The Millennium Challenge Corporation (MCC), USA

The Millennium Challenge Corporation (MCC) is an innovative and independent U.S. foreign aid agency that is helping developing countries to fight against poverty through economic development. It is created by the U.S. Congress in January 2004 with strong bipartisan support, MCC is changing the conversation on how best to deliver smart U.S. foreign assistance by focusing on good policies, country ownership, and results. MCC forms partnerships with some of the world’s poorest countries, but only those committed to good governance, economic freedom and investments in their citizens.

MCC provides funds to well-performing countries with large-scale grants to fund country-led solutions for reducing poverty through sustainable economic growth.  MCC grants complement other U.S. and international development programs. There are two primary types of MCC grants: compacts and threshold programs.

  • Compacts are large, five-year grants for countries that pass MCC’s eligibility criteria.
  • Threshold Programs are smaller grants awarded to countries that come close to passing these criteria and are firmly committed to improving their policy performance.

MCC has approved over $10 billion in compact and threshold programs worldwide that support country-determined projects in such sectors as:

The objectives of implementation of compacts and threshold programs are promoting growth opportunities, opening markets, raising the standard of living, and creating a more prosperous future for some of the world’s poorest people.

As of September 2017, MCC has formed partnership in 46 countries around the world including Nepal. Nepal is the only country in South Asia that MCC provided fund. Sri Lanka is in the pipeline after Nepal.

 

Partnership between The Millennium Challenge Corporation (MCC) and Nepal

 Recognizing Nepal’s strong commitment to democracy, economic freedom and good governance, MCC has selected Nepal for its support. MCC and Nepal conducted a diagnostic study in Nepal in 2013-2014. MCC concluded that energy and transport sector are two major binding constraints for higher economic growth in Nepal and thus, these two areas of its focus to support in Nepal.

Based on the diagnostic study, overall political and development potentials, and bilateral relations, MCC formerly selected Nepal directly for the Compact program in December 2014, not going through the threshold program.  MCC opened its Nepal office in April 2015 and a Country Director was assigned in Oct 2015 to reinforce the activities in Nepal.

MCC conducted feasibility studies to identify the projects in 2016-2017 and it submitted projects to the MCC Board on November 2016. The Nepal and MCC delegation concluded program negotiations in Washington DC in June 2017. MCC Board of Directors approved Nepal Compact Program which includes USD 500 million grants in August 2017.

The Compact signing is done on September 14, 2017 in Washington DC between Nepal and MCC at the State Department’s Treaty Room.  Finance Minister Mr. Gyanendra Bahadur Karki and MCC Acting CEO Mr. Jonathan Nash singed the Compact agreement.

MCC supports goes to construct about 300km 400 KV transmission lines from Lapsiphedi – Galchhi- Damauli – Sunawal corridor along with 3 substations and maintenance of about 300 km Roads in various alignment of Mechi, Koshi, Sagarmatha, Tribhuvan Rajpath and East west highway.

MCC will provides grant of USD 500 million and Nepal bears USD 130 million for this $630 million project where USD 500 million goes to Energy sector and $130 million goes to Roads sector.