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Moderator: Ambassador John J. Danilovich, CEO, Millennium Challenge Corporation
Panel 1 Participants:
Ken Hackett, President, Catholic Relief Services
Sofia Mohapi, CEO, Millennium Challenge Account-Lesotho
Ritu Sharma Fox, President and Co-Founder, Women Thrive Worldwide
Dr. Juan Sebastián Chamorro, Director General, Millennium Challenge Account- Nicaragua
Announcer: Ladies and gentlemen, please let's welcome the moderator for this afternoon's next panel, the Chief Executive Officer of the Millennium Challenge Corporation, Ambassador John Danilovich.
Ambassador John Danilovich: I can't tell you how delighted I was to see that film. It was very enjoyable to watch and it gave me a chance to catch my breath after the stunning words of Bob Geldof. I thought they were truly remarkable.
I am John Danilovich and it's my great privilege to welcome all of you to our MCC panel discussion this afternoon. The themes of country ownership and good governance and results-based programs with accountability discussed so far in today's programs are essential parts of the new era in international development that is the heart of this summit and the fundamental principles upon which the Millennium Challenge Corporation is founded. Our panel discussion this afternoon will focus on a key pillar in reducing poverty - creating economic growth. This is a principle I see at work every day in my capacity as the CEO of the Millennium Challenge Corporation, America's newest development assistance program. MCC is investing nearly $7 billion dollars in partner countries worldwide to create conditions where funding helps these countries win the fight against poverty.
We know, and the panel will explore today, that there cannot be a significant reduction in poverty if a country is not experiencing economic growth. Countries that experience sustained, rapid economic growth benefit in two ways. First, there is a direct benefit. Economic growth raises household incomes, pulling households out of poverty. And secondly, there are important indirect benefits. Wealthier societies are better able to afford social investments such as healthcare and education. Countries that have experienced significant economic growth have seen their poverty levels fall, and counties that see their growth rates rise see poverty fall even faster. President Bush has taken bold and courageous moves during his presidency that have fundamentally changed the thinking about how assistance is delivered by placing a premium on programs that foster economic growth for the world's poor.
The U.S. no longer views assistance as just a question of allocating funds in the name of foreign aid, although U.S. aid funding has increased dramatically during the past eight years. The conversation about aid has changed and matured. Instead of measuring how much we are funding, we are asking what results and outcomes we are achieving in programs funded by the American taxpayer. MCC was born out of this idea, based in the principles that aid funding will have a greater impact in those countries with a commitment to reform and good policy performance, countries dedicated to sound political, social and economic policies. Then economic growth is the fundamental building block of meaningful poverty reduction. That counties cannot be passive recipients of outside aid, but must be champions of their own development. And we must hold ourselves and our partner counties accountable for their aid we provide. Now with four years of experience under our belt, the MCC concept is a reality. What was a great concept has now become a great reality with implementation activities going full speed ahead around the globe.
We are honored to have a very distinguished panel who is familiar with these innovations and who come from around the world and from some of our participating partner countries. Each of them has an area of expertise that will enrich our conversations today and bring unique perspectives to our discussions on reducing poverty through economic growth. Let me introduce our distinguished panelists who can illustrate this connection.
Panelists, if you could come out on the stage now, I'd like to introduce each of you.
We'll hear from Ken Hackett, President of Catholic Relief Services. Ken oversees an organization with operations in 99 countries and a global staff of more than 5,000. He has dedicated a 35-year career to Catholic Relief Services beginning in 1972 when he served on the ground in Sierra Leone and in posts throughout Africa and the Philippines. Ken also serves on the MCC Board and I value his judgment and counsel greatly.
Next we have Sophia Mohapi from Lesotho. Ms. Mohapi led the team that designed her country's $363 million grant with the U.S. government through the Millennium Challenge Corporation.
Then we'll hear from Ritu Sharma Fox, co-founder and president of Women Thrive Worldwide, formerly known as Women's Edge Coalition. A graduate of Georgetown and Johns Hopkins, she has played a vital role in ensuring that the interests of poor women worldwide are incorporated into U.S. economic assistance and trade policies and, in some cases, into U.S. law.
Ritu and her organization played an instrumental role in the formulation of MCC's comprehensive gender policy in 2006.
