Daniel Yohannes is a quick study – he has to be. Since taking the helm at the Millennium Challenge Corp. two months ago, he has attended the government corporation’s annual board meeting, helped develop U.S. aid reform strategies and, just last week, traveled to Ghana and Cape Verde to meet with MCC partners.
Yohannes was sworn in Dec. 2 as the third CEO of the Millennium Challenge Corp., a “government corporation” created by President George W. Bush to promote good governance and spur economic growth in the developing world.
Devex spoke with Yohannes, who emigrated to the U.S. from Ethiopia at the age of 17, about his vision for MCC as well as his focus on innovation, measurable results and public-private partnerships. In this second part of our two-part interview, Yohannes discussed several agency policies that are currently being reviewed.
How do you think the MCC threshold program could be reformed, when it comes to USAID’s role, funding flexibility for low-income and lower-middle-income countries, countries that graduate from one group to another, and so on? How and when do you think Congress will take this up?
One, we have an excellent relationship with USAID. They manage the threshold programs on the ground. We’re currently reviewing the success of the program, and I’m expecting to get reports sometime in the next 90 days. So, I think that’s one.
Two, we’re currently working with Congress to make some changes, particularly as it relates to concurrent compacts. Currently we’re only allowed to do one compact every five years. But we’re trying to get permission to be able to do concurrent [ones], which means we wouldn’t have to wait until the entire project is over. Some things we could do as projects are ready to go. And that would help us tremendously.
And in terms of graduating countries: This year, as you know, Philippines and Jordan graduated from low-income countries to lower-middle-income countries. And we were given special permission by Congress to continue to work with those countries without any limitation, which is currently [that] we can only [use] 25 percent of your budget with LMICs and the other 75 percent is with low-income countries. Since most countries have been with us for the last two years of working as low-income countries, we were able to get an exception to it. I believe we were able to get the exception with Indonesia as well. But I believe this is a new area in which we’re working with Congress, trying to get an answer on how to deal with it so that at least many of our partner countries are not impacted. Keep in mind, our mission is primarily, still, focusing on countries that are poorer, that have a small per-capita income, less than $1,800. That’s our major constituency. That’s where we focus, but nevertheless when we have this graduation issue, we want to make sure that the countries are not penalized.
When do you see foreign aid reform legislation coming to head?
I wish I could tell you that, but I don’t know.
On second compacts. Cape Verde recently became the first country to qualify for a follow-up compact. Next year, several MCC programs will end. Do you see MCC signing more follow-up compacts, and if so, how will that change MCC’s mission?
We’re very happy with Cape Verde. They’ve done a very good job. …
One thing is that the second compact is not automatic. I mean, I just want to make that very clear. And we look, in terms of second compacts, at the same principles – [they] must stay the same as to qualify for the first compact. But now, we [also] look in terms of how the first compact was implemented. And also, we look at the result. Did we achieve the desired result for the first compact?
The process is very rigorous and we do not have all the resources to be able to do second compacts. It’s very selective and we’re looking forward to working with Cape Verde and with our team in Cape Verde.
You’ve said in December that you’d like to work with partner governments on restructuring their economic policies. Is that part of the MCC mandate, and how would you go about it?
I think what we have right now is we have a [memorandum of understanding] with the French government, we have an MOU with the British government. And, what we might be able to do, for example, [is to work with them in] countries where we’re not able to do certain things, and they complement us.
In fact, I just met with the ambassador from Netherlands. And, as we look in terms of developing our compact program in Indonesia, we’re looking in terms of what they might be able to do, how they might be able to work with us as partners so that at least we do have much bigger dollars available than what might be available only from us.
We look [at this issue] in terms of coordination, we’re looking in terms of expertise that might be available. And so, … [improving] coordination [goes beyond] our own [operations] here at home: [It] is [about] how much we might be able to get other donors – whether they are private or government-owned – to go with this to complement what we’re trying to achieve.
Compact terminations have happened in the case of Madagascar, and there have been some suspensions. Other donors tend to continue the work MCC started. How does MCC collaborate in such cases?
