Posts Tagged: World Bank
October 18, 2010
 Author’s photo of the earthquake-affected region of Kashmir, November 2005
This post also appeared in the Guardian’s Development Network blog.
Five years ago this week, I arrived in Islamabad with a team of donors. A deadly 7.6 magnitude earthquake had just struck Pakistan, claiming more than 70,000 lives and leaving nearly 2.5 million people homeless. The international response that I witnessed was swift, and impressive. Islamabad’s hotels were quickly filled to capacity, as a veritable “Benetton ad” of relief workers, helicopter pilots, aid officials and journalists from across the globe traveled to the earthquake-affected areas. The United States in particular stepped up in a big way, committing more to the quake relief than any other bilateral donor and earning a temporary boost in popularity as a result. Today, Pakistan is reeling from yet another natural disaster: flooding so catastrophic that the UN has dubbed it the single worst natural disaster in the institution’s history. Once again, the United States has led the international relief efforts. Touting the mantra “the first with the most,” U.S. officials have pointed out that the United States has given more to the flood relief efforts than any other single donor country. Read More…
August 26, 2010
This is a joint post with Molly Kinder.
As Pakistan struggles to cope with the worst flooding in the country’s history, international donors have contributed upwards of $800 million to humanitarian relief efforts. (See here for the UK’s Guardian newspaper’s ongoing tracking of individual donor pledges to Pakistan’s floods.) The full cost of rebuilding Pakistan’s flooded regions is still being calculated, and will no doubt be staggering. The Asian Development Bank has already pledged $2 billion to the recovery and reconstruction efforts and the World Bank another $900 million. Most other international donors have yet to announce their contributions to the mammoth rebuilding effort that is to come.
As background, this post lays out how much the United States and other international bilateral and multilateral donors were already giving to Pakistan, before the floods. These aid figures were compiled earlier this year, and do not take into consideration any reprogramming or redirection of funds towards flood relief and recovery. As donors adjust their assistance plans, we will continue to track the numbers, and will update our “Aid to Pakistan by the Numbers” page. Check back for more! You’ll find raw data for all of the charts in this post here. Read More…
May 28, 2010
This is a joint post with Wren Elhai.
It is little wonder the Obama Administration has prioritized Pakistan’s energy sector in its $1.5 billion aid program this year. Pakistan is gripped by a very serious energy crisis. Daily black-outs in major Pakistan cities sometimes exceed 12 hours. Businesses are suffering, jobs have disappeared, and quality of life has plummeted. Frustrated Pakistanis are taking to the streets, and the political turmoil threatens to further destabilize the country and weaken the (already fragile) central government. Pakistani citizens and policymakers have turned to the United States for help. The United States sees an opportunity both to improve its public image, shore up a friendly government, and remove a key bottleneck to economic growth. Ultimately, fixing the Pakistani energy sector would go a long way towards stabilizing a critical state and benefiting U.S. national security interests.
However, the ever-present danger in jumping into a crisis situation with wallet in hand is that the desire to make progress quickly can overshadow the need to fix the longer-term problems that caused this crisis and, if not dealt with, will cause others in the future. Read More…
February 21, 2009
A standing room only event hosted Wednesday by Oxfam America explored a new working paper and issue brief from the MCC, outlining their approach to country ownership. Although often touted as the ideal for international development aid, “country ownership” is often not well defined, nor do guidelines exist for best practice. The MCC has settled on the following definition:
Country ownership of an MCC compact occurs when a country’s national government controls the prioritization process during compact development, is responsible for implementation, and is accountable to its domestic stakeholders for both decision making and results.
This definition seemed pretty well received at the event. And while the MCC is quick to point out that its work in fostering country ownership is a work in progress, with different experiences in each country, panelist H.E. Mr. Ombeni Sefue, Tanzanian Ambassador to the U.S., gave it high praise: “the MCC allows developing countries to think for themselves, and their approach creates capacity and confidence within the country, and the five-year compacts make budgeting easy.”