And we'll hear from Juan Sabastian Chamorro from Nicaragua. Mr. Chamorro is the head, the Director General, of the organization that is implementing his country's $175 million program with the Millennium Challenge Corporation. Panelists, I would encourage each of you to share with us what you've seen with your own eyes about the connection between economic growth and poverty reduction. I will also pose a question to you individually as we get out discussion started and before throwing out a few general questions to the group.
I'll turn the floor over to our first panelist, Mr. Ken Hackett.
Ken, after our introductory remarks, please tell us how governments and non-governmental sectors can work together in more integrated ways to reduce poverty through economic growth.
Ken Hackett: Thank you very much, John. It's- this is a pleasure to be here and to participate in this very special event. I was thinking, as I sat out there earlier today, 40 years ago I stepped foot for the first time on the continent of Africa as a Peace Corps volunteer. And in the subsequent years, I remember all the conversations and hopes about what if our government did this or that. We could really spend money to reduce disease, to promote economic growth. And to sit here today and hear reports on all of these things happening - civil society participation, accountability, holding governments responsible for results - those were the dreams of young people so many decades ago and they're now coming true.
We're not there yet, but the beginning has started. And I think we, as Americans, can be proud of what we've done. How can civil society organizations, non-governmental organizations, governments, our government work together to promote growth? In the Millennium Challenge Corporation, I think we're seeing a good foundation for this to happen. It was rough starting off in the beginning. Collaboration between MCC and UNSAID was difficult because it was new.
It's now moving in lockstep and we're making real progress. The engagement of civil society in the countries that I've visited that have received MCC compacts or threshold grants is really impressive.
Many countries have the civil society engagement in their PRSP. MCC has taken it to another level. Truly involving civil society, different groups in society, business as well as private groups together with the government in looking for a new future, a future of growth and a future about poverty alleviation is starting to happen. I saw it a few months ago in Rwanda and in Tanzania.
I saw it last year in Madagascar where I sat down. Actually in Madagascar they have a board of directors that guide the MCC program there, very much modeled on the board of directors that we have here in the United States, of public and private individuals. This can happen, I think, with the different offices of our government and of the many private organizations that want to contribute, both business and non-profit, we can form a new partnership and it can work.
Ambassador John Danilovich: Thank you, Ken - very, very moving. I'd like to now turn the floor over to Sophia Mohapi.
As I mentioned, Sophia is the head of our MCC partnership in Lesotho. Sophia, I wonder if you could share with us what specific efforts have the most success in promoting economic growth in your country.
Sofia Mohapi: Thank you Ambassador Danilovich. The specific efforts that have the most success in promoting economic growth in a country like Lesotho really can be accomplished by using a model that requires the Lesotho country to take full ownership of the whole program development by identifying the country's needs through a consultative process involving government, non-government organizations, the private sector and the civil society at large. And this can be accomplished through setting priorities, given limited resources available and having the country take full responsibility for program implementation. As the ambassador rightfully pointed out, countries cannot be passive recipients of outside aid, but must be champions of their own development. In Lesotho, three sectors were identified - health, water and private sector development. It was also recognized that gender was going to be a major issue in program implementation, and therefore in December of 2006 the house of parliament of the kingdom of Lesotho passed a law cited as the Legal Capacity of Married Persons Act.
The Act provides for removal of minority status of married women. It repeals marital power which a husband has over the person and property of the wife. It removes various types of restrictions which the marital power places on the legal capacity of the wife such as entering into a contract, registering removal of property in the name of the wife, acting as a trustee of an estate and acting as a director of a company. But most importantly, both men and married women, now have access to the same economic opportunities such as access to credit and access to land and property. And in Lesotho where the married- majority of married women are engaged in some economic activity or another, this Act has enabled married women to have access to credit which most require to grow their businesses. Again, as Ambassador Danilovich pointed out, economic growth is a building block of meaningful poverty reduction. The MCC compact also provides an intervention designed to mitigate the negative economic impacts of poor maternal health, HIV and AIDS and other diseases.
And how is this done? Through strengthening the country's healthcare system by renovating or rehabilitating or relocating 150 health centers throughout the country, construction of individual viable treatment clinics in 14 hospitals to enable people to have access to life-prolonging new medication in a nation heavily stricken by HIV and AIDS. But collaboration with PETFAR, the President's Emergency Plan for AIDS Relief should, and will, make it possible for people living with AIDS to have their life prolonged and thus be able to participate in economic activity.
