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Sarah Rose is a policy fellow at the Center for Global Development. Her work, as part of the Center’s US Development Policy Initiative, focuses on US government aid effectiveness. Areas of research and analysis include the policies and operation of the Millennium Challenge Corporation (MCC), the use of evaluation and evidence to inform programming and policy, the implementation of country ownership principles, and the process of transitioning middle income countries from grant assistance to other development instruments.
Previously, Rose worked for the United States Agency for International Development (USAID) in Mozambique as a specialist in strategic information and monitoring and evaluation. She also worked at MCC, focusing on the agency’s evidence-based country selection process. She holds a Masters degree in public policy and a BS in foreign service, both from Georgetown University.
This week, Congress passed the African Growth and Opportunity Act and Millennium Challenge Act Modernization Act (H.R. 3445). Once signed, it will give MCC the long-awaited authority needed to pursue regional programming more effectively. The change is a technical one that will permit the agency to have multiple, concurrent compacts with a single country—allowing MCC to pursue both a standard, bilateral compact with a partner, as well as a regionally focused investment with coordinated interventions in neighboring countries. With this authority, MCC will be better placed to address cross-border constraints to growth—which is often critical and potentially very high return in many of the places the agency works.
MCC has been angling for concurrent compact authority for years. The agency first put the idea forth as a legislative priority in 2010, though at that time, it was focused on using the authority to manage pipelines and address unobligated balances. Though concurrent compacts fell down the agency’s legislative priority list for a few years after that, by 2015, MCC had turned back to the idea, this time as a critical tool to enable regionally focused programming. Now that MCC and its partner countries have the green light to think beyond national borders, how can they make the most of it?
Regional programs are much more complicated than bilateral programs, often take longer, and can carry more risk. And MCC’s particular way of doing business—working only with countries that maintain good governance and giving partner countries the lead in program identification and implementation—will add layers of complexity. The agency has undoubtedly started thinking through how it would structure a regionally focused investment using concurrent compacts. As MCC solidifies this thinking and moves to pilot initial programs, there are several questions the agency will need to answer.
How will cross-border investments be identified? Will the agency structure constraints to growth analyses specifically to look at regional issues and/or allow for a regional investment to emerge from the findings of an individual country growth diagnostic? To what extent will MCC seek to support components of pre-existing regional initiatives?
How will regional anchors outside the MCC sphere be taken into account? In most regions, the regional economic powerhouse is not an MCC partner country, due either to its income level (South Africa) or its governance quality (Nigeria), or—in the case of India—its economic size and disinterest in the kind of aid MCC offers. But these countries are likely to play an important role in regional development initiatives and cross-border economic activity. How will the agency incorporate these actors in ways that don’t involve direct funding?
How will MCC deal with suspension or termination of individual countries in a multi-country program? MCC has had to suspend, terminate, or otherwise curtail funds to a number of partner countries whose policy choices became inconsistent with MCC’s good governance requirements. The decision to pull funds is always a difficult one for MCC to make; it would be more challenging if multiple countries are involved. Would MCC suspend/terminate just the activities in the particular country? What if the economic viability of the investment were contingent upon the activities and associated reforms in the suspended/terminated country taking place?
What will the local implementation unit(s) look like? MCC’s bilateral programs are run through local implementing units, typically set up as new government units. Will the units that manage cross-border investments be new multiparty structures, or would existing country units be restructured (and expanded) to take on new roles? What structure will best manage the complexity of multiple stakeholders?
How can MCC best structure incentives across multiple parties when costs and gains are unlikely to be equally shared? In order for MCC investments to yield their expected results, partner country governments must often agree to tackle difficult reforms. These can be tough negotiations even when the gains from the investment would accrue primarily to the country in question. In a cross-border investment, costs and gains may not be equally shared. How can MCC ensure the success of multilateral negotiations when one party may have reduced incentive to undertake necessary but difficult political reforms if the benefits accrue disproportionately to another party?
These questions are complicated, as are many other issues that MCC will undoubtedly grapple with as it moves ahead. But complicated doesn’t mean prohibitive. It just means that MCC would be wise to proceed conservatively, undertaking a small number of pilots with opportunities for learning built in. Sean Cairncross, the nominee to be MCC’s new CEO, recognizes this, pointedly saying that it would be important for the agency to pursue regional investments “carefully” and “in a focused manner.” Sounds like a good plan.
Tomorrow, USAID Administrator Mark Green heads to Capitol Hill to defend the Trump administration’s FY 2019 foreign assistance budget request. It won’t be easy. Lawmakers have pushed back hard against the drastic cuts to US global development and humanitarian spending proposed by the administration.
And while, under Green’s leadership, USAID has advanced several smart ideas to improve the agency’s effectiveness—including developing a framework for thinking about aid transition, piloting new ways to pay for results, and improving procurement processes—there remain significant questions about how these efforts will fare in the absence of sufficient resources and whether proposing such deep cuts provokes a level of skepticism that jeopardizes reform efforts.
Here are some specific issues I hope receive attention during tomorrow’s hearing:
At this time last year, the Trump administration was reportedly contemplating folding USAID into the State Department as part of an effort to “streamline” the federal government. The consensus reaction from the development community was that preserving USAID’s independence is paramount. For several months we’ve heard repeated assurances that consolidation is no longer on the table. But ongoing unease about the relationship between the State Department and USAID suggests the point remains relevant.
The rapport between the department and agency is liable to change with new leadership on the horizon for State. Even so, the hearing provides a useful opening for the many members who support USAID’s independence to go on record and give Green a chance to make the case for it.
Green’s vision for USAID’s development work is centered on a “journey to self-reliance”—supporting the development of countries’ capacity to finance and manage their own development so they can eventually transition away from aid. This vision isn’t new—previous administrators have espoused similar convictions. But Green’s proposal to develop a transparent and evidence-based approach to deciding if, when, and how to transition a relationship with a country from one based on grant-based economic assistance to one focused on trade support and other forms of development finance is more focused than many previous efforts and deserves recognition.
An idea, however, is only as good as its implementation, and there are a number of unanswered questions about how this concept will be put into practice. If the hearing delves into Green’s signature “journey to self-reliance,” I hope members ask, how would USAID seek to redefine its relationship with a country based on the new framework? How will proposed metrics be used to inform decisions about readiness for transition and/or the approach USAID should take in a particular country, and what makes them an appropriate tool for this purpose? What is the relationship between the “journey to self-reliance” framework and other strategy-setting processes?
And how does it feed into processes that seek to include local priorities and goals? Directives and initiatives from Washington already tend to dominate missions’ strategic decisions; how will USAID ensure its “journey to self-reliance” framework doesn’t become yet another Washington-based tool that limits the influence of country-determined priorities?
