‘Malawi to resuscitate MCC Compact’

Natural Resources, Energy and Environment Minister Goodall Gondwe says Capital Hill will do everything possible to resuscitate the suspended $350 million Millennium Challenge Corporation (MCC) Compact.

The MCC board of directors meeting, chaired by Secretary of State Hillary Clinton, on Thursday suspended the Malawi Compact due to what it described as a pattern of actions by the Government of Malawi that is inconsistent with the democratic governance criteria that MCC uses to select its compact partners.

The suspension of the compact has jeopardised the country’s hopes of having an efficient power system in the near future.

MCC has given Malawi up to June 2012 to make improvements on concerns or risk having the compact terminated.

MCC argued that it maintains compact partnerships only with countries that demonstrate a clear commitment to good governance, economic freedom and investing in their citizens.  It said through its actions over the past year, the Government of Malawi has failed to meet this standard.

‘We will work on reforms’

But Gondwe in an interview on Monday said government will in the next two months work on reforms to ensure that it is in line with the dictates of MCC.

“I am very optimistic, we will get these funds,” said Gondwe.

Malawi desperately needs the MCC Compact to modernise its power transmission systems to accommodate any increase in generation. The compact will also bring an additional six megawatts into the national grid.

‘Suspension big blow’

Malawi Confederation of Chambers of Commerce and Industry (MCCCI) president Matthews Chikankheni said suspension of the compact is a big blow to the industry as it would have reduced challenges in the power sector.

He said suspension pushes the country backwards in the race for development against other countries.

“The longer it takes to get back the compact, the more industry suffers. It’s a big blow,” said Chikankheni.

He hoped government will put in place all the necessary measures to get back the compact.

Agnes Phiri, a resident of Manyowe in Blantyre, expressed disappointment over the suspension of the compact programme, arguing it had raised hopes that her house will be connected.

“I have been on the list of people waiting to be connected with electricity for years and the suspension of the compact means more waiting time,” said Phiri.

MCC chief executive officer Daniel Yohannes said an MCC Compact is a partnership, and the commitment to democratic rights, accountable government and sound economic management is fundamental to that partnership.

“In light of our ongoing concerns about democratic governance in Malawi, MCC has formally suspended the compact. The future of this compact now rests on the actions of the Malawian government leadership between now and June, when the MCC Board is next scheduled to meet.

“While the Government of Malawi had taken initial steps in the right direction after the violence of July 2011, more recent events — including the arrests of opposition and human rights leaders and inflammatory rhetoric by senior government officials — supported MCC’s finding of a pattern of actions inconsistent with good democratic governance.

“The lack of progress on economic policy to bring the country’s IMF programme back on track has contributed to significant deterioration of the economic environment and put at risk the viability of MCC’s planned compact investments. Malawi’s decision to allow Sudanese President Omar al-Bashir to attend a trade summit in Lilongwe, despite the International Criminal Court’s (ICC) outstanding warrant for his arrest, further deepened MCC’s concerns,” said Yohannes.

The MCC’s $350 million investment in the power sector was expected to provide close to $2 billion in net income benefits to nearly six million Malawians, the great majority of whom live on less than $2 per day.