The other sector covered under the compact is water. And this will be done by provision of additional access to improved water supply and sanitation in the rural and urban areas for domestic, commercial and industrial users.
Provision of critical infrastructure necessary to provide additional water to support the garment and textile operations, we provide badly needed employment opportunities for thousands of Lesotho who are mostly women. In the private sector development, the proposed land reform project will make it possible to use land as an economic asset. And lastly, the civil legal reform is intended to improve the investment environment for all businesses by having the commercial court operational, creating a modern case management procedures, promoting dispute resolution mechanisms and developing simplified small claims court. All of these activities, ladies and gentlemen, will stimulate economic growth and thus reduce poverty.
Thank you very much.
Ambassador John Danilovich: You know, Lesotho is a very small country, geographically and with regards to population, but Sophia has so eloquently expressed in such an impressive way the enormous strides that Lesotho has made in partnership with the Millennium Challenge Corporation to empower women in so many respects. You can't have economic growth, you can't have development if half of your population is disenfranchised either politically, economically or socially. Lesotho has taken the necessary steps to reduce those barriers to the involvement of women in those aspects of Lesotho life. With regards to HIV-AIDS, with regards to water, with regards to civil reform, these are tremendous strides that Lesotho has taken. And many of our countries have taken similar constitutional and legislative and reform requirements to meet our criteria to have a good government, to take the necessary steps for your people to progress economically and politically and socially to become good governments, to have a good government infrastructure so that they can in fact implement their physical infrastructure MCC programs.
But Sophia, Lesotho is certainly a shining exemplary model for us at the MCC in terms of the great efforts that you have made. And quite naturally, Ritu, that segues very directly into the great efforts that your organization has made with regards to the empowerment of women. And I wonder if you could expand on that subject of women and economic growth.
Ritu Sharma Fox: Thank you, Ambassador. It's definitely an honor to be with you at this capstone event, and I congratulate you on everything you have been able to accomplish. The link between women and economics is really all around us, but we tend not to see it. There's a 60 percent chance that women picked the coffee beans for the coffee that you drank at your break. There's a 90 percent chance that a women's hands put together your Blackberry, which you are assiduously checking your e-mail. And there is an 80 percent chance that a women sewed the shirt that you're wearing today. So without women, there is no global economy, there is no economic growth. Women are the economy.
And the link between women and poverty is even simpler than that. Women are the poor. In almost every country around the world, women make up the vast majority of those living on less than $2 or less than $1 a day. And why is that? It's not because women want to be poor, it's because they lack the most basic rights. It's because their social roles relegate them to the home and keep them away from the economic sphere. It's because they don't have the resources, whether that be access to property or credit. And because of the traditional responsibilities that are placed on women who may, like my grandmother, have a baby a year from the age of 15 to 25, which doesn't really leave a whole lot of time for much else. So in response to your question, Ambassador, it's impossible to separate women from the economy or from poverty. Today's word really is "legacy."
And one of the most profound legacies that the MCC is leaving us is your very innovative and groundbreaking gender policy. Gender is not women and there's a lot of confusion between what is gender and what is women's empowerment. What gender is about is really exploring the roles, responsibilities, rights and resources that men and women have, and using that information to be smart and effective. Gender permeates everything that we do. Juan has short hair, I have long hair. Men wear ties, God knows why, but gender is just something that's part of our world.
And those are trivial things but there are more profound gender differences that we absolutely have to take into account in our programming. The African farmer is a woman, not a man, so we need to hire female extension agents. In Nicaragua, there's a wonderful example of the work that Juan Sebastian and his colleagues have been doing where, when they've gone to rural communities to say, "We would like to register and title your property so that you will have ownership of it, it can provide collateral for you to take loans."
And it was the natural thing for people in the household to say register it in the husband's name. Even women themselves would say, "Register it in my husband's name." And the MCC in Nicaragua realized that they needed to do some education because women have the right to have their name on their deed. And they addressed that gender dynamic in the household.
And they didn't do it. The MCC hasn't done it to be nice, although it is nice. They've done it to be effective. They've done it to have the impact on the ground that our President is demanding, that the Congress is demanding and that the American taxpayers are demanding. Also true to the "C" - the last "C" in the MCC - the MCC really embraced the innovation of gender analysis and applied it, applied it to everything. And it's having the MCC effect now spreads into this milieu of gender around the world and we've seen what happened in Lesotho.
