1

Investing In Results

annual report 2009
2 2009 Annual Report

“To the people of poor nations, 

we pledge to work alongside you 

to make your farms flourish 

and let clean waters flow; 

to nourish starved bodies 

and feed hungry minds.”

President Barack H. Obama January 20, 2009
Investing In Results

Annual Report 2009

Millennium Challenge Corporation

United States of America

October 1, 2008 to September 30, 2009
2 2009 Annual Report

“The Millennium Challenge 

Corporation is an essential 

partner as we work to 

combat global poverty...”

President Barack H. Obama November 6, 2009
Investing in Results 3

The Millennium Challenge Corporation is an innovative U.S. Government approach to achieving President Obama’s vision for fighting global poverty. MCC 

makes prudent choices about where to deliver development assistance by partnering with poor countries already committed to good governance, economic freedom, 

and the empowerment of their citizens. MCC expects partner countries to lead 

their development through homegrown ideas and local implementation, creating 

their own sustainable solutions. MCC-funded projects advance quantifiable results 

that improve the lives of the poor in practical and meaningful ways. Our transparent, country-driven, results-based approach to fighting global poverty is expected 

to raise incomes by over $8 billion over the life of our current investments, benefitting more than 45 million people. This generates opportunities for the poor and 

contributes to worldwide prosperity, which is critical to America’s own economic 

recovery. For MCC, fighting global poverty means investing in results for both the 

world’s poor and American taxpayers.

4. . . . . . . . Message From Secretary of State Hillary Rodham Clinton, Chair of the Board of Directors

5. . . . . . . . Message From Daniel W. Yohannes, Chief Executive Officer 

6. . . . . . . . Forward-Thinking

20. . . . . . . . Partnerships That Deliver

25. . . . . . . . Tangible Results 

61. . . . . . . . Financial Statements

Overview & Table of Contents
4 2009 Annual Report

The Millennium Challenge Corporation (MCC)’s approach 

to development assistance is one of the U.S. Government’s 

most innovative and forward-thinking vehicles for leveraging resources in this fight against global poverty. MCC’s 

progress is measured in more than indicators such as the 

number of schools opened, children vaccinated, roads 

built, farmers trained, and land titles issued. It is also measured by how MCC is investing in results. Additionally, we 

have made anticorruption a priority not only for qualifying 

for MCC’s assistance (the “hard hurdle”), and subsequent 

program implementation, but also a platform for encouraging partners towards more responsible governance and 

enhanced accountability. MCC proves that a model for development can, in fact, work effectively when partnerships 

are predicated on sound policy reforms, where countries 

are responsible for their own development, and where 

tangible results are measured by indicators of success. 

MCC offers valuable lessons learned to inform the future of 

foreign assistance.

MCC’s results-driven development model will continue 

creating opportunities for global growth and prosperity 

with the ongoing support of Congress and the development 

community, non-governmental organizations, the private 

sector, and key stakeholders, including the American people. Advancing MCC’s work is one way all of us can make a 

sustainable difference in the lives of the world’s poor.

The Obama Administration is also working toward increasing U.S. assistance for long-term agricultural productivity 

in order to strengthen global food security and reduce 

hunger and poverty. In addition, we are calling for a new, 

integrated approach to assistance for global health in order 

to bolster health systems and to provide investments for 

child and maternal health, family planning, and ways to 

save lives from HIV/AIDS, neglected tropical diseases, 

malaria, and tuberculosis.

Initiatives like these confirm a new chapter in American 

global engagement. It is “smart power” at its best, building 

partnerships not just through our defense and diplomacy 

capabilities but also through our development abilities to 

help the poor strengthen their capacity to sustain a higher 

standard of living for themselves and their families.

Message From Secretary of State Hillary Rodham Clinton, 

MCC Chair of the Board of Directors

Hillary Rodham Clinton, Chair
Investing in Results 5

Results matter, and in the fight against global poverty, 

results are life-changing and life-saving. That is why the 

Millennium Challenge Corporation is committed to investing in programs that achieve sustainable results to improve 

the lives of the poor worldwide. To do this, we are thinking 

differently about the fundamental principles that make the 

delivery of development assistance effective. We are forging strong partnerships with others who share our goals to 

maximize efforts across key sectors. We are breaking new 

ground by measuring and reporting results in ways that are 

transparent and open to public scrutiny and feedback. We 

are proud to be part of the ongoing discussion about the 

future of development assistance. 

The 2009 Annual Report chronicles what has already been 

achieved, as partner countries worldwide continue implementing over $7 billion in Millennium Challenge grants 

to fight poverty and stimulate economic growth. With 

gender-inclusive investments in agricultural productivity, education, health, infrastructure, and land security, for 

example, MCC is a smart and effective investor of U.S. resources in the fight against global poverty. We are delivering the tangible opportunities that give poor communities 

a reason to hope. We are showing American taxpayers that 

their development dollars are being wisely spent for the 

benefit of the world’s poor and to forge a more prosperous 

and secure world that benefits us all.

We still have much more to do. In my time as MCC’s Chief 

Executive Officer, I am committed to advancing MCC’s 

noble mission through innovation, through broader engagement of the private sector, through stronger partnerships both within and outside the U.S. Government, and 

through a continued focus on results. The valuable lessons 

learned by working with partner countries, interacting 

with supporters and critics in the development community, 

and implementing our programs continue to show us ways 

to more effectively invest in results. And through these 

results, MCC is delivering opportunities and sustainable 

solutions in the fight against global poverty. 

Message From Daniel W. Yohannes, 

Chief Executive Officer

Daniel W. Yohannes, Chief Executive Officer
6 2009 Annual Report

Through an innovative approach to development assistance, MCC invests in results by investing in critical sectors 

that improve the lives of the poor. These sectors reflect the Obama Administration’s international development goals, 

and MCC is a key tool in helping the U.S. Government move forward in fulfilling these priorities through partnerships 

worldwide.

Forward Thinking

Partnerships that Deliver

Tangible Results
Forward Thinking 7

“Food security is not merely a question of 

getting food to hungry people. It represents 

the convergence of complex issues that 

have a direct bearing on economic growth, 

energy and environmental factors, and our 

strategic interests. And as such, it demands 

a comprehensive response. If we can build 

partnerships with countries to help small 

farmers improve their agricultural output and 

make it easier to buy and sell their products 

at local or regional markets, we can set off a 

domino effect. We can increase the world’s 

food supply for both the short and the long 

term; diminish hunger; raise farmers’ incomes; improve health; expand opportunity; 

and strengthen regional economies.”

Secretary of State 

Hillary Rodham ClInton

September 25, 2009

Promoting Food Security

Barbara Ayisa of Affumkrom, Ghana spends her day growing onions and maize. This year, she was among the 48 

farmers in the Affumkrom Vegetable Growers’ Association 

to receive training as part of an integrated solution to longterm agricultural productivity under MCC’s $547 million 

compact with Ghana. The program also includes MCCfunded projects that enhance land tenure security, promote 

irrigation development, improve post-harvest handling of 

produce, expand credit, and rehabilitate secondary/feeder 

roads. In addition, Barbara and other farmers received 

seeds, fertilizers, self-sealing grain storage bags, and farming tools. Equipped with these new resources, as well as 

MCC-funded training, Barbara increased her field’s yield. 

With the self-sealing plastic bags she received, she is able to 

safely store her maize to feed her family or until she can sell 

it at the best market price, earning the most she can. 

An ocean away in Honduras, a better way to farm led Edras 

Mateo to a better life for himself and his family. Looking for an alternative to poverty and gangs, Edras sought 

out agricultural training through MCC’s compact with 

Honduras. Through this training, Edras learned how to 

implement techniques to increase his lettuce yield to meet 

market demand and expand into other high-value crops. A 

year later, with his increased income, Edras was able to buy 

a home for his family, keep his two children in school, and 

purchase 5.6 hectares of land to farm. Now, nearly a dozen 

nearby farmers seek him out for technical assistance to 

emulate his success. Complementary projects in the Honduras compact that invest in irrigation, for example, create 

added benefits for Edras and farmers like him to increase 

productivity.

Barbara Ayisa and Edras Mateo—and thousands of other 

farmers benefitting from MCC assistance—are proof that 

alleviating global poverty requires investing in global food 

security. The U.S. Government is committed to this, and 

MCC is an effective and essential tool in achieving America’s commitment to global food security by supporting 

long-term agricultural development and rural economic 

growth. 

Nearly $3.7 billion of MCC’s total worldwide commitment of over $7 billion supports sustainable, marketbased advancements in food security. Through a diverse 

portfolio of investments, MCC supports all aspects of the 

food production and distribution system. This includes 

transferring agricultural technology, securing land rights 

and access to rural finance, increasing access to sufficient 

and clean water, and building rural roads and other farmto-market infrastructure, like dry- and cold-storage facilities. These investments help farmers and rural businesses 

obtain productive inputs such as seeds, water, and fertilizers, overcome bottlenecks that hinder their ability to get 

produce from farm to market, and engage in higher-value 

production to generate rural income growth. 
8 2009 Annual Report

Investing in human development is a prerequisite to sustainable poverty reduction and economic growth. That’s 

why MCC promotes human development through investments in health, education, water, and sanitation. In 

total, MCC is investing nearly $1 billion in education, 

health, water, and sanitation worldwide. This investment 

strengthens human development and expands the capacities of citizens in partner countries to lead healthy lives, to 

increase their knowledge, and to attain a decent standard 

of living. 

In Lesotho, where an estimated 24 percent of the adult 

population is HIV-positive, MCC is investing $122 million in compact funds to strengthen healthcare systems. 

In coordination with the President’s Emergency Plan for 

AIDS Relief (PEPFAR), MCC is helping the children of 

HIV-positive mothers live long and healthy lives. MCC’s 

renovations of health centers complement PEPFAR’s 

particular focus on the prevention of mother-to-child HIV 

transmission. As more women deliver babies at these 

MCC-renovated health facilities with maternity wards, 

PEPFAR can better track mothers’ and babies’ adherence to 

HIV prophylaxis. 

In Mongolia, MCC is investing compact funds to improve 

and expand the national non-communicable diseases and 

injury prevention program. By implementing programs 

aimed at changing poor dietary habits, lack of exercise, 

smoking rates, and alcohol abuse, MCC’s partnership with 

Mongolia’s Ministry of Health aggressively tackles noncommunicable diseases, which are a major cause of death 

among working-aged Mongolians.

In Ghana, 65 schools have been renovated or are under 

renovation, with hundreds more to be built, as part of 

Ghana’s $547 million MCC compact. Through a partnership with the United States Agency for International 

Development (USAID), these MCC-funded schools will be 

staffed with trained teachers. In addition to Ghana, MCC 

is funding educational and training programs in Burkina 

Faso, El Salvador, Mongolia, Morocco, and Namibia.

In Mozambique, $203.6 million of the country’s $506.9 million MCC compact is improving access to water and sanitation in eight cities and 600 rural villages. Increasing access 

to safe, reliable water supplies and sanitation services 

boosts productivity and reduces water-borne diseases, the 

leading cause of death in children under five. MCC investments are also expanding the capacity of water treatment 

plants in Tanzania and rehabilitating water sanitation and 

irrigation systems in Georgia. Jordan’s proposed compact, 

under development during this fiscal year, is expected to 

include major projects to increase access to drinking water, 

improve waste water collection, and reduce water losses in 

the country’s second largest city.

Strengthening Human Development
Forward Thinking 9

Building Infrastructure

The prosperity of households and the growth of communities throughout the developing world depend 

on sound infrastructure. Adequate infrastructure 

facilitates private sector investments, expands trade 

opportunities, opens markets to farmers, and provides 

access to schools and health clinics. Without such 

infrastructure, the cost of doing business increases, 

transportation costs and times skyrocket, economic 

growth is stunted, and the standard of living for the 

world’s poor remains bleak. It is no surprise, then, that 

MCC partner countries have overwhelmingly targeted 

their MCC investments to address their infrastructure 

needs, not only building critical roads and bridges but 

also renovating ports, electricity grids, and irrigation systems. More than 33 percent of MCC’s total 

worldwide commitments support transportation 

infrastructure alone. 

Cape Verde completed the construction of the road 

from Orgãos to Pedra Badejo on Santiago Island 

through its $110 million MCC compact. This marked 

MCC’s first completed road project in Africa. The 

new road, inaugurated in June 2009, complies with all 

environmental requirements, decreases transportation 

costs, and improves access to markets, schools, and 

community services for families, farmers, businesses, 

non-governmental organizations, and social service 

providers who live and work along its path. 

In Ghana, groundbreaking for National Highway 1 

(N1) took place in October 2008. The N1 is a linchpin 

project in Ghana’s $547 million MCC compact, which 

is transforming the country’s agriculture sector and 

making exports more competitive. Now, pineapples sit 

on the back of a lorry for three hours between Malam 

and Tetteh Quarshie on their way to the port of Tema, 

wasting time and fuel, and shortening the fruit’s shelflife. By facilitating movement around Accra and to 

Tema, the N1 will reduce these transport costs and will 

complement the agriculture and rural development 

projects also funded by the compact.

Similarly, El Salvador witnessed the historic groundbreaking for the Northern Transnational Highway in 

April 2009, the major component of its $461 million 

MCC compact. The highway fulfills a generational 

dream to unite the Northern Zone with the rest of 

the country through a modern road system, slashing 

travel time from Metapan to Chalatenango from four 

hours to 45 minutes. On this and all road projects, 

MCC requires comprehensive resettlement plans. In 

El Salvador, for example, the Northern Transnational 

Highway will pass through the land of the López family. Through MCC-funded resettlement efforts, the 

family was compensated for their land and received a 

pair of cows and training in milk production to boost 

their earnings. 

Also in El Salvador, the first 115 kilometers of rural 

electrification lines have been constructed and the first 

450 solar panel systems have been installed, making 

a difference in the lives of more than 2,000 isolated 

households. This investment protects the environment, while harnessing a renewable energy source in 

the fight against poverty.

In Armenia, new and refurbished water canals continue to provide farmers with a reliable supply of water 

to irrigate their farms, expand production, invest in 

profitable crops, and increase their incomes. To further this, the rehabilitation of a 4.2 kilometer section 

of the main Arzni-Shamiram water canal started in 

December 2008, with portions completed during the 

harsh winter for use during the Spring 2009 irrigation 

season. 
10 2009 Annual Report

MCA-Benin, which is responsible for managing the 

implementation of Benin’s MCC compact, partnered 

with 54 villages to support activities that increase 

land tenure security and improve land management. 

Public ceremonies were held throughout the country 

to engage local authorities and inform beneficiaries 

of upcoming opportunities. These outreach efforts 

complemented technical innovations, including 

installation of seven Continuously Operating Reference Stations (CORS) as the core of a modern national 

geodetic reference framework, which allows surveyors—pictured here with GPS equipment—to survey 

and map land parcels accurately and efficiently. With 

this MCC-funded technology and technical assistance, 

Benin hopes to convert 30,000 occupancy permits 

in urban areas to land titles and to issue land titles or 

certificates to 75,000 rural households.

Like Benin, many other MCC partner countries 

recognize that secure and efficient access to land and 

property rights contributes to poverty reduction and 

economic growth. Countries are supporting legal and 

regulatory reforms to bolster transparency and the 

rule of law, clarifying and formalizing land and property rights, developing more client service-oriented 

property registries, building the capacity of local institutions, and engaging in land-related outreach and 

education. These approaches reduce transaction costs, 

increase tenure security, and improve land allocation, 

resulting in more investments in land and property 

and higher land productivity and value.

MCC has invested over $297 million in countrydetermined and country-driven strategies to 

strengthen the real property rights and land policy 

systems in countries from Africa to Eurasia to Latin 

America. Because of this commitment, farmers, 

households, and businesses are more willing to protect 

and invest in their land or property. Secure tenure is 

critical for accessing credit, promoting investment and 

private sector activities, and generating self-sustaining 

market opportunities for economic growth. This 

commitment also promotes community development. 

Secure rights to property use, ownership, and transfer 

empower communities to demand basic services from 

their governments, like electricity, water, and sanitation. Investing in access to land and property rights 

protects women and their children, who, together, 

disproportionately shoulder the burden of poverty. 

Moreover, tenure security creates incentives for managing land and natural resources responsibly, thereby 

promoting environmental stewardship and addressing 

the implications of climate change. 

Securing Land Rights

Photo courtesy of Trimble, supplier of the GPS equipment
Forward Thinking 11

Championing Gender Equality

The October 2008 launch of Jordan’s Women’s Knowledge 

Network is an example of the role gender integration plays 

in development. Funded through Jordan’s MCC threshold 

program with support from the Jordanian National Commission for Women and USAID, the Network gives women 

a valued voice in society by promoting the gender integration of local councils. It focuses on empowering female 

municipal council members nationwide. As of March 

2009, the Network conducted several regional meetings 

attended by over 260 female council members from over 70 

municipalities. The Network also hosted a popular workshop focused on improving local government planning and 

capacity. 

MCC continues to work to strengthen gender integration in the development and implementation of programs 

worldwide. In Benin, women are learning of the benefits 

associated with obtaining land titles and receiving microloans. Lesotho worked with MCC to ensure gender 

equality in economic rights. And, the largest component of 

Lesotho’s compact focuses on delivering essential maternal and child health services, particularly related to HIV/

AIDS prevention and treatment. In Mali, women will have 

access to irrigated land plots through women’s associations 

so they can grow what they choose to feed their families 

or sell at market. Nicaragua established a consultative 

council of female representatives to help shape the country’s compact program. Women entrepreneurs in Georgia 

are contributing to economic growth by expanding their 

agribusinesses. 

MCC recognizes that gender inequality is a significant 

constraint to economic growth and poverty reduction; 

that is why we ensure that gender issues and the concerns 

of vulnerable populations are considered in all stages of 

our work with partner countries. Throughout the selection of eligible countries, the development and design 

of compact programs, the implementation of projects, 

the monitoring of program results, and the evaluation 

of program impacts, gender plays an important role. 

MCC’s Gender Policy consolidates our commitment to 

gender integration as fundamental to sustainable poverty 

reduction and economic growth. An initial internal review 

of the implementation of this Gender Policy revealed progress in designing gender-inclusive programs that account 

for gender differences and inequalities, in creating opportunities for learning and capacity-building across sectors, in 

generating greater awareness of the value of gender integration to program quality and deliverables, and in broadening 

local interest in dedicating resources and staff to social and 

gender assessment.
12 2009 Annual Report

Understanding the MCC Model

MCC invests in results by investing in a different way of delivering development assistance.

A policy performance-based model that 

rewards good governance

MCC works with those countries that show they are committed to good policies. 

MCC assistance is more likely to be successful when it is invested in countries committed to sound policy performance. To qualify for a large-scale grant—what we call 

a compact—potential partners must score better than their peers, either low-income 

or lower-middle-income countries, on 17 independent indicators that measure, 

among other factors, government effectiveness, control of corruption, civil liberties, 

immunization rates, girls’ primary school graduation rates, days and cost to start a 

business, and trade policy. 

The MCC selection process also provides an incentive for other countries to improve 

their policies so they too might qualify for a grant. Liberia’s President Ellen Johnson Sirleaf stated in October 2008, “MCC has had a transformative effect across the 

developing world. Responsible, reform-minded governments have set their sights on 

the MCC benchmarks, and this has accelerated the pace of reform while empowering 

governments to make decisions on their own path of development and the direction of 

their future.” 

MCC has focused a particularly intense spotlight on corruption. MCC’s Board of 

Directors generally requires that countries “pass”—score above the median on—at 

least half of the indicators in each of the three categories: governing justly, investing 

in people, and encouraging economic freedom. The Board also generally requires that 

countries pass the control of corruption indicator. As a result, many countries, including those in MCC’s threshold program, focus their program on efforts to reduce 

corruption. 

GNI/Cap: $2,470

Population 4,364,461 Georgia FY10 LMIC

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. Scores above the median, 

represented with green, meet the performance standard. Scores at or below the median, represented with red, do not meet the performance standard. 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.

Freedom House

World Health Org.

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 IMF/National Sources

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

Sources:

Sources:

Sources:

0

10

20

30

40

'04 '06 '08

Median 20

Political Rights

Data 18 (44%) 

0

20

40

60

'04 '06 '08

Median 33

Civil Liberties

33 (47%) 

Median 0.00

Control of 

Corruption

0.31 (74%) 

- 2.0

- 1.0

0.0

1.0

2.0

'04 '06 '08

Median 0.00

Government 

Effectiveness

0.60 (91%) 

- 2.0

- 1.0

0.0

1.0

2.0

'04 '06 '08

Median 0.00

Rule of Law

0.02 (53%) 

- 2.0

- 1.0

0.0

1.0

2.0

'04 '06 '08

Median 0.00

Voice and 

Accountability

0.00 (53%) 

- 2.0

- 1.0

0.0

1.0

2.0

'04 '06 '08

Median 0.00

Regulatory Quality

1.02 (100%)

- 2.0

- 1.0

0.0

1.0

2.0

'04 '06 '08

Data

-10

-5

0

5

10

'04 '06 '08

Median -0.4

Fiscal Policy

-4.7 (9%) 

2 0

4 0

6 0

8 0

10 0

'0 4 '0 6 '0 8

Median 93.5

Immunization Rates

Data 94 (53%) 

0.0

0.2

0.4

0.6

0.8

1.0

'05 '07 '09

Median 0.722

Land Rights and 

Access

1.000 (100%) 

0.0

0.2

0.4

0.6

0.8

1.0

'05 '07 '09

Median 0.960

Business Start-Up

0.995 (100%) 

20

40

60

80

100

'05 '07 '09

Median 72.6

Trade Policy

89.1 (100%) 

0

10

20

30

'04 '06 '08

Max. 15

Inflation

10.0 (42%) 

10

4 0

70

10 0

13 0

'0 4 '0 6 '0 8

Median 97.6

Girls' Primary 

Education Completion 

96.7 (48%) 

0

3

6

9

12

15

'0 4 '0 6 '0 8

Median 2.81

Health Expenditures

1.50 (12%) 

0

2 5

50

75

10 0

'0 5 '0 7 '0 9

Median 79.64

Natural Resource 

Management

81.46 (58%) 

0

2

4

6

8

10

'0 4 '0 6 '0 8

Median 1.97

Primary Education 

Expenditures

1.05 (12%) 

10/21/2009

Visit www.mcc.gov and click on Selection Criteria to learn more.

View the comprehensive Policy on Preventing, Detecting, and Remediating 

Fraud and Corruption in MCC Operations at www.mcc.gov.
Forward Thinking 13

Country ownership is not just a catchphrase at MCC. It is a founding principle, 

stemming from the firmly held belief that significant and sustainable development 

cannot be imposed from outside but must be built from within. U.S. assistance 

through MCC can be a powerful catalyst for development, but only if partner countries seize the opportunities it creates. For that reason, once a country is selected, 

it is in control. The country, not MCC, identifies its barriers to poverty reduction 

and economic growth and develops its own compact proposal. Countries are asked 

to consult broadly—with civil society, the private sector, their legislature, political 

parties, international donors, and potential beneficiaries—either as a supplement to 

existing consultations or, in some cases, as their first public consultation. 

Once the compact is approved, the country is responsible for implementing it. The 

country designates an entity to oversee compact implementation, which often takes 

the form of a board and program management office composed of partner country 

nationals. These country-specific entities are referred to as MCAs. Because of this 

leadership, MCC is able to maintain a small in-country presence, usually only two 

U.S. direct-hired staff members, with two or three local hires. MCC encourages 

consultation throughout implementation by insisting on transparency and public 

outreach. Because countries differ in capacity, MCC has adopted a sliding scale of 

technical assistance and oversight, never losing sight of the value of “learning by 

doing” among local stakeholders. 

A country-driven model that demands country-led development
14 2009 Annual Report

Country MCA Name Website

Armenia MCA-Armenia http://www.mca.am/new/enversion/index.php

Benin MCA-Benin http://www.mcabenin.bj/

Burkina Faso MCA-Burkina Faso

Cape Verde MCA-Cape Verde http://www.mca.cv/

El Salvador FOMILENIO http://www.mca.gob.sv/fomilenio/index.php

Georgia Millennium 

Georgia Fund http://www.mcg.ge/

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

Honduras MCA-Honduras http://www.mcahonduras.hn/

Lesotho MCA-Lesotho

Madagascar MCA-Madagascar http://www.mcamadagascar.org/

Country MCA Name Website

Mali MCA-Mali http://www.mcamali.org/

Mongolia MCA-Mongolia

Morocco

Agence du 

Partenariat pour le 

Progrès

Mozambique MCA-Mozambique

Namibia MCA-Namibia

Nicaragua MCA-Nicaragua http://www.cuentadelmilenio.org.ni/

Senegal MCA-Senegal

Tanzania MCA-Tanzania http://www.mca-t.go.tz/

Vanuatu MCA-Vanuatu http://www.governmentofvanuatu.gov.vu/mcavanuatu/Home/tabid/54/Default.aspx
Forward Thinking 15

Getting started: 

• Country names National 

Program Coordinator – key 

manager of the compact 

process

• Country establishes Core 

Team – responsible for 

completing the compact 

• Country commences initial 

public consultations

• Country completes analysis 

of binding constraint to 

growth

• MCC provides feedback on 

analysis of binding constraints to growth

• MCC provides guidance on 

results focused project 

design principles and tools

Identifying priorities: 

• Country consults stakeholders on potential projects

• Country develops and provides a Project Concept 

Paper for each potential 

project – each paper proposes a set of related investments

• MCC conducts a “peer 

review” of the proposed 

Project Concept Papers; 

MCC may undertake factfinding mission to country

• MCC provides formal response to Project Concept 

Papers – identifying suitable 

candidates and indicates 

further studies that may be 

needed

• MCC provides 609(g) funding if needed for project 

development of approved 

concepts

Developing the program: 

• Country further develops 

projects that appear promising for potential investment

• MCC disburses 609(g) 

funding and assists with 

needed preparatory studies 

–feasibility studies, environmental impact assessments, framework resettlement plans, preliminary 

designs, etc.

• Country consults stakeholders on project design 

and sustainability 

• At an appropriate time, 

MCC prepares and submits 

Congressional Notification 

to commence negotiations*

• MCC conducts formal appraisal of developed projects, including second 

“peer review”

Negotiating* the terms of the 

Compact: 

• MCC and country conduct 

compact negotiations 

(technical content)

• MCC prepares and submits 

Investment Memo to MCC 

Investment Committee

• MCC and country negotiate 

compact documents (legal 

documentation)

• MCC Board approves Compact

• MCC and country sign the 

Compact -- at this point 

funds are obligated, program objectives are defined 

and total dollar amount is 

set

Phases of Compact Development

Getting ready for 

implementation: 

• Compact ratification, if necessary

• Completion of stand-up of 

Millennium Challenge Account (MCA) Accountable 

Entity

• Completion of Implementing 

Entity agreements

• Completion of annual budgets and implementation 

plans

• Completion of Terms of 

Reference and work plans 

for implementation and 

procurement

• Pre-qualification of consultants and contractors for 

early procurements

The clock starts: 

• Compact “Enters Into 

Force” (EIF) and five year 

clock starts

• Compact provisions in full 

force and effect in the country

• Accountable Entity is responsible for overseeing 

implementation of projects

• PMU submits quarterly 

progress reports

• MCC authorizes disbursements, U.S. Treasury transmits funds

• Ongoing public updates on 

Compact

• Monitoring and evaluation 

of project impacts

• MCA Consultation may 

include: transparency; outreach; stakeholder committees; resettlement process, 

etc.

 Country sets up its Project Management Unit (PMU) structures – Accountable Entity, Fiscal Agent, Procurement Agent, and Implementing Entities established and trained

* As defined under Section 610 of the 

Millennium Challenge Act of 2003

1. Start up and 

Preliminary Analyses 

2. Project 

Definition 

3. Project

Development 

and Appraisal 

4. Compact 

Negotiation and 

Compact Signing 

5. Pre-Entry into 

Force Activities 

Implementation Preparations 6. Implementation 

Updated Sept. 14, 2009 

Phases of Compact Development
16 2009 Annual Report

$1.4 billion

in cumulative programrelated* Disbursements 

$2.2 billion

in cumulative compactcontract Commitments 

Results count. Each proposed MCC compact activity is assessed for its potential 

economic rate of return: To what extent will the additional income generated by 

MCC investments for local families and firms exceed the cost of MCC investments? 

Compact programs are also assessed for their projected impact on beneficiaries: 

To what extent will a significant share of the additional income go to low-income 

households? This focus on results defines MCC’s aid effectiveness according to 

impact rather than process. 

Other elements of MCC’s approach are also in line with international principles 

of aid effectiveness. The emphasis on country ownership—including the broad 

participation of civil society and the private sector, the predictability of funding 

enabled by setting aside funds for the entire compact at the outset, fair and open 

international procurements run by partner countries, and coordination with other 

donors—are evident in every step of the MCC process. These factors help ensure 

that MCC investments are targeted to the right objectives and to maximizing value 

for our investments. With a headquarters staff limited to 300 people and an incountry footprint of only two U.S. direct-hires and two or three local hires in each 

compact country, MCC extends this same concern about ensuring value for limited 

resources to our own operations. 

A results-oriented model of accountability and sound stewardship that 

optimizes aid effectiveness and organizational efficiency

rESULTS THROUGH THE END

OF fISCAL yEAR 2009

*Includes compact, threshold, 609(g), and due diligence
Forward Thinking 17

MCC’s Board of Directors

The effectiveness of MCC’s operations is enhanced by the experience of a unique public-private Board of Directors 

comprised of the Secretary of State (Chair), the Secretary of Treasury (Vice Chair), the U.S. Trade Representative, the 

U.S. Agency for International Development Administrator, MCC’s CEO, and four individuals from the private sector appointed by the President with the advice and consent of the U.S. Senate. Contributing valuable insights and expertise, the 

private sector component of our Board is one of MCC’s most distinct features.

Hillary Rodham Clinton

Secretary of State 

Chair

Timothy F. Geithner

Secretary of Treasury 

Vice-Chair

Dr. Rajiv Shah

Administrator, U.S. Agency for 

International Development

(as of December 24, 2009)

Ambassador Ron Kirk

United States Trade Representative

Daniel W. Yohannes

MCC Chief Executive Offiver

(as of December 1, 2009)

Lorne Craner

President, International Republican 

Institute 

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

Kenneth Hackett

President, Catholic Relief Services 

(Term expired October 2009)

Alan J. Patricof

Founder and Managing Director, 

Greycroft, LLC
18 2009 Annual Report

“The simple reality is this: if we want others to help combat the threats that concern us most, then we must help others combat the challenges that threaten them most. For many nations, those threats are first and foremost the things that afflict human beings in their daily 

lives: corruption, repression, conflict, hunger, poverty, disease, and a lack of education and opportunity. When the United States joins 

others to confront these challenges, it’s not charity. It’s not even barter. In today’s world, more than ever, America’s interests and our 

values converge. What is good for others is often good for us.”

U.S. Permanent Representative to the United Nations Ambassador Susan E. Rice, August 13, 2009

MCC is designed to maximize each dollar invested for poverty reduction and economic growth. 

Our increasingly globalized world brings immeasurable economic and cultural benefits, but with these benefits come an increasing reliance on citizens and governments beyond U.S. borders for long-term security and economic prosperity. Today, 

more than one billion people live on less than $1 a day. Nearly three billion live on 

less than $2 a day. Aside from the humanitarian imperative to assist those less fortunate, the case for acting in our own interest to help people pull themselves out of 

extreme poverty has never been stronger. We have all seen how terrorism, disease, 

and environmental degradation can cross borders and impact American lives. 

MCC is an important U.S. instrument for addressing these threats. By challenging 

countries to adopt good governance, health, education, and economic policies that 

empower their citizens, MCC fosters stable, open societies that counter fanaticism 

and can evolve into positive role models in their regions. MCC investments lead 

to sustainable reductions in poverty that can decrease the need for emergency humanitarian assistance, increase access to education and health care, and strengthen 

efforts to protect the environment. 

President Obama said, “In an era of integration and interdependence, it is also my 

responsibility to lead America into recognizing that its interests, its fate, is tied up 

with the larger world; that if we neglect or abandon those who are suffering in poverty, that not only are we depriving ourselves of potential opportunities for markets 

and economic growth, but ultimately that despair may turn to violence that turns on 

us.” 

Greater prosperity in the developing world will alleviate the poverty that breeds 

discontent and instability. It will expand markets for American exports. It will 

reduce the spread of disease. MCC is promoting America’s security and well-being 

even as it generates a better life for millions around the globe.

MCC’s Value to American Taxpayers
Forward Thinking 19

MCC is making key contributions to the analysis of development policy. We are 

contributing to the Quadrennial Diplomacy and Development Review being conducted by the State Department. We are participating also on the interagency committee organized by the National Security Council to review the U.S. Government’s 

development policy under the Presidential Study Directive.

