Amendment 0011 to MCC APS NOFO No. 95332419N0001 Conformed Copy - v12 - 04.14.22.pdf

MILLENNIUM CHALLENGE CORPORATION (MCC)

ANNUAL PROGRAM STATEMENT (APS)

NOTICE OF FUNDING OPPORTUNITY (NOFO) NO.: 95332419N0001

PARTNERSHIPS with MCC Program

VERSION 12 / Amendment 00111

Amendment Issued: April 14, 2022

NOFO Issue Date: March 26, 2019

NOFO Closing Date: March 31, 2023

CFDA #: 85.002 MCC Foreign Assistance for Overseas Programs

Pursuant to the Foreign Assistance Act of 1961 and the authority contained in the Millennium Challenge Act of 2003, as amended, the United States Government (USG), as represented by the Millennium Challenge Corporation (hereinafter referred to as "MCC"), is pleased to launch this Annual Program Statement (APS) No. 95332419N0001 for opportunities to support MCC in advancing our mission via partnership.

The APS facilitates a co-creative process to scope, design, and launch partnerships that leverage the unique capabilities of MCC and external entities. Partnerships enable MCC and external organizations to achieve outcomes that either party working alone could not realize. Through partnership, MCC seeks to increase the impact, scale, innovation, and sustainability of programs that advance our mission of poverty reduction through economic growth.

The purpose of this APS is to disseminate information to prospective applicants so they may develop and submit applications for MCC funding. Through this APS, MCC and external organizations can discuss their respective objectives and goals, determine how those interests align, and jointly identify ways to leverage and combine resources via partnership. This APS: (A) describes the types of activities for which applications will be considered; (B) describes the funding available and the process and requirements for submitting applications; (C) explains the criteria for evaluating applications; and (D) refers prospective applicants to relevant documentation available on the internet.

MCC is seeking concept papers for the following partnership opportunities (see Section A.6. for details related to each opportunity):

1. Empowering African Women through Data Skills – Due Date: Closed

2. Environmental Economics Partnership – Due Date: Closed

3. Women’s Entrepreneurship Partnerships – Due Date: Closed

4. Collaborative for Data Science in Africa – Due Date: Closed

5. Geospatial and Earth-Observation Analyses for Africa – Due Date: Closed

1 Any amendments that change the terms of this NOFO or the associated Partnership Opportunity Statements will be highlighted in an updated copy of the NOFO as part of the amendment package in grants.gov. It is MCC’s intent to ensure that the version of the NOFO posted on Grants.gov at any point in time captures all changes and updates made to date.

6. Strengthening Evidence and Economic Modeling Partnership – Due Date: Closed

7. Fiscal Analysis Partnership – Due Date: Closed

8. Community Engagement to Achieve Social License Agreements with Tourism Investors in the

Solomon Islands – Due Date: Closed

9. Increasing Access to Rural Infrastructure – Due Date: Closed

10. Women’s Data Lab and Network (WDLN) project in Côte d’Ivoire – Due Date: Closed

11. Partnership on Integrated Environmental-Economic Modeling – Due Date: April 25, 2022, 5:00 pm ET

12. Shared learning agenda and multistakeholder collaboration in the areas of financial inclusion for

MSMEs and transportation infrastructure in Indonesia – Due Date: May 2, 2022, 5:00 pm ET

To be eligible for award, the applicant must provide all information and be fully responsive to all directions as required under this APS and meet eligibility standards in Section C. Eligibility Information.

This funding opportunity is posted on www.grants.gov, and may be amended. Interested applicants should check the website regularly to ensure they have the latest information pertaining to this Annual Program Statement.

Issuance of this NOFO neither constitutes a binding commitment on the part of the Government to issue an award nor commits the Government to pay for costs incurred in the preparation and submission of any concept papers, engagement, collaboration, co-creation, or full applications. MCC solely reserves the right to fund any or none of the applications submitted under this APS.

We hope you will consider responding to the partnership opportunity statements contained in this APS.

Sincerely, Jacqueline H. Naranjo Agreement Officer http://www.grants.gov/

Table of Contents

ACRONYMS

A. PROGRAM DESCRIPTION

A.1. AUTHORIZING LEGISLATION

A.2. OVERVIEW OF THE MILLENNIUM CHALLENGE CORPORATION (MCC)

A.3. INTRODUCTION

A.4. ANNUAL PROGRAM STATEMENT DESCRIPTION

A.5. OVERVIEW OF THE APS PROCESS

A.6. PARTNERSHIP OPPORTUNITY STATEMENTS

B. FEDERAL AWARD INFORMATION

B.1. ANTICIPATED NUMBER AND TYPE OF AWARDS

B.2 ANTICIPATED PERIOD OF PERFORMANCE FOR NEW AWARDS

B.3. SUBSTANTIAL INVOLVEMENT

B.4. ANTICIPATED AWARD BUDGETS

C. ELIGIBILITY INFORMATION

C.1. ELIGIBLE APPLICANTS

C.2. COST SHARE OR MATCHING

C.3. LEVERAGE FUNDING

C.4. PROFIT OR FEE UNDER ASSISTANCE AWARDS

D. APPLICATION AND SUBMISSION INFORMATION

D.1. APS DOCUMENT INFORMATION

D.2. APPLICATION SUBMISSION REQUIREMENTS

D.3. STAGE I – CONCEPT PAPER PRE-APPLICATION SUBMISSION

D.4. STAGE III – TECHNICAL APPLICATION SUBMISSION FORMAT AND CONTENT

D.5. STAGE III – BUSINESS/COST APPLICATION AND OTHER RELEVANT INFORMATION

D.6. UNIQUE ENTITY IDENTIFIER AND SYSTEM FOR AWARD MANAGEMENT (SAM)

