- What is the difference between the Millennium Challenge Account (MCA) and the Millennium Challenge Corporation (MCC)?
- How does a country become eligible for MCA assistance?
- How often are countries selected to be eligible for MCA assistance?
- What happens after a country is selected as an eligible MCA country?
- What activities will MCC fund?
- How much assistance will MCC provide?
- How much funding does MCC have and where does this money come from?
- What is a compact? Will MCC only sign compacts with governments?
- How will the MCC monitor compacts in countries?
- How will the MCC measure success?
- What happens if there is a problem with a program?
- How is MCC related to USAID and other USG agencies?
- What is the MCC threshold program?
- Is the role of women in society a part of the MCA eligibility process?
1. What is the difference between the Millennium Challenge Account (MCA) and the Millennium Challenge Corporation? [top]
The Millennium Challenge Corporation (MCC) administers the Millennium Challenge Account (MCA). The MCC is a government corporation headed by a Chief Executive Officer and staffed leanly with talent drawn from the public and private sectors. A Board of Directors oversees the MCC, and it is chaired by the Secretary of State and includes the Secretary of the Treasury, as Vice Chairman, the U.S. Trade Representative and the Administrator of the U.S. Agency for International Development. The Board also includes the Chief Executive Officer of MCC and four independent members who are nominated and confirmed by Congress.
2. How does a country become eligible for MCA assistance? [top]
The MCC will select only countries that are, in President Bush's words, "ruling justly, investing in their people, and encouraging economic freedom." The MCC will use 16 objective indicators to measure country performance on these three criteria. To qualify, candidate countries are expected to score above the median on half of the indicators in each of the three criteria areas and above the median on the corruption indicator specifically. Given that no quantitative indicator is without flaws, the Board will then review the results, take into account factors such as data gaps or lags and other matters that Congress has indicated should receive consideration, and select the countries that will be eligible for MCA assistance. (See Report on the Criteria and Methodology for Determining the Eligibility of Candidate Countries for the Millennium Challenge Account Assistance in FY 2004.) 
Countries should focus on improving performance on political, economic, and social policies that are fundamental for countries to grow and for citizens to escape from poverty and to lead better lives. These policies are also what are essential for MCA qualification.
3. How often are countries selected to be eligible for MCA assistance? [top]
Candidate countries will be selected by the MCC Board of Directors on an annual basis.
4. What happens after a country is determined to be eligible for MCA assistance? [top]
After the Board determines eligible countries, the MCC will work with potential recipient countries to develop compacts that set forth a commitment between the United States and the developing country to meet agreed performance benchmarks. In this partnership, countries will identify their own highest priorities for achieving sustainable economic growth and poverty reduction, recognizing that economic growth is largely driven by a country's own efforts, policies, and its people. In developing its compact proposal, a country should:
- Focus on maximizing growth and poverty reduction;
- Engage a broad array of its society in coming up with its development priorities;
- Identify the measurable objectives that it wants to achieve;
- Include a plan for achieving those objectives with targets to assess progress;
- Develop transparent mechanisms to measure and evaluate whether targets are being met and to ensure financial accountability and procurement integrity; and
- Provide a plan for sustaining progress and policy enhancement after the MCA compact ends.
The selection of a country by the Board as an "eligible" country therefore does not ensure that a country will receive MCA funding. The extent to which a country's proposal meets the above requirements will help determine whether and how much the MCC will invest in the country.
5. What activities will MCC fund? [top]
The MCC's mission is to achieve economic growth and reduce poverty. Examples of areas that are directly tied to a country's productivity and economic growth include agricultural development, education, enterprise and private sector development, governance, health, and trade capacity building. However, these categories are meant to be illustrative, not exclusive. Because country ownership is a hallmark of the MCA, decisions on specific MCA investments will be made on a country-by-country basis and will fit within each country's overall growth and poverty reduction strategy.