MCC was created to fulfill one mandate—poverty reduction through economic 

growth. We do this by partnering with countries worldwide, using certain flexibilities we have, namely, no earmarks and no-year funding. MCC practices some 

of the most innovative lessons learned for aid effectiveness: incentivizing good policies, requiring country-led development to build homegrown capacity, engaging 

civil society, demanding accountability, applying rigorous measures to evaluate outputs and outcomes, and practicing transparency in all that we do. While MCC’s 

approach is not easy, it is proving effective in delivering development assistance to 

reduce global poverty. We continue to share our experiences and best practices in 

the implementation of our principled approach. 

MCC as Incubator of Ideas, Innovation in U.S. Foreign Assistance 

“My immediate reaction [to MCC] was this makes a tremendous amount of sense, sort of a criteria-based determination involving the 

people of the country in terms of priorities on our valuable tax dollars going for foreign assistance in a fashion that would demonstrate 

the greatest capacity to produce results. And that’s what I think MCC is doing and is trying to achieve, and so I am a strong supporter of 

it... a lot of the ideas of MCC, to me, are a prototype for what should sort of take hold in our whole foreign assistance program. So not 

only is this important in terms of what it’s doing in the countries it’s now active in, but as a good indicator and a good instructor of directions we might go in with the whole foreign assistance program.”

Chairman of the House Foreign Affairs Committee Howard L. Berman (D-California), June 24, 2009
20 2009 Annual Report

To invest in results, MCC pursues an integrated approach to sustainable economic development. 

Working with partner countries, other U.S. Government agencies, donors, and the private sector, 

MCC demonstrates how we can achieve more through coordination and cooperation.

Forward Thinking

Partnerships that Deliver

Tangible Results
Partnerships that Deliver 21

MCC works closely with partner countries to increase the quality and sustainability of MCC-funded projects. From 

reforming policies to setting aside maintenance funds for the upkeep of newly constructed roads, partner countries themselves are doing what it takes to ensure that MCC-funded projects are able to continue delivering benefits well beyond the 

life of our partnerships. 

Women Farmers in Honduras Benefit 

from Training, Increased Incomes

“As a result of the better yields, product 

quality, and markets, my conditions at 

home have improved. We now have more 

money to buy clothes and schools supplies 

for our kids, and we can provide the health 

care required for one of our daughters who 

needs special health assistance,” shares Ana 

Cristina Vasquez Rodriquez of Honduras. 

With technical assistance through the rural 

development program of Honduras’s MCC 

compact, she diversified her farm to include 

the high-value production of coriander, lettuce, and potatoes. As a result, Rodriquez’s 

net sales per hectare jumped from $1,315 

before such MCC-funded technical training 

to $6,142 in 2008 and $9,892 as of August 

2009. Women farmers are increasingly 

benefitting from MCC-funded training in 

horticulture production. In 2006, only seven 

women farmers participated in the program. 

As of September 2009, that number skyrocketed to 440.

Partnering with countries through an integrated approach 

 Jordan’s water sector is changing rapidly, and policy 

and institutional reforms are needed to ensure the 

impact and long-term sustainability of proposed MCC 

investments. MCC has worked closely with the Jordanian government and other donors to ensure that the 

investments proposed for Jordan’s compact program 

reinforce the recently adopted National Water Strategy. In particular, the proposed investments would support efforts to reduce water losses due to leaking pipes, 

poor connections, or weak administrative controls; to 

restructure tariffs and establish water companies that 

will manage water resources on a commercial basis; 

to limit groundwater extraction to sustainable levels; 

and to substitute treated wastewater for freshwater 

resources, wherever possible. 

 Moldova has agreed to draft and support the enactment of a new Water User Association Law, to be 

presented to the Parliament for approval and official 

publication early in the compact’s life and prior to the 

start of any rehabilitation construction. In accordance 

with international best practices, the enactment of the 

new law will create a solid legal foundation to transfer 

responsibility for management and operation of irrigation systems rehabilitated with MCC funding from the 

state to existing and newly-created water user associations to sustain agricultural productivity.
22 2009 Annual Report

Maximizing the value of U.S. development dollars invested abroad means closer coordination among U.S. Government 

agencies providing such funds. This coordination minimizes waste and costly duplications, and builds an integrated way 

of achieving sustainable results.

 The United States Trade and Development Agency 

(USTDA) awarded grants to three MCC partner 

countries—Morocco, Ghana, and El Salvador—to fund 

technical assistance and feasibility studies to support 

MCC-funded projects and stimulate private sector 

activity to sustain those projects. USTDA awarded a 

$462,970 grant to Morocco’s National Office of Fisheries for technical assistance associated with necessary 

cold storage infrastructure to complement the Moroccan compact’s small-scale fisheries project. This follows a previous $531,810 USTDA grant to Morocco for 

cold storage capabilities to reduce losses in palm date 

production related to MCC-funded fruit tree productivity projects. USTDA also provided $1.13 million in 

grants to support MCC-funded projects in El Salvador, 

providing technical assistance to the Municipality of 

Chalatenango, the National Development Commission, and the Salvadoran Foundation for Economic and 

Social Development (FUSADES). Similarly, in Ghana, 

USTDA provided a $360,000 grant to support the development of an agricultural leasing sector to promote 

mechanized farming and higher crop yields for smallholder farmers benefitting from the MCC compact. 

 From the earliest days of compact development, Senegal partnered and coordinated with all stakeholders 

in the Senegal River Valley, including USAID and the 

United States Department of Agriculture to ensure 

that MCC’s investments would be complementary to 

other existing and planned investments throughout the 

region and would be supported by other donors. 

Partnering with other U.S. Government agencies through an integrated approach 

A Bridge to Progress

“To go to the market, we had to cross the 

river bed every day, without any security 

conditions and we often put our lives at risk. 

Today, we are happy because we calmly cross 

the bridges,” explains Antónia Cândida. “At 

our age, for the tranquility we need, this is a 

great work. That’s all we needed for a future 

with progress,” adds Paula Inês. Both are 

residents of Paul on Santiago Island in Cape 

Verde. Part of the island-nation’s $110 million 

MCC compact built critical infrastructure, 

such as bridges, to increase economic activity and facilitate access to markets.
Partnerships that Deliver 23

As the number of MCC partner countries increases, we 

maximize our investments by strengthening our cooperation with other development partners. For example, in 

late 2008, we signed a memorandum of understanding 

with both the Danish Ministry of Foreign Affairs and the 

Agence Française de Développement to expand coordination in partner countries. MCC activities build on and 

complement other donors’ work, resulting in valuable cost 

and time savings. 

 MCC joined the World Bank, African Development 

Bank, European Union, the Netherlands, and Spain

to purchase equipment and provide technical assistance in Cape Verde to help create one of the world’s 

most transparent and efficient public financial management systems.

 In Vanuatu, both the Australian Agency for International Development (AusAID) and New Zealand’s International Aid and Development Agency (NZAID)

are providing supplemental funding to complete 

roads proposed under the MCC program. AusAID 

is rehabilitating three roads and is helping the Public 

Works Department develop long-term infrastructure 

maintenance capability. NZAID is adding NZ$14 million (US$10 million) to MCC funding to finish another 

major road. 

 The World Food Program (WFP) signed a memorandum of understanding with MCC in December of 2008 

that outlines cooperation in agricultural production, 

policy and program reforms, and gender integration, 

all of which strengthen local markets and help achieve 

sustainable food security. Already, MCC and the WFP 

are seeking ways to develop synergies in countries of 

mutual focus between MCC-funded investments in 

market-access infrastructure, technology transfer, land 

reform and property rights, and access to water, inputs, 

and finance and WFP-funded programs supporting 

domestic food purchase initiatives that involve developing procurement systems for locally-grown food. 

This includes purchases of food produced by farmers 

and farmer groups—benefitting from MCC and the 

Alliance for a Green Revolution in Africa (AGRA)

programs—to be distributed in schools, clinics, and 

other public and private institutions.

Partnering with donors through an integrated approach

Creating Jobs in Honduras

“I’d like to generate more job opportunities. 

I’m sure more producers from my community will see this example and do the same,” 

stated Rafael Antonio Andino Rodriquez of 

Honduras. Through technical assistance and 

training provided through the rural development program of Honduras’s MCC compact, 

Rodriquez learned modern systems and 

technologies to boost his productivity and 

profitability. With his traditional approach, 

his onion yields were 3,246 kilograms 

per hectare. Now, through what he has 

learned—from using contour plowing to 

maintaining drip irrigation systems—Rodriquez managed to produce a yield of 

78,893 kilograms per hectare in 2008. His 

net income skyrocketed from $376 to 

$16,329 per hectare, allowing him to invest in 

an irrigation system and improvements to his 

home. Most important, Rodriquez’s training 

allowed him to expand and create jobs. His 

labor force increased from 120-person days 

before the MCC-funded training to 342 

person-days in 2008.
24 2009 Annual Report

Partner countries are doing more to leverage MCC 

funding through innovative finance mechanisms with 

the private sector. They are also using MCC compacts 

to attract investments, connect MCC beneficiaries to 

global markets, and spur trade.

 

 As MCC partner countries develop their projects, 

MCC continues to talk with the private sector 

about ways of increasing the impact of MCC 

funding. During the past year, the Philippines and 

Malawi have sought private sector advice for their 

MCC proposals, issuing “Requests for Information” (RFIs) to solicit written feedback. MCC’s 

partner countries are using these private sector 

dialogues and RFIs to learn best practices from 

the private sector, solicit information about technology solutions to identified growth constraints, 

and generate opportunities to leverage compact 

funds with private sector financing, trade, and 

investment. 

 El Salvador’s FOMILENIO (the Salvadoran entity 

responsible for implementing the compact) approved a $33 million public-private participation 

agreement with Virginia-based AES Corporation, 

leveraging more than $8 million from AES and the 

Government of El Salvador. This arrangement will 

support 1,300 kilometers of new rural electrification lines, connections, and extensions of existing 

lines throughout the country’s Northern Zone. 

Combined with an existing public-private participation agreement, over 30,000 poor families in 

the area who do not have access to electricity will 

be connected to the grid. 

 Malawi has proposed a renewable energy project 

that would help increase access to electricity for 

the 92 percent of the population that currently 

does not have access. Increased access to electricity could also stimulate potential agricultural, 

agro-processing, and business activity. Malawi’s 

proposal includes an innovative, public-private 

partnership approach that could include a 

performance-based financing structure in order 

to maximize the number of beneficiaries obtaining access to electricity. MCC is helping Malawi 

identify and promote investment opportunities 

and income-generating activities around future 

energy sites. 

 Ghana’s MiDA (the Ghanaian entity responsible 

for implementing the compact) is beginning to 

leverage compact funding with private sector 

commitments. For example, a large international 

production and marketing company is exploring 

sourcing its European market from compactfunded Ghanaian pineapple farms and considering long-term contracts with compact-supported 

Ghanaian farmers. This company has identified 

farms with which it may contract, including medium-size farms that work with small out-growers, 

furthering economic benefits for smallholders. 

Farmers are expected to benefit from training to 

world-class quality and sanitary standards, less expensive globally-sourced inputs, and the potential 

to increase the productivity of their operations.

Partnering with the private sector through an integrated approach 
Tangible Results 25

Our commitment to investing in results signals our commitment to transparency and accountability. This fiscal year 

marked the groundbreaking launch of the results section on MCC’s website, a gateway to MCC’s results as they 

emerge from every stage of our poverty reduction partnerships worldwide. A pioneering compilation that strives to 

be unique and comprehensive, the results section showcases MCC’s cutting-edge approach to managing for results 

and using information to improve decision-making. Planning, measuring, and tracking results are essential for delivering on our investments. 

Forward Thinking

Partnerships that Deliver

Tangible Results
26 2009 Annual Report

MCC’s systematic approach to achieving results

Constraints Analysis

Before any compact project is proposed, typically MCC asks partner countries to 

undertake a constraints analysis to identify the primary impediments to economic 

growth in the country. This exercise helps focus country proposals on programs that 

will remove barriers to growth and poverty reduction. 

Economic Rate of Return Analysis

MCC’s unique approach to poverty reduction through economic growth includes 

analyzing each program to determine its likely economic impact, as reflected in an 

economic rate of return (ERR). The ERR compares a project’s costs and benefits and 

incorporates factors that will determine the sustainability of the proposed investment. 

MCC economists calculate the additional income expected to be earned by beneficiaries as a result of a project and compare it to the project’s overall costs. As part of 

our commitment to transparency, we make all ERR data available to the public on our 

website.

Beneficiary Analysis

The ERR analysis projects the total new household income that is expected to be 

generated by MCC investments, but it does not provide direct information on which 

households are likely to receive those benefits. Beneficiary analysis represents an 

extension of the ERR analysis by describing which segments of society will benefit 

from increased incomes. Beneficiary analysis can help determine the impact of MCC 

projects on particular populations, such as women, the aged, children, and regional 

or ethnic sub-populations. Early discussions of the distributional implications of 

initial designs provide opportunities to consider revised or alternative implementation approaches that might generate better distributional outcomes, higher ERRs, or, 

sometimes, both.
Tangible Results 27

Monitoring and Evaluation

To fulfill MCC’s commitment to deliver results, monitoring and evaluation (M&E) is integrated into all phases of 

compact development and implementation. We collaborate with a partner country to finalize program benchmarks 

and to create an M&E plan, which tracks performance on 

processes and outputs at the beginning of a compact’s life. 

MCC then tracks outcomes and impacts at the end of a 

compact to assess how activities have affected poverty and 

economic growth. Achievements are reported throughout 

the compact’s lifecycle.

Impact Evaluation

Impact evaluation also contributes to our focus on results. 

MCC is carrying out rigorous, scientific impact evaluations 

in every compact, covering roughly 50 percent of all activities and almost 60 percent of all funds. We hire professional researchers to conduct independent impact evaluations 

of key programs. These analyses measure the changes in 

individual, household, or community income and wellbeing that result from a particular project or program by 

comparing the final results with a credible estimate of what 

would have happened without the project. Evaluators establish this counterfactual scenario by conducting extensive 

surveys and data collection of project participants and a 

statistically similar comparison group. In addition to these 

impact evaluations that are contracted at the start of each 

compact and designed into implementation approaches, 

MCC plans to contract independent evaluations for most 

of the remaining activities as part of the compact closeout process. In many cases, these evaluations will also use 

baseline and endline data to assess the impact of programs. 

The results of these evaluations and their supporting data 

will be made publicly available on our website, and we expect such results to guide future investment decisions. 

Increasing Government Transparency in 

Delivering Results 

Reflecting a commitment to transparency and accountability, MCC is a trailblazer in making information about 

results accessible to the general public. Through www.

mcc.gov, visitors can access spreadsheets detailing the ERR 

calculations, monitoring indicator tracking tables, and 

summarizing impact evaluations. Constraints analyses, 

beneficiary analyses, and impact evaluation data can be 

viewed too. We not only make this information available 

to the public but also encourage feedback on it from our 

stakeholders. 

Green Development

Together with partner countries, MCC recognizes that sustainable economic growth and 

a healthy environment are interdependent. 

In Morocco, we see an excellent opportunity to maximize this critical relationship. 

Moroccan artisans have traditionally used 

techniques that burn tires, wood, and other 

materials, producing significant amounts 

of often toxic smoke, which pollutes the 

environment and harms public health. Part 

of MCC’s $697.5 million poverty reduction 

grant to Morocco will help address this 

problem. The MCC-funded Artisan and Fez 

Medina Project will assist the potters of Fez 

and Marrakech in meeting growing demand 

for high-quality Moroccan pottery by investing in modern techniques and equipment, 

including cleaner-burning kilns. Replacing traditional kilns with modern ones in 

Morocco will improve the quality of life for 

artisans. 
28 2009 Annual Report

Responding with Responsibility

MCC is committed to maximizing the value of every dollar invested in the fight 

against global poverty and sometimes must make tough choices regarding compact partnerships, whether this means terminating assistance because of an undemocratic change in government; or deciding not to fund certain compact projects due to poor policy performance; or restructuring project activities because of 

changing market conditions, cost escalations, or new information resulting from 

updated feasibility studies. Given our willingness to make necessary changes to 

realign resources most efficiently, MCC exercises a dynamic, flexible approach 

that allows us to deliver results that are meaningful and sustainable.

Summary of Project Restructurings and Re-Allocations

Country Project Restructure Cause Solution Implemented 

Armenia Irrigation 

Infrastructure 

• Dollar depreciation 

• Increased input costs

Project re-scoped to reduce the number 

of components to be repaired, focusing 

on irrigation infrastructure with high 

ERRs that can be completed within the 

compact term

Mongolia Rail Project • Unable to complete the financial 

audit of the UBTZ Railroad, the major 

condition precedent to the project, the 

Government of Mongolia notified MCC 

in April 2009 that it must withdraw the 

rail component from the compact.

Re-allocate funding from rail project to 

the expansion of the three remaining 

projects (Health, Education, Property 

Rights) and explore potential new projects

Ghana Transportation, 

Agriculture, and 

Rural Development 

• Increased project costs Re-allocation of funds among projects 

Summary of Project Holds, Suspensions, and Terminations

Country Project Restructure Cause Solution Implemented 

Armenia Roads • Due to a pattern of actions by the 

Government of Armenia inconsistent 

with the criteria used by MCC to determine eligibility for assistance, the MCC 

Board decided to place an operational 

hold on the project, leading MCC to fully 

disengage from the road project as of 

September 2009.

Project re-scoped to reduce the number of components to be 

repaired, focusing on irrigation infrastructure with high ERRs 

that can be completed within the compact term

Nicaragua Property Regularization• Pattern of actions by the Government 

of Nicaragua inconsistent with the criteria used by MCC to determine eligibility 

for assistance. Electoral irregularities 

were reported surrounding the November 2008 municipal elections.

Funding for all activities in this project was terminated.

Nicaragua Transportation • Pattern of actions by the Government 

of Nicaragua inconsistent with the criteria used by MCC to determine eligibility 

for assistance. Electoral irregularities 

were reported surrounding the November 2008 municipal elections.

Terminated funding for road works not yet contracted, 

including upgrading a major stretch of the Pacific Corridor 

Highway, and technical assistance to the Government of Nicaragua. Continuing with upgrading 18 kilometers of highway 

and 50 kilometers of rural secondary roads.

Honduras Transportation • Pattern of actions by the country 

inconsistent with the criteria used 

by MCC to determine eligibility for 

assistance. The manner of the removal 

of the President and the failure to reestablish democratic order in Honduras 

are contrary to sound performance on 

MCC’s eligibility criteria, which require 

countries to demonstrate a commitment 

to “just and democratic governance.” 

In September 2009, MCC’s Board voted to terminate assistance for the vehicle weight control activity, representing 

approximately $5 million. This termination became effective 

as of October 2, 2009. In addition, MCC placed a hold on 

MCC funding related to the Tegucigalpa to Villa de San Antonio section of highway CA-5, which is jointly financed by MCC 

and the Central American Bank for Economic Integration. 

Honduras Rural Development • Pattern of actions by the country 

inconsistent with the criteria used 

by MCC to determine eligibility for 

assistance. The manner of the removal 

of the President and the failure to reestablish democratic order in Honduras 

are contrary to sound performance on 

MCC’s eligibility criteria, which require 

countries to demonstrate a commitment 

to “just and democratic governance.” 

In September 2009, MCC’s Board voted to terminate assistance for approximately 93 kilometers of farm to market 

roads, representing approximately $5 million of MCC funding. 

This termination became effective as of October 2, 2009. 

Madagascar Compact terminated • Undemocratic transfer of power. MCC’s Board decided in May 2009 to terminate the compact. 

Termination was effective August 31, 2009 with administrative closure to be completed in early December 2009.
Tangible Results 29

Results at a Glance

Commitments by Sector: All Compact Countries

Millions USD, Total $7 billion (as of September 30, 2009)

Transportation 38%

Agriculture 22%

Finance & Enterprise Development 7%

Water Supply & Sanitation 8%

Health, Education & Community Services 6%

Governance 4%

Energy 4% Program Administration & Oversight 9%

Monitoring & Evaluation 2%
30 2009 Annual Report

Mali

Morocco

Mozambique

Output

Number of farmers trained

102,181

farmers trained

Armenia ........................30,150

Cape Verde..........................83

El Salvador...................... 3,751

Ghana............................. 19,667

Honduras ........................5,997

Madagascar* ................35,123

Nicaragua........................7,410

Cape Verde

Morocco

Mozambique

Output

Number of 

enterprises assisted

1,499

agribusiness assisted

Armenia ..............................106

El Salvador...........................38

Georgia.................................188

Ghana................................... 413

Honduras ............................ 416

Madagascar* .....................338

Burkina Faso

Mali

Output

Value of agricultural 

and rural loans

$38.2 million 

in agricultural 

and rural loans

Armenia .........$4.228 million

Cape Verde......$.252 million

Georgia** ........$9.613 million

Ghana............. $13.105 million 

Honduras ............$9.9 million

Madagascar*** $1.08 million Armenia

Burkina Faso

Ghana 

Mali

Morocco

Mozambique

Output

Number of hectares

under production with 

MCC support

15,571 hectares 

under production

Income increase 

attributable to MCC 

activities will be measured 

by impact evaluations

El Salvador...3,392 hectares

Honduras .... 6,000 hectares

Nicaragua......6,174 hectares

Cape Verde.........................4.5

Outcome

Increase in income

MCC investments in agriculture 

aim to increase incomes by 

creating jobs in the agriculture 

sector; increasing farmers’ 

capacity, productivity, and 

access to markets; improving 

access to credit; and 

strengthening agribusiness.

Indicator

Type

Progress

Indicators

Totals

Pending

Implementation

Currently

Implementing

All program data are as of September 30, 2009. Data are preliminary and are subject to adjustment. *MCC’s compact with Madagascar has been 

terminated. Final project numbers are not available yet. ** This number has been revised downward to rectify an error in last quarter’s reporting on 

Value of Agriculture Loans (Georgia) ***The “value of loans” indicator for Madagascar includes both agricultural and non-agricultural rural loans.

Agriculture Project Results as of Sept. 30, 2009

Capacity Building of Farmers Other Support to Farms & Agribusiness 

(irrigation, inputs, credit, and marketing support)

Growth in 

Agricultural Sector & 

Employment Generation 

Fact Sheet

Results in Agriculture

102,181 

farmers trained

1,499

agribusinesses assisted 

15,571

hectares under production 

with MCC support

$38.2 million

in agricultural and rural loans
Tangible Results 31

Process

Value of signed contracts for 

feasibility, design, supervision 

and program mgmt contracts

$43 million in 

studies contracted

Armenia .......................$7.67M 

Burkina Faso ................$0.3M

Ghana..................................$7M

Morocco.....................$18.95M

Nicaragua......................$0.7M

Process

% disbursed for 

contracted studies

39% disbursed for 

contracted studies

Armenia .............................35%

Burkina Faso ....................78%

Ghana....................................9%

Mali ........................................ 3%

Morocco............................... 5%

Nicaragua....................... 100% Burkina Faso

Ghana

Morocco

Nicaragua

Process

Value of signed contracts for 

works for irrigation systems

$133.2 million in 

works contracted

Armenia .......................$47.8M 

Cape Verde...................... $6M

Mali ...................................$79.4

Burkina Faso

Ghana

Morocco

Nicaragua

Process

% contracted irrigation 

works disbursed 

32% of contracted 

irrigation system 

works disbursed

Expected upon 

completion of works

Armenia ...............................4%

Cape Verde...................... 80% 

Mali .......................................12%

Outcome

Expected upon 

completion of works

MCC investments 

in irrigation include 

the construction and 

rehabilitation of irrigation 

systems and watershed 

management systems. They 

aim to increase income and 

productivity of agricultural 

producers.

Indicator

Type

Progress

Indicators

Totals

Pending

Implementation

Currently

Implementing

All program data as of September 30, 2009. Data are preliminary and subject to adjustment. 

Irrigation Project Results as of Sept. 30, 2009

Procurement for Works

(4 to 8 months)

Feasibility and/or Detailed Design

Includes Environmental Impact Assessments, 

Environmental Management Plans, and 

Resettlement Action Plans, as applicable

(6 to 12 months)

Construction

(1 to 5 years)

Expected

Outcomes

(up to 15 years)

Fact Sheet

$43 million

contracts for feasibility, design, supervision and/or program management contracts

39%

disbursed, contracted feasibility, design, supervision and/or 

management contract for canals, 

pipes, and other water conveyance 

systems

$133.2 million

contracts for irrigation system 

construction

32%

disbursed, irrigation system works 

contracts

Results in Irrigation
32 2009 Annual Report

Results in Roads

Process

Value of signed contracts for 

feasibility, design, supervision 

and program mgmt contracts

$96.5 million in 

studies contracted

Armenia ..................$3.06M

Burkina Faso.............$3.8M

Cape Verde*..............$3.2M

El Salvador*..............$8.3M 

Georgia ..................... $12.1M

Ghana .........................$17.1M

Honduras...................$8.3M

Mozambique...........$13.4M

Nicaragua................. $6.9M

Tanzania...................$18.5M

Vanuatu**...................$1.8M

Process

% disbursed for 

contracted studies

48% of contracted 

studies disbursed; 

4,170 km of roads 

under design

Armenia .......90% 892km

Burkina Faso........ 145km 

Cape Verde......83%* 62.2km

El Salvador......36% 150km

Georgia .........63% 253km

Ghana ............ 33% 1,186km

Honduras...........68% 200km

Mozambique........... 416km

Nicaragua ........87% 384km

Tanzania*........ 4% 363km

Vanuatu**.....63% 119km

Burkina Faso

Mozambique

Tanzania

Process

Value of signed 

contracts for road 

works

$526 million in 

works contracted

Armenia***................$4.7M

Cape Verde ............ $22.7M

El Salvador.............$50.2M

Georgia ...................$166.1M

Ghana ......................$42.2M

Honduras............... $107.7M

Mali...........................$34.8M

Nicaragua................. $41.1M

Vanuatu**...............$56.3M

Burkina Faso

Mozambique

Tanzania

Process

Kilometers (km) 

of roads under 

works contracts

1,200 km of 

roads under 

works contracts

Armenia***... 24.5km

Cape Verde .....40km

El Salvador...43.5km

Georgia ........... 219km

Ghana ..................6km

Honduras.......599km

Mali......................81km

Nicaragua.........68km

Vanuatu...........119 km

Burkina Faso

Mozambique

Tanzania

Burkina Faso

El Salvador

Georgia

Ghana

Honduras

Mozambique

Nicaragua

Tanzania

Process

% of contracted 

roads works 

disbursed

50% of 

contracted 

roads works 

disbursed

Armenia ............100%

Cape Verde ........ 87% 

El Salvador..........18%

Georgia ............... 34%

Ghana ................... 12%

Honduras............44%

Mali....................... 25%

Nicaragua...........69%

Vanuatu............... 59%

Outcome

Expected upon 

completion of 

works

Expected 

upon 

completion 

of works

MCC 

investments 

in roads aim 

to reduce 

transportation 

costs, improve 

access to 

basic services, 

increase farm 

to market 

access, and 

facilitate trade.

Outcome

Kilometers 

(km) of roads 

completed

80.4 km 

of roads 

completed

Armenia .... 24.5km

Cape Verde.. 26.9km

Vanuatu........ 29km

Indicator

Type

Progress

Indicators

Totals

Pending

Implementation

Currently

Implementing

All program data are as of September 30, 2009. Data are preliminary and subject to adjustment. *Additional studies associated with compacts have been funded by the governments in El Salvador and 

Tanzania, and by another donor in Cape Verde. **Design-Build contract, where the value of design work is included in the value of the works contract. Contract amount listed in first column is a supervision 

contract only.***Due to the operational hold on the roads project in the Armenia and Honduras compacts, MCC will no longer be funding additional works contracts that were previously reported.

Road Project Results as of Sept. 30, 2009

Feasibility and/or Detailed Design

Includes Environmental Impact Assessments, Environmental 

Management Plans, and Resettlement Action Plans, as applicable

(12 to 36 months)

Procurement for 

Construction Contractors

(6 to 9 months)

Construction

(1 to 3 years)

Expected

Outcomes

(up to 15 years)

Fact Sheet

 $96.5 million

contracts for feasibility ,design, supervision and/or program management contracts

48%

disbursed, contracted feasibility, 

design, supervision and/or management contracts

4,170 kilometers of roads under design

$526 million contracts for roads design and/or 

works

1,200 kilometers of road under works 

contracts

50%

disbursed, road works contracts

80.4

km of roads completed
Tangible Results 33

Senegal

Output

Preparatory Studies 

Completed; Legal and 

Regulatory Reforms Adopted

39 studies completed; 

8 legal and regulatory 

reforms adopted

Benin..........16 studies; 0 reforms

Burkina Faso 0 studies; 1 reform

Ghana .............4 studies; 1 reform

Lesotho.......... 1 study; 0 reforms

Madagascar..8 studies; 4 reforms

Mali...............0 studies; 2 reforms

Mongolia.....5 studies; 0 reforms

Mozambique. 1 study; 0 reforms

Nicaragua.. 4 studies; 0 reforms

Burkina Faso

Namibia

Senegal

Output

Stakeholders Reached

122,519 Stakeholders 

Reached

Benin.............................38,960

Ghana...............................5,458

Lesotho................................125

Madagascar ....... unavailable 

Mali ....................................... 614

Mongolia...........................7,921

Mozambique.....................406

Nicaragua....................69,035

Burkina Faso

Lesotho

Mali

Senegal

Output

Buildings Built or 

Rehabilitated; Equipment 

Purchased; Personnel Trained

122 Buildings built/

rehabilitated; $7.52 million 

in equipment purchased; 

14,307 personnel trained

Benin...........................0 bldgs; 

$0.88 mil; 62 trained

Ghana..........................0 bldgs; 

$0.07 mil; 83 trained

Madagascar ...........114 bldgs; 

$4.8 mil; 12,216 trained

Mongolia....................0 bldgs; 

$0.0 mil; 308 trained

Mozambique.............0 bldgs; 

$0.06 mil; 28 trained

Nicaragua..................8 bldgs; 

$1.69 mil; 1,610 trained

Benin

Burkina Faso

Lesotho

Mali

Mozambique

Namibia

Senegal

Output

Rural Hectares (Ha) 

mapped/formalized; Urban 

Parcels mapped/formalized

1,069,116 rural hectares 

mapped; 49,680 rural 

hectares formalized; 2,454 

urban parcels formalized

Ghana.................3,501 rural Ha mapped

Madagascar...................................46,392 

rural Ha mapped and formalized

Mongolia...... 988,334 rural Ha mapped

Nicaragua .... 30,889 rural Ha mapped; 

3,288 rural Ha formalized; 

2,454 urban parcels formalized

Outcome

Effective Property Rights 

System

Reduced Transaction Costs

Increased Tenure Security

Improved Allocation of 

Land

Increased Transactions and 

Investment in Land and 

Property

Increased Land 

Productivity and Value

Indicator

Type

Progress

Indicators

Totals

Pending

Implementation

Currently

Implementing

All program data are as of September 30, 2009. Data are preliminary and subject to adjustment.

Property Rights and Land Property Project Results as of Sept. 30, 2009

Institutional Upgrading 

and Capacity Building

Public 

Outreach

Regulatory, Legal,

and other Work

Clarification and 

Formalization of 

Land Rights

Expected

Outcomes

(up to 20 years)

Fact Sheet

* These activities may be implemented in this order but often overlap and extend throughout the compact period.

14,307

stakeholders trained in land registration, surveying, conflict resolution, land use planning, land legislation, land management and/or new 

technologies

49,680

rural hectares formalized

2,454

urban parcels formalized

122,519

stakeholders reached

8

legal and regulatory 

reforms adopted

Results in Property Rights and Land Property
34 2009 Annual Report

Compact Portfolio Performance

Commitments and Disbursements as Percent of Compact Total

Country Entry Into 

Force Date

Compact Total 

(in USD millions)

% Committed 

through FY09Q4

% Disbursed 

through FY09Q4

Madagascar Jul-05 $109.77 79% 74%

Honduras Sep-05 $215.00 90% 51%

Cape Verde Oct-05 $110.08 91% 55%

Georgia Apr-06 $395.30 84% 37%

Vanuatu Apr-06 $65.69 97% 59%

Nicaragua May-06 $174.71 56% 43%

Armenia Sep-06 $235.65 46% 18%

Benin Oct-06 $307.30 65% 16%

Ghana Feb-07 $547.01 63% 16%

El Salvador Sep-07 $460.94 39% 11%

Mali Sep-07 $460.81 37% 10%

Mongolia Sep-08 $284.91 5% 3%

Morocco Sep-08 $697.50 17% 3%

Mozambique Sep-08 $506.92 15% 2%

Tanzania Sep-08 $698.14 6% 1%

Lesotho Sep-08 $362.55 20% 5%

Burkina Faso Jul-09 $480.94 4% 7%

Namibia Sep-09 $304.48 3% 1%

Senegal TBD $540.00 0% 0%

Total $6,957.70 32% 13%

Compact Performance Against FY09 Financial Targets

FY09 

Targets

FY09 

Actuals

FY09 

Peformance 

on Targets

Cumulative Targets 

through the end of 

FY09

Cumulative Actuals 

through the end of 

FY09

Cumulative 

Performance

Contract 

Commitments

$945 M $1,275M 135% $1.8-2.0 B $2.22 B1 117%

Compact 

Disbursements

$475 M $535 M 112% $745-850 M $889 M2 111%

1 Commitment figure of $2.22B represents projections submitted by Accountable Entities as of early September 2009 Based on MCC’s reporting cycle, FY09 Q4 commitment actual figures will be available next quarter. MCC 

expects FY09 actual figures to be approximately $950 million, based on the delayed signature of several major contracts 

in Ghana, Georgia, El Salvador, and Morocco until next quarter. 