Read More…
May 13, 2008
This is a joint blog posting by Sheila Herrling and Amy Crone.
A quick shout-out to the MCC on the launch of its new economic rate of return web feature! It shows how the MCC and its partner countries use ERR analysis in its decision making and evaluation processes and includes interactive spreadsheets on six countries (with more to come) which can be manipulated to see the effect of project changes (cost, time, etc.) on estimated impacts. We think it is a bold demonstration of the MCC’s commitment to transparency, public feedback and accountability for results.
The reliance — or as some observers suggest, overreliance – by the MCC on the ERR to drive its investment choices was the focus of the event we hosted here at CGD in late April. To an audience of over 100 of what we lovingly referred to in our welcoming remarks as “development dorks,” MCC Chief Economist Franck Wiebe presented the methodology used by the MCC and previewed the new web feature. He aimed to debunk the misperceptions regarding the dominance of economics in MCC decision-making: the countries drive the process while economics “helps inform the process”, along with other considerations such as gender and the environment.
If you missed the event, watch the video here, or read on for some quick points.
In a lively panel discussion following the presentation, Franck, Steve Radelet of CGD, Asma Lateef of Bread for the World Institute and Mauela Ferro of the World Bank debated several important points, including:
• the proper weighting of the ERR vs. beneficiary targeting or social and poverty impact analysis in MCC funding decisions. (Radelet raised the point that poverty impact can technically be included in ERR analysis by weighting where dollars accrue, i.e., more weight attributed to those dollars that accrue to those living on less than $1/day. Wiebe was concerned, however, about data availability and reliability.)
• the importance of publicly posting information on distributional and poverty-impact analysis since they factor into the decision making process. (Wiebe responded that the beneficiary analyses are scheduled to be posted as well – likely in the fall, to which we say Bravo!)
• the potential use of MCC Threshold Programs to improve poverty data quality for use in measuring distributional and poverty impact. (Lateef noted that this has occurred on a limited basis through pre-compact grants (609g funding) in Namibia and Burkina Faso, but is not systematically incorporated into the threshold program)
• the possibility of the MCC delivering a portion of its funding through budget support where ERR analysis is less relevant. (Ferro and Lateef noted that the MCC has only funded project assistance to date, despite the rigorous selection criteria which indicate that eligible Compact countries should be capable of effectively utilizing budget support or other novel financing arrangements; see the MCA Monitor issues and options paper.)
One important topic which was mentioned in the event but not examined in detail was the role of the ERR in Compact restructurings currently underway between the MCC and its partner countries. The increase in oil, the depreciation in the US dollar, and the sharp rise in infrastructure input costs due to an international construction boom have all combined to affect implementation costs, timing and benefits of Compact components. So the question now turns to, when the rubber meets the road in terms of rescaling and recosting the portfolio, how will the MCC balance the trade-off between maintaining their internal ERR hurdle rate and maintaining strong numbers of project beneficiaries? And all within their 5-year time frame.
So, back to the title of the blog. The MCC continues to impress on its commitment to transparency and a willingness to open itself up to public scrutiny. We need to praise them for this…it’s not easy, particularly in an environment of scarce development dollars. And we can provide advice, criticism and examples of how to improve their efforts. We all want the same thing — more and better results on the ground in terms of economic prosperity and poverty reduction. So, MCC, make those beneficiary analyses public so we can understand — and, yes, perhaps criticize — the weighting it plays in the decisionmaking process. Make it a transparency and aid effectiveness home run.
September 28, 2007
Earlier this month (Sept. 12), the MCC Board of Directors approved a compact with Mongolia. The compact, coming in at $285 million, is the fourth largest compact per capita since Mongolia–while territorially quite large–is the least densely populated country in the world.
Read More…
September 10, 2007
On September 6, the Senate, by a margin of 81 to 12, approved a $34.2 billion FY08 State, Foreign Operations and Related Programs Appropriations bil. While the Senate and House bill provide the same overall funding level — $3 billion above the FY07 CR level and 2 percent or $700 million less than the Administration’s request — there are specific acccount funding and policy differences that need to be negotiated by a conference committee.
