MCC CEO’s Remarks at Powering Africa Summit

Sean Cairncross, MCC CEO Photo courtesy of MCC

MCC CEO Sean Cairncross’ Remarks at the Powering Africa Summit

For Immediate Release
Millennium Challenge Corporation
February 24, 2020

MIAMI, FLORIDA, February 24, 2020 – Today, MCC CEO Sean Cairncross delivered remarks at the 6th Annual Powering Africa Summit in Miami, Florida. The Summit brought together more than 370 energy leaders from Africa with innovative technology providers and investors from North America to accelerate business between the two continents.

Read his full remarks below:

Hello, thank you—I am so glad to join all of you this afternoon.

Thank you, Ambassador [of the Republic of Mozambique] Carlos dos Santos, for leading this important discussion here today.

Mozambique is one of our most recently selected partner countries, and MCC looks forward to working closely with you in the months and years to come.

My name is Sean Cairncross, and I am the CEO of the Millennium Challenge Corporation, or MCC.

I am thrilled to be here in Miami alongside so many wonderful partners—each aiming to bring power to more people in Africa by working together to strengthen the energy sector across the continent.

Development of, and investment in, the African power sector is one of the most important challenges of our time; for the Millennium Challenge Corporation it is also one of the greatest opportunities.

In my many visits to our MCC partner countries—like Malawi—I’ve seen first-hand how U.S. Government investment in the power sector has changed lives—putting countries on a path toward greater economic prosperity.

Grace Ghambi is a fourth-year electrical engineering student at the University of Malawi because of an MCC-sponsored scholarship. While visiting Nkula power plant outside of Blantyre, Grace explained to me that MCC’s investment made her education possible.

And now—after she finishes her schooling—Grace wants to come back and assist on implementing further MCC investment by working at ESCOM, an electrical utility in Malawi that is helping to privatize the energy sector. She has also started a girls mentoring group, sharing information and encouraging young women to reach their dreams, and inside of two years she has reached thousands of young girls in Malawi.

If that’s not a good demonstration of America’s power to inspire—to drive economic prosperity through investment in the energy sector—I don’t know what is.

MCC is the largest U.S. Government contributor of power infrastructure funding under Power Africa to date.

Those of you familiar with MCC know that our development model is different.

By design, our approach brings together the rigor, analysis, and expertise of the private sector and donor agencies—but all with one focus—to reduce poverty through economic growth—to move these countries from aid partners to trade partners.

And, where and how we work are subject to several rules.

Put simply, we only work with developing countries that are well governed. That is, they are low or lower-middle income and they have demonstrated a commitment to consolidating the reform necessary to build economic freedom, ruling justly, and be responsive to their citizens. These countries must be democratically governed and actively working to prevent corruption.

Our investments are grants—not loans that could add to a country’s debt burden—and they are limited to just five years, so there is real incentive to get things done.

But don’t let the five-year timeline make you think these are easy—we tackle difficult problems and push our partners on complex reforms alongside our big infrastructure investments.

What sets MCC apart is its data-driven decision-making process. We first look at what factors are holding back a country’s economy, and then we work directly with our partner government to design the investment.

MCC is built on country ownership—so our partner country governments, civil society, and the private sector are leading the way in identifying the problem, designing the solution, and implementing the investment from day one.

The story of MCC is really all about consistently applying these principles of effectiveness and accountability—proving that U.S. development dollars go beyond just rhetoric—we put ideas into action, to get real results.

To date, MCC has signed 37 compacts with 29 countries.

And, currently, about two thirds of our partner countries are in Africa.

Across the continent we currently have six compacts in implementation, and four in development.

Our active power sector investments are in Benin, Ghana, Liberia, and Senegal.
 
Each of these compacts directly address the lack of reliable, affordable power holding these countries back from achieving the kind of economic growth that will lift more of their citizens out of poverty.

When MCC makes these multi-million dollar investments in the power sector, we pair our major infrastructure projects with reforms that will improve the policies and institutions that govern the sector—we insist on this model to 1) ensure country ownership and accountability, 2) to ensure the sustainability of our investments and, 3) to create a stable environment that encourages private investment in the power sector in each of these countries.

One example I touched on this morning, but that I’d like to highlight again is Benin.

MCC’s $375 million Benin 2 Power Compact aims to strengthen the country’s power grid, including on-grid solar generation and off-grid power solutions.

And, funding for each of these projects is conditioned. Meaning, the Government of Benin must achieve specific institutional and utility reforms before any MCC funding is released. An example of this is tariff reform—to establish both Independent Power Producers and off-grid enabling environments, as well as improved utility governance to introduce private industry participation into the power sector.

This is important for three reasons.

One, it speaks to the agency’s unique model and our ability to incentivize and drive reforms before any American taxpayer dollars go out the door. Our data-driven programs are designed to increase accountability and deliver quality results and cost-effective investments on behalf of the American people—investments that not only align with U.S. values and national security interests, but also maximize the impact of each dollar spent, and open up new markets to U.S. businesses around the globe.

And two, MCC plays a unique role within the development trajectory of its partner countries by working directly with the government in driving reforms to create a sustainable, investment-ready environment. We insist that our country partners uphold the rule of law, work to eliminate corruption, and consolidate democratic and free market reforms to attract private investment and open up capital markets within the sector.

Finally, the MCC development model insists upon self-reliance and increases a country’s ability to tackle problems on their own. Our compacts build capacity through country ownership and drive sustainable economic growth that creates jobs and real economic opportunities.

Through these foundational principles of transparency, country ownership, and mutual accountability for results, MCC stands in stark contrast to the debt-laden development models, such as Belt and

Road, which fuels debt, economic distress, and threatens a country’s autonomy and stability.

Our approach has a sustained impact—Chinese projects often leave only the infrastructure behind—typically without the necessary sustainability measures in place—but MCC’s programs invest in infrastructure and capacity building—leaving behind strengthened institutions, ministries, and utilities, with trained local labor, and market ready economies.

Just as important, MCC‘s process brings along members of a partner country’s civil society—strengthening stability.

Elsewhere in West Africa, MCC’s $600 million Senegal II Power Compact includes the construction of a 225 kilovolt network around Dakar, accounting for 60% of the country’s electrical demand. This new, reliable high-voltage network will encourage private-sector investment in generation, resulting in lower electricity costs.

MCC also funded a long-term strategy and action plan that underpinned Senegal’s power sector reform to provide more legal clarity in the sector and help ensure the financial viability of the country’s electrical utility.

Looking ahead, MCC is developing a compact with Burkina Faso. The proposed compact includes MCC’s biggest investment in battery storage to date, which aims to assist Burkina Faso’s continued diversification away from its legacy high-cost thermal plants, and toward increased solar power and regional imports.

Through these and other investments in power infrastructure and sector reforms, MCC is furthering the larger goals of the U.S. and Power Africa, advancing our mission to reduce poverty through economic growth. MCC remains committed to working with our partner country governments, the private sector, and civil society, across Africa, to unlock the continent’s economic potential.

We are also sending a clear message that the United States is serious about building lasting partnerships—moving aid partners to trade partners—leading to a more prosperous and stable world.

The challenge of powering the African continent is enormous, but through 1), collaboration, 2), innovation, and 3)—and arguably the most important—accountability, together, we will get the job done.

Thank you.

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