MCC has terminated or partially terminated only a handful of compacts over our 16-year history, but these are the ones that seem to be the focus of continued disinformation here in Sri Lanka sadly. This includes both our Madagascar compact, which was terminated in year 3 due to a political coup, and part of our Honduras compact, which was likewise terminated due to an undemocratic transition in power back in 2009.
Below are summaries and links to results from these two programs, including some independent reports from the US Office of the Inspector General and US Government Accountability Office. I am also attaching some of MCC’s land project success globally and a document that describes Sri Lankan press and social media coverage of MCC land projects in Africa and the actual facts.
Specific results of MCA-Madagascar programs include: restoration of 149,000 disintegrating land rights documents to regional offices, construction of 29 land office buildings, strengthening the national inter-bank payment system at the Central Bank, increasing the populations access to savings products, establishing a network of over 350 farmer leaders, and providing technical assistance training to approximately 34,450 farmers and 290 small businesses, farmers associations, and cooperatives.
Madagascar’s compact with the MCC entered-into-force on July 27, 2005. Despite early termination, the compact disbursed $85.6 million which went to raising incomes by assisting the rural population to transition from subsistence agriculture to a market economy. Strategic investments in three projects helped rural Malagasy secure formal property rights to land; access credit and protect savings; and receive training in agricultural production, management and marketing techniques. This integrated approach provided the rural population with the necessary conditions to use the land productively, to build profitable businesses, and help ensure environmental sustainability.
Did the Agriculture Business Investment Project (ABIP), together with the Land Tenure project, yield positive results in a selected area of project activity?
Although the Agricultural Business Investment (ABIP) and Land Tenure project yielded positive results in selected areas of project activity, the ABIP and Land Tenure projects did not achieve all of their results for the periods—Year 3 and first 3 months of Year 4— prior to the coup d’état on March 17, 2009. The coup d’état in Madagascar occurred 18 months before the completion of its compact. Although MCA-M continued to implement some projects, complete termination occurred in May 2009. As of September 2009, MCC had disbursed $80.8 million of the compact amount of $110 million to Madagascar. Of that amount, $13.8 million out of $17.7 million was disbursed for the ABIP and $26.4 million out of $37.8 million for the Land Tenure project.
The review team met with eight ABIP beneficiaries and four Land Tenure project beneficiaries in the Vakinankaratra region of Madagascar. Because the ABIP farmers used the skills they were taught, they explained that their income increased and livelihood has improved. Each farmer explained that the crop yields have increased and they were able to sell more products to the market.
In addition, MCC has ensured that the Land Tenure project continues even after compact termination. The local Land Tenure offices remain open and are issuing land certificates to applicants. Furthermore, beneficiaries from the Land Tenure project explained that their land certificates enabled them to prove that their land belonged to them. Before the MCA program, the beneficiaries experienced several land issues in terms of inheritance and land disputes. Receiving their land certificates helped them to resolve these conflicts and prevent new problems.
The results are evident in rural Honduran farmers like Juan Carlos, a participant in the MCC’s program. It’s been over three years since his training ended, and, with his new-found skills, he has purchased more land to farm, expanded his portfolio of high-value crops, hired other farmers, and is in the process of building his family a brand-new house. The MCC program demanded that each farmer who received training earn at least $2000 per hectare by the training’s end. Juan Carlos is making well over $2000 on less than a hectare. (Keep in mind the GNI per capita of Honduras is $1,880 – MCC demands over-achievement.)
Or take the rural community of Ajuterique. Its farmers benefited from a triple investment of training, new access to credit, and a rehabilitated secondary road that allows for the quick conveyance of produce to market. Mario Palencia, the mayor of Ajuterique, described the MCC model difference and the continued results of the compact:
With other donors, people knew that the funds had come but they didn’t see any results. We had to convince people to adapt to the Millennium Challenge way of working with its different, more strict rules. The MCA gave us a model of how to successfully run a program in a transparent manner and it also convinced the people that the work they did must be of the highest quality to last into the future. With the MCA, all the projects were interrelated and well thought-out. It was all about supporting the farmers to produce a good product and then teaching them commercial skills so they have a solid foundation to build upon.
Our farmers have been taken advantage of in the past because they didn’t know how to market their product and so they always lost. The MCA came and it focused on reviving interest in the small producer that sometimes is very ignorant but is also very intelligent. The MCA was a school for us on how to manage funds and how a program should be run…the MCA administered it well, executed it well, and achieved the best results.
