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Malawi, US seal K362 billion deal

As America pledges to help with securing IMF programme

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FOR ECONOMIC GROWTH—Gwengwe and Alright show the signed document

Malawi Wednesday signed the long-awaited $350 million [approximately K362 billion] second Millennium Challenge Corporation (MCC) compact which seeks to assist the Government of Malawi in addressing the root causes of constraints to economic growth.

The signing of the compact has brought to an end Malawi’s four years of waiting, having qualified for the assistance in December 2018.

Among other things, the compact, which was signed by Finance Minister Sosten Gwengwe and MCC Chief Executive Officer (CEO) Alice Albright in the presence of United States (US) Secretary of State Anthony Blinken and President Lazarus Chakwera, seeks to address the high price of road freight transport service and remove barriers to linking farms to markets in rural areas.

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The compact is also designed to address difficulties with access to land for investment due to mismanagement of the estate sector and ambiguity on property and land rights, particularly for women smallholder farmers.

The compact will include three key projects namely the Accelerated Growth Corridors Project, the Increased Land Productivity Project and the American Catalyst Facility for Development Project.

The Accelerated Growth Corridors Project is designed to address the root causes of the binding constraint of high price of road freight transport service.

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Reductions in travel time and vehicle operating costs due to improved road conditions and more efficient routes that feed into a broader transport network in Malawi are expected to reduce costs to existing roads users and to spur additional (generated) traffic along the investment corridors.

In addition, ensuring women’s safety in transport and agricultural marketing are assumed to complement and sustain the benefits of the physical road works.

Speaking during the signing ceremony, Blinken said the second compact opens a chapter in the partnership between the US and Malawi.

He said upgrading major roads will make urban markets more accessible to rural people and allow them to travel more quickly and cheaply and to bring their produce more swiftly to the market.

“Secondly, improving government administration will help Malawi make the most of one of its core resources and that is land. Helping strengthen record keeping, for example, will make it easier for families and marginalised people to prove that they own the land and help protect themselves from exploitation.

“For companies, these records will mean that they can invest with confidence. They can grow their businesses. They can create more jobs for Malawian citizens,” Blinken said.

Blinken said like all MCC endeavours, the projects under the second compact will be transparent, collaborative and built to meet the highest standards of quality.

“They provide grants to Malawi not debt,” he stressed.

Blinken also pledged the support of the US in helping Malawi get the Extended Credit Facility programme with the International Monetary Fund.

On his part, Chakwera described the compact as an important programme for Malawi, which he said attests not only to the long-standing cordial relations between Malawi and the US, but also to the progress Malawi has made in recent months to meet the exacting standards of the MCC Scorecard on the policies his government has implemented for the advancement of governance, economic freedom, democracy, people-centred investments and the fight against corruption.

Chakwera said his government has taken a zero-tolerance stance against corruption, shielding no one from investigation and prosecution, as well as removing and suspending from office suspects for whom there is credible evidence.

“Our desire in doing so is to ensure that everyone understands that on our list of obstacles to Malawi’s development, corruption ranks number one, and so we consider it our biggest enemy. We will, therefore, continue to fight it and stand against it, no matter how long it takes, until it is defeated.

“The fight against corruption ensures that investments like this MCC Compact fulfil their intended purpose and yield their intended benefits,” Chakwera said.

Chakwera also took the opportunity to request MCC to consider implementing a regional compact which would help Malawi, Zambia and Mozambique.

“In our case, as a land-linked country, securing a reliable and inexpensive link to the sea would de-risk our economy. This is a request that I would like to leave with MCC to continue to mull over,” Chakwera said.

Speaking in Lilongwe recently during the launch of Malawi Secondary Cities Plan, Malawi Millennium Development Trust CEO, Dye Mawindo, urged Malawians to remain patient, saying after the signing ceremony of the compact, there will be a period of about 12 months before they see graders working on the ground.

Mawindo said during the 12 months period, contractors will be procured and detailed designs of projects sought.

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