What does it mean for Malawi to reach the compact status of the Millennium Challenge Corporation?
First, let me start by on behalf of President Bush and on behalf of the chief executive officer of MCC John Danilovich to congratulate you and Malawi and the people of Malawi for the fact that Malawi has now been chosen as an MCC eligible country. I think this is an achievement that we at MCC are very proud of and Malawian people should be very proud of and I think that it represents a further step in the very strong and excellent relations that the United States has with Malawi.
May be just a few words about MCC and how we have organised and then what does this mean in practice for Malawi. MCC is the United States government agency set up in the form of a corporation. But we are a United States government agency and we receive a funding from congress and we provide grants not loans. This is money that countries do not need not return.
We provide grants to our compact eligible countries. Now, MCC works on the principle that our development assistance will be best used by those countries that are doing three things. Countries that are ruling justly, that are supporting democratic principles and human rights, countries that are investing in their people, investing in health and in education, and countries that are adopting policies that lead to economic freedom, that lead to a strong and vibrant market economy and stimulate private sector growth.
So, the idea is to work with developing countries but with a very select group of developing countries. Again that rule justly, that invest in their people, and that promote economic freedom.
How do we determine which countries we work with? We take the eighty some countries that follow into the so-called low income category. And those eighty some countries we apply 17 non United States Government indicators, which measure whether the country is ruling justly, investing in its people, and promoting economic freedom. These indicators maintained by independent both parties. And every year each country’s ranking sheet and the results of these 17 indicators is published on our website. Here is the ranking sheet for Malawi.
We have six indicators that measure ruling justly, we have five indicators for investing in people and six indicators in economic freedom. The medium is established for each indicator. You are being compared to your peer group of countries. Your peer group for example, you are being compared to your peer group of countries and if your country scores above the medium it’s going to be passed. If your country scores below the median you fail. To qualify for MCC Compact eligibility you need to be above the medium of three of the six, three of the five and three of the six. We have one pass-fail indicator, that’s corruption. If you right up corruption you are above. So, this is the methodology that we use to choose countries. Now, Malawi was chosen based on this methodology. We now have in total 24 countries that we work with, 13 of them are in Africa. Malawi is one of the eligible countries.
And very important to know is that every year our board re-assesses eligible countries. So, while it’s important to do well on the indicators to become initially eligible. But every year our board will re-evaluate and so you got to be vigilant as you notice that Malawi is very close to the medium in many of these indicators. So in order to continue in the program every year you need to do well on the indicators.
Does that entail every country that qualifies for the compact status automatically receives aid or there is still some kind of monitoring that has to be done?
What does MCC Compact eligibility mean in practice in Malawi?
One feature with MCC is the way we chose the eligible countries, another feature of our process is that we will finance that which Malawi thinks needs for development. In other words, country ownership. We very much believe that that you know much better than we do what you need for your development needs and we are prepared to finance. There are no preferences. We have no preferences as to sectors. We can do things in health, education or infrastructure or water and sanitation, rule of law, aid for trade. But the point here is that we will finance that which Malawi feels need for its development need. What does this mean in practice, now that Malawi has been chosen as eligible; Malawi now needs to prepare a proposal, a funding proposal, a business plan for MCC which articulates the programs the Malawi has to finance. Our singular mission is to reduce poverty
through the vehicle of sustainable economic growth. So a proposal that we will receive from Malawi will need to focus on poverty reduction through growth. But again we have no sectors that we prefer. So it’s for you the Malawians to decide the sector that you like us to finance.
The next step is for the government to organize a broad consultative process with Malawian civil society and the private sector to ask Malawian people what they feel MCC funding should be used for. We very much view the Malawian proposals that we will receive to reflect a bottom-up approach not a top-down approach so that the proposals that we receive reflects broad consensus among the Malawian people as to what the country’s priorities are.
This is a national program. This is not a program with a particular party or faction, it’s a national program. We work, by definition, with countries that hold elections. Elections mean governments stay, governments go. We would like this MCC Compact to be something that most Malawians can feel represents a significant national priority. I would urge you and your fellow Malawians in the civil society and private sector to get engaged in this consultative process. Once this consultative process is completed then the government will need to put together based on this consultative process a proposal to MCC. And when we receive your proposal we will then review it from a tactical perspective and work with you to help refine it to improve it and will offer help to make this program very strong and after that we sign the Compact and begin working.
The third feature is that you are also responsible for implementing. You will be here to guide and offer suggestions with us but Malawi will be responsible for implementing this program. But again every year during the Compact, the country will be assessed based on these indicators.
How long will the process take and how much is Malawi expected to get from MCC
How long will the process take?
History has shown with other countries that generally it takes six to eight months for a country to produce a solid proposal, in other words to do the consultative process and then come up with a good proposal. We then need six to eight months to review, and to refine the proposal and technically assess it. So, I would think that the earliest that we will be in a position to sign something with Malawi will be in the second and third quarter around the year 2009. We had no minimum and maximum number we give a country. There is no quota or formula or funding envelope that we have for Malawi.
