Millennium Challenge Corporation (MCC) Description, Background & Business 1

Millennium Challenge Account (MCA) Formally established in 2004 as a new, independent government corporation managed by a CEO and overseen by a Board Fulfills President Bush’s 2002 Monterrey commitment to “provide greater resources to countries taking greater responsibility for their own development” Illustrates that development is a key pillar in the US national security strategy -- helps to build democratic societies Mission: Poverty Reduction Through Economic Growth MCA resources add to other U.S. aid The process: eligibility, approval, MCAs, Threshold-- procurement, Compact--procurement, Procurement Agent, Fiscal Agent 2

Eligibility MCC eligibility intended as a reward to countries for good policy performance and be an incentive to improve further. A “candidate country” must meet one of the following income criteria and cannot be statu­torily ineligible to receive U.S. economic assistance under the Foreign Assistance Act or any other provision of law. Low Income Category: countries with a per capita income among the poorest 75 countries; or Lower Middle Income Category: countries with a per capita income above the poorest 75 countries but below $4,125. 3

Eligibility (cont) To evaluate policy performance, MCC uses objective and quantifiable policy in­dicators in three broad policy categories: Ruling Justly, Investing in People, and Encouraging Economic Freedom. MCC favors policy indicators developed by independent third party institutions that rely on objective, publicly available data and have an analytically rigorous methodology. MCC seeks indicators that have broad country coverage, cross- country comparability, and broad consistency in results from year to year. 4

Encouraging Economic Freedom Indicators Used Ruling Justly (WB) Investing in People Encouraging Economic Freedom Civil Liberties (Freedom House) Immunization Rates (World Health Organization and UNICEF) Business Start-Up (IFC) Political Rights (Freedom House) Public Expenditure on Health (World Health Organization) Land Rights and Access (IFAD and IFC) Control of Corruption (World Bank/Brookings Institution WGI) Girls’ Education (UNESCO) Trade Policy (Heritage Foundation) Government Effectiveness (World Bank/Brookings Institution WGI) Primary Education Completion (Scorecard LICs) Regulatory Quality (World Bank/Brookings Institution WGI) Rule of Law (World Bank/Brookings Institution WGI) Secondary Education Enrolment (Scorecards LMICs) Inflation (IMF WEO) Freedom of Information (Freedom House / FRINGE Special/ Open Net Initiative) Public Expenditure on Primary Education (UNESCO) Fiscal Policy (IMF WEO)   Child Health (CIESIN and YCELP) Access to Credit (IFC) Natural Resource Protection (CIESIN and YCELP) Gender in the Economy (IFC) 5

Countries with Completed Compacts since 2004 (in millions) Latin America Africa Eurasia El Salvador: $461M Nicaragua: $175M Honduras: $215M Out of 21 completed compacts, 12 were located in the Africa Region. Benin: $307M Burkina Faso: $481M Cape Verde: $110M Ghana: $547M Lesotho: $363M Madagascar: $110M Mali: $461M Morocco: $698M Mozambique: $507M Namibia: $305M Senegal: $540M Tanzania: $698M Armenia: $236M Georgia: $395M Mongolia: $285M Moldova: $262M Philippines: $433M Vanuatu: $66M 6

Overview: MCC Africa Engagement Over $5bn approved: COMPACTS Malawi: $351M (suspended) Liberia: $256M Cape Verde: $66.2M Ghana: $498M Namibia: $304M Mali: $460M Mozambique: $507M Lesotho: $362M Tanzania: $698M Senegal: $540M Madagascar: $110M (terminated) Marocco: $697M Cote d’ Ivoire: $525M Niger: $437M THRESHOLD PROGRAMS Burkina Faso: $481M Kenya: $13M Uganda: $10M Sao Tome & Principe: $7.3M Rwanda: $25M 7

Current MCC Threshold Countries FY2016 (in millions) Latin America Africa Eurasia Guatemala: $28M Honduras: $16M Sierra Leone: $44M Kosovo: $49M

MCC Ongoing Compacts FY2016 (in millions) Latin America Africa Eurasia El Salvador: $277M Benin: $375M Cape Verde: $66M Ghana: $498M Liberia: $256M Morocco: $450M Niger: $437M Cote D’ Ivoire: $525M Malawi: $351M Zambia: $355M Georgia: $140M Jordan: $275M Indonesia: $600M Philippines: $433M

Planned MCC Compacts Latin America Africa Eurasia Lesotho Senegal Mongolia Nepal Philippines Kosovo Sri Lanka

MCC Latest Commitment MCC launched its latest commitment to help mobilize the private sector. MCC’s new Public-Private Partnership (P3) Platform includes a commitment of $70M in MCC grants -incl. $52M in Africa- to support public-private partnerships in partner countries. This new commitment is expected to generate $1bn in private-sector investments over the next five years. 11

Compact Commitment per Sector 12

Contact The PFD Group 818 18th Street, NW, Suite 1010 Washington, D.C. 20006 USA Tel. + 1 202 785-0052               + 1 202 785-0053      Fax + 1 202 521-0596 Email: Mr. Spiros Voyadzis spiros.voyadzis@pfdusllc.com 13

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