Goats and Soda

As the Trump administration rapidly dismantled USAID, the United States’ largest foreign aid agency, the staff at a lesser-known but widely-praised agency were on edge.

The Millennium Challenge Corporation is an independent government agency dedicated to boosting economic growth in low- to middle-income countries. Started during the George W. Bush administration, MCC has garnered bipartisan support through targeted investments in the private sector.

The staff breathed a sigh of relief after a White House official visited the agency in February and basically concluded that MCC was streamlined and well serving its mission, according to an MCC official who requested anonymity for fear of losing their job.

“We were feeling confident that maybe MCC would be retained because the model actually speaks to the priorities that the administration put forward,” the source said.

But this week, MCC got a different message. The Department of Government Efficiency has directed major cuts to the agency’s staff and the termination of all existing grants, according to the official.

The extent of cuts aren’t yet clear, the official said, but could reduce the workforce of roughly 320 to just a couple dozen.

How MCC works

MCC has invested about $17 billion in 47 countries since it was launched in 2004. It targets its roughly $1 billion yearly budget toward investments in the private sector, aiming to reduce poverty by boosting economic growth. Current projects include improving Côte d’Ivoire’s electrical grid so the country can sell electricity to its neighbors, modernizing Nairobi’s bus transit system and improving rural roads in Zambia to make it easier for farmers to get their produce to market.

To qualify for grants, countries have to meet certain standards by instituting political reforms, including fighting corruption, to ensure the money is spent efficiently.

“Before the countries get selected they have to prove they’re worthy of contribution by fighting corruption, by investing in women and children, by honoring the marketplace,” said George W. Bush in a speech last year marking the 20th anniversary of MCC. “There is a partnership with the belief that people can solve their own problems … That’s what MCC is all about to me, and the results have been extraordinary.”

MCC is consistently ranked as one of the most transparent development organizations in the world by Publish What You Fund, an organization that advocates for aid transparency, in part because MCC publishes rigorous analyses of their programs.

DOGE representatives arrived at the agency, which is located in Washington, D.C., on April 14, quickly gaining access to internal systems and data, the MCC official said. A week later, they recommended that MCC be reduced to the statutorily required minimum and that all existing contracts be terminated.

According to the source, DOGE did not articulate reasons for the cuts. That contrasts with how the Trump administration publicly rationalized its cuts to USAID, citing fraud, abuse and programs not aligning with priorities. The MCC official said DOGE officials had not shown any interest in understanding the work of the agency and were strictly focused on making cuts.

The White House did not respond to requests for comment.

A relatively small budget

MCC’s annual budget is about $1 billion, a comparatively small slice of the nearly $7 trillion federal budget.

“And through that, we create opportunities for economic growth in our partner countries, which ultimately creates the markets for American exporters. That’s MCC’s value for America, along with other returns,” the MCC official said.

Losing MCC would mean losing a model of foreign aid that’s demonstrated clear benefits for recipient countries and the U.S., said James Mazzarella, a former official at MCC who also worked at the National Security Council during the first Trump administration.

“In all the countries that MCC partners with, the US government has a tremendous amount of influence and goodwill,” said Mazzarella. He points to an early project in Ghana, where MCC partnered with the local government to improve road infrastructure. Ghana named a resulting highway after then-former President George W. Bush.

If the cuts go through, he said, “in addition to not having access anymore, we’re going to be seen as a country that breaks its word. Our partners made significant, tough political reforms based on our promises, and now they’re being left high and dry.”