2 Compact disbursement figure includes $917K in disbursements for the Burkina Faso Bright 2 Schools Project ($817k) and Kenya grant project ($100k).

* Senegal has been added to the table as of FY09 Q4; the compact was signed on September 16th, 2009
Tangible Results 35

In 2009, MCC reviewed, and subsequently revised, estimates of the number 

of individuals expected to benefit from compacts. These revisions reflect 

MCC’s updated approach to counting beneficiaries ex ante, consistent with 

our Guidance on Beneficiary Analysis, and do not represent corrections of errors in the original calculations. Recognizing that there are often several ways 

to estimate potential beneficiaries, this guidance was designed to enhance 

the consistency of practices across MCC compacts. Characteristics of the 

guidelines include: classifying projects by scope, counting as beneficiaries only 

the portion of project participants expected to derive an income gain, avoiding 

double-counting beneficiaries that benefit from multiple projects, and projecting beneficiaries over the long term when relevant. Beneficiary estimates will 

be updated as new information and evidence of actual impacts become available and will be made available on MCC’s website.1 2 3 4 5

1 Typically 20 years.

2 These estimates do not include beneficiaries of projects or activities that have been terminated 

or suspended by MCC. In the case of Madagascar, the estimates account for the compact’s early termination.

3 This estimate is still preliminary and subject to further adjustment.

4 This estimate is being revised to include benefits from the injection in 2008 of $100m in additional compact funds.

5 This estimate does not include beneficiaries from the rail project, which was part of the original 

compact but has since been discontinued at the Government’s request. Additional beneficiaries from compact re-scoping options currently under review are not reflected in the estimate. 

Estimating Compact Beneficiaries

Compact Estimated Number 

of Beneficiaries

Estimated Income Gain 

over the Long Term1

Armenia 427,6232 $435,000,000

Benin 13,421,000 $435,000,000

Burkina Faso 1,181,296 $186,872,277

Cape Verde 384,765 $178,000,000

El Salvador 904,207 $530,000,000

Georgia 4,592,0003 $292,000,0004

Ghana 1,217,000 $683,000,000

Honduras 1,818,0002 $331,000,000

Lesotho 1,041,000 $375,000,000

Madagascar 462,5942 $123,000,000

Mali 2,837,000 $457,000,000

Mongolia 2,600,0005 $158,000,000

Morocco 973,107 $806,000,000

Mozambique 4,445,000 $632,000,000

Namibia 1,761,029 $335,797,817

Nicaragua 108,9102 $193,000,000

Tanzania 5,425,000 $1,336,000,000

Senegal 1,662,129 $1,276,532,940

Vanuatu 14,783 $84,000,000
36 2009 Annual Report

Threshold Program Update — September 2009

Quick Facts

 MCC has signed 21 threshold programs with 19 countries totaling nearly $470 

million. 

 Of the 19 threshold program countries, eight have become compact eligible. 

Two countries—Burkina Faso and Tanzania—have signed compacts. Six others—Indonesia, Jordan, Moldova, Malawi, the Philippines, and Zambia—are 

actively developing compact proposals. 

 USAID administers the majority of the threshold programs. The U.S. Department of Treasury administers the Sao Tome and Principe program and participates, along with the U.S. Department of Justice, in several programs by providing direct technical assistance and training in a number of areas. 

 Liberia and Timor-Leste were selected as threshold eligible in December 2008 

and are working to develop program proposals. 

Control of

Corruption Control of

Corruption Control of

Corruption

Fiscal Policy

Rule of Law

Rule of Law

M&E

M&E

Immunization

Rate

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

Indonesia Philippines Kyrgyz

Republic

Business Star-tup

Girls' Primary Ed. Comp.

Government Eectiveness

Land Rights and Access

Voice and Accountability

Trade Policy

Political Rights

Immunization Rate

Civil Liberties

M&E

Rule of Law

Fiscal Policy

Control of Corruption

Control of

Corruption

Control of

Corruption

Control of

Corruption

Control of

Corruption

Fiscal Policy

Rule of Law

Civil Liberties

Political Rights

Trade Policy

Business Start-Up

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

$50,000,000

Albania I Albania II Moldova Ukraine Jordan

Control of

Corruption

Control of

Corruption

Control of

Corruption

Fiscal Policy

Rule of Law

Rule of Law

Rule of Law

M&E Immunization

Rate

Business

Start-Up

Business

Start-Up

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

Guyana Paraguay I Paraguay II Peru

Control

of

Corruption

Control

of

Corruption

Control

of

Corruption

Control

of

Corruption

Control

of

Corruption

Fiscal

Policy Rule of

Law

Civil

Liberties

Political

Rights

Voice &

Acctblty

Government

Eectiveness

Girls'

Primary

Ed. 

Comp.

Girls'

Primary

Ed. 

Comp.

Business

Start-Up

Business

Start-Up

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

Burkina

Faso

Kenya Malawi Niger Rwanda Sao

Tome

TanzaniaUganda Zambia

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

Control of

Corruption

Control of

Corruption

Control of

Corruption

Control of

Corruption

Fiscal Policy

Rule of Law

Civil Liberties

Political Rights

Trade Policy

Business Start-Up

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

$50,000,000

Albania I Albania II Moldova Ukraine Jordan

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

Control

of

Corruption

Control

of

Corruption

Control

of

Corruption

Control

of

Corruption

Control

of

Corruption

Fiscal

Policy Rule of

Law

Civil

Liberties

Political

Rights

Eectiveness

Girls'

Primary

Ed. 

Comp.

Girls'

Primary

Ed. 

Comp.

Business

Start-Up

$0

$5,000,000

$10,000,000

$15,000,000

Burkina

Faso

Kenya Malawi Niger Rwanda Sao

Tome

TanzaniaUganda Zambia

Threshold Program Successes

 Indonesia’s threshold program focuses on increasing immunization rates and 

reducing public corruption. The immunization component concluded in March 

2009, increasing immunization coverage through the use of local health centers 

to 97 percent in the targeted districts and helping to vaccinate over five million 

children, as planned, for measles and DPT3. The corruption component also 

achieved success. Through trainings on judicial codes of conduct, an increase in 

wealth reporting by judges, and increased transparency in Supreme Court decisions, the threshold program helped facilitate a change in the Supreme Court’s 

organizational culture and create momentum within the government and donor 

community for continued judicial reform. 

 Jordan’s threshold program concluded in August 2009. The customs modernization component of the program upgraded 14 customs centers with an integrated risk management system and implemented the “single window” customs 

procedures in five locations to improve efficiency and help eliminate possibilities 

of corruption. As a result, the average time to complete the customs clearance 

Africa Eastern Europe / Middle East
Tangible Results 37

Control of

Corruption Control of

Corruption Control of

Corruption

Fiscal Policy

Rule of Law

Rule of Law

M&E

M&E

Immunization

Rate

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

Indonesia Philippines Kyrgyz

Republic

Business Star-tup

Girls' Primary Ed. Comp.

Government Eectiveness

Land Rights and Access

Voice and Accountability

Trade Policy

Political Rights

Immunization Rate

Civil Liberties

M&E

Rule of Law

Fiscal Policy

Control of Corruption

Civil Liberties

Political Rights

Trade Policy

Jordan

Control of

Corruption

Control of

Corruption

Control of

Corruption

Fiscal Policy

Rule of Law

Rule of Law

Rule of Law

M&E Immunization

Rate

Business

Start-Up

Business

Start-Up

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

Guyana Paraguay I Paraguay II Peru

Control

of

Corruption

Control

of

Corruption

Government

Eectiveness

ganda Zambia

Control of

Corruption Control of

Corruption Control of

Corruption

Fiscal Policy

Rule of Law

Rule of Law

M&E

M&E

Immunization

Rate

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

Indonesia Philippines Kyrgyz

Republic

Business Star-tup

Girls' Primary Ed. Comp.

Government Eectiveness

Land Rights and Access

Voice and Accountability

Trade Policy

Political Rights

Immunization Rate

Civil Liberties

M&E

Rule of Law

Fiscal Policy

Control of Corruption

Control of

Corruption

Control of

Corruption

Control of

Corruption

Control of

Corruption

Fiscal Policy

Rule of Law

Civil Liberties

Political Rights

Trade Policy

Business Start-Up

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

$50,000,000

Albania I Albania II Moldova Ukraine Jordan

Control of

Corruption

Control of

Corruption

Control of

Corruption

Fiscal Policy

Rule of Law

Rule of Law

Rule of Law

Business

Start-Up

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

Guyana Paraguay I Paraguay II Peru

Control

of

Corruption

Control

of

Corruption

Control

of

Corruption

Control

of

Corruption

Control

of

Corruption

Fiscal

Policy Rule of

Law

Civil

Liberties

Political

Rights

ment

Eectiveness

Girls'

Primary

Ed. 

Comp.

Girls'

Primary

Ed. 

Comp.

Business

Start-Up

$0

$5,000,000

$10,000,000

$15,000,000

Burkina

Faso

Kenya Malawi Niger Rwanda Sao

Tome

TanzaniaUganda Zambia

process dropped by 50 percent in four targeted MCC customs centers. The program’s local governance component strengthened the performance of community 

representatives in municipal planning, including improving the performance and 

participation of locally-elected women officials.

 The Philippines’ threshold program concluded in May 2009, meeting all its 

programmatic targets. These include increasing the annual conviction rate at the 

Office of the Ombudsman from 19 percent to 76 percent, increasing the number of 

cases filed against smugglers and tax evaders at the Department of Justice from 11 

to 95 and from 44 to 117, respectively, and computerizing 97 percent of the offices of 

the Bureau of Internal Revenue nationwide.

 Uganda’s threshold program focuses on reducing and preventing corruption in 

public procurement and increasing the number of successful public corruption 

prosecutions. Through diligent procurement audits of government entities, advocacy from civil society, and media support, the threshold program facilitated the 

publication and distribution of 17 procurement audits that highlight the challenges 

in central and local government entities. 

 Ukraine’s threshold program focuses on reducing corruption in the public sector 

and in higher education through such avenues as civil society monitoring, advocacy, and improved legal structures prosecuting corruption. Through the program’s 

civil society networks, 114 advocacy campaigns were supported, resulting in 127 

reforms, including 10 at the national level. The threshold program also supported 

the creation of standardized testing for higher education admissions, which is now 

used across the country. 

 Zambia’s threshold program concluded in February 2009. The program helped 

reduce administrative corruption and barriers to trade and investment. By increasing transparency and accountability and streamlining procedures in seven pilot 

ministries, the threshold program decreased the processing time for registering a 

property at the Ministry of Lands from 52 to 16 days, reduced the time to register 

a business from 35 to 18 days, and strengthened the Anticorruption Commission’s 

relationship with the Zambian business community.

Latin America Asia/Eurasia
38 2009 Annual Report

Funds Flow in Millions USD per Threshold Program

graphically displayed as a percentage 

of total funds expended

The Obama Administration embraces 

the United Nations Millennium Development Goals (MDGs) as America’s goals 

too in the fight against global poverty. 

The MDGs outline a series of targets to 

be achieved by 2015 to reduce extreme 

poverty, hunger, disease, and child mortality, and to increase gender equality, 

access to education, maternal health, 

safe drinking water, and environmental stewardship. MCC is one tool the 

Administration is using to achieve the 

MDGs. 

MCC works to meet the MDGs by supporting country-driven programs that 

address these goals and country-led policies that are essential for their sustainability well beyond 2015. 

On the one hand, partner countries are 

choosing to address the MDGs in the 

design of their antipoverty compacts. 

MCC’s compacts with Namibia, Mongolia, and Lesotho, for example, contain 

education and health components. 

MCC’s compact with Mozambique 

invests in water and sanitation systems, 

which contributes to the MDG to expand safe drinking water. Several MCC 

compacts invest in secure tenure and 

land titling, giving farmers an incentive 

to improve, rather than abandon, cultivated land. MCC investments in roads, 

like in Senegal, Cape Verde, Ghana, and 

El Salvador, not only enable crops to get 

to markets but also provide better access 

to schools and health facilities. 

On the other hand, MCC creates a 

strong incentive for policy reform that 

supports progress on the MDGs. Many 

of the 17 policy indicators our Board 

uses to select partners converge with 

the MDGs, including those that assess 

a country’s commitment to improve 

girls’ primary school completion rates, 

immunization rates, incidence of child 

mortality, gender equality, access to water and sanitation, and natural resources 

management. Moreover, MCC threshold programs focus mainly on rooting 

out corruption and improving governance that foster a policy framework 

where poverty reduction and economic 

growth can take root. 

How MCC is Achieving Results Toward the MDGs

0.3

0.2

7.6

4.3

9.0

44.3

7.6

4.3

24.7

5.8

5.0

8.8

40.7

34.5

25.0

20.6

22.7

11.1

13.7

12.9

20.5

24.4

30.1

15.5

11.4

26.6

10.7

5.1

11.7

0.0

0.9

2.4

1.7

4.3

0.1

0.0

0.1

0.0

0.0

0.1

-

0.4

0% 25% 50% 75% 100%

Rwanda

Paraguay II

Niger

Albania II

Peru

Indonesia

Kenya

KyrgyzRepublic

Moldova

Guyana

Sao Tome & Principe

Uganda

Ukraine

Paraguay I

Jordan

Philippines

Zambia

Tanzania

Albania I

BurkinaFaso

Malawi

Accrued Expediture Remaining Funds
Tangible Results 39

Putting Results a Click Away

Results for each MCC partner country are a 

simple click away on our website, www.mcc.gov. 

There, under the dedicated Results tab, you can 

access a comprehensive and regularly-updated 

portfolio of performance metrics by country. 

Be sure to visit the website often and view:

•	 country-specific tables of performance 

indicators used to monitor progress toward 

results, like the one pictured here, 

•	 country-specific impact evaluations in 

progress,

•	 country-specific quarterly status reports, 

and 

•	 country-specific economic rates of return 

spreadsheets.

A feedback tab allows you to submit comments 

on every facet of how we work with partner 

countries to plan for and measure results. 

GEORGIAEntry Into Force: 4/7/2006

Compact Ends: 4/30/2011

Currently in Year 4 of Implementation

Cumulative Past Performance 

Through Last Completed Compact 

Year (Year 3)

Performance for Current Compact 

Year (Year 4)

End of 

Compact 

Target

Quarter 1 to Quarter 12 

(April 2006 - March 2009)

Quarter 13 - Quarter 16 

(April 2009 - March 2010) 

Q1 to Q20

Indicator 1 Unit Level Classification Baseline

Cumulative 

Target

Cumulative 

Actual Deviation

Annual 

Target

Cumulative 

Actual 

through 

September 

2009 2

% 

Complete 

Towards 

Annual 

Target Target

Regional Infrastructure Rehabilitation Project

Household Savings from Infrastructure Rehabilitation Activities $US Million Objective Cumulative 0 0 0 0% 7790 NA NA 7790

Savings in Vehicle Operating Costs (VOC) 3 $ US Thousands Outcome Cumulative 0 157 -100% 13177 NA NA 13,204

International Roughness Index (IRI) Meters/ Kilometer Outcome Level 16.6 17 -100% 14.6 NA NA 3.2

Annual Average Daily Traffic (AADT) Vehicles (thousands) Outcome Level 5.3 6 -100% 6.6 NA NA 6.7

Travel Time Hours and Minutes Outcome Level 5:33 4:33 -100% 3:03 NA NA 2:45

Road Paved/completed Km Output Cumulative 0 0 0 0% 83.5 0 0% 119.5

Construction Works completed (Contract 1) % Process Cumulative 0 25 15 -41% 70 18.6 27% 100

Road Construction Works completed (Contract 2) % Process Cumulative 0 20 4 -80% 65 11 17% 100

 Signed road contracts for feasibility and/or design studies 4 $US Million Process Cumulative 0 NA 3.95 NA NA 10.2 NA NA

% of contracted Road studies disbursed 5 % Process Cumulative NA 98 NA NA 53 NA NA

Km of Roads Under Design 6 Km Process Cumulative NA 253 NA NA 253 NA NA

Signed contracts for road works 7 US $ Million Process Cumulative NA 99.3 NA NA 138.4 NA NA

Km of Roads Under Works Contracts 8 Km Process Cumulative NA 171 NA NA 217 NA NA

Pipeline Sites Rehabilitated (Phases I,II,III) Number Outcome Cumulative 0 15 8 -47% 23 10 43% 23

Pipeline Construction Works Completed (Phase II) % Output Cumulative 0 100 65 -35% 100 92 92% 100

Savings in Household Expenditures for all RID Sub-projects $US thousands Outcome Cumulative 0 0 0 0% 3,810 NA NA 7,790

Population Served by all RID Sub-projects Number Outcome Cumulative 0 42,000 42,000 0% 228,000 42,000 18% 265,964

RID Sub-projects Completed Number Output Cumulative 0 1 1 0% 2 1 50% 5

Value of RID Grant Agreements Signed $ US thousands Process Cumulative 0 38,892 64,401 66% 38,892 64,401 166% 40,000

Value of RID Works and Goods Contracts Signed $ US Thousands Process Cumulative 0 28,800 20,274 -30% 37,400 29,269 78% 37,400

RID Sub-projects with Works Initiated Number Process Cumulative 0 4 4 0% 4 5 125% 5

Enterprise Development Project

Jobs Created - ADA and GRDF Number Objective Cumulative 0 2,043 1,033 -49% 3,700 NA NA 4,342

Household Net Income - ADA and GRDF $US Objective Cumulative 0 1,543 1,307 -15% 5,581 NA NA 6,617

Jobs Created - ADA Number Outcome Cumulative 0 1,665 885 -47% 2,450 1,462 60% 2,450

Firm Income - ADA $ US Outcome Cumulative 0 189 235 24% 525 864 165% 571

Household Net Income - ADA $ US Outcome Cumulative 0 920 866 -6% 3,086 1,237 40% 3,499

ADA Beneficiaries (Direct and Indirect) Number Outcome Cumulative 0 25,242 27,313 8% 50,991 40,071 79% 54,246

ADA Grant Agreements Signed (Primary Producer) Number Output Cumulative 0 126 101 -19% 145 122 84% 145

ADA Grant Agreements Signed (Value Adder) Number Output Cumulative 0 16 13 -19% 18 14 78% 18

ADA Grant Agreements Signed (Value Chain Initiative) Number Output Cumulative 0 33 17 -48% 41 24 59% 41

ADA Grant Agreements Signed (Farm Service Center) Number Output Cumulative 0 26 25 -4% 30 28 93% 30

Increase in Gross Revenues of GRDF Portfolio Companies $ US Million Outcome Cumulative 0 5310 2,491 -53% 16,890 2,491 15% 22,200

Increase in GRDF Portfolio Company Employees Number Outcome Cumulative 0 378 148 -61% 1,250 174 14% 1,892

Increase in Wages Paid to the GRDF Portfolio Company Employees $ US Outcome Cumulative 0 623 441 -29% 2,495 441 18% 3,118

GRDF Portfolio Companies Number Output Cumulative 0 8 8 0% 14 10 71% 20

Funds Disbursed to the GRDF Portfolio Companies $ US thousands Process Cumulative 0 4250 16,450 287% 11,800 20,150 171% 22,000

1. Not all indicators have an annual target for every year of the Compact. In cases where an indicator does not have an annual target, and is not required to be reported on, it is marked with NA. In cases where an indicator does 

have an annula target, but it was not reported on, it is left blank. In addition, Georgia’s Monitoring and Evaluation Plan was revised in September 2008; some of the indicators listed here were only added to the plan at that time. 

As a result, the first annual targets accompanying those indicators would come due in Quarter 12, and the end of Program Year 3. 

2. Includes complete data through Quarter 13, and some preliminary data from Quarter 14, which will be updated in the following quarter, per MCC’s reporting cycle. For a complete quarterly breakdown, see the accompanying 

Quarterly Breakdown table.

3. Indicators and targets for the Samtske-Javakheti Road and Regional Infrastructure Development activities do not yet reflect an additional $100 million in Compact funds that Georgia received in 2008. MCC anticipates doing a 

revision of the M&E Plan to adjust the monitoring framework as necessary to account for these additional funds.

4 - 8. This indicator is for tracking purposes only, and does not have targets. 
40 2009 Annual Report

Results by Region

Monitoring & Evaluation

Program Administration & Oversight

Energy

Governance

Health, Education & Community Services

Water Supply & Sanitation

Finance & Enterprise Development

Agriculture

Transportation 

Millions USD

Transportation

33%

Agriculture

24%

Monitoring & 

Evaluation

2%

Finance & 

Enterprise 

Development

7%

Water Supply &

Sanitation

9%

Health, Education &

Community Services

7%

Governance

5%

Program 

Administration 

& Oversight

Energy 9%

4%

Millions USD

Transportation

51%

Agriculture

17%

Monitoring & 

Evaluation

2%

Finance & 

Enterprise 

Development

3%

Water Supply &

Sanitation

27%

Health, Education &

Community Services

4%

Governance

2%

Program 

Administration 

& Oversight

8%

Energy

6%

MCC Commitments by Sector — Africa

Millions USD, Total $5.1 billion • As of Sept. 30, 2009 

MCC Commitments by Sector — Eurasia and Pacific

Millions USD, Total $982 million • As of Sept. 30, 2009 
Tangible Results 41

Monitoring & Evaluation

Program Administration & Oversight

Energy

Governance

Health, Education & Community Services

Water Supply & Sanitation

Finance & Enterprise Development

Agriculture

Transportation 

Millions USD

Transportation

51%

Agriculture

17%

Monitoring & 

Evaluation

2%

Finance & 

Enterprise 

Development

3%

Water Supply &

Sanitation

27%

Health, Education &

Community Services

4%

Governance

2%

Program 

Administration 

& Oversight

8% Energy

6%

MCC Commitments by Sector — Latin America

Millions USD, Total $851 million • As of Sept. 30, 2009 

For performance indicator data, impact evaluations 

in progress, and economic rates of return 

spreadsheets for all MCC compacts, 

visit www.mcc.gov/results. 
42 2009 Annual Report

courthouses and a Legal Information Center should be completed 

by November 2009. 

 Access to Markets Project: In July and August, the three largest 

design-build contracts for the Port of Cotonou were signed by 

MCA-Benin. The start of construction is expected in early 2010. 

 Access to Land Project: The National Commission to Support the 

Attainment of Land Titles has approved its Manual of Procedures, 

defining the land-titling process for citizens and clarifying the 

land rights in twelve departments have been established. 

 Access to Financial Services Project: The Challenge Facility 

grant fund is working with the 40 projects selected in March to 

begin project implementation. Grant agreements for 18 additional 

projects were signed in September. The projects, all proposed by 

local microfinance institutions and small businesses, will reduce 

poverty by improving access to financial services. 

Compact At-A-Glance

Signed............................................ 2/22/2006

Entry Into Force...........................10/6/2006

The five-year, $307.3 million compact 

will increase access to land through more 

secure tenure, expand access to financial 

services through grants to enterprises, 

provide access to justice by bringing 

courts closer to rural populations and 

improve access to markets through improvements to the Port of Cotonou.

Country At-A-Glance

Population.....................................8,662,086*

GNI per Capita .................................... $690* Program Administration and Control

$39.13

Monitoring and Evaluation

$8.78

Access to Markets Project

$169.45

Access to Justice Project

$34.27

Access to Financial Services

$19.65

Access to Land Project

$36.02

in millions

 $200,350,499 total contract commitments

$49,027,313 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MCA-Benin: 

www.mcabenin.bj

Benin Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

July-Aug. 2009: 

Design-build 

contracts are 

signed for the 

three largest Port 

contracts totaling 

$123 million.

October 2009: 

National Commission for Land Title 

Transformation 

holds validation 

workshop and completes Procedures 

Manual.

September 2009: 

Challenge Facility 

launches signs 

second batch of 

grant agreements.

We Are Here

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009

Disbursements to Date................. $49,027,313

Total Contract Commitments.... $200,350,499

Compact Implementation Status Report Timeline, Benin

 10/06 - 09/07 10/07 - 09/08 10/08 - 09/09 10/09 - 09/10 10/10- 09/11

Access to Markets

 Port Institutional Activity: Customs Improvement, Audit 

 Port Security and Landside Improvements

 Waterside Improvements

 Studies: Port Project and Design, Dry Port, Master Plan

Access to Land

 Policy and Legal Framework

 Property Rights and Registration

 Land Registration Services and Info Management

 Information, Education and Communication

Access to Financial Services

 Financial Institution Capacity Building 

 Financial Enabling Environment Activity

Access to Justice

 Arbitration Center

 Business Registration Station

Improved Courts Services: Legal Information 

Center,Judges' Training, Legal Aid, New Courthouses

 Project Preparation

 Construction - Infrastructure 

 Project Activities - Other Sectors

3 3

2

2

1

1
Tangible Results 43

ing resettlement action planning) for the Dedougou-Nouna-Mali 

border road (145 km) and the Banfora-Sindou road (50 km) have 

been signed by MCA-BF and mobilization is underway. MCA-BF 

is currently evaluating the proposals submitted for the design and 

environmental and social assessment studies related to the SabouKoudougou-Didyr road (160 km).

 Agriculture Development Project: MCA-BF is currently negotiating four important Agricultural Development contracts worth 

project management support services. 

 BRIGHT 2 Schools Project: USAID is managing the transition 

of the Bright I Threshold Program to the larger Bright II Program. 

Currently, implementing partners are remodeling halls to be used 

as temporary classrooms while new classrooms are built during 

Phase II. Textbooks, school kits, and desks are also being delivered 

to classrooms by Burkina’s Ministry of Basic Education (MEBA). 

Compact At-A-Glance

Signed.......................................... 07/14/2008

Entry Into Force........................ 07/31 /2009

The five-year, $480.94 million compact 

seeks to reduce poverty in Burkina Faso 

through economic growth by making 

strategic investments to improve agricultural productivity, land use rights and 

land management, farm-to-market roads, 

and girls’ primary education.

Country At-A-Glance

Population....................................15,208,590*

GNI per Capita .................................... $480*

 $21,119,050 total contract commitments

$31,820,348 disbursed to date

Obligations by Project

On the Web: 

www.mcc.gov

MCA Burkina Faso:

www.mcaburkina.bf

Program Administration and Control

 $39.0 Monitoring and Evaluation

 $6.6 

Agriculture Project

 $47.0 

Tourism Project

 $67.0 

Education Project

 $145.0 

in millions

World Development Indicators, World Bank, 2008

Burkina Faso Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

Construction on 

Irrigation Systems 

and Rehabilitation 

of the Léry Dam 

begins. 

First loans expected 

to commence in 

May 2010.

We Are Here

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009

Disbursements to Date................. $31,820,348

Total Contract Commitments..... $21,119,050

Compact Implementation Status Report Timeline, Burkina Faso

2

1

New Rural Land 

Law passed that 

will provide detailed 

guidelines for users.

3

7/09 - 7/10 7/10 - 7/11 7/11 - 7/12 7/12 - 7/13 7/13 - 7/14

Agricultural Development Project

 Water Management and Irrigation

 Irrigation Works and Dam Rehabilitation

 Development and Water Users Associations, Water 

__ Management Institutions 

 Diversified Agriculture

 Access to Rural Finance

Rural Land Governance Project

 Legal and Procedural Change and Communication

 Institutional Development and Capacity Building

 Site-Specific Land Tenure Interventions

Roads Project

 Development of Primary Roads

 Development of Rural Roads

 Capacity Building and Tech. Assistance for Road Maintenance

 Incentive Matching Fund for Periodic Road Maintenance

Bright 2 Project

 Phase One

 Phase Two

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

2

1

3

4

Construction on the 

Dedougou-NounaMali Border Road to 

begin.

4
44 2009 Annual Report

is underway in the other two islands. Under the Credit Activity, 

56% of $450.000 has been disbursed to microfinance institutions 

for agribusiness and drip irrigation.

 Infrastructure Project: The Assomada Rincão (15.6 km) road was 

inaugurated on July 18, 2009 and 40% of Cruz Grande-Calhetona 

(15km) has been completed. Over 80% of all the bridge works (4 

bridges and a connecting road) in Santo Antao are completed. 

 Construction on the rehabilitation of the Port of Praia are 

include the implementation of a Water Resources Management 

Plan to ensure sustainable use of wells for agriculture.

 Program Administration: The Compact closure process for Cape 

Verde’s Compact is underway. MCA-CV has presented a draft 

closure plan to MCC for review.

 Cape Verde received the visit of Hillary Clinton, Secretary of State 

and Chair of MCC Board, on 13-14 August.

Compact At-A-Glance

Signed...............................................7/4/2005

Entry Into Force..........................10/17/2005

The five-year, $110.0 million compact 

seeks to improve investment climate, 

reform the financial sector, develop infrastructure to support increased economic 

activity and provide access to markets, 

employment and social services. Other 

goals include increasing agricultural 

productivity and rural incomes.

Country At-A-Glance

Population........................................ 498,672*

GNI per Capita .................................. $3,130*

Program Administration and Control

Monitoring and Evaluation $10.22

$3.62

Private Sector 

Development Project

Infrastructure Project

$83.16

Watershed Management and 

Agricultural Support Project

$11.00

in millions

$2.08

 $99,869,930 total contract commitments

$61,090,075 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MCA-Cape Verde: 

www.mca.cv

Cape Verde Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

August 2009:

Water capturing 

infrastructure and 

distribution system 

complete on San 

Antao Island.

July 2009:

Road between 

Assomada and Rincao 

inaugurated.

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

Compact Implementation Status Report Timeline, Cape Verde

3

1

As of September 30, 2009

Disbursements to Date................. $61,090,075

Total Contract Commitments..... $99,869,930

October 2009:

Construction of 

Access Road, 

renovation of Quay 2 

and construction of 

the Cargo Village are 

ongoing.

2

10/05 - 09/06 10/06 - 09/07 10/07 - 09/08 10/08 - 09/09 10/09 - 09/10

Watershed Management and Agricultural Support

 Water Management Activity 

 Agribusiness Development Services Activity

 Credit Activity

Infrastructure

 Port

 Roads and Bridges

Private Sector Development

 Partnership to Mobilize Investment

 Financial Sector Reform

Program Administration

 Enhanced Transparency Initiative

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

We Are Here

1

2

3
Tangible Results 45

 Sixty agriculture ministry officers have been trained and took 

their exams in Global Partnership for Good Agricultural Practices. 

Those certified will be in a position to transfer this knowledge to 

industry stakeholders. 

 Improve Credit Services and Value Chain Investments Activity: To 

date, $19.7 million in credit has been provided to FBOs, farmers 

and agribusinesses. With over 33,000 farmers being trained this 

calendar year, MiDA expects a very high demand for agricultural 

credit next planting season. A loan guarantee facility between 

Transportation Project: N1 Highway Activity: Construction com

menced on the first section of the highway following the completion of the resettlement and compensation of affected persons. 

 Rural Development Project: Community Services Activity: The 

first phase of school construction will soon be complete with 65 

schools commissioned across the country. All Community Service 

activities are now in the feasibility and design stage, and construction procurements will soon be completed. 

Compact At-A-Glance

Signed..............................................8/1 /2006

Entry Into Force............................2/16/2007

The five-year, $547.0 million compact 

seeks to increase farmer incomes through 

private sector-led agribusiness development. The compact aims to spur the production and productivity of both staple 

and high-value crops to make Ghana’s 

agricultural products more competitive in 

regional and global markets.

Country At-A-Glance

Population....................................23,350,930*

GNI per Capita .....................................$670*

$342,013,452 total contract commitments

$89,866,778 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MiDA: 

www.mida.gov.gh

Agriculture Project

$227.90

Program Administration 

and Control

$41.88

Monitoring and Evaluation

$13.58

Transportation Project

$174.29

Rural Development Project

$89.36

in millions

Ghana Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

By December 2009:

51,150 farmers are 

will have entered 

the FBO training 

program.

October 2009:

Pineapple trial 

shipments to 

the EU with an 

international 

exporter continue.

October 2009: 

$83 million contract for N1 Lot 2 

awarded. Contractor to mobilize by 

November. experience

We Are Here

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009

Disbursements to Date................. $89,866,778

Total Contract Commitments..... $342,013,452

Compact Implementation Status Report Timeline, Ghana

3

2

1 2/07 - 1/08 2/08 - 1/09 2/09 - 1/10 2/10 - 1/11 2/11 - 1/12

Agriculture Project

 Training of Farmer Based Organizations (FBOs)

 Irrigation Development

 Land Tenure Facilitation

 Improve Post Harvest & Value Chain Services

 Improve Credit Services & Value Chain Investments

 Rehabilitation of Feeder Roads

Transportation Project

 Upgrading of National Highway (N1)

 Construction/Rehab of Afram Basin Trunk Roads

 Improvements to Volta Lake Ferry Service

Rural Development Project

 Strengthen Public Sector Procurement Capacity

 Construction/Rehab of Educational Facilities (rolling)

 Construction of Water Sanitation Facilities

 Electrification of Rural Areas

 Improvements/Networking of Rural Banks

 Improvements of National Payment System

 Project Preparation

 Construction 

 Project Activities

3

2

1

4

July 2009: 

About 300 

students placed in 

summer internships 

for practical 

procurement 

experience.

