2007

Guyana $6.7 August 23, 2007

Changing the Conversation 15
MCC’s Board of Directors

MCC is managed by a Chief Executive Officer and is overseen by a public‐private Board of 

Directors comprised of the Secretary of State, the Secretary of the Treasury, the U.S. Trade 

Representative, the USAID Administrator, the CEO, and four individuals from the private 

sector appointed by the President with the advice and consent of the U.S. Senate. 

Chair

Condoleezza Rice

Secretary of State 

Lorne W. Craner

President, 

International 

Republican Institute 

Vice Chair

Henry M. Paulson, Jr.

Secretary of Treasury 

Senator 

William H. Frist, M.D.

Schultz Class of 1951 

Visiting Professor 

of International 

Economic Policy 

Woodrow Wilson 

School of Public and 

International Affairs 

Princeton University

Susan C. Schwab

United States 

Trade Representative 

Kenneth Hackett

President, 

Catholic Relief 

Services 

Henrietta Holsman Fore

Administrator, 

U.S. Agency for 

International 

Development

Alan J. Patricof

Founder and 

Managing Director, 

Greycroft, LLC 

John J. Danilovich

MCC Chief 

Executive Officer

Christine Todd 

Whitman

Former Governor 

of New Jersey 

Three-year term 

ended June 27, 2007.

16 Changing the Conversation
MCC’s Staff

We reached our planned corporate head‐

quarters staffing level of 300 in fiscal year 

2007. Our workforce (full-time, directhire MCC employees) is a diverse one, 

composed of 25 percent minorities and 55 

percent women. We continue to assess how 

best to balance workforce availability with 

workload demands and are determining 

which activities should remain core compe‐

tencies within MCC and which should be 

outsourced.

MCC’s Reorganization 

to Focus on 

Implementation 

Support

Since 2004, supporting partner countries in 

compact development has been at the core 

of MCC’s efforts. With the negotiations 

and signings completed for a number of re‐

sults-oriented compacts to reduce poverty 

and stimulate growth, we now enter a new 

phase of our evolution. While continuing 

compact development on a regular basis, 

over the long-term, MCC’s core activity 

will focus on oversight and support for 

country-led compact implementation. This 

new focus will also help MCC to implement 

best practices to build country capacity in 

procurement, to monitor and accommo‐

date changes in requirements during imple‐

mentation of infrastructure projects, and to 

ramp up disbursements while maintaining 

the highest level of accountability. 

In late fiscal year 2007, MCC initiated a 

major reorganization to position ourselves 

to meet the long-term demands required to 

work with partner countries to implement 

compacts with quality and speed. We have 

taken concrete measures to reorient from 

working with partner countries in develop‐

ing compacts to also working with them to 

ensure that the compacts are implemented 

successfully. This means fully utilizing the 

expertise and experience of MCC profes‐

sionals to focus on oversight and support 

of program implementation. It has meant 

moving more responsibility and authority 

to resident country directors in all partner 

countries by giving them the latitude to 

make decisions that will expedite compact 

implementation. It has meant combining 

and restructuring two existing depart‐

ments—the Department of Operations and 

the Department of Accountability—to form 

two new departments—the Department of 

Compact Development and the Department 

of Compact Implementation. 

We initiated such a comprehensive reorga‐

nization at MCC to address the challenges 

associated with compact implementation. 

Our new structure bolsters capacity build‐

ing to empower our partner countries to 

launch transparent procurement processes, 

implement their compact projects in a 

timely manner, and monitor and evaluate 

the overall results.

Changing the Conversation 17
The future success of MCC in 2008 and 

beyond depends on achieving the expected 

results from our partner countries’ 

compact implementation. As a result, we 

have realigned priorities, goals, functions, 

and staff to meet that challenge and are 

better equipped now to achieve success‐

ful compact implementation, without 

compromising our dedication to financial 

and procurement accountability, the 

important role of gender in development, 

effective monitoring and evaluation, sound 

economic underpinnings for programs, and 

international best practice management of 

social and environmental issues. 

18 Changing the Conversation
MCC’s Brand

MCC Introduces a New Logo

On September 10, 2008, the Millennium 

Challenge Corporation unveiled a new logo 

as part of the organization’s efforts to raise 

awareness of the global fight against pov‐

erty and the leadership by the United States 

to provide sustainable, long-term solutions 

for the world’s poor.

MCC’s new logo, a star formed in the 

classic shape of those on the American 

flag, is an emblem of the partnership 

and progress that this innovative way of 

delivering foreign assistance is bringing to 

some of the world’s poorest countries. The 

logo contains sweeping stripes of red and 

white, symbolic of roads or fields that are 

part of many MCC programs, as well as 

three stars representing the principles of 

aid with accountability, country ownership 

and partnership, and results-based assis‐

tance that define MCC’s cooperation with 

countries across the globe. The new logo is 

energetic, giving a sense of forward motion 

and progress, of long-term and sustainable 

economic growth, and of the partnership 

that takes place when two countries work 

together through Millennium Challenge 

Corporation programs. 

MCC developed this new logo after feed‐

back from Congress, partners in the field, 

and other stakeholders called for a clearer 

visual connection between MCC’s pro‐

grams and the people of the United States. 

The MCC star will replace the current 

logo (which will be retained as the official 

“seal” of the organization) over the next six 

months. MCC will gradually replace the 

logos in order to minimize costs and ensure responsible use of graphic, web-based 

and other communications products. 

MCC’s Public Web Site

As part of our communications strategy, 

MCC unveiled a state-of-the-art and 

user-tested website during fiscal year 2007, 

reflecting best industry practices. Its easy 

navigation and constantly updated content 

drew an ever-increasing number of visitors, 

making the website one of our most effec‐

tive tools in showcasing progress to date. 

In fact, in the year since the launch of the 

redesigned website, visits skyrocketed an 

average of 294 percent from the previous year. 

Changing the Conversation 19
MCA Accountable Entities

Another tool in communicating MCC’s mission is the tremendous public relations work 

undertaken by partner countries themselves. As accountable entities are established in each 

partner country to implement compacts, they are writing newsletters, maintaining their 

own websites, engaging the press, organizing events, communicating with stakeholders, 

and interacting with nongovernmental organizations to explain and highlight how MCC 

investments are fighting poverty, stimulating growth, and improving the lives of the poor. 

MCC’s visibility in each partner country plays an instrumental role in advancing U.S. public 

diplomacy efforts. 

Accountable entities, as part of their compact agreement, create a logo to help promote the 

partnership with the MCC and the United States. 

The logo must meet these four requirements:

1. The logo must be a circle.

2. The logo must include “Millennium Challenge Account,” which may be translated.

3. The logo must include the most commonly recognized country name by its citizens, 

which may be translated.

4. The logo must acknowledge the generosity of the people of the United States of America.

Accountable Entities created prior to October 31, 2006 and having already established 

a name and a logo were granted exemptions from the four requirements, but must also 

display either the MCC logo or the U.S. flag in conjunction with their own. Georgia, Mada‐

gascar, Nicaragua, and Ghana are examples of such countries. 

The following page shows a sample of the accountable entity logos in use worldwide.

20 Changing the Conversation
MCA-Vanuatu

http://www.governmentofvanuatu.gov.vu/mca-vanuatu/

MCA-Nicaragua

http://www.mcg.ge/

MCA-Honduras

http://www.mcahonduras.hn/

MCA-Benin

http://www.mcabenin.bj/

MCA-Lesotho MCA-Madagascar

http://www.mcamadagascar.org/

FOMILENIO

http://www.mca.gob.sv/fomilenio/

Agence de Partenariat pour le Progrès

MCA-Armenia

http://www.mca.am/new/enversion/

Millennium Georgia Fund

http://www.mcg.ge/

MiDA

http://www.mida.gov.gh/

MCA-Mali

http://www.mcamali.org/

M CHALLENGE

IU

A

N

C

N

C

E

O

L

U

L

N

I

T

M

MCA

Changing the Conversation 21
Colin Buckley, MCC Resident Country Director in Georgia, shakes hands with Leri 

Mikaberidze, Construction Manager for the Georgian company responsible for repairs to the 

North-South Gas Pipeline. The pipeline is a major component of the compact with Georgia.
What We Do

23
Good policy performance:

Selection process

Country ownership:

Compact development process

Country responsibility:

Implementation process

Together, 

this process leads to tangible results, 

the focus of Section 3.

The MCC Process

The Millennium Challenge Corporation awards grants—not loans—to 

partner countries through an innovative and competitive process built upon 

four fundamental principles that are essential for the effective and efficient 

use of development assistance—good policy performance, country owner‐

ship, country responsibility, and tangible results.

24 Changing the Conversation
Good Policy Performance:

Selection Process

We work with countries that are committed to ruling justly, investing in their people, and 

promoting economic freedom. We assess a government’s performance in these three areas 

by using objective, transparent, and third-party indicators taken from non-U.S. govern‐

ment sources. We use these indicators to create a scorecard measuring a country’s policy 

performance among its own peer group in the same per capita income range. Our Board of 

Directors then uses these scorecards to determine and select annually which countries are 

eligible to receive our aid based on policy performance.

