“Innovation” is a word we hear frequently these days, especially in the context of development. Everywhere we turn, there are stories, messages, and ad campaigns from organizations touting “innovative” designs, “innovative” programs, and “innovative” thinking. Too often, however, the popular buzzword is not backed up by true acts of innovation.
At the Millennium Challenge Corp., we are committed to putting our principles into practice with an emphasis on innovation. We are committed to selecting country partners based on proven policy performance, country-led planning and implementation, and managing our portfolio for transparency and results. As a U.S. government agency, we believe this rigorous, integrated and open approach to development sets the standard for accountable and truly innovative development assistance. With this model as a foundation, further “innovation” for MCC means something very simple: a constant push to learn from our experiences and to try new approaches that can enhance the impact and sustainability of our investments.
MCC is a learning institution that continuously improves its approaches throughout compact development, implementation and program evaluation. MCC and our partner countries develop projects that leverage resources from other institutions, including those in the private sector. We also adjust and improve projects during implementation and share lessons learned and best practices with other donors and governments.
Innovation in compact development
As a result of the integration of our lessons learned from previous MCC compacts, recently developed compacts provide dynamic examples of how MCC is innovating within our compact development process.
Jordan
In Jordan, MCC’s $275 million grant will fund projects in the Zarqa governorate, one of the poorest and most densely populated parts of the country. The Jordan compact reflects new approaches for MCC in several ways.
The compact focuses on a single critical sector of the nation’s economy: the water and sanitation sector, which is an area of clear need in a country that ranks as the fifth most water-poor country in the world. The focus on just one sector allows for a comprehensive approach to sector management and more comprehensive activities; each project comprising the compact program is interrelated. The projects will expand the effective supply of water by reducing losses in municipal water pipes, by expanding the sanitation system to collect additional wastewater, and by expanding a modern wastewater treatment facility.
Additionally, the compact addresses sustainability in an innovative way. By implementing a private-sector partnership to expand the As-Samra wastewater treatment plant, the compact will mobilize a substantial portion of its construction costs via a build-operate-transfer agreement. The first of its kind for MCC, this large-scale BOT arrangement will extend the plant’s operational capacity and ensure the sustainability of MCC’s investment in Jordan.
Innovation in compact implementation
As MCC matures as an agency and we see our earliest compacts come to a close, we have formally begun integrating our implementation lessons learned into actions in order to maintain efficiency and to expand the diversity of our portfolio.
Mongolia
In Mongolia, we have designed an original project promoting clean energy to improve the quality of life. Ulaanbaatar, the coldest capital city in the world, also experiences some of the worst winter air pollution in the world.
This pollution is due in large part to the coal-fired heating and cooking stoves in traditional “gers” (circular felt dwellings), which emit a toxic brew that causes smog from thousands of chimneys dotting the city’s skyline. Mongolia’s energy and environment project, one component of the MCC compact with Mongolia, addresses urban air pollution in part through the Millennium Challenge Energy Efficiency Innovation Facility. The MCEEIF provides consumer subsidies toward the purchase of energy-efficient and lower emissions technologies such as stoves, insulation, boilers and heaters that have been certified through a product review process. The process includes efficiency and emissions testing, cost-benefit analysis and market analysis.
In contrast to previous donation programs, which offered such equipment for free, the MCC-funded project employs market-based solutions and significant financial incentives to accelerate the adoption of proven technologies and to contribute to a sustainable market for energy efficient and lower-emissions technologies.
Namibia
Namibia’s tourism sector is an important source of employment for the country and is a sector with a robust potential for growth. As the majority of Namibia’s tourism is based on wildlife viewing, involving rural communities in wildlife management and allowing them to benefit from tourism is essential for long-term sector sustainability and poverty alleviation.
Through the MCC-funded tourism project, MCA-Namibia developed an innovative partnership approach that supports partnerships between communities living in rural areas and private companies interested in investing in the tourism sector. Revenues from tourism are an important source of cash income for members of communal conservancies, local organizations comprised of Namibians living in rural parts of the country that have rights over wildlife and tourism development on communal land. However, high costs of doing business on communal lands have served as a disincentive for members of the private sector to enter into joint venture partnerships (usually in the form of tourism lodges).
To alleviate this disincentive, MCA-Namibia’s Conservancy Development Support Grant Fund will help communal conservancies attract new private-sector partners by providing the investment promotion and capital necessary to entice private-sector operators to enter into joint ventures. This is expected to increase the benefit to the conservancies by raising their share of joint venture revenue.
By stimulating the development of new joint venture lodges, the CDSGF will increase employment opportunities and cash incomes to conservancy members. Involving and integrating poor rural communities in the benefits of ecotourism is essential for the long-term sustainability of the natural resources that drive the tourism sector in Namibia. This in turn will reduce poverty for more than 200,000 Namibian conservancy members.
Innovating forward
MCC will continue to use these and other techniques to stimulate increased private-sector and non-governmental engagement so that we expand the reach, sustainability and impact of U.S. government development investments. We at MCC are continually seeking to pilot new approaches – and to learn from them through evaluation – to ensure the long-term sustainability of our investments and to promote creative solutions to delivering foreign assistance in a resource-constrained environment. We are putting our words into actions.
To learn more about MCC compacts in Latin America, Africa, Eastern Europe, the Middle East, Asia, and the Pacific, visit www.mcc.gov. To find MCC funding opportunities in your region or sector, check the Devex website. And check out our Development Innovators initiative on Facebook.
