Two Approaches to Country-led Development

The Millennium Challenge Corporation

In the Philippines, the Millennium Challenge Corporation worked on developing water resources for farm communities.

Feed the Future has the potential to be a major step forward in U.S. foreign assistance, but it is not the first effort to adopt a country-led development approach. The Millennium Challenge Corporation (MCC), a U.S. government agency, uses a country-led approach in its work with developing countries. The MCC is widely regarded as one of the more innovative examples of U.S. foreign assistance, and it provides a compelling model for establishing a country-led development approach for Feed the Future.

MCC’s approach to country-led development puts participating governments in the lead on both program development and program implementation. To secure U.S. funding, or in MCC parlance to sign an aid “compact,” developing country governments are invited to propose projects that reflect their own development priorities. Partner governments are required to consult with key stakeholders in their country, including civil society groups, the private sector, and communities slated to benefit directly from the assistance. MCC is a partner in the process of developing the compact; its role includes ensuring that proposed investments have good potential to spur growth and reduce poverty, and that the government consults with stakeholders who will benefit from the compact and who can help make the program successful. Just developing and signing the compact can take one to two years.

Before governments submit a project proposal, they must conduct rigorous analysis to identify their country’s key barriers to economic growth and poverty reduction. Based on the analysis, they propose programs to help overcome these barriers, and MCC helps them select and design investments that show greatest promise for increasing incomes among beneficiaries. It’s rare for MCC not to help countries sharpen their proposals. MCC’s objective is not economic growth by any means that works—nor is it to support just any project that will help poor people. The agency will only fund investments that do double duty: stimulating growth and lifting people out of poverty.

An example of how MCC tries to make projects both country-led and successful comes from the Philippines. Water shortages in one district led the government to propose using MCC funding to build a system of reservoirs. Farmers in the district blamed their low productivity on a lack of year-round access to water. When MCC technical specialists analyzed the situation, they determined that the water shortages were caused by inadequate delivery mechanisms rather than storage capacity (which would have required the reservoirs). Thus, MCC did not change the problem identified by the community as a priority, but the solution was adapted based on MCC’s analysis of its causes. MCC’s strengths include its access to such technical expertise. Is this inconsistent with a country-led approach? MCC doesn’t see it that way. Rather, the process works as a partnership, with both parties working to identify the investments with the greatest potential for poverty reduction.¹

As in any true partnership, moreover, knowledge flows in both directions. For example, the MCC compact signed with Ghana was originally centered on agriculture and transportation infrastructure. Shortly before the compact was signed, Ghanaian officials wanted to add a component to build schools in the areas where the infrastructure would be built.² MCC staff working on the compact hesitated. The Ghanaians said that the schools were needed to buttress the planned gains in agriculture in the region—because once families earned enough income, they would move somewhere that had schools for their children. The Ghanaians understood their own community in ways MCC staff did not, and in the end, the schools were added to the compact.

Once the compact is signed, MCC’s country-led approach continues. Country governments set up entities that oversee implementation of MCC-funded programs and are expected to continue to consult with the project’s stakeholders.³ These entities are accountable not only to the government, but also to the representatives of local civil society and the private sector that serve on their boards of directors.

MCC posts extensive information about projects on the Internet, both on its own website and that of the implementing body in-country. The information includes specifics such as the sectors receiving U.S. funds, the people in charge, the contractors being paid to do the work, and the timelines for reaching milestones. This gives stakeholders information they need to hold their government accountable for its use of the aid money and also enables the U.S. public to track how taxpayer dollars are being used. MCC’s commitment to transparency is unique among U.S. government agencies with international development programs.

MCC assistance is also different because its compacts last five years—longer than other U.S. development programs. For example, most USAID projects are funded for one or two years at a time. A five-year commitment reflects the ambitious scope of MCC projects and the emphasis on a country-led approach, which is bound to introduce new uncertainties. “We could have moved a lot faster if we’d done more of the work ourselves and paid less attention to country ownership,” said Maureen Harrington, Managing Director of MCC’s Africa office, at the time the Ghana compact was signed.⁴

“The process of doing this right takes far longer than anyone thinks,” said Troy Wray, who worked on the Ghana and Philippines compacts. A compact is a learning experience for all parties involved from beginning to end—and it includes responding to developments from earlier in the project. Both a Harvard study and meetings at the MCC for this report found unequivocally that development work is rife with uncertainty. A country-led approach is far more dependent on local conditions.

“A country’s management capacity becomes much clearer two or three years into a compact,” explained an MCC staffer. Political will goes a long way toward making progress in development, but it is also important to have the technical capacity to manage assistance in a way consistent with MCC’s standards for transparency and environmental and social protections and to ensure that funds are used within the five-year compact period. MCC hopes that by being in the driver’s seat throughout program development and implementation, partner governments will strengthen their capacity to not only manage MCC-funded programs but also sustain progress once the aid runs out.