6. How much assistance will MCC provide? [top]
When he announced the Millennium Challenge Account in March 2002, President Bush proposed a new "global development compact" in which "greater contributions from developed nations must be linked to greater responsibility from developing nations." In January 2004 Congress approved legislation authorizing the MCC and providing MCA $1 billion in FY 2004. The President's request for the MCA in FY 2005 is $2.5 billion, paving the way to reaching the $5 billion funding level proposed by the President for FY 2006.
7. How much funding does MCC have and where does this money come from? [top]
Congress appropriated $1 Billion to MCA for FY 2004. MCA funding is no year funding.
8. What is a compact? Will MCC only sign compacts with governments? [top]
Yes. Although we anticipate that a wide variety of actors will be involved in developing and implementing each compact, the government of each recipient country will sign the agreement with the MCC and, with the assistance of MCC, have principal responsibility for managing the implementation of the compact.
9. How will MCC monitor compacts in countries? [top]
MCC compacts will be monitored by the MCC staff, the administrators within the countries and by independent experts employed by the MCC. These monitoring activities will occur contemporaneously to provide checks against each other. MCC will seek to design compacts so that they are amenable to effective monitoring. The monitoring activities will include the following: an initial assessment of the priority and impact of the program on maximizing growth and poverty reduction; ongoing assessments of whether the intermediate objectives of the programs are being accomplished on schedule and within the budget; ongoing assessments of whether value added will indeed be increased by the compact, and a retrospective assessment of the impact of the project on economic growth after completion.
10. How will the MCC measure success? [top]
Demonstrating tangible results aimed at maximizing growth and poverty reduction is at the heart of the MCA. Each compact proposal submitted by an eligible country must include clear, measurable objectives, targets and baselines. MCC will be measuring success ultimately by assessing the amount by which value-added increased as a result of the MCC program.
11. What happens if there are problems with a program? [top]
The MCC will work with countries and implementers to identify and correct any problems with respect to performance or financial accountability. Should any such problems persist or if a country or implementing entity fails to adhere to its responsibilities under the compact, the CEO, in consultation with the Board, may decide to suspend or terminate assistance. The CEO may decide to reinstate assistance if the relevant country or implementing entity has demonstrated a commitment to correcting the situation.
12. How is MCC related to USAID and other USG agencies? How will USAID and the MCC coordinate assistance programs? [top]
The MCA represents new money for development and will not necessarily supplant current USAID assistance. MCC and USAID will work together to ensure that their respective activities complement each other. The USAID Administrator serves as a member of the MCC Board, which determines country eligibility and approves MCA compacts. After the selection of countries that will receive MCA assistance, USAID will conduct a review of its programs and determine which should continue and which will be phased out or become a part of the MCA program. For example, regional programs or those fighting HIV/AIDs or trafficking in persons might continue, while programs in a sector of MCA concentration might logically be incorporated into the MCA program. These decisions will be on a country-by-country basis.
13. What is the MCC threshold program? [top]
USAID, working with the MCC, is prepared to assist "threshold" countries. Threshold countries are ones that just miss being determined eligible to receive MCA assistance but demonstrate a commitment to improving policy reform. USAID will provide targeted assistance through programs under the MCA rubric of ruling justly, investing in people and encouraging economic freedom, with particular attention to areas of weakness in qualifying for the MCA. The aim will be to promote economic growth and development and encourage policy improvements that will eventually enable the country to qualify for the MCA. Steps to make a country more likely to qualify for the MCA will also make the country more attractive for domestic savings, investment flows, and donor funds.
14. Is the role of women in society a part of the MCA eligibility process? [top]
The MCA's emphasis on the fundamental elements of economic growth will be extremely beneficial to women. Eligibility criteria on governance, human rights, health and education and the requirement to include a variety of stakeholders in the development of MCA compacts promote the role of women in economic development. Countries that fail to advance women's human rights will find it difficult to pass the criteria for ruling justly. In the same way, countries that discriminate against women and girls in education or health will score poorly on the "Investing in People" indicators. The Board will also be able to consider information from the State Department Human Rights Report regarding the treatment of women and girls, and it will be able to consider both the level and trend in girls' enrollment rates in primary school. During implementation of MCA compacts, where applicable, the MCC will monitor and assess the role of women and girls.
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