The United States (US) is Lesotho’s major development partner, funding various projects to combat the HIV/AIDS pandemic, Covid-19 and to improve the health delivery system in general.
Even Lesotho’s security sector has not been left out as the US government has facilitated cooperation and training programmes for the Lesotho Defence Force (LDF) and Lesotho Mounted Police Service (LMPS) aimed at improving their skills and overall professionalism to enable them to effectively discharge their mandates.
The US government has also come up with multimillion dollar compact programmes under the Millennium Challenge Corporation (MCC) to foster socio-economic growth. The two countries finally signed a long awaited agreement for a Second MCC Compact in May this year. Valued at a staggering US$300 million, the Second Compact is expected to be implemented over a five year period. It will fund 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.
It builds on the First Compact grant worth US$362, 6 million (about M3 billion) back in 2007. It was used to fund various projects to reduce poverty and spur economic growth.
The Lesotho Times (LT) Editor Herbert Moyo recently sat down with the MCC CEO, Alice Albright, who was in Lesotho for new Prime Minister Sam Matekane’s swearing in ceremony at Setsoto Stadium on Friday. Ms Albright discussed the eagerly awaited implementation of the Second Compact. She also discussed the scope of the US government’s work in Lesotho and the rest of the world aimed at fostering socio-economic development, democracy and good governance.
Excerpts:
LT: Please outline the scope of the MCC’s work. How many countries are you cooperating with on development projects and what is the value of the projects undertaken in 2021?
Albright: The Millennium Challenge Corporation is a US Government foreign assistance agency. MCC provides grants to low and lower-middle income countries to reduce poverty through inclusive and sustainable economic growth. We partner with developing countries who are committed to good governance, economic freedom, and investing in their people. What makes MCC so effective is two-fold: First, we use an evidence-based approach to developing programs that tackle complex issues holding back a country’s economic growth;
Second, we mandate that every grant programme be led from start to finish by partner country governments, with the help of MCC’s development experts.
Our time-limited grants couple infrastructure investments in sectors such as energy, transport, agriculture, and education with institutional and policy reforms to deliver inclusive and sustainable economic growth.
Overall, we have invested roughly US$15 billion dollars in 49 partner countries, helping more than 200 million people.
The majority of our investments have been here in Africa – totaling more than $9 billion across 24 African countries, helping nearly 50 million people.
This includes US$662 million here in Lesotho between our first compact and the Health and Horticulture Compact signed in May of this year.
In 2022, MCC has achieved a record performance, committing US$1, 3 billion in new investments across four compact grants – including the US$300 million Lesotho Health and Horticulture Compact.
LT: Why is the fight against global poverty important for MCC?
Albright: Poverty has a profound impact on the daily lives of millions of people and in many ways – from poor health and food insecurity to insufficient education and business opportunities. The United States is determined to do its part to help lift people up and build a stronger, healthier global community. For MCC, it is our mandate and our sole mission to reduce global poverty through fostering economic growth.
Challenges arising from the Covid-19 pandemic, other disease outbreaks, conflict, and climate change have threatened to unravel the development gains many low and lower-middle income countries have achieved.
For example, between 2016 and 2021, the number of people around the world living in acute food insecurity skyrocketed from 108 million people to 161 million, particularly among marginalised groups like women and youth. This has been exacerbated by Russia’s unprovoked war in Ukraine, which may push an additional 70 million people into acute food insecurity.
Through MCC and initiatives including USAID’s Feed the Future, the US Department of Agriculture’s McGovern Dole School Feeding Programme, Prosper Africa and PEPFAR, the United States government is working together with our African partners and other stakeholders to advance our shared vision of a better, greener, healthier, and more secure future.
Since February of this year, the United States has provided more than US$6, 1 billion in humanitarian assistance and US$2, 3 billion in development aid to combat hunger and strengthen food security.
The United States Government is committed to doing more – especially here in Lesotho. Through MCC’s Health and Horticulture Compact we will focus on improving the quality of healthcare provided to the people of Lesotho, because we know that a healthy workforce is critical to a thriving economy.
LT: We understand that the stock of US foreign direct investment (FDI) in Africa stood at US$44, 8 billion in 2021. This is relatively low compared to other continents. Why is this so?
Albright: Although foreign direct investment in Africa is growing, more can and should be done.
The MCC is committed to leveraging its grant resources to help stimulate the private sector and other partners by creating the right enabling environment and mitigating risk in our most challenging sectors to finance.
For example, each of the projects under our health and horticulture compacts contain elements and reforms that seek to increase private sector participation. We have also set aside funds in the compact to partner with the US International Development Finance Corporation to de-risk and unlock additional private sector investment in Lesotho.
More broadly, the US Government, through initiatives such as Prosper Africa, is working with global investors, international partners, and African stakeholders to drive investment.
We are providing US investors with substantive market information, connecting them with African partners, supporting them to identify and conduct due diligence on potential investment opportunities, and bringing them to the continent on investor delegations where they can see the opportunities up close.
By working together with US investors, international partners, and African stakeholders, we are leveraging the power of US financial markets to lower the real and perceived risk of investing in the African continent.
LT: How significant is US government support for US firms seeking to do business in Africa? How much is the US government doing to encourage US firms to invest in Africa?
Africa has one of the world’s fastest growing populations, largest free trade areas, and one of the most diverse ecosystems. It is impossible to meet this era’s defining challenges without African contributions and leadership – including in the global business community.
The US government encourages US firms to invest in Africa by providing them with a robust and comprehensive toolkit to enter and expand in African markets. This includes market intelligence, matchmaking, financing, feasibility studies, and information on public-private partnerships.