The MCC did not say to the government of Lesotho, "You must pass the Married Person's Act or we will not give you 300-some million dollars." What the MCC said is, "We need to be effective, we need to make sure our investment works and we just really don't think it's going to work if half your population is disenfranchised." I want to thank Ambassador for honoring the role that Women Thrive has played in the gender policy, but the truth is that we were simply the seed and it really could not have taken root without the real rich soil of your leadership. Thank you. And also the dedication of some of the key members of your team, to Sherry Cram who really believed in this from the first day we met her before the MCC even was set up and to Jenny Sites - I hope she's here - who is the gender specialist, who it's her hard work that made this a reality.
Finally, given this new economic reality that we've been hearing about all day today, it is absolutely essential that U.S. assistance is strategic, effective and transparent. I think that the MCC represents the future of U.S. assistance and not the past. But the truth is that our overall system is outdated, it's messy, it has no coherent strategy and yet it's more important than ever.
I, and others in the audience, have joined a bipartisan group of experts and practitioners, called the Modernizing Foreign Assistance Network. And we have presented a plan that will increase the value and impact and transparency of development investments and can do it in a very pragmatic, realistic way. So I hope that we'll have a chance not only to explore gender further, but also to explore how we can expand the legacy of the MCC to really transforming our development programs overall. Thank you.
Ambassador John Danilovich: Ritu, thank you very much for those very positive words.
And I think the future will be interesting and all the more interesting because you're going to play a vital role in it, and I very much appreciate that. Our next panelist is Juan Sebastian Chamorro.
He's the Director General of our program in Nicaragua. Nicaragua was our fourth of our 18 countries in our MCC compact portfolio. It's a $175 million program. You all know very well that the relationship between Nicaragua and the United States has been somewhat complicated over the last several decades. However, the MCC program with Nicaragua, with the government and the people of Nicaragua, is a success story. And it's a great testament to, even in the complicated relationship, how two governments can work very closely together in partnership for the benefit and for the economic prosperity of their people.
And Juan Sebastian, maybe you could talk about our program and the activities in Leon and Chinandega and how an MCC American program works in Nicaragua. What are the fundamentals of it and the complications in that relationship?
Dr. Juan Sebastian Chamorro: Thank you, Ambassador Danilovich. I would like to comment on the importance of how to make this relationship work and really if assistance is focused on economic growth and certain conditions are present, how we should expect economic growth in sustainable and permanent way. You see, the idea here is that this new form of development help will help a specific sector of the economy to become the engine of growth. We have seen in Nicaragua this engine of growth is agricultural and livestock producers, just like in other countries such as Ghana, Honduras where agriculture is also selected as the engine of growth. We'll see other cultures such as Georgia that has selected energy as the engine of economic development. Investment promotion from Lesotho and transportation services in Mali. So the idea here is that a particular sector of the economy becomes the engine of this new development.
And that's what you were referring to for companies to become champions of their own development. So in practicality, what you will see is a specific sector of the economy, this new engine of growth, to participate more in economic growth and development. Now I would like to, before I mention some specific examples of the work that we are doing, I would like to comment on what are these conditions. Right conditions have to be present in order to have a successful development program. First, I think it is important that development agencies reward good policies. We have seen in the case of Lesotho, in the case of Nicaragua, I remember in 2005 the Nicaraguan government was asked to pass legislation to ensure the proper maintenance of the entire road system. So that allowed MCC to enter and finance the construction of new roads.
That's a good example of the type of policies that are needed before you enter with a development program.
A second thing is important, is crucial, is that agencies ask countries what they want. We know in developing countries what our main constraints for development are. Back in 2005 we conducted a consultative process. We had thousands of people in town meetings and the answer to the question of what were the constraints for development were very common. The country needed roads and the country needed land titling and the country needed assistance to producers to export. And that's how our problem was conceived and that's how our program was designed.
And this is fundamental for the country ownership and the social accountability because you made people part of the process. Now we receive a lot of feedback from organizations that participated in the consultative process and they tell us what they think about the program as this program is evolving. A third component that I think is important, and very relevant to the Central America, is that it should be complemented with trade.