A Guatemalan health worker (left) talks with a woman living with HIV about her family’s health care and nutrition needs. Programs like this help combat HIV/AIDS.

The Global Fund

Feed the Future, like the Millennium Challenge Corporation’s work, is bilateral assistance—meaning that the U.S. government decides which countries to help and how funding is divided among them, and the assistance comes from the United States alone. Multilateral assistance, on the other hand, generally combines resources from many funders and provides assistance through independent financing mechanisms. It is a different model that also offers lessons for country-led development.

The Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria, usually called simply the Global Fund, is a multilateral donor with a unique approach to country-led development. The Global Fund was established in 2002 to gather and coordinate more funding to battle these three deadly diseases, which together kill almost 5 million people a year.⁵ By 2010, it had disbursed nearly $20 billion for 572 programs in 144 countries, pooling resources from more than 50 governments as well as from nongovernmental and private sector sources.⁶ The U.S. government was one of the first governments to provide funding, and its generous support has been influential in leveraging contributions from others.

The Global Fund doesn’t design or implement programs, leaving this to the countries it supports. But in addition to making money available for programs that fight its target diseases, the Global Fund also mobilizes technical support from funders.⁷ The gains of today are unlikely to prove sustainable over time without improvements in critical sectors such as health care, so the Global Fund’s objectives include strengthening recipients’ health systems. The poorest countries in particular need more than money to strengthen their health systems, hence the provision of technical assistance. For example, in addition to funding, the U.S. government provides technical support through USAID.

Billboards on AIDS prevention, like this one in Maseru, Lesotho, are common in sub-Saharan Africa.

The Global Fund’s approach to county-led development is distinguished by a unique decision-making structure and an unrelenting focus on performance at every stage of program development. Decisions on how Global Fund resources are used are made by developing country governments and civil society. To ensure that civil society has the role of a valued stakeholder, the Global Fund requires recipient countries to establish a Country Coordinating Mechanism (CCM) to administer the funding with at least 40 percent of its members drawn from civil society.⁸ CCMs design programs, write grant proposals, and decide on implementing organizations. This degree of civil society participation in program management is a radical difference between the Global Fund and other multilateral and bilateral donors. In other development programs, civil society is at best consulted through a process spearheaded by government. The CCM structure, on the other hand, guarantees civil society an opportunity to play a significant role in running programs. Of course, participation and influence are not the same thing, and the CCM cannot turn a weak civil society sector into a strong one all by itself. It turns out that in countries where the CCM has the most meaningful civil society involvement, the sector was already strong when the Global Fund arrived.

The Global Fund requires countries to set and meet ambitious performance targets to win and keep funding. The Fund uses a standard set of evaluation criteria (for example, the number of insecticide-treated bed nets or amount of antiretroviral medications distributed), but these are secondary to the performance targets set by the countries themselves in their grant proposals. Rigorous reviews are conducted in the application phase to ensure that only strong, relevant proposals are funded. In other words, countries must promise to challenge themselves. After two years, the grants are evaluated and may be renewed for another three years. The continuation of funding is linked to the achievement of clear, measurable targets that can be independently evaluated. Failing to meet performance measures does not automatically cut off funding—generally there is a second chance with a reduced funding level, and funding may be increased again if performance improves.

The value of civil society’s contributions to implementing development programs cannot be overstated. These are organizations that provide care to the most vulnerable and marginalized people in the country. Their ongoing relationships in these communities speed the process of building trust with beneficiaries. For example, explains Dr. Esther Tallah, a pediatrician and the manager of the Cameroon Coalition against Malaria of Plan International, a successful vaccination program cannot start by sending strangers in to sit down with parents and try to discuss their superstitions about letting children be vaccinated.⁹ People close to the community, however, are able to walk families from their homes to the vaccination site and can be relied on to be available afterward and show parents what to do in case of fever.

A family in Eldoret, Kenya, receives food assistance as part of an HIV/ AIDS treatment program. Hunger and malnutrition reduce the effectiveness of anti-retrovirals.

The Global Fund says that the CCM is an evolving model and notes several remaining obstacles to stronger civil society participation, including “lack of technical capacity…and problems in accessing CCM-related information.” Donors, though they cannot solve deep-seated structural or political problems that impede the programs they fund, can address some needs by using technology to create better networking and knowledge-sharing capabilities. Few tools exist to improve the networking capacity of civil society. But in an age when it is possible to find people with cell phones in the most remote corners of the world, it is unlikely that technical barriers alone prevent networking and coalition-building. In many countries, civil society groups simply do not have experience using newer communications tools and have not felt a pressing need to ask for them. After all, there are few cases apart from the Global Fund where donors involve civil society to this extent.

Civil society groups are an integral part of reducing hunger and malnutrition just as they are in fighting the diseases targeted by the Global Fund. USAID can help countries map civil society organizations in the sectors most important to Feed the Future. The effort should be led by the host country government along with members of civil society who are able to provide support.

Issues