Government’s cautioned on MCC grant



MASERU – The government has been advised to augment best project management practices, and increase accountability and governance in the execution of projects under the Millennium Challenge Corporation (MCC)’s Second Compact that has just been approved for Lesotho. The signing of this second Compact is scheduled for May with the exact date yet to be announced.

The United States of America’s MCC Board of Directors voted to approve a five-year, US$300 million (about M4.5 billion) Compact Programme for Lesotho on March 31. This second Compact consists of three projects; the Health Systems Strengthening (HSS) Project, Market Driven Irrigated Horticulture (MDIH) Project and the Business Environment and Technical Assistance (BETA) Project.

The Compact Programme is expected to advance economic growth and reduce poverty by addressing the root causes of the constraint of ineffective policy planning, coordination, and execution across the three identified key sectors of health, agriculture, and access to finance.

Following this approval, independent economic observer and Chartered Accountant, Robert Likhang, said the elements cited have to be included in the design and execution of the projects under the second compact, further noting that it is important that political interference be limited to zero.

He said the MCC funding has always been adding economic and social value in the country, adding that the funding will be handy for Lesotho given the social and economic challenges the country is currently faced with. Likhang noted that the purpose of the grant is to drive sustainable, inclusive economic growth and is well designed to address the challenges Lesotho faces which include but are not limited to gaps in health services and food security.

He further indicated that the Covid pandemic and climate change effects on food security bring risk to sustainable growth, with political instability not helping the situation. It was commendable that other socio-economic projects will be included, he said, adding it is also important that the economic side will be implemented to bring in sustainability.

“Whilst social projects are helpful, adding the economic side in the design and implementation will bring in sustainability,” he said. Likhang also noted that the inclusion element which is about the involvement of rural people in projects will allow a broad supply value chain and lead to increased exports. The government announced these developments through the office of Prime Minister Moeketsi Majoro on Monday this week.

According to Majoro’s Press Attaché Buta Moseme in statement issued in Maseru, the Compact Programme aims to spur private sector growth by increasing workforce productivity through improved health outcomes, investing in the emerging horticulture sector, and supporting the creation and viability of private businesses through provision of technical assistance, incubation and acceleration services and access to finance.

“The Compact investments are also designed to target structurally disadvantaged populations, particularly the poor, women, and youth. The Government of Lesotho and MCC expect a stronger, more robust and organised private sector constituency which will be able to demand more effective and efficient goods and services from government,” Moseme noted. He said in turn, a more effective and efficient government can provide the public with the goods and services necessary to stimulate and sustain private sector-led growth, poverty-reduction and job creation.

Moseme also said the government is pleased to partner with the MCC under this Compact Programme and support building the country’s institutional capacity through select reforms to strengthen the efficiency and effectiveness of the government to provide public goods and business services in the health, irrigated horticulture and the financial sector. Under the terms of this agreement, the government is expected to use the funds to undertake feasibility studies and other activities related to the Compact development process.

In its first compact with Lesotho, completed in 2013, the MCC invested US$362.5 million to increase economic growth and reduce poverty by improving water supply, increasing access to essential health services, and removing barriers to private sector investment.

The compact resulted in over 140 rehabilitated clinics and out-patient departments, 2 300 household water connections and construction of the Metolong Water Treatment Plant as well as independent or joint land titles for over 17 000 women through the Land Administration Authority.

The second Compact will work towards those same goals through improved planning and delivery of public goods and services to enable private investment. Created by the US Congress in January 2004, MCC is a US government agency that provides five-year grants and assistance to select countries that meet rigorous standards for good governance, from fighting corruption and respecting democratic rights to investing in health and education. The MCC’s mission is to reduce global poverty through economic growth.

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