Domestic resource mobilization
An administration-released factsheet on the FY19 budget request highlighted a new commitment to domestic resource mobilization (DRM)—$75 million for activities that help countries self-finance their own development. This is a welcome push that aligns well with USAID’s “journey to self-reliance” framework, as well as with the internationally endorsed Addis Tax Initiative, which asks donors to increase their support for DRM.
But even amid widespread support for DRM, there are real gaps in what we know about assistance in this area. To begin with, we don’t even have a good account of how much we’re currently spending on DRM, though this is improving. We also know relatively little about the effectiveness of various interventions, which largely fall into the camp of more-difficult-to-evaluate technical assistance. I hope, as part of the new initiative, that Green can articulate how the agency will define success in this area and assess the degree to which its investments achieve their intended outcomes.
While it may not sound glamorous or exciting, getting procurement right is foundational to USAID’s effectiveness. Previous administrations have spearheaded some important shifts in how USAID makes awards, but more work remains to ensure award types are better aligned with USAID’s vision for how it wants to do business.
The Trump administration makes a lotofreferences to the importance of evidence-based decision making. And USAID, with Green at the helm, has demonstrated this commitment in some noteworthy ways. Within the last year, for instance, the agency hosted a day-long event showcasing evidence and evaluation and announced participation in a new development impact bond (DIB), an innovative results-based financing scheme.
On the other hand, the administration’s proposed budget would strike a massive blow to USAID’s evidence and evaluation functions. The FY19 budget request contains a 40 percent cut (compared to FY17 levels) to the Bureau of Policy Planning and Learning—the headquarters of the agency’s learning, evaluation, and research efforts. And it would slash funding for the Global Development Lab (the Lab) by 80 percent.
Within the Lab, the evidence-focused components have been particularly shorted. Last year, USAID closed new applications for Development Innovation Ventures (DIV), the part of the Lab that rigorously tests new ideas for solutions to development problems and helps scale those that prove successful.
Green has talked a lot about improving the efficiency and effectiveness of USAID. The hearing provides an opportunity for him to highlight some of the innovative ways USAID is using evidence to pursue these objectives, but he should also be pressed on the risks that downsizing the agency’s evidence engines poses to the broader effectiveness agenda.
Fragile and conflict-affected contexts
At least a third of USAID’s assistance goes to fragile and conflict-affected states.* Fragile states are where poverty is increasingly concentrated, humanitarian relief is most needed, and US national security interests are often most pressing. Fragility, however, is extraordinarily complex, often confounding the most well-intentioned efforts by donors to promote stability and development. Recently introduced legislation (H.R. 5273), sponsored by a number of panel members, would require USAID—along with the State Department and Department of Defense (DOD)—to take a hard look at what works and what doesn’t in aid to fragile states, create a strategy for violence reduction in select countries, and better assess impact.
With over 15 years of experience providing assistance to fragile states, USAID should already have some thoughts on how to approach these questions. It would be great to get Green’s take on how USAID should adjust its procurement, program design, and implementation processes to respond quickly to emergent needs and adapt interventions in constantly evolving fragile environments.
One of the big threads in the recent US foreign assistance reform and redesign conversation has focused on how the fragmentation of aid across 20-plus agencies compromises its efficiency and effectiveness. Eliminating this fragmentation isn’t really on the table—it would be hugely complicated and require a complete rework of the distinct roles of various agencies. But it may be possible to ease the symptoms of fragmentation through improved coordination and collaboration.
This has been critical in the context of a cross-cutting initiative like Power Africa—and would likewise be necessary for doubling down on DRM. The new proposed US International Development Finance Corporation would need to coordinate closely with USAID. And the agency has highlighted the need for better coordination with DOD in its work in fragile states. For each of these needs, what can USAID do to improve coordination and collaboration? What does good coordination look like in practice?
*In FY16, 29 percent of USAID’s obligations went to the 20 most fragile states as ranked by the Fragile States Index.
After over a year without top political leadership, the Millennium Challenge Corporation (MCC) may soon have a new CEO. Sean Cairncross, the Trump administration’s nominee to take the helm of the agency, has his Senate hearing tomorrow—where we’ll get an early look at his vision for MCC.
Cairncross is a relative unknown in the development community. As some have pointed out, he has virtually no development (or any sort of international) experience. But, in truth, most of MCC’s previous CEOs came to the position with little development experience, so this isn’t a huge break from the past. What Cairncross would bring to MCC is strong ties to the White House and Congress—positioning that could serve the small agency well.
To be truly effective, however, Cairncross must also demonstrate command of the development issues most relevant to MCC’s work. The hearing should provide an initial glimpse into his understanding of the principal challenges facing the agency.
Over the longer term (if confirmed), part of Cairncross’ success in a new field will come from being willing to trust and rely on MCC’s career staff. He should also seek to ensure the agency’s remaining political leadership positions are filled by strong candidates with relevant expertise.
As Cairncross gets up to speed, here are five big issues that should be on the agenda.
A limited pipeline of future partners: MCC works only with countries that meet its good governance criteria. The problem is that this set of countries changes little on an annual basis. Over the past five years, fewer than one new country a year (on average) has passed MCC’s “scorecard.” To date, MCC has had little difficulty forming new partnerships through a combination of newly passing countries and second compacts with previous partners. But these opportunities will become increasingly limited unless the agency eventually pursues third compacts with select partner countries. This is unquestionably the right way for the agency to go, as I outlined here. But it could prove a tough political sell. How will MCC’s new CEO approach the pipeline constraint, and will he be willing to push for a potentially politically unpopular but ultimately critical approach?
The potential for new regional authority: Congress may grant MCC new authorities, which would enable the agency to undertake regional programming. This would be a welcome step for MCC. Many important constraints to growth are cross-border in nature, and MCC’s bilateral focus has prevented it from taking advantage of potentially high-return regional opportunities, even though the agency often invests in sectors—like infrastructure or energy—with an inherent regional component. That said, regional programs are more complex, riskier, and take longer to put together. If granted the necessary authorities, will MCC’s new CEO commit to proceeding in a limited way at first, allowing the agency to identify risks, manage them, and learn as it goes?
The need to mobilize private capital: Donor agencies around the world are increasingly seeking to use their foreign assistance funds to mobilize private capital in pursuit of development objectives. As a growth-focused agency, this has always been one of MCC’s goals; the question has been how to do it better. In what ways will the new CEO seek to position MCC as a leader in mobilizing private finance for development? And what risks must MCC manage in pursuit of this goal?
A continued focus on results: Over the course of its 14-year history, MCC has been at the forefront of US government thinking on development results. It remains the only agency to systematically—and largely transparently—apply a range of results tools to its entire portfolio of country compacts, from program development to ex-post evaluation. The agency has also made commendable efforts to demonstrate how it takes lessons that emerge from its results processes and applies them to future programming. How will the new CEO ensure MCC continues to lead—and innovate—with respect to its focus on results?