Fiscal Year 2007 

Country Selection: 

The Competition 

to Participate

The Millennium Challenge Act of 2003, 22 

U.S.C.A. 7701, 7707 (b) (the “Act”) requires 

that MCC carry out a series of steps to 

determine countries eligible for MCA 

assistance during the fiscal year based on 

their commitment to just and democratic 

governance, investing in their people, and 

economic freedom. There must also be 

strong opportunities for poverty reduction 

and economic growth. 

In fiscal year 2007, we completed our 

fourth cycle of selecting countries eligible 

to apply for assistance. Required reports 

were transmitted to the appropriate Con‐

gressional committees at each of the follow‐

ing three stages of the selection process and 

are available on MCC’s website. 

Stage 1: 

Identification of Fiscal Year 

2007 Candidate Countries

In accordance with the Act, MCC submit‐

ted a Report to Congress on August 11, 2006, 

listing the countries that were candidates 

for MCA assistance during fiscal year 2007 

based on their per capita income levels and 

their eligibility to receive assistance under 

U.S. law. This report identified 69 candi‐

date countries in the “low income” category 

and 30 candidate countries in the “lower 

middle income” category for fiscal year 

2007. “Low income” candidate countries 

have a per capita income equal to or less 

than $1,675. “Lower middle income” can‐

Changing the Conversation 25
Ghana FY08 GNI/Cap: $520 LIC

Population: 22,112,800

Investing In People

Ruling Justly

Economic Freedom

How to Read this Scorecard: Each MCC Candidate Country receives an annual scorecard assessing its performance in 3 policy categories: Ruling Justly, Investing in People, 

and Economic Freedom. Under the name of each indicator is the country’s score and percentile ranking in its income peer group (0% is worst; 50% is the median; 100% is 

best). Under each country’s percentile ranking is the peer group median. Country performance is evaluated relative to the peer group median and passing scores, or scores 

above the median, are represented with green. Failing scores, or scores at or below the median, are represented with red. The black line that runs along the horizontal axis 

represents the peer group median. Each World Bank Institute indicator is accompanied by a margin of error, which is represented by the vertical blue bar.

Sources: Freedom House

Sources: World Health Org.

Sources: World Bank Institute

Freedom House World Bank Institute World Bank Institute World Bank Institute World Bank Institute

World Health Org. UNESCO/National Sources UNESCO CIESIN/YCELP

IFAD/IFC IFC Heritage Foundation IMF WEO National Sources

For more information regarding the Millennium Challenge Account Selection Process and these indicators, please consult MCC’s website: www.mcc.gov

0

10

2 0

3 0

4 0

'02 '04 '06

Median 20

Political Rights

Data 37 (100%) 

0

20

40

60

'02 '04 '06

Median 30

Civil Liberties

47 (93%) 

Median 0.00

Control of 

Corruption

0.65 (93%) 

-2.0

- 1.0

0.0

1.0

2.0

'02 '04 '06

Median 0.00

Government 

Effectiveness

0.92 (99%) 

-2.0

- 1.0

0.0

1.0

2.0

'02 '04 '06

Median 0.00

Rule of Law

0.74 (92%) 

-2.0

- 1.0

0.0

1.0

2.0

'02 '04 '06

Median 0.00

Voice and 

Accountability

1.07 (97%) 

-2.0

- 1.0

0.0

1.0

2.0

'02 '04 '06

Median 0.00

Regulatory Quality

0.60 (99%) 

-2.0

- 1.0

0.0

1.0

2.0

'02 '04 '06

Data

-8.00

-5.50

-3.00

-0.50

2.00

4.50

'02 '04 '06

Median -1.34

Fiscal Policy

-3.94 (19%) 

2 0

4 0

6 0

8 0

10 0

'02 '04 '06

Median 84

Immunization Rates

Data 84.5 (51%) 

0

0.2

0.4

0.6

0.8

1

'03 '05 '07

Median 0.610

Land Rights and 

Access

0.768 (86%) 

0

0.25

0.5

0.75

1

'03 '05 '07

Median 0.930

Business Start-Up

0.952 (74%) 

2 0

4 0

6 0

8 0

10 0

'03 '05 '07

Median 58.2

Trade Policy

58.0 (49%) 

0

10

20

30

'02 '04 '06

Max. 15

Inflation

10.91 (20%) 

10

4 0

70

10 0

13 0

'02 '04 '06

Median 67.8

Girls' Primary 

Education Completion 

67.8 (49%) 

0

3

6

9

12

15

'01 '03 '05

Median 2.07

Health Expenditures

2.59 (56%) 

0

2 5

50

75

10 0

'03 '05 '07

Median 66.53

Natural Resource 

Management

67.69 (56%) 

0

2

4

6

8

10

'02 '04 '06

Median 1.67

Primary Education 

Expenditures

1.70 (52%) 

10/10/2007

Sample MCC Scorecard showing how a country 

performs on the indicators.

26 Changing the Conversation
didate countries have a per capita income 

between $1,676 and $3,465. 

Stage 2: 

Selection Criteria and 

Methodology Report

In accordance with the Act, MCC submit‐

ted a Report to Congress on September 8, 

2006, indicating the criteria and methodol‐

ogy to be used to measure and evaluate the 

candidate countries in order for our Board 

of Directors to select eligible countries from 

among them. Following the submission of 

this report and its posting to MCC’s web‐

site and the Federal Register, we solicited 

and considered public comments for a 

period of 30 days. 

At that time, candidate countries competed 

against their income peer group on 16 

policy indicators that assess the degree to 

which the political, social, and economic 

conditions in these countries promote—

and can sustain—poverty reduction and 

economic growth. These independently de‐

veloped indicators are selected based on a 

number of factors, including their theoreti‐

cal or empirical link to economic growth 

and poverty reduction; analytical rigor, 

quality, and objectivity; public availability; 

broad country-coverage; comparability 

across countries; and broad consistency in 

results from year to year. The 16 indicators 

used for fiscal year 2007 are listed in the 

chart below.

To become eligible, candidate countries 

are expected to score above the median on 

half of the indicators in each of these three 

criteria areas and above the median specifi‐

cally on the Control of Corruption indicator. 

One exception to this methodology is that 

to pass the Inflation indicator, a country’s 

inflation rate needs to be under a fixed ceil‐

ing of 15 percent. A performance scorecard 

was created for each candidate country, 

which was published on MCC’s website. 

MCC staff met with representatives from 

many of these countries to discuss policy 

performance on the indicators and to high‐

light areas where reforms might increase 

future chances of qualifying for assistance.

As a general practice, we continually 

review the indicators used to ensure they 

are the best possible measures of country 

performance, consulting with experts 

across the U.S. government, the develop‐

ment community, public and private sector 

practitioners, researchers at think tanks, 

donors, and academia. From time to time, 

we recommend changes or refinements 

if better indicators or improved sources 

of data are identified. For instance, due to 

improvements in data quality and availabil‐

ity, we made several source changes to the 

fiscal year 2007 selection criteria. Rather 

than relying on multiple sources for the 

Inflation indicator, we relied exclusively on 

annual data reported in the International 

Monetary Fund’s World Economic Outlook 

database. For Public Expenditure on Health, 

Changing the Conversation 27
we substituted World Health Organization 

data for data previously collected through 

national governments. Finally, for the 

Public Expenditure on Primary Education

indicator, we established the United Na‐

tions Educational, Scientific and Cultural 

Organization (UNESCO) as the primary 

source and self-reported data from national 

governments as a secondary source. 

For the first time in fiscal year 2007, MCC 

measured each candidate country’s sustain‐

able management of natural resources using 

two new indicators: a Natural Resources 

Management Index and a Land Rights and 

Access Index. The two new indicators mea‐

sure how well candidate countries provide 

clean drinking water, expand sanitation ser‐

Ruling Justly

1. Civil Liberties

2. Political Rights

3. Voice and 

Accountability

4. Government 

Effectiveness

5. Rule of Law

6. Control of 

Corruption

Investing in People

1. Public Expenditure 

on Health

2. Public Expenditure on 

Primary Education

3. Immunization Rates

(DPT3 and Measles)

4. Girls’ Primary 

Education 

Completion

Encouraging 

Economic Freedom

1. Cost of Starting a 

Business

2. Inflation

3. Fiscal Policy

4. Trade Policy

5. Regulatory Quality

6. Days to Start 

a Business 

The 16 Indicators Used for FY 2007

vices, streamline the property registration 

process, and make land rights accessible 

and secure for poor and vulnerable popula‐

tions. They were developed over the course 

of more than a year and resulted from a 

public process led by former MCC Board 

member Christine Todd Whitman. They 

involved extensive consultations with Con‐

gress, executive agencies, nongovernmental 

organizations, think tanks, and academics.

The Natural Resources Management Index

and a Land Rights and Access Index pro‐

vided non-binding, supplemental informa‐

tion in fiscal year 2007 and were formally 

adopted by the Board in September 2007 

for use as selection indicators for fiscal year 

2008 and beyond. The Natural Resources 
Source

Created by Columbia University’s Center for International Earth Science Information Network and the Yale Center for 

Environmental Law and Policy

Components

1. Protection of Eco-Regions: assesses 

whether countries are protecting at 

least 10 percent of all their biomes 

(e.g., deserts, tropical rainforests, 

grasslands, savannas, tundra) 

2. Access to Improved Water: measures the percentage of the population with access to at least 20 liters 

of water per person per day from 

an “improved” source (household 

connections, public standpipes, 

boreholes, protected dug wells, protected springs, rainwater collection) 

within one kilometer of the user’s 

dwelling. 