You can see that we have given Madagascar US$110 million; we have given Tanzania US$700 million. So, there is no number for Malawi. The number that we will give Malawi will be a function of the quality of the proposal. Was it the result of the consultative process? Can the country effectively implement and absorb the amount of money that it’s asking. So there is no minimum and maximum number. We will evaluate the proposal on its merits. It is very important that we do not politicize this process. This is a national program between people of United States and people of Malawi. And it is designed to reduce poverty through growth and we urge them no to politicize but come together as a country and give MCC a solid national proposal that most Malawians could rally around.
After Malawi finally receives the grant from MCC; are there any ways of monitoring that the country does not relapse on its performance as dictated by the indicators?
Of course we will monitor the indicators every year. That’s one level of monitoring. The second is together with Malawi we will develop very robust and very strong mechanisms for monitoring and evaluating. We want to make sure that the money is properly used. Two, to make sure that we are achieving the results that we would like to achieve. In other words, we have in the Compact agreed specific benchmarks that we hope to meet in this Compact. We can sign compacts for up to five years. So, we can only finance programs that can only be completed in five year period.
So the there will be nothing like the politicians say ‘we have the money but we can go back to old ways?’
No, because the money is not disbursed immediately. If we gave for example X number of dollars to Malawi, we just don’t just turn the money over to the country. What we do is out of our bank account we take the X amount and we reserve it upfront. So to reserve for Malawi and it is disbursed over five years as needed. It’s disbursed over those five years only if during those five years Malawi continues to perform well on the indicators and continues to implement the program well.
Friday, February 22, 2008
America in Africa
Challenging poverty through economic growth
By Emmanuel Luciano
It’s not always the case that great expectations make frustrated men.
The Chairman for the Parliamentary Committee on Trade, Commerce and Industries, who is also Member of Parliament for Lilongwe South West Constituency, is an optimistic man.
Willard Gwengwe envisages a wonderful future for Malawi. He envisions a Malawi with more referral hospitals than the present four of Mzuzu, Kamuzu, Queens and Zomba Central hospitals.
He dreams of a time when even the remotest of places like Phoka in Rumphi, Sinyala in Lilongwe, Makanjira in Mangochi and Marka in Nsanje will have roads befitting a country that gained independence some 44 years ago.
In Gwengwe’s ideal country there are no trees that transform into classrooms of some sort because the available school blocks can not accommodate the surging numbers of pupils in primary schools.
His is a world of conventional secondary schools and proper education system where teachers are spared from the bedlam of shacks they currently call homes because there are enough and proper teachers’ houses.
In the MP’s perfect world, it is only a country with a top-notch health and education system that can spur development in other sectors like of trade and commerce.
Just days after meeting John Hewko, the vice-president of Compact Development of the Millennium Challenge Corporation (MCC), Gwengwe has every reason to positively look into the future. After all, as Anna Eleanor Roosevelt would have it, ‘the future belongs to those who believe in the beauty of their dreams.’
The prospect of Malawi getting huge grants from MCC’s Compact should, therefore, be exciting news to any development conscious Malawian.
In Africa, MCC has approved nearly US$3.9 billion for its engagement with countries like Ghana getting US$547 million; Mozambique US$ 507 million; Lesotho US$363 million; Morocco US$ 687.5 million; and Tanzania US$ 698 million.
The money is not yet here, and there are still a few things that have to be done in the interim before Malawi starts receiving the grants. But with all these figures that went to other countries, Gwengwe can now start counting the eggs.
“It’s my sincere hope that the administration of the fund is not going to be politicised. We should priotise the key areas of education and the health sector as well.
“To spur trade and investment, we need to remove the supply-side constraints. These are bottlenecks like poor road infrastructure, electricity problems and water supply which the private sector is facing in the country,” says Gwengwe.
Dreams, wishes, prospects are just words that on their own are meaningless and in the case of Malawi’s MCC Compact, meaning will on be attached to these words when, as Hewko said, a consultative process to formulate proposals for Malawi starts.
“The next step is for the government to organise a broad consultative process with Malawian civil society and the private sector to ask Malawian people what they feel MCC funding should be used for.
“We very much view the Malawian proposals that we will receive to reflect a bottom-up approach not a top-down approach so that the proposals that we receive reflects broad consensus among the Malawian people as to what the country’s priorities are,” said Hewko.
It is in the consultation process where the chair for Parliamentary Committee on Trade, Commerce and Industries thinks that Parliament should be involved to remove the fear of government politising the issue.
“At least if one or two members from Parliament would be part of the consultative process. We can for instance involve the position of the speaker since he is supposed to be neutral because he represents all political parties represented in Parliament hence the wishes of the people can be priotised,” Gwengwe says.
But Steve Malamba, Chairman for Parliamentary Committee on education, one of the perceived priority sectors, is a bit skeptical because he thinks at the end of the day it will still be government that will draw proposals to be submitted to MCC.
“If government wants to maximise on the benefits of the Millennium Challenge Corporation and they want us to participate, then we are ready to assist. But the ball is in their court really.
“I understand that there has to be the Malawi Challenge Account Board that will also comprise people in government, that’s when they might want to consider involving other sectors,” Malamba says.
