Podcast Summary: "Putting the Emphasis on Infrastructure – Dana Hyde on MCC's Next Decade"

The CGD Podcast | Center for Global Development
Guest: Dana Hyde, CEO, Millennium Challenge Corporation
Host: Rajesh Merchandani
Date: May 11, 2015

Episode Overview

In this episode, host Rajesh Merchandani speaks with Dana Hyde, CEO of the Millennium Challenge Corporation (MCC), about the organization’s first decade and its vision for the future. The discussion centers around MCC’s unique approach to reducing poverty through economic growth, its emphasis on infrastructure, and its commitment to accountability, country ownership, and results. The episode also explores the broader trends in development finance, especially the evolving role of private investment and performance-based aid.

Key Discussion Points & Insights

MCC’s Guiding Principles and Achievements

• Mission and Method:
  • MCC’s purpose is to "reduce poverty through economic growth" ([00:32]).
  • Founded with three principles: accountability for results, country ownership, and partnerships/data ([00:39]).
• Investment Focus:
  • 65% of MCC's portfolio has gone to Africa; 70% to infrastructure ([00:52]).
  • MCC’s country-led, demand-driven model is seen as ahead of its time ([01:23]).
  • "Absolutely...we're seeing a very demand-driven focus from countries...They are looking for jobs, they're looking for economic growth..." — Dana Hyde ([01:25]).
• Country Ownership Model:
  • Collaboration with finance ministries and economists to diagnose constraints to growth and target investments ([02:15]).
  • Recognition of urbanization and youth bulge as key development drivers ([02:10]).

Measuring Success and Results

• Impact on Governance:
  • MCC uses selection criteria centered on governance and performance, spurring participating countries to reform laws even before receiving funds ([02:59], [03:07]).
    • "Countries are changing their laws just to be eligible to get our assistance. I think that's phenomenal." — Dana Hyde ([03:08]).
• Infrastructure Expertise:
  • Unique capacity to deliver large-scale projects like roads and power infrastructure ([03:25]).
• Rigorous Results Measurement:
  • All projects are independently evaluated: 40% impact, 60% performance evaluations ([04:18]).
  • Outputs (like completed infrastructure) are meeting targets; outcomes (income rises) are slower to materialize ([04:54]).
  • Recognition that intangible impacts, such as policy and institutional reforms, need better tracking ([05:40]).

Embracing "Pay for Results"

• Alignment with MCC’s Approach:
  • Pay-for-results fits with MCC’s focus on outcomes and country-led development ([06:24]).
  • At least one of the nine upcoming compacts will pilot a pay-for-results model ([06:24]–[07:13]).
    • "It is happening. It is happening. We are shaping..." — Dana Hyde ([06:52]).
• Future Investment Plans:
  • Upcoming $2 billion investment across nine compacts, with results-based financing included in an increasing number ([07:10]).

MCC’s Size, Growth, and Influence

• Agency Scale and Expectations:
  • MCC’s budget has been flat or declining (~$900M), but seeks an increase due to its catalytic impact ([07:47]–[08:43]).
    • "MCC, I'd like to say, punches above its weight." — Dana Hyde ([07:47]).
• Leveraging Influence:
  • Beyond direct funding, MCC influences policy and institutional change, amplifying its impact ([07:51]).

The Evolution of Development Finance

• From Monterey to Addis Ababa:
  • MCC launched as a "deliverable" at Monterey; now a "contributor" to global dialogue ([09:13]).
    • "MCC has gone from the deliverable to the contributor 10 years later." — Dana Hyde ([09:13]).
  • Expectation that new international conferences will focus on leveraging private investment and establishing measurable goals ([09:22]–[10:06]).
• Role in the Next Decade:
  • MCC seen as a vanguard in unlocking private sector resources (e.g., via co-financing and public-private partnerships) ([10:18]).
    • Reference to Ghana Compact as an example ([10:35]).

Broader Policy Context

• US Foreign Policy and Development:
  • Development positioned as a core component of American strategy, on par with diplomacy and defense, as highlighted by the Quadrennial Diplomacy and Development Review (QDDR) ([11:27]–[11:53]).
    • "I think there is for economic reasons, ... for strategic reasons...and for moral reasons, it's the right thing to do..." — Dana Hyde ([11:53]).

Vision for MCC’s Next Decade

• Looking Forward:
  • Continued emphasis on facilitating private investment, supporting reforms, and achieving outsized policy impact ([12:33]).
    • "MCC I think will really have made a mark in how to put pressure private capital to work in the developing world." — Dana Hyde ([12:33]).

Notable Quotes & Memorable Moments

• Country-Driven Approach:
  "We're seeing a very demand-driven focus from countries... They're looking to figure out how we can move the dial on markets." — Dana Hyde ([01:25])

• Incentivizing Good Governance:
  "Countries are changing their laws just to be eligible to get our assistance. I think that's phenomenal." — Dana Hyde ([03:08])

• Results and Learning:
  "The early results are not showing as much as we want in terms of income rise, which is what we're looking for. And we're... making changes accordingly in the portfolio." — Dana Hyde ([04:54])

• Innovating with Performance-Based Aid:
  "It is happening. We are shaping... You will see pay for results in some of those [compacts]." — Dana Hyde ([06:52], [07:08])

• Development’s Place in Foreign Policy:
  "Putting development on par with diplomacy and defense has been a cornerstone of this administration. And I think it's the right thing to do and it's the smart thing to do." — Dana Hyde ([12:18])

Key Timestamps

• 00:39: MCC’s core principles explained
• 01:23: Country-driven, demand-responsive model
• 02:59 – 03:25: Major successes: governance, country ownership, infrastructure
• 04:18 – 05:22: Independent evaluation of projects, lessons learned
• 06:24 – 07:13: Introduction and commitment to pay-for-results pilots
• 07:47 – 08:43: MCC’s scale, budget, and strategic role
• 09:13 – 10:06: Role of MCC in international finance conferences and private sector catalytic efforts
• 11:27 – 11:53: US foreign policy, development, and the QDDR
• 12:33 – 13:02: MCC’s future vision for next decade

Conclusion

Through this engaging conversation, Dana Hyde underscores MCC’s commitment to data-driven, country-owned, and results-oriented development. The agency’s focus on infrastructure, good governance, innovation in aid models (like pay-for-results), and catalytic influence on both policy and private investment continues to set it apart. As the global landscape shifts towards more private sector involvement, MCC aims to remain at the forefront, shaping development practices for the next decade and beyond.