You know, the free trade agreement that was passed, the Central American Free Trade Agreement, was passed a couple of years ago. And we're already seeing results of this policy. Exports from Nicaragua to the U.S. in the last two years have gone up 39 percent alone. And that tells you how important trade can become. And this is not including just the products that were covered by the agreement. If you do that, if you look, can go up to 60 percent. And, by the way, in Central America, the Millennium Challenge Corporation alone is investing $151 million in this area alone. So that tells you the importance of complementing the trade policies with aid polices. You know, now what about to the specifics?
I think that Nicaraguan small business owners and producers, cattle ranchers, have understood the importance of the U.S. assistance as a complement to these trade policies. Basically, what we do is that we provide technical, as well as financial, assistance to producers to produce better - it includes value added - find markets and export the products. If they needed, we also provide land titles to the property so they can get loans and they can ask for- get credit and do investments. So the results are really there. For the first time, in the region that we're working, we've seen producers exporting products such as casaba. We hope pretty soon we'll be exporting plantains also.
And our milk producers, for example, are now collecting the milk, selling the product into refrigerator centers that we helped them finance and they're converting that milk into cheese and it's being exported to countries such as El Salvador and Honduras through the road that we are building. So you see an integration of all these components - technical assistance, land titling and infrastructure - to allow the economy to flow in a more efficient way. As a result, I know prices have gone up worldwide, but even controlling for that effect, we're seeing that the value of production for casaba, for example, has gone up ten times just by introducing simple technological changes and finding the right market. Same thing for milk - since January of this year the value of production of milk has increased about seven times.
So it's important that these little changes that we do, in combination with the private sector, with exporters finding the right markets can do a real effect on the people's income. So, finally I would like to say that, you know, when we see these modulated producers and small business owners, small livestock producers that in the past were forced to sell at the very local markets and now we see them really happily dispatching containers of their products to Central America, to the U.S., to Europe, we see real hope in their future. I really think that these producers exemplifies the millions of poor people in the world that can flourish if the right market conditions are there and if it's effective.
Ambassador John Danilovich: Juan Sabastian, thank you for that very thorough overview.
I think what Sebastian's comments have highlighted the comprehensive nature of what is really a very well conceived and very well designed and now being very well executed compact that the Millennium Challenge Corporation has in partnership with Nicaragua and with all of our countries, particularly those initial countries. Ken mentioned Madagascar, our first country, Nicaragua is our fourth country. In the natural evolution and cycle of things, those countries are now beginning to show very real and tangible results, successful results, positive results in the implementation of our programs, not only with casaba and milk, for example, or land titling in Nicaragua, but also Madagascar with geranium plants and the oil they're producing for soap and perfume. All of these programs are now, fortunately, showing results that we had hoped they would. And we anticipate this continuing in our other programs as they come to fruition.
As the evolutionary cycle continues, actual physical infrastructure programs, things such as roads, naturally take longer. Roads are more complicated to build and agricultural process is somewhat easier to see the achievements in the early stages. And I think the comments that Juan Sebastian has made very clearly show that those are actually happening in Nicaragua. I had the pleasure of visiting the two northern provinces of Nicaragua, Leon and Chinandega, where our program is taking place not only with regards to the agricultural programs but also with land titling and also with road connectivity in certain areas. I'm going to take the liberty of telling a story, which is already out there, with regards to our relationship with Nicaragua. With President Ortega, we went up to the north to an agricultural fair and the robust farmers were full of enthusiasm in expressing to him with great enthusiasm how successful the MCC, the program of the United States government, was being in Nicaragua. Afterwards, we spoke to a gathering of 6,000 people in the town square at sunset.
It was very beautiful.
There was lovely architecture and a Spanish church and lovely buildings. It was a very pleasant evening with 6,000 people in the square and everyone making their speeches in, as I've mentioned, a country where we have had a complicated relationship. President Ortega made his speech. He highlighted the success of the Millennium Challenge Program in Nicaragua, the direct benefits that had accrued to the citizens that were being impacted by this program, the women with regard to land titling, the farmers, men and women, with regards to agricultural productivity, the road connectivity in the areas which were in fact connecting not only the region but also to other countries in the region. And he concluded his speech, perhaps against all odds, by saying "Viva Los Estados Unitos." That's a bit of a breakthrough, all things considered.