One such funding account difference is the Millennium Challenge Account, where the difference between the Senate bill’s $1.2 billion and the House bill’s $1.8 billion appropriation will need to be reconciled. The reason for such a low Senate appropriation? Discomfort over large, undisbursed obligations when there are immediate needs for foreign aid elsewhere.
Senate staffers claim to support an overall funding level that covers the four compacts expected to be finalized between now and end-FY08 — Tanzania, Burkina Faso, Namibia and Mongolia. At currently projected levels, however, $1.2 billion does not cover those compacts. The impact will most likely hit Burkina Faso where hard-fought reforms achieved will go unrewarded. More specifically, the Burkinabe who have been both making progress on an MCA Threshold program and working with the government to prepare a compact would need to wait another year to receive funding.
The Senate’s proposed solution? Instead of increasing the overall funding level, the Senate approved unanimously an amendment by Senator Lugar (introduced by Senator Leahy) that changes the current stipulation requiring the MCC to obligate the entirety of the funds for approved compacts at the time of their signing to require that “not more than 50 percent of the entire amount anticipated for the duration of the compact” be obligated upfront. That does a couple of things. First, it technically allows the MCC to sign compacts with the four countries cited above, and more. (Although it remains unclear whether the MCC would, or should, take that path.) And, going forward, it would make the overall balance sheet optics a little better – reduces the current ‘”wow factor” of what are now large undisbursed balances which, theoretically, reduces the “poachability” of the MCA come budget time. The simple reality from the perspective of appropriators is that even if they support the concept of the MCA, they will see the opportunity costs (needs today) of hundreds of millions of dollars waiting to be spent in the future.
And yet, the MCA was specifically designed to challenge the business-as-usual allocation and appropriation systems of US foreign aid. The Lugar amendment removes a key innovation in the MCA program — the predictability of aid – purposefully accommodated in the MCA’s design based on internationally-endorsed development effectiveness lessons. The idea was that countries that performed well enough to get into the MCA program, that then worked with their citizens to design a credible development program, and that met performance benchmarks during implementation would know with certainty that funding for the program they designed was guaranteed and was not at risk of being redirected to other foreign aid programs. Countries have been told that this “predictability-with-performance element” distinguishes the MCA program from USAID and countries have responded. Removing this innovation could impact how incentives for sustained reform work.
So it comes down to two big questions. One is a question of risk – how likely is it that the remaining 50% of compact funding would not be available when needed? On the one hand, I can’t think of any example of the US not fulfilling its bilateral aid commitment. On the other hand, the risks of redirection are real — the lion’s share of US foreign aid goes to ten countries, the majority of which are geopolitical allies in the war on terror or drugs. A rising deficit will continue to put pressure on international affairs spending, and maintaining political allies has trumped development spending to date.
And the weightiest question of all? What will it take to convince Congress that global development is a national priority – the right and smart thing to do – and that the MCA program, including its unique funding obligation construct, should be given a chance to demonstrate its effectiveness. Potentially the greatest innovation of the MCA is that it creates a new kind of political ally – America’s model partners in the war on global poverty and instability.
Some Congressional staffers believe that the amendment is necessary to protect both future MCA funding levels and the reputation of the MCC by allowing it to continue negotiations with countries in the final stages of compact preparation. Maybe. But the cost is the very core of what distinguished the MCA from the pack. Proceeding along these political lines is a slippery slope toward programmatic conventionalism. Instead, Congress could have provided an amendment to allow for concurrent compacts which could address the same irritation in a more pragmatic and programmatically-relevant way.
I’m not convinced that the Lugar amendment is the right approach to saving the MCA. What I am convinced of is that it’s time to rebuild — not just reform — US foreign assistance more broadly, and to keep the MCA program and its principles as a cornerstone and critical component of any final strategy.
|
|
Rethinking U.S. Foreign Assistance Blog
Print
Share
