Malawi has missed out on the second Millennium Challenge Corporation (MCC) compact programme designed to spur economic growth and reduce poverty, The Daily Times has learnt.
The development means that Malawi will not have a compact programme once the current five-year $352 million energy compact expires in September this year.
The development also comes at a time Malawians were hopeful of a new compact following the country’s good performance on the MCC scorecard.
But at its quarterly meeting in December, the US Government’s MCC Board of Directors selected Timor-Leste and the Gambia for a compact.
As part of the annual selection process, the board also reselected Burkina Faso, Mongolia, Senegal, Sri Lanka, and Tunisia, enabling the development of compacts in those countries to continue.
In addition, the board reselected Lesotho after a two-year hiatus, recognising Lesotho’s concrete steps over the past year that demonstrate a commitment to addressing MCC’s ongoing rule of law concerns.
In an emailed response on Thursday, US Embassy Public Affairs Officer, Edward Monster, said selection for a second compact is not automatic, adding that second compacts are very competitive and subject to higher expectations and greater scrutiny for MCC funding eligibility.
Monster said when considering a second compact, MCC’s board of directors looks for successful implementation of the first compact; a commitment to sector reforms; and continued improvement on MCC’s scorecard, especially on issues of democratic rights and control of corruption.
“It often takes time for MCC’s board to be assured that a country is meeting these higher standards. To date, only half of first compact MCC countries have received a second compact.
“MCC’s board re-examines all eligible countries each December. The board’s decision this year does not preclude the board from considering Malawi in the future if Malawi continues to pass MCC’s scorecard,” Monster said.
He said going forward, it will be important that Government of Malawi demonstrates a strong and successful close-out to the current compact, including clear measures to ensure sustainability of efforts, such as of adoption of an electricity tariff in line with the costs of maintaining and expanding the national system; conclusion of independent power purchase agreements; and sound corporate governance and financial stability of its electricity utility, Escom.
“Show a strong commitment to combatting corruption, especially given the trajectory on the control of corruption indicator in recent years. Corruption fundamentally undermines economic growth, which is why MCC examines a country’s commitment to combatting corruption when choosing partner countries and when developing and implementing programs,” Monster said.
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