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The Millennium Challenge Account - Washington, DC USA
August 2008
Market Overview
Introduction
The United States established the Millennium Challenge Account (MCA) in 2003 as a new development partnership between the U.S. and developing countries. The Millennium Challenge Corporation (MCC) is the government entity designated to identify MCA-eligible countries and to manage MCA funds. The MCC is designed to provide grants to countries that have a demonstrated commitment to promoting good governance and economic reform. The MCC views economic growth as the catalyst for poverty alleviation and works with countries based upon their commitment to ruling justly, encouraging economic freedom and investing in people.
In creating the MCA, the U.S. was seeking to create a country-driven development mechanism where projects are designed and implemented by the recipient country. The procedures of the MCC are based upon four fundamental principles: good policy performance, country ownership, country responsibility and tangible results.
To receive MCA assistance, countries must complete a three-step process consisting of:
- a per capita annual income test based on World Bank country income levels;
- an assessment against 17 policy indicators to examine the country's commitment to policies that promote political and economic freedom, investments in education and health, control of corruption, and respect for civil liberties and the rule of law; and
- submission of a compact proposal that outlines the country's priorities for MCA assistance.
The MCC provides two different kinds of monetary assistance - compact agreements and threshold agreements. A "Compact" is a multi-year agreement between the MCC and an eligible country to fund specific programs targeted at reducing poverty and stimulating economic growth. Since its inception, 40 countries have been selected as eligible for MCA assistance, and of these, 16 countries have signed compact agreements. A "Threshold" is an agreement between the United States and a developing country that demonstrates a meaningful commitment to reform and a high probability of success, but does not yet meet all 17 policy indicators. The MCC currently has signed threshold agreements with 22 countries.
The MCC does not replace the U.S. Agency for International Development (USAID) or other U.S. government assistance programs. Rather, in countries that receive both MCA and USAID funding, the agencies will collaborate to provide a comprehensive portfolio of development assistance. The MCA will fund economic growth related activities and USAID will focus on sectors not covered by the MCA, such as education, health and food aid. USAID also provides targeted technical assistance within or complementary to, the MCC threshold agreements.
MCC is managed by a nine-member Board of Directors, chaired by the Secretary of State and the Secretary of the Treasury, which selects eligible countries and approves compact proposals. To limit the growth of a large bureaucracy and to keep funding focused on recipient countries, Congress capped the number of MCC staff at 300. A full list of MCC board members and key staff is available from the MCC website.
Funding for the MCA was expected to be US$5 billion per year but, in the first four years of its existence funding totalled just $6.5 billion. Through 2008, MCC has approved $5.5 billion in compacts and $325 million in threshold agreements.
The MCA Selection and Preparation Process: Briefly, the MCC process involves the identification of eligible countries, the selection of candidate countries, the development of a country's compact proposal and, monitoring a country's project preparation and implementation using MCA funding.
Identification and Selection of Candidate Countries: Each year MCC prepares a list of eligible countries that meet MCC's low income level criteria and are committed to its three criteria: governing justly, investing in their citizens, and encouraging economic freedom. Candidate countries must not be subject to legal provisions that prohibit them from receiving U.S. economic assistance. In 2008 the list comprised 67 low income countries and 28 lower middle income countries.
To determine which eligible countries will be selected for MCA funding, each country is then measured against 17 policy indicators, varying from civil liberties and anti-corruption to immunization rates and inflation. A scorecard is created ranking the candidate's policy performance among other countries in its peer income group, and successful countries are then invited to submit proposals for funding.
Development and Approval of Compact Proposals: Once a country is selected, it must develop a funding proposal outlining its priorities for MCC assistance. The proposal must be based on a timely and meaningful consultative process with their civil societies, including the private sector, NGOs, other donors, women's associations and the poor themselves. MCC evaluates and conducts due diligence on each proposal. If a country proposal is approved by the MCC Board, MCC and the country enter into a country-specific compact that outlines the responsibilities of both parties and stipulates the progress benchmarks to ensure accountability and outcomes.
