When it comes to foreign assistance, many in the agriculture community think of the U.S. Agency for International Development (USAID) or the U.S. Department of Agriculture’s Foreign Agriculture Service, perhaps even the U.S. Trade Representative. Lesser known is a small agency located just a few blocks north of USAID that works in this same area – the Millennium Challenge Corporation (MCC).
The MCC is not a traditional development agency. It is a small, independent U.S. foreign assistance agency that is helping lead the fight against global poverty through economic development. It was created by Congress in 2004 at the suggestion of President George W. Bush and serves as a partner in the President’s Emergency Plan for Aids Relief (PEPFAR). The MCC continues to coordinate and partner with other agencies on a variety of projects, such as USAID’s Feed the Future, to promote effective economic development.
The agency offers a refreshing perspective on how to achieve sustainable results from U.S. foreign development assistance. Their methods are driven by data and aim to ensure accountability and real results by enabling the private sector. The main goal of all MCC projects is economic growth to reduce poverty. This economic growth comes from investments in a variety of sectors, especially agriculture.
Growth in the agriculture sector is nearly twice as effective in reducing poverty as growth in other sector. For this reason, $5 billion of MCC’s funding since its founding in 2004 has gone to projects that promote food security. These projects encompass investments in transportation and storage infrastructure, agribusiness, irrigation, land tenure, water, sanitation and hygiene, and nutrition.
Successful projects begin with successful leaders. The CEO of the MCC is Sean Cairncross, a dynamic and innovative thinker who is leading the agency in the right direction for agriculture by emphasizing public-private partnerships, women’s economic empowerment, and sustainable, data-driven solutions. Originally from Minnesota, Mr. Cairncross is a former Deputy Assistant to President Donald Trump and Senior Advisor to the White House Chief of Staff.
Sean Cairncross, CEO, MCC
Mr. Cairncross has brought his energy to MCC, which undoubtedly will build on project success. In Honduras, for example, the MCC funded an access to credit program that was made possible after policy reforms. By the end of the compact, nearly 6,000 loans were given to individuals in the agriculture industry. In Ghana, the MCC trained nearly 67,000 farmers in business development and crop productivity, established 10 new agribusiness centers, and rehabilitated 358 kilometers of feeder roads to improve farm-to-market access. In Indonesia, an MCC project used incentives-based community grants to increase demand for health, nutrition and education services. The project improved the health sector’s capacity to respond to this increased demand and is projected to benefit children in up to 5,700 villages where the rates of stunting and low birth weight are higher than national averages.
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The MCC forms their partnerships with developing countries committed to good governance, economic freedom, and investing in their citizens. They provide time-limited grants and focus on country-led solutions and implementation. Countries are selected based on several third-party policy indicators and must meet a certain threshold in order to form Compacts with the MCC. A recent and important development at the MCC is its goal to work regionally by forming Concurrent Compacts for making Regional Investments. This is based on the notion that business does not have borders and regional efforts are often needed to remove barriers in trade. Lastly, the MCC has a Threshold Program that focuses on policy and institutional reform by awarding smaller grants to countries that come close to meeting the MCC’s eligibility criteria and have demonstrated commitment to improving their policy performance.
All decisions made in MCC projects, from country selection to implementation, are evidence-based. The MCC works with selected countries to determine their greatest barriers to economic growth and develops their Compact around addressing these constraints.
The MCC forms strong and strategic partnerships with the private sector to drive innovative solutions to the world’s most challenging problems. The private sector is kept on the front end of project development, as the private sector is what provides inputs to farmers and links them to consumers. All MCC projects help foster an enabling environment for business by addressing the policy and infrastructure barriers that constrain economic growth. In promoting economic growth through development, the MCC addresses poverty.
MCC is looking to further boost its impact. As part of its commitment to innovation and learning, MCC’s “AgReboot” is collaborating with the International Food Policy Research Institute (IFPRI) to further enhance its collaboration with the private sector through blended finance, invest in the agricultural value chain from inputs to retail, boost public goods to support agriculture, consider how nutrition can boost growth, and remove constraints that keep agriculture from reaching its potential. MCC is using these ideas to develop a new generation of agriculture-related compacts in Lesotho, Tunisia, and Malawi.
The key to global food security is agriculture development in Africa. If real progress is to be made, we cannot stress enough the importance of policy and infrastructure that allow agriculture supply-chains to operate. Africa is on the verge of an agricultural transformation, going from a means of survival to thriving businesses. It is projects like those carried out by the MCC that will get us there.
Marshall Matz specializes in agriculture and food security at OFW Law in Washington, D.C. Julia Johnson graduated from Purdue with a degree in agriculture and has joined OFW Law as a Legislative Assistant.