4

5

September 2009: 

Tamale Water 

Sanitation 

feasibility and 

design commences.

5
46 2009 Annual Report

 Water Sector Project: A firm was hired for program management 

and construction supervision of the Rural Water Supply and Sanitation project. The facilities include 250 water systems and 10,000 

latrines. 

 Health Sector Project: A firm was hired for program management 

and construction supervision of the health sector infrastructure 

activity. The facilities include 138 health clinics, 14 out-patient 

departments retrofitted for anti-retroviral therapy, blood bank, 

ers to improve health information and human resources.

 Private Sector Development Project: Land: The Land Bill and 

Land Administration Authority Bill are both under consideration 

by Parliament and are expected to be passed this quarter. The 

legislation will establish greater land tenure security, increase 

protections for all land occupants and enable the establishment of 

a new authority that will provide land administration services to 

public and private users. 

Compact At-A-Glance

Signed.............................................7/23/2007

Entry Into Force..............................09/17/08

The approximately $363 million compact 

with Lesotho seeks to improve health 

outcomes and productivity through 

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

sector investment and providing water 

supply for industrial and domestic use.

Country At-A-Glance

Population......................................2,016,823*

GNI per Capita ..................................$1,080*

Program Administration and Control

$31.60 Monitoring and Evaluation

$7.81

Private Sector Development

$36.72

Health Sector

$122.40

Water Sector

$164.03

in millions

 $73,775,632 total contract commitments

$17,150,994 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

Lesotho Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

October 2009: 

Rural Water Supply 

Design Review 

& Construction 

Supervision firm 

mobilizes.

October 2009: 

Health Systems 

Strengthening 

Technical 

Assistance Firm 

mobilizes.

October 2009: 

Contract for 

Modernization 

of Land Services 

& Institutional 

Strengthening 

signed.

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009

Disbursements to Date................. $17,150,994

Total Contract Commitments..... $73,775,632

Compact Implementation Status Report Timeline, Lesotho

3

2

1

We Are Here

10/08 - 9/09 10/09 - 9/10 10/10 - 9/11 10/11 - 9/12 10/12 - 9/13

Water Sector Project

 Metolong Dam Bulk Water Conveyance System

 Metalong Dam Program Management Unit

 Urban and Peri-Urban Water Infrastructure 

 WASA Project Implementation Unit

 Rural Water Supply and Sanitation Infrastructure 

 Wetlands Restoration and Conservation 

Health Sector Project

 Health Care Centers Infrastructure 

 ART Clinic Infrastructure

 Central Lab Infrastructure 

 Blood Transfusion Center

 National Health Training College Dormitory Infrastructure

 Health Systems Intervention

 Medical Waste Management

 Health PIU

Private Sector Development Project

 Civil Legal Reform

 National ID/Credit Bureau

Land Administration Reform

Payment and Settlement System

Gender Equality in Economic Rights

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

3

2

1
Tangible Results 47

 Financial Sector Reform Project: The Finance Project was de

signed to improve a weak banking system, make essential financial 

services available to rural areas, advance credit skills, and cut delays 

and risks in payments for goods and services.

 Agricultural Business Investment Project: This project was 

designed to identify investment opportunities for rural Malagasy 

populations in local, regional, or international markets, and train 

farmers and other entrepreneurs in production, management, and 

marketing techniques.

Compact At-A-Glance

Signed.............................................4/18/2005

Entry Into Force............................7/27/2005

The five- year, approximately $110 million 

compact seeks to increase land security, 

modernize the financial sector, and spur 

investment in farms and other rural businesses

Country At-A-Glance

Population......................................9,110,940*

GNI per Capita .....................................$410*

Program Administration and Control

Monitoring and Evaluation

Agricultural Business Investment Project

Financial Sector Reform Project

Land Tenure Project

$32.45

$17.68

$20.66

$36.03 $2.96

in millions

 $86,675,319 total contract commitments

$81,544,763 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MCA-Madagascar: 

www.mcamadagascar.org

Madagascar Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4

Following the MCC 

Board decision in May 

2009 to terminate the 

MCC Compact in Madagascar, MCC is working 

with MCA Madagascar 

to ensure an orderly 

windup of the program.

MCC will issue a final 

status report after the 

termination process is 

complete.

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

Compact Implementation Status Report Timeline, Madagascar

Year 5

Compact Windup

08/05 - 07/06 08/06 - 07/07 08/07 - 07/08 08/08 - 07/09 08/09 - 07/10

Land Tenure Project

 Support Development of National Land Policy Framework

 Improve Ability of the National Land Service Administration

 Decentralization of Land Services

 Land Tenure Regularization

 Information Gathering Analysis and Dissemination

Finance Project

 Promote Legal and Regulatory Reform

 Reform Sovereign Debt Management and Issuance

 Strengthen the National Savings Bank

 Provide New Instruments for Agribusiness Credit

 Modernize National Interbank Payment System

 Improve Credit Skills Training, Increase Credit Information

Agricultural Business Investment Project

 Create and Operate Six Agricultural Business Centers

 Create National Coordinating Center for ABC's

 Identify Investment Opportunities

 Build Management Capacity Zones

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors As of September 30, 2009

Disbursements to Date................. $81,544,763

Total Contract Commitments..... $86,675,319
48 2009 Annual Report

tives from MCC and MCA-Mali met in Bamako in September to 

evaluate progress made on the Compact thus far, identify possible 

risks to the implementation of the Airport and Alatona projects, 

and discuss strategies for mitigating those risks. 

 During this reporting period, MCA-Mali has signed approximately $100 million worth of contracts, including 2 applied agricultural research grants, the supervision contract for the Alatona 

rehabilitation of the main water control gates, the construction 

 Bamako-Sénou Airport Improvement Project: In early August, 

representatives from MCA-Mali, MCC, the Ministry of Equipment 

and Transport, the Agency for Air Navigation Safety in Africa and 

Madagascar (ASECNA), and other aviation related stakeholders 

attended a workshop to review preliminary landside designs and 

budgets for the airport. Validation of the documents allowed 

MCA-Mali to advance to the detailed design stage scheduled for 

November. 

Compact At-A-Glance

Signed........................................... 11/13/2006

Entry Into Force............................9/17/2007

The five-year, $460.8 million compact 

seeks to increase the productivity of 

agriculture 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.

Country At-A-Glance

Population.....................................12,711,140*

GNI per Capita .....................................$580*

Industrial Park Project

$2.64

Monitoring and Evaluation

$4.91

Program Administration

and Control

$37.12

Alatona Irrigation Project

$234.88 

Bamako Senou Airport 

Improvement Project

$181.25 

in millions

$168,470,841 total contract commitments

$46,357,275 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MCA-Mali: 

www.mcamali.org

Mali Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

September 2009: 

Road construction 

underway – site 

cleared and 14km 

ready for pavement.

August 2009: 

Agricultural 

Systems 

Development 

Contract signed.

September 2009: 

Detailed designs for the 

airside infrastructure are 

submitted to MCA-Mali for 

validation. 

We Are Here

4

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009

Disbursements to Date................. $46,357,275

Total Contract Commitments..... $168,470,841

Compact Implementation Status Report Timeline, Mali

3

1

June-Aug. 2009:

Contracts for primary irrigation infrastructure, design 

and supervision, 

and rehabilitation 

of the main gates 

signed.

2

9/07 - 9/08 9/08 - 9/09 9/09 - 9/10 9/10 - 9/11 9/11 - 9/12

Alatona Irrigation Project

 Niono - Goma Coura Road

 Irrigation Planning and Infrastructure

 Social Infrastructure

 Land Allocation

 Resettlement

 Social Services (Education and Health)

 Agricultural Services and Financial Services 

Bamako-Senou Airport Improvement Project

 Airside Infrastructure

 Landside Infrstructure 

Institutional Strengthening 

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

3

2

1

4

September 2009: 

Workshop held to discuss 

results of key institutional 

strengthening study.

5
Tangible Results 49

a total of 9,240 hectares, of which 4,840 are small-and mediumsized perimeters and 4,400 are in oasis. APP and its partners are 

collaborating with farmers in 45 project sites on plans to improve 

the productivity and marketing potential of existing olive orchards. 

 Financial Services Project: APP disbursed $6.5 million to Jaida, a 

microfinance investment fund, to support Moroccan microfinance 

institutions. 

and performing arts. APP and its partners are also preparing for 

an international design competition for the site, which will be 

launched at the beginning of 2010.

 APP also partnered with UNESCO and government ministries to 

launch literacy training for artisans, fishermen and women and 

agricultural workers throughout the country. 

Compact At-A-Glance

Signed............................................8/31 /2007

Entry Into Force............................9/15/2008

The five-year, $698 million compact will 

increase productivity in high potential 

sectors, including investments in fruit 

tree productivity, small-scale fisheries and 

artisan crafts.ÿ Small business creation 

and growth will also be supported by 

investments in financial services and 

trainings for entrepreneurs.

Country At-A-Glance

Population................................... 31,228,980*

GNI per Capita ..................................$2,580*

Monitoring and Evaluation Program Administration and Control $20.74

Enterprise Support Project

$33.85

Financial Services Project

$46.20

Artisan and Fez Medina Project

$111.87

Small Scale Fisheries Project

$116.17

 Fruit Tree 

 Productivity Project

 $300.90

in millions

$67.77

$120,349,758 total contract commitments

$22,199,127 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MCA-Morocco:

www.app.ma

Morocco Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

March-May 2009: 

Public consultations 

held for Morocco’s 

first Strategic 

Environmental 

Assessment.

July-Sept. 2009: 

Action plans 

completed with 

farmers in 45 

sites to improve 

productivity of 

olive orchards.

February 2009: 

International Design 

Competition for 

Fez Makina site will 

be launched.

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

Compact Implementation Status Report Timeline, Morocco

3

2

1

As of September 30, 2009

Disbursements to Date................. $22,199,127

Total Contract Commitments..... $120,349,758

We Are Here

9/08 - 8/09 9/09 - 8/10 9/10 - 8/11 9/11 - 8/12 9/12 - 8/13

Fruit Tree Productivity Project

 Rain-fed Olive, Almond & Fig Tree Intensification & Expansion

 Olive Tree Irrigation and Intensification

 Date Tree Irrigation and Intensification

 Fruit Tree Sector Services

Small-Scale Fisheries Project

 Development of Fish Landing Sites and Port Facilities

 Development of Wholesale Fish Markets

 Support to Mobile Fish Vendors

Artisan and Fez Medina Project

 Literacy and Vocational Education

 Artisan Production

 Fez Medina

 Artisan Promotion

Financial Services

 Access to Funds for Microfinance

 New Financial Product Development

 Improvement of Operating Efficiency and Transparency

Enterprise Support Project

 National Agency of Small & Medium Business Training

 Office of Professional Training and Labor Promotion Training

National Initiative for Human Development Training

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

1

2

3

4 June 2009: 

Disbursed $6.5M 

to Jaida, an 

investment fund to 

support Moroccan 

microfinance 

institutions. 

4

5

November 2009: 

Training of 600 

start-up enterprises 

will begin. 

3
50 2009 Annual Report

 Rehabilitation/Construction of Roads Project: Three contracts 

were signed for the rehabilitation of road segments and bridges in 

Cabo Delgado, Nampula, and Zambezia. MCA held kick-off meetings with consultants who have begun preparing feasibility studies, 

resettlement studies, and environmental impact reports.

 Farmer Income Support Project: MCA signed a contract in 

September with the FISP Service Provider, which is tasked with 

managing removal of diseased trees in areas affected by Coconut 

 Water Supply and Sanitation Project: Contracts were signed in 

July and August for the Three Cities Water and Three Cities Sanitation projects, which will provide water supply and sanitation for 

three major cities, including Pemba. 

 Land Tenure Project: Purchase of satellite imagery for 12 districts 

and 8 municipalities is underway, with delivery expected by March 

2010. Activities for the management of land disputes “hot spots” 

will begin once imagery is available. 

Compact At-A-Glance

Signed.............................................7/13/2007

Entry Into Force........................... 9/22/2008

The five-year, $506.9 million compact 

seeks to improve rural and urban water 

and sanitation, roads, land administration, and agriculture. It also addresses 

key policy reforms and capacity building 

initiatives. The program focuses on the 

economically lagging northern provinces, 

home to half of the country’s population.

Country At-A-Glance

Population....................................21,780,610*

GNI per Capita .....................................$370*

Monitoring and Evaluation

Program Administration and Control

Farmer Income Support Project

Land Tenure Project

Rehabilitation and Construction of Roads Project

Water Supply and Sanitation Project

$132

$176.31

$203.59

$17.43

in millions

$62.33

$39.06

$8.21

$73,883,631 total contract commitments

$11,595,507 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

Mozambique Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

July/August 2009: 

Contracts signed 

for feasibility, design, and supervision for Three Cities 

Water and Three 

Cities Sanitation 

Activities.

Aug./Sept. 2009:

Three contracts 

signed for Roads 

feasibility, design, 

and supervision. 

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

Compact Implementation Status Report Timeline, Mozambique

2

1

As of September 30, 2009

Disbursements to Date................. $11,595,507

Total Contract Commitments..... $73,883,631

9/08 - 8/09 9/09 - 8/10 9/10 - 8/11 9/11 - 8/12 9/12 - 8/13

Water Supply Sanitation

 Rural Water - Nampula and Cabo Delgado

 Nacala Dam Rehabilitation

 Three Cities Water

 Three Cities Sanitation

 Five Towns Water Supply and Sanitation

Rehabilitation/Construction of Roads Project

 Chimuara - Nicoadala Road

 Namialo - Rio Lurio and Rio Lurio - Metoro Roads

 Rio Ligonha - Nampula Road

Farmer Income Support Project

 Support to Farmers

Land Tenure

 Land Tenure Reform Activities

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

2

1

We Are Here

3 September 2009:

Contract signed 

with FISP Service 

Provider.

3

4

September 2009:

Hot spots with land 

disputes selected 

and land administration needs assessment initiated.

4
Tangible Results 51

ing the quality of general education in regions with the most need. 

The Textbook Baseline study has commenced, which will inform 

the first tranche of purchases of textbooks for English, Science and 

Mathematics for Grades 5 to 12, with the objective of eventually 

ensuring a textbook to learner ratio of 1:1. 

 Tourism Project: MCA-Namibia recently appointed the Change 

Management Advisor for Etosha National Park. This individual 

will support the Ministry of Environment and Tourism to imple

targeted communal conservancies. MCA is close to hiring a firm 

to develop, test and launch a new website for the Namibia Tourism 

Board..

 Agriculture Project: MCA –N is finalizing Implementing Partnership Agreements with the Ministry of Agriculture, Water and Forestry and the Ministry of Lands and Resettlement. MCA-Namibia 

advertised for a consultant to make recommendations on sustainable harvesting of Devil’s Claw, one of Namibia’s most promising 

indigenous natural products.

Compact At-A-Glance

Signed..........................................07/28/2008

Entry Into Force.........................09/16/2009

Namibia’s $304.5 million MCC Compact 

seeks to reduce poverty and accelerate 

economic growth by strengthening access 

to and quality of the education and training sector, increasing productivity of farm 

enterprises in communal rural areas and 

promoting growth in Namibia’s tourism 

industry.

Country At-A-Glance

Population....................................... 2,114,161*

GNI per Capita .................................$4,200*

Obligations by Project

On the Web: 

www.mcc.gov

MCA Namibia:

www.mca.gov.na

Program Administration and Control

 $39.0 Monitoring and Evaluation

 $6.6 

Agriculture Project

 $47.0 

Tourism Project

 $67.0 

Education Project

 $145.0 

in millions

 $10,605,047 total contract commitments

$2,038,940 disbursed to date World Development Indicators, World Bank, 2008

Namibia Compact Update

Compact Implementation Timeline Year 1 Year 2 Year 3 Year 4 Year 5

September 2009: 

Awarded final design for 47 

schools.

October 2009: 

Change Mgmt. Advisor begins 

reform implementation at Etosha.

We Are Here

* For more information on country proposals, due diligence, program set-up, implementation and monitoring, 

and ongoing impact, please see the diagram entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009

Disbursements to Date................. $2,038,940

Total Contract Commitments..... $10,605,047

Compact Implementation Status Report Timeline, Namibia

2

1

September 2009: 

Conservancy Needs Assessment 

contract awarded.

3

Oct. 2009 Oct. 2010 Oct. 2011 Oct. 2012 Oct. 2013

Education Sector Project

 47 Schools

 College of Education Equipment

 Establishing NTF and Priority Training Grants

 Expanding and Improving COSDECs

 Upgrading Access to and Mgmt. of Adequate Text Books

 Investment in Regional Study and Resource Centers

 Expanding and Improving Access to Tertiary Finance

 Cross Project Support (HIV/AIDS)

Tourism Sector Project

 Etosha NP Change Management

 Construction of Etosha NP Mgmt. Centers and Housing

 Road Maintenance and Wildlife Relocation Equipment

 North American Destination Marketing

 NTB Website and Online Marketing Campaign

 Conservancy Development Support Program

 Conservancy Grant Fund

Agriculture Sector Project

 Construction of State Veterinary Offices

 Communal Land Support

 Community Based Rangeland and Livestock Management

 Livestock Traceability System

 Livestock Marketing Efficiency Fund

 Indigenous Natural Products Support Activity and EIA

 INP Innovation Fund

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

1

2

3

4

October 2009: 

MCA –N is finalizing 

Implementing Partnership 

Agreements with the Ministry of 

Agriculture, Water and Forestry 

and the Ministry of Lands and 

Resettlement. 

4
52 2009 Annual Report

Senegal Compact Update

(the “Interim MCA”) is acting on behalf of the Government. The 

Interim MCA is preparing key procurements to expedite Compact 

implementation such as procuring the services of a commercial 

bank, preparing implementing entity agreements and assisting 

in the recruitment of senior staff and technical experts to be employed by MCA-Senegal. The Interim MCA recently contracted, 

on behalf of MCA-Senegal, with a commercial consortium for 

the provision of procurement and fiscal agent services during the 

Compact term.

 Irrigation and Water Resource Management Project: The Interim MCA is finalizing the procurement timeline and solicitation 

documents for detailed design and supervision services, as well 

as for the development of resettlement action plans and project 

management and technical assistance services. Procurement of 

a contractor to conduct certain land tenure studies critical to the 

irrigation project’s success has commenced.

Compact At-A-Glance

Signed..........................................09/16/2009

Entry Into Force............ To Be Determined

Senegal’s $540 million aims to reduce 

poverty and invest in economic growth by 

unlocking the country’s agricultural productivity and expanding access to markets 

and services through critical infrastructure investments in major national roads 

and the irrigation sector. 

Country At-A-Glance

Population.....................................12,211,180*

GNI per Capita .....................................$970*

Obligations by Project

On the Web: 

www.mcc.gov

Program Administration

Monitoring and Evaluation $42.17

 $3.76

Rural Road 

Rehabilitation Project

 $324.06

Irrigation and Water Resource 

Management Project

 $170.01

in millions

World Development Indicators, World Bank, 2008

On September 16, 2009, MCC Acting Chief Executive Officer Darius Mans 

joined Senegalese Minister of Finance and Economy Abdoulaye Diop to sign 

Senegal’s five-year, $540 million poverty reduction compact. This marks the 

first MCC compact to be signed during the Obama Administration, and the 

only one signed during fiscal year 2009. U.S. Secretary of State Hillary Rodham 

Clinton and President Abdoulaye Wade of Senegal presided at the signing held 

at the U.S. State Department. Reflecting Senegalese development priorities, this 

compact will rehabilitate two major roads and expand a major irrigation and 

water resources management system. These investments are critical to boosting 

agricultural productivity, economic growth, trade, and food security. 

Pictured: Standing as witnesses from left to right: U.S. Assistant Secretary of State 

Ambassador Johnnie Carson, U.S. Ambassador to Senegal Marcia Bernicat, President of 

Senegal Abdoulaye Wade, Secretary of State Hillary Rodham Clinton, Senegal’s Minister 

of Foreign Affairs Cheikh Tidiane Gadio, and Senegal’s Ambassador to the United States 

Amadou Lamine Ba. Seated to sign from left to right: Senegal’s Minister of Economy and 

Finance Abdoulaye Diop and MCC’s Acting CEO Darius Mans.
Tangible Results 53

 In August 2009, as part of the Malagarasi Hydropower and 

Kigoma Distribution Activity, a team of scientists surveyed the 

ecosystem in and around the proposed hydropower plant site to 

help MCC and MCA-Tanzania better understand the environmental sensitivities associated with this Activity. 

 The undersea survey for the Zanzibar Interconnector Activity is 

now fully complete, and a full-scale environmental and social 

impact assessment is underway. 

and resettlement compensation to over 1000 people to be affected 

by the upgrading of the road between the seaport of Tanga and 

Horohoro at the Kenyan border. 

 A contract for feasibility, updated design, and environmental and 

social preparatory work for the Zanzibar Rural Roads Activity has 

been awarded. On the Mafia Island Airport Activity, MCA-Tanzania is working with the Tanzania Airports Authority to procure a 

firm to update designs, complete environmental and social work, 

and eventually supervise the rehabilitation of the airport.

Compact At-A-Glance

Signed.............................................2/17/2008

Entry Into Force............................9/17/2008

The five-year, $698 million compact 

seeks to stimulate economic growth, 

increase household incomes, and raise the 

quality of life in program areas through 

targeted infrastructure investments in 

transporta?tion, energy and water.

Country At-A-Glance

Population...................................42,483,920*

GNI per Capita .....................................$430*

Program Administration and Control Monitoring and Evaluation

$10.00

Water Sector Project

$66.33

Transport Sector Project

$372.78

Energy Sector Project

$206.47

in millions

$42.55

$40,863,537 total contract commitments

$7,915,283 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MCA-Tanzania: 

www.mca-t.go.tz

Tanzania Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

September 2009:

Construction supervision contracts 

signed for all three 

mainland trunk 

roads segments.

September 2009:

Contract awarded 

for Pemba Island 

rural roads feasibility, updated design, 

and environmental 

preparatory work.

August 2009:

Expert team of 

scientists surveyed 

ecosystem in and 

around proposed 

hydropower plant 

site. 

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

Compact Implementation Status Report Timeline, Tanzania

3

2

1 09/08 - 08/09 09/09 - 08/10 09/10 - 08/11 09/11 - 08/12 09/12 - 08/13

Transport Sector

 Mainland Trunk Roads Activity

 Zanzibar Rural Roads Activity

 Road Maintenance Activity

 Mafia Island Airport Activity

Energy Sector

 Zanzibar Interconnector Activity

 Malagarasi Hydropower & Kigoma Distribution 

 Distribution Systems Rehabilitation & Extension

Water Sector

 Lower Ruvu Plant Expansion Activity

 Non-Revenue Water Activity

 Morogoro Water Supply Activity 

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

3

1

2

We Are Here

As of September 30, 2009

Disbursements to Date................. $7,915,283

Total Contract Commitments..... $40,863,537

4

July 2009:

Water Project 

coordination and 

technical assistance 

contract initiated 

to produce an improved water tariff 

study and better 

inform public water 

rates in Dar es 

Salaam.

4
54 2009 Annual Report

proved agricultural productivity to 100 communities in 6 regions 

of Armenia. In addition, MCA-Armenia signed a $5.5 million contract for new construction on gravity systems that will benefit over 

61,000 farmers in Armenia. Further rehabilitation of Armenia’s 

irrigation systems continues, including main canals.

 Water-to-Market Activity: An additional 5,000 farmers have been 

trained in the use of new and improved farming technologies, 

project (see Note below), MCAArmenia completed approxi

mately 24.5 km of rural roads under an initial pilot component of 

the project. 

 Note: As a result of the June 2009 meeting of MCC’s Board of 

Directors, MCC will not resume funding for any further road 

construction and rehabilitation under the compact. This hold 

on funding is a result of actions by the government of Armenia 

that are inconsistent with MCC principles promoting democratic 

governance. 

Compact At-A-Glance

Signed............................................ 3/27/2006

Entry Into Force...........................9/29/2006

The five year, $236 million compact 

will reduce rural poverty by increasing the agricultural sector’s economic 

performance. This goal will be achieved 

through strategic investments in rural 

roads and irrigation systems.

Country At-A-Glance

Population..................................... 3,077,087*

GNI per Capita ..................................$3,350*

Program Administration and Control

$18.39 Monitoring and Evaluation

$5.08

Irrigated Agriculture Project 

(Water to Market)

$32.42

Irrigated Agriculture Project 

(Infrastructure)

$112.66

Rural Road 

Rehabilitation Project

$67.1

in millions

 $107,740,790 total contract commitments

$41,339,513 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MCA-Armenia: 

www.mca.am

Armenia Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

MCC June 2009 

Board decision led 

to permanent hold 

on funding for road 

construction.

October 

2009: $36M in 

contracts for the 

rehabilitation 

of 17 pumping 

stations throughout 

Armenia began in 

October 2009.

Rehabilitation of 

the Arzni-Shamiram Main Canal 

continues.

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009 

Disbursements to Date................. $41,339,513

Total Contract Commitments...... $107,740,790

Compact Implementation Status Report Timeline, Armenia

3

2

1

September 2009: 

$5.5M in contracts 

to repair 4 Gravity 

Schemes throughout Armenia

4

We Are Here

09/06 - 08/07 09/07 - 08/08 09/08 - 08/09 09/09 - 08/10 09/10 - 08/11

Rural Road Rehabilitation Project

 Pilot Road (24.5 km)

 Package 1 (273 km)

 Package 2

 Package 3

Irrigation Infrastructure Activity

 Pumping Stations

 Main Canals

 Gravity Schemes

 Tertiary Canals

 Ararat Valley 

 Environmental Consultation

Water-to-Market Activity

 Institutional Strengthening (WSA/WUA)

 On-Farm Water Management Technologies

 Transition to Higher-Value Agriculture

 Post-Harvest, Processing, and Marketing

 Credit 

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

1

2

4

3

5

Over 30,000 farmers trained to date 

under Water-toMarket Activity, and 

approximately $4.2 

M credit lent to 

farmers.

5
Tangible Results 55

cused on improving municipal service delivery by providing grants 

to improve and develop physical infrastructure such as water supply, sanitation and irrigation in regions outside of Tbilisi. In June 

2009, one water supply rehabilitation project was completed and 

the other four projects are currently under construction. 

 Energy Rehabilitation Activity: Construction on the second phase 

of rehabilitating the North-South Gas Pipeline is complete. The 

third phase of this project is underway and nearly complete. 

economic growth. 

 Georgia Regional Development Fund: To date, the Fund has 

invested over $20 million in small to medium sized Georgian 

enterprises, mostly operating outside the capital city of Tbilisi, 

providing long-term risk capital and technical assistance to a 

variety of businesses.

Compact At-A-Glance

Signed.............................................9/12/2005

Entry Into Force............................. 4/7/2006

The five-year, $395.3 million compact will 

rehabilitate key regional infrastructure, 

stimulate regional trade by improving 

transportation, a reliable energy supply, the 

delivery of regional and municipal services, 

and developing regional enterprises by providing investment capital and by increasing 

productivity in farms.

Country At-A-Glance

Population..................................... 4,364,461*

GNI per Capita ..................................$2,470*

Monitoring and Evaluation

$8.45 Program Administration

$23.90

Regional Infrastructure Development Activity

$64.54

Enterprise Development Project

$52.30

Energy Rehabilitation Activity

$62.50

Road Rehabilitation Activity

$183.62

in millions

 $331,283,713 total contract commitments

$145,949,040 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

Millennium Challenge Georgia Fund: 

www.mcg.ge

Georgia Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

October 2009: 

The construction 

of the SamskhteJavakheti road 

continues. 

October 2009: 

Construction is underway at Bakuriani, 

Borjomi, Kobuleti, 

and Kutaisi.

October 2009: 

Phase II construction is complete. 

Construction on 

Phase III continues.

We Are Here

October 2009:

GRDF exceeds 

$20 million mark in 

Small and MediumSized Enterprise 

Investments. 

4

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009

Disbursements to Date................. $145,946,040

Total Contract Commitments..... $331,283,713

Compact Implementation Status Report Timeline, Georgia

3

2

1

October 2009:

236 grants awarded 

with a value of 

approximately $12 

million.

5

4/06 - 3/07 4/07 - 3/08 4/08 - 3/09 4/09 - 3/10 4/10 - 3/11

Road Rehabilitation

Regional Infrastructure Development

 Poti Municipal Water Project

 Borjomi Municipal Water Project

 Bakuriani Municipal Water Project

 Kutaisi Municipal Water Project

 Kobuleti Municipal Water Project

Energy Sector Rehabilitation

 Phase I - Emergency Repairs - 6 Sites

 Phase II - 9 Sites

 Phase III - 8 Sites

Georgia Regional Development Fund

 Investments

Agribusiness Development Activity

 Grant-Making

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

4

3

2

1

5
56 2009 Annual Report

peri-urban component of the Property Rights Project. The funds 

will be reallocated accordingly. 

 Vocational Education Project: The consulting services for a labor 

market study, and a grants’ program administration are in the 

process of being procured. Technical assistance for the newly established National Committee for Vocational Education has been 

provided to assist in the set-up of a promotion fund. 

NCDI in Mongolia has begun implementation through collaboration with the World Health Organization. 

 New project development: MCC has continued its due diligence 

of the Government of Mongolia’s proposals for new projects to 

receive a reallocation of funds from the cancelled rail project, 

working together with groups from the relevant Government of 

Mongolia Ministries and with MCA-Mongolia. 

Compact At-A-Glance

Signed.......................................... 10/22/2007

Entry Into Force............................9/17/2008

The five-year, $285 million compact seeks 

to better enable the country?s burgeoning 

urbanized market based economy and 

help Mongolians increase their incomes 

by becoming healthier and better trained, 

by using their land assets more productively and by increasing their capacity to 

trade with the world.

Country At-A-Glance

Population......................................2,632,387*

GNI per Capita ...................................$1680*

Program Administration

Monitoring and Evaluation

$4.70

Health Project

$16.98

Vocational Education

$25.49

Property Rights

$22.91

Rail Project*

$188.48

in millions

$26.45 

$13,898,315 total contract commitments

$7,893,969 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MCA-Mongolia: 

www.mca.mn

*MCC is currently reallocating funding from this project

Mongolia Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

August 2009: 

First two consulting 

procurements 

advertised. 

September 2009: 

Recieved 623 

applications from 

herders’ groups. 

The expansion 

proposal is 

approved and two 

more sites added. 

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009

Disbursements to Date................. $7,893,969

Total Contract Commitments..... $13,898,315

Compact Implementation Status Report Timeline, Mongolia

2

1

September 2009: 

Technical 

assistance for the 

newly established 

National Committee 

for Vocational 

Education has been 

provided to assist 

in the set-up of a 

promotion fund. 

3

9/08 - 8/09 9/09 - 8/10 9/10 - 8/11 9/11 - 8/12 9/12 - 8/13

Property Rights

 Improvements of the Land Privatization & Registration System

 Privatization and Registration of Ger Area Land Plots

Peri-Urban Rangeland Management

 Peri-Urban Land Lease Activity 

Vocational Education Training

 Reforms to TVET Policy and Operational Framework 

 Creation of Skills and Standards and Competencies System

 Competency Based Training System

 Career Guidance System

Health

 Non Communicable Decease & Injury (NCDI) Capacity Building

 NCDI Prevention

NCDI Early Detection

NCDI Management

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

We Are Here

2

1

September 2009: 

The STEP survey to 

determine the risk 

factors of NCDI in 

Mongolia has begun 

implementation.

4

4

3
Tangible Results 57

and pavement shaping is almost complete for the first section of 

the Santo East Coast Road, with sealing on target to commence 

this quarter. Designs are finalized for the two remaining sections.

 In June, the Government of Vanuatu signed an agreement with 

the New Zealand Agency for International Development (NZAID) 

toward road construction in Santo and Efate. MCA-Vanuatu 

previously signed a $54 million contract for the construction of the 

Efate Ring Road and segments of the Santo East Coast Road. The 

flect higher than expected infrastructure costs. MCC will fund up 

to 70 percent of the road rehabilitation planned in the Compact. 

With MCC assistance, the Government of Vanuatu and MCAVanuatu are continuing to seek funding from other donors (in 

addition to NZAID) to finance originally proposed infrastructure 

projects that will not be funded under the compact. Three projects 

(on Tanna, Malekula and Ambae) are being funded by AusAID and 

several others have been included in the Government of Vanuatu 

funded road program.

Compact At-A-Glance

Signed.............................................. 3/2/2006

Entry Into Force...........................4/28/2006

The five-year, $66-million compact 

focuses on improvements to the country’s 

transportation infrastructure. The program will benefit rural agricultural producers and the tourism sector by reducing 

transportation costs and improving 

transportation services.

