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US government announces Millenium Challenge Account countries

NGOs funded by the US government, like my former employer, have been waiting with bated breath for the announcement of Millenium Challenge Account countries. The envelope, please:

Winning unspecified amounts of development aid in exchange for reforming markets, protecting civil rights and rooting out corruption are: Benin, Cape Verde, Ghana, Lesotho, Madagascar, Mali, Mozambique, Senegal, Armenia, Georgia, Mongolia, Sri Lanka, Vanuatu, Bolivia, Honduras and Nicaragua.

Center for Global Development’s Steve Radelet released a paper a few weeks back, predicting the countries that would qualify – he listed 17 likely to qualify and an additional 17 near misses.

The surprises? Georgia and Bolivia, which both have corruption levels too high to be acceptable somehow squeaked in – Georgia was probably given a pass given it’s progressive new president, and Bolivia was right on the line. Bhutan, Vietnam, Guyana and Mauritania didn’t make it, despite qualifying on paper.

I’ve worked in five of the qualifying countries, and they rank among my favorite places in the world. Two are countries I’ve thought seriously about starting businesses in. All of which makes me think that the process of country selection was likely a pretty good one. I’m sufficiently cynical that I expected the US government to sneak a repressive but compliant country like Uzbekistan into the list, and I’m thrilled that they didn’t.

The question now on everyone’s minds (okay, everyone who cares about these issues sufficiently to have read to this point in my post)

is how much money will really get committed to the program, and whether this aid will be above and beyond existing aid levels, or will serve as an alternative. While the program may never reach the promised $5 billion a year in aid, the $1 billion budgeted for the first year of the MCA program is big. $62.5 million per nation big. Given that the total USAID budget for Mongolia last year was $12 million, and that national GDP is only around $1 billion, that’s serious money.

Does this mean the US is finally stepping to the plate and taking on it’s fair share of international development? Not even close. Despite the continuing misperception that the US spends 20% of it’s annual budget on foreign aid, the actual number is less that 1%. Even with the additional MCA money, the US will still rank dead last among aidgivers in foreign aid spending as expressed as a percentage of GDP.