BUILDING A STRATEGIC PARTNERSHIP BETWEEN THE MILLENIUM CHALLENGE CORPORATION MCC AND CABEI

1
BUILDING A STRATEGIC PARTNERSHIP BETWEEN THE
MILLENIUM CHALLENGE CORPORATION (MCC) AND CABEI

• June 15, 2004

2
II. CABEIs role and strategy in Central America
3
CABEI MAIN FACTS

• Founded in 1960 in order to promote development
  and integration in Central America
• 5 founding member countries
• Costa Rica
• El Salvador
• Guatemala
• Honduras
• Nicaragua
• 5 extraregional member countries
• Argentina
• Mexico
• China (Taiwan)
• Colombia
• Spain
• Initiatives underway to attract
• New extraregional countries
• Non-founding beneficiary member countries

Mexico
The Central American market Expanded Population
65 million
4
A RECORD YEAR FOR CABEI
(2003)
5
PARTICIPACION DEL BCIE EN FINANCIAMIENTO
MULTILATERAL A CENTROAMERICA
(2000 2003)
6
Financiamiento del BCIE comparado con la Entrada
de Capital por Inversión Externa DirectaEn
Millones de US
7
Cartera de Préstamos
Cifras a Mayo 2004
Cartera de préstamos US2,654 millones
8
Distribución de Cartera de Préstamos
Exposición Económica Sectorial Diversificada
Aprobaciones Netas por Sector Económico, 1961
2002 ()
9
CABEIs Mission (Art. 2. Constitutive
Agreement) The purpose of the Bank shall be to
promote the economic integration and the balanced
economic development of the Central American
Countries.
VISION To improve the quality of life of the
Central American population, exercising
leadership in the design of development financial
solutions and in the support of regional programs
to promote i) the insertion of our countries
into the world economy, ii) regional integration
and iii) the fight against poverty, acting
according to the highest standards of service and
upon the basis of the finest effectiveness,
transparency, integrity and ethics culture.
10
PROPOSED CABEIs STRATEGIC THEMES AND OBJECTIVES
2004 - 2009
Poverty
Globalization
Integration

• To generate opportunities and wealth through the
  creation of employment for the poorest segments
  of the society
• To generate capacities through the support of
  technical training
• Programs
• To support the countries in the fulfillment of
  the Millennium Development Goals

• To contribute to the improvement of the regions
  business climate in order to foster direct and
  local foreign investment
• To become a Center of Support for regional
  competitiveness
• To promote strategic alliances with key actors in
  order to increase the impact of the Bank in
  supporting the participation of our countries in
  the world economy
• To play a key role in the processes of
  negotiation, ratification, implementation and
  sustainability of trade agreements

• To foster the process of physical, economic,
  commercial and financial
• integration of the region
• To strengthen the regional financial market
• To promote the harmonization of regulatory
  frameworks and the adoption of best practices in
  strategic sectors
• To support the development of initiatives
  regarding environmental protection and climatic
  change

11
To generate opportunities that contribute to the
creation of formal employment.
Systemic support to the Micro, Small and Medium
enterprise in the region. Sustainable Rural
Development. Development of new entrepreneurs.
Programs to strengthen peoples ability to
participate in the formal economy. Development of
standards to mitigate risks caused by natural
disasters. Housing programs. Water and sewage
Infrastructure. Support to public services
concession at the local level.
To support countries in the development of
solutions to respond to basic needs such us
education, health and housing.
Programs to support border local governments.
Support of the development of technological
platforms to enhance managerial skills.
To contribute to local government strengthening
encouraging economic autonomy and managerial
capacity.
Complementing efforts with other organizations to
finance activities in education, health and
housing, within the framework of the Millennium
Development Goals
To facilitate access to credit, transforming
CABEI in the microfinance regional lider.
To strengthen the transfer of experiences and
knowledge between CABEIs member countries and
the rest of the world.
12
Proposal of Focus areas in INTEGRATION
To foster the process of physical, economic,
commercial and financial integration of the
region
Plan Puebla Panama Customs Union Financing of
projects and programs of regional impact
reduction of digital divide Infrastructure
Promoting the Social Cohesion Fund Supporting
activities aimed at strengthen the banking
supervision - Introduction of best practices and
standards - making productive use of remittances-
obtaining resources from pension funds
To strengthen the regional financial market
To promote the harmonization of regulatory
frameworks and the adoption of best practices in
strategic sectors
Harmonization and improvement of the regulatory
frameworks in the financial system
To support the development of initiatives
regarding environmental protection And climatic
change
Protection of river basins - environmental
legislation
13
Proposal of Focus areas in GLOBALIZATION and
Insertion in the World Economy
To contribute to the improvement of the regions
business climate in order to promote local and
foreign investment
Transference of communications and information
technology Public security. Development of new
financial products
Facilitation of the insertion of small and medium
enterprises into the productive
chains. Financing of the productive
infrastructure, industrial Re-conversion,
agribusiness, assemble of second and third
generation, business- processing.
Standardization and best practices
To become a Center of Support for
regional competitiveness
To promote strategic alliances With key actors
to increase the impact of the Bank in support
of our countries participation in the world
economy
Alliances with WB, I.A.D.B., O.A.S., WTO,
GTZ ECLAC, USAID, JBIC, IICA among others and
governments
To play a key role in the processes of
negotiation, ratification, implementation and
sustainability of trade agreements
Support the countries in the processes
associated with free trade agreements (CAFTA,
FTAA, WTO)
14
PROPOSAL
To build a partnership between MCC and CABEI to
help Honduras and Nicaragua in the development,
implementation and monitoring of their
country-led MCA Compacts.
15
POTENTIAL AREAS FOR COLLABORATION A few
examples