D.7. FUNDING RESTRICTIONS

E. APPLICATION REVIEW INFORMATION

E.1. APPLICATION EVALUATION REVIEW PROCESS

E.2. MERIT REVIEW CRITERIA

E.3. COST EVALUATION (STAGE III ONLY)

E.4. ADDITIONAL CONSIDERATIONS FOR AWARD (STAGES I AND III)

F. FEDERAL AWARD ADMINISTRATION INFORMATION

F.1. AWARD NOTICES

F.2. QUESTION SUBMISSIONS

F.3. PRE-AWARD RESPONSIBILITY DETERMINATION AND RISK ASSESSMENT

F.4. AWARD ADMINISTRATION

F.5. PROGRAM INCOME

F.6. BRANDING AND MARKING

F.7. REPORTING

G. FEDERAL AGENCY POINTS OF CONTACT

G.1. EMAIL ADDRESS FOR QUESTIONS AND APPLICATION SUBMISSIONS

G.2. MCC APS POINTS OF CONTACT (POCs)

H. OTHER INFORMATION

H.1. BACKGROUND INFORMATION REGARDING ANNUAL PROGRAM STATEMENTS AT MCC

H.2. KEY WEBSITES, APPLICABLE REFERENCES AND REGULATIONS

H.3. REVIEW OF APPLICATION MATERIALS BY EXTERNAL PARTIES

H.4. DISCLAIMERS TO APPLICANTS

H.5. CLOSED PARTNERSHIP OPPORTUNITY STATEMENTS (not currently open for applications)

H.6. LIST OF ANNUAL PROGRAM STATEMENT ANNEXES

ACRONYMS

AO Agreement Officer APS Annual Program Statement CFR Code of Federal Regulations CGM Contracts and Grants Management DCO Department of Compact Operations DPE Department of Policy and Evaluation MCA Millennium Challenge Account MCC Millennium Challenge Corporation NOFO Notice of Funding Opportunity SAM System for Award Management UEI Unique Entity Identifier USG U.S. Government

A. PROGRAM DESCRIPTION

A.1. AUTHORIZING LEGISLATION

The authorizing legislation is the Millennium Challenge Act of 2003, as amended. The award will be subject to 2 CFR §200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and MCC’s Standard Provisions for Assistance Awards (see Annex A).

A.2. OVERVIEW OF THE MILLENNIUM CHALLENGE CORPORATION (MCC)

The Millennium Challenge Corporation (MCC) is a government corporation as defined in section 103 of title 5, United States Code, established by the U.S. Congress in the Millennium Challenge Act of 2003, 22 U.S.C. §7701, et seq. MCC’s mission is to provide assistance that will support economic growth and poverty reduction in carefully selected countries that demonstrate a commitment to just and democratic governance, economic freedom, and investments in their citizens.

Eligible countries develop, in coordination with MCC, a program agreement (Compact) that is then implemented in five years. MCC also supports programs to assist countries seeking to attain eligibility for Compacts by supporting targeted policy and institutional reforms (“Threshold Programs”). Our model is defined by core principles of selectivity, country ownership, transparency, and a focus on results.

MCC provides selected well-performing countries with large-scale grants, in the form of compacts, to fund country-led solutions for reducing poverty through sustainable economic growth. MCC compact and threshold programs complement other U.S. and international development programs. Countries that receive MCC assistance are referred to as “MCC Partner Countries.”

The accountable entity designated by each country to oversee implementation of its MCC-funded program is often referred to as a Millennium Challenge Account (or “MCA”). During implementation of the MCC-funded program, MCC maintains an oversight role, including a rigorous and transparent program of funds control and monitoring and evaluation. For more information on MCC, please visit www.mcc.gov.

A.3. INTRODUCTION

Partnering is widely recognized as a powerful multiplier of development impact. MCC pursues a variety of co-created and co-funded partnerships at the global and country levels that align public, private, and civil sector resources and acumen to reduce poverty and drive economic growth. Partnerships with the private sector enable businesses and institutional investors to align public and private sector funding, value chains, ecosystems, activities, and innovations with MCC and country counterpart programs.

Partnerships with academic and research institutions enable technological advancement in how MCC designs, monitors, and measures the effectiveness of programs. Partnerships with foundations enable MCC to leverage the financial investments and networks of like-minded funders to reduce risk or extend the impact of programs. Partnerships with non-governmental organizations enable MCC to align efforts to promote inclusive economic growth and strengthen national systems. MCC seeks to partner with organizations that share our goal of achieving poverty reduction through economic growth.

https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=c3a348de5af0be1685ea7424cab2c58e&mc=true&n=pt2.1.200&r=PART&ty=HTML https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=c3a348de5af0be1685ea7424cab2c58e&mc=true&n=pt2.1.200&r=PART&ty=HTML http://www.mcc.gov/

MCC is issuing this APS in order to develop partnerships2 with organizations that share compact and threshold program and MCC institutional goals and align with the needs of MCC’s current portfolio. MCC partnerships take many forms and benefit both MCC and our partner organizations by increasing our respective access to cutting-edge research, knowledge, data, technologies, networks and expertise, as well as co-funding. Partnerships can help open new markets, scale programs, drive innovation, and transform the lives of people around the world. Successful partnerships are expected to involve collaboration between MCC and partner staff and support MCC’s ability to achieve its mission and programmatic goals.