3. Access to Improved Sanitation:

measures the percentage of the 

population with access to facilities 

that hygienically separate human 

excreta from human, animal, and 

insect contact

4. Child Mortality (Ages 1-4): measures the probability of a child 

dying between the ages of 1 and 4, 

which is determined largely by efforts to reduce indoor air pollution 

and expand access to potable water 

and sanitation services

Why It Matters

The Natural Resources Management 

Index measures whether governments are investing their resources 

in ways that will enable poor people, 

particularly poor women and children, 

to live healthy and productive lives. 

Eco-region protection is important 

for sustainable economic growth and 

poverty reduction because ecosystems 

provide essential clean water, fresh air, 

healthy soils, livable climates, and wild 

foods that underpin human welfare. The 

Access to Improved Water, Access to 

Improved Sanitation, and Child Mortality 

subcomponents of this index measure a 

government’s commitment to providing 

basic environmental services.

New Indicator: 

Natural Resource Management Index

Changing the Conversation 29
Source

Created by combining the International 

Fund for Agricultural Development’s 

Access to Land indicator with the International Finance Corporation’s Time and 

Cost of Property Registration indicators

Components

1. Access to Land: assesses the extent 

to which the institutional, legal, and 

market framework provides secure 

land tenure and equitable access to 

land in rural areas, including (a) the 

extent to which the law guarantees 

secure tenure for land rights of the 

poor; (b) the extent to which the 

law guarantees secure land rights 

for women and other vulnerable 

groups; (c) the extent to which land 

is titled and registered; (d) the functioning of land markets; and (e) the 

extent to which government policies contribute to the sustainable 

management of common property 

resources

2. Days to Register Property: measures how long it takes to register 

property in the capital city

3. Cost of Registering Property: measures the cost to register property 

as a percentage of the value of the 

property in the capital city

Why It Matters

Land is a crucial asset and a social 

safety net that poor people rely on to 

improve their well-being. Access to 

land often determines whether or not 

the poor can earn enough income to 

survive and invest in their own futures. 

It also addresses gender equality and 

assesses a government’s commitment 

to investing in women. Secure land 

tenure is also a critical component of 

sustainable natural resource management because those who lack clear 

ownership or use rights to their land 

are less likely to make long-term investments in land productivity and more 

likely to make short-term decisions with 

negative environmental impacts, such 

as deforestation. By measuring whether 

governments are improving their laws, 

policies and administrative practices 

to make land access more secure, MCC 

can better identify countries committed 

to investing in the entrepreneurship of 

their people and empowering them to 

more fully harness their skills and talents to improve their own livelihoods.

New Indicator: 

Land Rights and Access Index

30 Changing the Conversation
gaps, lags, or other weaknesses. The Board 

also considered whether MCA assistance 

would have an impact on poverty reduc‐

tion and economic growth in a particular 

country as well as the extent of available 

MCC funds. 

The re-selected countries from the “low 

income” category were: Armenia, Benin, 

Bolivia, Burkina Faso, Georgia, Ghana, 

Honduras, Lesotho, Madagascar, Mali, 

Mongolia, Mozambique, Nicaragua, Senegal, Sri Lanka, Tanzania, Timor-Leste,

and Vanuatu. 

The re-selected countries from the “lower 

middle income” category included: Cape 

Verde, El Salvador, and Namibia. 

These 21 countries in the “low income” and 

“lower middle income” categories had each 

been selected in at least one previous cycle, 

and the Board reselected them for fiscal 

year 2007 based on their continued policy 

performance since their prior selection. 

However, six of these countries—Benin, 

Cape Verde, Ghana, Madagascar, Senegal, 

and Sri Lanka—did not perform above the 

median in relation to their peers on at least 

half of the indicators in each of the three 

policy categories. Yet, we did not believe 

that a serious erosion of policy performance 

had occurred in any of these countries and 

they were, consequently, reselected. Each 

of their governments committed to specific 

courses of actions to address indicator 

Management Index has been placed in the 

investing in people category, and the Land 

Rights and Access Index has been placed 

in the economic freedom category. The 

gradual and transparent integration of the 

two new indicators into MCC’s selection 

framework provided candidate countries 

with an opportunity to understand how 

the new benchmarks would be used in the 

eligibility selection process. 

With the Board’s formal adoption of these 

two natural resources management indica‐

tors and the decision it took to consolidate 

into one index the two indicators we use 

from the International Finance Corpora‐

tion to assess the number of days and cost 

to start a business, the total number of 

performance indicators moving forward 

increased from 16 to 17. 

Stage 3: 

MCC’s Board Names 

Fiscal Year 2007 Eligible 

and Threshold Countries

The third and final step in the country 

selection process was the Board’s determi‐

nation of fiscal year 2007 compact eligible 

and threshold eligible countries. MCC sub‐

mitted this list in its Report to Congress on 

November 13, 2006 (Section 608(d) of the 

Act). In making its decision, the Board of 

Directors evaluated each candidate coun‐

try’s performance scorecard and exercised 

its discretion in considering additional 

information, including adjustments for data 

Changing the Conversation 31
performance weaknesses and to improve 

performance overall. 

Three additional countries were selected for 

the first time in fiscal year 2007: Moldova

and Ukraine in the “low income” category 

and Jordan in the “lower middle income” 

category. While now eligible for compact 

assistance, all three of these countries 

are also currently participating in the 

threshold program. The governments of 

Moldova, Ukraine, and Jordan are required 

to successfully implement their respective 

threshold programs—and corresponding 

reforms—even during the compact devel‐

opment process. Proceeding with a com‐

pact depends on successful performance in 

each country’s threshold program. 

As a result of the fiscal year 2007 selection 

process, Niger, Peru, and Rwanda were 

selected for the threshold program, joining 

17 countries chosen during previous MCC 

threshold program selection rounds in 

2004 through 2006. (Read “MCC’s Thresh‐

old Program” on page 33 for more details.)

These children, at a school in Niger, will benefit from Niger’s Threshold 

Program which concentrates on improving its Girls’ Primary Education 

Completion Rate indicator. Read more at www.mcc.gov/niger.
To provide further incentive for policy reform and 

to assist countries to become compact eligible, 

MCC’s legislation established a threshold program 

for countries that demonstrate a significant commitment to meeting the eligibility criteria but fall short 

on several indicators. Threshold assistance helps 

countries address specific areas of policy weakness 

identified in the MCA selection indicators. Up to ten 

percent of MCC’s appropriation may be spent on the 

threshold program.

Threshold countries

The following countries were eligible for threshold 

program assistance in fiscal year 2007: Albania, 

Burkina Faso, Guyana, Indonesia, Kenya, Kyrgyz 

Republic, Jordan, Malawi, Moldova, Niger, Paraguay, 

Peru, Philippines, Rwanda, Saõ Tomé and Principe, 

Tanzania, Uganda, Ukraine, Yemen, and Zambia. 

Of these, Niger, Peru, and Rwanda were selected 

in fiscal year 2007 to participate in the threshold 

program. 

Certain threshold countries have subsequently been 

selected as compact-eligible, and performance on 

any ongoing threshold program will be considered 

by MCC’s Board of Directors in approving a possible 

future compact. 

Countries with approved threshold programs 

As of the end of fiscal year 2007, MCC has approved 

and signed 14 threshold programs totaling about 

$316 million with Burkina Faso, Malawi, Tanzania, 

Albania, Paraguay, Zambia, Philippines, Ukraine, 

Jordan, Indonesia, Moldova, Kenya, Uganda, and 

Guyana. 

MCC’s Threshold Program

Threshold Program Development Implementation

Indicator Analysis

Once a resholdeligible government 

indicates that it is 

interested in developing 

a reshold Country 

Plan, MCC initiates the 

process by conducting a 

comprehensive 

assessment of the 

country’s performance 

on our eligibility 

criteria.  e resulting 

Indicator Analysis is 

shared with the 

government to stimulate 

an extensive dialogue 

between reshold 

country officials and 

MCC on indicator 

performance and areas 

for improvement.

Section I of the 

reshold Country 

Plan

Based on the Indicator 

Analysis, the 

reshold-eligible 

government is invited to 

submit a general 

summary of its 

proposed reshold 

Country Plan.  Section I 

broadly states which 

specific indicators will 

be addressed in a 

reshold program and 

how this will advance 

policy reform in the 

country. 

reshold Country 

Plan

Once Section I is 

reviewed and approved 

by MCC’s Investment 

Committee, the 

reshold-eligible 

government is invited to 

more fully develop its 

reshold Country Plan 

through an iterative 

process.  is involves 

consultation with civil 

society and donors, as 

well as input from MCC 

and other U.S. 

Government agencies.  

Upon finalization, the 

reshold Country Plan 

is submitted to the 

MCC Investment 

Committee again for a 

recommendation for 

consideration by the 

Board of Directors. 