• Assistance to Honduras and Nicaragua
  preparation of their MCA Compacts
• Institutional Support to Honduras and Nicaragua
  implementation, monitoring, supervision and
  evaluation of their MCA Compacts
• Technical support complement MCA financing
• Support to Honduras and Nicaragua development
  of specific MCA projects

16

• ...
• Overall financial management of MCA funds
• Mix of MCA with CABEI resources multiplying
  funding availability
• Support for open, fair and competitive
  procurement
• Logistics support CABEI regional offices in
  Honduras and Nicaragua
• Coordination of MCC activities with other
  development partners

17
CABEI COMPETITIVE ADVANTAGES An Illustrative
List.

• Deep-rooted, productive and lasting USA-CABE
  relationship dates back to 1963
• Fully supportive of objectives pursued by the MCC
• Committed to economic growth and poverty
  reduction efforts
• Strongest institution within Central Americas
  regional institutional framework
• Solid relationship with public and private sector
  leaders and stakeholders

18

• Solid financial and legal position and positive
  institutional image
• Uniquely skilled and experienced staff
• Permanent presence in each Central American
  country
• Capacity to reduce operation/implementation costs
  of donors and development organizations that do
  not have strong in-country presence

19

• Demand-driven approach based on countries
  priorities and strategies
• Conditionality limited to project and program
  level
• Demonstrated capacity managing special purpose
  funds of development partners
• Capacity to integrate funds from different
  sources for common development goals multiplier
  effect and avoidance of duplicative efforts

20

• Flexibility and adaptability to donor
  requirements
• Assurance of donor visibility
• Strong strategic alliances with numerous
  development partners
• Capacity to replicate best development practices
  within countries
• Tax exempt status

21
POTENTIAL BENEFITS OF AN MCC-PARTNERSHIP, for

• Honduras and Nicaragua
• MCC
• CABEI

22
BENEFITS FOR HONDURAS AND NICARAGUA

• Greater availability of resources to implement
  their MCA Compacts
• Greater support for the implementation,
  monitoring, financial management and
  accountability, supervision, and evaluation of
  their MCA Compacts
• Stronger support from their own regional
  development bank
• Support in complying with MCA Compact requirements

23

• Support for greater coherence among development
  assistance providers (donor coordination), based
  on their country-led development and poverty
  reduction strategies
• Appropriate institutional framework to facilitate
  coordination with civil society and private
  sector in implementation matters, where
  appropriate

24
BENEFITS FOR THE MCC

• Faster start-up of MCA programs - through CABEIs
  installed capacity
• Lower entry and implementation cost in the region
• Synergy among US and CABEI economic
  growth/poverty reduction goals
• Greater coherence and co-financing opportunities
  with other bilateral, regional and multilateral
  development stakeholders

25

• Economies of scale in delivering MCA assistance
  to two countries through one local development
  institution
• Multiplier development assistance effect by
  contributing to the institutional strengthening
  of a sub-regional development institution (CABEI)
  with permanent presence in Honduras and
  Nicaragua, contributing to post-Program
  sustainability
• Opportunity to replicate successful regional
  development experiences and best practices in
  Honduras and Nicaragua
• Appropriate support for fiscal accountability of
  funds disbursed to Honduras and Nicaragua
  pursuant to their Compacts

26
BENEFITS FOR CABEI

• Stronger support to Honduras and Nicaraguas
  economic development and poverty reductions
  strategies
• Increased funding for Honduras and Nicaragua in
  highly concessional terms
• Stronger collaboration with the United States in
  development efforts in the region
• Institutional strengthening

27
FINAL REMARKS

• CABEI seeks to build on and strengthen its
  cooperative relationship with the U.S. Government
  to help our countries overcome poverty
• MCA assistance to Honduras and Nicaragua as an
  unprecedented opportunity for pursuing this
• With more than 40 years of on the ground
  development experience in Central America, CABEI
  is uniquely positioned to support the MCA
  programs in Honduras and Nicaragua
• CABEI is prepared to commit its resources and
  competitive advantages to build a fruitful
  partnership with MCC.
• As shown today, there are numerous benefits that
  could be achieved from and MCC-CABEI, for the
  beneficiary countries - Honduras and Nicaragua,
  for the MCC and for us.
• We look forward to broaden our discussion on this
  proposal.