MCC approves second Malawi compact
Millennium Challenge Corporation (MCC), a United States of America government agency, has approved that Malawi negotiates for a second compact after the successful completion of the $350.7 million energy project.
MCC broke the news in a Twitter update posted around 5pm yesterday.
Reads the tweet: “MCC isexcited to announce that at yesterday’s board of directors meeting, the boardselected #Malawi as eligible for a compact programme.”
Reacting to the news, Minister of Finance, Economic Planning and Development Goodall Gondwe yesterday said while he did not have official communication, he was aware that Malawi performed well in the first compact.
He said: “Of course, we are extremely excited. What they asked us to do is that we should consult within government and outside and then we will consult with them and come up with an agreement. It will take a bit of time.”
However, Gondwe could not hint on what could be contained in the next compact, saying: “On the power generation, we seem to be okay now. Maybe we could go to another aspect of infrastructure. Maybe transportation, but we will see, we’ll see.”
In an earlier interview, the US Embassy in Malawi said eligibility for a second compact was dependent on several factors prominent amomg them the successful implementation of the first compact and improved scorecard score, particularly on fighting corruption.
Economics Association of Malawi (Ecama) president Chiku Kalilombe hailed government for its efforts to secure another compact, but cautioned it to carefully select the next sector for maximum impact.
He said: “It is very good news. There are some sectors that we really need help to grow but how we use it afterwards will determine whether it is impactful.”
Kalilombe said it is Ecama’s submission that the second compact considers the water sector, particularly improving water supply to districts and rural areas.
“That is where we have problems. Some might not have arisen yet, but it is a ticking time bomb. If it is up to Malawi to determine what the next compact should concentrate on, it should be something that will make a lot of impact,” he said.
Given the opportunity, Kalilombe said Ecama would want to be involved in the discussions on the next compact.
Of the $350.7 million compact, about $238 million was invested in upgrading the national electricity grid to increase distribution and transmission capacity.
Through the MCC energy compact, implemented by Millennium Challenge Account-Malawi (MCA-M), capacity at Bunda substation was doubled, a 132 kilovolts (kV) overhead transmission line from Nkhoma to Bunda Turn-off was erected and construction of two 400/132 kV power transmission lines has since been completed.
The compact has also added 12 megawatts (MW) following the rehabilitation of Nkula A Hydro Power Station which saw its capacity increased from 24MW. It also covered administrative reforms in the power sector to improve efficiency at Electricity Supply Corporation of Malawi (Escom) and Malawi Energy Regulatory Authority (Mera).
In the 2019 scorecard, Malawi scored 65 percent on controlling corruption from 59 percent last year in 2018, owing to increased prosecution of Cashgate cases and commitment by the government on legal reforms in the Anti-Corruption Bureau.
Unlike 2018 when Malawi failed five out of 20 indicators, in the 2019 scorecard was an improvement but it fared badly on the indicator on encouraging economic freedom in the areas of business start-up, fiscal policy.
Malawi signed the first compact with MCC in 2011 before it was suspended due to poor governance in 2012. It was resuscitated later in 2013.
