THE BLOG
04/22/2008 05:05 pm ET Updated May 25, 2011

Increasing U.S. Credibility Through Better Aid Predictability

The United States is often criticized abroad--and sometimes even domestically--for not providing enough foreign aid. Actually, the American government and people combined are the largest donors in the fight against global poverty. Yet, how aid is delivered is as important as how much aid is delivered. Assistance must be provided in a way that delivers tangible results that the poor desperately need and that U.S. taxpayers rightfully deserve. And, for this aid to be most effective, it must be predictable. The Millennium Challenge Corporation, with its unique mission to reduce poverty through growth, is helping address this need.

Just the way Americans around kitchen tables cannot budget without knowing their income, developing countries--often lacking capacity and struggling to meet the basic human needs of their citizens--cannot start or finish projects for their people without knowing whether promised development funds will materialize. Unfinished roads and schools without teachers are too often the result of unpredictable aid from donors.

Oxfam America's insightful report from earlier this year, Smart Development: Why U.S. Foreign Aid Demands Major Reform, states that, "Until U.S. development agencies have mechanisms to assure funding over five years or more, recipients will never be able to plan or allocate U.S. funding strategically..."

In 2004, Congress had the foresight to address this problem through the Millennium Challenge Corporation (MCC), an unprecedented, different, and demanding approach to foreign aid.

Reflecting American values of accountability and responsibility, MCC assistance is awarded only to countries that practice good governance, fight corruption, invest in their citizens' health and education, and support economic freedom. As a result, we see countries embrace reforms to qualify for MCC grants.

And, MCC tackles the aid predictability problem head-on. The full amount of these five-year grants for our well-governed partners is set aside at the start. This is truly innovative. It has become a strong incentive for countries to maintain their good policy performance and act expeditiously to plan and implement their antipoverty programs.

Knowing that the funds are available to them to complete what they start, MCC partner countries are making tough choices to curb corruption and allow the participation of their people in the political process. They are enacting laws to make it easier to open a business or own property. They are educating and immunizing their children and looking at ways to protect their environment. They are building critical infrastructure to help farmers transport their crops to market and the poor access schools and health clinics. Partner countries reported in a recent Gallup survey that MCC, compared to other donors, provides more oversight, more help toward sustainability, and does a better job of building country capacity. This is due, in large part, to the predictability of the funds MCC pledges from the start.

Aid predictability allows assistance to be both compassionate and corporate-like by insisting on accountability and results. Congress got this right in 2004 by mandating the Millennium Challenge Corporation's emphasis on predictability that is revolutionizing the effectiveness of our development assistance. Such "smart aid" is meeting our shared objective for a more prosperous global community--addressing the challenges of developing countries, while strengthening America's credibility in the world.

The writer is the Chief Executive Officer of the Millennium Challenge Corporation and formerly served as U.S. Ambassador to Costa Rica and Brazil. To learn more, explore www.mcc.gov.