The Millennium Challenge Corporation (MCC) is a bilateral United States foreign aid agency established by the U.S. Congress in 2004. It is an independent agency separate from the State Department and USAID. It provides grants to countries that have been determined to have good economic policies and potential for economic growth. The country qualification process is objective, involving scores provided by third parties in 20 different areas. An eligible country must apply for a grant with a specific project in mind.
History At the Inter-American Development Bank meeting on March 14, 2002, President George W. Bush called for a new compact for development with accountability for both rich and poor countries. He pledged to increase development assistance by 50% by fiscal year 2006 (which, by the end of 2004, doubled and was to double again by 2010). Other development programs like USAID have been thought to suffer from many different and sometimes conflicting goals, which often are a result of political pressures, and for not delivering long-term economic improvements.
MCC was authorized in 2004 with bipartisan support. Its guiding principles are:
Competitive selection: Before a country can become eligible to receive assistance, MCC's Board examines its performance on 20 policy indicators and selects compact-eligible countries based on policy performance. Country-led solutions: MCC requires selected countries to identify their priorities for achieving sustainable economic growth and poverty reduction. Countries develop their MCC proposals in broad consultation within their society. MCC teams then work in close partnership to help countries refine a program. Country-led implementation: MCC administers the Millennium Challenge Account (MCA). When a country is awarded a compact, it sets up its own local MCA accountable entity to manage and oversee all aspects of implementation. Monitoring of funds is rigorous and transparent, often through independent fiscal agents.
Leadership The first CEO of the Millennium Challenge Corporation was Paul V. Applegarth, a finance manager with experience in emerging markets. Applegarth was followed by John Danilovich, a business executive who had served as the U.S. Ambassador to Costa Rica from 2001 to 2004 and then U.S. Ambassador to Brazil. On November 20, 2009, Daniel W. Yohannes, an Ethiopian-born American business person, was confirmed by the Senate as the CEO. He was appointed in May 2014 as US Ambassador to the OECD and succeeded by Dana Hyde who was CEO through January 2017. Sean Cairncross was confirmed as CEO under the Trump administration in June 2019 after four acting CEOs. In January 2021 Mahmoud Bah became Millennium Challenge Corporation Acting CEO. On February 16, 2022, Alice P. Albright was sworn in as CEO. She left on January 20, 2025.
Board of directors The board of directors is composed of nine members, four appointed by the president of the United States with the consent of the United States Senate and five ex officio members. The five ex officio members are the U.S. secretary of state, the secretary of the treasury, the administrator of the United States Agency for International Development, the CEO of the MCC, and the U.S. trade representative. Of the four appointed members, one each shall be appointed from lists of individuals with relevant international experience submitted by the minority and majority leaders of the House of Representatives and Senate, respectively. These four each serve initial terms of three years, and may be reappointed to one additional term of two years. They may continue to serve after the expiration of each of their terms of office until a successor has been confirmed, for a maximum of one year.
The secretary of state serves as the chairperson of the board. A majority of the members of the board constitutes a quorum, which must include at least one of the four appointed members.
Board members The board members : Position Name Party Assumed office Term expiration Chair (ex officio)Secretary of State Republican — Vice chair (ex officio)Secretary of the Treasury Republican — Member (ex officio)Administrator of USAID Vacant — Member (ex officio)CEO of the MCC Vacant — Member (ex officio)U.S. Trade Representative Republican — Member Republican Member Vacant Member Vacant Member Vacant
Nominations President Trump has nominated the following to fill seats on the board. They await Senate confirmation. Position Name Party Term expires Replacing CEO of the MCC Republican —
Advisory councils The Millennium Challenge Corporation has two federal advisory committees under the U.S. Federal Advisory Committee Act (FACA): the MCC Advisory Council and the Economic Advisory Council. The bodies give independent, non-binding advice to the corporation's leadership on strategic, policy and technical matters concerning international development, economic growth and MCC programmes.
Created in 2016, the MCC Advisory Council advises the corporation on partner countries' developments, private-sector engagement, infrastructure, sustainability and emerging trends in international development. The Council meets regularly and has recommended that more work be done with private sector partners, involve investors earlier in compact development, and build partnerships with institutional investors, philanthropic organisations and other non-traditional development partners.
In 2018, MCC announced the establishment of the Economic Advisory Council, which will support MCC's leadership and the Department of Policy and Evaluation with technical guidance on development economics and programme evaluation. It has worked on themes such as the link between economic growth and poverty alleviation, the private finance mobilisation through blended finance, and analytical approaches to regional compact development.