I think if you look, in most cases we have continued to work with those projects that have already been committed. I think in Madagascar, we terminated the projects that had not been committed, but we continued with the projects that had already been committed. So I think you’re going to see some results in that area. But we take our principles very seriously. I mean, we work with countries that are committed to good governance. And, when in fact you do not have those kinds of commitments, then definitely we have to take action. We have actions for them, we’ve taken action – whether we suspended some programs, whether we put [them] on hold or terminated. But we take our agreement very seriously, and that’s what makes it, again, very unique and very special.
What positions is MCC looking to hire for right now?
We have six positions that directly report to me. There’s compact development, there’s compact implementation, there’s policy and international relations, there’s a position open for vice president for finance and administration, and there’s a position open for government relations. And we also have another position open for PR. So, those are the positions that are open today [MCC hired Sheila Herrling for the policy position shortly after this interview, the editor], and we do have some candidates for some of those positions….
Are any lower-level staff being added to MCC operations?
Our approved number is 300 [full-time equivalent employees]. That has been the case and we don’t plan to go over that.
Are you planning any internal reforms, for instance by restructuring certain MCC departments?
I think my first goal is primarily to put the management team together. And once that happens then we have to decide based on what’s best for the business model.
Secretary Clinton has indicated the administration wants to rely less on contracting. How would that affect MCC?
Again, we work with countries that have taken responsibility for their own growth. Many of the programs are designed and implemented by partner countries as well. In some cases we have contractors, in some cases we don’t. So, I think she was referring primarily, when she was talking about this, to USAID, I presume. But, we don’t have a lot of countries, we only have very few countries which we work with. And in some cases we do employ … contractors.
Is MCC trying to reach out to new types of partners or contractors – maybe think tanks, universities, NGOs, rather than just going straight with the host government?
In the last two months since I’ve been here, I’ve met with so many different organizations that are NGOs, consultants and so forth. They all have a vested interest in the economic development of many of the poorest of the world. So, part of when you talk about innovation is trying to reach out and do some programs or projects with NGOs within those countries and maybe with state government in addition to the central government we talked about earlier. We’re looking at a lot of other opportunities in which we might be able to get involved.
Do you think that will affect your outreach strategy here and also abroad in your partner countries?
I don’t think it’s going to change because I think we have the same approach today and I doubt that’s going to change, frankly. But, the only thing is, as we look into some of these countries in the future, especially probably for second compacts, we’re looking to see who else could go with us in terms of investing in some of the projects. Definitely we could ask the private sector to do it, we could ask some of the NGOs to go with us… because it is within our mandate and we have the flexibility to do it. So, we might be looking at a lot of other ways in which we could become a lot more effective.
With the current foreign aid reforms, where do you see MCC in a few years?
Definitely our people have participated in both [State Department’s ongoing quadrennial diplomacy and development review] and [the presidential study directive on global development policy], and we’re waiting to see the final results sometime this year. And what we would hope with MCC, if we look in the next five years, is to really create prosperity in many of those countries so that we don’t have to be there. The real success of any program is to make sure you don’t stay there for the next 15 years or 40 years. It’s to be able to help them become self-sufficient and to get out.
And the relationship between MCC, USAID, the President’s Emergency Plan for AIDS Relief, Defense Department and other actors – do you see that changing?
Oh, definitely. I met with Rajiv Shah, who’s the new USAID administrator, and we’re going to work together very closely. The same thing with PEPFAR. My objective is to try to work with all the U.S. development agencies so we could become more effective and not duplicate each other’s efforts. So, we‘re now looking forward to great cooperation between USAID and MCC, USAID and PEPFAR, and other development agencies within our countries. I’m excited. I think we’ve got great leadership at both the president and the secretary’s level. They all have a vested interest and a lot of support for foreign aid development. So I am excited and look forward to the next couple of years at MCC.
Are you a little bit floored as well with that task, especially aid coordination? A lot of people have tried to coordinate aid better, not just here in the U.S. but elsewhere. It seems like a difficult task to achieve.
Well, I think, again, the White House, under the [presidential study directive], is looking [at] how we might be able to coordinate a lot of the activities here at home. So it’s a much bigger review. We’re looking forward to the results, and [to working], in the meantime, with other agencies here at home, by making sure that we’re deploying American tax dollars effectively and efficiently overseas.
Read part one of our interview with Daniel Yohannes, in which he discusses his vision for the Millennium Challenge Corp., his plans to boost partnerships and aid effectiveness, and his journey from his native Ethiopia to the center of U.S. politics.
Jemila Abdulai contributed to this report.