The need to use data wisely: MCC eligibility centers on countries’ performance on a set of indicators designed to measure various facets of good governance. The trick is, governance quality can be hard to measure with precision. Particularly challenging is understanding how indicators capture (or more often don’t capture) changes in governance over a short period of time. This is something MCC is keen to track for its existing partners since backsliding may be grounds for reevaluating—and sometimes terminating—the partnership. The indicators don’t always track this well, however. And unfortunately, when imprecise data are interpreted too rigidly, it can lead—and has led—to poor decisions that resulted in cutting off, slowing, or downgrading existing partnerships on the basis of data noise rather than an actual decline in governance quality. Will the new CEO recognize that key to making smart, evidence-based decisions is knowing your data, including its limitations? Will he use his position to steer the agency (and its board of directors) toward nuanced, rational use of data in decisions about continuing eligibility for existing partners?
I don’t expect the hearing will touch on all of these areas—a number of them are fairly weedy. If Cairncross is confirmed, however, I’ll be watching for how he steers the agency on these difficult issues from the helm of MCC.
One of the biggest questions donors grapple with is how to balance implementing specific projects with building local capacity to execute similar programming in the future. Indeed, this question is central to the conversation—now active at USAID—about how donors can “work themselves out of a job.” One good example of how this can look comes from the Millennium Challenge Corporation’s (MCC) 2005-2010 partnership with Honduras. In this story, a key part of MCC’s legacy is not about what the agency funded but how it funded it. Through its commitment to country-led implementation, MCC helped set the stage for the government of Honduras to sustain and expand upon the structures and processes put in place to manage the MCC compact. The result: a new—and wholly Honduran—government unit that, over the last decade or so, has built a reputation for sound program management and a solid track record of efficient implementation.
At the origin: MCC’s commitment to country ownership
The idea that country ownership is critical for successful, lasting development programs is a central tenet of MCC’s model. A key way the agency puts this into practice is by giving the partner country the lead role in implementing the agency’s large-scale, five-year grant programs known as compacts. To do so, the partner country sets up and staffs an accountable entity called a Millennium Challenge Account (MCA)—usually as a separate government unit—to manage all aspects of the compact, including coordination with government ministries, procurement, contract management, maintenance of project timelines, and monitoring results. The MCA is overseen by a local board of directors with membership from government ministries, the private sector, and civil society. While MCAs usually wind down or dissolve at the end of a compact, for MCA-Honduras (MCA-H), implementing the compact was just the beginning.*
Expansion to manage other funds
Since the compact concluded in 2010, the government of Honduras has transformed MCA-H into a permanent government structure and expanded it to be the primary platform for managing donor funds in the areas of infrastructure, rural development, and food security. Rebranded as INVEST-Honduras in 2014, the unit has managed over $1 billion in funding from the government of Honduras and donors including the Central American Bank for Economic Integration (CABEI), the Inter-American Development Bank, the World Bank, and USAID.
As part of USAID’s own pledge to increase local partnerships, including government-to-government partnerships (G2G), USAID/Honduras had its eye on INVEST-Honduras, which it had watched develop through the MCC compact. USAID’s own standard pre-G2G procedure risk assessment tool reaffirmed INVEST-Honduras’ reputation for sound program management and relatively low risk. Thus, in 2014, the mission began funding a nutrition, watershed, and agricultural development program through INVEST-Honduras. Still ongoing, the program has expanded from its original $24 million to $60 million, and USAID points to additional benefits of directly funding INVEST-Honduras. Channeling money in this way has leveraged substantial cash contributions from the government of Honduras and better enabled the government to adopt the program as its own and build upon USAID interventions with other sources of funding.
On the front lines against corruption
Late last year, INVEST-Honduras was appointed by the president to chair a commission to liquidate and restructure the government’s road maintenance fund (Fondo Vial) in response to allegations of widespread dysfunction and corruption, including linkages with criminal networks. As of December, INVEST-Honduras is now executing all road maintenance functions, and is empowered to suspend personnel and revoke or renegotiate contracts with irregularities. The expectation is that such a move will close opportunities for corruption present in the previous model and increase the efficiency of contract execution.
Longevity and stability
INVEST-Honduras/MCA-H is now 13 years old. It has survived intact—with the same structure and largely the same staff—through five different governments. A number of factors seem to have contributed to its endurance, including competitive compensation and contracts that give donors a say over changes to key personnel, as well as a broad recognition that what the government was able to implement through the unit is worth preserving.
While MCC had a key role in INVEST-Honduras’ origin story, and other donors—including USAID—deserve credit for supporting its continuation, like all good country ownership stories this one ultimately owes its success to the local actor—in this case, the government of Honduras. And that’s how it should be. At the end of the day, it’s important to recognize that donor funds—in and of themselves—will not “transform” a developing country. The best hope is that a donor seeds something that local actors sustain and build upon. So make no mistake, the credit here goes to the government of Honduras. But let’s give MCC a quiet nod, too.
*While it is not the norm for partner country governments to preserve MCA structures post-compact, Honduras is not the only example. MCAs have also persisted post-compact in Lesotho, Tanzania, Morocco, Burkina Faso, and Ghana.
This week, the Millennium Challenge Corporation (MCC) edged one step closer to securing new authorities that would better position the agency to undertake regional programming. On Wednesday, the House approved the AGOA and MCA Modernization Act (H.R. 3445), sponsored by House Foreign Affairs Committee Chairman Ed Royce (R-CA), which would authorize MCC to pursue concurrent compacts with a single country—allowing for one with the traditional, bilateral focus and one that is regional in nature. House passage tees up the bill for action in the Senate, where the Foreign Relations Committee greenlit a companion measure in October.
Similar provisions were included in fully five bills in the 114th Congress, but none made it over the finish line. Hopefully 2018 will be the year.
Why should MCC focus regionally?
MCC’s singular mission is to reduce poverty through economic growth—and important constraints to growth can be cross-border in nature. MCC also works in regions—like sub-Saharan Africa—that contain many small economies and fragmented markets. In such contexts, some of the highest returns come from facilitating regional connections.
Because MCC can only form bilateral agreements, the agency hasn’t been able to exploit potentially high-return regional opportunities, even though a number of MCC projects in sectors like infrastructure and energy have an inherent regional component. For instance, in a number of early compacts—Tanzania, Honduras, and Nicaragua—MCC rehabilitated roads up to a national border and then stopped.
In recent years, MCC has done more to incorporate regional considerations into its bilateral compact development processes, but its ability to address key regional constraints to growth remains limited.
Why is concurrent compact authority important?
Currently, MCC can have just one compact at a time per eligible country. So even where MCC partner countries are adjacent to one another—and have cross-border issues that hamper greater economic activity—the agency hasn’t been able to coordinate programming among them effectively since countries are rarely at the same stage of eligibility or program design at the same time. Consider West Africa. The map below suggests there may be some prospects for regional integration. But because programs began development at different times, the agency was unable to build in a regional lens from the outset.