Partnerships must concentrate on priority development activities which fall within MCC’s mission of poverty reduction through economic growth and align with its core principles of results, good policies, and accountability. MCC funds activities in the public sector where the government role is clear and preeminent, but through partnership hopes to draw more broadly on non-governmental partners to stimulate additional investment and innovative development practices.

MCC recognizes that partnerships offer the possibility of promoting greater effectiveness and sustainability in programming, and thus offer an opportunity to substantially increase the impact of MCC programs. Partnerships may support program priorities and objectives through every stage of the compact and threshold cycle – selection, development, implementation, and closeout – and the organizational effectiveness of the agency.

A.4. ANNUAL PROGRAM STATEMENT DESCRIPTION

This Annual Program Statement (APS) is issued to enable MCC to advertise, receive, and consider partnership opportunities and ideas for collaboration; and to make grant and/or cooperative agreement awards in an open, fair and competitive manner for the partnership opportunity statements detailed in this announcement. The APS enables MCC and select prospective partners to co-create partnerships around shared objectives and to align effort, resources, and risk.

With this APS, MCC is soliciting interest in innovative, co-funded partnership opportunities. In determining whether to provide such funding MCC will consider the nature of the concept paper and application, available funding, and the appropriate funding mechanism.

This APS will focus on co-funded partnerships in situations where partners would require funding from MCC to engage in partnership activities. MCC aims to create partnerships via this APS that are co-created during partnership formation and highly collaborative between MCC and partner teams in their implementation. MCC encourages applicants to consider what non-financial contributions (e.g., expertise, innovations, technologies, data, networks, etc.) they would bring to a prospective partnership; as well as what forms of engagement or non-financial contributions they would need from MCC in order to make the partnership successful. Additionally, prospective partners are asked to provide cost share or matching in line with 2 CFR §200.306 as part of their application. Additional details regarding cost share requirements are found in Section C.2. Applicants are also encouraged to consider additional sources of leverage in addition to the required cost share.

2 MCC’s Policy Regarding MCC Partnerships defines a partnership as “A collaborative relationship between two or more entities -- governmental or nongovernmental -- in which the partners work together to achieve a common purpose or undertake a specific task and to share risks, responsibilities, resources, competencies, and benefits, and mutually determine the goals, structure, governance, roles, and responsibilities of their collaboration.” As used in this APS, the term “partnership” is not intended to mean or be construed as a partnership as defined by law.

https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=ce2eacfce6539472b87fc6cd876f3b93&mc=true&r=SECTION&n=se2.1.200_1306

It is important to note that MCC is committed to country ownership, and some partnerships will be subject to concurrence by or engagement with MCC Country Partners. Where appropriate, MCC will support and facilitate this relationship to achieve effective and meaningful partnerships based on mutual interests and objectives. Therefore, applicants are hereby notified that concept papers and complete applications may potentially be shared with MCC Partner Countries during the co-creation and evaluation process.

This APS is designed to facilitate partnerships between MCC and external entities. MCC Partner Countries may also choose to utilize partnerships to facilitate the design or implementation of compact and threshold programs. Partner Country-led partnerships are facilitated via a separate MCA Funded Program Partnership Solicitation (PPS) process and not via this APS. Additional information about MCC and MCA partnering opportunities can be found on the “Partner With Us” page of MCC’s website (www.mcc.gov/work-with-us/partnerships).

The anticipated period for submissions under this annual program statement is 48 months. At its discretion, MCC may issue addenda or updates to this APS, such as when new partnership opportunities arise, and when existing partnership opportunities close.

A.5. OVERVIEW OF THE APS PROCESS

The APS uses a four-stage, competitive application process for partnership formation that fits within the parameters of USG assistance awards:

• Stage I: Concept

• Stage II: Co-Creation

• Stage III: Application

• Stage IV: Award

A.5.1. STAGE I: CONCEPT

Organizations are invited to review the Partnership Opportunity Statements in Section A.6 and to submit a Concept Paper in response to any/all opportunities where your organization’s capabilities and resources would align to or advance MCC’s partnership goals.

Each Partnership Opportunity Statement has a unique and defined time window for response, and MCC will review all concept papers received by the respective partnership opportunity statement due date.

Concept papers are reviewed by MCC technical teams, which are comprised of subject matter experts from MCC, and potentially other entities, including MCC Partner Country Counterparts. The technical teams will review the concept papers on a pass/fail basis and recommend to the Agreement Officer which applicant(s) should be considered for co-creation discussions (Stage II). Applicants who submit a successful Stage I – Concept Paper and who fall within the criteria set forth in this APS may be invited to participate in the next stage of the APS process. MCC may choose to advance one or more applicants (or no applicants) to co-creation for a given partnership opportunity. Details about the required format and content of the concept paper can be found under D.3. STAGE I – CONCEPT PAPER PRE-APPLICATION

SUBMISSION.

http://www.mcc.gov/work-with-us/partnerships

MCC will publish the organizational name, address, point of contact, and point of contact email address for all organizations that submit a Concept Paper on https://www.mcc.gov/work-with-us/partnerships.