Board Approval and 

Congressional 

Notification

Once approved by 

MCC’s Board of 

Directors, Congress is 

notified of the 

reshold Country Plan.

Signing

After the 15-day 

Congressional 

notification of the 

Board’s decision has 

passed, a reshold 

agreement can be 

signed.

Implementation

e reshold program 

is implemented by a U.S. 

Government agency, 

working with one or 

more implementing 

partners, which may 

include eligible local, 

U.S. and other 

international firms, 

non-governmental 

organizations and 

international 

organizations.  e 

implementing 

partner(s), together with 

the primary U.S. 

Government 

implementing agency 

and MCC, monitor and 

evaluate progress 

toward achieving 

performance 

benchmarks throughout 

the reshold program’s 

implementation.

Indicator

Analysis

Section I of the 

Threshold 

Country Plan

Threshold

Country Plan

Board Approval 

& Congressional 

Notification

Signing In-Country 

Implementation

Changing the Conversation 33
Country Ownership:

Compact Development Process

Once countries qualify and are selected for full MCC assistance because of their policy 

performance, they are invited to develop a proposal for funding—through an agreement we 

call a compact—to address their constraints to poverty reduction and economic growth. 

In keeping with MCC’s core value of country ownership, we expect countries to inform 

MCC of what they need to achieve their antipoverty strategies, rather than MCC selecting 

and designing the programs we think we should be funding. This level of expectation—and 

responsibility—demanded by country ownership has stretched existing capabilities among 

our partner countries and developed new capacities. The process is making our partner 

countries the leaders of their own development.

Eligible countries must first identify their 

main constraints to poverty reduction and 

economic growth through a timely and 

meaningful consultative process with their 

civil societies, including the private sector, 

nongovernmental organizations, private 

voluntary organizations, other donors, 

women, and the poor themselves who are 

to benefit from the programs. Eligible coun‐

tries are expected to design and submit 

their own proposals for funding addressing 

their identified constraints. We make it 

At the 2005 Gleneagles summit, President Bush and 

other G8 leaders agreed to double aid to Africa by 

2010. Later that year at the WTO meetings in Hong 

Kong, the U.S. committed to more than double 

aid-for-trade from $1.3 billion in 2005 to $2.7 billion 

by 2010, provided development partners prioritize 

trade in their development plans. MCC plays an 

important role in helping the United States work 

toward these commitments. Over 60 percent of the 

$5.5 billion MCC has approved in compacts through 

the first quarter of fiscal year 2008 benefits sub-Saharan Africa, and MCC has become the largest U.S. 

contributor to aid-for-trade, with nearly $778 million 

in obligated aid-for-trade activities in FY 2007. 

MCC is among the largest donors in each of our 

partner countries. After the initial compacts, which 

were smaller in size, MCC is now among the top 

three donors in most partner countries and has 

helped raise the overall profile of the United States 

as a donor.

MCC as a Major Donor

34 Changing the Conversation
1. Designate MCC Point of 

Contact and establish a 

Core Country Team.

2. Conduct Economic 

Constraints Analysis

3. Begin Consultative 

Process

4. Based on 2 and 3, 

identify possible 

compact components 

to propose

5. Identify Beneficiaries for 

each project/program

6. Develop preliminary 

monitoring and 

evaluation plan

7. Conduct preliminary 

feasibility studies

8. Economic analytics 

(financial and opportunity cost-benefit 

and ERR)

9. 609g funding as needed

10. Country submits 

compact proposal

1. MCC submits 

Opportunity Memo to 

begin due diligence

2. MCC conducts due 

diligence:

a. Economic impacts

b. Environmental 

and social risk

c. Alternative solutions

d. Proposal development process

3. Implementation 

Planning

a. Procurement 

process

b. Accountable entity

c. Banking/funding

d. Strengthening 

monitoring and 

evaluation plan

4. U.S. Congressional 

notification and briefing

5. Final compact 

negotiations 

(MCC and county)

6. MCC submits Investment Memo to Board 

for compact approval

7. MCC notifies U.S. 

Congress

1. Finalization of 

legal documents

2. Compact signing

3. Staffing up of 

Accountable Entity

4. Negotiation of Audit 

and Marking procedures

5. Entry into Force 

of the Compact

6. Collect baseline data for 

monitoring and 

evaluation plans

7. Initial disbursement

8. Secure fiscal agent, 

procurement agent, and 

contractors

1. Compact’s provisions in 

full-force and effect in 

the country

2. Quarterly Progress 

Reports

3. Procurement 

Performance Reports

4. Financial Reports

Proposal 

Development and 

Program Design

Due Diligence 

and Program 

Refinement

Mobilization

and Start Up

In-Country

Implementation

Close

Out

Compact Development Compact Implementation

Proposal 

Submission

Country 

Eligible

Compact

Signing

Entry

into Force

Compact

Completion

The Making of a Compact

clear that should MCC approve their pro‐

posals, we expect them to be responsible 

for the implementation. For this reason, we 

ask partner countries to think through their 

implementation mechanisms as part of the 

proposal process. 

We evaluate and conduct due diligence 

on each proposal to determine whether it 

will lead to poverty reduction and growth. 

If a country’s proposal is approved for 

funding—and approval is not automatic—

MCC and the country enter into a countryspecific compact. This mutual agreement 

outlines responsibilities for both MCC and 

the partner country and stipulates progress 

benchmarks along the way to ensure ac‐

countability and outcomes. 

Changing the Conversation 35
MCC is committed to a participatory, timely, and meaningful consultative process as key to successful compact 

proposal development and implementation. This process takes into account the local input and perspectives 

of the rural and urban poor, women, private and voluntary organizations, the business community, and other 

donors in each partner country. Consultations are tailored to each specific phase of compact evolution.

Phase

Purpose of Consultations 

at this phase include:

Consultations enable 

partner countries:

1. Proposal development 

and program design

To explain the compact development process and consultations to 

the public

To gather information on problems 

and priorities from a wide range of 

stakeholders

To identify economic obstacles with 

broad impact 

To identify solutions and program 

ideas to propose as compact components

To draft and submit a compact 

proposal

2. Due diligence and 

program refinement 

To explain publicly why the elements included in the compact 

proposal were selected

To gather local-, sector- and stakeholder-specific information needed 

to refine technical elements of the 

proposal through consultations 

with domestic and international 

technical experts, the donor community, and groups that are likely 

to benefit from or be affected by 

the implementation of a proposed 

program or project

To make technical decisions relating 

to the proposal to maximize the 

number of beneficiaries, increase 

public participation, ensure genderequal access, alleviate cost burdens 

on vulnerable groups, and fine-tune 

an impact monitoring and evaluation plan

The Consultative Process

36 Changing the Conversation
Phase

Purpose of Consultations 

at this phase include:

Consultations enable 

partner countries:

3. Mobilization and start up To promote realistic public understanding of the compact, including 

outlining and managing public 

expectations about its implementation

To establish transparent communication channels that can be 

used throughout implementation 

to continue interacting with the 

beneficiaries of the proposed 

programs or projects, civic and 

private sector groups that seek 

information—including procurement 

opportunities—during implementation, and the media

4. In country implementation To provide beneficiaries with the 

information needed to encourage 

and enable them to participate in 

compact programs

To gather information from beneficiaries and stakeholders about 

the impact and effectiveness of 

compact programs 

To provide interested stakeholders and the general public with 

information about the progress and 

impact of the compact 

To continue an ongoing exchange 

of information with the public 

throughout implementation, with 

an eye to correcting problems and 

scaling up positive outcomes

Changing the Conversation 37
Country Responsibility:

Implementation Process

Once a partner country has successfully gone through the selection process and has de‐

veloped its own feasible and approved compact, it is responsible for implementing its own 

compact programs and is accountable for maintaining policy performance and achieving 

program results. This responsibility reinforces MCC’s commitment to country ownership. 

Tangible results in the lives of the poor are an outgrowth of successful, country-led imple‐

mentation, which requires a partner country’s willingness to mobilize its own resources and 

talented professionals for implementation. Such mobilization entails 

 establishing an independent, in-country accountable entity, the organization formed by 

the country to manage and implement compact activities, 

Extensive monitoring and evaluation (M&E) 

plans are integrated into each MCC program to 

benchmark progress and measure impact. In fact, 

we work with eligible countries to develop instruments and procedures to enable them to carry out 

comprehensive and rigorous program performance 

monitoring and impact evaluation. M&E spans the 

entire life cycle of a program from concept through 

implementation and beyond, generally covering 

three main stages: 

First

We ask that countries analyze their constraints to 

growth and opportunities for investment before 

constructing a proposal. MCC conducts an economic analysis of every proposal submitted to 

identify potential economic impacts. Assessing the 

economic growth and poverty reduction rationale 

for each project also helps to identify key indicators 

of progress in implementation.

Second

A set of indicators for monitoring performance 

during implementation is developed, with annual 

targets for each. This helps eligible countries identify problems early-on and make mid-course corrections during implementation in order to ensure 

that the program is on track to achieve the ultimate 

outcomes and impact. 

