Millennium Challenge Account

Participants in the Program; United States as donor is in green, red countries have active compacts, blue countries have active threshold compacts and purple countries are in negotations for either

The Millennium Challenge Account (MCA), run by the Millennium Challenge Corporation, is a bilateral development fund announced by the Bush administration in 2002 and created in January, 2004. Through this program, the administration proposed to permanently increase United States foreign aid funding by $5 billion by 2005. Countries are selected on a competitive basis through a set of 16 indicators designed to measure a country’s effectiveness at ruling justly, investing in people, and fostering enterprise and entrepreneurship. The focus of the MCA is to promote economic growth in the recipient countries. The program emphasizes good economic policies in recipient countries. The Bush administration has stated their belief that development aid works better in countries with good economic policies, such as free markets and low corruption.

History

At the Inter-American Development Bank on March 14, 2002, American President George W. Bush calling for a new compact for development with accountability for both rich and poor countries. he also pledged to increase development assistance by 50% by Fiscal Year 2006.

Congress has consistently provided less funding for the program than the president requested. For Fiscal Year 2007, 2 billion dollars were provided, a 14% increase over the previous year but still under the 3 billion target.

Criteria for eligibility

The program uses a fully transparent method of choosing the recipient countries. All indicators used and the whole process of qualifying are publicly available at the homepage of the MCA. Through this open process, the administration hopes to keep the MCA away from political influence. Other development programs like USAID (United States Agency for International Development) have been thought to have suffered from many different and sometimes conflicting goals, which often are a result of political pressures. On September 11, 2006, two new criteria were adopted for the Fiscal Year 2008 selection process, both of which relate to the environment. They will measure candidate countries ability to provide "clean drinking water, expand sanitation services, streamline the property registration process, and make land rights accessible and secure for poor and vulnerable populations."

Eligible countries

In the first year (2004), 17 countries were made eligible for a MCA loan: Armenia, Benin, Bolivia, Cape Verde, Georgia, Ghana, Honduras, Lesotho, Madagascar, Mali, Mongolia, Morocco, Mozambique, Nicaragua, Senegal, Sri Lanka, and Vanuatu. Madagascar and Honduras were the first countries to receive actual funding from the MCA. As of May 2005, Nicaragua, Cape Verde and Georgia are next in line to receive money. On June 16, 2006, The Gambia was suspended from eligibility, citing the deterioration of in 8 of the 16 criteria categories.

Several countries were chosen in 2004 for a new part of the program called Threshold Program Assistance, which are smaller compacts used to assist a country close to meeting account eligibility to become eligible for a full program.

Candidate countries

Namibia submitted their proposal to the MCC in October, 2006 which involved improvements in education, livestock production and marketing, tourism, "Green Scheme" and indigenous natural products. Yemen, having successfully competed a democratic election, hopes to have improved enough to gain account funding eligibility in 2006.

Implimentation and impact

The funding of Tanzanias compact has been pushed foreword from May 2007 to an earlier date to accelerate reform.

Doing Business 2007 cited the Millennium Challenge Accounts as a catalyst for reforms underway in 13 countries.

External links

• Millennium Challenge Corporation Official Website
• MCA Monitor: Web site and blog provided by the Center for Global Development