Current MCC partner countries in West Africa with the year compact development began
With concurrent compact authority, MCC could pursue a regionally focused investment while still advancing separate bilateral programs with one or more of the participating countries on their own timelines.
If MCC does receive authority to pursue concurrent compacts, how should the agency approach regional engagement?
Regional programs are much more complex than bilateral programs, often take longer, and can carry more risk. There will be operational challenges as well, in terms of figuring out how to define regions, how to deal with suspension or termination of individual parties, how to design a multiparty implementation unit, and how to structure incentives across multiple parties when costs and gains are unlikely to be equally shared. These challenges are not insurmountable and should not preclude MCC from the opportunity to expand its impact and generate greater economic returns. In fact, as CGD’s Nancy Birdsall pointed out, MCC has some advantages over other funders of large, cross-border investments. What the list of challenges does suggest is that, if given the opportunity to pursue concurrent compacts, MCC should reiterate its pledge to move slowly and cautiously (e.g., starting with an initial pilot) and reaffirm its long-held commitment to measuring results and learning from the process.
Even before he took office, USAID Administrator Mark Green made clear his vision that the objective of foreign assistance “should be ending its need to exist.” While his predecessors espoused similarconvictions, Administrator Green’s pledge to make “working itself out of a job” central to USAID’s approach has focused renewed attention on the question of how to responsibly and sustainably transition countries away from traditional, grant-based development assistance.
In recent months, USAID has been working diligently to craft its approach to “strategic transitions,” framing the principles it will follow, the benchmarks that will help inform transition decisions, and the programs and tools it can bring to bear. This Thursday, in a public discussion with the agency’s Advisory Committee on Voluntary Foreign Aid (ACVFA), USAID will outline its initial thinking about strategic transitions.*
In formulating its approach to strategic transitions, USAID should draw on the following 10 lessons that emerge from its own history and that of other bilateral donors:
Define transition goals, while recognizing broader US foreign policy objectives. Country transition plans should include both the development results and policy objectives USAID hopes to sustain as well as the actions required to achieve them, while taking into account the nature of the bilateral relationship.
Consider options short of complete aid exit. While complete withdrawal may be prudent in some circumstances, USAID should have leeway to pursue other options—such as approaching transition on a sector-by-sector basis, maintaining a development representative in country to support limited programming, or funding programs from Washington or a regional mission.
Recognize that coordination is crucial for effective transition planning. Close collaboration between USAID Washington and the field mission, as well as with other US government agencies, Congress, partner country stakeholders, implementing partners, and other bilateral and multilateral donors, is critical for transition success.
Assess and mitigate risks to sustaining development results (i.e., know who will fill the vacuum). USAID should protect the value of its past investments and seek to sustain its results by collaboratively identifying priority areas to be advanced by local actors (or other donors) and considering how to prepare the designated actors to take on new managerial or financial responsibilities.
Prioritize evaluation and costing of assistance activities that will be wound down. Critical to ensuring USAID-supported development results are sustained is understanding what (and whether) results have been achieved; costing exercises are similarly important for determining the appropriate actors—and the capacity of those actors—to take on additional obligations.
Transparently monitor progress on the transition plan. Monitoring progress toward the agency’s goals of ensuring sustained results can help USAID understand whether a transition approach is on track, and, if not, explore opportunities to adjust plans.
Ensure sufficient time for the above steps to occur. Sufficient time—at least 3-5 years—is necessary to meaningfully implement good transition practices; in contrast, overly compressed timelines can compromise US interests by hurting bilateral relations, undermining past development results, and/or leaving a void for competing powers to exploit.
Balance clarity and flexibility in the transition strategy. While it is important for USAID to define and clearly communicate its objectives, timeline, plans, etc., there should be enough flexibility to accommodate new information (e.g., from consultations) and contextual shifts (e.g., natural disasters, economic shocks) that emerge during the transition process.
Plan for mission staffing adjustments as part of the transition. USAID should recognize that transitions may require specific managerial skills and expertise that may not already exist within all missions; in addition, any staff downsizing must be sensitive to the need to preserve important relationships throughout the transition and support local staff in moving to new employment.
Learn and capture lessons. USAID should expand knowledge around common challenges and pitfalls by building into each transition process opportunities for real-time learning through experience sharing, as well as formal ex-post evaluation.
The pros and cons of using quantitative benchmarks to identify countries for transition—and an idea for how to do it
USAID has signaled interest in using quantitative benchmarks to evaluate a country’s readiness for transition. Using quantitative metrics ensures evidence is brought to bear on an important determination and can lend greater transparency, credibility, and accountability to the process. However, quantitative indicators will never provide a comprehensive picture of a country’s transition readiness, nor will they easily quantify broader US foreign policy and national security interests. Furthermore, data often carry some imprecision and are reported with a time lag. For these and other reasons, it is important that USAID not adopt a rigid or overly prescriptive interpretation of the quantitative criteria it develops.
We recommend a two-stage assessment for determining which countries might be ready for transition. The first stage would employ quantitative indicators to measure factors such as country need, fragility, good governance, business and economic environment, and financing capacity. The set of countries that show high performance across these measures would be analyzed further in the second-stage analysis that would employ both quantitative and qualitative information to assess whether national-level performance masks important subnational, gender-based, or other disparities, as well as a wider range of policy, institutional, and capacity issues most relevant to the sectors USAID funds.
Defining US engagement through the transition process and beyond
As USAID seeks to define a path for sustained partnership with transitioning countries, the agency should explore a full range of tools, some of which go beyond traditional, grant-based assistance.
The avenues of engagement that USAID pursues and the legacy structures it seeks to put in place will vary by country, depending on the nature of the agency’s existing investments, capacity and financing gaps in the partner country, the priorities of the partner country government, and the character of the broader bilateral relationship, among other things.
*Sarah Rose participated in an ACVFA working group focused on strategic transitions.
Every December, MCC’s board of directors meets to select the set of countries eligible for MCC’s compact or threshold programs. And each year, before the board meeting, CGD’s US Development Policy Initiative publishes a discussion of the overarching issues expected to impact the decisions alongside its predictions for which countries will be selected. Here’s what to watch for at the upcoming MCC board meeting on December 19.
The Overarching Questions
How might the prospect of a historically low budget constrain decision-making?
Budget uncertainty is an ever-present feature of MCC’s eligibility decisions since—in recent years—the appropriations process has rarely been finalized until well after the December meeting. But while the current appropriations limbo is nothing new, this year MCC is looking at the potential for a budget lower than any the agency has ever seen. The Trump administration’s FY2018 budget request slashed international affairs spending, and though MCC was spared the severe cuts dealt to other development accounts, the request of $800 million—if enacted—would be the agency’s lowest-ever appropriation. It might not end up there. The House Appropriations bill provided the $800 million included in the president’s request, but the Senate came in at $905 million, level funding compared to FY2017.
