Minister Sophonea in the US for MCC Compact II negotiations

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Bereng Mpaki

FINANCE Minister Thabo Sophonea is currently in the United States (US) for negotiations on a multi-million-dollar second compact under the US government’s Millennium Challenge Corporation (MCC Compact II).

Two months ago, in December 2021, the US embassy in Lesotho said the MCC board could approve the compact early this year and a definitive funding agreement would then be signed later in the year.

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

All of this is however, dependent on the Lesotho government meeting eligibility criteria, particularly addressing human trafficking concerns that have been raised by the US government.

In line with this, Minister Sophonea flew to the US at the head of a high-level delegation consisting of government officials from various ministries as well as officials from the Lesotho Millennium Development Agency (LMDA) which is tasked with monitoring the projects funded under the MCC compact agreement.

Finance Ministry spokesperson, Litemoso Thatho, yesterday said the Compact II negotiations began on Monday and are expected to be concluded tomorrow.

“The purpose of the mission is to negotiate the MCC second compact,” Ms Thatho said in an interview.

“The negotiations began on 14 February 2022 and are expected to be concluded by 18 February 2022. Expected outcomes are successful negotiations and reaffirmation of the agreement for the implementation on the second compact to begin next year,” she added.

Back in 2007, Lesotho benefited from the first MCC compact that was worth US$362, 6 million (about M3 billion) through the implementation of various projects to reduce poverty and spur economic growth.

In 2015, the MCC baulked at renewing the compact programme over rampant human rights abuses under then Prime Minister Pakalitha Mosisili’s regime.

Lesotho’s eligibility for the second compact was first 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 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 Lesotho Millennium Development Agency (LMDA), is currently developing its second compact with the support of the MCC.

“The Lesotho compact development is an ongoing process that includes continuous dialogue between LMDA, MCC, and stakeholders to tap into different views and opinions, perspectives, and expertise to strengthen project outcomes.  The compact has three proposed projects – Market-Driven Irrigated Horticulture (MDIH), Business Environment and Technical Assistance (BETA), and the Health System Strengthening (HSS) project, and each project has several components,” the embassy said.

Its statement is titled: “Millennium Challenge Corporation Compact II Development Approaches Final Stages in Lesotho”.

This gives hope that Lesotho could finally be able to conclude the development process and sign a definitive funding agreement which would run into millions of dollars.

The statement notes that the LMDA and MCC discussions have centred around the following:

  • A market-driven irrigated horticulture project which proposes up to 2000 hectares of irrigation at several sites to drive growth in the irrigated horticulture sector. The project has a strong focus on empowering communities, landholders and farmers to demonstrate the success this sector can have in Lesotho.  The project will focus on ensuring women and youth participate in the programme.  Institutional reforms and capacity strengthening in land, water, agriculture, and gender will help ensure that Lesotho can sustain the project’s success and replicate in other areas.
  • A business environment and technical assistance project to strengthen the business ecosystem to address system-wide or horticulture sector-specific challenges such as horticulture standards and quality conformity, access to finance for horticulture subject matter experts (SMEs), and the promotion of women and youth-owned SMEs.
  • A health system strengthening project to increase the efficiency and efficacy of health resource utilisation resulting in a reduction in per unit treatment cost, improved health outcomes, and ultimately improved cost-efficiency of the Ministry of Health’s expenditures. In addition, the project will reduce household medical and associated expenses and increase labour productivity, complementing the first project.  Improved private sector productivity will contribute directly to a growing economy.”

The embassy statement indicated that the MCC hoped to approve the compact early this year and that a funding agreement will also be signed this year.

All these hinges on Lesotho meeting eligibility criteria, particularly addressing human trafficking concerns that have been raised by the US government.

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.

A fortnight ago, outgoing US Ambassador, Rebecca 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 needs 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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