Implementation of Programs and Monitoring Results: Consistent with the country-led development approach, the implementation of MCA-funded projects is conducted by the recipient country with ongoing oversight by the MCC in Washington. Each country is responsible for establishing an accountable agency with a defined structure and procedures, which then develops and carries out all plans for the implementation of compact activities. These include: financial plans, procurement plans, work plans and monitoring, evaluation and audit plans. It becomes the central point of contact for MCC, other donors, contractors and consultants. Along with establishing an accountable entity, the country also selects fiscal and procurement agents, responsible for the financial and reporting systems, developing standard bidding documents and working on procurement activities prior to the compact's entry into force.
Opportunities
Foreign Competition and Canada's Capabilities
MCA funding is untied and local firms as well as international firms, are eligible to bid. Given the MCC's aim of engaging local stakeholders, it is expected that where local capacity exists, preference will be given to local or regional firms. However, the MCA is mostly funding projects in sectors where local capacity is weak; as a result, governments often turn to foreign companies and institutions for goods, works, and consultancies.
Canada has recognized international expertise in many of the sectors of funding priority in the approved MCA compacts including: infrastructure, agriculture/agribusiness, private sector development, finance sector development, land management, irrigation, institution and capacity building and vocational training and health (telemedicine). Canada's primary competition will come from firms in other OECD countries that maintain large donor-funded portfolios in the recipient country. As with projects financed by the World Bank and the UN, Canadian firms and NGOs are advised to work with a local partner in order to be competitive.
MCC Procurement Guidelines
In July 2007, MCC published its own "MCC Program Procurement Guidelines", principally based on the World Bank's "Guidelines for the Selection and Employment of Consultants by World Bank Borrowers" and "Guidelines for Procurement under IBRD Loans and IDA Credits", they define the policies and procedures for compact related procurement of goods, works, consultant, and non-consultant services. Even so, they have been adapted to better reflect the needs of MCC programs and the applicable laws and regulations that govern them.
Key differences between the MCC guidelines and those of the World Bank are: a requirement for broader advertising of opportunities, tighter restrictions on currency use, prohibits a national preference, inclusion of a list of excluded parties by the U.S. government and, the identification of English as the official MCC operating language.
MCC partners with compacts signed after July 2007 must comply with "MCC Program Procurement Guidelines". MCA partners with compacts signed before July 2007 must comply with procurement guidelines that were written specifically for their compact, which are usually very similar. The current guidelines and the compact-specific procurement guidelines are posted on the MCC website.
Approved Country Compacts
The funding priorities included in each recipient country's approved compact proposal are summarized in Table 1 below. In many countries, the projects outlined in the compact proposal are based upon the development needs identified in the country's Poverty Reduction Strategy Paper (PRSP)1, prepared in collaboration with the World Bank. Approved compact proposals contain more detailed project information and firms are encouraged to review these documents to learn more about future opportunities. MCA country websites also include information on the current status of individual projects.