With up to three compacts expected to be approved in FY2018 and up to four more in the pipeline for subsequent fiscal years, competition for funds will be tight. MCC cannot afford to select all 31 countries that pass the scorecard (nor would all be top choices for reasons of size and policy performance). As always, the board will have to prioritize. The average number of new first or second compact selections in a year is three. This year may see fewer.
How will the new board interpret MCC’s good governance mandate?
This will be the fourth board meeting under the Trump administration, but only the second with political appointees in four of the five public positions (no nominee has been named to lead MCC), and the first to deal with country eligibility. Of course, this isn’t unfamiliar territory for all the board members. USAID Administrator Mark Green served five years on the MCC board in one of the four slots reserved for private members. The two current private members are veterans too. But the two other private sector slots remain unfilled, giving the administration more weight than usual in the board’s decisions.
This year’s selection decisions will require the board to make judgments about one of the core precepts of MCC’s model—that policy performance matters. MCC bases its eligibility criteria on governance quality to reward countries taking responsibility for their own development, create incentives for reform, and (potentially) increase the effectiveness of MCC investments. The eligibility criteria are also intended to depoliticize eligibility decisions, in recognition that blended objectives—supporting geostrategic partners and promoting development—can sometimes muddle development results. In practice, US geopolitical interests have certainly influenced the direction of some eligibility decisions, but rarely—if ever—trumped policy performance. The question at this year’s meeting will be how the MCC board, under the Trump administration, weighs good governance in the spirit of MCC’s founding model against the importance of a bilateral relationship, a factor the agency’s model seeks to downplay.
This year, the board faces decisions about large and/or strategically important countries—for example, the Philippines (the decision to watch this year) and Bangladesh—that come with important concerns about civil liberties and human rights. On the flip side, the board will need to define the next stage of MCC’s relationship with several countries that are already engaged in a threshold program or compact development that are smaller and less strategically important—for example, Lesotho, Timor-Leste, and Togo.
The Trump administration has provided some insight into its broad views on the issues at the heart of these eligibility decisions. For instance, President Trump has been largely silent (and at one point congratulatory) about human rights concerns in the Philippines. And the FY2018 budget request’s gutting of foreign assistance, which included zeroing out development-focused aid for 37 countries, suggests limited appetite for spending scarce development dollars where US strategic and economic interests are weaker. But these clues are well outside the context of MCC, so how the board considers good governance versus bilateral importance for MCC eligibility is unclear.
A Brief Overview of How MCC’s Selection Process Works
Here are four key things to know. For more detail, see MCC’s official document or my short synopsis (section “How the Selection Process Works,” p. 2-4).
MCC’s country scorecards provide a snapshot of a country’s policy performance compared to other low- and lower-middle-income countries. To “pass” the scorecard, a country must meet performance standards on 10 of the 20 indicators, including the Control of Corruption indicator and one of the democracy indicators (Political Rights or Civil Liberties).
The scorecard is only the starting point. The board also considers supplemental information about the policy environment, as well as whether MCC could work effectively in a country, and takes into consideration how much money the agency has.
Once a country is selected as eligible for a compact, it must typically be reselected each year until the compact is approved (usually 2-3 years).
A country can be considered for a second compact if it is within 18 months of completing its current program. In decisions about subsequent compacts, MCC looks for improved scorecard performance and considers the quality of partnership during the first compact.
Countries that Pass MCC’s FY2018 Scorecard Criteria
Low IncomeLower Middle Income
Micronesia, Fed Sts.
São Tomé and Principe
MCC Eligibility Predictions for FY2018
Below are my predictions for FY2018 MCC eligibility. I don’t cover all 83 countries since around two-thirds of them have low enough scorecard performance to make them unlikely candidates. Instead I restrict my analysis to:
All countries that pass the scorecard criteria, except those not in the running for any kind of eligibility decision. These are Benin, Côte d’Ivoire, Georgia, Ghana, Liberia, Morocco, Nepal, and Niger, all of which are currently implementing compacts and are not within the timeframe for subsequent compact eligibility.
Countries that don’t pass the scorecard but for which a decision about continued eligibility is expected.
Countries that don’t pass the scorecard but come close enough to be considered for threshold eligibility.
Click on any country name to read a brief analysis and rationale for my prediction.
First compact eligibility, new selection
Timor-Leste has a long and complicated history with MCC. It was selected as eligible for a compact in FY2006 but never finalized an agreement for unstated reasons—likely related to political unrest as well as repeatedly failing the Control of Corruption indicator (due mostly to its move from the low-income group to the more competitive lower-middle-income group). Instead, as somewhat of a consolation, MCC moved Timor-Leste to the threshold eligibility in FY2009, and the country implemented a program that concluded in 2014.
Last year, Timor-Leste (once again classified as low income) passed the scorecard for the first time in a decade, and the board selected it for a second threshold program. Now that Timor-Leste passes handily for a second year in a row, the board could opt to move Timor-Leste up to compact eligibility.
It’s not a sure thing, though. First of all, Timor-Leste is small and remote, and it’s hard to tell if the new board will find it appealing to spotlight the tiny half-island nation, especially when there are few other prospective new compact countries to pick this year. Timor-Leste also has a large petroleum sovereign wealth fund, raising questions about the country’s need for grant funding. And on top of that, its per capita income puts it near the threshold separating the low-income category from the more competitive lower-middle-income category. Timor-Leste may well bump into the higher category again soon, and if it does, it will almost certainly fail the scorecard again.
That said, the board also likely recognizes that Timor-Leste is a very poor country, despite the oil wealth that has made it nominally middle income. Nearly half the population lives under $1.90 a day, and its median household income per capita is just $2—on par with countries like Benin, Niger, and Tanzania. Furthermore, a dip in oil prices and declining production has hit Timor-Leste hard and presents risks for future fiscal sustainability. After 12 years of a tumultuous partnership, this might be the year MCC restarts compact eligibility with Timor-Leste.
Second compact eligibility, new selection
Malawi passes the scorecard for the 11th year in a row. When the board meets next week, the country will be nine months out from completing its compact and could be considered for second compact eligibility. While it’s a possible choice, there are a couple of factors that may make the board think twice. First, the last year of compact implementation is often the most intensive, as countries push to complete the program before the five-year time clock runs out. MCC may prefer that Malawi focus its finite capacity on successful implementation, without the distractions that come with developing a new program. In addition, while Malawi has an excellent record of passing the scorecard, second compact eligibility demands a higher bar and the expectation that a country will demonstrate improved scorecard performance, especially in the areas of control of corruption and democratic rights. Here, the case for Malawi is harder to make. Its Control of Corruption score has declined some in recent years, on the heels of a major 2013 corruption scandal that led donors to withhold funds. While this isn’t a statistically significant decline, it is noteworthy that Malawi has dropped over 15 percentage points in rank in the last five years and is now hovering close to the pass/fail threshold. Subsequent scandals have unfolded since 2013, and efforts to investigate them have faced hurdles. Arrests of protestors and treason charges against opposition figures also merit attention, as do the current government’s trumped up charges against a former president. With few contenders for new first or second compacts this year, Malawi may be in the running, but it is not a clear-cut choice.