Third

While good program monitoring is essential, it is 

often not sufficient to measure the long term impact 

of a program on the well-being and incomes of beneficiaries as well as on national economic growth 

and poverty reduction. Thus, MCC incorporates 

impact evaluations into compact implementation as 

well. We are also working on ways to measure and 

evaluate program impacts beyond the typical five 

year compact duration.

Taken alone these are not new ideas, but the combination and unique implementation of these three 

steps, in addition to the central role the countries 

play, achieve the intended outcomes.

Monitoring and Evaluation

38 Changing the Conversation
MCC and MCA teams have coordinated investments with USAID, other U.S. agencies, and donors 

throughout compact development and implementation. Some current compact activities build upon 

successful programs of other donors, complement 

existing donor initiatives, and are helping catalyze 

new donor investments. For example:

In Armenia, MCA-Armenia has accelerated 

the construction planning on approximately 

20 kilometers of rural roads by using detailed design studies made available by the Lincy 

Foundation. This cooperative effort will result in 

approximately $50,000 in savings to the MCAArmenia program and allow MCA-Armenia to break 

ground in late 2007.

In El Salvador, the Central American Bank 

for Economic Integration has provided a 

$55 million loan to the National Registry 

Center that is critical to the sustainability of MCC 

compact results. The loan supports El Salvador’s 

Northern Zone Development Program and will be 

used to fund the necessary strengthening of land 

rights and the modernization of the cadastre and 

property registration systems.

In Georgia, MCC’s Agribusiness Development Activity joined the USAID-funded 

activity AgVANTAGE in the publication and 

distribution of a magazine for farmers that reports 

on wholesale market prices for agricultural products and raw materials. 

In Lesotho, PEPFAR activities supported 

the Ministry of Health and Social Welfare 

in developing MCC’s first successful health 

proposal. In turn, projected MCC investments in 

health systems strengthening and infrastructure 

helped provide the impetus for PEPFAR to increase 

its in-country staff from seven in FY 2007 to nine 

in FY 2008 and enabled PEPFAR to make key FY 

2008 budgeting decisions.

In Mongolia, the Vocational Education Project builds on complementary investments 

funded by the Asian Development Bank, 

the German Agency for Technical Cooperation, the 

Japan Fund for Poverty Reduction, and the Nordic 

Development Fund. The prior work of these donors 

saved MCC time and money during the project 

design phase and will likely yield further benefits 

by allowing MCA-Mongolia to incorporate lessons 

learned into the Vocational Education Project’s 

implementation.

In Morocco, the compact’s Financial 

Services Project builds on the strategic 

priorities articulated by other donors and 

industry professionals. MCC is partnering with the 

Agence Française de Développement, Germany’s 

Kreditanstalt für Wiederaufbau, and the International Finance Corporation to invest in the Jaida 

fund, which provides debt funding to the Moroccan 

micro-credit sector.

In Mozambique, the compact’s Water 

Supply and Sanitation Project builds on 

pioneering World Bank work started over 

a decade ago. MCC’s approved investments in 

water and sanitation will benefit from $40 million in 

complementary support through the World Bank’s 

Water Services and Institutional Support Project 

and are attracting other donor investments into the 

sector as well. 

MCC increased efforts to share experiences and 

learn from others in broader donor and development fora in areas such as evaluation, procurement, 

gender, and aid effectiveness. MCC donor coordination, both in partner countries and at headquarters, has helped save time and money and leverage 

MCC investments.

Working with Other Donors and U.S. Agencies

Changing the Conversation 39
 developing systems for financial control 

and oversight, 

 finalizing the legal documentation 

requirements, and 

 concluding detailed project planning. 

Establishing the 

accountable entity

Each country’s accountable entity—not 

MCC—is responsible for the daily 

management, operation, coordination, 

implementation, as well as monitoring and 

evaluation of the compact. The accountable 

entity becomes the central point of contact 

for MCC, other donors, contractors, 

consultants, and the country’s citizens 

overall. The country decides what type 

Honduras’ MCC compact is about to change the face of Highway CA-5 

North and the lives of approximately 600 families settled near the 

road. Read more at www.mcc.gov/honduras.

of entity would best advance the goals of 

government accountability, transparency, 

efficiency, and operational capability, as 

well as the inclusion of stakeholders during 

compact implementation. The accountable 

entity develops and carries out all plans for 

the implementation of compact activities, 

including financial plans, procurement 

plans, the monitoring and evaluation plan, 

the fiscal accountability plan, work plans, as 

well as any audit plan. 

Mobilization of fiscal 

and procurement agents

Along with establishing an accountable 

entity, each MCC partner country also 

selects fiscal and procurement agents. 
These agents are responsible for establish‐

ing the financial and reporting systems, 

developing standard bidding documents, 

and beginning work on any procurement 

activities required prior to the compact’s 

entry into force. Finalizing legal 

documentation

MCC’s legal team and the country’s legal 

counsel cooperate in finalizing all legal 

documentation to provide for the compact’s 

entry into force. These documents give 

full legal effect to the compact, describe in 

detail how the accountable entity will be 

structured and managed, and are required 

to lay the foundations for how procure‐

ments and finances are to be managed. 

Detailed project planning

With assistance from MCC staff, the ac‐

countable entities create work plans to 

guide compact activities. Along with such 

plans, the accountable entities develop 

feasibility studies, environmental impact 

assessments, and strategic environmental 

assessments. Procurement plans and dis‐

bursement requests are also devised to map 

out the steps and timelines required for 

procurement actions.

To ensure transparency and accountability, 

our assistance is disbursed according to 

such timelines only as performance bench‐

marks are achieved.

The girl in this photo lives in the village of Gomo Coura, Mali, a region where MCC is funding 

a road project to bring, among other things, more economic growth to the region. The 

village will directly benefit from the project. Photo by MCC staff member Marc Tkach.

Why We Do What We Do

43
Changing the Conversation 

About Development

While delivering country-specific results through compacts and threshold programs, 

MCC’s approach also offers positive incentives for creating the very conditions that make 

development sustainable and transformative. This, too, is at the core of our early successes 

and demonstrates how we are changing the conversation about how development takes 

place.

Changing lives 

through policy reforms

MCC motivates reforms. By stressing 

sound political, economic, and social 

policies, MCC motivates the hard work 

of policy changes in countries that want 

to either maintain their eligibility with us 

or qualify for it. As a result, these govern‐

ments are making improvements in gover‐

nance, increasing investments in health and 

education, and creating pro-business condi‐

tions. Even before a dollar of our assistance 

is invested, countries begin investing in 

their own development to qualify for MCC 

funding, a phenomenon we call the MCC 

incentive effect. 

 According to the World Bank’s Doing 

Business project, 24 countries specifi‐

cally cited MCC as the primary motiva‐

tion for their efforts to improve their 

business climate. Interministerial com‐

mittees and presidential commissions 

have been set up in at least a dozen 

countries to devise reform strategies 

that address our selection criteria. 

 Many countries—though not yet eli‐

gible for MCC assistance—are under‐

taking the hard work of policy reform 

and improving their practices and pro‐

cedures with the expectation of qualify‐

ing for our assistance. For instance, 

motivated by its interest to qualify for 

MCC funding, Guatemala has taken 

significant steps to improve its policy 

performance on MCC’s indicators. 

Tough anticorruption reform measures 

include prosecuting high-ranking offi‐

cials on charges of corruption, creating 

a financial crimes unit, hiring a foreign 

accounting firm to audit congressional 

spending, initiating online disclosure 

of government procurements, and 

44 Changing the Conversation
implementing a performance-based 

budgeting process. 

Once countries become eligible, they must 

continue an aggressive reform agenda to 

keep pace with an increasingly demand‐

ing standard for eligibility. Competition 

is getting tougher, and countries must 

continue maintaining and improving policy 

performance. 

 Madagascar reduced the minimum 

capital requirement for new busi‐

nesses by 80 percent in 2006 and saw 

a 26 percent increase in new business 

registrations. Similarly, El Salvador 

reduced the number of days it takes to 

start a business from 115 to 26 days. To 

maintain its eligibility, El Salvador also 

passed a new ethics/anticorruption law 

and other reforms, resulting in its in‐

clusion in the World Bank’s 2007 Doing 

Business report as a top 10 performer 

worldwide.

 Madagascar, Mali, and Benin are un‐

dertaking land reform measures, which 

are necessary to promote secure land 

rights, access to credit, investments, 

and increased productivity. MCC is the 

leading donor for land reform in Mada‐

gascar, where only seven percent of 

land is officially titled, and the backlog 

of registration requests could take over 

100 years to process without these key 

reforms. 

 Nicaragua and Honduras implemented 

reforms to secure unprecedented levels 

of funding for road maintenance. These 

funds improve the sustainability of 

the road investments MCC and others 

are making. In a country where road 

maintenance funds were insufficient to 

maintain the road network in sustain‐

able ways, Nicaragua, specifically, col‐

lected $10 million for road maintenance 

in the first year. In Honduras, not only 

has funding for road maintenance 

dramatically increased, but also the re‐

porting requirements for the country’s 

road maintenance plan have improved 

transparency in planning and execu‐

tion. 

