U.S. Agency’s Slow Pace Endangers Foreign Aid
By CELIA W. DUGGER Published: December 7, 2007
The Millennium Challenge Corporation, a federal agency set up almost four years ago to reinvent foreign aid, has taken far longer to help poor, well-governed countries than its supporters expected or its critics say is reasonable.
The agency, a rare Bush administration proposal to be enacted with bipartisan support, has spent only $155 million of the $4.8 billion it has approved for ambitious projects in 15 countries in Africa, Central America and other regions.
And the agency’s slow pace is making it politically vulnerable at budget crunch time. Both the House and the Senate have slashed the Bush administration’s 2008 budget request for the agency, but the Senate has gone a step further, pushing for a change that African leaders say threatens the essence of the agency’s novel approach.
Eyeing the unspent billions, the Senate has proposed that Congress provide no more than half the money up front for future five-year projects, which typically come with a price tag of $250 million to $700 million. Such projects are now fully financed at the start to make sure countries have the wherewithal to finish what they start.
Senator Patrick J. Leahy, the Vermont Democrat who heads the Senate appropriations subcommittee on foreign aid, said that Congress could be counted on to come up with the rest of the money if the countries fulfilled their end of the bargain. But, he asked, where else should Congress look for savings in its foreign aid budget?
“Do we cut maternal health?” he asked. “AIDS? Malaria? Do we cut refugees? The only thing that’s got a blank check is the war in Iraq.”
Agency officials and the African leaders they assist said in recent interviews that the change would be a big step backward. American foreign aid often takes the form of modest, short-term projects that are planned in Washington and carried out by American contractors and charities. But under the agency’s approach, poor countries with sound economic policies and strong track records of helping their people are chosen to conceive and carry out big undertakings themselves.
The Millennium Challenge Corporation’s budget now makes up less than 10 percent of the United States foreign aid budget.
By changing how its projects are financed, “then M.C.C. becomes like the World Bank and all the other countries using overseas development aid in stop and go fashion,” said John A. Kufuor, the president of Ghana, who heads the African Union. “The aid is spread so thin that at the end of the day the necessary difference is not made.”
The Millennium Challenge Corporation’s chief problem has been its sluggish record in getting projects beyond the planning stage to the point where contractors can actually build the roads, irrigation canals, power plants and clean water systems that poor countries say they need.
Sheila Herrling, who follows the agency at the Center for Global Development, a nonprofit research group in Washington, says there are understandable reasons projects take time and suggests that the agency’s current five-year timeline for each one may be too short.
Poor countries, even relatively well-run ones, are not used to planning such complex developments and have needed more time than expected to get them off the ground, she said.
Also, the infrastructure projects poor countries need are prone to corruption, and putting stringent accountability systems in place has consumed more time than expected.
Development analysts have praised the agency for giving poor countries an incentive to make significant reforms to qualify for its big contracts, including improving education for girls, making it easier for individuals to operate on-the-books businesses.
But the agency itself must also shoulder some of the blame for the slow progress, Ms. Herrling said. Its decision-making has been too focused on putting together the projects, rather than on carrying them out.
“It shouldn’t have taken so long,” she said. “The agency needs to figure it out this year. They are part of the problem.”
John J. Danilovich, the businessman and former ambassador who has led the agency for two years, recently reorganized it to concentrate on results with what he called “laser focus.”
“We need to do better and we will do better,” he said in an interview.
Mr. Danilovich, a Bush appointee, has convinced Representative Nita Lowey, the New York Democrat who heads the House appropriations subcommittee that oversees foreign aid, that he is serious. Mrs. Lowey said in an interview that the agency was still unproven. And she was disappointed on a visit to Ghana this year to find that its $547 million compact to develop a modern agricultural economy still was not very far along. But on the need for progress, she said, “I do believe that Danilovich gets it.”
One of many schools in Burkina Faso that had been paid for by a $13 million grant by the Millennium Challenge Corporation.
The future of the Millennium Challenge Corporation is one of the many issues caught in the budgetary stalemate between the administration and Congress.
The administration asked for $3 billion for the agency. In their foreign aid appropriations bills, the House provided $1.8 billion, the Senate $1.2 billion. Mrs. Lowey said she strongly opposed the Senate’s proposal to provide no more than half the financing up front, an idea originally suggested by Senator Richard G. Lugar, Republican of Indiana. The House and Senate are expected to settle the issue by next week.
If the agency gets the lesser Senate amount, under the current rules requiring the money up front, Burkina Faso, a West African country that has spent more than two years qualifying for and drafting its $560 million to $620 million plan, will get nothing, agency officials said. Tanzania and Namibia are ahead of it in line.
Burkina Faso’s prime minister, Tertius Zongo, said his country would be deeply disappointed if the money was not available.
“We have done our part,” he said. “This is a partnership.”
Burkina Faso has gone to great lengths to meet the agency’s good governance standards. The agency gave it a $13 million grant to improve girls’ education, which the country used to build, among other things, schools with day care centers so school-age girls do not have to stay home to look after their younger siblings.
Identified by the International Finance Corporation as one of the most difficult places in the world to do business, Burkina Faso has also halved the number of days it takes to start a business, and reduced by a third the cost of registering property.
In small, poor countries like Burkina Faso, every burp and hiccup of an aid agency like the Millennium Challenge Corporation is news — and often front page news. David Weld, the agency’s country director for Burkina Faso, said he did not know how he could face people there if Congress did not come through with enough money to help them.
“What type of message does that send to Burkina Faso, a country that has spent a huge amount of political capital and money on this process?” he asked. “What does that tell the Togos, the Nigers that want to become eligible? It tells them: Do everything like Burkina Faso, make all these reforms, spend millions of your own money, and then maybe at the end we might be able to sign a compact with you — or maybe not.”
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Africans, less esteemed than ever, seemed to me the most lied-to people on earth - manipulated by their governments, burned by foreign experts, befooled by charities, and cheated at every turn.
Paul Theroux, "Dark Star Safari"
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