Specifically, through the Prosper Africa initiative, the United States is bringing a full suite of services from across 17 US government agencies to increase two-way trade and investment between African countries and the United States.
Through this whole-of-government approach, we are partnering with the private sector to advance deals, promote market opportunities, and strengthen business and investment climates.
We do this work because it creates jobs and fosters shared prosperity on both sides of the Atlantic.
Since launching Prosper Africa three years ago, the US government has directly supported 800 two-way trade and investment deals to close across 45 African countries for a total value of US$50 billion.
At the 14th US-Africa Business Summit earlier this year, more than 1000 US private sector executives, investors, and senior government and multilateral stakeholders — representing trillions of dollars in assets — gathered to further two-way trade and investment.
The MCC is also actively managing more than US$2, 75 billion in projects across the continent, with more than US$1, 5 billion in additional projects in the pipeline.
We are building on this momentum, and the United States is committed to doing more.
LT: We know that the US government ties investment and development assistance to good governance. In your view how far has this been an impediment to doing business in Africa?
Albright: The United States understands that, on most of the urgent challenges and opportunities the world is facing, Africa will make the difference. We can’t achieve our goals around the world without the leadership of African governments, institutions, and citizens.
Good governance is key to Africa’s political, economic, and social transformation in the coming decades. And this, along with respect for human rights and the rule of law, are the basis of US foreign policy.
While we recognise that some actors do not prioritise good governance in their investment activities, we push back on corrupt or coercive practices because they ultimately damage our interests and those of our African partners.
Many countries throughout Africa are making institutional reforms that improve governance structures; but more needs to be done.
The United States is committed to working with partner countries in Africa and throughout the world seeking to improve governance and invest in their people – this is why MCC exists.
LT: A second MCC Compact worth US$300 million was agreed and signed earlier this year. What happens after the signing?
Albright: MCC and the Government of the Kingdom of Lesotho continue to work together to finalize the design of the Compact’s projects and prepare for implementation. This includes conducting final studies and preparing for the establishment of the Millennium Challenge Account, or MCA, the institution to be established by the Government of the Kingdom of Lesotho to implement the compact.
The MCC will monitor and support MCA-Lesotho, but MCA- Lesotho will lead the compact’s implementation in line with MCC’s core principle of country ownership.
I note that the Lesotho compact contained conditions precedent which are requirements that must be achieved by the Government of the Kingdom of Lesotho in order for the compact to enter into force, i.e. then the five-year clock on the grant program officially begins.
Two conditions precedent involve legislation passed by Parliament earlier this year but their validity and other laws receiving the King’s assent in August were affected by the court’s decision in September on the constitutionality of the State of Emergency. Once the new government is formed, MCC will urge enactment of the Harmonisation Bill and Counter Domestic Violence Bill as well as the law that will establish MCA-Lesotho.
The Harmonisation Bill is essential to the equitable implementation of the compact so that it supports the economic empowerment of women and builds upon the Legal Capacity of Married Persons Act, a law passed under the first compact which established legal majority status of married women.
The Counter Domestic Violence Bill strengthens legal protections against domestic violence and complements the compact’s Health System Strengthening Project.
The Millennium Challenge Account Act establishes the accountable entity for the implementation of the Lesotho II Compact.
LT: How are the compact funds going to be disbursed and when should we expect the first tranche of money?
Albright: Once the MCC compact with the Lesotho Government enters into force, MCA-Lesotho will be responsible for selecting contractors and suppliers, as well as awarding and administering contracts in compliance with MCC’s Program Procurement Principals.
As part of our commitment to transparency, MCC’s compact procurements are fair and open, with no preferences for companies in partner countries or the United States. This creates a level playing field where all eligible companies, including small businesses, can compete – and win. After procurements are awarded, all work is verified before funding is disbursed directly and transparently to those companies that completed the work.
Until disbursed directly to contractors, MCC’s grant funds remain at the US Treasury.
MCC and the Government of the Kingdom of Lesotho are planning for entry into force by late 2023.
LT: What systems are in place to ensure accountability for the compact funds and the success of the projects envisaged under the Compact II programme?
Albright: Every MCC compact is led by partner countries, meaning the Lesotho Health and Horticulture Compact – from design to implementation – will be led by the Government of the Kingdom of Lesotho.
The MCC’s development experts work in close coordination with the Lesotho Government throughout the lifecycle of a compact to ensure each grant meets our rigorous standards for implementation.
The monitoring of funds is a rigorous, transparent process that reflects the focus on accountability and governance, key principles of the MCC.
This is often managed through independent fiscal agents and shared publicly. It is important to note that during the implementation of the compact, MCC will only issue funding based on the successful completion of project milestones. This helps to ensure programs remain on schedule and are completed as initially designed.
LT: It has been said before by US government officials that the implementation of the compact may be suspended at any point it is felt that Lesotho is regressing in terms of its commitment to good governance, the rule of law and the overall respect for human rights. Please elaborate on this?
Albright: The United States Congress founded MCC with the expectation that our agency and our Board of Directors would partner with countries that demonstrate a clear commitment to just and democratic governance, economic freedom, and social investment.
These elements are critical to creating an enabling environment for the sustainable, inclusive economic growth that our compacts aim to achieve.
If a country engages in a pattern of actions contrary to these principles, there can be consequences for its partnership with MCC.
MCC is proud of our long partnership with Lesotho and recognises Lesotho’s demonstrated commitment to these governance principles.
We look forward to seeing the new Government of the Kingdom of Lesotho affirm this commitment as we deepen our partnership with the country through implementation of the Lesotho Health and Horticulture compact.
