Cape Verde a victor in fund competition, gains boost in US aid
Set to get $110m for development
WASHINGTON -- Cape Verde's prime minister, Jose Maria Neves, made the rounds in Washington yesterday like a sprinter running a victory lap: State Department and World Bank officials lauded the island nation for good governance, and US aid is set to catapult from roughly $4 million this year to $110 million over the next five years.
Cape Verde is decidedly a winner in the new competition for aid funding known as the Millennium Challenge Account, a quasi-private billion-dollar corporate fund established under President Bush to competitively reward developing nations that make progress in political and economic reform.
''The MCA comes as the crowning of a development process that has been very successful," Neves said in an interview yesterday after meeting with officials in Washington.
Competition for the aid is so great that Neves once compared his country's success in the process ''the third most significant achievement" in the country's history, after winning independence from Portugal in 1975 and holding multiparty elections in 1991.
But critics say the Millennium Challenge Account might need Cape Verde's success almost as badly as Cape Verdeans do. The program has been criticized in recent months by five African presidents for moving too slowly and erecting too many bureaucratic hurdles.
Just two other countries have hammered out agreements for the aid: Honduras and Madagascar. Nicaragua is scheduled to sign its pact for $175 million over five years at a ceremony today presided over by Secretary of State Condoleezza Rice.
The pace of disbursing funds from the start-up institution has left Bush administration officials struggling to justify the president's 2006 request for $3 billion, given that little of the $1 billion allocated in 2004 and the $1.5 billion in 2005 has been spent.
''You have to understand how Congress works," said Marc Miles, director of the Center for International Trade and Economics at the Heritage Foundation, a conservative Washington think tank. ''Congress allocated the money. The administration made a request for more money, and Congress's attitude is 'You haven't spent the money we have given you.' "
But Paul V. Applegarth, CEO of the program, said that the initiative is expected to commit about $1 billion in aid by the fall, and that by next year, the program's current funds will have been set aside for projects. ''We'd be exhausted in early 2006," he said.
As for the countries that complained to Bush about the fund, Applegarth said that two -- Botswana and Nambia -- were ineligible because they were too well-off. A third, Niger, had failed to meet the minimum standards for fighting corruption and for seven other criteria, including rule of law, immunization rates, health expenditures, and completion rates for girls' primary education, he said. Ghana and Mozambique are still candidates for aid.
''It's a competition," he said. ''The winners like it, the losers complain that there is a lot of red tape."
Applegarth said the program prompts leaders to strive for better governance and economic indicators.
Neves agreed.
''The program has allowed for certain African leaders to say, 'What do we need to do [to become eligible?]' I think that MCA is really working as a catalyst."
Cape Verde, a drought-prone country of more than 400,000 west of Senegal, has few natural resources. About 25 percent of its economy comes from foreign aid and remittances from immigrants abroad. Neves estimated that about 300,000 Cape Verdeans live in the United States -- the majority in New England -- and send home about $100 million a year.
In the arduous 10-month process of qualifying for the fund, Neves said, the expatriate community in the United States was consulted alongside the rest of Cape Verdean civil society about where the aid should be used. The MCA program requires that governments ask their citizens for input during the grant process.
Cape Verde put the proposal through Parliament and opted to ask for development funds to improve bridges and roads to connect the various islands, to update the port, to improve mechanisms for capturing rainwater, and to bolster the private sector with access to capital. ''I must say that some of the roads that will be financed were basically asked for by the population since 1975," Neves said.
But Cape Verde is also a victim of its own success. Just as its leaders were informed that they won the funding, they were also told that their progress had pushed them into a new Millennium Challenge category -- middle-income -- making the country ineligible for future competition with low-income countries for the same kind of aid. ''This is our great struggle," Neves said. ''We think that we must continue to insist in the sense that good, positive experiences be rewarded. We have now taken off and we are beginning our trip toward development, and we cannot run out of fuel." 