Country At-A-Glance

Population..........................................231,142*

GNI per Capita ..................................$2,330*

Program Administration and Control

$4.40

Monitoring and Evaluation

$1.06

Transport Infrastructure Project

$60.23

in millions

$63,508,228 total contract commitments

$38,572,691 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MCA-Vanuatu: 

www.governmentofvanuatu.gov.vu/

mca-vanuatu

Vanuatu Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

June 2009: 

Agreement 

with NZAID for 

approximately 

NZD$14 million of 

additional funding 

towards completion 

of the Transport 

Infrastructure 

Project.

October 2009: 

Approval of final 

designs and pricing 

for Efate Ring Road 

and Santo East 

Coast Road.

We Are Here

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009

Disbursements to Date................. $38,572,691

Total Contract Commitments..... $63,508,228

Compact Implementation Status Report Timeline, Vanuatu

2

1 4/06 -03/07 4/07 - 3/08 4/08 - 3/09 4/09 - 3/10 4/10 - 3/11

Transportation Infrastructure Project

 Design and Build Civil Works Project

 Technical Assistance for Supervisory and Public Works Dept.

Institutional Strengthening 

 Institutional Capacity Building within the Public Works Dept.

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

2

1 3

October 2009: 

30 kilometers of 

road sealed on 

Efate. 

3
58 2009 Annual Report

 Connectivity Project: Two construction contracts have been 

awarded for segments of the Northern Transnational Highway. On 

August 19, 2009 President Funes presided over the ground breaking ceremony for the construction of segment 2B2 of the Northern 

Transnational Highway (NTH). 

 Human Development Project: The improvement of 20 technical 

schools are underway and hundreds of teachers are being trained. 

tems in rural homes in the Northern Zone is underway. 

 Program Administration: As part of their continuing outreach 

and consultative process, FOMILENIO representatives met with 

the mayors of the municipalities in the Northern Zone and with 

beneficiaries of the Compact related resettlement plan.

Compact At-A-Glance

Signed..........................................11 /29/2006

Entry Into Force...........................9/20/2007

The five-year, $461.0 million compact 

seeks to improve the lives of Salvadorans 

through strategic investments in education, public services, agricultural production, rural business development and 

transportation infrastructure.

Country At-A-Glance

Population......................................6,133,901*

GNI per Capita ................................. $3,480*

Program Administration and Control

$34.96

Monitoring and Evaluation

$9.78

Connectivity Project

$233.39

Productivity 

Development Project

$87.85

Human Development Project

$94.96

in millions

 $177,841,704 total contract commitments

$49,275,801 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

FOMILENIO: 

www.fomilenio.gov.sv

El Salvador Compact Update

As of September 30, 2009 

Disbursements to Date................. $49,275,801

Total Contract Commitments..... $177,841,704

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

September 2009:

Over 1,125 people 

have received nonformal training.

September 2009:

450 solar systems 

installed and 115 km 

of rural electricity 

lines built, benefiting over 2,185 

homes.

September 2009:

To date, 4,530 

beneficiaries have 

received technical 

assistance and 1,255 

new jobs have been 

generated by micro, 

small and medium 

enterprises.

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

Compact Implementation Status Report Timeline, El Salvador

3

2

1 10/07 - 9/08 10/08 - 09/09 10/09 - 09/10 10/10 - 09/11 10/11 - 09/12

Human Development Project

 Education and Training

 Water and Sanitation

 Rural Electrification

 Community Infrastructure

Productive Development Project

 Production and Business

 Investment Support

 Financial Services

Connectivity Project

 Northern Transnational Highway

 Connecting Roads

 Project Preparation

 Construction - Infrastructure 

 Project Activities - Other Sectors

We Are Here

3

1

2

10/07 - 9/08 10/08 - 09/09 10/09 - 09/10 10/10 - 09/11 10/11 - 09/12

Human Development Project

 Education and Training

 Water and Sanitation

 Rural Electrification

 Community Infrastructure

Productive Development Project

 Production and Business

 Investment Support

 Financial Services

Connectivity Project

 Northern Transnational Highway

 Connecting Roads

 Project Preparation

 Construction - Infrastructure 

 Project Activities - Other Sectors

4

September 2009:

The construction of 

segment 2B2 of the 

NTH will generate 

568 jobs and will 

benefit more than 

33,000 habitants in 

the region.

4
Tangible Results 59

sites on the North segment of the CA-5 Higway are complete. 

Most beneficiaries have received keys to their new homes and 

business stalls.

 Rural Development Project: As of August 2009, more than 5,900 

small farmers received technical assistance in the production 

and marketing of high value horticultural crops. A total of 13,849 

hectares have been planted, since the Farmer’s Training Development Program commenced. The participation of female farmers in 

the activity has increased to 7.4% (440 women). The gross sales of 

 Note: In September 2009, MCCs Board decided to partially terminate MCC assistance, ceasing to fund the vehicle weight control 

activity and the portion of the farm to market roads activity corresponding to the construction and improvement of approximately 

93 kilometers of rural roads. The termination is a result of actions 

by the government of Honduras that are inconsistent with MCC’s 

eligibility criteria. In addition, MCC’s Board determined that 

a hold would be placed on approx. $4 million of MCC funding 

related to Section 1 of the CA-5 Highway until further notice. 

Compact At-A-Glance

Signed.............................................6/13/2005

Entry Into Force........................... 9/29/2005

The five-year, $215.0 million compact?s 

two main objectives are to increase the 

productivity and business skills of farmers and to reduce transportation costs 

between targeted production centers and 

national, regional and global markets.

Country At-A-Glance

Population......................................7,241,504*

GNI per Capita ..................................$1,800*

Program Administration and Control

$11.84

Monitoring and Evaluation

$4.98

Transportation Project

$123.62

Rural Development Project

in millions

$74.56

 $193,102,925 total contract commitments

$109,129,818 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MCA-Honduras: 

www.mcahonduras.hn

Honduras Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 Year 5

September 2009: 

Paving operations 

have begun on the 

North Segment 

of the CA-5, and 

two Secondary 

Roads are nearing 

completion.

August 2009: 

More than 7,000 

market linkages 

have been made 

between program 

farmers and 

buyers, including 

agricultural 

processors, 

wholesale markets, 

exporters and local 

distributors. 

August 2009: 

Secured Transaction Law passed by 

Honduran Congress 

on August 19. This 

Law will provide 

opportunities for 

small and medium 

entrepreneurs nationwide to access 

credit through formal institutions.

We Are Here

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009 

Disbursements to Date................. $109,129,818

Total Contract Commitments..... $193,102,925

Compact Implementation Status Report Timeline, Honduras

3

2

1 10/05 - 09/06 10/06 - 09/07 10/07 - 09/08 10/08 - 09/09 10/09 - 09/10

Transportation Project

 CA-5 Highway

 Secondary Roads

 Weight Control System

Rural Development Project

 Farmer Training and Development

 Farmer Access to Credit

 Farm to Market Roads

 Agricultural Public Goods Grant Facility 

Program Administration and Control

 Program Administration

 Audit

Monitoring and Evaluation

 Data Quality Review

 Data Collection

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

3

2

1
60 2009 Annual Report

 Rural Development Project: MCA-Nicaragua has assisted 5,253 

livestock and agriculture producers and 1,676 forestry producers in 

implementing business plans by providing technical and financial 

support. A sustainability strategy is being implemented two years 

before the end of the Compact through cooperation between 

private actors in the value chain and producers’ associations. It is 

expected that strong commercial relations between producers and 

markets will remain viable after the project concludes. 

the Property Regularization Project and for activities not already 

contracted under the Transportation Project. MCC has reduced 

the amount of funding available from $175 million to $113.5 million. 

MCC remains committed to working with governments that rule 

justly, invest in their people and encourage economic freedom. It 

is the hope of MCC that the Government of Nicaragua will renew 

its commitment to these principles as we work to finish what has 

been an effective partnership to reduce poverty and create growth 

for the Nicaraguan people.

Compact At-A-Glance

Signed.............................................7/14/2005

Entry Into Force........................... 5/26/2006

The five-year, $175 million compact 

seeks to reduce transportation costs 

and improve rural communities access 

to markets, increase wages and profits 

from farming and related enterprises in 

the region and increase investments by 

strengthening property rights.

Country At-A-Glance

Population...................................... 5,677,771*

GNI per Capita ...................................$1080*

Monitoring and Evaluation

Program Administration and Control

Rural Development Project

Property Regularization Project

Transportation Project

$22.00

$32.90

$105.19

$2.46 $12.45

in millions

$98,118,646 total contract commitments

$75,728,669 disbursed to date

Obligations by Project

World Development Indicators, World Bank, 2008

On the Web: 

www.mcc.gov

MCA-Nicaragua: 

www.cuentamilenio.org.ni

Nicaragua Compact Update

Compact Implementation Timeline

Year 1 Year 2 Year 3 Year 4 June 2009: 

The N-I road 

component was 

terminated by 

the MCC Board of 

Directors.

September 2009: 

Upgrading 50 

kilometers of two 

secondary roads 

and 18 kilometers of 

highway underway. 

All major bridges 

and drainage 

structures, as well 

as asphalt paving 

for all three projects 

have essentially 

been completed.

June 2009: 

The Property 

Project was 

terminated by 

the MCC Board of 

Directors.

September 2009: The third 

agricultural cycle has begun with 

inputs and technical assistance to 

farmers affected by droughts.

* For more information on country proposals, due diligence, program set-up, 

implementation and monitoring, and ongoing impact, please see the diagram 

entitled Typical MCC Program Cycle at www.mcc.gov.

As of September 30, 2009

Disbursements to Date................. $75,728,669

Total Contract Commitments..... $98,118,646

Compact Implementation Status Report Timeline, Nicaragua

3

2

1

2009: 3,257 million trees have been 

planted as part of the Reforestation 

Campaign. MCA is working with 

the forestry operator to implement 

strategies to mitigate the effects of 

the severe drought.

5

4

6/06 - 5/07 6/07 - 5/08 6/08 - 5/09 6/09 - 5/10 6/10 - 5/11

Transportation Project

 Rehabilitation of the N-1 (Segment of Pacific Corridor)

 Upgrading of Key Secondary Routes

 Technical Assistance to FOMAV

 Technical Assistance to MTI

 Villanueva to Guasaule

Property Regularization Project

 Institutional Capacity Building

 Cadastral Mapping

 Database Installation

 Land Tenure Regularization 

 Protected Area Demarcation

 Analysis and Communication

Rural Development Project

 Rural Business Development Services

 Technical Assistance

Grants to Improve Water Supply for Farming and Forest 

Production

 Project Preparation

 Construction - Infrastructure

 Project Activities - Other Sectors

We Are Here

4

3

2

5

1

Year 5
Tangible Results 61

Financial Statements
62 2009 Annual Report

Financial Statements

I am pleased to report that the Millennium Challenge Corporation received a clean audit opinion on 

its financial statements from the Office of Inspector 

General once again this year.

As a small U.S. Government corporation, MCC is not 

subject to the requirements of the Chief Financial Officers Act. Yet, we choose to follow the professional 

standards it incorporates along with other good government reforms applicable to the executive branch. 

As MCC has matured and evolved in fulfilling our 

mission as an innovative and results-driven American 

resource in the fight against global poverty, we have 

worked effectively to match our administrative and 

financial capabilities to the task. We developed a new 

security policy and redesigned all network security 

controls, bringing MCC’s systems into full compliance 

with federal laws, reducing system-wide risks, and 

producing a safer, more stable and capable computing 

platform to support MCC’s business goals. In addition, 

we continued the development of the MCC Integrated 

Data Analysis System (MIDAS) to improve financial reporting and further integrate programmatic, 

performance, and financial information. MIDAS has 

already improved the timeliness and use of financial 

and performance data to manage program costs and 

support decision-making. During FY 2010, we will 

explore options for further integration of our financial 

management system, and we will establish the policy, 

framework, and identify the tools for a comprehensive 

document management program.

The FY 2009 Independent Auditor’s Report cites only 

one material weakness in MCC’s controls over mission activities and support. This report also identifies 

four significant deficiencies. MCC agrees with all the 

proposed recommendations to address these issues. 

Six of the FY 2009 audit recommendations, involve 

financial management issues with MCC’s oversight of 

its compact and threshold programs. MCC plans to 

work closely with our development partners, in compact countries and at USAID, to develop action plans 

to address and resolve these findings during the current fiscal year. During FY 2009, MCC also resolved 

26 open items from the FY 2008 Federal Information 

Management Security Act (FISMA) audit, including 

items that dated back to the FY 2005 FISMA audit. 

The FY 2008 audit findings necessitated major capital 

outlays to correct system security issues. By contrast, 

the FY 2009 FISMA audit included relatively minor 

compliance items, such as changes to security plans, 

procedures, and policies. MCC already closed two of 

the FY 2009 findings and developed a plan and schedule to close the remaining 20 items by April 2010. 

MCC’s achievements in FY 2009 and the continued 

progress we plan for FY 2010 will provide the financial, 

administrative, and technology support essential for 

successful program development and implementation. 

This is fundamental to achieving real results toward 

MCC’s goal of sustainable poverty reduction through 

growth for the benefit of the world’s poor.

Michael Casella

Acting Vice President, Administration and Finance
Financial Statements 63

Fund Summary

As of September 30, 2009 (in $)

0

FY 2009 

Quarter 4 

Obligations

Obligations in 

FY 2009

Cumulative 

Obligations 

Through FY 2009 

Quarter 4

FY 2009 Quarter 4 

Disbursements

 Disbursements 

in FY 2009

FUND Grouping 0 0 0 0

Actual Projected Actual Projected

609(g)2 26,618,112 32,766,768 92,440,551 4,821,499 13,827,885 50,327,055 56,499,170 50,327,055 56,499,170

ADMINISTRATIVE 25,454,941 88,536,188 371,897,434 25,592,716 88,570,088 344,628,897 341,058,809

AUDIT 0 2,743,893 12,871,380 1,551,181 3,792,544 11,739,690 11,447,146

COMPACTS3 754,753,264 855,042,374 6,423,069,612 229,887,281 535,807,155 889,409,987 853,602,831 889,409,987 853,602,831

DUE DILIGENCE 15,312,017 40,248,637 157,338,540 10,319,087 28,456,152 97,957,369 94,501,216 97,957,369 94,501,216

THRESHOLD4 101,557 34,574,447 486,292,743 29,860,440 121,713,706 313,418,902 381,608,794 313,418,902 381,608,794

Total 822,239,891 1,053,912,307 7,543,910,260 302,032,204 792,167,530 1,351,113,313 1,386,212,011 1,707,481,900 1,738,717,966

4

All data for the threshold program are provided by USAID, except for the Sao Tome and Principe threshold program, which is administered by U.S. Department of Treasury. USAID’s data for this report are from its 

General Ledger by country rather than its Threshold Country Programs report. USAID is working to rectify discrepancies between these two data sources. 

2

The fund grouping "609(g)" includes funds under section 609(g) of the Millennium Challenge Act of 2003, as amended, other than Compact Implementation Funding. 

3

The fund grouping "Compacts" includes Compact Implementation Funding, Compacts, and other grants except those made using threshold program and 609(g) fund groupings.

Millennium Challenge Corporation

MCC Semiannual Report to Congress - Fund Summary

As of September 30, 2009

1

Program Disbursements include all fund groupings, except administrative and audit expenses. 

(in $)

Cumulative Program Disbursements 

Through FY 20091

 Cumulative Disbursements Through FY 

2009 
64 2009 Annual Report

Compacts and Compact-Related

As of September 30, 2009 ($, in millions)

Status Signing 

Date

Entry Into 

Force (EIF)

Projected 

Obligations 

in 

FY 2005 FY 2006 FY 20072 FY 2008 FY 2009 FY 2010 FY 2005 FY 2006 FY 20072 FY 20083 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

Country FUND Grouping

Armenia 609 (g) 0.5 (0.5) 0.0 (0.0)

COMPACTS EIF 3/27/2006 9/29/2006 235.2 0.5 7.9 16.3 17.1 44.9 91.9 

DUE DILIGENCE 0.4 0.7 1.1 1.3 1.1 0.1 0.2 0.9 0.6 0.7 

Benin 609 (g) 1.5 (1.5) 0.5 (0.5)

COMPACTS EIF 2/22/2006 10/6/2006 307.3 13.4 11.0 24.6 48.7 210.4 

DUE DILIGENCE 0.7 1.3 1.3 0.9 1.7 0.0 1.2 0.6 0.4 0.8 

Burkina Faso 609 (g) 9.4 2.2 1.4 

COMPACTS Signed 7/14/2008 7/31/2009 16.1 462.8 3.3 28.6 20.4 110.5 123.7 117.1 77.6 

DUE DILIGENCE 0.0 0.3 4.4 1.8 1.8 0.0 0.0 1.0 4.0 0.8 

Cape Verde 609 (g) 0.2 0.2 0.0 0.1 

COMPACTS EIF 7/7/2005 10/17/2005 110.1 7.5 6.4 13.1 34.1 29.1 21.0 

DUE DILIGENCE 1.7 0.2 0.2 1.8 0.6 0.5 0.3 0.6 0.4 0.5 

El Salvador COMPACTS EIF 11/29/2006 9/20/2007 460.9 0.0 2.2 10.0 36.8 80.5 212.6 118.9 

DUE DILIGENCE 2.0 1.7 1.5 1.5 1.2 0.9 1.2 1.3 

Georgia 609 (g) 4.2 1.1 (0.5) (0.6) 0.0 2.4 1.1 0.3 0.3 

COMPACTS EIF 9/12/2005 4/7/2006 294.7 0.6 100.0 10.1 19.9 43.1 72.8 81.2 168.5 

DUE DILIGENCE 0.8 4.0 2.3 1.6 1.0 0.2 1.9 2.5 1.2 1.1 

Ghana 609 (g) 0.1 13.5 (10.4) 0.1 2.8 0.4 

COMPACTS EIF 8/1/2006 2/16/2007 547.0 9.3 16.6 63.9 117.8 226.4 117.2 

DUE DILIGENCE 0.2 4.6 0.2 2.2 0.2 0.0 1.8 2.0 0.4 1.3 

Guyana DUE DILIGENCE 0.0 0.0 

Honduras COMPACTS EIF 6/13/2005 9/29/2005 215.0 3.0 8.0 24.0 74.2 68.8 

DUE DILIGENCE 0.7 1.0 0.5 0.7 1.0 0.3 0.6 0.5 0.5 0.6 

Indonesia COMPACTS Program 

Development

To be 

determined

To be 

determined

Jordan 609 (g) 13.3 

COMPACTS Program 

Development

To be 

determined

To be 

determined

12.5 

DUE DILIGENCE 0.0 0.6 0.2 

Lesotho4 609 (g) 0.6 0.6 0.1 0.3 0.6 0.1 

COMPACTS EIF 7/23/2007 9/17/2008 15.7 346.9 (0.0) 4.0 13.1 26.5 108.2 108.1 102.8 

DUE DILIGENCE 0.1 3.4 2.8 2.9 0.0 2.8 0.9 1.1 

Madagascar 609 (g) 1.3 (1.3)

COMPACTS EIF 4/18/2005 7/27/2005 109.8 2.5 7.1 13.1 27.3 31.5 

DUE DILIGENCE 0.3 0.5 2.3 0.3 0.4 1.3 0.4 0.1 0.5 0.0 

Malawi 609 (g) 1.3 0.2 

COMPACTS Program 

Development

To be 

determined

To be 

determined

15.0 

DUE DILIGENCE 0.9 0.1 

Mali 609 (g) 5.1 4.6 0.7 6.2 2.7 0.1 

COMPACTS EIF 11/13/2006 9/17/2007 460.7 0.1 2.1 8.2 36.1 63.7 179.9 172.9 

DUE DILIGENCE 0.2 1.5 0.9 1.6 4.9 0.0 0.7 1.1 0.9 1.1 

Disbursements in Projected Disbursements1 Obligations in in

Millennium Challenge Corporation

Semiannual Report to Congress - Compact and Compact Related

As of September 30, 2009

($; in millions)
Financial Statements 65

Compacts and Compact-Related (continued)

As of September 30, 2009 ($, in millions)

Status Signing 

Date

Entry Into 

Force (EIF)

Projected 

Obligations 

in 

FY 2005 FY 2006 FY 20072 FY 2008 FY 2009 FY 2010 FY 2005 FY 2006 FY 20072 FY 20083 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

Country FUND Grouping

Moldova 609 (g) 5.0 2.9 

COMPACTS Program 

Development

To be 

determined

To be 

determined

- 275.0 19.1 53.5 89.6 68.6 

DUE DILIGENCE 0.1 0.8 0.0 0.2 

Mongolia COMPACTS EIF 10/22/2007 9/17/2008 284.9 1.7 6.2 15.6 50.1 43.4 30.1 

DUE DILIGENCE 1.4 2.1 1.7 1.2 0.3 1.8 1.1 0.9 

Morocco COMPACTS EIF 8/31/2007 9/15/2008 32.4 665.1 - 0.8 21.4 72.6 258.8 212.5 132.1 

DUE DILIGENCE 0.2 4.7 2.3 2.6 0.0 3.3 0.8 0.9 

Mozambique 609 (g) 13.9 (0.4) 0.9 6.6 1.8 0.1 

COMPACTS EIF 7/13/2007 9/22/2008 25.3 481.6 2.8 8.8 26.3 199.1 176.2 94.3 

DUE DILIGENCE 0.0 1.0 2.8 1.6 2.7 0.1 1.8 1.0 0.7 

Namibia 609 (g) 3.2 0.9 2.0 

COMPACTS Signed 7/28/2008 9/16/2009 19.5 284.9 2.0 14.1 78.2 106.1 61.6 43.1 

DUE DILIGENCE 0.0 2.4 0.9 0.5 0.0 0.9 1.9 0.3 

Nicaragua5 609 (g) 0.1 (0.1) 0.0 (0.0)

COMPACTS EIF 7/14/2005 5/26/2006 174.9 0.1 (0.3) 0.3 2.2 7.8 24.3 41.5 18.9 18.9 

DUE DILIGENCE 0.5 0.9 0.8 0.8 0.8 0.2 0.7 0.3 0.4 0.4 

Philippines COMPACTS Program 

Development

To be 

determined

To be 

determined

30.0 

DUE DILIGENCE 0.0 1.3 0.0 

Senegal 609 (g) 6.5 (1.6) 13.1 1.6 3.0 0.1 0.0 

COMPACTS Signed 9/16/2009 To be 

determined

5.0 535.0 130.8 167.7 136.9 78.0 

DUE DILIGENCE (0.2) 1.3 0.0 0.1 0.1 0.0 0.1 

Tanzania 609 (g) 9.8 1.3 6.8 

COMPACTS EIF 2/17/2008 9/15/2008 698.1 0.3 7.6 57.0 203.8 225.4 204.1 

DUE DILIGENCE 0.2 5.4 3.8 2.1 0.0 3.7 1.6 1.5 

Vanuatu COMPACTS EIF 3/2/2006 4/28/2006 65.7 1.6 0.4 22.2 14.4 13.9 13.2 

DUE DILIGENCE 2.1 1.1 0.6 0.0 0.6 0.9 0.2 0.1 

Zambia DUE DILIGENCE 0.2 0.0 

Cross-Cutting DUE DILIGENCE 6.3 7.5 5.7 4.7 7.5 2.8 4.2 6.5 (0.7) 13.8 

Total 343.0 953.0 1,893.1 2,556.1 925.5 867.5 8.3 52.3 142.9 256.0 577.3 800.0 2,301.5 1,625.4 968.5 267.3 

Footnotes: 

4

FY 2009 Lesotho obligations were understated by $23,881. This issue will be corrected in FY 2010.

5

FY 2008 obligations and disbursements for Nicaragua are understated by $289,110. This issue was corrected in FY 2009.

Obligations in Disbursements in Projected Disbursements1 in

3

Disbursements before FY 2008 were adjusted to be in line with a new accounting policy.

Millennium Challenge Corporation

(continued)

Semiannual Report to Congress - Compact and Compact Related

As of September 30, 2009

($; in millions)

1

MCC anticipates FY 2010 disbursements to be within 10 percent of the projections. MCC’s assessment of risks across the whole portfolio of compacts and is, therefore, lower than the sum of all compact countries' MCA work plan projections. FY 

2011 Projections are based on detailed project planning and represent the full year's projection. Projections for FY 2010 and beyond are based on general program plans and are subject to revision as more detailed planning occurs. Program 

implementation involves uncertainty associated with factors such as procurement process, construction schedules, and capacity of Accountable Entities and Implementing Entities. Projected disbursements will be contingent on contract 

deliverables meeting expected timelines and quality standards. The projected obligations for Jordan, Moldova, and Timor-Leste are notional and are likely to increase or decrease based on negotiations with the countries and MCC Board 

approval.

2

During FY 2007, the Compact Implementation Funding (CIF) was created as a new fund type. CIF, originally classified as 609(g), was then reclassified to CIF (COMPACT). This change caused several of the obligations and disbursements to 

become negative for 609(g) due to the timing of this accounting event.
66 2009 Annual Report

Compacts in Development

Information and Estimates as of September 30, 2009

Country Expected Signing Current Status

Estimated Grant 

Amount 

(in $ millions)

Indonesia1 FY 2011 Constraints Analysis $600-800

Jordan2 FY 2010 - Quarter 4 Program Development & Appraisal $300

Malawi2 FY 2010 - Quarter 4 Program Development & Appraisal $250-350

Moldova FY 2010 - Quarter 1 Board Approval Pending $262

Philippines2 FY 2010 - Quarter 3 Program Development & Appraisal $400-500

Senegal FY 2009 - Quarter 4 Signed $540

Zambia1 FY 2011 Constraints Analysis $250-350

Major stages in compact development process:

Selected

Core Team Established

Public Consultations Commenced

Constraints Analysis

Concept Paper(s)

Program Development & Appraisal

Investment Memo

Negotiations

Board Approval

Signed

- Country has been selected as Compact eligible by MCC's Board of Directors

- Country has established and funded a team to work with MCC

- Core team is consulting with public stakeholders on project priorities

- Core team is analyzing constraints to growth and poverty reduction

- Core team is developing or has submitted detailed project concepts for MCC 

consideration

- Compact has been signed

- MCC has prepared Compact proposal for Investment Committee consideration

- MCC and country negotiate legal agreements

- MCC's Board has approved Compact

Millennium Challenge Corporation

2

Estimates for compacts for Jordan, Malawi and Philippines are based on draft or final project concepts. 

Semiannual Report to Congress - Compacts in Development

Information and Estimates as of September 30, 2009

- MCC and core team further develop concepts through detailed feasibility 

assessments, and determine viability

1

Funding for compacts for Indonesia and Zambia will depend on appropriations provided for in the President's Budget 

Request for FY 2010. 
Financial Statements 67

Threshold Country Programs

As of September 30, 2009

Administrative 

Fees1

Projected3 

Program 

Obligations in 

(in millions)

Total Program 

Disbursements 

($)

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Country Status Signing Date

Albania Completed 4/3/2006 1.0 14.0 0.1 4.9 7.7 1.1 0.1 13,857,236

Albania II Signed 9/29/2008 1.1 15.7 3.0 3.8 8.9 2,956,895

Burkina Faso Completed 7/22/2005 0.9 12.9 0.0 0.3 10.9 1.5 0.1 - 12,904,331

Guyana Signed 8/23/2007 0.5 0.1 6.7 0.1 1.2 3.8 1.7 5,096,591

Indonesia Signed 11/17/2006 3.9 55.0 1.8 19.6 20.6 13.1 41,920,197

Jordan Completed 10/17/2006 1.8 25.0 3.2 9.6 11.4 0.8 24,196,862

Kenya Signed 3/23/2007 0.9 12.7 0.9 5.5 6.3 6,428,001

Kyrgyz Republic Signed 3/14/2008 1.1 16.0 0.4 3.4 12.2 3,810,973

Liberia Eligible - 15.0 - 4.5 9.0 1.5 -

Malawi Completed 9/23/2005 1.5 20.9 6.2 6.9 6.3 0.7 0.9 20,104,664

Mauritania Not Eligible - 0.1 0.0 - 0.0 41,248

Moldova Signed 12/15/2006 1.7 24.7 0.5 9.7 11.1 3.5 21,224,268

Niger Signed 3/17/2008 1.6 23.1 7.3 7.9 7.9 7,298,806

Paraguay Completed 5/8/2006 2.4 0.1 34.8 0.1 0.1 7.8 15.6 8.7 2.5 32,376,080

Paraguay II Signed 4/13/2009 2.1 30.3 0.2 15.1 15.1 196,981

Peru Signed 6/9/2008 2.5 0.0 35.6 0.0 4.9 12.3 18.4 4,911,311

Philippines Completed 7/26/2006 1.4 20.7 2.1 9.4 9.0 0.2 20,470,565

Rwanda Signed 9/24/2008 1.7 0.0 24.7 0.1 7.3 14.8 2.5 128,042

Sao Tome & Principe Signed 11/9/2007 1.3 0.2 7.4 0.0 0.2 0.7 4.2 2.4 5,154,023

Tanzania4 Completed 5/3/2006 0.8 11.2 (0.0) 0.1 2.8 6.4 1.6 0.3 10,891,458

Timor-Leste5 Eligible - 0.1 0.1 10.0 0.1 0.1 3.0 6.0 1.0 254,151

Uganda Signed 3/29/2007 0.7 10.4 0.0 3.3 4.1 3.0 7,424,859

Ukraine Signed 12/4/2006 3.1 45.0 1.3 14.4 18.0 11.3 33,632,357

Yemen Not Eligible - 0.1 0.0 0.0 0.1 - 111,742

Zambia Completed 5/22/2006 1.6 22.7 0.2 12.4 9.5 0.6 0.0 22,735,000

Total 33.6 13.3 124.4 179.7 122.5 30.4 25.0 0.2 7.4 54.8 116.3 119.4 104.8 72.6 17.5 2.5 

Administrative Fee 

Obligations 0.3 4.6 3.2 3.4 0.5 1.8 

1

Administrative fees reflect allocations and transfers to other agencies for the cost of administering the MCC Threshold Program. 

2 "Obligations" and "Disbursements" amounts include funding for technical assistance to develop threshold country plans and for independent monitoring and evaluation as well as program funds.

3 The projected obligations are notional and are likely to change after negotiations of the threshold program agreements. Projected disbursements are based on USAID and U.S. Department of Treasury estimates. 

4 Funds for Tanzania were deobligated in FY 2009 quarter 4.

5

 Technical assistance was provided to develop a threshold country plan in 2005 when Timor-Leste was previously eligible, but funds were not obligated until FY 2007. Additional technical assistance was provided in 2009 to develop its Threshold Country Plan.

Program Disbursements2 in 

(in millions)

Projected3

 Program 

Disbursements in 

(in millions)

Program Obligations2

in 

(in millions)

Millennium Challenge Corporation

MCC Semiannual Report to Congress - Threshold Country Programs

As of September 30, 2009
68 2009 Annual Report

OFFICE OF INSPECTOR GENERAL 

For the Millennium Challenge Corporation

AUDIT OF THE MILLENNIUM 

CHALLENGE CORPORATION’S 

FINANCIAL STATEMENTS, 

INTERNAL CONTROLS, AND 

COMPLIANCE FOR THE PERIOD 

ENDING

SEPTEMBER 30, 2009 AND 2008 

AUDIT REPORT NO. M-000-10-001-C 

November 16, 2009 

WASHINGTON, DC Millennium Challenge Corporation 

1401 H Street N.W. 

Suite 770 

Washington, DC 20005 

www.usaid.gov/oig

 Office of Inspector General 

 for the Millennium Challenge Corporation 

November 16, 2009 

Darius Mans 

Acting Chief Executive Officer 

Millennium Challenge Corporation 

875 15th Street, N.W. 

Washington, DC 20005-2221 

Subject: Audit of the Millennium Challenge Corporation’s Financial Statements, Internal 

Controls, and Compliance for the Period Ending September 30, 2009 and 2008 

 Report No. M-000-10-001-C 

Dear Mr. Mans, 

Enclosed is the final report on the subject audit. The Office of Inspector General (OIG) 

contracted with the independent certified public accounting firm of Cotton & Company LLP to 

audit the financial statements of the Millennium Challenge Corporation (MCC) for the period 

ending September 30, 2009. The contract required that the audit be performed in accordance 

with United States Generally Accepted Government Auditing Standards, Office of Management 

and Budget (OMB) Bulletin 07-04 as amended, Audit Requirements for Federal Financial 

Statements, and the GAO/PCIE Financial Audit Manual.

In its audit of the MCC’s financial statements for the period ending September 30, 2009 the 

auditors found: 

• that the financial statements were fairly presented in conformity with U.S. Generally 

Accepted Accounting Principles, 

• five significant deficiencies, one of which is considered a material weakness, in the 

internal controls over financial reporting and its operation, and 

• no instances of material noncompliance with laws and regulations. 