Changing lives 

by rejecting corruption

MCC demands transparency. MCC is the 

only donor that currently ties eligibility for 

assistance to performance on a transparent 

and public Control of Corruption indicator. 

This creates a powerful incentive for coun‐

tries to adopt tough anticorruption laws, 

strengthen oversight institutions, open up 

the public policymaking process to greater 

scrutiny, and step up corruption-related 

investigations and prosecutions. 

 To promote transparency and good 

governance, each compact adheres to 

strict fiscal and procurement standards. 

This not only protects MCC invest‐

Changing the Conversation 45
of low income candidate countries in 

2004 to the 78th in 2005. The percent‐

age of firms in Georgia reporting that 

bribes are necessary to get things done 

plummeted from 37 to seven percent. 

Georgia has arrested scores of cor‐

rupt public officials, made legislative 

changes that facilitate the prosecution 

of corruption cases, and increased the 

salaries of 10,000 public servants to 

counter the lure of petty corruption. In 

September 2007, Transparency Inter‐

national released its 2007 Corruption 

Perception Index, and other than the 

Baltic countries, Georgia outperformed 

all other countries in the former Soviet 

Union. The World Bank’s 2006 and 

2007 Doing Business reports identified 

Georgia as one of the world’s most ag‐

gressive reformers. 

When MCC was created as a new model 

for foreign aid, we also envisioned a new 

way for evaluating our progress, to get 

at the very core of what makes development sustainable. Four key questions 

guide us in our self-evaluation: 

 First, are MCC candidate and partner 

countries elevating their focus on 

maintaining and improving policy 

performance through necessary 

reforms?

 Second, are countries consulting 

with their citizens and other stakeholders to present well-designed 

programs that stimulate growth and 

transform the lives of the poor? 

 Third, are partner countries implementing projects in an effective and 

transparent way? 

 Fourth, did the projects deliver the 

desired results during implementation and upon completion?

ments in partner countries from waste 

and fraud, but also helps countries 

learn the importance of adopting and 

applying sound budget, fiscal, and 

procurement management.

 Benin produced an action plan to 

ensure compliance with the MCC 

corruption indicator. On its own, it 

initiated sweeping reform of several 

government offices and ministries to 

reduce corruption and establish a “no 

tolerance for corruption” campaign. 

Several high-level government person‐

nel have been dismissed or indicted on 

charges of embezzlement or misuse of 

public funds.

 Georgia adopted dramatic anticorrup‐

tion reforms leading to a significant 

improvement in its control of corrup‐

tion indicator from the 36th percentile 

Evaluating Progress: The Questions to Ask

46 Changing the Conversation
The MCC Effect has been externally validated by 

NGOs, third-party indicator institutions, other donors, and heads of state of partner countries.

The World Bank’s 2007 Celebrating Reform report 

hails MCC as a catalyst for reform: “When the 

United States’ Millennium Challenge Account made 

eligibility for funding dependent on the ease of 

business startup, countries from Burkina Faso to El 

Salvador to Georgia to Malawi started reforms.” 

The World Bank Institute reports that numerous 

MCC candidate, threshold, and compact countries 

have contacted them for advice on policy reforms 

needed to improve performance on their governance indicators. Over the last year and a half, the 

World Bank Institute met with Dominican Republic, 

El Salvador, Fiji, Guatemala, Rwanda, Yemen, Ecuador, Honduras, Kyrgyz Republic, Nigeria, Paraguay, 

Tanzania, Uganda, Cameroon, Malawi, the Philippines, and Indonesia, among many other countries.

Steve Radelet, of the Center for Global Development, has identified “a strong MCC Effect in which 

the requirement to pass specified quantitative 

indicators has created the incentives for potential 

recipients to more carefully track the data and introduce the policy changes needed to meet the requirements. There are examples from all around the 

world of the incentive effect of the MCA selection 

process.” Radelet refers to the MCC Effect as “the 

major success story of the MCC.” The Millennium 

Challenge Account in Africa: Testimony before the 

House Committee on Foreign Affairs Subcommittee 

on Africa and Global Health, 

June 28, 2007

Michael Gerson, Senior Fellow at the Council on 

Foreign Relations, points out that “since the global 

competition for [MCC] compacts is vigorous, nations are willing to make major changes to receive 

them.... When I worked at the White House, the 

finance minister of an African country seeking MCC 

funds once said to me: ‘I keep telling others in my 

government that we’ve got to do better fighting 

corruption. We’ve got to compete.’” Washington 

Post op-ed, August 1, 2007

The MCC Effect

 The majority of MCC’s threshold pro‐

grams are designed to fight corruption.

Changing lives through 

capacity building

MCC helps countries build institutional 

capacity. By insisting that partner coun‐

tries design and implement their own 

development plans, we are strengthening 

institutions and jumpstarting critical think‐

ing about the policies necessary to ensure 

sustainability. Country ownership encour‐

ages civil participation and accountability 

and helps sustain high environmental and 

social impact standards. It reinforces the 

good policies we demand in the first place. 

And, good practices are spreading beyond 

just MCC-funded programs in partner 

countries.

 In Ghana, one of the obstacles to suc‐

cessful development has been the lack 

of adequately trained procurement 

specialists. MCC is funding a procurement capacity-building initiative within 

the Ghanaian government designed to 

strengthen the effectiveness of various 

Changing the Conversation 47
procurement entities to help Ghana 

help itself overcome this barrier to its 

own development. Ghana also plans to 

use the consultative and rigorous proj‐

ect evaluation process MCC requires 

for compact development to evaluate 

non-MCC funded activities within the 

country. Moreover, to share experi‐

ences and lessons learned in developing 

and implementing compacts, Ghana 

hosted a conference for representa‐

tives of other African countries with 

compacts.

 In Georgia, extensive collaborative 

efforts are strengthening the Georgia 

Department of Statistics to ensure that 

Millennium Challenge Georgia—which 

is responsible for compact implementa‐

tion, monitoring, and evaluation—has 

the best possible data to evaluate its 

program in particular and to generate 

stronger impact evaluation and data 

gathering capacity within the Georgian 

government overall. Asking countries 

to develop their own compacts—in‐

cluding the monitoring and evaluation 

plans for them—enhances their abilities 

and skills to evaluate other government 

programs. MCC partner countries are 

responsible for establishing baselines 

and demonstrating and measuring re‐

sults to focus on outcomes and impacts 

rather than project inputs and outputs. 

 In Nicaragua, extensive public partici‐

pation in designing and implementing 

the compact program has generated 

unwavering support from local officials, 

civil society groups, and program 

Andrés Velásquez of Puentecito, a village in Honduras, lives with his 

wife and five children and grows crops on a small farm. Read how 

MCC’s Honduras compact is helping Andrés at www.mcc.gov/success.
beneficiaries. This support serves to 

buoy the program during elections 

and political transitions, allowing it to 

progress uninterrupted.

 Mali conducted an MCA Press Corps

training workshop. Journalists from 

various media were briefed on both 

MCC and the components of the Mali’s 

compact in a focus-group format. This 

has led to more in-depth investigative 

reporting of the program, increased 

reporting volume, widening coverage 

to radio and multiple language formats, 

and has inspired improved reporting 

on the MCA program and its synergies 

with other donor organizations.

 In Honduras, representatives from 200 

municipalities attended workshops to 

identify roads to be improved under the 

Farm to Market Roads activity, result‐

ing in applications for improvements to 

6,645 kilometers of road, about 10 times 

what can be funded with the $21.5 mil‐

lion budget for this activity. Civil engi‐

neers are now using publicly available 

criteria to conduct field assessments of 

the applications to make selections. The 

wide participation of municipalities and 

the use of transparent and objective 

criteria to select the roads are making 

this a model process in Honduras.

 Georgia’s program raised the bar on 

environmental protection as well as 

health and safety by improving stan‐

dards applied to gas pipeline repairs. 

Georgian corporations have embarked 

on a program to raise project construc‐

tion and supervision to international 

environmental, safety, and health stan‐

dards for the first time.

 Farmers in the MCC-funded Farmer 

Training and Development Activity

in Honduras have sharply reduced 

their pesticide and fertilizer use and 

improved their handling of these 

products, directly improving their 

health and that of other users, while 

minimizing damage to the watershed 

and improving crop yields. In addi‐

tion, the MCA-Honduras program is 

implementing a resettlement process 

that is fairer and more transparent than 

anything previously done in Honduras. 

Changing lives by 

giving voice to women

MCC engages women in development. In 

keeping with our gender policy, we demand 

that women, alongside men, be involved 

throughout every stage of our assistance, 

including country selection, compact 

development and implementation, and 

program monitoring and evaluation. The 

participation of women in the process and 

helping them realize their political and eco‐

nomic rights are central to any discussion 

of development.

Changing the Conversation 49
 In Benin, over 100 local civil society 

organizations elected representatives 

to the working group to design that 

country’s compact; and representatives 

of Benin’s leading NGO promoting 

women’s rights played an instrumental 

role in expressing the views of rural 

women and addressing the interrelated 

issues of land ownership and agricul‐

tural production. 

