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US$300 million Compact II grant within sight

  • as MCC board approves lucrative grant to “drive sustainable, inclusive economic growth,”
  • all that is left is an official signing ceremony before funds are disbursed.

Bereng Mpaki

LESOTHO is much closer to finally accessing the long-awaited lucrative US$300 million grant from the United States’ Millennium Challenge Corporation (MCC) to fund various socio-economic projects under a second compact (Compact II) programme.

This after the MCC board of directors met on 31 March 2022 and voted to approve the grant.

The board approval means that the country is much closer to finally receiving the funding for its agriculture, health and other socio-economic projects under Compact II. An official signing ceremony must now take place between the two countries before the disbursement of the funds for the implementation of the projects which the MCC has said must begin sometime next year.

But to preserve its eligibility, Lesotho must continue to fulfil strict criteria including tackling the human trafficking scourge and promoting the rule of law.

Failure to adhere to the criteria will result in the compact being suspended even after the disbursement of funds has commenced.

In a weekend statement, the MCC said the board held its quarterly meeting in the US capital, Washington DC, where they approved the US$300 million grant to Lesotho. The board also approved a US$60 million grant for Kenya.

The grants to Lesotho and Kenya will “drive sustainable, inclusive economic growth” in the two African countries, the MCC said in its statement.

“The MCC’s proposed compact with the Government of Lesotho seeks to improve health outcomes through better primary healthcare delivery, increase incomes in rural communities through the provision of irrigated land for high-value crops, and boost profits and formal employment for women- and youth-owned enterprises.

“The proposed threshold program with the Government of Kenya aims to bolster the Nairobi transport authority, connect Nairobi residents to public transportation, counter pervasive sexual harassment on minibuses, modernize land use planning, and catalyze financing for bus rapid transit to promote lower greenhouse gas emissions,” the MCC said.

MCC CEO Alice Albright added, “through these partnerships, MCC will help the Kenyan and Lesotho governments tackle tough policy and institutional reforms and invest in critical infrastructure in the health, agriculture, finance, and urban planning sectors, creating pathways to prosperity for more than 2, 5 million people”.

United States Ambassador to Lesotho, Maria Brewer, welcomed the MCC board decision to approve the US$300 million grant.

“The approval of this compact is a critically important step in Lesotho’s continued achievement of its development goals for the citizens of Lesotho. The approval of this second compact between the MCC and Lesotho demonstrates the United States government’s commitment to remain a strong and enduring partner with Lesotho.

“The compact will address three development objectives. The first will focus on health systems strengthening to improve efficiency and delivery of primary health care services in Lesotho.

“Through a market-driven irrigated horticulture project, the compact’s second initiative will seek to increase rural incomes by an investment of up to 2000 hectares in climate-smart irrigation infrastructure, human capital development, increased women and youth participation in horticulture, and support for key reforms. The third initiative – the business environment and technical assistance project – will aim to improve the business climate in Lesotho with a focus on empowering local business service providers, public-private dialogue facilitation, and inclusive financial services,” Ms Brewer said.

The approval of the grant comes just over a month after MCC officials reached an agreement with the Lesotho government over the US$300 million funding for a second compact.

The Compact II agreement will certainly bring relief to Lesotho which has endured a five year wait for a definite funding agreement.

Implementation of the agreed projects will then begin in 2023 up to 2028.

Lesotho got the first compact grant worth US$362, 6 million (about M3 billion) back in 2007. It was used to fund various projects to reduce poverty and spur economic growth.

However, in 2015, the MCC refused to renew the compact programme over rampant human rights abuses under then Prime Minister Pakalitha Mosisili’s regime.

Lesotho’s eligibility for the second compact was initially confirmed by the MCC Board in December 2017 after the ouster of Mr Mosisili in the June 2017 elections and the advent of the second Thomas Thabane-led coalition.

Through the assistance of the Lesotho Millennium Development Agency (LMDA), Lesotho has been involved in the process of developing its second compact with the support of the MCC since 2018.

In its December 2021 statement, the US embassy said, “the government of Lesotho, through the (LMDA), is currently developing its second compact with the support of the MCC.

On 18 February 2022, the MCC and Lesotho government finally agreed a US$300 million amount for Compact II.

But as emphasised by former US Ambassador, Rebecca Gonzales, Lesotho must stay the course at all times in terms of adhering to the eligibility criteria prescribed the US government. The compact can be suspended at any point even when disbursement of the funds and implementation has started.

For a long time after Lesotho was selected to develop a second compact in December 2017, a definitive agreement on the size of the compact could not be agreed due to concerns about Lesotho’s human rights record among other things.  The US government was particularly concerned about Lesotho’s failure to addressing human trafficking issues.

The US government considers human trafficking a serious offence and countries like Lesotho, that are on its Tier 2 Watchlist for trafficking, are ineligible to receive various forms of US development assistance.

Two months ago, Ms Gonzales, acknowledged that the Lesotho government had made some “significant” steps since 2020 including the passing the Anti-Trafficking (Amendment) Act in November 2021 to combat human trafficking by imposing lengthy and even life imprisonment on those convicted of the crime.

She however, said the government needed to do more including expediting investigations against government officials and others suspected of involvement in the trafficking of persons.

“We want to see Lesotho’s meaningful anti-TIP progress that would warrant an upgrade to Tier 2 by the end of February 2022 because this means that we will have supported the protection of crucial foreign assistance and the country’s proposed second Millennium Challenge Corporation compact,” Ms Gonzales said.

 

 

 

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