Senior executives, economists, investors, development practitioners from multinational corporations, financial institutions, universities, think tanks and international development organisations have served on the advisory councils. Some members of the MCC Advisory Council who have served in the past include Daniel F. Runde of the Center for Strategic and International Studies (CSIS); Stephen Groff, Governor of the National Development Fund of Saudi Arabia; Tariye Gbadegesin, Chief Executive Officer of ARM-Harith Infrastructure Investment Ltd; and Special Adviser to the President of Nigeria on Energy, Olu Verheijen.
Selection indicators A country is considered eligible for a compact (aid grant) if selected as eligible by the Board of Directors. The Board of Directors chooses countries based on three factors: policy performance as measured by the selection indicators on MCC's scorecard, the opportunity to reduce poverty in a country, and the availability of funds. In order to pass the scorecard a country must pass 10 of the 20 indicators, pass either the Political Rights or Civil Liberties Indicators, and pass the Control of Corruption indicator. For 16 of the 20 indicators, a country passes if its score exceeds the median score of its peer group. The remaining 4 indicators (Political Rights, Civil Liberties, Immunization Rates (if the median is above 90%, otherwise it is median based), and Inflation) are scored based on a static threshold.
All 20 indicators are compiled by third parties with no connection to MCC. MCC grants are made without considering politics. This is perhaps the most innovative aspect of MCC, as previous foreign aid missions were plagued by political considerations. The focus of the MCC is to promote economic growth in the recipient countries. The program emphasizes good economic policies in recipient countries, such as free markets and low corruption.
The indicators are:
IndicatorCategorySourceCivil libertiesRuling justlyFreedom HousePolitical rightsRuling justlyFreedom HouseFreedom of InformationRuling justlyReporters Without Borders Centre for Law and Democracy
Access NowGovernment effectivenessRuling justlyWorld Bank InstituteRule of lawRuling justlyWorld Bank InstituteControl of corruptionRuling justlyWorld Bank InstituteImmunization rate Investing in peopleWorld Health OrganizationPublic expenditure on healthInvesting in peopleWorld Health OrganizationGirls' primary education completion rate / Girls' secondary education completion rate Investing in peopleUNESCOPublic expenditure on educationInvesting in peopleUNESCO and national sourcesNatural resource protectionInvesting in peopleCIESIN/YaleChild HealthInvesting in peopleCIESIN/YaleInflation rateEconomic freedomInternational Monetary Fund WEOTrade policyEconomic freedomThe Heritage FoundationLand rights and access index Economic freedomIFAD / V-Dem InstituteRegulatory quality Economic freedomWorld Bank InstituteFiscal policyEconomic freedom IMF WEOAccess to CreditEconomic freedomFindex, World Bank, IMFGender in the EconomyEconomic freedom Women, Business and the Law World Bank, UCLAEmployment OpportunityEconomic freedomV-Dem Institute, UCLA
An eligible country must apply for a grant with a specific project in mind.
Countries and country tools Compact countries
Threshold countries
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 requires that each partner government creates a special purpose legal entity that will be accountable for implementing the compact program.
Eligible countries In the first year (2004), 17 countries were made eligible for an MCC grant: Armenia, Benin, Bolivia, Cape Verde, El Salvador, Georgia, Ghana, Honduras, Lesotho, Madagascar, Mali, Mongolia, Morocco, Mozambique, Nicaragua, Senegal, Sri Lanka, and Vanuatu. Madagascar and Honduras were the first countries to receive actual funding from the MCA. On June 16, 2006, the Gambia was suspended, citing deterioration in 8 of the 16 criteria categories. Mali was approved in October 2006 for a $461 million program to develop modern irrigation systems and an industrial park. Jordan was granted full compact eligibility, despite objections from Freedom House for its lack of full political and civil rights. MPs in Uganda from the opposition party hailed their country's rejection from full compact status, demanding instead a stronger effort in stopping the corruption that disqualified their country. In June 2007, MCA-eligible countries in Africa held a meeting in Accra, Ghana, to discuss their experiences. Malawi qualified for a full compact in 2007, while Mauritania became threshold eligible.
Threshold eligible Several countries were chosen in 2004 for a new part of the program called Threshold Program Assistance, which are smaller compacts used to assist a country close to meeting account eligibility to become eligible for a full program. Jordan received a Threshold program aimed at democracy and trade totaling $25 million. Yemen was previously eligible for a threshold agreement, but was suspended after their indicators fell too low to qualify. But having successfully completed a democratic election and various economic reforms, the MCC made Yemen eligible again for a threshold agreement. On December 12, 2007, the MCC Board selected Malawi for a compact and Mauritania for a threshold agreement, as well as allowing Albania, Paraguay, and Zambia to submit a first ever second stage threshold agreement. In 2007 the U.S. Ambassador to Swaziland highlighted the progress on the MCC indicators over the last few years and encouraged the country to work toward eligibility.
A full listing of MCC partner countries can be found at https://www.mcc.gov/where-we-work/. MCC's portfolio focuses mostly on African nations.
Funding