Nevertheless, Central America does remain a challenge. But at that moment at that time President Ortega acknowledged, on behalf of himself and his government and I think for the people of Nicaragua, how successful this particular partnership has been, highlighted somewhat by the political nature of our relationship with Nicaragua but also in Lesotho, also in Madagascar and Ghana, the pineapples that you saw being cleaned were at a farm, called Prudent Farm, just outside of Accra, the capital of Ghana. President Kufuor and I visited that program. The Danian program is moving ahead very smoothly. In whatever country it may be, in Mali and Burkina with our great educational programs, they are now beginning to show results. It's a great testament to the vision of President Bush and the United States Congress, where our money comes from, that they had been willing to try this experiment.
It's still very young. It's only four and a half years old but it's worked and it's working. And if I could take the liberty to also say to you, in meetings that I and my colleagues have had with the two potential presidents and with their now transition teams, there has been complete and full engagement with regards to ongoing and strengthening commitment with the MCC and perhaps to even seeing the mandate of the MCC expanded in whatever the next administration may be.
And we, who I'm sure your efforts with regards to the organization that you're involved in will also be focusing on this.
Ken, I'd like to ask you a question with regards to encouraging public interest and public participation in economic development and in poverty reduction indirectly in our MCC programs but in Lesotho, in Nicaragua, in Madagascar, in the many countries that you have visited wearing your wonderful Catholic Relief Services had as well as MCC, as well as if I can just say chief humanitarian on behalf of all of us, how do you see the engagement of the public in these programs and how do they view the MCC program as opposed to the other programs operating in their country?
Ken Hackett: I would say at the outset many of the governments that don't really how to engage their civil society. As I mentioned earlier, some of them had gone through a PRSP process, which did engage some elements of society, but it was a learning curve for many governments. I would suggest that at this point in time, in many of the countries that are two and three years into it, there is a robust engagement of civil society. It's pervasive and I often go into a country and the first thing I'll do is I will ask the leaders in the Catholic Church what they know about the Millennium Challenge Corporation. When I first stated four years ago, they gave me the Millennium development goals. Now, time and time again, whether it be in Rwanda or Tanzania or in Burkina Faso or in Honduras, Nicaragua, they know. They have opinions, they have suggestions, they have specific involvement.
In El Salvador just recently, there was a concern on the part of some in the Catholic Church at least, and others, about one aspect of the MCC program. And they took it to their parliamentarians and it was a very healthy debate. I don't know exactly what the status of that end debate is, but there is a new level of involvement. And I think it's powerful in terms of transparency and accountability.
Ambassador John Danilovich: These are wonderful things to hear about the engagement of citizens in their own country in finding their own solutions to their own problems, in taking reasonability, in being accountable, realizing that no one is going to do it for them. We have a big part of this formula, the MCC, we are the money part of the formula. We're accountable to that for the American taxpayer.
But the country, itself, has to create its own program, it has to implement it and take responsibility for its implementation. In that regard, Ken, also countries are having to do this in a new way. Before, they weren't asked to assume that responsibility. But in so doing, they are becoming stronger, their capacity is building, they're taking price in their own development. They're realizing they can do it themselves, they're really don't need somebody else to do it with them. Yes, they need the economic help to do so. That leads us onto the rather unfortunate present predicament we find ourselves in with the global economic crisis not only here within the United States but whether it's Washington, New York or Loss Angeles or Rome, London, Paris, Tokyo, Beijing or in Dar es-Salaam or Cape Town or in Accra or Rabat, in the developing world as well as the developed world, this is the issue. And I think the fact that the world in total, in totality, is being affected by this highlights more than ever the fact that we are really a village. And what happens in New York also has a very direct and immediate impact on what happens in the developing world.
There is a lot of conversation now in Washington and I've recently been in Europe in Brussels with the European Union and in Geneva with donors and recipient countries about the impact that the present financial crisis might have on development assistance and foreign aid. It remains to be seen. However, I think it would be a tremendous tragedy if we were to back away from the great success and achievements and the momentum, which has been achieved by programs such as the Millennium Challenge Corporation and PETFAR and the Malaria Initiative and other programs. When you hear about the results that are being achieved in these counties that heretofore were not achieving results - they were receiving aid but the results weren't there, the results are now beginning to happen - to step away from that, to back away from that not to realize, frankly, that poverty anywhere is a threat to prosperity anywhere.