MCC will not publish the actual Concept Papers. Best efforts will be made to notify applicants of the MCC’s decision regarding their Concept Paper within 90 days of receipt.

A.5.2. STAGE II: CO-CREATION

Successful applicants who pass the Concept stage will receive a notification letter inviting them to participate in the next stage of the process, Co-Creation. Co-Creation is a creative and deliberative stage where relevant teams from MCC and the prospective partner organization(s) work together to mutually shape a partnership project that could meet the objectives outlined in the Partnership Opportunity Statement.

MCC conducts separate partnership co-creation discussions with each organization that successfully moves from the Concept to Co-Creation stage, and may eventually award zero, one, or more than one awards for a given Partnership Opportunity Statement.

During Concept Paper review, MCC may determine that several concepts are worth a co-creation discussion and may contemplate combining multiple concepts. In such case, MCC may request those applicants to form a teaming arrangement (one prime and one or more subrecipients). This is not an obligatory requirement and any of the applicants may opt out of such arrangement at any time before award, at which point MCC will reassess how and whether to proceed with the next steps. Once the team has been formed, MCC will invite the collective team for co-creation. If during the co-creation process, an agreeable project is not reached with the team, MCC may request a re-arrangement of the team and/or may hold individual co-creation sessions with the applicant(s) who individually meet the criteria per subsection E.2. Merit Review Criteria. At any time in the process, MCC may also decide to not move forward with either the team arrangement or the individual applicant(s).

During co-creation, MCC and the prospective partner(s) explore the “why,” “what,” “where,” “when,” and “how” aspects of the prospective partnership to gain a clear understanding of the shared goals and resources each party will provide or facilitate. Co-creation provides an open space for brainstorming, idea sharing, innovation, dialogue, and feedback. During the co-creation session(s), MCC and invited prospective partner(s) will map prospective approaches and challenges to addressing the needs outlined in the Partnership Opportunity Statements detailed under Section A.6. MCC and invited prospective partner(s) will discuss scope and implementation strategies, potential capabilities and contributions each partner might bring to a partnership; risks and challenges to successful implementation; funding and cost sharing expectations, and the envisioned benefits of and approaches to a potential partnership.

The co-creation process may be completed in a single, day-long (or multiple days-long) workshop; or progress over a series of shorter technical conversations between MCC and the prospective partner(s).

MCC prefers that co-creation include at least one in-person design session at the MCC Headquarters in Washington, DC, though co-creation may also be conducted at a prospective partner’s location, an alternate location, or virtually, as mutually agreeable to the parties.

Following Co-Creation, MCC will decide whether to invite one or more organizations to submit a full technical application as well as a cost application in Stage III: Application. If a mutually agreeable, compelling vision is not arrived at during the Co-Creation stage, MCC will notify the applicant accordingly and the process will end for that applicant.

https://www.mcc.gov/work-with-us/partnerships

MCC will publish the organizational name, address, point of contact, and point of contact email address for all organizations that are invited to Co-Creation on https://www.mcc.gov/work-with-us/partnerships. MCC will not publish a summary of nor information shared during co-creation discussions.

A.5.3. STAGE III: APPLICATION

Successful applicants who pass the Co-Creation stage will be invited to submit a technical and cost application as part of Stage III. When the Agreement Officer notifies the prospective partner that they are invited to Stage III, if applicable, MCC will clarify pre-award requirements and any additional instructions and criteria for full application submissions, beyond those detailed under SECTION D.

APPLICATION AND SUBMISSION INFORMATION below. After receipt of the full application package, additional clarifications/negotiations regarding the technical and cost application and/or the terms of the award may be necessary.

Applications are reviewed by MCC technical teams, which are comprised of subject matter experts from MCC, and potentially other entities including MCC Partner Country Counterparts. The technical teams will review the applications and recommend to the Agreement Officer which applicant(s) should be considered for award. The Selection Committee can recommend all, some, or no applications for award.

MCC can eventually issue more than one award if funds are available and partnership objectives align;

there does not need to be only one winner.

Though co-creation should provide ample insight for both MCC and the prospective partner(s) about the goals, governance, milestones, funding, and implementation plan for a given partnership, MCC reserves the right to invite Applicants to make pre-award oral presentations and teleconferences in support of their applications, and also may request to interview the Applicant’s proposed key personnel.

A.5.4. STAGE IV: AWARD

Once MCC has decided to proceed with the award of a cooperative agreement or grant to an external organization based on the results of the Application stage, MCC will work with counterparts from the prospective partner organization to negotiate any unique terms and conditions, finalize and sign the award agreement, and announce the partnership.

MCC will publish the organizational name, address, point of contact, and point of contact email address for all organizations that receive awards via the APS process on https://www.mcc.gov/work-with-us/partnerships. MCC will not publish the actual applications received from prospective partners. MCC and the awardee(s) may also choose to announce or promote the partnership in other forums besides mcc.gov (e.g., via press releases, events/convening, etc.).

