Readout on CSIS Interview with new MCC CEO Sean Cairncross

August 14, 2019

The Center for Strategic & International Studies (CSIS) hosted Millennium Challenge Corporation's new CEO, Sean Cairncross, for a sit down interview today. Expertly facilitated by Dan Runde, CSIS's Senior Vice President and Director, the hour-long session allowed listeners and participants a small window into the priorities of the MCC going forward, and how Cairncross plans to leverage the successes of the 15-year old agency to buoy increased development aid from the U.S. Government. Notes are below:

What is the MCC?

The Millennium Challenge Corporation is an independent development agency designed to deliver on a merit-based model in support of the economic development need of countries based on very specific criteria. The agency works in partnership with developing country governments to identify where there are critical economic development gaps and needs, and where those governments are committed to partnering with the U.S. Government to jointly address those priorities through mutual investment in programs called "compacts".

How does it work? The U.S. Government delivers grants to partner governments based on a rigorous and open process of need identification, and ensures investments will help address clear economic constraints. As governments engage with the MCC, their efforts to maintain sustainable, measurable and achievable progress in closing development gaps while ensuring improved lives of people in their countries is paramount. The MCC demands accountability and transparency, and has the ability to withdraw funds, narrow project scope or cancel compacts if partner governments are not adhering to their agreed actions. The agency prides itself on being one of the best stewards of American tax dollars given the transparency, and accountability inherent in all programs. All data, evaluation briefs, and project rates of return are made transparent. Buy in by partner governments is critical, and mutual agreement on value for money/investment is necessary from both government partners (U.S. and other) for the programs to be successful. MCC is looking for measurable impact on the lives of country’s citizens. This is in stark contrast to other models (i.e. Chinese investment which isn’t as accountable).

What are some of the investments MCC is making? Sharing knowledge and technical assistance. Helping deliver effective human resources programs and capacity, gender equity, technological advancements. Infrastructure constraints often dictate where MCC works. Most of MCC's project portfolio is around transportation or energy infrastructure. Many partner countries have greatest need in these areas. MCC is also engaging in regulatory and policy reform inherent in corruption reform. This is very critical for economic advancement. Many of the smaller projects, which are called threshold programs, help bring countries along, particularly those that are already on right track, but may not immediately meet compact criteria.

What does future look like for MCC? In addition to delivering on current compacts, the nature of MCC's work may require a move towards more regionally-focused compacts, in order to address issues like transportation, agriculture, or power transmission. MCC is very interested in addressing partner governments' desire to increase American corporate investment. Many partner governments aren't familiar with how to procure in the U.S., and may not be as familiar with private sector language. MCC is helping these governments develop more transparent and competitive bidding processes to both increase outside investment and also eliminate corruption in procurement.

How is MCC evaluating partnerships with the private sector? MCC recognizes that engaging private sector actors is critical to building a more sustainable economy. Over its lifetime, MCC has leveraged $5.6 billion in private sector dollars, working in 37 countries with 29 compacts for $14 billion in total development assistance benefiting 200 million individuals. There is an opportunity to do more, however. Cairncross wants to increase the knowledge level here in the U.S. about what opportunities there are for American companies to compete overseas, particularly in developing countries. He is looking forward to engaging with companies outside of DC to share the opportunity and need for engagement with private sector actors.

How will MCC work with the new Development Finance Corp and on cross-agency issues like the Women's Global Development Program (WGDP)? The U.S. Government as a whole is focusing on development as a tool for self-reliance. MCC has a critical role to play helping bring all of U.S. Government resources in countries where it is investing, to create the enabling environment for increased private sector investment. For example, where OPIC (soon to be DFC) is partnering with the private sector, it's critical to collaborate and coordinate in countries where MCC is working. Communication and mutual understanding of priorities and expectations is needed. Looking for a very collaborative effort with these and other agencies. Cairncross sees opportunities to blend activities with DFC as long as model and focus of MCC does not change. His aim is to stay laser focused on poverty reduction through economic growth using innovation and infrastructure development. What has made MCC successful and draws abundant talent at MCC is the commitment to making these programs work on behalf of the U.S. Government.

Regarding the WGDP, the MCC is engaged in this government-wide approach to empowering women and unlocking women’s economic potential in developing countries. Gender has been a focus for the MCC for a long time, and is part of the economic advancement indicator set in its scorecard. MCC also has a gender and social inclusion unit in its compact development division. Working with governments to bring women into industries that were traditionally all male (i.e. energy, transportation) or investment in extension programs where women can gain valuable training and job potential is high priority for MCC.

How does MCC feel about broader U.S. Government position on limiting aid budgets? Cairncross believes a wider discussion on broader U.S. development aid budget constraints is needed, no question. MCC is well positioned to continue engagement on development. The Agency is achieving concrete, measurable results for taxpayers. MCC plans to stick to its budget and achieve results while holding countries accountable. All partnerships are country-led, so onus for success in development is on the partner country. Cairncross understands very clearly what concern is around aid budget. He wants to use MCC as an example as a strong case for continued US engagement in development going forward.

Joanne Sonenshine is a development economist, and Founder + CEO of Connective Impact, a partnership strategy advisory firm in Washington, D.C., working with mission-driven companies and nonprofits to advance social and environmental impact through effective collaboration.