What happens in Africa, in Central America, in Asia, in the Caucuses - we have two countries, Georgia and Armenia in the Caucuses - what happens in all of our countries in lower income, in our lower middle income countries, affects us right here at home. It's inevitable. This crisis highlights the village nature of our planet. We have to find the solutions to these problems because what's good for them in terms of the Millennium Challenge Corporation and the developing world is good for us right here in the United States of America. Well, Sebastian, I wonder if you could comment on whether or not there have been any discussions about this in Nicaragua or any of the contiguous countries - we also have programs in Honduras and El Salvador - if you have heard amongst your compatriots or your colleagues in other countries discussion about what impact, not with regards to the MCC because our money is guaranteed for these countries when they sign the compact, but with regards to future foreign aid and development assistance.
Dr. Juan Sebastian Chamorro: Absolutely, I'm coming from a part of the world that is probably closest to the United States.
And in terms of our culture, in terms of our economic ties, the United States is the first partner in trade Central America. And there is a great concern about the - in the countries - about the potential reduction of the lack of continuation of the development policies so far because, basically what these programs, these economic aid, are intended to do is to generate economic development in the country so we avoid exporting our own people to the United States and which at the end bring remittances to our economies. I have to say many households, our remittances can be up to 80 percent of the total income of the family. So whatever happens in the United States affects directly, directly through household income by the reduction of remittances.
Where we see MCC program is that we're trying to substitute this external flow of funds in the form of remittances and by family members to engage families and small businesses into an economic activity that will substitute these sources of income and will create a permanent economic growth. So for the case of Central America and Latin America in general, there is great concern about a potential reduction of these resources.
Ambassador John Danilovich: Sophia, are you hearing in Lesotho and in other African countries similar comments with regards to the financial meltdown and how that might affect specifically Lesotho and other African countries?
Sofia Mohapi: I think in our part of the world, the reality of this financial crisis has probably not yet hit us but over time, it will. And really, in my view, what needs to be done is that people who have the knowledge the cost of this crisis or its potential impact to the population at large should begin to educate our people at the grass roots about what effect this will have on their day-to-day life. But without doubt in my mind, sooner or later the reality will hit us and it will affect a number of things, including our ability to participate in the economic activity worldwide. In the case of Lesotho, for example, we export textiles and garments to the U.S. and [inaudible] and with the situation the way it is, that's bound to affect our exports in one form or other. And the effect of that is that people are probably going to lose jobs and that will affect households. And I think that's the reality.
Ambassador John Danilovich: Thank you. It's a daunting prospect for all of us, and to the extent that I can say this to their group who have been so exemplary in their participation in today's summit, it's imperative that a new Congress and a new president understand clearly the implications of foreign aid for the countries that receive it but more importantly, frankly, here in Washington of the impact it will have on our own economy and our own stability and security. Ken, I wonder I could ask you perhaps to step a little bit outside - only a little bit outside - of the Catholic Relief Services and MCC realm and discuss how you see the private sector being involved in our programs, not only in Africa of course but in Central America and in other countries.
Ken Hackett: Well certainly private sector involvement, if you include private voluntary organization, non-governmental organizations, foundations, and that community of people who are interested in some of the issues that Bob Geldof talked about, stepping up to the plate, that's a challenge for us. I think we have to hold whichever party wins the next election, we have to hold them to task in really making sure that the future in the next administration continues this type of program. It is a moral question as well as a question in our interest. Secondly, I think the paradigm now is accepted throughout the world that civil society in all its different forms, in all its messiness as President Sirleaf said, has to be part of the development process.
People are no longer going to accept that the decisions about the future development of a country take place absent engagement of civil society in some fashion. And I think that is an accepted new paradigm, as I say, and one that we have to ensure is continued grows (inaudible) the future.
Ambassador John Danilovich: Would any panelist like to say anything before we wrap up?
I see our time is getting near an end.
Dr. Juan Sebastian Chamorro: I think the private sector role is fundamental for the things that we're doing. When I was referring to the efforts that we're doing with small producers and small businesses to export to village markets, MCA is not doing it, what we're doing is to facilitate, to bring the conditions, bring information, put together people who- private sector people who are buying in other markets to our producers and convert this output and all this potential that our countries have into export and more income and more wealth.
Ambassador John Danilovich: Well thank you, Juan Sebastian, Ritu, Sophia, Ken, thank you very much for your able participation in this panel. On behalf of myself, as head of the MCC and all of my colleagues at the Millennium Challenge Corporation, I want to thank you very much for your interest and your participation in today's summit. Thank you very much.