MCC will not reimburse prospective partners for any costs associated with developing concept papers, participating in co-creation, or submitting technical/cost applications.

A.6. PARTNERSHIP OPPORTUNITY STATEMENTS

MCC is currently inviting Concept Papers for the following Partnership Opportunity Statements.

Additional partnership opportunities may be added over the course of the APS announcement period and partnership opportunities will be closed and removed as MCC’s partnering interests are met.

https://www.mcc.gov/work-with-us/partnerships https://www.mcc.gov/work-with-us/partnerships

A.6.1. PARTNERSHIP OPPORTUNITY STATEMENT #1

Empowering African Women through Data Skills Concept Paper Due Date: CLOSED

A.6.2. PARTNERSHIP OPPORTUNITY STATEMENT #2

Environmental Economics Partnership

A.6.3. PARTNERSHIP OPPORTUNITY STATEMENT #3

Women’s Entrepreneurship Partnerships

A.6.4. PARTNERSHIP OPPORTUNITY STATEMENT #4

Collaborative for Data Science in Africa

A.6.5. PARTNERSHIP OPPORTUNITY STATEMENT #5

Geospatial and Earth-Observation Analyses for Africa

A.6.6. PARTNERSHIP OPPORTUNITY STATEMENT #6

Strengthening Evidence and Economic Modeling Partnership

A.6.7 PARTNERSHIP OPPORTUNITY STATEMENT #7

Fiscal Analysis Partnership

A.6.8 PARTNERSHIP OPPORTUNITY STATEMENT #8

Community Engagement to Achieve Social License Agreements with Tourism Investors in the Solomon Islands

A.6.9 PARTNERSHIP OPPORTUNITY STATEMENT #9

Increasing Access to Rural Infrastructure

A.6.10 PARTNERSHIP OPPORTUNITY STATEMENT #10

Women’s Data Lab and Network (WDLN) Project in Côte d’Ivoire

A.6.11 PARTNERSHIP OPPORTUNITY STATEMENT #11

Partnership on Integrated Environmental-Economic Modeling Estimated Federal Budget: $750,000

Concept Paper Due Date: April 25, 2022, 5:00pm ET

The Millennium Challenge Corporation (MCC) is seeking a Partnership on Integrated Environmental- Economic Modeling (hereinafter “Partnership”) to advance the analytical frontier for integrated quantitative environmental and economic modeling in support of development planning. The aim of such modeling is to support a rigorous scenario-based characterization and order-of-magnitude quantification of (especially climate-related) environmental costs and benefits. These quantitative estimates are intended, in turn, to inform the prioritization of promising sectors or programmatic areas for investments by the donor community in sustainable economic development. The modeling effort should emphasize the following issue areas, which in recent decades have seen considerable advances through collaborative research efforts across the development and scientific communities:

• Interactions between ecosystem services and economic activity

• Improved management and use of natural capital and

• Benefits of increased resilience to the impacts of climate change

Building on those efforts, the partnership will itself expand learning opportunities across the development community regarding integrated quantitative environmental and economic modeling.

The overarching public purpose of this Partnership is to create an integrated modeling framework in the public domain that is relevant to the needs of the global development community. In broad terms, the Partnership will proceed in two stages:

1. To establish an initial proof of concept, the first stage is to develop case-based applications for this integrated model in the context of the MCC program cycle.

2. Based on these cases, the Partnership will develop tools and frameworks that will be generalizable to development planning approaches worldwide.

MCC expects that this Partnership’s public purpose will be supported and amplified by the Agency’s existing external engagements. For example, MCC currently participates in several fora featuring connections to a range of domestic and international technical experts across relevant social and natural science disciplines. Examples of these fora include the following:

• The Country Diagnostics Platform (CDP). Last June, MCC conceived and convened a virtual Technical Workshop including numerous bi- and multilateral donor organizations worldwide, “Climate and Environmental Factors in Country Analytics and Programmatic Implications.”3 At this Workshop, MCC received positive and encouraging feedback on a high-level conceptual sketch of the motivation for this Partnership.

3 Apart from MCC, the CDP includes African Development Bank (AfDB), Asian Development Bank

(AsDB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Foreign Commonwealth & Development Office (FCDO, UK), the International Finance Corporation (IFC), the

Organisation for Economic Co-operation and Development (OECD), the Swedish International Development

Cooperation Agency (Sida), and the World Bank, all of whom attended the MCC-organized Technical Workshop.

https://www.countrydiagnostics.com/

• MCC’s Economic Advisory Council is a forum with international membership for exchanging and discussing analytical methods and innovations that bear on development effectiveness at MCC and globally. (According to the guidelines set forth in the Federal Advisory Committee Act, all meetings are open to the public, and meeting minutes are posted on MCC’s public website.)

• As an active participant in the US Government interagency process, MCC is recently or currently engaged on a number of White House interagency initiatives and dialogs:

o Build Back Better World (B3W), aimed at helping to narrow the $40+ trillion infrastructure need in the developing world o Implementation of Executive Order 14008 on Tackling the Climate Crisis at Home and Abroad o National Security Council-led dialog on global development and climate change.