 Lesotho’s parliament enacted a law to 

confer equal legal status on married 

women so as to engage them fully in 

that country’s economic life. MCC 

welcomed this groundbreaking policy 

reform as critical to the success of the 

Lesotho compact. MCC is partially 

funding the government of Lesotho’s 

commitment to identifying existing 

laws that conflict with the Legal Capacity of Married Person’s Bill and intro‐

ducing legislation to harmonize certain 

laws prior to the compact’s initial 

disbursement after entry into force.

 In Ghana, the Agriculture Productivity 

Project and the Land Regularization 

Activity address the constraints to 

women’s participation along the pro‐

ductive value chain for rural agriculture 

and in land access, ownership, and 

management. For both activities, MiDA 

(MCA-Ghana) has taken the lead in 

developing gender assessments to 

ensure that female beneficiaries are able 

to both participate and benefit. 

 Both MCA-Mozambique and MCATanzania, through their respective 

gender officers, are developing gender 

integration strategies to ensure that 

both sexes are represented in the plan‐

ning, implementation, and evaluation 

of compact activities.

Changing lives 

through 

entrepreneurship 

and trade

MCC paves the way for greater private enterprise and trade. Fundamental to MCC 

programs is the belief that aid alone can 

not end poverty and that MCC compacts 

should lay the foundation for self-sustaining 

economic growth. The most significant 

development benefit we can bring to a 

country is to serve as a catalyst for private 

sector-led investment over the long-term. 

The private sector brings the jobs, technol‐

ogy, and training necessary to encourage 

further policy reform and economic growth 

to end, ultimately, the trap of poverty. 

MCC can play a unique role within the U.S. 

government to foster and leverage mainline 

international investment and help scale 

up viable private sector activity. We do 

this by coordinating efforts with other U. 

S. government agencies and international 

programs to maximize private sector incen‐

tives for investment in MCC economies. 

We are integrating private sector activi‐

50 Changing the Conversation
ties into MCC compacts and working to 

stimulate follow-on investments in MCC 

countries. We also address critical con‐

straints to private sector development, such 

as inadequate infrastructure, by investing in 

partner countries’ infrastructure priorities. 

As the Finance Minister of Indonesia as‐

serts, the real draw of MCC’s eligibility 

and selection process is not necessarily 

the development assistance but the “good 

housekeeping seal of approval,” which sends 

a powerful signal to private investors that 

conditions are right in MCC countries for 

investing and doing business.

 Grupo Beta, a textile manufacturing 

firm, made a $6 million investment in 

Nicaragua, attracted by the favorable 

business conditions MCC helped cre‐

ate. The investment is projected to 

create 1,200 new jobs. 

 Honduras, Nicaragua, and El Salvador, 

which are not only partners with MCC 

but also partners in trade through 

CAFTA-DR, are accelerating the 

pace of domestic market-led growth, 

while building greater trading capac‐

ity to maximize regional free trade 

arrangements already in place. MCCsponsored workshops held in Honduras 

and Miami with Nicaraguan farmers 

have stimulated over $3 million in new 

private sector commitments in agricul‐

tural exports. 

 In connection with its MCC compact, 

the Port of Cotonou in Benin has 

Repairing Georgia’s North-South Gas Pipeline became a priority as 

the old, exposed pipeline was subject to extreme damage from severe 

weather. Read more about the pipeline at www.mcc.gov/success.

Changing the Conversation 51
enacted dramatic changes that have 

allowed it to comply with the International Ship and Port Security code 

nearly two years earlier than expected. 

$169 million is being used to improve 

the port’s operations and infrastructure, 

resulting in fewer delays, lower opera‐

tional costs, and a significant increase 

in the volume of merchandise traffic. 

 MCA-Honduras is training farmers in 

small business skills and production 

practices needed to compete under 

CAFTA-DR. For example, MCA is pro‐

viding training on EurepGAP standards 

for good agricultural practice. EurepGAP training involves actions not only 

to ensure good agricultural product 

quality during production, processing, 

and transportation, but also to guaran‐

tee food safety as well as the protection 

of the environment and field workers. 

EurepGAP will allow Honduran farmers 

to meet global export standards.

 Ghana has identified farmer and 

enterprise training to accelerate the 

development of commercial skills and 

post-harvest handling facilities for 

fruits and vegetables as a priority for 

trade, which is expected to significantly 

expand Ghana’s pineapple trade.

Women process pineapples for export at a nucleus farm 

in Ghana. Learn more about the programs in MCC’s 

Ghana compact at www.mcc.gov/ghana.

52 Changing the Conversation
Changing Lives: 

Threshold Programs

At of the end of FY 2007, highlights of threshold program progress include:

In Burkina Faso, construction 

of 132 new school complexes has 

been completed. A recent analysis of MCCfunded schools reported an attendance rate 

of over 95 percent and a drop-out rate of 

less than two percent. 

In Malawi, 45 journalists were 

trained on investigative reporting 

techniques. As a result, a journalist from 

Capital Radio broke a story on officials 

diverting fertilizer subsidies, another 

exposed waste in the salaries of the Priva‐

tization Commission, and others reported 

dwindling medicines and school closures 

because of corruption and mismanagement. 

All 13 standing committees of Malawi’s 

National Assembly convened for the first 

time in its history to exert the effective 

parliamentary oversight that is critical to 

executive branch accountability and the 

sustainability of anticorruption efforts.

In Zambia, the business registra‐

tion process at the Patents and 

Companies Registration Office has been 

reduced from 10 days to one, effectively 

reducing the number of days required to 

start a business from 35 to less than 10. The 

projected benefit from the savings in busi‐

ness personnel time and earlier initiation of 

business activity is estimated at more than 

$12 million per year.

In Jordan, legislation to reform 

municipal governments passed, al‐

lowing for the election of municipal mayors 

and council members, the reduction of the 

voter eligibility age from 19 to 18, and the 

establishment of a 20 percent quota for 

women in municipal councils. MCC sup‐

port is now assisting nine municipalities—

including one with a female mayor—to 

respond better to the priority needs of their 

citizenry through targeted trainings, grants, 

and public discussion programs. 

In Tanzania, MCC support for 

training in investigative journalism 

has resulted in Tanzanian newspapers 

publishing over 800 stories exposing cor‐

ruption. 

Changing the Conversation 53
Country Threshold Program Description

Albania

The $13.8 million program focuses on reducing corruption by reforming tax administration, 

public procurement and business administration. The program anticipates reducing the bribes 

and bureaucracy needed to start a business while increasing the national tax base. 

Burkina Faso

Burkina Faso’s program focuses on creating a plan to increase girls’ primary school enrollment and 

attendance rates in the country’s 10 lowest performing provinces. It provides for the construction 

of 132 schools and other interventions to improve the access and quality of education for girls 

within these 10 provinces. 

Guyana

MCC’s two-year, $6.7 million Threshold Program with Guyana seeks to improve Guyana’s 

performance on MCC’s Fiscal Policy indicator. Specifically, the grant will help the Government 

of Guyana implement its new value-added tax (VAT) system and develop ways to assist and 

educate taxpayers, while at the same time helping the government better plan and control 

spending. Additionally, the grant will help reduce the number of days and costs associated with 

starting a business by modernizing and streamlining the business registration process.

Indonesia

The $55 million program seeks to immunize at least 80 percent of children under the age of one 

for diphtheria, tetanus and pertussis and 90 percent of all children for measles. The program 

also has a component aimed at curbing public corruption by reforming the judiciary. 

Jordan

The $25 million program supports Jordan’s efforts to broaden public participation in the 

political and electoral process, increasing government transparency and accountability, and 

enhancing the efficiency and effectiveness of customs administration.

Kenya

Kenya’s program focuses on reducing public sector corruption by overhauling the public procurement 

system, focusing on health care procurements in the supply chain. A new public financial management 

reform strategy reduces the opportunity for corruption and includes a public procurement project. 

Malawi

Malawi’s program focuses on improving the legislative and judicial branches, providing support 

for lead anti-corruption agencies, strengthening independent media coverage and expanding and 

intensifying the work of civil society organizations. 

Moldova

The $24.7 million Moldovan Threshold Program seeks to reduce corruption in the public sector 

through reforms to the judicial, health, tax, and customs systems. The reforms will complement 

Moldova’s national strategy aimed at reducing corruption.

Threshold Program Descriptions

54 Changing the Conversation
Country Threshold Program Description

Paraguay

Paraguay signed a $34.65 million Millennium Challenge Corporation Threshold program to 

initiate a multi-sectoral attack on corruption and create conditions conducive to economic 

growth and business development in Paraguay. By helping Paraguay improve its tax collection 

rates, prevent smuggling, and decrease the time required to start a business, MCC is helping to 

improve the business and investment environment in the country

Philippines

The $22.1 million program aims at improving revenue administration and anti-corruption 

efforts. The program will reduce corruption by strengthening the Office of the Ombudsman 

and strengthen enforcement within three departments in the Department of Finance. 

Tanzania

Tanzania’s program focuses on controlling public corruption. The program includes projects to 

build the non-governmental sector’s monitoring capacity, strengthens the rule of law for good 

governance, establishes a Financial Intelligence Unit and curbs corruption in public procurement.

Uganda

Uganda’s program focuses on fighting corruption by improving public procurement and financial 

management practices, increasing the effectiveness of investigations and prosecutions and 

strengthening the role of civil society.

