MCC approves compact aimed at reducing poverty, stimulating growth
USINFO.STATE.GOV
16 August 2005
The Bush administration’s Millennium Challenge Corporation (MCC) has
approved a five-year, $295.3 million agreement with Georgia that aims
Georgia To Receive Over $295 Million in Millennium Aid Fundingto reduce
poverty and stimulate economic growth in the regions outside of Tbilisi, the
country’s capital.
The agreement — called a compact – is based on proposals developed by the
government of Georgia. It focuses on rehabilitating regional infrastructure
and promoting private sector development, according to an MCC statement
issued August 16. The compact is expected to be signed in September.
The funding will support improvements to roads, a gas pipeline and other
infrastructure; an investment fund to provide risk capital for small and
medium-sized enterprises; and grants and technical assistance for farmers
and agribusinesses.
“Georgia’s proposal was truly a homegrown effort,” said MCC Vice President
Charles Sethness. “They had a vision for reducing poverty and submitted a
thoughtful, results-oriented program to execute that vision. This Compact
is a testament to Georgia’s commitment to development.”
In March 2002, President Bush proposed a “new compact for global
development,” which linked greater contributions from developed nations to
greater responsibility from developing nations. The mechanism to implement
this compact is the Millennium Challenge Account program, under which
development assistance is provided to those countries that rule justly,
invest in their people, and encourage economic freedom. The Millennium
Challenge Corporation was established on January 23, 2004, to administer the
MCA.
For additional information on the MCC and compacts that have already been
signed with Madagascar, Cape Verde, Honduras and Nicaragua, see Millennium
Challenge Account.
Following are an MCC press release and a fact sheet:
Millennium Challenge Corporation
August 16, 2005
MILLENNIUM CHALLENGE CORPORATION BOARD APPROVES $295.3 MILLION COMPACT WITH
GEORGIA
Washington, D.C. -The United States, through the Millennium Challenge
Corporation, has approved a five-year $295.3 million Compact with Georgia.
The Millennium Challenge Compact aims to reduce poverty and stimulate
economic growth in the regions outside of Georgia’s capital, Tbilisi, where
more than 50 percent of rural households live below the poverty line. By
focusing on rehabilitating regional infrastructure and promoting private
sector development, the program will directly benefit approximately a
half-million Georgians. In addition, over one quarter of the population of
the country will receive indirect benefits from the program; for example,
the reliable transmission of gas will reduce environmental, health, and
safety risks.
“Congratulations to the people and Government of Georgia for developing an
integrated program targeted at helping the regional poor,” said MCC Vice
President Charles Sethness. “Georgia’s proposal was truly a homegrown
effort. They had a vision for reducing poverty and submitted a thoughtful,
results-oriented program to execute that vision. This Compact is a
testament to Georgia’s commitment to development. MCC looks forward to
building on our partnership with the people of Georgia to ensure that they
have the tools needed to lift themselves out of poverty.”
The Millennium Challenge Corporation anticipates signing the Compact with
Georgia in September. In addition to approving a Compact with Georgia, MCC
has signed Compacts with Madagascar, Cape Verde, Honduras, and Nicaragua.
MCC is also actively engaging with other Millennium Challenge Account
eligible countries.
Launched by President Bush, the Millennium Challenge Account is a historic
approach to development assistance that recognizes sound policies and good
governance are critical to poverty reduction and economic growth in
developing countries.
—–
Millennium Challenge Corporation (MCC), a U.S. government corporation
designed to work with some of the poorest countries in the world, is based
on the principle that aid is most effective when it reinforces good
governance, economic freedom, and investments in people that promote
economic growth and elimination of extreme poverty.
GEORGIA AND MILLENNIUM CHALLENGE CORPORATION: BUILDING A PARTNERSHIP FOR
POVERTY REDUCTION THROUGH SUSTAINABLE ECONOMIC GROWTH
The Millennium Challenge Corporation’s (MCC) Board of Directors has approved
a five-year, $295.3 million Compact with Georgia.
In Georgia, 54 percent of the population living outside of the capital city,
Tbilisi, lives in poverty. The Georgians identified two barriers to poverty
reduction and economic growth in the regions outside of Tbilisi — a lack of
reliable infrastructure and the slow development of businesses, particularly
agribusiness. To address these impediments, the people of Georgia, through
a broad consultative process, developed a program focused on rehabilitating
regional infrastructure and enterprise development.
The two projects complement one another by facilitating economic growth.
The first enables agricultural and other suppliers to more easily connect
with consumers and the second facilitates access to capital for business
development. These projects will improve the lives of the Georgian poor by
helping them to integrate economically through improved access to jobs and
markets, by providing more reliable access to basic services such as heat
and electricity, and by providing capital and technical assistance for
enterprise development.
Regional Infrastructure Rehabilitation
The Regional Infrastructure Rehabilitation Project of the Compact totals
$211.7 million and includes the following three activities:
— Samtskhe-Javakheti (S-J) Road Rehabilitation – The $102.2 million
activity will fund rehabilitation and construction of approximately 245
kilometers of main road traversing the S-J region.
— Energy Rehabilitation – The $49.5 million activity will be used to
rehabilitate the North-South Gas Pipeline that fuels electric power
generation and provides heat to homes and businesses, and to further develop
and implement the Georgian government’s energy sector strategy.
— Regional Infrastructure Development Facility – The $60 million activity
will fund regional and municipal physical infrastructure for water supply,
sanitation, irrigation, municipal gasification, roads and solid waste in
regions outside of Tbilisi.
Enterprise Development
The Enterprise Development Project of the Compact totals $47.5 million and
includes the following two activities:
— Georgia Regional Development Fund – The $32.5 million activity will fund
a professionally and independently managed investment fund to provide
long-term risk capital and technical assistance to SMEs [small and
medium-sized enterprises], primarily in the regions outside of Tbilisi, and
will identify legal and policy reforms needed to improve the investment
environment.
— Agribusiness Development Assistance – The $15 million activity will be
used for technical assistance and grants to farmers and agribusinesses that
supply agricultural products to the domestic market.
Program Administration
Program Administration and Control will cost $27.6 million and Monitoring
and Evaluation will cost $8.4 million.
The Millennium Challenge Compact with Georgia is expected to improve the
lives of the rural poor in the following ways.
— Reduce the incidence of poverty in the Samtskhe-Javakheti region by 12
percent.
— Benefit approximately a half-million Georgians, and over one-quarter of
the population of the country will receive indirect benefits from the
program.
— Reduce average travel time from regional areas to Tbilisi –currently
6.5 hours — almost three hours or 43% percent, thereby reducing
transportation costs for farmers, for small business owners, and for
Georgians needing access to social services.
— Reduce the risk that a major accident will occur due to the gas
pipeline’s dilapidated condition. The completed rehabilitation of the gas
pipeline will provide reliable heat and electricity to over one million
Georgians.
The Compact is expected to be signed in September.
(Distributed by the Bureau of International Information Programs, U.S.
Department of State. Web site: )