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Yohannes: MCC Showcases Value of Foreign Assistance

The American people want to know that their tax dollars are making a difference and having an effect. As the Millennium Challenge Corp. marks its eighth anniversary, we celebrate one of our most distinct features — making our growth-focused, poverty-reducing assistance more accountable through a disciplined and rigorous focus on results at every stage of our investment.

During these challenging economic times, the value of foreign assistance to U.S. economic interests is increasingly visible. We all win when assistance strengthens emerging markets and makes them attractive partners for trade with and investment by American businesses. The world’s poor get a helping hand toward self-sufficiency, and American businesses have new growth opportunities that can retain or, better yet, create jobs. Apart from the moral urgency to fight global poverty, smart aid delivers returns that make economic sense.

It’s imperative, therefore, that we demand a return on our development investments and quantify and make public their effect. To do just that, MCC employs a “continuum of results” framework, which meticulously measures performance throughout the entire life cycle of each development program. MCC programs deliver results along this continuum — from policy changes that countries make to become eligible for assistance to outputs such as improved roads to outcomes such as increased commerce and to effects measured in higher incomes, the ultimate poverty reducer.

Following this continuum, we capture policy and institutional reforms countries enact right from the start. MCC can point to policy reforms in Tanzania, for example, to make the energy sector more competitive for private-sector investment. These reforms paved the way for MCC’s grant to the country and for a U.S. company, Symbion Power, to gain a foothold in Tanzania and expand its business globally, becoming one of the top privately owned energy producers in East Africa.

As programs mature, MCC closely tracks interim outputs to make sure our investments are headed in the right directions. Because of this approach, we see impressive outputs, like the more than 188,000 farmers trained worldwide through MCC-funded programs and the more than 1,162 kilometers of roads paved so far, which is about the driving distance from Washington, D.C., to Jacksonville, Fla.

Moving along the continuum, we also gather outcomes — or economic changes — to measure the success of our investments. In Benin, we see how outputs — namely our investment in the modernization and expansion of the Port of Cotonou — have catalyzed key outcomes. Already, the merchandise volume flowing through the port has increased from 4 million metric tons in 2004 to 7 million metric tons in 2010. American shipping companies, such as some based in Delaware, are using the MCC-modernized port in Benin to reach more customers in West Africa.

Ultimately, post-program effect evaluations help us confirm income gains and understand to what extent those can be attributed to MCC’s investments. They help us, our country partners and others learn more about optimum program design. We expect the first post-program effect evaluations on completed projects to be ready shortly, providing us a fuller assessment of investment effects.

MCC’s continuum of results succeeds in capturing this wide breadth of results information because it is built on two values insufficiently prioritized in international development: transparency and critical learning.

MCC’s commitment to transparency means making all results — both positive and negative — public. No wonder the 2011 Publish What You Fund aid transparency report ranks MCC as the most transparent U.S. government donor and the seventh most transparent donor in the world. Such a frank and open embrace of what works and does not work creates a platform for learning, not just for learning’s sake, but to improve performance, make midcourse corrections and inform better development projects throughout the development community.

MCC’s continuum of results framework provides an innovative, systematic process for tracking results every step of the way. It is one way MCC “gives the taxpayer real bang for the buck,” according to a Fortune magazine article on how we are changing global aid. Such accountable, responsible development assistance is how MCC delivers results that matter to us all.

Daniel W. Yohannes is the CEO of the Millennium Challenge Corp.

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