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This is an archived USAID document retained on this web site as a matter of public record.
Remarks by Frederick W. Schieck,
Deputy Administrator, USAID
The Millennium Challenge Account and Sustainable Development
Meridian House
July 12, 2002
It is a great pleasure to be here and participate in this important forum.
You have heard from Under Secretary Dobriansky about the Administration's goals for next month's World Summit on Sustainable Development and will hear more from Secretary Powell this afternoon.
As this country's lead agency on foreign assistance, USAID will be an active participant at the Summit. We hope it will be a success. But it can only be so if the nations represented there adopt a realistic approach to development and take a good, hard look at what works and what does not.
One of the key points that USAID emphasized at the Financing for Development Conference in Monterrey and the World Food Summit in Rome and that we will stress again in Johannesburg is the importance of agriculture to sustainable development. Over the past decade and a half, the international donors have cut back their investments in agriculture rather substantially. Like the World Bank, the IMF, the U.N. and most bilateral development agencies, USAID did the same.
We are now doing our best to rectify it, adding $200 million to our agriculture budget over the next two fiscal years.
We hope other donor nations and organizations come to the same conclusion and make the necessary adjustments, so that agriculture regains the prominence it once had in international development strategy.
That, in my opinion, would represent a huge step forward for sustainable development and mark this conference as a milestone in the history of international development.
Virtually every developing country in the world is predominantly agricultural. In fact, three-quarters of the world's poor live in rural areas. Most of them depend on farming and herding to support their families. It stands to reason, therefore, that the best way to help lift people from poverty is to help them improve agricultural productivity. Doing so means more food security for their countries. It means rising incomes in the countryside, improved nutrition, and lower child mortality rates. It means more opportunities for families to educate their children or start a business. And it means a more equitable balance between urban and rural development, the need for which has all too often been overlooked.
It will be interesting to see how many of the speeches and presentations at the World Summit get to the heart of the sustainable development question - achieving a level of income and maintaining a rate of economic growth that allows it to finance its own future.
I would like to turn now to the President's Millennium Challenge Account. As most of you know, the MCA was first announced in March, in an address President Bush gave at the Inter-American Development Bank. I would urge you all, if you have not done so, to read the MCA speech. It's easy enough to find on the White House or USAID web sites.
As you will see, President Bush made a very clear statement about what works and what does not in international development. We at USAID believe that this is one of the most significant speeches on the topic a U.S. President has ever made. In fact, Andrew Natsios, the Administrator of USAID and a real history buff, puts it in the same category as Truman's 1947 speech on Greece and Turkey - the one that led to the Marshall Plan -- and Kennedy's 1961 speech on the Alliance for Progress - the one that led to the creation of AID.
The MCA is a genuinely new look at foreign assistance. It is bold in vision, generous in spirit, and very pragmatic in approach. Over time, I believe it will influence our entire approach to foreign assistance.
Sustainable development can mean many things to many people. For me, it means something pretty simple, it is the ability of a nation to achieve a level of income and maintain a rate of economic growth that allows it to finance its own future. This is the essence of sustainable development. Our new Millenium Challenge Account will set out to achieve this in a select number of countries, for example, and its emphasis on development success and results get at the specifics of how that is done in ways that benefit all.
I have a simple definition, but it is not a simple task. All the complications that development practitioners have come to know are still there. What level of income is necessary? How fast does the economy have to grow? What sectors have the greatest income growth potential? What are the trade offs and synergies between developing human potential and increasing growth?
So how does the Millenium Challenge Account get at this in ways that power up our existing development efforts. How will it help to achieve sustainable development? I will suggest that it does so in three ways:
- By acknowledging the basics of economic growth. The Millenium Challenge Account starts with a simple, clear idea that says: achieving and maintaining economic growth is a function of a) ruling justly, b) investing in people and c) establishing and protecting economic freedom without national responsibility and commitment there will not be sustainable growth.
- By working where the environment for efficient use of increased development resources exists. The MCA says that nations that have established the basics for their development have created- or are creating-an environment conducive to accelerating income growth and sustaining higher economic growth rates. These are the nations in which increased financial resources will be most likely to achieve measurable development results-results such as lower poverty levels, increased agricultural and industrial production, higher literacy and education rates, and better health status.