Zambia passes the scorecard for the 10th year in a row. Its current compact will end in November 2018, almost a full year from next week’s board meeting. While this puts it within the 18-month window for second compact consideration, it’s not an obvious choice this year. MCC may prefer not to distract from the final, intensive year of compact implementation with preparations for a new program. It can also be hard to fully gauge the quality of the partnership, one of the criteria for second compact eligibility, when there is still a (very busy) year to go. Not only that, Zambia may not meet the higher bar for improved scorecard performance. Its Political Rights indicator has shown substantial decline due to a restrictive environment for political opposition before the country’s 2016 general elections, and increased restrictions on freedom of expression and demonstration. Because there are few compact contenders this year, and because Zambia is within the window for second compact selection, it will probably be under serious consideration. However, it seems more likely that MCC will wait to reassess the political environment and the quality of compact implementation after the current compact concludes.
Threshold program, new selection
The Gambia (probably)
MCC picked the Gambia for compact eligibility back in FY2006, but suspended it less than a year later due to concerns about the policy environment. A decade later, MCC and the Gambia seems set for a do-over. This year, the only criteria that keep the Gambia from passing the scorecard is the democracy hurdle. And there is reason to believe this may soon change. The indicators reflect the events and conditions of 2016, a year that culminated in the then president—who had been in power for 22 years—refusing to accept the results of an opposition electoral victory. In January, he finally agreed to leave office, leading to the country’s first transfer of power by popular election. The party of the new president won a sweeping victory in the mid-2017 parliamentary elections, which could facilitate further reforms. With a failing scorecard, the Gambia isn’t a contender for a compact yet, but it could be an attractive country for a threshold program. MCC has a strong presence in West Africa, which it has long been eyeing for regional opportunities. The agency is likely interested in testing how a partnership with the newly democratic Gambia would go, while watching the policy trajectory of the new government.
For seven years running, Bangladesh has either passed (twice) or come very close to passing the scorecard, falling just short on the Control of Corruption indicator. However, MCC has always decided against compact or threshold eligibility for Bangladesh. Its inconsistent passing of the Control of Corruption indicator has made it a risky bet for compact eligibility. And more broadly, MCC undoubtedly has had a watchful eye on constraints to political rights, civil liberties, and press freedom in Bangladesh. There have been no major advances in these areas that would suggest this year presents a particular opportunity for eligibility. Just the opposite, in fact, with a government crackdown on labor protestors earlier this year and reports that press freedom is increasingly under threat. General elections are also due at the end of next year, and Bangladesh has a history of political violence around its electoral cycles.
That said, MCC has been thinking about possible regional approaches in South Asia, and Bangladesh is a major player in the region. The US government may also be particularly interested in supporting Bangladesh at this time, given its role on the front lines of the Rohingya crisis, having received over a million refugees from neighboring Myanmar.
The board is almost certainly giving Bangladesh some serious thought this year. Though its governance issues raise questions about its fit with MCC’s good governance mandate, the board could consider the country for threshold program eligibility. A threshold program would allow work to begin on initial phases of a partnership, but afford MCC time to watch how next year’s elections and the broader human rights context unfold. One important consideration, however, is that threshold programs are small (around $20 million over three or so years), and therefore may not get a lot of attention in Bangladesh, which receives over $4 billion in foreign aid each year. So even compact consideration may not be entirely off the table. Either way, Bangladesh isn’t a highly likely pick. But it shouldn’t be ruled out.
First/second compact eligibility, reselection to continue compact development
Burkina Faso (probably)
Burkina Faso was initially selected as eligible for a second compact last year. It passes the scorecard for the seventh year in a row and has been working with MCC on a constraints to growth analysis that will inform the focus of the compact.
Lesotho—which holds the distinction of being the only current candidate country to pass the scorecard every single year since MCC’s inception—was first selected for second compact eligibility in FY2014. It’s had a bit of a rough road since then. For the last two years, the board deferred a reselection decision due to uncertainty surrounding how the country would address serious concerns about the behavior of the military, including allegations that the armed forces had been active in stifling the opposition and those loyal to the prior regime. Just before last year’s selection-focused board meeting, there were early signs of progress in Lesotho, and the board decided to see how well they would be implemented over the coming year. Instability still persists in the mountain kingdom, but the government of Lesotho has taken steps that demonstrate the seriousness with which it is taking the Southern African Development Community (SADC)’s recommendations to address its challenges. It has launched a reform process, and President Thabane recently requested a SADC stabilizing force to provide protection to the government as it implements the regional body’s recommendations to arrest and try military officers and tackle security sector reforms. The board will probably take a positive view of these recent steps and give Lesotho the green light to proceed with compact development.
Since it was first selected for a second compact in FY2015, annual eligibility determinations for Mongolia have been anything but straightforward. In FY2016, Mongolia’s per capita income briefly rose above the ceiling for MCC candidacy, taking it out of the pool of country scorecards. Since it wasn’t a candidate country, the board couldn’t reselect it; however, they did reaffirm the agency’s commitment to continuing to develop a second compact with Mongolia. Last year, Mongolia was back in the candidate pool, but failed the Control of Corruption hurdle. The board wisely reselected it anyway, recognizing that the failure was not indicative of an actual policy decline. There are no such hitches for Mongolia this year, which passes the scorecard once again.
The Philippines (hard to predict, but unlikely)
As I explain in more detail here, the Philippines decision is the one to watch this year. The Philippines, an important strategic ally for the United States, has had a long partnership with MCC. It had a threshold program from 2006 to 2009, a compact from 2011 to 2016, and was selected as eligible for a second compact in FY2015. But since the inauguration of Filipino president Rodrigo Duterte in mid-2016, some serious questions have emerged about whether the Philippines continues to meet MCC’s good governance criteria. In particular, there are concerns about Duterte’s support for the extrajudicial killings of thousands of people suspected of involvement in illicit drug activity. This issue—in addition to the Filipino president’s inflammatory anti-American (and specifically anti-Obama) rhetoric—led the board to defer a decision about whether to reselect the Philippines last year. A vote up or down would have constituted a major foreign policy decision just weeks before the new Trump administration would take office. Over the past year, Presidents Trump and Duterte have developed an amicable relationship. Trump recently returned from a successful trip to the Philippines, and, over the course of his first year in office, he has been largely silent about (or arguably supportive of) the extrajudicial killings.