| Table 1: Summary of Approved Country Compacts | |
|---|---|
| Country Compact value (millions) Signing date | Compact Activites (value in millions2): Components |
| Armenia $236 March 2006 www.mca.am/new/enversion/index.php | Rural roads ($113): project design; environmental assessment; rehabilitation of rural roads. Irrigation infrastructure ($67): pumping stations reservoirs; canals; gravity schemes; Ararat Valley drainage scheme. Water-to-Market ($32): strengthen water user associations; farm water management technologies; post-harvest, processing and marketing; credit for farmers. |
| Benin $307 February 2006 www.mcabenin.bj | Access to Port of Cotonou ($170): port institutional activity: customs improvement and audit; port security and landside improvements; waterside improvements; development of port project and design, dry port, master plan. Land management ($36): policy and legal framework; property rights and registration; land registration services and info management. Access to financial services ($20): financial institution capacity building; financial enabling environment activity. Access to justice ($34): arbitration center; business registration station; improved courts services: legal information center; training judges, legal aid, new courthouses. |
| Cape Verde $132 July 2005 www.mca.cv | Agriculture and productivity ($13): water management and soil conservation; agribusiness development services; access to credit. Infrastructure ($95): upgrade the Port of Praia; strengthen road and bridge networks. Private sector development ($9): remove barriers to foreign investment; promote financial sector reform. |
| El Salvador $461 November 2006 www.mca.gob.sv | Human development ($95): education and training; water and sanitation; rural electrification; community infrastructure. Productivity development ($88): production and business; investment support; financial services. Infrastructure ($234): northern transnational highway; connecting roads. |
| Georgia $355 September 2005 www.mcg.ge | Economic development: creation of Georgia Regional Development Fund ($39); agriculture fund ($18). Infrastructure investment: road rehabilitation Samtskhe-Javakheti ($123); North-South gas pipeline, energy strategy ($60); establishment of regional municipal infrastructure investment fund ($72). |
| Ghana $547 August 2006 www.mida.gov.gh | Agriculture ($241): training Farmer Based Organizations (FBOs); irrigation development; land tenure facilitation; post harvest and value chain services; credit services and value chain investments; rehabilitation of feeder roads. Transportation ($101): upgrading national highway (N1); construction/rehabilitation of Afram Basin roads; improvements to Volta Lake ferry service. Rural development ($143): public sector procurement capacity; construction/rehabilitation of educational facilities; construction of water sanitation facilities; electrification of rural areas; improvements/networking of rural banks; improvements of national payment system. |
| Honduras $259 June 2005 www.mcahonduras.hn | Agriculture and productivity ($90): farmer training and development; farmer access to credit; rural road rehabilitation; agriculture grant facility. Transportation ($151): highway rehabilitation; construction of 8 vehicle weight control stations. |
| Lesotho $363 July 2007 www.lesotho.gov.ls | Water ($64): Metolong Dam program and conveyance system; urban and peri-urban water infrastructure; rural water supply and sanitation; wetlands restoration and conservation. Health ($123): health centers and central lab infrastructures; blood transfusion center; national health training college; health system intervention; medical waste management. Private sector development ($36): civil legal reform; national ID/ credit bureau; land administration reform; payment and settlement system; gender equality in economic rights. |
| Madagascar $132 April 2005 www.mcamadagascar.org | Land administration reform ($45): implementing National Land Policy Framework; protecting property rights; strengthen capacity to administer land management policies. Financial sector ($43): legal and regulatory reform; sovereign debt management and issuance; strengthening National Savings Bank; instruments for agribusiness credit; modernizing national inter-bank payment systems; improving credit skills training; increasing credit information. Agriculture investment ($22): create five agriculture business centres; investment strategies. |
| Mali $461 November 2006 www.mcamali.org | Alatona irrigation ($235): building roads; irrigation planning and infrastructure; social infrastructure and services; land allocation; resettlement; agricultural and financial services. Industrial park ($94): primary and secondary infrastructure; resettlement; institutional strengthening. Bamako-Senou Airport ($90): airside infrastructure; landside infrastructure; institutional strengthening. |
| Mongolia $285 October 2007 www.mca.mn | Rail ($188): rail sector technical assistance; Lease Co. establishment and operation. Property rights ($23): land registration system; privatization of land plots; peri-urban land leasing. Vocational education ($26): national framework; industry-led skills standards system; competency-based training system; career guidance system. Health ($17): capacity building; prevention; early detection; management. |
