This financing model is built on the premise that, with modest support, Millennium Village economies can transition over a period from subsistence farming to self-sustaining commercial activity. Over time, household incomes will rise due to increased productivity, diversification into higher value crops and expanded off-farm employment. Higher incomes will raise household savings, accelerating economic diversification and household investments in human capital. As economic growth accelerates, the villages will assume the cost of many interventions that the Millennium Villages initiative is financing.
The process of funding and implementing a Millennium Village is a shared effort between the Millennium Villages initiative, other donors, local and national governments, NGOs and the village community. The following diagram depicts the anticipated contributions of each partner.
Each Millennium Village requires a donor investment of $300,000 per year for five years. This includes a cost of $250,000 per village per year (5,000 villagers per village multiplied by $50 per villager) and an additional $50,000 per village per year to cover logistical and operational costs associated with implementation, community training, and monitoring and evaluation. Note that this level of external support is fully consistent with the 2005 G8 commitments for official development assistance to Africa by 2010.
The other $60 per villager per year will come from village members, local and national governments and partner organizations, making for total funding of $110 per person per year.