THE Millennium Challenge Corporation (MCC) has again deferred a vote on the reselection of Lesotho for a second compact “until governance concerns have been addressed” in a likely harbinger for Lesotho’s loss of African Growth and Opportunity Act (AGOA) eligibility for 2017.
The MCC is a bilateral American foreign aid agency established by the United States Congress in 2004, with countries expected to meet certain conditions such as good governance and respect for the rule of law to qualify.
In 2007, the MCC and Lesotho signed the first $362.6 million (over M3 billion) compact to reduce poverty and spur economic growth.
The five-year compact helped to expand water supply for household and industrial use, strengthened the country’s health care system and removed barriers to foreign and local private sector investment.
Lesotho was supposed to receive its second compact this year, but on 16 December 2015, the MCC Board decided not to vote on the issue citing governance concerns, particularly after the killing of the former army commander Maaparankoe Mahao.
The US government insisted that Lesotho would only continue to benefit from AGOA and to receive a second MCC compact after taking “concrete actions” that address concerns about “impunity and the rule of law” as well as implementing recommendations made by the SADC Commission of Inquiry.
AGOA accords duty-free treatment to products exported by beneficiary sub-Saharan countries to the United States including Lesotho. A determination on Lesotho’s AGOA eligibility will be made before the end of the year and become effective on 1 January 2017.
In a press statement issued yesterday, after a meeting of the agency’s board of directors in Washington DC, the MCC said it deferred a vote on Lesotho owing to the Mountain Kingdom’s failure to meet the eligibility criteria. The Philippines’ vote had also been deferred over concerns around rule of law and civil liberties.
The board, however, selected Burkina Faso, Sri Lanka and Tunisia for new MCC compacts and reselected Cote d’Ivoire, Mongolia, Nepal, and Senegal to continue developing their respective compact proposals.
For a country to be selected as eligible for MCC assistance, it must demonstrate a commitment to just and democratic governance, investments in its people, and economic freedom, as measured by third-party policy indicators on MCC’s annual scorecard.