| Morocco $698 August 2007 www.pm.gov.ma | Fruit tree productivity ($301): intensification and expansion of rain-fed production; irrigation; fruit tree sector services. Small-scale fisheries ($116): development of fish landing sites and port facilities; development of wholesale fish markets; support to mobile fish vendors. Artisan sector ($112): literacy and vocational education; artisan production and promotion. Financial Services ($46): access to microfinance; new financial product development; improvement of efficiency and transparency. Enterprise support ($33): training. |
| Mozambique $507 July 2007 www.mozambique.mz | Water supply and sanitation ($204): technical assistance and capacity building; rehabilitation/expansion of urban water supply systems; rehabilitation/expansion of municipal sanitation and drainage systems; construction/reconstruction of wells. Rehabilitation construction of roads ($176): technical assistance; road rehabilitation. Land tenure services ($39): national policy monitoring process; land administration capacity building; site specific secure land access. Farmer income support ($17): rehabilitation of endemic areas; control of epidemic disease; research and development support; improvement of productivity; business development support. |
| Namibia $305 July 2008 www.mca.gov.na/ | Education ($145): infrastructure and equipment for schools; vocational education and training; textbooks; regional study and research center; tertiary education. Tourism ($67): national park infrastructure; promotion; eco-tourism. Agriculture ($47): land management; livestock; indigenous. |
| Nicaragua $175 June 2005 www.cuentadelmilenio.org.ni/ | Property rights ($32): strengthen and modernize the property registration system in León. Infrastructure improvement ($112): upgrade of the Pacific Corridor Highway; rehabilitate secondary roads. Agriculture and rural productivity ($41): train farmers to produce higher-value crops; improve water supply; promote sustainable land management. |
| Tanzania $698 February 2008 www.mca-t.go.tz | Transport ($372): rehabilitate high-traffic roads; upgrade the airport on Mafia Island; road maintenance. Energy ($206): submarine electric transmission from the mainland to Zanzibar; small run-of-river hydropower plant; rehabilitate distribution infrastructure. Water ($66): expand capacity of water treatment plant; improve capacity of Water and Sewerage Authority; rehabilitate water intake and water treatment plants; improve distribution network in the city of Morogoro. |
| Vanuatu $66 March 2006 www.governmentofvanuatu.gov.vu | Infrastructure ($61): design and build civil works project; institutional capacity building and technical assistance for supervisory and Public Works Department. |
Identifying Opportunities
All MCA procurements are solicited, awarded and administered by the MCA accountable entity, the organization established by the partner country to manage the programs identified in the compact. MCC is not a party to these contracts. The MCA accountable entity is required to post procurement notices on its own website as well as, United Nations Development Business and dgMarket. Information about contracts awarded is published on the compact specific MCA websites.
In order to streamline information about business opportunities, MCC launched a procurement website. The new webpage provides direct links to MCC's compact program procurements, threshold program procurements and corporate procurements. The webpage also enables users to obtain up-to-date information about compact program procurements via an RSS feed and includes an in-depth video and downloadable podcast presentation on the full range of MCC's various business opportunities.
MCC Corporate and Threshold Procurement
Procurement for work related to studies and technical assistance that support the operational work of MCC in Washington, remains tied to U.S. firms, NGOs and consultants. These assignments are advertised on the U.S. government's federal business opportunities website, FedBizOpps. MCC threshold programs are primarily implemented by U.S. federal agencies.
Canadian Government Contacts
Canadian Embassy, Washington, D.C.
Office of Liaison with International Financial Institutions (OLIFI)
E-mail: IFIWashington@international.gc.ca
Internet: www.IFIWashington.gc.ca
Useful Internet Sites
- Millennium Challenge Corporation (accessed July 24, 2008)
- MCC Program Procurement Guidelines
- Center for Global Development, MCA Monitor
- dgMarket "Tenders and Procurement Opportunities Worldwide"
- FedBizOpps (U.S. Federal Business Opportunities)
- United Nations Development Business (UNDB) Online
- World Bank
- World Bank Guidelines for Procurement under IBRD Loans and IDA Credits
- World Bank Guidelines for the Selection and Employment of Consultants by World Bank Borrowers
- World Bank Poverty Reduction Strategy Papers
1 The World Bank's Poverty Reduction Strategy Papers (PRSP) describes a country's macroeconomic, structural and social policies to promote growth and reduce poverty, as well as associated external financing needs.
2 Funding levels in these descriptions are included only for project activities, not for administrative expenses. Therefore, the funding levels indicated may not add up to the total MCA allocation for a country.