The breadth of agricultural training the MCC compact offered was impressively comprehensive, but the real highlight is the training’s sustainable results over a year later. Because the MCC model mandated that sustainability measures and results (in this case a farmer receiving a much higher income) be at the forefront of project design, the MCC is seeing its investments flourish well over a year later. After the MCC training dollars and spotlight have left the Honduran countryside, Juan Carlos continues to grow his family’s income. He has a standing agreement to sell his produce to Wal-Mart in Honduras and plans to use his increased income from this deal to expand his business and export internationally, and he will keep growing until he meets that goal.
“As Hondurans, we only agree on two things: the Millennium Challenge Account and the national soccer team.” A Honduran MCA representative voiced this succinct observation, but stakeholders across the spectrum from the Honduran national government to the national business council to local farmers expressed similar sentiments about the achievements of the Millennium Challenge Corporation (MCC) compact in Honduras. The $205 million, five-year compact officially closed in September 2010, but its effects continue more than 14 months later. The compact directly benefitted the household incomes of more than 1.7 million Hondurans (two out of every nine Hondurans), a significant influence considering the average Honduran earns $1,880 per year. And the compact’s activities continue to reach new beneficiaries as farmers who benefited from the compact train other farmers in their communities and as new users take advantage of rehabilitated roads.
In Honduras, MCC met a key original target and most final targets by the end of the $205 million compact. For example, MCC constructed approximately half of the planned highway and all rescoped secondary roads. MCC disbursed approximately $90.3 million to reconstruct four sections of a major highway in Honduras. MCC completed two sections of highway, totaling about 50 kilometers, or 45 percent of the original compact target. Remaining work on a third and a fourth sections is being funded with a loan of about $130 million from the Central American Bank for Economic Integration (CABEI).
MCC disbursed $27.7 million to upgrade key secondary roads. MCC met its revised target for the construction of 65.5 kilometers of secondary roads, 72 percent of the original target of 91 kilometers. According to MCA-Honduras officials, the scope was reduced because updated estimated costs to upgrade the planned roads, after the first contract was bid, exceeded original estimates by 80 percent.
MCC disbursed approximately $26.6 million through the farmer training and development activity. MCC funded the training of 6,029 farmers to harvest high-value horticultural crops, meeting its final target of 6,000, or 82 percent of the original target of 7,340.28 According to MCC, this target was reduced to provide additional technical assistance to those trained to increase the sustainability of the assistance provided. A number of farmers stated that, as a result of the training, they began growing different types of crops and using new techniques, which led to larger volumes and higher quality, and, thus, increased income.
Farm-to-market roads: MCC disbursed approximately $20.1 million to upgrade farm-to-market roads. By the end of the Honduras compact, MCC had funded the reconstruction of 495 kilometers of farm-to-market roads—33 percent of the original target of about 1,500 kilometers and 99 percent of the final target of 499 kilometers. The farm-to-market roads activity was rescoped because the Honduran quality, environmental, and social standards on which the cost estimates were based did not meet compact requirements, which increased the cost from $14,300 to $42,000 per kilometer. In addition, according to MCC officials, the change in target to reconstruct fewer kilometers was based on MCC’s decision to improve the durability and life of the roads by adding drainage structures to reduce water damage, which increased the per-kilometer cost.
Farmer access to credit: MCC disbursed $12.8 million for the farmer access to credit activity. The activity consisted of three components designed to increase the supply of credit to rural borrowers—a $6 million agricultural credit trust fund designed to provide loans to financial institutions for rural lending, technical assistance to strengthen financial and nonfinancial institutions, as well as expansion of the national property registry. Initial lack of interest in the trust fund among traditional banking institutions and a delay in demand for credit among farmers led MCA to refocus the activity on smaller sources of credit and to expand beneficiaries to nonprogram farmers, agribusinesses, and other producers and vendors in the horticultural industry. By compact completion, the trust fund had disbursed $10.7 million in loans—37 percent of the original target for the value of loans disbursed and 178 percent of the revised target.
Agricultural public goods grant facility: MCC disbursed $8.8 million to fund 15 small competitive grants to enhance and accelerate the development of market-based commercial agriculture. MCC exceeded a key original and final target for this activity. Specifically, grants for irrigation projects connected 967 farmers to the community irrigation system—almost 250 percent of the target of 392 farmers.