A material weakness is a deficiency, or combination of deficiencies, in internal control, such that 

there is a reasonable possibility that a material misstatement of the entity's financial statements 

will not be prevented, or detected and corrected on a timely basis. 
Financial Statements 69

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is 

less severe than a material weakness, yet important enough to merit attention by those charged 

with governance. Cotton & Company LLP reported the following internal control significant 

deficiencies: 

1. Control over Mission Activities and Support (material weakness) 

2. Quality Control over Financial Reporting 

3. Controls over Payroll Processes 

4. Proper Reporting Period 

5. Fund Balance with Treasury Reconciliation 

In carrying out its oversight responsibilities, the OIG reviewed Cotton & Company, LLP’s report 

and related audit documentation. This review, as differentiated from an audit in accordance with 

U.S. Generally Accepted Government Auditing Standards was not intended to enable the OIG 

to express, and we do not express, opinions on MCC’s financial statements, or internal control; 

or on MCC’s compliance with applicable laws and regulations. Cotton & Company, LLP is 

responsible for the attached auditor’s report, dated November 13, 2009, and the conclusions 

expressed in the report. However, our review disclosed no instances that Cotton & Company, 

LLP did not comply, in all material respects, with applicable standards. 

To address the internal control deficiencies reported by Cotton & Company, LLP we made the 

following recommendations to MCC’s management on November 09, 2009: 

1. Controls over Mission Activities and Support (material weakness) 

 1.1 Untimely Performance and Lack of Monitoring of MCA Audits 

Recommendations: We recommend that the MCC Department of Compact Implementation 

and Division of Finance: 

• Strengthen the monitoring of the MCA audit process, from submission of the audit plan 

through issuance of the audit report to ensure timely completion and sufficient time for 

OIG review, prior to issuing the report to MCC for management comment. 

• Increase communication between the MCAs, the audit firms, and the OIG to ensure all 

parties are adequately informed of the progress of all audits in a timely manner. Ensure 

that the MCAs understand the impact of these audits and how they affect MCC’s 

assessment of overall controls and its financial statement audit. 

3 

1.2. Lack of Adequate Documentation to Support Transactions 

Recommendation: We recommend that MCC management, in coordination with the U.S. 

Agency for International Development (USAID), establish effective and periodic communication 

with MCA and Threshold mission personnel, to emphasize the need for proper documentation to 

be maintained in the MCA files, and that these documents are readily available and promptly 

submitted for inspection when requested. 

 1.3 Improper Reporting of Re-disbursements 

Recommendations: We recommend that MCC Department of Compact Implementation and 

Division of Finance: 

• Develop training for MCA Fiscal Agents to ensure proper reporting of re-disbursements 

on the QFRs to ensure the MCA is only requesting advances for immediate funding 

needs.

• Develop a tracking mechanism to monitor prepayments and to ensure that MCC and 

NBC personnel are properly reviewing the quarterly submitted QFRs for proper reporting 

of both the projected needs for advancement of funds and actual re-disbursements of 

previously advanced funds.

2. QUALITY CONTROL OVER FINANCIAL REPORTING

Recommendations: We recommend that the MCC Division of Finance: 

• Strengthen its quality control reviews over financial statements, notes, and other 

information presented, to ensure the information received is accurate, complete, and 

complies with accounting standards and reporting guidance. 

• Increase communication with USAID to ensure information received has been reviewed 

and is reliable, in order for MCC to prepare complete and accurate financial statements 

in accordance with accounting standards and reporting guidance. 

3. CONTROLS OVER PAYROLL PROCESSES

3.1 Untimely and Incomplete Processing of Separated Employees 

Recommendations: We recommend that the MCC Division of HR: 

• Ensure all HR personnel are aware of the requirement to document and retain the 

employee exit form in the OPF. In addition, direct HR personnel to obtain completed 

employee exit form from the Division of Security in a timely manner and document it 

properly in the employee’s OPF. 

• Direct HR personnel to follow up on all missing items when performing the OPF audits 

and completing the Purged OPF Check List. 

4 
70 2009 Annual Report

• Develop and implement a process to monitor and ensure that HR and/or NBC personnel 

are completing leave audits as required and processing payments for amounts due to, or 

amounts owed by, separating employees on a timely basis.

3.2 Improper and/or Lack of Certification on the SF-52 and SF-50 

Recommendations: We recommend that the MCC Division of HR:

• Review its current policies and procedures to ensure that proper authorization and 

approval of personnel actions are clearly documented on the required forms prior to 

processing. 

• Direct HR personnel to adhere to the documented policies and procedures when 

preparing, reviewing, and approving personnel actions, to ensure reviews and approvals 

are properly documented.

• Provide the necessary training to responsible HR personnel to ensure that they are 

aware of the need for properly documenting reviews and approvals of personnel 

transactions. 

3.3 Lack of Support for Employee Selected Benefit Deductions 

Recommendations: We recommend that the MCC Division of HR: 

• Establish a consistent tracking mechanism or other historical file for MCC employees to 

document all changes in employee benefits that are not documented using standard 

forms or Employee Express. 

• Revise current policies and procedures to ensure that supporting documentation for all 

transactions processed by HR personnel on behalf of MCC employees are clearly 

documented either in the OPF or other historical file, and are readily available for 

examination. 

4. PROPER REPORTING PERIOD

Recommendations: We recommend that MCC Division of Finance: 

• Continue to strengthen, and revise as necessary, policies and procedures for yearend 

accruals to ensure that all countries, types of funding, and programs are considered 

when recording estimates for future expenses, and that accruals are reasonably 

sufficient to cover anticipated costs. 

• Establish and communicate procedures for the MCAs to require the submission of 

estimates or payment requests for current period expenses that have not, or will not be 

recorded until the subsequent year, for each fund type. 

• Ensure that the accrual amount is adequately and reasonably calculated, clearly 

documented and supported, and properly reviewed for completeness and accuracy prior 

to and subsequently after posting to the GL. 

5 

6 

5. FUND BALANCE WITH TREASURY (FBWT) RECONCILIATION

Recommendations: We recommend that the MCC Division of Finance: 

• Inquire of USAID’s procedures to resolve the issue of incomplete SF 224 reporting. 

• Consider revisions to the Memorandum of Agreement (MOA) with USAID to require 

timely responses upon inquiry by MCC management regarding financial statement audit 

findings related to Threshold Program transactions. 

In finalizing the report, we received and considered MCC’s response to the draft audit report 

and the recommendations included therein. In its comments, MCC concurred with all of the 

recommendations. We acknowledge that management decisions have occurred for the audit 

recommendations. Please inform us when final action has been taken. 

The OIG appreciates the cooperation and courtesies extended to our staff and to the staff of 

Cotton & Company, LLP during the audit. Please contact me or Richard J. Taylor, Director, 

Financial Audits Division, at (202) 216-6963, if you have any questions concerning this report. 

Sincerely,

 

Alvin A. Brown /s/ 

Assistant Inspector General 

Millennium Challenge Corporation
Financial Statements 71

TABLE OF CONTENTS 

 Page

Independent Auditor’s Report 

 Opinion on the Financial Statements 2 

 Internal Control over Financial Reporting 4 

 Compliance with Laws and Regulations 17 

 Status of Prior Year Findings – Appendix A 18 

 Management Comments and Our Evaluation – Appendix B 20 

 Management Comments – Appendix C 24 

Financial Section 30 

Balance Sheet 31 

Statement of Budgetary Resources 32 

Statement of Net Cost 33 

Statements of Operations and Changes in Net Position 34 

Notes to Financial Statements 35 

Summary of Financial Statement Audit 44 

 and Management Assurances 

Management Challenges 45 

MCC Response to Management Challenges 51 

Inspector General 

United States Agency for International Development 

Board of Directors 

Millennium Challenge Corporation 

INDEPENDENT AUDITOR’S REPORT

We have audited the Balance Sheets of the Millennium Challenge Corporation (MCC) as of September 

30, 2009 and 2008, and the related Statements of Net Cost, Changes in Net Position, and Budgetary 

Resources for the years then ended. These financial statements are the responsibility of MCC 

management. Our responsibility is to express an opinion on the financial statements based on our audit. 

We conducted our audits in accordance with auditing standards generally accepted in the United States of 

America; standards applicable to financial audits contained in Government Auditing Standards, issued by 

the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin 07-

04, Audit Requirements for Federal Financial Statements. These standards require that we plan and 

perform the audit to obtain reasonable assurance about whether the financial statements are free of 

material misstatement. An audit includes examining, on a test basis, evidence supporting amounts and 

disclosures in the financial statements. An audit also includes assessing accounting principles used and 

significant estimates made by management, as well as evaluating overall financial statement presentation. 

We believe that our audits provide a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present fairly, in all material respects, the 

financial position of MCC as of September 30, 2009, and 2008, and its net costs, changes in net position, 

and budgetary resources for the year then ended in conformity with accounting principles generally 

accepted in the United States of America. 

Management’s Discussion and Analysis (MD&A) and other accompanying information are not required 

as part of MCC’s basic financial statements. For MD&A, which is required by OMB Circular A-136, 

Financial Reporting Requirements, and the Federal Accounting Standards Advisory Board’s Statement of 

Federal Financial Accounting Standards No. 15, Management’s Discussion and Analysis, we made 

certain inquiries of management and compared information for consistency with MCC’s audited financial 

statements and against other knowledge we obtained during our audit. For other accompanying 

information, we compared information with the financial statements. On the basis of this limited work, we 

found no material inconsistencies with the financial statements, U.S. generally accepted accounting 

2
72 2009 Annual Report

principles, or OMB guidance. We did not audit the MD&A or other accompanying information and 

therefore express no opinion on them. 

In accordance with Government Auditing Standards, we have also issued separate reports dated 

November 13, 2009, on our consideration of MCC’s internal control over financial reporting and on our 

tests of its compliance with certain provisions of laws and regulations. The purpose of these reports is to 

describe the scope of our testing of internal control over financial reporting and compliance and results of 

that testing, and not to provide an opinion on internal control over financial reporting or on compliance. 

These reports are an integral part of an audit performed in accordance with Government Auditing 

Standards and should be considered in assessing results of our audits.

COTTON & COMPANY LLP 

Colette Y. Wilson, CPA 

Partner

November 13, 2009 

Alexandria, Virginia 

3

Inspector General 

United States Agency for International Development 

Board of Directors 

Millennium Challenge Corporation 

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL

We have audited the Balance Sheet of the Millennium Challenge Corporation (MCC), as of September 

30, 2009 and 2008, and the related Statements of Net Cost, Changes in Net Position, and Budgetary 

Resources for the years then ended. We have issued our report thereon dated November 13, 2009. We 

conducted our audit in accordance with auditing standards generally accepted in the United States of 

America; standards applicable to financial audits contained in Government Auditing Standards, issued by 

the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin 07-

04, Audit Requirements for Federal Financial Statements.

In planning and performing our audits, we considered MCC’s internal control over financial reporting as a 

basis for designing audit procedures for the purpose of expressing our opinion on the financial statements, 

but not for the purpose of expressing an opinion on the effectiveness of the MCC’s internal control over 

financial reporting. Accordingly, we do not express an opinion on the effectiveness of MCC’s internal 

control over financial reporting. 

A control deficiency exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent or detect 

misstatements in a timely manner. A significant deficiency is a control deficiency, or combination of 

control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or 

report financial data reliably, in accordance with generally accepted accounting principles, such that there 

is more than a remote likelihood that a misstatement of the entity’s financial statements, that is more than 

inconsequential, will not be prevented or detected by the entity’s internal control. 

We noted five matters involving internal control and its operation that we consider to be significant 

deficiencies. These matters are listed below and are detailed in the report. 

• Controls Over Mission Activities and Support 

• Quality Control Over Financial Reporting 

• Controls Over Payroll Processes 

• Proper Reporting Period 

• Fund Balance with Treasury Reconciliation 

4
Financial Statements 73

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in 

more than a remote likelihood that a material misstatement of the financial statements will not be 

prevented or detected by the entity’s internal control. 

Our consideration of internal control over financial reporting was for the limited purpose described above 

and would not necessarily identify all deficiencies in internal control that might be significant deficiencies 

or material weaknesses. However, we consider the significant deficiency related to Controls over Mission 

Activities and Support to be a material weakness as defined above. 

CONTROLS OVER MISSION ACTIVITIES AND SUPPORT

The vast majority of activities and expenses occur in the Compact and Threshold programs. As such, 

controls in the mission countries should be adequately designed and operate effectively. In addition, MCC 

should be adequately monitoring those controls to gain assurance over the activities taking place and the 

resulting financial information being reported. During our audit, we noted areas of weakness related to the 

monitoring of audits, completion of those audits, control activities in the countries, and the ability to 

provide underlying support for transactions. These areas, which represent a lack of controls over activities 

and support, are detailed below. 

Untimely Performance and Lack of Monitoring of MCA Audits 

Audits of controls, transactions, and balances of Millennium Challenge Accountable Entities (MCA) are 

not completed and submitted to the Office of Inspector General (OIG) in a timely manner. In addition, 

MCC is not adequately monitoring the start and completion of these audits to ensure a timely submission 

of audit reports and notification of findings. This increases MCC’s risk of not being informed of MCA 

activities that would affect the financial statements in a timely manner. 

As a major component of internal control over the MCAs, MCC requires audits to be conducted on a 

semiannual basis for the six months ending December and June of each year. The results of the audits 

give MCC some assurance over the validity and accuracy of payments and advances that are processed 

for the MCAs and reported in its financial statements. This assurance is needed as invoices and other 

underlying supporting documentation for transactions are not reviewed or maintained by MCC or the 

National Business Center (NBC). Instead, MCC relies on approved request documents submitted by 

MCA personnel. 

Based on our inquiries and review of the timing of audit planning documents and audit reports submitted 

by the MCA auditors, we concluded that MCC is not adequately monitoring the start and completion of 

the MCA audits. Details of our review for the 16 countries that had entered into force, as of June 30, 

2009, follow. 

For audits conducted for the six months ending December 31, 2008, in which audit reports were due by 

March 31, 2009, we noted the following: 

• The OIG issued nine audit reports, of which seven were submitted between 28 and 45 days late. 

• Four audit reports that have yet to be issued by the OIG, were also submitted after the due date; 

one in early June 2009, and three in July 2009. 

•

Audits were not conducted for two MCAs (Morocco and Mozambique) that entered into force in 

September 2008; the first audits were extended into the next audit period. 

5

• One audit (MCA Honduras) has not started due to failed procurements. 

For audits conducted for the six months ending June 30, 2009, in which audit reports were due by 

September 30, 2009, we noted the following: 

• Audit planning documents for eight audits were submitted and approved after June 30, 2009 (one 

in July, six in August, and one in September), and one has not been received (MCA Honduras is 

still experiencing procurement delays). Planning documents are required to be approved by the 

OIG prior to commencement and audit work should begin within the audit period to ensure 

effective testing of controls. 

• Thirteen audit reports are currently past due; only one was submitted to the OIG by the due date 

and two were submitted in October. Outstanding audit reports include MCAs Morocco and 

Mozambique, which have now been in operation for one year since entering into force. 

Outstanding audit reports for the period ending June 30, 2009, which cover two quarters of fiscal year 

(FY) 2009 activity, will now be received well after the current fiscal period, and would not be useful in 

MCC’s assessment or assurance of FY 2009 activities. Some audits were delayed due to procurement 

issues, extended audit periods for MCAs that entered into force during an audit period, and the OIG’s 

delayed issuance of final reports. However, audit reports that are not issued in a timely manner increase 

the risk that MCC will not be notified of potential inadequate controls and inaccurate financial 

information, which could have a material impact on MCC’s financial statements. In addition, we noted 

that OIG comments on the audit reports relate to questionable amounts presented, clarification of audit 

findings, and lack of adherence to audit requirements and formatting of reports. Resolution of these 

comments is dependent on sufficient and timely responses from the MCA auditors. 

Also during testing of internal controls we noted instances of Quarterly Financial Reports (QRF) being 

submitted after required deadlines and Payment Request Forms (PRF) that were not properly approved 

prior to requesting disbursement from MCC. 

OIG’s Guidelines or Financial Audits Contracted by the Millennium Challenge Corporation’s 

Accountable Entities (Guidelines; revised August 2007), states: 

MCC standard audit provisions require that the Accountable Entity (hereafter referred to as 

MCA) ensures that an audit is contracted by MCA for itself at least annually in accordance with 

these Guidelines. The MCC may require more frequent audits than annually (§1.5).

MCC responsibilities are to: 1) monitor and ensure that the required contracted audits of the 

MCA and all non-US governmental and nongovernmental covered providers expending more 

than $300 thousand in their fiscal year are performed in a timely manner; 2) ensure the audits 

are performed by auditors on the list of approved auditors; and 3) make sure proper action is 

taken to correct deficiencies identified by the auditors. ... The MCC is also responsible for 

ensuring that audit contract agreements between MCA and Covered Providers, subject to audit, 

and their independent auditors contain a standard statement of work that includes all the 

requirements of these Guidelines (§1.8). 

All required audits must be completed and the reports issued in accordance with the compact (no 

later than 90 days after the end of the audit period) or such other periods as Parties may agree in 

writing. Extensions must be requested by the MCA and the Covered Provider in advance of the 

6
74 2009 Annual Report

audit due date. The approval of the extension will be coordinated and approved by the Office of 

the Inspector General on a case by case basis (§1.15). 

The OIG must receive the audit report in accordance with the Compact, no later than 90 days 

after the first anniversary of the Entry into Force and no later than 90 days after the end of the 

audited period thereafter, or such other periods as the Parties may otherwise agree (§2.3).

Not closely monitoring the MCA audit process increases MCC’s risk that MCAs are incurring costs and 

requesting advances that are potentially unallowable, incorrect, or not supported by underlying 

documentation. In addition, there is a risk that the MCAs do not have appropriate internal control 

structures in place that MCC can rely upon for approval of advance and payment requests. 

Recommendations: We recommend that the MCC Department of Compact Implementation and 

Division of Finance: 

• Strengthen the monitoring of the MCA audit process, from submission of the audit plan through 

issuance of the audit report to ensure timely completion and sufficient time for OIG review, prior 

to issuing the report to MCC for management comment. 

• Increase communication between the MCAs, the audit firms, and the OIG to ensure all parties are 

adequately informed of the progress of all audits in a timely manner. Ensure that the MCAs 

understand the impact of these audits and how they affect MCC’s assessment of overall controls 

and its financial statement audit. 

Lack of Adequate Documentation to Support Transactions

MCA and Threshold missions did not provide or respond to our requests for supporting documentation in 

a timely manner for all expense and undelivered order sample items. Prior to yearend testing, we 

informed MCC that documentation would be requested from the MCA and Threshold missions for 

substantiation of yearend balances and that due to tight deadlines for the audit, responses would be 

required within five days. This detailed, written information was communicated to all MCA and 

Threshold mission points of contact. 

Upon submission of the sample items, some countries responded in a timely manner, while others 

provided either incorrect, insufficient, or no documentation at all. MCC was advised of the lack of 

responses and in turn sent several emails to the countries and agency points of contact, in efforts to obtain 

the supporting documentation. Significant amounts remained unsupported at the conclusion of audit 

fieldwork.

The Government Accountability Office (GAO) Standards of Internal Control, states that:

Internal control and all transactions and other significant events need to be clearly documented, 

and the documentation should be readily available for examination. ... All documentation and 

records should be properly managed and maintained (page 15). 

Documentation was not provided or was insufficient to support the following: 

• Expenses for Compacts and Threshold transactions, in the amounts $995,737 and $2,269,864, 

respectively. 

7

• Undelivered Orders for Compact and Threshold balances, in the amounts of $620,217 and 

$5,665,222, respectively. 

Lack of response and submission of underlying documentation by the MCA and Threshold missions 

weakens the oversight and monitoring of mission activities and increases the risk of MCC reporting 

inaccurate balances in its trial balance and financial reports. 

Recommendation: We recommend that MCC management, in coordination with the U.S. Agency for 

International Development (USAID), establish effective and periodic communication with MCA and 

Threshold mission personnel, to emphasize the need for proper documentation to be maintained in the 

MCA files, and that these documents be readily available and promptly submitted for inspection when 

requested.

Improper Reporting of Re-disbursements 

During a review of outstanding advances, we noted that re-disbursements for a compact and 609(g) 

funding were not applied to earlier, outstanding advances, and/or were not properly reported by the MCA. 

Details of our review at interim are as follows: 

Vanuatu partially liquidated an April 2008 advance in April 2009, and had additional outstanding 

advances from FY 2008 that also had not been liquidated (one from June 2008, two from August 2008, 

and one from September 2008). These advances were not reported as disbursements on the MCA’s 

Quarterly Financial Report (QFR) until April 2009; thus, the additional advances received after April 

2008 may not have been needed. 

Ghana’s 609(g) disbursements for advances received in FYs 2008 and 2009 were not reported in a timely 

manner; they were reported on its June 2009 QFR. Funds were continually advanced on subsequent 

disbursement packages without discussion with the MCA as to why the amounts were not included on 

subsequent QFRs for proper re-disbursement recording in the general ledger (GL). 

Volume 1, Part 6, Other Fiscal Matters, of the Treasury Financial Manual (TFM), states: 

Advances to a recipient organization will be limited to the minimum amounts necessary for 

immediate disbursement needs and will be timed to be in accord only with the actual immediate 

cash requirements of the recipient organization in carrying out the purpose of an approved 

program or project. The timing and amount of cash advances will be as close as is 

administratively feasible to the actual disbursements by the recipient organization for direct 

program costs and the proportionate share of any allowable indirect costs. (§2025) 

Monitoring and review procedures were not sufficient by MCC and NBC to ensure that aged advances 

were completely liquidated prior to issuing further advances and liquidating subsequent advances. In 

addition, MCAs that do not properly or timely report their actual re-disbursement amounts cause MCC’s 

Congressional reporting to be inaccurate. 

Recommendations: We recommend that MCC Department of Compact Implementation and Division of 

Finance:

• Develop training for MCA Fiscal Agents to ensure proper reporting of re-disbursements on the 

QFRs to ensure the MCA is only requesting advances for immediate funding needs. 

8
Financial Statements 75

• Develop a tracking mechanism to monitor prepayments and to ensure that MCC and NBC 

personnel are properly reviewing the quarterly submitted QFRs for proper reporting of both the 

projected needs for advancement of funds and actual re-disbursements of previously advanced 

funds.

QUALITY CONTROL OVER FINANCIAL REPORTING

MCC addressed the prior year recommendation to effectively coordinate with service providers to ensure 

timely receipt of yearend trial balance and adjustment information. However, quality control procedures 

performed on consolidated financial information presented in the Agency Financial Report (AFR) require 

additional improvement. 

Yearend quality control reviews were not performed sufficiently to detect material misstatements and 

identify questionable and significant variances. Specifically, we noted the following: 

• A $7.9 million overstatement in Upward Adjustments of Prior Year Undelivered Orders was 

reported in the initial yearend financial statements. The overstatement, which was not detected by 

MCC or USAID, was discovered upon our inquiry of the nearly $8 million increase in GL 

account 4881 for the Threshold program when the prior yearend balance was only $396,264. In 

response to our inquiry, USAID personnel noticed a posting error for both the third and fourth 

quarter amounts. Per their explanation, the deobligation and reobligation adjustments were based 

on cumulative amounts reported for the entire year, instead of amounts for just the related quarter. 

In addition, these amounts included adjustments for subobligations, which should not have been 

included, as these amounts are already recorded at the initial bilateral obligation level.

• USAID personnel also noted that similar errors were made to GL account 4871 for downward 

adjustments, resulting in a $432 thousand misstatement. These errors were corrected and 

adjustments were posted to the final trial balance for inclusion in the financial statements. 

Additionally, detailed quality control reviews of consolidated financial information were not sufficient to 

ensure mathematical accuracy and presentation of comparable data between the trial balance, statements, 

and notes. During our review of the statements, notes, and information in the Management’s Discussion 

and Analysis (MD&A) section, we noted the following: 

• The presentation in the notes for Intra-governmental and Public costs, as well as Undelivered 

Orders, did not tie to amounts by program, as recorded in the trial balance. In addition, the total 

amount of costs did not tie to the Statement of Net Cost as it did for the prior year. 

• The presentation of funding, by program, in the initial MD&A did not tie to amounts recorded in 

the trial balance.

• Current and prior year amounts were not consistent in terms of classification in line items and 

presentation of amounts as positive or negative. 

• Mathematical errors, including some due to rounding, were noted not only in the initial AFR, but 

also in the revised version presented for audit. 

• Performance information presented in initial and revised versions of the AFR was not clearly 

defined and amounts cited for targets were incorrect. 

9

GAO Standards of Internal Control, states: 

Control activities occur at all levels and functions of the entity. They include a wide range of 

diverse activities such as approvals, authorizations, verifications, reconciliations, performance 

reviews, maintenance of security, and the creation and maintenance of related records which 

provide evidence of execution of these activities as well as appropriate documentation (page 11). 

OMB Circular A-136, Form and Content of Performance and Accountability Report (PAR), states: 

Reporting entities should ensure that information in the financial statements is presented in 

accordance with GAAP for Federal entities and the requirements of this Circular.... 

Preparation of the annual financial statement is the responsibility of agency management.... 

Financial statements presented for audit are the responsibility of MCC. Without conducting or ensuring 

effective, detailed analyses and quality control reviews over consolidated financial information, MCC is 

at risk for presenting statements that are not comparative, accurate, or in compliance with applicable 

requirements and accounting standards. 

Recommendations: We recommend that the MCC Division of Finance: 

• Strengthen its quality control reviews over financial statements, notes, and other information 

presented, to ensure that information presented for audit is accurate, complete, and complies with 

accounting standards and reporting guidance. 

• Increase communication with USAID to ensure information received has been reviewed and is 

reliable, in order for MCC to prepare complete and accurate financial statements in accordance 

with accounting standards and reporting guidance. 

CONTROLS OVER PAYROLL PROCESSES

Untimely and Incomplete Processing of Separated Employees 

Human Resource (HR) personnel are not proactive in obtaining the completed employee exit forms from 

the Division of Security, nor are they including copies of employee exit forms in the Official Personnel 

File (OPF). During our testing of 10 separated employees, we noted that employee exit forms were not 

properly documented in the OPF for all 10 employees sampled. MCC conducted OPF audits in which all 

sampled employees were included. When completing the Purged OPF Check List, it was simply 

documented that the employee exit form was not included in the OPF prior to being sent to storage or to 

the transferring employee’s new agency. 

In addition, we noted that for one separated employee, the lump sum payment for annual leave was not 

received until the 5th pay period after separation from MCC. MCC provided no explanation for the delay 

in performing the leave audit and processing the lump sum payment; normal processing time is two pay 

periods.

MCC’s Policy and Procedures on Employee Exit Procedures, Section 5.2, states the following: 

After the entire exit form is complete with signatures, the employee will meet with HR for an exit 

interview and final checkout.... The HR representative will witness the employee’s final signature 

10
76 2009 Annual Report

on the MCC Exit Form, noting the return of all MCC property. The HR representative will retain 

a copy of the exit form, place it in the employee’s historical personnel file, and provide the 

employee a copy.... After the employee has turned in their MCC badge to the Associate Director 

for Security, the form will be submitted to the HR division for their personnel file. 

The Purged OPF Check List lists the documents to be included in the OPF: 

Copy of Employee Exit Form – filed on left side.

GAO Standards of Internal Control, states: 

Transactions should be promptly recorded to maintain their relevance and value to management 

in controlling operations and making decisions. This applies to the entire process or life cycle of 

a transaction or event from the initiation and authorization through its final classification in 

summary records. In addition, control activities help to ensure that all transactions are 

completely and accurately recorded (page 15). 

By not adhering to the process of completing and retaining the employee exit form, the risk increases that 

MCC employees may not return all required property before separating from the agency. In addition, the 

untimely processing and payment of amounts owed to its employees increases the agency’s risk of 

retaining excessive liabilities or long-term receivables on its books for excessive periods of time.

Recommendations: We recommend that the MCC Division of HR: 

• Ensure all HR personnel are aware of the requirement to document and retain the employee exit 

form in the OPF. In addition, direct HR personnel to obtain completed employee exit form from 

the Division of Security in a timely manner and document it properly in the employee’s OPF. 

• Direct HR personnel to follow up on all missing items when performing the OPF audits and 

completing the Purged OPF Check List. 

• Develop and implement a process to monitor and ensure that HR and/or NBC personnel are 

completing leave audits as required and processing payments for amounts due to, or amounts 

owed by, separating employees on a timely basis. 

Improper and/or Lack of Certification on the SF-52 and SF-50 

During our testing of controls over personnel actions, we noted that HR personnel are not properly 

preparing and certifying the Standard Form (SF) 52, Request for Personnel Action, and the SF 50, 

Notification of Personnel Action. HR specialists are not certifying SF-52s in Part C-2 to show evidence of 

approval of the personnel action processed. In addition, they are not properly reviewing the SF-52s to 

ensure all necessary signatures are obtained to ensure the actions were properly requested and authorized 

prior to processing the action, nor are they signing the SF-52 as the preparing individual. 

During testing of controls over 10 newly hired employees, we noted the following: 

• Three SF-52s that were not signed or dated for approval 

• One instance in which the SF-52 and SF-50 were prepared and certified by the same HR 

specialist

11

• Five SF-50s that were approved after the effective date of the personnel action 

In addition, during testing controls over the processing of SF-52s for 45 employees, we noted: 

• Twelve SF-52s did not have the signature of a Certification Officer in Part C-2 

• Two instances in which the SF-52 and SF-50 were prepared and certified by the same HR 

specialist

• One SF-52 was not signed by the requesting and authorizing officials 

• One SF-50 had an approval date that occurred before the requesting and authorizing dates 

MCC’s documented procedures for processing SF-52s state that the HR specialist should not sign 

the SF-50, and that SF-52s and SF-50s should not be released until all actions have been 

reviewed and approved. 

U.S. Office of Personnel Management (OPM), Guide to Processing Personnel Actions, states: 

No personnel action can be made effective prior to the date on which the appointing officer 

approved the action. That approval is documented by the appointing officer’s pen and ink 

signature or by an authentication, approved by the Office of Personnel Management, in block 50 

of the Standard Form 50, or in Part C-2 of the Standard Form 52. By approving an action, the 

appointing officer certifies that the action meets all legal and regulatory requirements and, in the 

case of appointments and position change actions, that the position to which the employee is 

being assigned has been established and properly classified (§4b, Effective Dates).

As explained in paragraph 4b, most personnel actions must be approved by the appointing officer 

on or before their effective dates. An appointing officer is an individual in whom the power of 

appointment is vested by law or to whom it has been legally delegated. Only an appointing 

officer may sign and date the certification in Part C-2 of the Standard Form 52 or blocks 50 and 

49 of the Standard Form 50 to approve an action (§4c, Approval of Personnel Actions) 

GAO Standards of Internal Control, states that: 

Key duties and responsibilities need to be divided or segregated among different people to reduce 

the risk of error or fraud. This should include separating the responsibilities for authorizing 

transactions, processing and recording them, reviewing the transactions, and handling any 

related assets (page 14). 

Not adhering to procedures for preparing and approving personnel actions and establishing proper 

segregation of duties increases the risk that personnel actions may be processed that are not properly 

authorized or approved.

Recommendations: We recommend that the MCC Division of HR:

• Review its current policies and procedures to ensure that proper authorization and approval of 

personnel actions are clearly documented on the required forms prior to processing. 

12
Financial Statements 77

• Direct HR personnel to adhere to the documented policies and procedures when preparing, 

reviewing, and approving personnel actions, to ensure reviews and approvals are properly 

documented. 

• Provide the necessary training to responsible HR personnel to ensure that they are aware of the 

need for properly documenting reviews and approvals of personnel transactions. 

Lack of Support for Employee Selected Benefit Deductions 

During testing of payroll and personnel transactions for 45 employees over two pay periods, we noted 14 

instances in which documentation was not readily available or was not provided to support the amount 

deducted for Thrift Savings Plan (TSP) benefits. Of these 14 instances, we noted nine instances in which 

the deduction taken did not agree with the amount authorized by the employee. 

GAO Standards of Internal Control, states: 

Internal control and all transactions and other significant events need to be clearly documented, 

and the documentation should be readily available for examination. ... All documentation and 

records should be properly managed and maintained (page 15). 

OPM’s The Guide to Personnel Recordkeeping, states in Chapter 3, Filing Documents in the Personnel 

Folder, states: 

Records are filed in the Official Personnel Folder to document events in an individual’s Federal 

employment history that have long-term consequences for the employee and for the Government.

Care should be exercised in filing documents correctly to ensure all documents pertaining to an 

employee’s rights and benefits are available in the personnel folder when needed.

Instead of using the proper TSP form or accessing Employee Express, employees are emailing the HR 

specialist with the authorized amount to process for their TSP deduction. HR does not maintain in the 

OPF or in a centralized location, authorizations that are not documented using the standard form. For 

differences noted during the audit, the HR specialist could not readily produce the emails and had to 

search archived emails for the employee’s authorization for the change in deduction amount. 

Not using proper forms or maintaining a record of changes made to employee deductions increases the 

risk that incorrect deductions may be made for enrolled benefits.

