The Millennium Challenge Corporation (MCC) is a bilateral United States foreign aid agency established by the U.S. Congress in 2004, applying a new philosophy toward foreign aid. MCC was authorized in 2004 with bipartisan support. It is an independent agency that came for a new compact for development with accountability for both rich and poor countries.
Main Principles of MCC
- Competitive selection
- Country-led solutions
- Country-led implementation
MCC compacts and thresholds programs in recipient countries
MCC signs either a compact or a threshold agreement with a partner country. A compact is awarded if the country scores highly on the selection criteria indicators. If the country scores poorly but has a positive, upward trend on the selection criteria, it can still be eligible for a smaller grant, called a threshold program.
MCC in Nepal
Nepal is one of the developing countries in Asia. In the coming days, it has continued to face extensive economic development challenges caused by high transportation costs to move both goods and people as well as an inadequate supply of electricity. Decades of political transition and the devastating earthquakes of 2015 further compounded Nepal’s development challenges. Hence, MCC’s Nepal Compact is designed to increase the availability of electricity and lower the cost of transportation in Nepal. These investments will help the Government of Nepal better deliver critical services to the people, it will ease the movement of goods around the country, and open up new opportunities for private investment.
An additional $130 million from the Government of Nepal in support of the compact − the highest up-front contribution from a partner country − enables MCC’s investment to have an even greater impact. It will increase the availability of electricity and lower transportation costs—helping to spur investments, accelerate economic growth, and reduce poverty. No conditions in the MCC Nepal Compact are against the spirit of Nepal’s constitution, nor do they threaten Nepal’s independence and sovereignty. The Compact is based on principles of accountability, transparency and mutual prosperity.
- MCC grant is for the construction of a high voltage 400 kV transmission line to evacuate the power.
- Construction of lines and road projects are to be done.
- Good governance, economic freedom, and investing in citizens will be high.
- It will deliver critical services to its people and open up new opportunities for private investment.
- Increase the availability of electricity and lower the cost of transportation in Nepal.
- Sustainable growth, private sector, providing the country with a much-needed boost.
- Intellectual property rights
- It has become the center of a row between two factions of the Nepal Communist Party, and stalled proceedings at the Central Committee meeting of the ruling party last week, raising questions about Nepal’s credibility.
- The rivalry between the US and China in Nepal.
- Nepal has accepted the clause about Parliament ratification.
- Parties are going against each other.
Facts about MCC Nepal
- At the request of Nepal’s leaders, the U.S. government began working with Nepal in 2012 toward the development of an MCC compact.
- Each government and every Nepali political party, when in power, has expressed a desire to conclude an MCC Compact for economic development in Nepal.
- The MCC project is focused purely on economic development by helping to build power lines and improve roads.
- There is NO military component to the MCC. In fact, U.S. law prohibits it.
- Nepal does not need to “join” or “sign up” for anything in order to participate in the MCC.
- The $500 million is a grant, with no strings attached, no interest rates, and no hidden clauses. All Nepal has to do is commit to spending the money, transparently, for the projects that have been agreed upon.
- Nepalis proposed and decided which projects MCC will fund in Nepal based on Nepal’s own priorities.
- MCC’s model requires Nepal to hire Nepalis to lead the implementation of the projects.
- MCC project tenders are open, transparent, and available to everyone.
- In Nepal, as in every country where MCC works, parliamentary ratification is required and provides transparency and an opportunity for Nepalis to understand the project.