While naturally focused on US Government equities and initiatives, the missions of many agencies comprising the interagency—e.g., the Departments of Energy, Treasury, and State; the Environmental Protection Agency; and the Agency for International Development; among others—have deep connections to the global public community.

To develop an initial proof of concept in advance of public domain applications, MCC seeks a technical partner to collaborate with MCC economists and other technical staff4 in undertaking the following anticipated activities:5

1. Identifying an existing modeling framework or platform offering the essential functionalities on which this Partnership can build;

2. Articulating enhancements to the modeling framework’s specifications and capabilities that tailor its applicability to national-level analyses of constraints to growth as an element of development planning;

3. Refining, adapting, and augmenting the modeling framework to deliver outputs and insights addressing key questions arising in identifying and prioritizing constraints to growth; and

4. Developing a practical deployment plan.

These activities are discussed in more detail below after a brief overview of the approach that MCC brings to development planning.

Adapted from the growth diagnostics framework6 that has been widely applied across the global development community, MCC’s Constraints Analysis (CA) is the first analytical step in the Agency’s evidence-based approach to developing compact and threshold programs. Through the CA, MCC works

4 MCC economists would collaborate on all activities listed. Activities 3 and 4 would, in addition, likely include a broader cross-section of MCC staff and consultants, e.g., those having expertise in (without limitation) environmental and social protection, gender, engineering, project design, and monitoring & evaluation. These staff would be engaged further downstream in interpreting and applying the modeling findings in the context of MCC’s program cycle.

5 Activities 3 and 4 need not be strictly sequential; rather, some iteration between modeling refinements and their application within the MCC program cycle may be desirable.

6 On growth diagnostics generally see, e.g., Ricardo Hausmann, Dani Rodrik, and Andrés Velasco, “Growth Diagnostics,” in Narcís Serra and Joseph E. Stiglitz (2008), The Washington Consensus Reconsidered:

Towards a New Global Governance, Oxford University Press (May); Ricardo Hausmann, Bailey Klinger, Rodrigo

Wagner (2008), “Doing Growth Diagnostics in Practice: A ‘Mindbook,’” Harvard University Center for Global

Development Working Paper No. 177 (September).

https://www.mcc.gov/about/org-unit/economic-advisory-council https://www.mcc.gov/our-impact/constraints-analysis with its partner countries to identify the constraints that, if addressed, have the most potential to promote poverty-reducing sustainable economic growth. The CA brings to bear a wide range of evidence to identify and characterize a select few binding constraints to growth that provide potential areas of focus for the development of an MCC program. Building on the CA, the next step in MCC’s program development is Root Cause Analysis (RCA), aimed at identifying key underlying causes of the binding constraints. The output of the RCA is a core problem around which MCC works collaboratively with partner countries to identify and develop solutions via an MCC-financed program.

MCC’s most recent CAs have typically taken stock of climate-related constraints by (i) using simple scalar indices or ordinal rankings to benchmark country performance against that of comparator countries, and (ii) using research surveys and syntheses of country-specific climate-related impacts.7 While these relatively rudimentary and static approaches offer general insights on climate-related development challenges with a minimum of effort, they suffer from a number of limitations as they

• Do not allow modeling or quantitative assessment of impacts (even of an order-of-magnitude nature) of user-specified policy or investment scenarios;

• Largely abstract from subnational detail;

• Do not incorporate feedbacks between economic conditions and public investments and policies on the one hand, and ecosystem services flows on the other; and

• Lack an explicit treatment of uncertainty related to environment- or climate-related factors and economic variables, and associated interactions.

Absent such functionalities, it is difficult to assess quantitatively and robustly the relative severity of various potential environment- and climate-related constraints to growth—in terms of, say, economic activity foregone—and to compare these to other potential constraints to growth. Given the breadth and level of ambition in MCC’s Climate Change Strategy and associated Climate Action Plan, MCC is seeking through this Partnership to augment and expand its existing analytical approaches in the climate and environmental domain.8

Unlike many donors, MCC typically does not have a pre-existing in-country presence or history of engagement with many of its country partners. As a consequence, MCC typically lacks established relationships with officials of partner country governments as well as a detailed understanding of government entities’ jurisdictions, portfolios, and processes for economic management and environmental protection. An implication for this Partnership is that MCC is unlikely to already possess non-public country data relevant for modeling efforts under such Partnership; securing any such required data would thus remain a task for the Partnership in the course of a given country-specific model application.

The four high-level activities that MCC envisions under this Partnership are set forth in greater detail below. MCC encourages potential applicants to outline in their Concept Notes how they would work with MCC to co-create an enhanced modeling framework to achieve the Partnership's purposes set forth here:

7 Examples of such resources include the ND-GAIN Country Index, the Global Climate Risk Index, the

INFORM Risk Index, ThinkHazard!, the World Bank’s Climate Knowledge Portal, and USAID’s Regional &

Country Risk Profiles.

