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Bush Trip Highlights Millennium Challenge Corporation

Of the five African countries President Bush is visiting this week, four are members of the Millennium Challenge Corporation. The MCC is one of the Bush administration's most prominent foreign policy initiatives -- which aims to boost economic growth in the developing world. It does so by focusing grants and other investments on those countries with a strong record of fighting corruption and supporting pro-market reforms. From Washington, reporter William Eagle takes a look at some of the countries on the president’s trip that are receiving support from the MCC, including Benin, Tanzania, and Ghana.

Earning the support of the Millennium Challenge Corporation, or MCC, isn’t easy. The agency uses 17 indicators to measure a government’s commitment to political and economic freedom, education and health care. They also measure progress in ensuring the rule of law, respect for civil liberties and controlling corruption. Those who rank the highest are eligible to enter into a compact – a five-year agreement to fund programs that will stimulate economic growth and reduce poverty.

Matthew Mclean is the vice president of the Department of Congressional and Public Affairs at the MCC.

He says several African countries have signed “compacts” with his agency, including Benin, Tanzania and Ghana.

As part of Tanzania’s agreement, the government will receive a grant of nearly 700 million dollars to help several of the sectors that can help promote economic growth.

"In Tanzania," he explains, "we are rehabilitating a number of roads and focusing on increasing the supply of energy to communities and businesses; and also in Tanzania a water project that will provide greater access to clean and safe water for the population."

One of the Tanzania projects includes the laying of a new 40 kilometer long submarine cable from the mainland to Unguja Island. It will help to provide power to the island, which is the largest in the Zanzibar archipelago, and enable it to continue to develop its tourism potential. Millions of dollars will also go towards rehabilitating roads connecting interior towns to ports and cities in neighboring countries. The effort should help stimulate agricultural production and exports.

For example, one road will connect the Tanga seaport in northeast Tanzania with Horohoro on the Kenyan border. The effort is expected to ease the transport of goods between the commercial city of Dar Es Salaam and Kenya. Also to be improved is the Tunduma-Sumbawanga highway in agriculturally fertile Western Tanzania. The road is the only link between Dar Es Salaam and Zambia. Funding will also go to improve the quantity and quality of potable water in Dar Es Salaam and the city of Morogoro. The effort is also expected to help cut back on the incidence of water-borne diseases.

In Benin, a $307 million dollar compact includes grants to microfinance institutions to assist small and medium enterprises. It will also help improve access to courts in rural areas, and improve the flow of goods through the Port of Cotonou. It also provides for land tenure reforms, which should help small farmers and entrepreneurs.

In Ghana, a compact worth over 540 million dollars aims to raise farmer incomes by increasing the production of domestic food crops and high value cash crops for export. Agricultural exports will also be enhanced with an improved highway between the main airport in Accra and the Port of Tema, and with the construction of up to 230 kilometers of roads in the central Afram Basin area.

Another project will help farm-based organizations with post-harvest infrastructure, including cold storage and processing facilities. Small dams and retention ponds will be built for farms that lack access to water.

The MCC expects that Ghana’s compact will help reduce poverty among 230,000 Ghanaians, while enhancing the livening standards of over one million altogether.

For those countries not ready to meet the economic and political criteria of a compact, the MCC does provide what it calls “threshold grants.” They fund projects that will help an interested government reach the levels of good governance and economic efficiency for a full-fledged “compact. In some countries, that may mean programs to fight corruption, or to increase the access of girls to education.

So far, the MCC has signed $325 million in threshold assistance in 15 countries, including Burkina Faso, Kenya, Niger, Malawi, Mauritania, Rwanda, Sao Tome and Principe, Uganda, Yemen and Zambia.

For example, Tanzania received threshold grants before it signed its compact with the MCC this month. Matthew Mclean explains how they worked:

He said, "In Tanzania, we [provided] resources to train civil society monitors, women and journalists to strengthen the rule of law and good governance. To fight corruption in Tanzania, we established a financial intelligence unit to receive, analyze and process information about financial institutions to combat corruption."

Mclean says Rwanda will likely sign a threshold program agreement in a few months, with likely programs initially aimed at improving governance.

McLean says another country on President Bush’s trip – Liberia – is not yet participating in the MCC, but is undertaking significant reforms and making progress in part to improve its prospects of joining the agency.

We worked closely with Liberians to analyze the areas of policy where we can help them increase their performance so they would eventually become eligible. We’d like to think in next couple of years or so Liberia will join the MCC family. But that depends on Liberians to undertake the efforts to increase their scores. We are confidant Liberians are moving in right direction, they have great leadership and are terrific friend of US.

Matthew Mclean says the Millennium Challenge Corporation has committed 5.5 billion dollars to compacts with the 16 countries– nine of which are in Africa. They include Benin, Cape Verde, Ghana, Lesotho, Madagascar, Mali, Morocco, Mozambique, Tanzania. This year, Burkina Faso and Namibia are also expected to sign large compacts of assistance to spark economic growth. Mclean says about 3.8 billion of that total are going to Africa countries. He says it’s a manifestation of the US commitment to Africa and to those countries that are performing well.

President Bush has requested in his 2009 budget to Congress 2.22 billion dollars for the Millennium Challenge Corporation – an increase of $680 million over the amount enacted last year.