Millennium Challenge Corporation transforming electrical capacity in Benin

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The United States has long been in the business of helping developing nations. That goes on no matter who is in the White House. One instrument of that work is the Millennium Challenge Corporation. This relatively new agency is active in several countries. For an update on one of them, Federal Drive with Tom Temin turned to the MCC’s country director for Benin, Chris Broughton.

Interview transcript:

Tom Temin: Mr. Broughton, good to have you on.

Chris Broughton: Good morning Tom. Thanks for having me.

Tom Temin: And you are in Benin at the moment. And for those of us that are geographically challenged, just give us the rough location of where Benin is in Africa.

Chris Broughton: Benin, it’s in West Africa, just west of Nigeria. And it is one of the major port and trading gateways for all the inter-land countries N’djamena, Chad, parts of Nigeria and Burkina Faso.

Tom Temin: Got it. Alright, and tell us what the MCC is doing there at the moment.

Chris Broughton: So in Benin, we have an electric power focused compact that we signed in 2015, and entered into force into 2017. And this electric power focus compact, is really an example, Tom, of the strategic, national and really generational impact that MCC compact can have. Now, when we come into a country, about two thirds of our portfolio around the world, whether in Africa, where most of our countries are located, Asia, Latin America, or Europe, we have traditionally focused in infrastructure, because we are looking for the biggest bang for the buck, we are looking where we can have a positive net economic rate of return for the grants that we’re giving. And so in the case of Benin, we’ve been focused on the electric power sector, which, as in much of sub Saharan Africa is a constraint to economic growth in this nation of Benin.

Tom Temin: And so what is a compact? Define that word for us?

Chris Broughton: Yeah, so a compact is an international agreement between the United States and a partner country of MCCs. Now, one of the things about MCC that your listeners may not know, it’s a relatively new federal agency. As you said, Tom, was started in 2004, by the Bush administration with bipartisan support. And really, the idea behind MCC was very straightforward. And it was to use the best principles and practices of aid effectiveness, such as country ownership and data driven decision making, for one single purpose. And that is to reduce poverty through economic growth. And so we have this principle of country ownership that MCC pursues wherein the countries produce their own investment programs, which as I stated, are oftentimes national in scale, and oftentimes intergenerational, that is to say that they oftentimes impact the entire country and have an impact across generations. And so once we develop these investment programs, and once they go through our investment, pass gates, including having a net economic rate of return greater than 10%, we then enter into a legal agreement, which we call a compact. And the compact lays out the mutual rights and obligations and really how that funding is going to be governed. And one of the other things that’s distinct about these compacts is that they have a time limit. So once they enter into force, there is five years to execute very large programs. And that puts a lot of pressure on both parties to get work done.

Tom Temin: And in this case, the compact covers a grant of $375 million. And so I guess one of the big distinctions here, this is not a loan like other agencies might make, but a grant. And so with that people in Benin, I guess I mispronounced it before, Benin will build electrical infrastructure?

Chris Broughton: That’s exactly right, Tom. So for every single investment that the United States makes through these compacts, and their very large investments, as you mentioned, in Benin it’s $375 million, we required the government’s to also put skin in the game. So the government of Benin, which is a very poor country, only has a GDP of about 9 or 10 billion, is putting in $28 million towards this investment. And so the first thing that we’re doing is we’re funding a major expansion of Benin’s power grid. So when we’re done, Benin will enjoy a five fold increase in electricity transformation capacity. And simply put Tom this means that there’ll be capacity for additional economic growth over the next generation because we know that as economies grow, there’s more demand for electric power, and all electric power that’s consumed goes through transformers. So that’s one key thing that we’re doing. The second is that we’re facilitating private investment in both utility scale solar photovoltaic power generation that will produce about one third of national daytime demand for electricity, as well as smaller off grid solar power systems that will give more than a half million people access to electricity for the first time in their lives. Now, we haven’t reached financial close on these deals yet. But through this MCC compact in Benin we have an opportunity to attract 100 and $50 million in private investment for clean energy. And the final thing time that we’re investing in are major policy and institutional reforms across the electric power sector to make sure all these investments are sustainable. And we estimate that over the next 20 years this MCC compact in Benin will benefit 9.8 million people. And again, as I said before, this is a great example of the strategic national scale impact that MCC compacts can have.

