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Digital Briefing with Sean Cairncross, CEO of the Millennium Challenge Corporation

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Special Briefing Via Telephone
October 27, 2020

 

SUMMARY

  • Sean Cairncross, CEO of the Millennium Challenge Corporation (MCC) discussed the new partnership between MCC and Africa50 that will create a global investment platform to attract capital to Africa, and his recent trip to West Africa.

Listen to or download the audio file here.

Moderator:   Good afternoon to everyone from the U.S. Department of State’s Africa Regional Media Hub.  I would like to welcome our participants from across the continent and thank all of you for taking part in this discussion.  Today we are very pleased to be joined by Sean Cairncross, CEO of the Millennium Challenge Corporation.  Mr. Cairncross will discuss the new partnership between MCC and Africa50 that will create a global investment platform to attract capital to Africa, and he will discuss his recent trip to West Africa.  Mr. Cairncross is joining us from Washington, D.C.

We will begin today’s call with opening remarks from Mr. Cairncross, then we will turn to your questions.  We will try to get to as many of them as we can during the time that we have.  If you would like to join the conversation on Twitter, please use hashtag #AFHubPress, and follow us on Twitter @MCCGov and @AfricaMediaHub.  

As a reminder, today’s briefing is on the record.  And with that, I will turn it over to Mr. Cairncross for his opening remarks. 

Mr. Cairncross:  Well, thank you, Marissa, and I’m thrilled to be with all of you today, and good morning, good afternoon, or good evening, depending on where you are.  I’m grateful to the U.S. Department of State Africa Regional Media Hub for arranging this time for me to speak with everyone today.  And I hope the Millennium Challenge Corporation needs little introduction to you.  But for those of you who aren’t familiar with MCC, we’re a small U.S. Government agency created in 2004 to fight poverty in low- and lower middle-income countries with a dedicated commitment to good governance.  Our time-limited grant investments promote economic growth and help people lift themselves out of poverty, creating more stable, secure countries with thriving economies.  MCC has got projects around the world, but over two-thirds of our portfolio is in Africa, where we’re working or developing programs in 15 countries across the continent.

So let me now provide some recent highlights of our work that I think will be of interest to you.  This past August, MCC signed a $450 million compact with Burkina Faso to sustain and broaden the country’s economic growth through investments in the electricity sector.  The compact is going to focus on addressing the high cost, poor quality, and low access to electricity in Burkina by improving energy infrastructure, generation capacity, and source diversification.  The new compact will also support Burkina’s increased participation in a regional power market, and support development of a potential MCC regional compact with Cote d’Ivoire. 

The bilateral compact, our second with Burkina, will build on the success of our first compact there, which invested $480 million in agricultural land tenure, water management, roads, and education.  The Government of Burkina has pledged $50 million toward this compact, cementing their commitment to its success.  So in addition – this is in addition to the 450 million provided by MCC.  With a combined investment of 500 million, it’s estimated that this compact will benefit eight million of Burkina Faso’s 19 million people.  So to learn more about this compact, I encourage you to visit our website at MCC.gov. 

Okay.  Earlier this month I traveled to two MCC partner countries, Benin and Sierra Leone.  In Benin, MCC’s implementing $375 million compact signed with the Government of Benin in 2015 to modernize and improve the country’s power sector.  The compact, our second in Benin as well, is supported by a $20 million contribution from the Government of Benin, and it aims to strengthen the national utility, attract private sector investment, and fund infrastructure investments in electricity distribution as well as off-grid electrification for poor and underserved households. 

During my visit I had a very productive meeting with President Talon where we discussed the progress of the MCC compact and reinforced our shared commitment to the United States-Benin partnership.  And I enjoyed going to some of the project sites to see the work that’s underway supporting the energy needs for the next generation in Benin, and meeting with the beneficiaries of the compact, like Ismè Zounmenou, one of the few female business owners of a renewable energy company in Benin. 

MCC is also developing a potential regional compact with the Government of Benin and the Government of Niger to improve the transportation of goods along the main corridor between Cotonou and Niamey.  This investment will also aim to facilitate the Benin-Niger border crossing, one of the busiest crossings in the region.  And this was a productive visit, and I look forward to a strong and continued engagement with Benin. 