Recommendations: We recommend that the MCC Division of HR: 

• Establish a consistent tracking mechanism or other historical file for MCC employees to 

document all changes in employee benefits that are not documented using standard forms or 

Employee Express. 

• Revise current policies and procedures to ensure that supporting documentation for all 

transactions processed by HR personnel on behalf of MCC employees are clearly documented 

either in the OPF or other historical file, and are readily available for examination. 

13

PROPER REPORTING PERIOD

Expenses for goods and services received and performed were not recorded in the proper period. We 

noted FY 2008 transactions recorded in the current fiscal year for which accruals had not been posted. In 

addition, we noted FY 2009 accrual transactions recorded in the beginning of FY 2010 that were not 

estimated and recorded. 

This is a repeat finding from the FY 2008 audit where MCC’s accrual processes were not sufficient to 

identify and compute amounts owed, but not paid, in the appropriate period. MCC did make 

improvements to their yearend accrual processes by contacting NBC for a listing of FY 2009 invoices and 

payment requests received but not paid in the first nine days of FY 2010, and ensuring comprehensive 

coverage of all funds, interagency agreements, and vendor contracts. However, significant amounts still 

lacked appropriate accruals and were recorded in the wrong period. It was also noted that expenses were 

reported in the wrong period for Threshold program costs. 

Statements of Federal Financial Accounting Standards (SFFAS) No. 5, Accounting for Liabilities of the 

Federal Government, (pp. 22 and 23) requires “a liability is recognized when one party receives goods or 

services in return for a promise to provide money or other resources in the future... The expense is 

recognized in the period that the exchange occurs.” 

OMB Circular A-136, Form and Content of the Performance and Accountability Report (PAR), Balance

Sheet, Section II.4.3.4 Liabilities, states that “liabilities shall be recognized when they are incurred 

regardless of whether they are covered by available budgetary resources.”

Unrecorded accruals for FY 2008 expenses reported in FY 2009 resulted in overstated expenses as 

follows:

• Compact and Compact Implementation funds in the amount of $1,902,313 

• Administrative and Due Diligence funds in the amount of $2,249,188 

• Threshold Program funds in the amount of $702,950 

Unrecorded accruals for FY 2009 expenses reported in FY 2010 resulted in understated expenses as 

follows:

• Compact funds in the amount of $2,632,499 

• Threshold Program funds in the amount of $22,568 

By not accruing for expenses in the proper period, FY 2009 expenses were overstated by $2,199,384.

USAID also recorded an adjustment to the Threshold program accrual amounts, as a result of significant 

deficiencies noted in the accrual reporting system, which were calculated and posted to the GL. 

Recommendations: We recommend that MCC Division of Finance: 

• Continue to strengthen, and revise as necessary, policies and procedures for yearend accruals to 

ensure that all countries, types of funding, and programs are considered when recording estimates 

for future expenses, and that accruals are reasonably sufficient to cover anticipated costs. 

14
78 2009 Annual Report

• Establish and communicate procedures for the MCAs to require the submission of estimates or 

payment requests for current period expenses that have not, or will not be recorded until the 

subsequent year, for each fund type. 

• Ensure that the accrual amount is adequately and reasonably calculated, clearly documented and 

supported, and properly reviewed for completeness and accuracy prior to and subsequently after 

posting to the GL. 

• Ensure that USAID has procedures to resolve incorrect accruals and to make certain that quarterly 

and yearend amounts for the Threshold program are complete and accurate. 

FUND BALANCE WITH TREASURY (FBWT) RECONCILIATION

USAID administers the Threshold Program for MCC, and Phoenix is the accounting system of record. 

During the review of internal controls, we noted that the monthly SF 224s, Statement of Transactions,

which include mission transactions for MCC’s Threshold Program, did not include all monthly cash 

disbursements and cash receipts recorded in Phoenix. Instead, only cash disbursements and cash receipts 

that are in agreement with those recorded and confirmed in Treasury’s system are reported to avoid 

having differences reported back by Treasury on the SF-6652, Statement of Differences (SOD). In 

addition, quarterly cash adjustments are posted to the GL in order to agree the FBWT account balance to 

the cash balance reported by Treasury. At yearend, it was noted that the missions followed the same 

procedures in preparing the September SF 224s.

The Treasury Financial Manual (TFM), Preparing FMS 224, §3330 states: 

Agencies prepare the monthly FMS 224 based on: 

• Vouchers paid or accomplished by [Regional Finance Centers (RFC)]; 

• Intra-governmental Payments and Collections (IPAC) transactions accomplished; 

• Cash collections received for deposit on SF 215s [Deposit Ticket]; and 

• Electronic payments/deposits such as those processed through the Automated Standard 

Application for Payments (ASAP) System or the Fedwire Deposit System. 

Agencies also should report transactions recorded in their [GL] that are not associated with an 

SF 215, SF 5515 [Debit Voucher], IPAC, or vouchers paid or accomplished by RFCs in Section I 

of the FMS 224 only.

§V, Subsection C, Adjustments, of Part 2-5100 states:

An agency may not arbitrarily adjust its FBWT account. Only after clearly establishing the 

causes of errors and properly documenting those errors, should an agency adjust its FBWT 

account balance. 

Improper reporting of FBWT to Treasury via the SF-224s bypasses the mandatory reconciliation and 

review process by Treasury, which in turn increases the risk of errors and misstatements ultimately being 

reported in the financial statements. 

Recommendations: We recommend that the MCC Division of Finance: 

• Inquire of USAID’s procedures to resolve the issue of incomplete SF 224 reporting. 

15

• Consider revisions to the Memorandum of Agreement (MOA) with USAID to require timely 

responses upon inquiry by MCC management regarding financial statement audit findings related 

to Threshold Program transactions. 

We noted certain matters involving internal control and its operation that we will report to MCC 

management in a separate letter. 

This report is intended solely for the information and use of USAID, MCC management, others within 

MCC, OMB, and Congress. It is not intended to be and should not be used by anyone other than these 

specified parties. 

COTTON & COMPANY LLP 

Colette Y. Wilson, CPA 

Partner

November 13, 2009 

Alexandria, Virginia 

16
Financial Statements 79

Inspector General 

United States Agency for International Development 

Board of Directors 

Millennium Challenge Corporation 

INDEPENDENT AUDITOR’S REPORT ON 

COMPLIANCE WITH LAWS AND REGULATIONS

We have audited the Balance Sheets of the Millennium Challenge Corporation (MCC) as of September 

30, 2009 and 2008, and the related Statements of Net Cost, Changes in Net Position, and Budgetary 

Resources for the year then ended. We have issued our report thereon dated November 13, 2009. We 

conducted our audits in accordance with auditing standards generally accepted in the United States of 

America; standards applicable to financial audits contained in Government Auditing Standards, issued by 

the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin 07-

04, Audit Requirements for Federal Financial Statements.

MCC management is responsible for complying with laws and regulations applicable to the agency. As 

part of obtaining reasonable assurance about whether MCC’s financial statements are free of material 

misstatement, we performed tests of its compliance with certain provisions of laws and regulations, 

noncompliance with which could have a direct and material effect on the determination of financial 

statement amounts, and certain other laws and regulations specified in OMB Bulletin 07-04. Providing an 

opinion on compliance with those provisions was not, however, an objective of our audits, and 

accordingly, we do not express such an opinion. 

The results of our tests of compliance disclosed no instances of noncompliance that we are required to 

report under Government Auditing Standards and OMB Bulletin 07-04. 

This report is intended solely for the information and use of United States Agency for International 

Development (USAID), MCC management, others within MCC and USAID, OMB, and Congress. It is 

not intended to be and should not be used by anyone other than these specified parties.

COTTON & COMPANY LLP 

Colette Y. Wilson, CPA 

Partner

November 13, 2009 

Alexandria, Virginia 

17

Appendix A

Status of 

Prior Year 

Findings

Following is the disposition of prior year (2008) findings, recommendations, and 

MCC Management’s action. 

Finding:

1. Absence of quality controls over financial reporting (material 

weakness) 

.

Recommendation No. 1: We recommend that the Millennium Challenge 

Corporation management: 

1.1. Perform detailed quality control reviews to ensure compliance with 

accounting standards and reporting guidance. 

1.2. Review and revise written policies and procedures regarding the 

preparation of the financial statements and related footnote disclosures to ensure 

that all financial statement line items are reported accurately and properly 

supported, and that any adjustments are reviewed and approved before 

recording in the GL by NBC. Document the above processes to ensure that an 

audit trail is available for all line items and amounts reported. 

 1.3. Effectively coordinate with its service providers (USAID and NBC) to 

 ensure timely and accurate receipt of final trial balance information 

 sufficient to prepare complete financial statements in accordance with OMB 

 Circular A-136. 

 Status: 

While improvements were made in the coordination with its service providers 

MCC still needs to strengthen its detailed quality control reviews and ensure that 

documented policies are finalized and adhered to. 

We consider this FY 2008 condition to be unresolved as of September 30, 2009. 

Finding:

2. Authorization for personnel actions inconsistent with stated 

policies and procedures. 

Recommendation No. 2: We recommend that the Millennium Challenge 

Corporation’s management review and revise its process for requesting, 

authorizing, and certifying its personnel actions to ensure all actions are properly 

authorized, documented, and retained prior to the action being processed into 

the personnel database. 

18
80 2009 Annual Report

Appendix A 

 Status: 

We consider this FY 2008 condition to be unresolved as of September 30, 2009, 

as similar findings are still noted by the auditors. 

Finding

3. Transactions not recorded in the period they occurred 

Recommendation No. 3: We recommend that the Millennium Challenge 

Corporation management develop and adhere to all policies and procedures 

related to quarterly and yearend reporting to ensure that all appropriate 

transactions are reviewed and a determination is made as to the amounts to 

accrue for the current period; and the accrual amount is properly prepared, 

clearly documented, and supported and that it is reviewed by both the service 

provider, NBC, and MCC for completeness and accuracy prior to and 

subsequently after posting to the GL. 

 Status: 

While improvements were made to the methodology used to accrue for yearend 

expenses, significant amounts remained in the current year which related to the 

prior year.

We consider this FY 2008 condition to be unresolved as of September 30, 2009. 

Finding

4. Lack of adequate review for accuracy and duplication prior to 

processing and recording transactions in General Ledger. 

Recommendation No. 4: We recommend that the Millennium Challenge 

Corporation management: 

4.1. Ensure that procedures for reviewing accruals and adjustments recorded by 

NBC are effectively performed to ensure each is valid and has been properly 

recorded.

4.2. Require documentation to support the entry of a JV to avoid duplication of 

the transactions. In addition, use of a consistent naming convention when 

entering JVs should be required to avoid duplication. 

4.3. Ensure that PP&E reconciliations are effectively performed each quarter 

and that amortization schedules are accurate and complete. 

 Status: 

 

 We consider these FY 2008 conditions to be unresolved as of September 30, 2009

19

Appendix B 

We received and evaluated MCC’s management comments to the 

recommendations made in this report. Management comments have been 

included in its entirety in Appendix C. 

Based on MCC’s comments, we acknowledge that management decisions have 

been reached on all of the recommendations. MCC should report to the OIG 

when final action has been taken on the recommendations. The following is a 

brief summary of MCC’s management comments on the five recommendations 

included in this report and our evaluation of those comments. 

Recommendation No. 1.1 

MCC agrees with the recommendations. The MCC’s Fiscal Accountability (FA) 

Directors will work with audit firms, MCAs and the OIG to ensure the timely 

completion and issuance of audit reports in the future. MCC has established a 

comprehensive audit tracking table to monitor the status of all MCA audits going 

forward, following up with MCAs to ensure timely completion, and providing 

notifications to the OIG on any issues or delays. MCC will stress to the MCAs the 

importance of timely audits as a part of MCC’s overall system of strong internal 

controls.

Auditor Evaluation: 

We conclude that management has adequately addressed this issue, and 

acknowledge that a management decision has been taken. 

Recommendation No. 1.2 

MCC agrees with the recommendation. MCC’s Fiscal Accountability (FA) 

Directors will work with the MCAs to ensure that documentation to support 

transactions is in good order and readily available. With regard to the 

Threshold missions, MCC plans to meet with USAID management to 

discuss the lack of response from the missions, and determine what steps 

both MCC and USAID can take to avoid this issue for future audits. 

Auditor Evaluation: 

We conclude that management has adequately addressed this issue, and 

acknowledge that a management decision has been taken. 

Management 

Comments and Our 

Evaluation

20
Financial Statements 81

Appendix B 

Recommendation No. 1.3 

MCC agrees with the recommendations. MCC has developed a report to monitor 

prepayments and will work with the National Business Center (NBC) to ensure that 

the first in/first-out method is followed when liquidating MCA advances. In addition, 

the FA Directors will provide training as needed to ensure that the MCAs provide 

accurate reporting of re-disbursements in their quarterly reporting submissions to 

MCC. MCC wishes to note that with the implementation of the Common Payment 

System (CPS), the use of advances is now limited to payment of MCA salaries and 

small dollar items. CPS makes payments directly to vendors via the US Treasury, 

eliminating the need for large dollar advances to MCA bank accounts. 

Auditor Evaluation: 

We conclude that management has adequately addressed this issue, and 

acknowledge that a management decision has been taken. 

Recommendation No. 2 

MCC agrees with the recommendations. As noted in the audit report, MCC has made 

improvements in its quality control over financial report in FY 2009 (this item was a 

material weakness in FY 2008). In FY 2010, MCC will expand its review process to 

include quarterly fluctuation analysis of all materials accounts, review its reporting 

process to ensure that there is adequate time for an effective review process, and 

continue to coordinate with USAID on the timeliness and accuracy of financial data 

for the Threshold program. 

Auditor Evaluation: 

We conclude that management has adequately addressed this issue, and 

acknowledge that a management decision has been taken. 

Recommendation No. 3.1 

MCC agrees with the finding and recommendations. MCC’s Human Resources 

division will establish procedures and controls to ensure that employee exit forms 

leave audits, and other requirements are met and filed in the OPF. MCC’s HR 

division is undergoing a project to document all policies and procedures (develop or 

update as necessary) to ensure we are compliant with all federal requirements. 

These policies will include procedures and metrics where necessary to ensure we 

are complying with the policies. This project is scheduled to be complete by the end 

of November 2009. 

21

Appendix B 

Auditor Evaluation: 

We conclude that management has adequately addressed this issue, and 

acknowledge that a management decision has been taken. 

Recommendation No. 3.2 

MCC agrees with recommendations. MCC’s Human Resources division will 

establish procedures and controls to ensure proper personnel actions (SF-52/SF-50) 

documentation. MCC’s HR division is undergoing a project to document all policies 

and procedures (develop or update as necessary) to ensure we are compliant with 

all federal requirements. These policies will include procedures and metrics where 

necessary to ensure we are complying with the policies. This project is scheduled to 

be complete by the end of November 2009 

Auditor Evaluation: 

We conclude that management has adequately addressed this issue, and 

acknowledge that a management decision has been taken. 

Recommendation No. 3.3 

MCC agrees with the findings and recommendations. MCC’s Human Resources 

Division will establish procedures and controls to ensure proper documentation of 

employee change requests. MCC will also discontinue the practice of accepting TSP 

changes via email. Employees will be required to use the appropriate form or 

Employee Express for changes to their TSP accounts. MCC’s HR division is 

undergoing a project to document all policies and procedures (develop or update as 

necessary) to ensure we are compliant with all federal requirements. These policies 

will include procedures and metrics where necessary to ensure we are complying 

with the policies. Project is scheduled to be complete by the end of November 2009. 

Auditor Evaluation: 

We conclude that management has adequately addressed this issue, and 

acknowledge that a management decision has been taken. 

Recommendation No. 4 

MCC agrees with the recommendations. MCC has implemented new formulation 

methodologies for its quarterly and year-end accruals that will ensure administrative; 

due diligence and program funds are accurately recorded. These new 

methodologies

22
82 2009 Annual Report

Appendix B 

will be reflected in the update of MCC’s financial management policy and procedures 

which will be released during the first quarter of FY 2010. MCC will meet with USAID 

management to discuss their procedures for ensuring that accruals reported as part 

of the quarterly reporting package to MCC are accurate and complete.

Auditor Evaluation: 

We conclude that management has adequately addressed this issue, and 

acknowledge that a management decision has been taken. 

Recommendation No. 5 

MCC agrees with the recommendations. MCC plans to meet with USAID 

management to discuss their plan of action to resolve this finding. MCC will update 

the MOU with USAID to require a copy of USAIDs consolidated monthly 

reconciliation for the fund balance with Treasury as part of their oversight Threshold 

reporting. MCC‘s ability to implement the recommendation with regard to USAID will 

be dependent on their agreement to the terms of the MO, and their timely completion 

of FBWT reconciliations in accordance with established Treasury guidelines.

Auditor Evaluation: 

We conclude that management has adequately addressed this issue, and 

acknowledge that a management decision has been taken. 

23

Appendix C 

TO: Alvin A. Brown 

 Assistant Inspector General 

FROM: Michael Casella /s/ 

 Acting Vice President, Administration and Finance 

DATE: November 10, 2009 

SUBJECT: Management Response to Draft Independent Auditor’s 

 Report on MCC’s Financial Statements for Fiscal Years 

 Ended September 30, 2009 and 2008, Respectively 

We have received the subject draft report and are pleased to note that the independent auditors, 

Cotton & Company, LLP, are issuing an unqualified opinion on our principal financial 

statements: 

 Balance Sheet; 

 Statement of Net Cost; 

 Statement of Changes in Net Position; and 

 Statement of Budgetary Resources 

The Millennium Challenge Corporation’s (MCC) management recognizes the importance of 

accountability, effective stewardship and public disclosures related to the resources entrusted to 

it. Our goal is to achieve and maintain excellence in our financial management, financial 

reporting and internal control systems. Accordingly, we will implement the recommendations as 

soon as possible to strengthen our systems of internal control and lend further credibility to our 

financial statements and overall financial operations. 

We wish to recognize and thank you, your team, and Cotton & Company for working closely 

with us during the audit process. Any questions may be addressed to Mr. Dennis Nolan, Deputy 

Chief Financial Officer, or to me. 

Following are our management decisions and responses to Cotton & Company’s audit 

recommendations. 

24
Financial Statements 83

Appendix C 

Material Weakness: Controls over Mission Activities and Support

Recommendation No. 1: Untimely Performance and Lack of Monitoring of MCA 

Audits

We recommend that the MCC Department of Compact Implementation and Division of Finance: 

• Strengthen the monitoring of the MCA audit process, from submission of the audit plan through 

issuance of the audit report to ensure timely completion and sufficient time for OIG review, prior to 

issuing the report to MCC for management comment. 

• Increase communication between the MCAs, the audit firms, and the OIG to ensure all parties 

are adequately informed of the progress of all audits in a timely manner. Ensure that the MCAs 

understand the impact of these audits and how they affect MCC’s assessment of overall controls and 

its financial statement audit. 

Management Response

MCC agrees with the recommendations. The MCC’s Fiscal Accountability (FA) Directors will 

work with audit firms, MCAs and the OIG to ensure the timely completion and issuance of audit 

reports in the future. MCC has established a comprehensive audit tracking table to monitor the 

status of all MCA audits going forward, following up with MCAs to ensure timely completion, 

and providing notifications to the OIG on any issues or delays. MCC will stress to the MCAs the 

importance of timely audits as a part of MCC’s overall system of strong internal controls.

Recommendation No 2

We recommend that MCC management, in coordination with the U.S. Agency for International 

Development (USAID), establish effective and periodic communication with MCA and 

Threshold mission personnel, to emphasize the need for proper documentation to be maintained 

in the MCA files, and that these documents are readily available and promptly submitted for 

inspection when requested. 

Management Response

MCC agrees with the recommendation. MCC’s Fiscal Accountability (FA) Directors will work 

with the MCAs to ensure that documentation to support transactions is in good order and readily 

available. With regard to the Threshold missions, MCC plans to meet with USAID management 

to discuss the lack of response from the missions, and determine what steps both MCC and 

USAID can take to avoid this issue for future audits.

25

Appendix C 

Recommendation No 3

We recommend that MCC Department of Compact Implementation and Division of Finance:

• Develop training for MCA Fiscal Agents to ensure proper reporting of re-disbursements 

on the QFRs to ensure the MCA is only requesting advances for immediate funding needs.

• Develop a tracking mechanism to monitor prepayments and to ensure that MCC and 

NBC personnel are properly reviewing the quarterly submitted QFRs for proper reporting of both 

the projected needs for advancement of funds and actual re-disbursements of previously 

advanced funds.

Management Response

MCC agrees with the recommendations. MCC has developed a report to monitor prepayments 

and will work with the National Business Center (NBC) to ensure that the first in/first-out 

method is followed when liquidating MCA advances. In addition, the FA Directors will provide 

training as needed to ensure that the MCAs provide accurate reporting of re-disbursements in 

their quarterly reporting submissions to MCC. MCC wishes to note that with the implementation 

of the Common Payment System (CPS), the use of advances is now limited to payment of MCA 

salaries and small dollar items. CPS makes payments directly to vendors via the US Treasury, 

eliminating the need for large dollar advances to MCA bank accounts. 

Significant Deficiency 1: Quality Control Over Financial Reporting

We recommend that the MCC Division of Finance: 

• Strengthen its quality control reviews over financial statements, notes, and other 

information presented, to ensure the information received is accurate, complete, and complies 

with accounting standards and reporting guidance. 

• Increase communication with USAID to ensure information received has been reviewed 

and is reliable, in order for MCC to prepare complete and accurate financial statements in 

accordance with accounting standards and reporting guidance. 

Management Response

MCC agrees with the recommendations. As noted in the audit report, MCC has made 

improvements in its quality control over financial report in FY 2009 (this item was a material 

weakness in FY 2008). In FY 2010, MCC will expand its review process to include quarterly 

fluctuation analysis of all materials accounts, review its reporting process to ensure that there is

26
84 2009 Annual Report

Appendix C 

adequate time for an effective review process, and continue to coordinate with USAID on the 

timeliness and accuracy of financial data for the Threshold program. 

Significant Deficiency 2: Controls Over Payroll Process

Recommendation No. 1: Untimely and Incomplete Processing of Separated Employees

We recommend that the MCC Division of HR:

• Ensure all HR personnel are aware of the requirement to document and retain the 

employee exit form in the OPF. In addition, direct HR personnel to obtain completed employee 

exit form from the Division of Security in a timely manner and document it properly in the 

employee’s OPF. 

• Direct HR personnel to follow up on all missing items when performing the OPF audits 

and completing the Purged OPF Check List.

• Develop and implement a process to monitor and ensure that HR and/or NBC personnel 

are completing leave audits as required and processing payments for amounts due to, or amounts 

owed by, separating employees on a timely basis. 

Management Response

MCC agrees with the finding and recommendations. MCC’s Human Resources division will 

establish procedures and controls to ensure that employee exit forms leave audits, and other 

requirements are met and filed in the OPF. MCC’s HR division is undergoing a project to 

document all policies and procedures (develop or update as necessary) to ensure we are 

compliant with all federal requirements. These policies will include procedures and metrics 

where necessary to ensure we are complying with the policies. This project is scheduled to be 

complete by the end of November 2009. 

Recommendation No 2: Improper and/or lack of certification on the SF-52/SF-50 

We recommend that the MCC Division of HR:

• Review its current policies and procedures to ensure that proper authorization and 

approval of personnel actions are clearly documented on the required forms prior to processing. 

• Direct HR personnel to adhere to the documented policies and procedures when 

preparing, reviewing, and approving personnel actions, to ensure reviews and approvals are 

properly documented. 

27

Appendix C 

• Provide the necessary training to responsible HR personnel to ensure that they are aware 

of the need for properly documenting reviews and approvals of personnel transactions. 

Management Response

MCC agrees with recommendations. MCC’s Human Resources division will establish 

procedures and controls to ensure proper personnel actions (SF-52/SF-50) documentation. 

MCC’s HR division is undergoing a project to document all policies and procedures (develop or 

update as necessary) to ensure we are compliant with all federal requirements. These policies 

will include procedures and metrics where necessary to ensure we are complying with the 

policies. This project is scheduled to be complete by the end of November 2009. 

Recommendation No 3: Lack of support for employee selected benefit deductions

We recommend that the MCC Division of HR: 

• Establish a consistent tracking mechanism or other historical file for MCC employees to 

document all changes in employee benefits that are not documented using standard forms or 

Employee Express. 

• Revise current policies and procedures to ensure that supporting documentation for all 

transactions processed by HR personnel on behalf of MCC employees are clearly documented 

either in the OPF or other historical file, and are readily available for examination. 

Management Response

MCC agrees with the findings and recommendations. MCC’s Human Resources Division will 

establish procedures and controls to ensure proper documentation of employee change requests. 

MCC will also discontinue the practice of accepting TSP changes via email. Employees will be 

required to use the appropriate form or Employee Express for changes to their TSP accounts.

MCC’s HR division is undergoing a project to document all policies and procedures (develop or 

update as necessary) to ensure we are compliant with all federal requirements. These policies 

will include procedures and metrics where necessary to ensure we are complying with the 

policies. Project is scheduled to be complete by the end of November 2009. 

Significant Deficiency 3: Proper Reporting Period

We recommend that MCC Division of Finance:

• Continue to strengthen, and revise as necessary, policies and procedures for yearend 

accruals to ensure that all countries, types of funding, and programs are considered when 

recording estimates for future expenses, and that accruals are reasonably sufficient to cover 

anticipated costs.

28
Financial Statements 85

Appendix C

• Establish and communicate procedures for the MCAs to require the submission of 

estimates or payment requests for current period expenses that have not, or will not be recorded 

until the subsequent year, for each fund type. 

• Ensure that the accrual amount is adequately and reasonably calculated, clearly 

documented and supported, and properly reviewed for completeness and accuracy prior to and 

subsequently after posting to the GL. 

• Ensure that USAID has procedures to resolve incorrect accruals and to make certain that 

quarterly and yearend amounts for the Threshold program are complete and accurate 

Management Response

MCC agrees with the recommendations. MCC has implemented new formulation methodologies 

for its quarterly and year-end accruals that will ensure administrative; due diligence and program 

funds are accurately recorded. These new methodologies will be reflected in the update of 

MCC’s financial management policy and procedures which will be released during the first 

quarter of FY 2010. MCC will meet with USAID management to discuss their procedures for 

ensuring that accruals reported as part of the quarterly reporting package to MCC are accurate 

and complete.

Significant Deficiency No 4: Fund Balance with Treasury (FBWT) Reconciliation

We recommend that the MCC Division of Finance: 

• Inquire of USAID’s procedures to resolve the issue of incomplete SF 224 reporting. 

• Consider revisions to the Memorandum of Agreement (MOA) with USAID to require 

timely responses upon inquiry by MCC management regarding financial statement audit findings 

related to Threshold Program transactions. 

Management Response

MCC agrees with the recommendations. MCC plans to meet with USAID management to 

discuss their plan of action to resolve this finding. MCC will update the MOU with USAID to 

require a copy of USAID’s consolidated monthly reconciliation for the fund balance with 

Treasury as part of our oversight Threshold reporting. MCC‘s ability to implement the 

recommendation with regard to USAID will be dependent on their agreement to the terms of the 

MO, and their timely completion of FBWT reconciliations s in accordance with established 

Treasury guidelines.

29

FINANCIAL SECTION

In accordance with the OMB Circular A-136, Financial Reporting Requirements, MCC’s 

financial statements are in the appropriate form and content for FY 2009. The tables below 

outline the following financial statements: 

` Balance Sheets; 

` Statements of Budgetary Resources; 

` Statements of Net Cost; 

` Statements of Changes in Net Position; 

` Notes to Financial Statements; and 

` Independent Auditor Reports of the MCC’s Financial Statements, Internal Controls, and 

Compliance for the period ending September 30, 2009 and 2008. 

30
86 2009 Annual Report

BALANCE SHEETS

FY 2009 FY 2008 

Assets

Intra-Governmental 

Fund Balance with Treasury (Note 2) $6,655,511,983 $6,546,857,481 

Advances (Note 5) 6,474,444 9,485,386

Total Intra-Governmental 6,661,986,427 6,556,342,867 

Accounts Receivable, Net (Note 3) 90,363 54,672 

General Property, Plant, and Equipment, Net (Note 4) 6,953,153 8,127,205 

Advances (Note 5) 32,422,386 33,093,266

Total Assets $6,701,452,329 $6,597,618,010 

Liabilities 

Intra-Governmental 

Accounts Payable (Note 1F) 229,546 4,973

Contributions and Payroll Taxes Payable 467,304 376,093 

Total Intra-Governmental 696,850 381,066

Federal Employee and Veteran Benefits Payable 35,751 0

Accounts Payable (Note 1F) 56,026,101 35,343,643 

Accrued Funded Payroll Liabilities 7,196,040 6,444,041 

Total Liabilities $63,954,742 $42,168,750 

Net Position 

Unexpended Appropriations – Other Funds $6,632,548,466 $6,548,610,190 

Cumulative Results of Operations – Other Funds 4,949,121 6,839,070 

Total Net Position $6,637,497,587 $6,555,449,260 

Total Liabilities and Net Position $6,701,452,329 $6,597,618,010 

The notes are an integral part of these financial statements. 

31

STATEMENTS OF BUDGETARY RESOURCES

FY 2009 FY 2008 

Budgetary Resources 

Unobligated Balance – Beginning of Period $962,304,024 $2,256,142,503 

Recoveries of Prior Years Obligations 1,029,114 504,898

Budget Authority: 

Appropriations 875,000,000 1,557,000,000

Nonexpenditure Transfers, Net, Anticipated and Actual (679,000) (10,810,404)

Permanently Not Available (Note 8) 0 (70,611,700)

Total Budgetary Resources $1,837,654,138 $3,732,225,297

Status of Budgetary Resources 

Obligations Incurred 

Direct $1,050,551,545 $2,769,921,274

Unobligated Balance Available 56,176,028 780,796,905

Unobligated Balance Not Available 730,926,565 181,507,118

Total Status of Budgetary Resources $1,837,654,138 $3,732,225,297

Change in Obligated Balance 

Obligated Balance, Net – as of October 1, 2008 

Unpaid Obligations, Brought Forward, October 1 $5,583,344,174 $3,287,907,145

Obligations Incurred 1,050,551,545 2,769,921,274

Gross Outlays (764,670,301) (473,979,346)

Recoveries of Prior Year Unpaid Obligations, Actual (1,029,114) (504,898)

Obligated Balance, Net – End of Period 

Unpaid obligations $5,868,196,304 $5,583,344,174

Net Outlays 

Gross Outlays $764,670,301 $473,979,346

The notes are an integral part of these financial statements. 

32
Financial Statements 87

STATEMENTS OF NET COSTS

Program FY 2009 FY 2008 

Program Costs (Note 7)

Compact 

Gross Costs $533,740,058 $226,498,265

Less: Earned Revenue 0 0

Net Program Costs 533,740,058 226,498,265

609 (g) Programs 

Gross Costs 15,693,976 9,768,972

Less: Earned Revenue 0 0

Net Program Costs 15,693,976 9,768,972

Threshold Programs 

Gross Costs 120,372,199 118,903,902

Less: Earned Revenue 0 0

Net Program Costs 120,372,199 118,903,902

Due Diligence Programs 

Gross Costs 28,922,102 17,338,771

Less: Earned Revenue 0 0

Net Program Costs 28,922,102 17,338,771

Audit

Gross Costs 3,792,544 2,304,181

Less: Earned Revenue 0 0

Net Program Costs 3,792,544 2,304,181

Administrative

Gross Costs 91,746,536 85,782,157

Less: Earned Revenue 0 0

Net Program Costs 91,746,536 85,782,157

Program Costs – Net of All Programs $794,267,415 $460,596,248

Net Costs of Operations $794,267,415 $460,596,248

The notes are an integral part of these financial statements. 

33

STATEMENTS OF CHANGES IN NET POSITION

FY 2009 FY 2008 

Cumulative Results of Operations 

Beginning Balances $6,839,070 $7,395,351

Adjustments (1,671,357)

Beginning Balance, as Adjusted 6,839,070 5,723,994

Budgetary Financing Sources 

Appropriations Used $790,382,685 $460,060,774

Other Financing Sources 

Donations and Forfeitures of Property (Note 1P) 205,266 0

Imputed Financing 1,789,515 1,650,550

Total Financing Sources 792,377,466 461,711,324

Net Cost of Operations (794,267,415) (460,596,248)

Net Change (1,889,949) 1,115,076

Cumulative Results of Operations $4,949,121 $6,839,070

Unexpended Appropriations 

Beginning Balance $6,548,610,190 $5,536,714,361

Adjustments 0 (3,621,292)

Correction of errors (39) 0

Beginning Balance, as Adjusted $6,548,610,151 $5,533,093,069 

Budgetary Financing Sources 

Appropriations Received $875,000,000 $1,557,000,000

Appropriations Transferred In/Out (679,000) (10,810,404)

Other adjustments (Note 8) 0 (70,611,700)

Appropriations Used (790,382,685) (460,060,774)

Total Budgetary Financing Sources 83,938,315 1,015,517,122

Total Unexpended Appropriations $6,632,548,466 $6,548,610,190

Net Position $6,637,497,587 $6,555,449,260

The notes are an integral part of these financial statements. 