Tom Temin: And that 9.8 million people is about 90 some percent of the whole population.

Chris Broughton: Correct. Now, what we do is we’re looking at a 20 to 25 year time horizon when we do our economic analysis. So we’re taking into account population growth, initial demand growth on the grid. So you’re exactly right Benin has a population of about 11 million or so. So we’re not benefiting 100% of the population today. But really over the next 20 years, as there’s population growth, as there are additional people who are using electricity on the grid, they’re going to benefit. And to give a concrete example of how the compact is already changing people’s lives or rather one person’s life. I’ll give you an example that MCC funded a women’s energy entrepreneurship initiative, which supported women owned or managed businesses to grow their companies and to make more efficient use of energy. A female entrepreneur was able to take this training and use what she learned from it to secure major contracts from the government of Benin for solar street lighting, and for energy efficiency audits of public buildings. This example is a part of MCC’s approach to empowering women economically worldwide, which we believe is a key solution to reducing poverty.

Tom Temin: So you live there, and what’s it like there in Benin?

Chris Broughton: Benin has actually been a great country to live in. I’ve now been here for five years, I’ve raised my family here. And Benin has a very rich historical tradition that includes a very deep folkloric music tradition, includes this is the actually the heartland of Voodoo. So all the Voodoo cults worldwide, with its Candomblé in Brazil, whether it’s Santeria in Cuba, the various cults in Haiti, they all come from Benin. Well, why? Because this was one of the major transatlantic slave trading ports for several centuries. So really, if you look at the ethnographic roots, the musical roots, they all come back here in Benin. So there’s a very thriving, vibrant culture, as well as a very dynamic economy. We have a government that we’re working with here that has been very committed to assisting us in putting forward policy and institutional reforms, which also has been supporting the compact not only financially, as I’ve stated, but to take on tough issues such as tariff increases on electricity, which is a key part of ensuring that the electric power investments that we’re making are going to be sustainable. As well as bringing in a private company to run the national electricity utility through a management contract. This is something that in other countries, donors have to force governments to do. In this case, it was at the government’s request that we are supporting this change in what is essentially the second largest company in the entire country. And that is essentially the main institutional beneficiary of all these investments that we’re making in the electric power sector.

Tom Temin: And how did you get into this type of work? What does one do to become a country director for a country like Benin?

Chris Broughton: Well, as many people who work in the development business, I got my start as a Peace Corps volunteer, Tom, so I was in the late 90s, in Nicaragua. And from there, I actually joined the Presidential Management Fellows program, worked for USCID for many years on the Afghanistan portfolio, worked for time at the State Department. And then I had the opportunity to serve on the National Security Council staff under both presidents Bush and Obama. From there moved to MCC where I worked in a variety of management roles, and then had the opportunity to come out to Benin and manage this very fascinating, very far reaching very impactful program. So I’m very grateful for the long career that I’ve had with the federal government, nearly 20 years now, having been able to go from the very grassroots level of development, where $3,000 was a lot of money to do some farmer training, to managing now here in Benin, this $375 million compact, which as I mentioned, is going to have a national scale impact and an intergenerational impact.

Tom Temin: And how’s the food in Benin, I don’t mean the embassy food, but I mean when you get out on the streets?

Chris Broughton: The food is wonderful here. I always say to anyone that comes to Benin, I’ve never had a bad meal in Benin. Some of the best seafood, wonderful local sauces. And of course, that food changes very much as cultures change moving towards the Sahelian regions of the north where they prefer artisanal cheeses with peanut sauces. And then they generally, of course, rely across much of West Africa on cassava and cassava starches and yams for much of their diet. And of course, abundant fresh food — and the most important thing, Tom, the sweetest pineapples in the world.

Tom Temin: Alright. I’m there. Chris Broughton is the country director for Benin at the Millennium Challenge Corporation. Thanks so much for joining me.

Chris Broughton: Tom, it’s been a pleasure. Thank you so much..

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