In Sierra Leone, I saw progress in implementing our $44.4 million threshold program.  This program is working to more effectively deliver water and electricity services to the citizens of Sierra Leone.  I had the chance to join Sierra Leone’s vice president, Juldeh Jalloh, in commissioning a new water kiosk in the community of Aberdeen in Freetown, one of 11 kiosks that the threshold program’s constructing, bringing clean water directly into homes and communities there. 

I discussed the threshold program during a meeting with President Bio, who has been an excellent partner and has demonstrated strong performance for the program throughout our partnership.  When complete, this threshold program will have built a foundation of policy reform for transparency and accountability, sector coordination, and operational management in both electricity and water sectors in Sierra Leone.  These investments will also enable Sierra Leone to better address the impacts of COVID-19, and as we’ve seen through this pandemic, health and economy are inextricably linked.  So this was a successful visit, and MCC is very proud of our work in Sierra Leone. 

And finally, as you mentioned, last week MCC and Africa50 signed an MOU to launch the Millennium Impact for Infrastructure Accelerator, or MIIA, a new development partnership.  This partnership is well aligned with one of MCC’s key priorities – seeking new and innovative opportunities for blended finance, a goal we share with Africa50, and a priority for the Trump administration.  Impact investing in infrastructure is limited, often due to the lack of bankable projects and the difficulty of measuring the development impact of these investments, but MIIA is going to help overcome these challenges with features such as a certification process for the social and environmental impact of infrastructure projects, resources to prepare bankable projects with certified impact, and the framework to match these projects with impact investors who can provide capital.  Investments through MIIA will cover projects across sectors such as water, health, education, transportation, power, and telecommunications.

So thank you for the opportunity to share our impactful work with you, and I’m looking forward to taking your questions. 

Moderator:  Thank you, Mr. Cairncross.  We will now begin the question and answer portion of today’s call.  For those asking questions, please indicate if you would like to ask a question, and then type in your name, location, and affiliation.  We ask that you limit yourself to one question related to the topic of today’s briefing: the new partnership between MCC and Africa50, and Mr. Cairncross’s recent trip to West Africa.

Okay.  Our first question goes to a question that was sent in to us from Cote d’Ivoire from Mr. Mamadou Komara from Plume Libre: “What does the MCC program provide in the event of a serious crisis such as that of the coronavirus in poor or developing countries, particularly in Africa?” 

Mr. Cairncross:  Well, thank you for the question.  So MCC’s success is really rooted in its model and its singular focus on reducing poverty through economic growth.  And one of the things that we’ve seen over the course of this pandemic is the need for that model and the basic delivery of services and infrastructure sustainability in our partner countries has been reinforced.  And so one of the things that we are focused on here is making sure that we stay focused on that mission rather than diverting to relief efforts that are the purview of other partners and other agencies, even within the U.S. Government. 

And that’s why our approach to a data-driven analysis of what a constraint – what the core constraints are on a country’s economy, and our focus on leveraging institutional and policy reforms that create a space for a functioning, thriving economy is all the more important, and we’re going to continue to do it. 

And then I’d say finally, on the health side, we’ve seen where the data takes us in that direction.  We’ve had health compacts in the past.  We’ve had one in Lesotho, for example.  We’re in Lesotho on a second compact that will be focused on health delivery.  But most of – in fact, in all of our compacts, as I say, the health sector is supported, whether it’s sanitation, water sanitation, transport, electricity that provides power to hospitals.  Across the board, that’s what – that’s what we’ve been supporting and that’s what we’re about. 

Moderator:  Thank you.  So we’re going to stay with Cote d’Ivoire.  We have a question within our question and answer chat room, a question from Joe Bavier of Reuters: “Question on West Africa:  Ivory Coast has seen some of the strongest economic growth in Africa over the decade since its 2011 civil war.  But as we’re now seeing, it hasn’t managed to shake off the specter of political instability and violence.  Despite its obvious draws as French-speaking Africa’s largest economy, how has persistent political uncertainty impacted Ivory Coast’s attractiveness as an investment destination, particularly for American business?” 

Mr. Cairncross:  Sure.  Well, that’s a great question.  We’re very proud of our work in Cote d’Ivoire.  Cote d’Ivoire, as you say, has come a very long way, and it’s a – it’s an MCC effect success story.  We’re focused on making sure that our project there is – continues, and continues to work toward successful completion.  It’s a – like every country where we work, MCC is very focused on continued strong performance on our indicators, our indicators having to do with good governance and democratic rights, economic freedoms, and a government’s investment in their own people.  And that’s no different in Cote d’Ivoire than it is anywhere else. 