- By addressing local priorities through local commitment. Another basic ingredient to "sustainability" is a high level of local involvement and commitment to the growth strategy and to specific investment projects. There must be local ownership. USAID's most successful projects have been defined and implemented by recipient country organizations, governments and private sector entities. Therefore a basic characteristic of MCA programs and projects will respond to local needs and potential, and engage local resources for execution.
What is so great about the Millenium Challenge Account? Why all the press and academic debate? What's really new here?
There are two things that are new - so far. As you may remember, the MCA's exact arrangements and defining characteristics are still under discussion and design by an interagency steering group so there remains ample room for further input. The two new elements embodied so far are:
- Performance-based selection and results countries must show that they have implemented real policy change in the areas of ruling justify, investing in people, and promoting economic freedom. Countries will be selected on the basis of clear, concrete and objective criteria. As a result, we expect that there will be a few select countries that qualify for funds under the MCA. That is a very different way of doing foreign assistance.
- The overall level of resources. Another and perhaps the most important aspect of the MCA, is the intended resource commitment. President Bush has announced his intention to place a budgetary priority on foreign development assistance that has not been seen for over a decade.
Possible investment sectors for MCA encompass a wide range of interventions. Examples include:
Agriculture: to expand domestic agricultural marketing and trading networks; strengthen domestic agricultural education, research and training facilities; promote agricultural technology improvement and transfer; develop and deepen rural property rights and private ownership of land; and strengthen financial services available to farmers and agri-business facilities.
Education: to finance expansion, improvement and reform of educational systems with a particular focus on girls' education.
Health: to expand basic health coverage and prevent disease, and,
Finance and Business: to strengthen macro-economic management and bolster financial and business sector capabilities.
Entrepreneurship: to expand the entrepreneurial business class through small business development programs (training and financing), and removing regulatory impediments.
Public Management: to strengthen national efforts to consolidate the rule of law, combat corruption and protect and promote democracy and human rights.
International and Regional Trade: to promote activities which will open domestic markets to international and regional trade, including financing specific projects to increase trade of commodities and services and providing technical assistance to help countries accede to the WTO.
We want to finance programs that contribute directly to countries' sustainable development. We want to lift people from poverty. We want to help them lead healthier lives and get the education they need to defend themselves in today's competitive world economy. But we have to be honest with ourselves and with those who seek our aid. We can only help when countries choose policies that encourage economic growth.
As the President said: "the world's help must encourage developing countries to make the right choices for their own people, and these choices are plain. Good government is an essential condition of development. So the Millennium Challenge Account will reward nations that root out corruption, respect human rights, and adhere to the rule of law. Healthy and educated citizens are the agents of development, so we will reward nations that invest in better health care, better schools and broader immunization.
Sound economic policies unleash the enterprise and creativity necessary for development. So we will reward nations that have more open markets and sustainable budget policies, nations where people can start and operate a small business without running the gauntlets of bureaucracy and bribery."
It's about time someone said that. And it's about time that countries like our own had the courage and vision to say it.
While we at USAID are naturally very pleased that the MCA will mean this country has more resources it can put toward international development, we know that public dollars will never be enough to meet the needs of the developing world. We need the private sector, too, for it is the great engine of economic growth.
Recognizing this, Secretary Powell launched the Global Development Alliance initiative last year as USAID's business model for the 21st Century. We at US AID are actively looking to marry our talents and expertise with a wide range of businesses, non-profits, universities, foundations, private voluntary organizations - and even some individuals. All of these have become important actors in the development world in recent years.
Thirty years ago, 70 percent of all money flowing to the developing world from the United States came from Official Development Assistance (ODA). Today, only 20 percent comes from ODA. The rest comes from trade, investment, remittances, foundations, private donations - and a host of other sources. Given this fact, it makes sense that we work with these new actors on projects where our interests coincide.
Indeed, I hope that the public-private partnerships that you will be discussing this afternoon will help pave the way for more such alliances.
Whatever comes from the World Summit - and the outcome of these conferences is never certain -- the President's MCA initiative has changed the way we look at foreign assistance. With its strong emphasis on accountability, governing justly, economic freedom, and investing in people, that is all to the good. The MCA is an idea whose time has clearly come.
Thank you.
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Last Updated on: January 02, 2009 |