8 This Partnership constitutes a significant substantive step toward the aspiration of “fully integrat[ing] climate considerations into the agency’s analytical tools, policies, guidelines, and decision‐making,” as articulated in the Climate Action Plan linked above.

https://www.mcc.gov/resources/doc-pdf/climate-change-strategy https://www.mcc.gov/resources/doc/climate-action-plan https://gain.nd.edu/our-work/country-index/rankings/ https://www.researchgate.net/publication/348759719_GLOBAL_CLIMATE_RISK_INDEX_2021 https://drmkc.jrc.ec.europa.eu/inform-index/INFORM-Risk https://thinkhazard.org/en/ https://climateknowledgeportal.worldbank.org/ https://www.climatelinks.org/climate-risk-management/regional-country-risk-profiles https://www.climatelinks.org/climate-risk-management/regional-country-risk-profiles

1. Identifying an existing modeling framework or platform offering the following essential functionalities:

a. Integration of economic and environmental interactions in an internally-consistent framework;

b. The potential to represent additional structural relationships involving key economic and environmental parameters and variables;

c. The potential for spatially explicit representation of national- and potentially (large area) subnational-level policies and associated outcomes; and

d. The potential for explicit treatment of uncertainty in the environmental and economic domains, including visualization and decision support tools.

MCC is open to modeling frameworks relying on either optimization or simulation modeling tools.

2. Articulating desired enhancements to the identified modeling framework’s specifications and capabilities to better capture (especially climate-related) environmental costs and benefits.

MCC invites potential partners to address questions such as the following regarding potential modeling enhancements:

a. How can the potential functionalities noted in paragraphs 1.b. through 1.d above be realized?

b. What would be the approach and associated level of effort required to update baseline country-level parameter sets and databases for a variety of countries?

c. Would it be feasible to disaggregate impacts of interest (e.g., on household incomes or key environmental outcomes) across population subgroups? If so, what would be entailed in doing so?

3. Using the setting of an MCC CA and RCA as a country-specific proof of concept, refining, adapting, and augmenting the modeling framework—including data, coding, workflows, and reporting and visualizing outputs—to deliver outputs and insights that can directly inform key analytical and empirical questions in growth diagnostics. In this connection, MCC invites potential partners to address the following questions:

a. How could the capability to articulate structured country-level (and potentially large area subnational) investment and policy reform scenarios and related model refinements be introduced or refined to shed light on the following:

i. Estimated direct effects (and, where possible, indirect and induced effects) of key investment and policy reform scenarios on economic output, suggesting shadow prices associated with the interventions characterized in the scenarios;

ii. Characterization and prioritization of key causal factors that drive the constraints and distortions addressed by the aforementioned policy scenarios;

b. How could the modeling framework be applied to quantitatively address key valuation questions, including

i. Valuing changes in natural capital stocks, and

ii. Representing and valuing measures to adapt to climate shocks?

c. In what ways could the modeling framework be refined and model outputs be used to address high-level design questions related to the economic viability of investments in key development sectors, e.g., various types of infrastructure, agriculture, land and property rights, and finance?

4. Based on the MCC-specific application and with a view towards generalization, developing a practical public outreach and dissemination plan to make available to the international development community (including MCC staff) tools and outputs associated with this enhanced framework. Such plan could include (without limitation) conferences; workshops; webinars;

web-based documentation, tutorials, open-source code repositories; and so forth.

MCC seeks partners with social and natural science and computer modeling expertise relevant for the activities and outcomes outlined above. The agency is open to partnering with academic institutions, government research laboratories, nongovernmental research organizations, development assistance agencies, or firms having expertise and experience in integrated quantitative environmental and economic modeling. MCC seeks partner organizations that can demonstrate experience convening a range of actors having strengths in both theoretical and applied areas of expertise, and in collaborating to develop practically useful and flexible tools.

MCC expects to contribute various inputs to this Partnership, including (as applicable):

• Co-funding;

• Use cases for CAs and RCAs within the program cycle for MCC partner countries;

• Skills, knowledge, and expertise in planning and implementing development assistance interventions;

• Guidance on enhancements to the modeling framework’s specifications;

• Access to host country government officials, implementing partners, and other relevant country contacts; and

• Relevant data.

Specific MCC partner countries to which the integrated environmental-economic model will be applied will be chosen from among those countries newly selected by the MCC Board of Directors as eligible for MCC assistance, typically in December each year.

The anticipated timeframe for the partnership(s) is three years. The total estimated budget from MCC for this effort is up to $750,000.

A.6.12 PARTNERSHIP OPPORTUNITY STATEMENT #12

Shared Learning Agenda and Multistakeholder Collaboration in the Areas of Financial Inclusion for MSMEs and Transportation Infrastructure in Indonesia

Estimated Federal Budget (Year 1): $500,000.00 Concept Paper Due Date: Monday, May 2, 2022, 5:00pm ET

In December 2018, MCC’s Board of Directors selected Indonesia as eligible to develop a second compact. The selection reflected the progress Indonesia has made on its policy performance and the strong partnership MCC and Indonesia built during the first compact. MCC is presently working with the Government of Indonesia (GOI) to develop a compact including the following two projects in the priority provinces of North Sulawesi, South Sumatra, Bali, Riau Islands and Riau: (i) access to finance for infrastructure, particularly transport and logistics infrastructure, and (ii) access to finance for micro-, small-, and medium-sized enterprises (“MSMEs”), particularly those owned by women. MCC and the GOI hope to announce a compact program in late 2022 and sign an agreement shortly thereafter. The compact should then be able to Enter-Into-Force in early 2024. Using this Partnership Opportunity Statement, MCC seeks partners (henceforth referred to as the “Learning Collaboration Partner”) with which to collaborate and jointly define and implement a shared learning agenda for collaboration that engages multiple stakeholders in Indonesia in the areas of financial inclusion for MSMEs and transportation planning, as described herein. Partnership proposals that address one of these two areas will be considered, but MCC has a preference for partners that have interest in both.