Another factor the board will have to weigh is that the Philippines doesn’t pass the scorecard this year, failing the critical Control of Corruption indicator. While this might appear important, it should really be less of a concern than the actual, identified human rights issues described above. The decline in the Philippines’ score is slight (not remotely significant), and the country has long ranked near middle of the pack on this indicator, fluctuating above and below the passing threshold. Its failing score is not a signal that it has suddenly become more corrupt. It does, however, offer an “easy out,” giving the board a way to curtail the relationship with the Philippines without being explicit about the human rights concerns the Trump administration has chosen to downplay. While “easy,” it’s not the right rationale. Instead, the board should refer to MCC’s criteria that countries must meet a higher bar on the scorecard for a second compact. The downward movement on the Civil Liberties indicator (reflecting, in part, the drug-related killings) suggests the Philippines probably doesn’t clear that hurdle.
The Philippines is a hard prediction to make. On the one hand, the US government is undoubtedly sensitive about its relationship with an important geostrategic ally whose current leadership has responded to US criticism by threatening American interests and edging closer to China. On the other hand, it’s hard to make the case that the Philippines meets MCC’s good governance standards for a second compact. I’m predicting that the board will ultimately vote not to reselect the Philippines this year. A different outcome would not be surprising. But it would be unfortunate for what it would say about how the current board interprets MCC’s good governance mandate.
Senegal was initially selected as eligible for a second compact in FY2016. It passes the scorecard for the 11th year in a row and has been working with MCC to develop a program in the energy sector.
Sri Lanka (probably)
Sri Lanka was selected for threshold program eligibility in FY2016 and then—before signing a threshold program—for compact eligibility last year. Since then, it’s been developing a compact on an accelerated timeline thanks to the constraints to growth analysis that it conducted as part of threshold program eligibility. The proposed programs will focus on regional transportation and access to land.
Tunisia was initially selected for a compact last year. It passes the scorecard for the second year in a row and has been working with MCC on an updated constraints to growth analysis that will inform the focus of the compact.
Countries that pass the scorecard but are unlikely to be selected
Bhutan, Comoros, Kiribati, Federated States of Micronesia, São Tomé and Principe, Solomon Islands, and Vanuatu
All have passed the scorecard in several prior years but have been passed over for eligibility, presumably because of their small size (all have populations under a million). Though MCC does not have an official minimum size requirement for compact eligibility, the board has demonstrated a preference against the selection of small countries.
Cabo Verde is also small (population 540,000), but, unlike the small countries listed above, it has had a long partnership with MCC, completing its second of two compacts in November this year. If the board were to select Cabo Verde again it would be for a third compact. MCC absolutely should be given the green light to pursue third compacts with select partners. However, because not all MCC stakeholders (including some members of Congress) buy into this idea wholeheartedly, it would be risky for MCC to pick tiny Cabo Verde as the vanguard of a potential new cohort of third compact partners.
India regularly passes the scorecard, but neither it nor MCC—not to mention many members of Congress—think a compact is an appropriate tool for the bilateral partnership. India is, after all, the world’s seventh-largest economy and a foreign aid provider, not to mention its over $300 billion in foreign exchange reserves. MCC and India have, however, discussed how they might collaborate on MCC’s programming in South Asia, including in Nepal and Sri Lanka.
Because Indonesia’s compact ends within 18 months, it could be considered for a second compact. It’s an unlikely choice, however. This is only the second year that Indonesia has passed the scorecard (the other time was in FY2009, the year it was selected for its first compact). This makes it a risky bet since it’s far from clear that it would continue to pass with any consistency in the future. In addition, the ability for an MCC compact to affect poverty reduction and growth is relatively limited in the world’s fourth biggest country and 16th largest economy, which gets trillions of dollars of foreign direct investment each year. That said, Indonesia is a strategic partner of the US government. If it continues to pass the scorecard for a few years, a more serious conversation about a second compact might arise in the future. But not this year.
Kosovo passes the scorecard for the second time this year. When it first passed, in FY2016, it was selected for compact eligibility. Last year, however, Kosovo was downgraded to threshold program eligibility due to a failing score on the Control of Corruption indicator. Though MCC cited Kosovo’s troublesome trajectory on the indicator as rationale for the shift, there was zero actual evidence of a real policy decline. The fact that it passes again this year (with its highest score since independence) makes MCC’s end-of-2016 professed dissatisfaction with Kosovo’s indicator performance appear, retrospectively, even more off base. Kosovo just signed a $49 million threshold program (the second largest in MCC history), however, so MCC probably won’t choose it for a compact again this year. But the Kosovo story amplifies the need for MCC to change its approach to the Control of Corruption indicator for reselection decisions.
Tanzania was selected for second compact eligibility in FY2013, but MCC suspended the partnership in 2016 based on the flawed and unrepresentative conduct of a 2015 election in Zanzibar, as well as moves by the government to stifle dissent and control information. There has been no appreciable improvement in these areas, so the board is unlikely to reselect Tanzania this year.
Togo passes the scorecard for the second year in a row. It was selected as eligible for a threshold program in FY2016 and is close to finalizing a program focused on policy reform in the information/communications technology and land sectors. However, at the board meeting in September, MCC flagged concerns with the political rights and civil liberties environment in Togo and indicated that it would not sign the threshold program agreement until there were clear signs of improvement. This suggests that Togo will not be moved up to compact eligibility this year.
A dozen years since it was set up with a remit to reduce global poverty through economic growth, the US government’s Millennium Challenge Corporation recently revealed a new Strategic Plan. Deputy CEO Nancy Lee joined me on the CGD Podcast to discuss how the new plan responds to a very different development landscape.
MCC’s model has received much recognition. However, since the agency controls just a small portion of the US foreign assistance budget, it alone has not fulfilled — and cannot be expected to fulfill — the founding vision of transforming US foreign assistance policy. Partly in response to the recommendations stemming from the 2010 Presidential Policy Directive (PPD) on Global Development, the larger agencies, especially the US Agency for International Development (USAID), have commendably worked to incorporate many of the same principles included in MCC’s model. For the most part, however, those principles are applied to a still-limited portion of the overall US foreign assistance portfolio. The next US president should continue to support MCC as a separate institution and support efforts to more thoroughly extend the good practices promoted in MCC’s model throughout US foreign assistance in general.
The Millennium Challenge Corporation (MCC), an independent US foreign assistance agency, was established with broad bipartisan support in January 2004. The
agency was designed to deliver aid differently, with a mission and model reflecting key principles of aid effectiveness.
