The MCA holds the promise of boosting American foreign aid by half over three years, to $5 billion annually–if the plan’s administrators find sufficient evidence of progress to merit doling out the funds. Apparently they have: on May 10 President George W. Bush announced the first 16 nations to qualify for $1 billion in U.S. grants available this year. All have met a series of good-governance incentive standards established by the new program. The winners include eight countries from Africa, including Benin, Mali and Ghana. Compared with U.S. military spending, the foreign-aid sum is microscopic; still, under the program, the United States would become the biggest foreign donor in each country selected. “This news is a tank of oxygen for us,” says Henri Rabesahala, a presidential adviser in Madagascar, another MCA winner that’s started an ambitious program of judicial reform. “It means we are doing the right things.”
That’s the point. The U.S. plan reflects a sea change in thinking about how best to use development aid. Created in 2002, the MCA developed out of World Bank research showing that aid money is most effectively spent in countries that are governed well. Instead of relying on subjective considerations to select aid recipients, the program chooses countries using an objective set of 16 performance standards, ranging from trade policies and immunization rates to how well they control corruption. Countries don’t apply for this aid–but once selected under the program, they can decide what sort of assistance they need most.
Critics have attacked both the gatekeepers and the standards. Some argue that countries aren’t rated on gender equality, that the poorest African countries aren’t given an edge over developing nations in other regions and that the program does nothing to assist so-called failed states that don’t qualify for funding. Still, says Chester Crocker, the Reagan administration’s top Africanist, “I think there’s a general recognition that it’s time to back winners.”
Even critics aren’t quibbling over the first-round picks, which were chosen from among 63 whose citizens have an annual per capita income of less than $1,415. “This very promising way to use the aid dollar is off to a good start,” says Steven Radelet of the Center for Global Development in Washington, who’s been an MCA critic. “But the real trick will be to hold these countries accountable.”
Showing results will be crucial, because the U.S. Congress is in a budget-cutting mood. Even as the MCA is born, it’s being trimmed. Congress reduced the program’s first-year budget to $1 billion from a requested $1.3 billion. Bush has asked for $2.5 billion next year, but is not likely to get it. Nevertheless, the carrot-based concept is working. The Millennium Challenge Corporation, which runs the program, says that the average number of “days needed to start a business,” one of the criteria for aid, dropped from 61 to 51 among the 63 finalists. That may be only the first reward from upending aid policy.