When we were in Côte d’Ivoire last year, one of the things that I was very pleased to hear from the – from the government was how strong the interest was in drawing private sector investment into Abidjan and into Cote d’Ivoire generally.  And I think that we have seen – we’ve got a great partnership there, for example, with Bechtel, where we’ve been working on a master infrastructure plan.  I think that there is a lot of room for continued success in Cote d’Ivoire.  It’s something that we are – like I say with our new partnership with Africa50 and MIIA, with the administration’s creation of the Development Finance Corporation, with MCC’s engagement and our alignment through the interagency, it’s something that we support and will continue to foster as much as we can. 

Moderator:  You just brought up DFC.  We have MCC, and there is all of these new members of what the initiative – the Trump administration is calling Prosper Africa.  Could you talk a little bit about MCC’s role in Prosper Africa and how this new initiative really combines the force and the power of U.S. agency and doesn’t confuse potential clients? 

Mr. Cairncross:  Sure.  Well, I think – and this dovetails with the last question.  So part of MCC’s real strength is the positive economic – the positive incentivizing effect that it has on our partner countries, moving toward policies that open economies and reforming regulatory and legal environments to enable that private sector capital to come in; on top of which, it’s the stamp of approval from the U.S. Government that this is a partner country government that is trying to do the right thing for its people and create that sort of environment. 

So we join Prosper Africa and the Development Finance Corporation’s efforts I think seamlessly, and it’s – and that effort to bring in private capital and U.S. engagement and private industry, which brings with it the sort of openness, transparency, environmental concerns, gender inclusion concerns that are the core of MCC’s model as well, just creates a real – a process that is self-reinforcing and the sum is the greater than its parts.  And our interagency partners, whether USAID, DFC, the Export-Import Bank, the State Department, are all in alignment on this effort and I think it’s paying enormous dividends and will continue to do so in our partner countries in Africa going forward. 

Moderator:  That’s truly a remarkable initiative and one that we’ve never seen anywhere before.

Okay, we’re going to see if we can go live.  We have Dumbani Mzale.  Okay, he is not live but he has put his question into the chat.  His question is – and this is Dumbani Mzale of The Nation, based in Malawi.  His question is: “Since your last visit in August of last year, what would you describe as major progress areas between MCC and Malawi authorities” —

Mr. Cairncross:  Sure.

Moderator:  — “when it comes to developing a second compact for Malawi, which successfully implemented a first compact between 2013 and ’18?”

Mr. Cairncross:  Well, we had a great trip to Malawi.  In fact, it was my – it was my first trip as CEO.  And before I talk about the second compact, I think it’s worth going back to the first and saying there’s no better indicator to us at MCC about the potential for success in a second compact than a successful execution of the first and follow-through on the first compact.  And one example of that is we were in on a power compact on compact number one, but part of that design was opening the power sector to independent power producer contracts for increased efficiency on delivery, and we saw those contracts start to flow.  In fact, DFC was engaged in backing some recently.  So that’s been a success story and that gives us confidence moving forward that we have a great partner government to work with.

And I think another thing that’s worth talking about in Malawi is we’ve seen a change of government over the course of the last year, but our project has been supported throughout and it’s been a fairly seamless transition.  The head of our MCA there is a gentleman named Dye Mwindo.  He’s doing a fantastic job working between governments and also with our team on the ground.  We’re in development on that second project.  We’re very excited about it.  It’s going to involve a transportation piece with a – with farm-to-market roads, an agriculture piece, and we – we’re looking forward to watching that first compact and the connection with Malawi through to the South African Power Pool really coming to fruition and hopefully be a successful story moving forward.

But we’re very – we’re very proud of our work in Malawi.

Moderator:  Thank you.  The next question goes to Mr. Kodjo Adams, a Ghanaian-based journalist from Ghanaian National Agency, or Ghanaian News Agency.  His question is very simple: “What is MCC’s role in Ghanaian economy?”