Background and Context

The Primary Goal of this partnership is to establish a shared learning agenda and platform for collaboration that engages multiple stakeholders in Indonesia in the areas of financial inclusion for MSMEs and transportation infrastructure planning and implementation. The stakeholders are intended to be both relevant government ministries and agencies, as well as academic institutions and other non-government entities such as business associations and NGOs. The collaboration and learning can be used both to improve ongoing policy reform and program design questions in Indonesia, as well as serve as a common platform for sharing knowledge and evidence generated by the compact. This shared learning agenda will benefit the projects in the compact by helping MCA and its partners focus in on the interventions which are most likely to achieve the desired results, including understanding the implications of different policies and programs for under-served populations such as women or the poor. It will also increase the Government of Indonesia’s ability to engage with academia on a credible and transparent basis and learn from relevant evidence. This will in turn lead to increased sustainability, credibility, and acceptance of compact projects as well as broader positive impacts in development policy making. While MCC has relationships with many of the stakeholders that could be included in such a partnership, MCC prefers partners that have existing relationships of their own within Indonesia.

Both proposed projects in MCC’s Indonesia II compact are focused on the need to improve government policies around financial access for MSMEs, particularly those owned by women, and around better infrastructure planning for transportation at the local level while delivering positive economic impacts during the five-year compact term.

Although transport infrastructure projects are subject to review by central ministries, there is not a system of creating defined pipelines of projects which have been derived from a rational analysis of need or demand. In fact, project identification is not standardized, and projects are identified by a https://www.mcc.gov/resources/doc/star-report-indonesia variety of actors and processes. In the transport sector, there is almost no rational multi-modal planning which considers how all transport modes work together across the transport network, especially at sub-national level, and therefore project identification tends to be piecemeal and uncoordinated, with resulting project ‘wish lists’ rather than a coordinated network transport plan. When a project need is identified, there is very little balanced consideration of all options, with appraisals generally based upon a single pre-selected project option. The MCC compact is aiming to address this issue with some components of the proposed project in infrastructure finance, but there will be a continuing need to re-establish the role of usage and demand data in the infrastructure planning process, which falls somewhat outside the scope of the proposed project and thus would benefit from the proposed partnership. Additionally, the Indonesia II compact is being designed with a particular focus on ensuring that the transportation planning processes that are established are inclusive of the needs of women, the poor and other marginalized communities. Traditional programming in these areas has not typically succeeded in achieving these results so understanding the evidence from past programming in similar contexts will be critical.

Similarly, Indonesia has a rich history of designing innovative credit schemes for small businesses, and there are positive experiences with group lending in rural areas. Regional development banks have also played an important role in channeling funds to micro entrepreneurs especially in rural areas. However, approximately 65 million MSMEs in Indonesia are not able to access formal financial services, including a group of growing businesses and women-led SMEs that the proposed compact aims to target. The group is somewhat larger businesses that need individual credit and tend to have more varied credit needs.

These are not the businesses that government programs have typically reached in the past. Alternative financial service providers are interested in serving this client base, in part because it is a huge potential market, but they are constrained in providing credit because:

• Fintech lending companies cannot use the existing credit registry (because they are not financial institutions);

• Fraud detection system of the fintech industry is still under-developed;

• Value chain finance (VCF) or supply chain finance (SCF) models which would be suitable for MSMEs are limited because of a lack of a critical mass of e-procurement, and the businesses often operate just on a cash basis;

• Credit scoring and risk assessment models are based on a limited amount of proprietary data.

MSME constraints to accessing finance additionally include:

a. Lack of business skills and financial literacy;

b. Lack of connections to value chains or other ecosystems that could help generate transaction data to accommodate risk assessment;

c. Discrimination against female borrowers.

Constraints for WMSMEs are amplified because:

a. Less likely to own acceptable conventional collateral;

b. Less access to networks and associations;

c. More demands on time due to family matters which may limit time that can be devoted to the business.

Evidence-based policymaking is reliant on generating and disseminating credible, relevant evidence, which the GOI does not typically budget for. While a great deal of evidence exists from research and practice in many countries in the areas outlined above, including Indonesia, a future MCA-Indonesia (the implementing unit for the compact program in Indonesia) will not have the scope or ability to diligently examine all the evidence and engage with academia to develop and advance an evidence-based learning agenda in these two areas. The inability to analyze and synthesize the abundant global and Indonesia-based evidence will reduce the impact of not only MCC/MCA programs but also other donor- and GOI-funded programs and impact the credibility and acceptance of all policy implications that may arise from compact activities.

By partnering with the Learning Collaboration Partner – likely to be an established research or policy analysis institution - MCC can support a more holistic and independent approach to learning in these subjects, both of which are critical to Indonesia’s future development efforts, that will outlast the compact and be responsive to the needs of all engaged stakeholders while at the same time including MCC’s own learning efforts as part of a networked approach. By supporting this independent platform, MCC may also be able to influence any research and analysis towards areas of MCC’s current institutional priorities in particular women’s economic empowerment and climate change.