Ukraine

The $48.1 million program focuses on reducing corruption by strengthening civil society’s 

ability to monitor and expose it. The program also enables the government to increase the 

monitoring and enforcement of ethical and administrative standards.

Zambia

The $24.3 million Zambia Threshold Program focuses on reducing corruption and improving 

government effectiveness. The Program is funding three components aimed at increasing 

control of corruption within the public sector, improving public service delivery to the private 

sector and strengthening border management of trade. 

Changing the Conversation 55
Changing Lives: Compacts

Initial performance results reported by countries in compact implementation demonstrate 

that MCC is making substantial progress. As of the end of fiscal year 2007, highlights of 

progress include:

improve technologies and access markets. 

These agribusinesses will employ about 

400 people and do business with 22,000 

customers and suppliers. 

In Nicaragua, thousands of farm‐

ers and rural entrepreneurs have 

benefited from technical assistance and 

business development services.

While infrastructure projects in compact 

countries typically take longer to launch as 

quarterly and other performance reports 

suggest, supplemental indicators indicate 

that MCC is reaching key process mile‐

stones on these projects so that longer-term 

objectives can be achieved. In certain 

cases, targets have been reached ahead 

of schedule. One of the targets for road 

rehabilitation in Cape Verde was exceeded, 

and a target for the value of regional 

infrastructure projects in Georgia was sur‐

passed. Georgia also completed 100 percent 

of its emergency pipeline repairs. The rise 

In Madagascar, a total of more 

than 876,000 documents have been 

inventoried to enable better land use. Six 

Agricultural Business Centers are now 

operational in five zones, with over 3,950 

visitors to date and 45 field agents as of June 

2007 providing services to small and me‐

dium enterprises. The agricultural project 

is providing technical assistance to over 

7,500 farmers in five zones.

In Armenia, 2,453 participants 

have been trained in on-farm water 

management to ultimately increase agricul‐

tural production, of which 571—almost 23 

percent—are female farmers.

In Georgia, the first round of 

emergency repairs to the NorthSouth Gas Pipeline in Georgia have been 

completed, improving the long term 

security and diversification of the country’s 

natural gas supply and providing Georgian 

citizens and businesses with electricity and 

heating as temperatures drop. In addition, 

grants totaling $1.1 million to 34 new or 

expanding agribusinesses are helping them 

56 Changing the Conversation
in procurements to mobilize key activities indicates that progress on infrastructure and 

other projects will intensify in fiscal year 2008. 

Overall, results reported on various process milestones, initial performance indicators, and 

annual targets demonstrate that partner countries are achieving substantive progress. 

Country Compact Description

Armenia

The five-year $235 million MCC Compact with Armenia is focused on increasing economic 

performance in the agricultural sector. The Compact consists of a five-year program of 

strategic investments in rural roads and irrigated agriculture. Specifically the investments 

will upgrade hundreds of kilometers of road, providing communities and rural residents with 

reduced transport costs and better access to jobs, markets and social services; and increase 

the productivity of 250,000 farmer households through improved water supply, higher yields, 

higher-value crops and a more competitive agricultural sector.

Benin

The five-year, $307 million compact aims to increase access to land through more secure and 

useful land tenure, expand access to financial services through grants given to enterprises, 

provide access to justice by bringing courts closer to rural populations and improve access to 

markets through the Port of Cotonou.

Cape Verde

The five-year, $110 million compact seeks to improve the country’s investment climate and 

reform the financial sector, improve infrastructure to support increased economic activity and 

provide access to markets, employment, and social services, increase agricultural productivity 

and raise the income of the rural.

El Salvador

In El Salvador, the five-year, $461 million Compact will improve the lives of Salvadorans through 

strategic investments in education, public services, enterprise development, and transportation 

infrastructure. The Compact is highlighted by a Human Development project designed to 

increase employment opportunities for the region’s poorest inhabitants and provide greater 

access to safe water and sanitation services. The Productive Development Project will assist 

the development of profitable and sustainable business ventures with a primary focus on poor 

farmers. The Transportation Project will fund road infrastructure improvements to increase 

access to markets, lower transportation costs, and provide increased economic opportunities.

Compact Descriptions

Changing the Conversation 57
Country Compact Description

Georgia

The five-year $295 million MCC Compact with Georgia will help reduce poverty by renovating 

key regional infrastructure and improving the development of regional enterprises. The 

Compact’s infrastructure projects will improve rural transportation, providing agricultural 

suppliers the opportunity to connect more easily with consumers and increase regional trade. 

Furthermore, by providing funding and technical assistance to targeted regional enterprises, 

the Compact will enhance productivity in farms, agribusinesses and other enterprises that will 

increase jobs and rural income.

Ghana

The five-year, $547 million compact seeks to raise farmer incomes through private sector-led, 

agribusiness development and to increase the production and productivity of high-value cash and 

food staple crops enhancing the competitiveness of Ghana’s agricultural products in regional and 

global markets.

Honduras

The five-year Compact with Honduras aims to reduce poverty by increasing agricultural pro‐

ductivity and decreasing transportation costs. MCC’s $215 million investment will develop the 

productivity and business skills of farmers who operate small and medium size farms and their 

employees and reduce transportation costs between targeted production centers and national, 

regional and global markets.

The Rural Development Project will result in higher incomes for the farmers, their employees, 

and their communities. The Transportation Project will enable farmers and other businesses to 

get their products to market more efficiently, rural Hondurans to get to work and access social 

services, and children to get to school.

Lesotho

The five-year, $363 million compact seeks to improve health outcomes and productivity through 

strengthening the health system, removing barriers to foreign and local private sector investment 

and providing water supplies for industrial and domestic use.

Madagascar

The four-year, $110 million compact seeks to increase land security, expand competition in the 

financial sector and increase investment in farms and other rural businesses.

Mali

The five-year, $461 million compact seeks to increase production and productivity of agriculture 

and small and medium-sized enterprises and expand Mali’s access to markets and trade through 

key infrastructure investments that capitalize on the Bamako-Sénou Airport and the Niger River 

for irrigated agriculture

Morocco

The five-year, $697 million compact seeks to increase productivity in high potential sectors 

including investments in fruit tree productivity, small-scale fisheries and artisan crafts. Small 

business creation and growth will be supported also by investments in financial services and 

training in business management.

58 Changing the Conversation
Country Compact Description

Mozambique

The five-year, $507 million Compact seeks to improve rural and urban water and sanitation, 

roads, improved land administration, agriculture and cross-cutting policy reforms and capacity 

building initiatives.

Nicaragua

The five-year Compact will provide $175 million to reduce transportation costs, improve access 

to markets, strengthen property rights, increase investment, and raise incomes for farms and 

rural businesses in the Leon and Chinandega region.

The Compact will improve property records of land parcels and create a modern system of 

parcel maps and registered land titles, making property rights more secure and lowering the 

cost of doing business in the region. Transportation projects will upgrade a stretch of the Pacific 

Corridor highway to better link producers in the northwest to commercial centers in Managua, 

Honduras, and El Salvador. Upgrades to rural secondary roads will improve community access 

to markets and social services.

Vanuatu

The five-year $65 million MCC Compact with Vanuatu addresses the country’s poor 

transportation infrastructure. Consisting of various infrastructure projects, including roads, 

wharfs, an airstrip and warehouses, the program seeks to benefit poor, rural agricultural 

producers and providers of tourist related goods and services by reducing transportation costs 

and improving the reliability of access to transportation services.

Changing the Conversation 59
60 Changing the Conversation

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Reducing pove
er in Lesotho. Improves potable water access in El Salva

Create agricultural business centers in Madagascar. Assis

crease drip irrigation usage in Cape Verde. Expand finan

ncial services in Benin. Strengthen public sector procure

ement capacity in Ghana. Construct a new airport passen

nger terminal in Mali. Farmer and enterprise training for

commercial agriculture in Ghana. Construct small and me

dium irrigation infrastructure in Morocco. Rehabilitate w

water treatment plants in Tanzania. Install animal shelters

n Mongolia. Provide technical assistance to farmers in E

Salvador. Modernize the commercial legal system in Les

Promote legal and regulatory reform in Madagascar. Rep

Decentralize land registration in Benin. Improve access to

o financial and market information in Mali. Designs, const

ructs, and rehabilitates secondary roads in El Salvador. 

Provide support and training to promote gender equality 

in Lesotho. Provides technical assistance to fish vendors 

n Morocco. Increase rail traffic in Mongolia. Lay a subma

ine electric transmission cable in Tanzania. Construct wa

ater reservoirs in Cape Verde. Rehabilitate a primary roa

n Nicaragua. Improve rural land tenure security in Mada

Construct a weight control system in Mongolia. Expand t

 water treatment plant in Honduras. Strengthens superv

ision of microfinance institutions in Benin. Expand irriga

ion infrastructure in Mali. Increase electricity coverage i

n El Salvador. Provide technical skills to youth and unem

mployed persons in Mongolia. Help financial institutions 

oans in Benin. Expand total area under irrigation produc

rty through growth. Millennium Challenge Corporation. 
Reducing Poverty Through Growth

2008-08-001-013-01-BAB