Mr. Cairncross:  Sure.  Well, we are in Ghana on a power compact.  We have a very good partnership with the Government of Ghana and we’re moving forward on that compact.  And the hope, in answer to your question, is the same that we have anywhere that we work, which is Ghana was selected because of a demonstrated commitment to success on our indicators having to do with good governance and economic freedom and a government’s investment in its own people – the delivery of those basic services to their own people.  And we’re there to support that.  We’re there to help that arc continue.  We believe that that is happening and that our project will not only through just the substantive provision of power to Accra and surrounding outlying areas, but the relationship that we help foster between civil society stakeholders and the government will increase that level of trust between the people of Ghana and its government that will lead – that will lead overall to a brighter and better future.

And so that combined with the enabling environment reforms that we’re targeting to bring in that private capital and investment I think is what our agency is about.

Moderator:  Thank you.  Now we’ll go to Zimbabwe.  Pearl Matibe of Open Parliament has a question: “Given the increasing Islamist extremism in Mozambique, can you comment on what you may be working on this year and into the future, and why?”  There’s a second question, sort of a follow-up to that one, from her: “What other countries in Southern Africa are you interested in in addition to South Africa, and why?” 

Mr. Cairncross:  Sure.  Well, the first thing I’d say with respect to that question is we selected, the board selected Mozambique for a potential compact last year.  We’ve been working in Mozambique to develop that over the course of this year.  Those projects typically take roughly two years to develop, and we expect at some point in – over the course of the next year and a half or so to have a project that we would then present to our board of directors for approval.

So what we’re focused on in doing that is continued commitment to those selection criteria that matter to us.  In supporting those criteria, our hope is – and I think it’s been demonstrated – progress on those criteria is also related to bringing down the role that extremists play in any given country.  It’s not a direct focus of ours, but we are certainly very aware of security environments in the countries in which we work.  But our hope is that we will continue to move forward, that we will continue to see progress, and that over the course of time our project in Mozambique will have a positive and beneficial outcome to the overall environment in Mozambique.

Now, with respect to the second question, Marissa, you might have to – you might have to remind me of the second piece.

Moderator:  Sorry about that.  Other projects in Southern Africa.

Mr. Cairncross:  Other projects in Southern Africa.  Yeah, of course.  Well, we’re in – as I say, we’re in development in Lesotho on a second compact, and we are – we’re of course interested in engaging anywhere in Africa, including Southern Africa, that meet our selection and eligibility criteria.  And so that’s low- or lower middle-income countries that meet our good governance, economic reform, and investment in their people indicators, which are on our score card.  And it’s our hope – and we’ve seen this happen in Cote d’Ivoire, we’ve seen this happen in Sierra Leone, we’ve seen this happen in multiple partner countries that we have where those have been part and parcel of the governing administration to meet those criteria and work on those selectors directly.  And so that’s – anywhere where we see that sort of commitment, where we see that progress, is somewhere that we are willing to work on.  

And obviously, the last thing I’d say is – and very importantly – within those indicators is the control-of-corruption indicator and fighting and targeting corruption.  It is part of our mission to focus and bring levels of corruption down as low as possible.

Moderator:  Thank you.  We’re going to go to a question regarding MCC projects with Chad, but before we go there I’d really like to ask you to explain to folks – because MCC is not business as usual.  People think USAID when they’re thinking of development projects out there that the U.S. is funding in country.  What makes MCC so different?  You’re a CEO; you have a board of directors.  That’s a very different model.  Could you discuss that, please?

Mr. Cairncross:  It is.  The model is very different.  It’s driven by data.  We have a singular mission, which is reducing poverty through economic growth.  The – we have a time-limited – by statute, once we start a project we have five years to finish and then it’s pencils down and we are done.  And so all of our projects need to be designed and ready to implement over that period.  MCC has never finished in – never finished over budget on one of its projects.  It’s a great return for the U.S. taxpayer.  It’s able to leverage the sort of policy reform and institutional reform that’s otherwise difficult for development dollars to target because it’s grant funding, and our partner governments not only want that grant funding but they want the stamp of approval that the United States, that MCC brings to the market and to the government that this is, like I say, a government that’s trying to do the right thing for its people.

So it’s that data-driven transparency and accountability that our model brings along with it, combined with the concrete infrastructure that’s sustainable and has a lasting impact on our partner countries that really makes us, I think, a very unique and – a unique agency and a fantastic example of government working.

