from Follow the Money

it is a good thing Mozambique’s Millennium Challenge Account grant was on the front page of the Wall Street Journal …

May 5, 2005

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Because apparently, that is the only grant the Millennium Challenge Account (MCA) has made to date.

Full disclosure: I have several friends who work for the Millennium Challenge Corporation (MCC), which administers the Millennium Challenge account -- the Bush Administration’s much hyped new approach to development. I understand why it is taking a long time to get the money out the door. The structure of the program almost guarantees it. First a country has to score high enough on the MCA’s range of tests to be declared eligible. But that is only the beginning. Then the country has to come up with a project, and the MCA has to decide to fund the project. And since the MCA doesn’t want to fund just any standard aid project, finding a match between what the country wants and what the MCA wants is going to take time. For all the gory details, look at this GAO report; or just check at the Center for Global Development’s MCA blog.

There is a trade-off between doing something new and different and getting dollars out the door quickly. The Administration has not been able to get aid dollars out the door that fast in Iraq, and no one doubts the Administration’s commitment there.

My problem: the surplus of Administration rhetoric around the MCA has almost guaranteed that the program’s rhetoric to results ratio would be bad -- particularly since quick "results" are hard if you are setting up something new. It is hard for the Administration to be taken seriously in development circles if, after three plus years, the Administration’s new approach to development boils down to one $55 million grant ($110 million over four years).

That is one 3% of what Denmark gave away in 2003.

There is a serious point here. The US is not a big player in the African aid game. In terms of funding, the MCA looks like the aid agency of a small European country; $1.5 billion a year is a bit less than Denmark’s development aid budget. If a country doesn’t get funding from the MCA, there are lots of other potential sources of funding -- that is one reason why I doubt its ultimate impact will live up to its founding rhetoric. One last point: The GAO says that the MCC is also negotiating with Cape Verde, Georgia, Honduras and Nicaragua -- so I suspect it would not be a total surprise if the President announces something during his visit to Georgia.

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