Malamba’s doubts stems from his experiences on how the country has handled some critical issues without consultation.
“What might prevent the government from cheating that they consulted us if they could not even consult on the China-Taiwan issue?” he asks.
Those who subscribe to the notion of measuring reality according to their experiences are right in their own way. They need not be worry when their expectations are not met.
There is a lot that has to happen before the great expectations of the likes of Gwengwe are met.
If the country all over a sudden starts performing badly on ruling justly as inherent in the corruption control, or stops investing in its people and warranting them economic freedom as provided for in the indicators that have to be continually observed, then they will be cause for worry.
According to MCC, there are no pre-set limits on Compact amounts that countries can request as “final Compact amounts will be based primarily on program quality, estimated costs, and available funds.”
And given all factors equal, the future looks very bright for Malawi.
By Emmanuel Luciano
It’s not always the case that great expectations make frustrated men.
The Chairman for the Parliamentary Committee on Trade, Commerce and Industries, who is also Member of Parliament for Lilongwe South West Constituency, is an optimistic man.
Willard Gwengwe envisages a wonderful future for Malawi. He envisions a Malawi with more referral hospitals than the present four of Mzuzu, Kamuzu, Queens and Zomba Central hospitals.
He dreams of a time when even the remotest of places like Phoka in Rumphi, Sinyala in Lilongwe, Makanjira in Mangochi and Marka in Nsanje will have roads befitting a country that gained independence some 44 years ago.
In Gwengwe’s ideal country there are no trees that transform into classrooms of some sort because the available school blocks can not accommodate the surging numbers of pupils in primary schools.
His is a world of conventional secondary schools and proper education system where teachers are spared from the bedlam of shacks they currently call homes because there are enough and proper teachers’ houses.
In the MP’s perfect world, it is only a country with a top-notch health and education system that can spur development in other sectors like of trade and commerce.
Just days after meeting John Hewko, the vice-president of Compact Development of the Millennium Challenge Corporation (MCC), Gwengwe has every reason to positively look into the future. After all, as Anna Eleanor Roosevelt would have it, ‘the future belongs to those who believe in the beauty of their dreams.’
The prospect of Malawi getting huge grants from MCC’s Compact should, therefore, be exciting news to any development conscious Malawian.
In Africa, MCC has approved nearly US$3.9 billion for its engagement with countries like Ghana getting US$547 million; Mozambique US$ 507 million; Lesotho US$363 million; Morocco US$ 687.5 million; and Tanzania US$ 698 million.
The money is not yet here, and there are still a few things that have to be done in the interim before Malawi starts receiving the grants. But with all these figures that went to other countries, Gwengwe can now start counting the eggs.
“It’s my sincere hope that the administration of the fund is not going to be politicised. We should priotise the key areas of education and the health sector as well.
“To spur trade and investment, we need to remove the supply-side constraints. These are bottlenecks like poor road infrastructure, electricity problems and water supply which the private sector is facing in the country,” says Gwengwe.
Dreams, wishes, prospects are just words that on their own are meaningless and in the case of Malawi’s MCC Compact, meaning will on be attached to these words when, as Hewko said, a consultative process to formulate proposals for Malawi starts.
“The next step is for the government to organise a broad consultative process with Malawian civil society and the private sector to ask Malawian people what they feel MCC funding should be used for.
“We very much view the Malawian proposals that we will receive to reflect a bottom-up approach not a top-down approach so that the proposals that we receive reflects broad consensus among the Malawian people as to what the country’s priorities are,” said Hewko.
It is in the consultation process where the chair for Parliamentary Committee on Trade, Commerce and Industries thinks that Parliament should be involved to remove the fear of government politising the issue.
“At least if one or two members from Parliament would be part of the consultative process. We can for instance involve the position of the speaker since he is supposed to be neutral because he represents all political parties represented in Parliament hence the wishes of the people can be priotised,” Gwengwe says.
But Steve Malamba, Chairman for Parliamentary Committee on education, one of the perceived priority sectors, is a bit skeptical because he thinks at the end of the day it will still be government that will draw proposals to be submitted to MCC.
“If government wants to maximise on the benefits of the Millennium Challenge Corporation and they want us to participate, then we are ready to assist. But the ball is in their court really.
“I understand that there has to be the Malawi Challenge Account Board that will also comprise people in government, that’s when they might want to consider involving other sectors,” Malamba says.
Malamba’s doubts stems from his experiences on how the country has handled some critical issues without consultation.
“What might prevent the government from cheating that they consulted us if they could not even consult on the China-Taiwan issue?” he asks.
Those who subscribe to the notion of measuring reality according to their experiences are right in their own way. They need not be worry when their expectations are not met.
There is a lot that has to happen before the great expectations of the likes of Gwengwe are met.
If the country all over a sudden starts performing badly on ruling justly as inherent in the corruption control, or stops investing in its people and warranting them economic freedom as provided for in the indicators that have to be continually observed, then they will be cause for worry.
According to MCC, there are no pre-set limits on Compact amounts that countries can request as “final Compact amounts will be based primarily on program quality, estimated costs, and available funds.”
And given all factors equal, the future looks very bright for Malawi.
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