Moderator:  Excellent.  Next question, we’re going to go back to Chad, the question about Chad.  Maria Maalouf from Washington, D.C. from Saudi 24 wants to ask, “What are MCC projects in Chad, if any?”

Mr. Cairncross:  Well, thank you, Maria, for the question.  We don’t have projects in Chad at the moment.  And what I would say is, like the earlier question having to do with other countries we’re interested in working in in South Africa – or in Southern Africa, we would love to see that sort of engagement or us get to a point where we were able to engage.  And that engagement is guided by our selection and eligibility criteria which is, as Marissa was just asking me, one of the things that makes this agency very unique.  It’s – the ball’s not in our court; the ball is in Chad’s court, in this example, to get to a place on those indicators where we would be able to move forward.

But anyone who does that, anywhere around the world, who meets the – not only in Africa, but around the globe, who meets the income, the need section of our eligibility and the merit section on the indicators, we are willing to engage and see if there’s a way to move forward with.

Moderator:  Excellent.  We’re going to go back to our question and answer box.  For now, we’ll go to Kevin Kelley of Nation Media Group based in Kenya.  “Kenya has never qualified for MCC inclusion due mainly to official corruption and human rights violations.  It was cleared last December to develop a second threshold program.  How confident are you that the Kenyans will finally meet MCC criteria?  And are you disappointed that the prospect of MCC support has apparently not been sufficient to coax the government into undertaking the needed reforms?”

Mr. Cairncross:  So what I would say is, first, just to be clear, a threshold program at MCC is a smaller, typically $30-50 million program that is where the board selects a country that isn’t quite eligible for a compact, that doesn’t meet the – doesn’t pass our scorecard and our indictors for compact eligibility.  So Kenya was selected for a threshold program last year.  We’re in the process of developing that threshold program with Kenya.  And like everywhere we work, what we are looking for is a demonstrated commitment from the Government of Kenya to move this threshold program forward and be successful.  It’s not a large program, but it is very important and it shows a government’s willingness to do the sorts of things that draw investors in, that demonstrate a willingness to invest the political capital needed to reduce corruption, to open an economy, to make service delivery more efficient, and the like.

And so we are working with the Kenyan Government to move this program forward.  I am hopeful that it is – that we can use it as an example, ultimately, of a successful program.  But like all of our projects, it – and as I said earlier, the ball here, like always, is in our partner government’s court, and we look to Kenya for their demonstrated commitment to success.

Moderator:  Thank you.  We have one more question for you, and I’m conscious of your time.  This last question goes to Malawi.  Chimewemwe Mangazi of the Times Media Group asks, “Currently, Malawi and MCC are working on a second project.  Should we expect other new parallel projects following the MCC and Africa50 partnership?”  And this is a great opportunity for you to talk a bit about Africa50.

Mr. Cairncross:  Yeah, no, thanks.  I was just going to say thank you for the question.  I – and just let me clear:  So Africa50 is an infrastructure investment platform contributing to Africa’s growth, and it’s going to – it does that by developing and investing in bankable projects, catalyzing private sector capital, and mobilizing private sector funding with differentiated financial reforms and impacts.  So we’re very excited about this.

This is going to – this partnership is well-aligned with our key priorities, which is seeking new and innovative opportunities for blended finance.  It’s a priority that this administration is, like I say, 100 percent behind and the interagency coordination on this is, I think, an unheralded piece of the Trump administration’s foreign development push.  But this is – it’s something that’s shared with Africa50 as well.  

And so, yeah, our expectation is that this partnership will help catalyze those projects around projects that we’re doing everywhere, and that would include in Malawi.  So we’re moving forward on this.  There is nothing to report as yet, but it is our hope and expectation that there will be plenty to talk about in the future.  We’re very excited about it.

Moderator:  Wonderful.  And I’m going to count those as your closing remarks.

Mr. Cairncross:  All right.

Moderator:  Everybody, that is all the time that we have today.  He’s already given us his final remarks, and that concludes today’s briefing.  I would like to thank Sean Cairncross, CEO of the Millennium Challenge Corporation, for speaking to us today, and thank all of the journalists for participating.  If you have any questions about today’s briefing, you may contact the Africa Regional Media Hub at [email protected]  Thank you.

Mr. Cairncross:  Thank you. 


This translation is provided as a courtesy and only the original English source should be considered authoritative.
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