34
88 2009 Annual Report

NOTES TO FINANCIAL STATEMENTS (AS OF SEPTEMBER 30, 2009)

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PRESENTATION 

The accompanying financial statements have been prepared to report the financial 

position, results of operations and budgetary resources for MCC as required by OMB 

Circular A-136, Financial Reporting Requirements, for form and content and in 

accordance with Section 613 of the Millennium Challenge Act of 2003, as amended, and 

the Government Corporation Control Act (31 U.S.C. §9106). These financial statements 

have been prepared from MCC’s books and records and are presented in accordance with 

the applicable requirements of OMB, the Secretary of the Treasury, and the Government 

Management and Reform Act of 1994. 

MCC’s accounting policies conform to and are consistent with Generally Accepted 

Accounting Principles for the Federal Government, as promulgated by OMB and 

prescribed by the Federal Accounting Standards Advisory Board.

MCC’s principle financial statements are: 

` Balance Sheet; 

` Statement of Net Cost; 

` Statement of Budgetary Resources; and 

` Statement of Changes in Net Position. 

Financial statement footnotes are also included and considered an integral part of the 

financial statements. 

B. REPORTING ENTITY

MCC was formed in January 2004 pursuant to the Millennium Challenge Act of 2003, as 

amended, (Public Law 108-199). MCC’s mission is to reduce poverty by supporting 

sustainable, transformative economic growth in developing countries that create and 

maintain sound policy environments. Assistance is intended to provide economic growth 

and alleviate extreme poverty, strengthen good governance, encourage economic 

freedom, and promote investments in people. 

C. BUDGETS AND BUDGETARY ACCOUNTING

MCC’s programs and activities are funded through no-year appropriations. Such funds 

are available for obligation without fiscal year limitation and remain available until 

expended. MCC has attained total appropriations of $875 million and $1.557 billion in 

FY 2009 and FY 2008, respectively. OMB apportions MCC administrative funds on an 

annual basis pursuant to statutory limitations in the appropriations bill. In addition, MCC 

35

receives from OMB a separate apportionment of funds for administrative and audit 

oversight, compact programs, due diligence programs, 609(g) programs and threshold 

programs. MCC does not have any earmarked funds. Because of the no-year status of 

MCC appropriations, unobligated administrative, audit, and due diligence funds 

(apportioned on annual bases) are not returned to the Treasury; however, unobligated 

balances as of September 30 for these three categories of funds are transferred to the 

program fund category at the beginning of the subsequent fiscal year.

D. BASIS OF ACCOUNTING 

Financial transactions are recorded on accrual and budgetary bases in accordance with 

pertinent federal accounting and financial reporting requirements. Under the accrual 

method of accounting, financing sources are recognized when used and expenses are 

recognized when incurred, without regard to receipt or payment of cash. Budgetary 

accounting facilitates MCC’s compliance with legal constraints and controls over the use 

of Federal funds.

The accompanying Balance Sheet, Statement of Net Cost, and Statement of Changes in 

Net Position are prepared on the accrual basis. The Statement of Budgetary Resources is 

prepared in accordance with budgetary accounting rules. 

E. FUND BALANCE WITH TREASURY 

MCC does not maintain cash in commercial bank accounts. Rather, MCC’s funds are 

maintained in Treasury accounts. The Department of the Treasury processes all cash 

receipts and disbursements for MCC. The fund balances with Treasury represent no-year 

funds, which are maintained in appropriated funds that are available to pay current and 

future commitments. 

F. ACCOUNTS PAYABLE 

MCC records as liabilities all amounts due to others as a direct result of transactions or 

events that have occurred. Accounts payable represent amounts due to Federal and nonFederal entities for goods and services received by MCC, but not paid at the end of the 

accounting period. In order to appropriately depict a comparable analysis of FY 2008 

activity, MCC reclassified its Federal accounts payable balances separately from its nonFederal balances. Accounts payable reported at the end of FY 2009 were $56 million 

(non-Federal) and $230K (Federal) and at the end of FY 2008 were $35.3 million (nonFederal) and $5K (Federal).

G. ACTUARIAL FECA LIABILITY 

The Federal Employees’ Compensation Act (FECA) provides income and medical cost 

protection to covered Federal civilian employees injured on the job, employees who have 

incurred a work-related occupational disease, and beneficiaries of employees whose 

deaths are attributable to a job-related injury or occupational disease. 

36
Financial Statements 89

Claims incurred for benefits for MCC employees under FECA are administered by the 

Department of Labor (DOL) and later billed to MCC. MCC’s actuarial liability for 

workers’ compensation includes any costs incurred but unbilled as of year-end, as 

calculated by DOL, and is not funded by current appropriations.

MCC incurred no FECA liabilities during FY 2009 and FY 2008.

H. ACCRUED ANNUAL LEAVE 

The value of employees’ unused annual leave at the end of each fiscal quarter is accrued 

as a liability. At the end of each fiscal quarter, the balance in the accrued annual leave 

account is adjusted to reflect current pay rates and leave balances. Annual leave is funded 

from current appropriations. Sick leave and other types of non-vested leave are expensed 

when used and, in accordance with Federal requirements, no accruals are recorded for 

unused leave.

I. NET POSITION 

Net position is composed of unexpended appropriations and cumulative results of 

operations. Unexpended appropriations are funds appropriated by Congress to MCC that 

are still available for expenditure at the end of the fiscal year. Cumulative results of 

operations represent the net differences between financing sources and expenses since 

MCC’s inception. MCC adjusted the FY 2009 beginning balance for unexpended 

appropriations by $39 to account for an error correction. 

J. FINANCING SOURCES 

Per note 1.C, MCC funds its program and operating expenses through no-year 

appropriations. Appropriations are recognized as an accrual-based financing source at 

the time they are used to pay program or administrative expenses, except for expenses to 

be funded by future appropriations.

K. RETIREMENT BENEFITS 

MCC’s employees participate in either the Civil Service Retirement System (CSRS) or 

the Federal Employees Retirement System (FERS). FERS was established by Public 

Law 99-335. Pursuant to this law, most U.S. Government employees hired after 

December 31, 1983, are covered by FERS and Social Security. Federal employees hired 

prior to January 1, 1984, were allowed to elect whether they desired to participate in 

FERS (with Social Security coverage) or remain in CSRS. For employees covered by 

CSRS, MCC contributes seven percent of their gross pay toward their retirement benefits. 

For those employees covered by FERS, MCC contributes 11 percent of their gross pay 

toward retirement. Employees are also allowed to participate in the Federal Thrift 

Savings Plan (TSP). For employees under FERS, MCC contributes an automatic one 

percent of basic pay to TSP and matches employee contributions up to an additional four 

percent of pay, for a maximum MCC contribution amounting to five percent of pay. 

37

Employees under CSRS may participate in the TSP, but will not receive either MCC’s 

automatic or matching contributions. 

As of the end of FY 2009, MCC made retirement contributions of $116,000 to CSRS, 

$2.58 million to FERS, and $1.01 million to TSP. 

L. USE OF ESTIMATES 

The preparation of financial statements requires management to make estimates and 

assumptions that affect the reported amounts of assets and liabilities, the disclosure of 

contingent assets and liabilities at the date of the financial statements, and the reported 

amounts of financing sources and expenses during the reporting period. Actual results 

could differ from such estimates. 

M. CONTINGENCIES 

MCC can be a party to various routine administrative proceedings, legal actions, and 

claims brought by or against it, including threatened or pending litigation involving labor 

relations claims, some of which may ultimately result in settlements or decisions against 

MCC. In the opinion of MCC’s management and legal counsel, there are no proceedings, 

actions, or claims outstanding or threatened that would materially impact MCC’s 

financial statements. 

N. JUDGMENT FUND

Certain legal matters to which MCC can be named as a party may be administered and, in 

some instances, litigated and paid by other Federal agencies. In general, amounts paid in 

excess of $2,500 for Federal Tort Claims Act settlements or awards pertaining to these 

litigations are funded from a special appropriation administered by the Department of the 

Treasury, called the Judgment Fund. Although the ultimate disposition of any potential 

Judgment Fund proceedings cannot be determined, management expects that any liability 

or expense that might ensue would not be material to MCC’s financial statements. 

O. CUSTODIAL LIABILITIES 

Under current policy and procedures, MCC disburses funds for Compact and preCompact projects and activities upon the presentation of a valid invoice. However, under 

certain conditions, MCC will fund countries by advancing funds on an as-needed basis to 

cover basic needs. Such funds provided to the countries are required to be deposited in 

interest-bearing accounts, if legally feasible, until disbursed. The interest earned on these 

accounts is remitted to MCC by the MCA and is then returned to the Treasury’s general 

funds. MCC received and deposited $213,000 and $1.61 million in interest remittances 

as of September 30, 2009 and 2008, respectively. This reduction of interest remittances 

is due to the full implementation of ITS with all MCC partner countries.

38
90 2009 Annual Report

P. DONATED SERVICES

MCC may on occasion utilize donated services from other Federal agencies, individuals 

and private firms in the course of business operations. The approximate fair market value 

of donated services for September 30, 2009 was $205,266. MCC did not utilize donated 

services for FY 2008.

Q. TRANSFERS WITH OTHER FEDERAL AGENCIES

MCC is a party to allocation transfers with another Federal agency as a transferring 

entity. Allocation transfers are legal delegations by one department of its authority to 

obligate budget authority and outlay funds to another department. A separate fund 

account (allocation account) is created in the U.S. Treasury as a subset of the parent fund 

account for tracking and reporting purposes. All allocation transfers of balances are 

credited to this account, and subsequent obligations and outlays that are incurred by the 

child entity are charged to this allocation account, as they execute the delegated activity 

on behalf of the parent entity. Generally, all financial activity related to these allocation 

transfers (e.g., budget authority, obligations, outlays) is reported in the financial 

statements of the parent entity, from which the underlying legislative authority, 

appropriations, apportionments are derived. 

MCC allocates funds, as the parent, to USAID. In FY 2009 and FY 2008, MCC 

transferred budgetary authority of $33 million and $110 million, respectively, to USAID 

to administer Threshold and Compact programs. USAID receives these allocations as 

transfers-in and reports quarterly to MCC as the child. MCC also transfers an 

administrative fee to USAID for the purposes of administering the Threshold and 

Compact programs. Since FY 2008, these administrative fee transfers are not reported 

back to MCC. 

NOTE 2—FUND BALANCE WITH TREASURY

The U.S. Treasury accounts for all U.S. Government cash on an overall consolidated 

basis. MCC is appropriated “general” funds only and maintains theses balances in the 

Fund Balance with Treasury. The general fund line items on the Balance Sheet for 

September 30, 2009 and 2008 consisted of the amounts presented in Exhibit 13. The 

status of the general fund balances is summarized by obligated, unobligated and NonBudgetary fund balances in Exhibit 14.

Exhibit 13: Fund Balance with Treasury as of September 30 

September 30, 2009 

(in thousands) 

September 30, 2008 

(in thousands) 

Fund Balances 

General Funds $6,655,512 $6,546,857 

Total $6,655,512 $6,546,857 

39

Exhibit 14: Status of Fund Balance with Treasury as of September 30 

September 30, 2009 

(in thousands) 

September 30, 2008 

(in thousands) 

Status of Fund Balance with Treasury 

Unobligated Balance 

 Available 

 Unavailable 

$56,176 

730,927 

$782,006 

181,507 

Obligated Balance $5,868,196 $5,583,344 

Non-Budgetary FBWT 213 

Total $6,655,512 $6,546,857 

NOTE 3—ACCOUNTS RECEIVABLE, NET

Accounts receivable reflect overpayments of payroll, travel and other MCC current and 

former employee expenses. It also reflects substantiated disallowed MCA expenditures.

MCC does not record an allowance for doubtful accounts as these expenses are deemed 

wholly collectible. Total receivables as of the end of FY 2009 and FY 2008 were 

approximately $90,000 and $55,000, respectively. 

NOTE 4—GENERAL PROPERTY, PLANT AND EQUIPMENT (PP&E), NET 

MCC’s PP&E costs are the associated leasehold improvements made to its leased office 

space. MCC has made significant leasehold improvements to its office space and 

amortizes the improvements based on the in-service (invoice) date of the improvement. 

Amortization on that in-service improvement is calculated on a quarterly basis. The cost 

of these improvements for both FY 2009 and FY 2008 was $10.9 million. Accumulated 

depreciation was approximately $4.0 million and $2.8 million, respectively. The current 

book value is $6.95 million and $8.1 million for the periods ending September 30, 2009 

and 2008, respectively. The useful life of the improvements is based on the lease terms: 

ten years for the Bowen building lease and eight years for the City Center building lease. 

MCC’s capitalization threshold for all other general property, plant and equipment must 

have an original cost of $50,000 or more and an estimated useful life of five or more 

years. MCC’s software capitalization threshold defines a capitalized asset that has an 

original cost of $200,000 or more and an estimated useful life of five years or more and 

the information technology infrastructure capitalization threshold defines a capitalized 

asset as having an original cost of $200,000 or more and an estimated useful life of three 

years or more. These Thresholds reduce MCC’s administrative costs associated with 

accounting for PP&E, and result in increased operational efficiency.

NOTE 5—ADVANCES

Advances reflect amounts provided to Compact countries and other Federal agencies in 

accordance with formal Compacts or inter-agency agreements. In order to appropriately 

40
Financial Statements 91

depict a comparable analysis of 2008 activity, MCC reclassified its Federal advances 

separately from its non-Federal balances. MCC reported $38.9 million ($6.5 million, 

Federal and $32.4 million, non-Federal) and $42.6 million ($9.5 million, Federal and 

$33.1 million, non-Federal) in advances as of September 30, 2009 and 2008, respectively. 

NOTE 6—LEASES 

MCC leases office space in two adjacent locations in Washington, D.C. These operating 

leases are on ten year (Bowen Building) and eight year (City Center Building) lease terms 

that terminate on May 25 and May 26, 2015, respectively. The Bowen building lease 

increases approximately one percent each year of the lease term. The City Center 

building lease increases at a fixed level every three years until the termination of the 

lease.

MCC also has short term leases for one (1) corporate vehicle (through May 31, 2010) and 

for eighteen (18) office copier machines (through January 31, 2012) utilized in both 

buildings. The future lease payments due are depicted in the Exhibit 15 below.

Exhibit 15: Operating Leases 

Future Lease Payments Due (in dollars) 

Fiscal Year Bowen City Center Total 

FY 2010 5,557,542 1,889,524 7,447,066 

FY 2011 5,613,117 1,942,376 7,555,493 

FY 2012 5,669,249 1,942,376 7,611,625 

FY 2013 5,725,941 1,942,376 7,668,317 

FY 2014 5,783,201 1,995,229 7,778,430 

FY 2015 5,841,033 1,995,229 7,836,262 

Total Future Lease Payments $34,190,083 $11,707,110 $45,897,193 

Future Lease Payments Due (in dollars) 

Fiscal Year MCC Vehicle MCC Copiers Total 

FY 2010 5,009 55,821 60,830 

FY 2011 0 55,821 55,821 

FY 2012 0 55,821 55,821 

Total Future Lease Payments $5,009 $167,463 $172,472 

NOTE 7—INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE 

The Statement of Net Cost reports the MCC’s gross cost less earned revenues to arrive at 

net cost of operations. Costs have been illustrated by MCC funded programs. Exhibit 

16 shows the value of exchange transactions between MCC and other Federal entities, as 

well as non-Federal entities. Intra-governmental costs relate to transactions between the 

41

MCC and other Federal entities. Public costs relate to transactions between the MCC and 

non-Federal entities. MCC does not have any exchange revenues.

Exhibit 16: Intra-governmental Costs and Exchange Revenue (in thousands) Compact 609(g) Threshold Due Diligence Audit Administrative

FY 2009 

Total 

(in

thousands) 

FY 2008 

Total 

(in

thousands) 

IntraGovernmental 16 - 5,683 6,601 2,022 14,512 28,834 19,089 

Public 533,724 15,694 114,689 22,321 1,771 77,234 765,433 441,507 

Total - 

Program $533,740 $15,694 $120,372 $28,922 $3,793 $91,746 $794,267 $460,596 

NOTE 8—ADJUSTMENTS TO BEGINNING BALANCE OF BUDGETARY RESOURCES 

At the beginning of FY 2008, $12.6 million of amounts appropriated under the Foreign 

Operations, Export Financing and Related Programs Appropriations Act were rescinded. 

The rescission was part of the across-the-board rescission enacted for FY 2008. MCC 

was also subject to a mid-fiscal year 2008 rescission of $58 million. MCC was not 

subject to any rescissions in FY 2009.

NOTE 9—EXPLANATION OF DIFFERENCES BETWEEN THE STATEMENT OF BUDGETARY 

RESOURCES AND THE BUDGET OF THE U.S. GOVERNMENT 

MCC ensures that the information reported in its books is reflected within the Budget of 

the U.S. Government. Since MCC’s financial statements are published before the 

President’s Budget, this reconciliation is based on the Statement of Budgetary Resources 

for FY 2008 and the FY 2008 actual data reported in the President’s 2010 budget 

submission. Fiscal year 2009 actual data will be published in February 2010 within the 

2011 Budget of the United States. No material differences were noted.

NOTE 10—UNDELIVERED ORDERS AT THE END OF THE PERIOD

Exhibit 17 presents Undelivered Orders, paid and unpaid, as of September 30, 2009 and 

2008.

42
92 2009 Annual Report

Exhibit 17: Undelivered Orders 

Undelivered Orders 2009 2008 

Administrative 27,268,537 27,302,437 

Audit 1,131,689 2,180,340 

609(g) 42,422,624 25,349,832 

Due Diligence 60,123,947 49,203,177 

Program 5,563,885,135 5,242,750,204 

Threshold 148,518,787 238,174,754 

Total $5,843,350,719 $5,584,960,744 

NOTE 11—RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET 

Exhibit 18 reconciles the resources available to MCC to finance operations with the net 

cost of operating MCC’s programs. Some operating costs, such as depreciation, do not 

require direct financing sources. This exhibit illustrates the reconciliation of Net Cost of 

Operations to Budget. 

Exhibit 18: Reconciliation of Net Cost of Operations to Budget 

Resources Used to Finance 

Activities Program Costs 

Budgetary Resources Obligated 

Obligations Incurred 1,050,551,545 794,267,415

Recoveries of prior year unpaid 

obligations 

(1,029,114) 

Other financing resources 1,994,782 

Total resources used to finance 

activities 

1,051,517,213 

Gross Costs 

Total resources used to finance items 

not part of the net cost of operations 

(258,466,266) -

Total components of net cost of 

operations that will not require or 

generate resources 

1,216,468 

Less: Earned Revenue 

Net Cost of Operations $794,267,415 Net Cost of Operations $794,267,415

43

Summary of Financial Statement Audit and Management Assurances 

In accordance with the requirements of OMB Circular A-136, MCC is required to prepare a 

summary of its financial statement audit. The FY 2009 Independent Auditor’s report cited one 

material weakness in MCC’s controls over mission activities and support. MCC resolved its FY 

2008 material weakness. Exhibit 19 provides a summary of the status of MCC Financial 

Statement Audit Material Weaknesses. 

Exhibit 19: Summary of Financial Statement Audit 

Audit Opinion Unqualified 

Restatement No 

Material Weaknesses Beginning 

Balance 

New Resolved Consolidated Ending

Balance 

Quality Control Over 

Financial Reporting 

1 - 1 - 0

Controls over Mission 

Activities and Support 

0 1 - - 1

Total Material 

Weaknesses 

1 1 1 - 1

44
Financial Statements 93

45

Office of Inspector General 

Mr. Darius Mans November 16, 2009 

Acting Chief Executive Officer 

Millennium Challenge Corporation 

875 15th Street, NW 

Washington, DC 20005 

Dear Mr. Mans: 

 The enclosed statement summarizes the Office of Inspector General’s (OIG) conclusions 

on the most serious management and performance challenges facing the Millennium Challenge 

Corporation (MCC). Our decisions on which challenges to report were based primarily on audit, 

evaluation, or investigative work we have performed and additional analysis of MCC operations. 

More challenges may exist in areas that we have not yet reviewed, and other significant findings 

may result from further work. 

 The Reports Consolidation Act of 2000 (Public Law 106–531) requires that agency 

performance and accountability reports include a statement prepared by each agency’s inspector 

general, summarizing the most serious management and performance challenges facing the 

agency and reporting the agency’s progress in addressing those challenges. The enclosed 

statement will be included in MCC’s fiscal year 2009 performance and accountability report or 

agency financial report. 

 We have discussed the management and performance challenges summarized in this 

statement with the responsible MCC officials. If you have any questions or wish to discuss the 

statement further, please contact me or Alvin Brown, the Assistant Inspector General for MCC. 

 Sincerely, 

 Donald A. Gambatesa /s/ 

 Inspector General 

Enclosure

U.S. Agency for International Development 

1300 Pennsylvania Avenue, NW 

Washington, DC 20523 

www.usaid.gov/oig

Statement by the Office of Inspector General on the 

Millennium Challenge Corporation’s

Most Serious Management and Performance Challenges 

Fiscal Year 2009 

The Office of Inspector General (OIG) has determined that the Millennium Challenge 

Corporation (MCC) faces management and performance challenges in the following areas: 

• MCC Suspended, Terminated, and Canceled Planned Compact Activities 

• Threshold Programs for Compact Eligibility 

• Financial Management 

• Information Technology Management 

For fiscal year (FY) 2009, the Office of Inspector General (OIG) is reporting “MCC Suspended, 

Terminated, and Canceled Planned Compact Activities” and “Threshold Programs” as serious 

management and performance challenges for the first time. OIG initially reported challenges in 

the “Financial Management” and the “Information Technology Management” areas in FY 2008.

While MCC has made some improvements in the areas of financial management and information 

technology management, both continue to represent serious management challenges for MCC. 

We had reported “Implementation of Compacts” as a serious management challenge for MCC in 

FY 2008. At that time, MCC was experiencing serious management challenges due to the low 

rate of disbursements and the increasing costs associated with infrastructure projects. MCC has 

increased its rate of disbursements through the implementation of a new compact development 

process. As a result of these improvements, we have not included “Implementation of 

Compacts” as a serious management challenge for FY 2009. OIG will continue to monitor the 

implementation of compacts. 

MCC Suspended, Terminated, and Canceled Planned Compact Activities 

In 2009, MCC suspended, terminated, or canceled a total of $340 million in planned activities in 

5 of the 19 compact countries because of political unrest in and around those countries. MCC 

has suspended or terminated activities because of the removal of democratically elected leaders 

(in two cases) and patterns of undemocratic actions involving the 2008 elections (in two other 

cases). As a result, activities totaling $152 million were terminated. In another case, a 

neighboring country would not allow the compact country to meet the compact requirements, 

which resulted in the cancellation of a $188 million project. During FY 2009, MCC has 

suspended, terminated, or canceled compact activities in the following countries: 

• Madagascar. On March 17, 2009, Madagascar removed its democratically elected 

president from office. MCC’s board determined that the nature of the actions taken 

represented a pattern of actions inconsistent with MCC’s eligibility indicator for the 

46
94 2009 Annual Report

“Ruling Justly” category. As a result, MCC placed an operational hold on activities on 

March 20, 2009. The compact was terminated on August 31, 2009. As a result, MCC 

will deobligate $21 million to $23 million. 

• Honduras. On June 28, 2009, Honduras removed its democratically elected president 

from office. The Government of Honduras (GOH) failed to address concerns regarding 

its commitment to democracy. MCC continued to assist the GOH with an agricultural 

irrigation project to maintain poverty reduction for the rural poor. In September 2009, 

the MCC board terminated a component of a rural roads rehabilitation project that had 

not yet begun, which resulted in a reduction of $11 million (approximately 5 percent) of 

the initial compact. 

• Nicaragua. Because of a pattern of undemocratic actions involving elections in late 

2008, MCC partially terminated its compact with Nicaragua. In February 2009, the MCC 

board voted to terminate funding for a property regularization project implemented by the 

Government of Nicaragua and for a major road rehabilitation activity that had not begun.

MCC will complete the projects that were underway, including rehabilitation of roads 

that were already under contract and rural business development projects that have a 

direct impact on the rural poor. As a result of the termination, the total assistance was 

reduced by approximately $61 million (approximately 35 percent) of the initial compact 

of $175 million. 

• Armenia. Because of a pattern of undemocratic actions involving elections in early 

2008, MCC placed an operational hold on a rural roads rehabilitation project. The MCC 

board confirmed the operational hold in February 2009. MCC will continue the irrigated 

agriculture project to maintain poverty reduction for the rural poor. At this late stage in 

the compact, it will be impossible to restart the rural roads rehabilitation project. 

Accordingly, the initial compact amount of $235 million will be reduced by $59 million 

(approximately 25 percent). 

• Mongolia. On April 27, 2009, the Government of Mongolia officially notified MCC of 

its need to cancel a rail project that had accounted for $188 million of the $285 million 

compact. The rail project was canceled because the Russian members of UBTZ, the joint 

Mongolian-Russian rail company, would not allow an audit of the company to proceed. 

Although MCC is considering alternative projects to fund in Mongolia, it has told the 

Government of Mongolia that there is no guarantee that all of the funds will remain in the 

compact. 

The actions mentioned above represent very serious management challenges that will persist 

because of the nature of MCC’s mission. MCC has established a set of indicators that a country 

must meet in order to become eligible for a compact. However, because MCC operates in the 

dynamic environments of developing countries, the political environment will be an ongoing 

management challenge as compacts are carried out over a 5-year period. 

47

Threshold Programs for Compact Eligibility 

As stated in our audit of the Threshold Program (M-009-003-P, April 29, 2009), MCC had 

provided about $440 million in funding for threshold programs to assist 12 countries to become 

compact eligible. However, we found no clear indication that the MCC Threshold Program was 

assisting countries in becoming compact eligible. For example: 

• Eight of the 12 countries that will complete threshold programs as of the end of FY 2009 

became compact eligible before completing their threshold programs (for those 

completed by the end of FY 2009). Three of the eight countries became eligible as early 

as 1 month before or after their threshold program started. 

• Three of the 12 countries did not become compact eligible. Two of the three countries 

did not become eligible after completing their first threshold programs; instead, MCC 

approved another threshold agreement (stage II). 

• One of the 12 countries received compact assistance about 11 months before its threshold 

program ended. 

Some countries have also become compact eligible and received compacts without participating 

in the Threshold Program. MCC measured the program results by changes in the countries’ 

“Control of Corruption” indicator scores, but the changes were not clearly attributable to MCC’s 

efforts. MCC is reviewing the Threshold Program to determine whether the existing program 

can achieve the objective of helping countries become compact eligible. 

Financial Management 

For FY 2009—the sixth consecutive year—OIG has issued unqualified opinions on MCC’s 

FY financial statements. Notwithstanding these unqualified opinions and the progress that MCC 

has made in establishing and maintaining financial management processes, MCC’s quality 

control over quarterly and yearend financial reporting is not sufficient to enable it to detect errors 

and misstatements and to make corrections in a timely manner. MCC does not perform 

sufficiently detailed quality-control reviews over yearend MCC trial balances and financial 

statements submitted for review and audit. 

The vast majority of MCC’s activities and expenses occur in the compact and threshold 

programs. These programs are implemented by MCC’s Millennium Challenge Account (MCA) 

entities and USAID’s overseas missions. MCC did not adequately monitor these organizations’ 

ongoing activities or the financial information being reported on its own financial statements. 

The MCA entities responsible for implementing the compact programs, as well as the USAID 

missions responsible for implementing MCC’s threshold programs, did not respond adequately 

to requests for supporting documentation for expenses reported to MCC. During our audit, we 

noted the following weaknesses: 

48
Financial Statements 95

• MCA Audits Lack Timely Completion and Monitoring. Audits performed by 

independent auditors of the controls, transactions, and balances of MCA entities have not 

been completed and submitted to OIG in a timely manner. In addition, MCC has not 

monitored the start and completion of these audits adequately to ensure a timely 

submission of audit reports and notification of findings. This situation increases MCC’s 

risk of not being informed of MCA entity activities that would affect timely preparation 

of financial statements. 

To ensure sufficient internal control over the MCA entities, MCC requires semiannual 

audits to be conducted for the 6-month periods ending in June and December of each 

year. The audit results assure MCC of the validity and accuracy of payments and 

advances that are processed for the MCA entities and reported in its financial statements. 

This assurance is needed because neither MCC nor its accounting service provider, the 

U.S. Department of Interior’s National Business Center, reviews or maintains invoices 

and other underlying supporting documentation for transactions. Instead, MCC relies on 

approved request documents submitted by personnel of the MCA entity.

• Transactions Lack Adequate Documentation. MCA entities and threshold missions 

did not provide or respond to requests for supporting documentation in a timely manner 

for all expenses and undelivered orders. The audit team informed MCC that, prior to 

yearend testing, documentation would be requested from MCA entities and threshold 

missions to substantiate yearend balances and that responses would be required within 

5 days to meet tight audit deadlines. This detailed written information was 

communicated to all points of contact for MCA entities and USAID threshold missions. 

Upon submission of the supporting documents, some MCA entities and threshold 

missions responded in a timely manner, but others provided incorrect or insufficient 

documentation or none at all. MCC was advised of the lack of responses and in turn sent 

several emails to MCA entities and threshold missions requesting their cooperation. 

However, significant numbers of transactions remained unsupported at the conclusion of 

audit fieldwork. These issues were raised, and recommendations made, in the audit of 

MCC’s FY 2009 Financial Statements (M-000-010-001-C, November 16, 2009). 

In conclusion, MCC officials commented that MCC will implement measures to improve quality 

control in accordance with OIG’s recommendations. 

Information Technology Management

Although MCC has made improvements to strengthen its information security program, it is still 

not fully compliant with the key components of the Federal Information Security Management 

Act of 2002 (FISMA). FISMA requires agencies to (1) develop, document, and implement 

agencywide information security programs to protect their information and information systems, 

including those provided or managed by another agency, contractor, or other source; (2) obtain 

an annual independent evaluation of information security programs and practices; and (3) assess 

compliance with the requirements of the act. Although MCC is making progress in complying 

with these requirements, weaknesses remain. 

49

MCC developed and implemented a comprehensive plan that addressed all but one of the 

FY 2008 FISMA audit findings. However, the FY 2009 FISMA audit found several areas in 

which MCC needs to strengthen existing policies and develop procedures to fully comply with 

requirements of the National Institute of Standards and Technology and the Office of 

Management and Budget. MCC noted that it has a comprehensive plan to address all of the 

FY 2009 FISMA audit findings by April 2010. 

50
96 2009 Annual Report

 

 

 

TO: Alvin A. Brown 

 Assistant Inspector General 

FROM: Michael Casella /s/ 

 Acting Vice President, Administration and Finance 

DATE: November 13, 2009 

SUBJECT: Management Response to Statement by the Office of Inspector 

General (OIG) on the MCC’s Most Serious Management and 

Performance Challenges Fiscal Year 2009 

We wish to thank the OIG for their recognition of the progress the MCC has made in its 

implementation of compacts and our efforts to increase the disbursement rates. In its FY 

2009 Statement of MCC’s Most Serious Management and Performance Challenges, the 

OIG notes four items: 

• MCC Suspended, Terminated, and Canceled Planned Compact Activities 

• Threshold Programs for Compact Eligibility 

• Financial Management 

• Information Technology Management 

We agree with OIG’s assessment that the unpredictable political environment in 

our partner countries will be an ongoing challenge for management and the MCC 

 Board of Directors. One of MCC’s founding principles is that aid is most 

 effective when it reinforces good governance. MCC will continue to abide by this 

 principle as we deal with current and future political challenges. 

The Threshold program has a portfolio of 21 programs, several of which have recently 

concluded. Due to the varying breadth of activities, countries and implementers, we are 

reviewing the program, its intentions, and measures of success. A full report 

will be presented to the MCC Board in FY 2010. 

 We also agree with the OIG’s FY 2009 audit findings and recommendations related to 

financial management. While MCC has received unqualified audit opinions since 

inception and has made great progress in establishing its financial management 

environment, we acknowledge that further improvement is needed. 

In FY 2010, we will focus on increased quality control both internally, and with our 

implementing partners in compact countries and at USAID. 

51


Financial Statements 99

This document is produced in accordance with Section 613 of the Millennium Challenge Act of 2003, codified at 22 U.S.C. §§7701, 7707 

(a). Every effort has been made to produce this document in a cost-efficient, user- and environmentally-friendly manner based on 

industry best practices and government printing protocols. The paper used to print this document includes a minimum of between 10 

percent (cover paper) and 30 percent (interior paper) postconsumer fiber as mandated by the U.S. Congress Joint Committee on 

Printing. To reduce costs, waste, and environmental impact, this document is made available on MCC’s website at 

http://www.mcc.gov/annualreport.
100 2009 Annual Report

Reducing Poverty Through Growth

2010-001-0020-07