Since its inception in 2004 the Millennium Challenge Corporation (MCC) has been an experiment in improving the effectiveness of U.S. aid in a small set of poor but well-governed countries. Drawing on visits to seven Millennium Challenge Account (MCA) countries between July 2005 and March 2007 on behalf of the Center for Global Development's MCA Monitor Program, the author draws broad lessons about the MCC’s first years of operation. These visits caught glimpses of different aspects of the MCA experience: compact proposal development (Mozambique, Ghana, and Tanzania); compact implementation (Honduras, Madagascar and Nicaragua); and the Threshold Program (Tanzania and Malawi). Lessons and observations include:
Successes of the MCC approach
- Changing national mindsets about development
- Making bold and integrated investments
- Raising the bar on transparency
- Learning and applying lessons
Key challenges going forward
- Define and demonstrate results
- Strike the right balance on risk management
- Refine the notion of country ownership
- Cultivate a constituency in Washington
Big-picture lessons on aid-effectiveness
- Meaningful public participation takes time, expertise, and resources
- Donor coordination is essential though specific approaches can vary
- Flexibility in program management structures is good, but parameters must be clear
- Unsexy issues can make or break a program
Specific operational recommendations
- Do not rush entry into force of compacts
- Allow for concurrent and longer-term compacts
- Make more of the MCC/USAID relationship
