Thank you Mahesh. And thank you Florie, Biova and the Corporate Council on Africa for all you do to foster links between Africa and the US. I am particularly thrilled to be here today with the launch of the Prosper Africa Build Together Campaign.
Just like in the US, emerging countries are looking at infrastructure development as a key catalyst for an economic reboot.
We need to look no further than the SDGs to understand how core infrastructure is for people, planet and prosperity.
Last month, President Biden and G7 Leaders endorsed the multilateral Build Back Better World (B3W) infrastructure partnership to help meet the tremendous infrastructure needs in low and middle income countries.
I am so pleased that the United States Government (USG) is poised to make a strong offer of sustained and meaningful investments in infrastructure, leveraging its full foreign assistance toolkit to develop quality infrastructure that boosts sustainable, inclusive and job-rich economic growth.
How does MCC complement other USG agencies and what are our lessons learned?
We all have a part to play.
MCC has a narrowly focused legislative mandate, and we are not everywhere. We focus on low and low middle income countries that are well-governed. But where we do work, MCC is generally the largest USG development partner.
Guided by our mission to reduce poverty through economic growth, MCC has a proven track record of delivering complex infrastructure projects on budget, on time and with high standards.
- We have learned it is important to take a systems approach, focusing on physical, institutional, and human infrastructure.
- MCC has “high quality money” – grants that are large, multi-year, and predictable. This is no year money, meaning it is patient capital, not earmarked by sector. And it does not add to a country’s debt burden.
- With these flexible grants – which range from $65 to $700 million for an average size of $350 million – MCC is able finance the gamut of investment needs in the infrastructure space, ranging from master plans and other studies to construction to human capacity. We typically focus on productive economic infrastructure in sectors like transportation, energy, and water, as well as in agriculture, health and education.
- Beyond financing, we know it is crucial to incentivize and work with governments so that they make—the often difficult—policy, legal and institutional reforms to promote the sustainability of investments and the viability of the overall sector.
- We need private sector capital and know-how. MCC’s grant funding can be used for blended finance to help de-risk private investments and to create the conditions for the private sector to thrive. We are piloting a new partnership with US DFC that will leverage our grant funding to de-risk impactful DFC-lead transactions in MCC partner countries.
- Country ownership and partnership is critical. MCC keeps the country in the drivers’ seat.
- And finally, we have learned that taking short-cuts today means someone pays tomorrow, or the risk of building a bridge to nowhere is high. This is why MCC-funded infrastructure is designed and built to high standards, with consultations with communities.
Now to your specific question on bridging the gap, Mahesh. I think we need to go beyond “bridging the funding gap” to addressing its underlying causes.
- The gap is not simply a lack of financial resources or structural innovations.
- It may be more about a combination of sub-optimal policy choices, that in the power sector might include tariff-setting or procurement methods or low technical capacity to manage assets, or all the above.
- This is the reason MCC does not only provide money to bridge the funding gap – we take a long-term view and work on the structural, institutional, and technical capacity issues that led to the funding gap in the first place.
We need persistent focus on a number of steps – together with innovative solutions to meet the challenges that arise along the way.
So, here is solution, with a small “s”, that addresses some of the barriers to the supply of bankable projects, keeping in mind that McKinsey estimates that 80 percent of African infrastructure deals fail to reach bankability.
- MCC, in partnership with Africa50, is setting up the Millennium Impact Infrastructure Accelerator (MIIA), an independent project preparation and technical capacity facility that will source, prepare, and fund impact-first sustainable infrastructure projects, focusing on projects under $100 million and thus filling a market niche.
Mahesh, MCC is intent on playing our part to help reboot economic growth through quality infrastructure investments.
We are thrilled to contribute to Build Back Better World and Prosper Africa. I am pleased to announce that MCC will sign over $1 billion of new economic growth programs in Africa between now and the end of 2022.