We’re getting closer to knowing how the USG spends its foreign assistance dollars. Recently, the State Department announced its first release of foreign assistance data on the ForeignAssistance.gov website (also known as “The Dashboard”). This may not sound terribly glamorous, but it’s actually important news. Since State’s spending makes up over a third of all US foreign assistance spending, the absence of its data has been a huge gap. With this recent State Department move, spending data for agencies responsible for 96 percent of US foreign assistance are now online. It’s great to see the Dashboard—now in its fourth year—slowly coming together. As it does, here are a few thoughts on why it’s still a good investment, the big challenges it faces, and how it can be improved.
Why We Should Cheer for the Dashboard
If well implemented, the Dashboard, an online resource of US foreign assistance spending (and potentially other) data, can:
Increase accountability and transparency: One of the Dashboard’s main goals is to enable easier access to information about US foreign assistance investments by US citizens, Congress, other US agencies, along with citizens and governments in recipient countries.
Ease agencies’ reporting burden (eventually): Behind the Dashboard lies a massive database that will eventually contain all of the underlying information necessary not just to populate the online interface but also to fulfill USG’s other regular reporting, like IATI, the Greenbook, and the OECD-DAC’s Creditor Reporting System. Once the Dashboard/IATI process is automated within the agencies, complying with all this reporting should become much more streamlined and, importantly, more institutionalized.
Create incentives for improved data quality: Publishing data can change the dynamic around data quality. The prospect of increased scrutiny can create an incentive for agencies to reinforce internal systems to produce cleaner, better organized data which can, in turn, bolster an agency’s own understanding of its internal operations.
Why It’s Taking So Long
The Dashboard was announced in 2010. The effort is led by State’s F Bureau, which coordinates with the (over 20!) USG agencies that deliver some form of foreign assistance, and collects, codes, and publishes their data submissions. Some agencies, however, are far more capable of reporting to the Dashboard than others. What’s so hard about data reporting, you may ask? Quite a few things, it turns out, including:
Existing information systems’ incompatibility with Dashboard requirements. Different agencies have different financial and project management information systems. In fact, individual agencies often have multiple, separate systems. Most of them long predate any notion of “open data” and are simply not designed to compile information in the way the Dashboard needs it. Changing IT systems is a massive, costly undertaking.
Foreign assistance funds must be parsed out from a broader portfolio. For agencies whose core mission isn’t foreign aid, internal systems weren’t set up to differentiate between foreign assistance and domestic spending. This makes it difficult to identify what’s right for the Dashboard and what’s not. MCC has it easy in this respect (foreign aid only); the Department of Health and Human Services, for example, does not (mostly domestic).
At this point, the Dashboard team over at State is focused principally on providing data (i.e., getting more agencies on board) as well as pushing for improved data quality. The team is pursuing a phased approach to populating the web portal, publishing agencies’ data as they have it ready. It’s a courageous move for the USG to publicly release information knowing that it’s incomplete (and highly imperfect). Yet, they recognize that an incremental approach maintains pressure for continued implementation and fosters competition among agencies. It may also help ease the culture shift towards transparency by gradually demonstrating that openness doesn’t have to be threatening.
This incremental approach also creates risks for users since:
A user can’t easily tell if data are complete—and often they’re not. By illustration, this graphic shows agency-by-agency reporting to the Dashboard. You’ll see that not a single year contains information from all agencies (2006 to current), and that most agencies have reporting gaps. It’s great that the Dashboard is frank about this, but the problem is that this is not clearly indicated where it needs to be. For instance, if you wanted to find out about aid to Tanzania from 2008 to 2012, you would probably go directly to the Tanzania page and assume that what you pulled for “all agencies” means just that. You’d be wrong. Only MCC and Treasury have 2008 data on the Dashboard, so “all agencies” means just those two for that year. More broadly, it’s hard for a user to tell easily if data that don’t show up are absent because they don’t exist (e.g. DOD didn’t spend foreign assistance money in Country X in a given year) or because it’s missing (e.g. DOD did spend foreign assistance money in Country X that year but hasn’t reported it). The Dashboard does include caveats about data limitations but they’re unintuitively scattered in way too many locations that aren’t near where users are looking at data. So they’re only helpful if a user thinks they should have a question about data quality or comprehensiveness and actively seeks this information.
Transaction-level data are incomplete (and sometimes unintelligible). Some important fields are missing from most agencies’ submissions. For example, State is uniformly missing project title and description making it nearly impossible for a user to tell what he or she is looking at. MCC has titles, but not descriptions. USAID has descriptions for most of its transactions, but many of these merely replicate the title, are unintuitive to outsiders, refer to supporting documents that are unavailable, and/or cut off mid-description. Start and end dates are also complicated. For USDA they’re missing. USAID provides only the year; MCC provides only the start date. State’s date reporting is spotty and contains apparently inconsistent information, like disbursements that happen before start dates.
Getting the data out there is important, and it’s the right thing to do. But doing so while simultaneously improving coverage and quality gives me two related (though opposite) concerns. I’m worried that:
1) People Will Use the Data and draw incorrect conclusions due to missing or poor quality data; and/or
2) People Won’t Use the Data because they are aware of its current limitations and will write off the Dashboard as an unreliable source, regardless of whether data coverage and quality improve later. In a bit of a chicken and egg conundrum, lack of use could in turn slow Dashboard progress, since, to some extent, agencies need to know people will use the data before they invest scarce resources to provide it and improve its quality.
Ideas to Increase the Dashboard’s Potential
State’s Dashboard team and the 20+ agencies with foreign assistance spending are working hard to make the Dashboard a useful, relevant tool. It’s a big undertaking. Here are four things I hope they are considering:
1) Help users better understand the data: The main risks to the Dashboard come from incomplete and thus unreliable data. Breadth and reliability are key requirements for data to be truly useful. Therefore, the Dashboard should be abundantly clear when users are looking at complete versus partial information, or preliminary versus final data. Users should not have to dig through multiple, separate “additional information” pages to find this out.
2) Improve transaction data: Agencies should strive to fill the gaps in their transaction data (especially critical things like titles that facilitate rolling up transactions to the project level), as well as improve the comprehensibility of the information (for example, make descriptions descriptive).
3) Don’t forget about usability: The current priority of the Dashboard is to publish as much data as possible in manipulable format and let users work with it as they wish. However, a single user interface is never going to be able to meet the needs of all stakeholders, so the USG should reinforce its efforts to: (i) define who their priority audiences are; and (ii) understand how these different groups want to use the data and tailor the interface accordingly. The Dashboard team is already taking steps in this direction with outreach to country missions and US-based stakeholders.
4) Publish agency specific implementation schedules: The Dashboard website does explain where each agency is in the implementation process. But, it should also include agency-by-agency schedules for reporting compliance (and not just with Dashboard requirements, but with IATI requirements, too). This would not only provide an accountability structure that would help motivate continued momentum, it would also serve as an important signal of commitment.
A key pillar of MCC’s model is its focus on policy performance. One of MCC’s defining characteristics is that it provides funding only to countries that demonstrate commitment to good governance and growth-friendly policies.