|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
![]() By Mumukshu Patel President Trump nominated Mr. Sean Cairncross to lead the Millennium Challenge Corporation. All prior MCC CEO's have been relative new comers to global development and Mr Cairncross is no different. His Congressional ties and association with the Trump White House may help the agency weather certain budgetary pressures. But, his true challenge will be to take the agency through 2020 in a rapidly changing global environment. On the day of his nomination hearing we lay out a vision of MCC 2.0 that represents an approach to practically reorient the agency toward greater relevance and effectiveness. We list key themes and ask questions of the nominee and the Senate Foreign Relations Committee to inform discussion on the future of the MCC. MCC is arguably the most effective US development agency, with a focused mission of reducing poverty through economic growth. Yet if it wants to remain relevant going forward, it must get out of area or it will get out of business. What Senator Lugar observed about NATO after the Cold War ('NATO get out of area or out of business') rings true for MCC in 2018. What does 'get out of area' mean for MCC? It must work in middle income countries, expand its base of low income clients and/or develop regional compacts; it must also go beyond traditional compacts/grant-making to leverage private capital.
MCC must broaden its low income country base otherwise it risks an absorptive capacity issue that will likely threaten its operations. MCC has a very small pool of countries that are compact eligible, and where compacts can eventually be secured under the current model. If it is unable to disburse cash appropriated by Congress, it runs the risk of losing its relatively low budget (which has never gone beyond a billion dollars, considerably less than what was envisioned in its creation).
MCC must explore regional compacts to ensure that its investments, particularly those geared toward infrastructure, in compact countries get maximum bang for the buck.
MCC must leverage private capital more directly, it must develop new instruments toward this end. Private sector financial flows dwarf foreign aid flows today. Blended finance is in vogue, yet not many public sector entities have been able to develop financial instruments that truly leverage and crowd in private capital, rather than simply subsidize it.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All Rights Reserved. Copyright 2002 - 2022 |