United States of America (USA) has allowed Malawi not to pay its $26.25 million (approximately K27.2 billion) share in the recently signed second Millennium Challenge Corporation (MCC II) compact.
The MCC is a bilateral US foreign-aid agency established by the US Congress in 2004. It is an independent agency separate from the State Department and the US Agency for International Development.
The second pact, which was sealed by Minister of Finance Sosten Gwengwe and MCC Chief Executive Officer Alice Albright, is worth $350 million (approximately K362 billion).
The Malawi Government is supposed to contribute $26.25 million in cash but, according to Malawi Millennium Development (MMD) Trust Chief Executive Officer and National Coordinator, Dye Mawindo, the money will be paid in kind.
“The line of argument of Malawi was that the Americans are helping us because we are a developing country and against a background of Covid and increasing prices of goods because of the war in Ukraine, Malawi is not in a good place to find the $26 million.
“We succeeded in that argument and persuaded the Americans and the contribution, therefore, is in kind,” Mawindo said.
He indicated that 40 percent of salaries of civil servants who will be working in the compact will be considered as Malawi’s contribution.
MMD’s motor vehicles that will be used in the implementation of the programme have also been recognised as Malawi Government’s contribution.
“There are other projects that the government is doing in the transport sector and those have also been recognised as government contribution,” Mawindo said.
A section in the pact that tackles each partner’s obligations indicates that the contribution, to be not less than $26.25 million, is supposed to be made over the compact term of five years towards meeting the project objectives.
“The government contribution shall be subject to any legal requirements in Malawi for the budgeting and appropriation of such contribution, including approval of the government’s annual budget by its legislature.
“During implementation of the programme, the government contribution may be modified with MCC approval as provided in the guidelines for country contributions,” the pact reads.
But, according to Mawindo, Malawi is no longer bound by that requirement.
MCC II, among other targets, seeks to address high price of road freight transport services and remove barriers to linking farms to markets in rural areas.
The first road is 88 kilometres (km) long, starting from Mkanda in Mchinji and passes through Masumbe, Nsuname, Chimwankango, Estate 74, Kalanga, Gogo, Nthunduwala, Kamtukuwa, Kamboni, Kaziwa, Malipela, Rusa, Kapaladza, Chiujeni, Kayesa, Katcheleza and terminating at Linga in Kasungu.
The second one, which is 53km long, starts from Chileka in Lilongwe, passes through Chisaka, Kafinya, Ming’ongo, Kachawa, M’davayani, Mvenja, Ndaula, Kawiri, Phiri Lanjuzi, Malingunde, Tanga, Malili, Chiwenga and terminating at Chigwirizano in Lilongwe.
The third road, which is 67km long, starts from Chikwawa in Rumphi, passes through Thulwe, Bowe, Vwaza, Kazuni, Enkweleni, Amon Munthali, Mpherembe, Kabwafu Turn-Off, Emangeni and Mzambazi and terminates at Euthini in Mzimba.
The last one is the 79km road starting from Mkutumula in Ntcheu, passing through Banda, Handa, Chikande, Leveni, Black, Naunje, Mphika, Mtonda, Phirilongwe, Khungwa, Muonekera, Maloya, Chilonga, Chimvuwu, Msikidzi, Mteleleka and Nankumba and terminates at Chamtulo in Mangochi.
Mawindo said there are other feeder roads and maintenance works on existing roads which connect to these planned roads under the project.
Speaking during the signing ceremony of the pact, President Lazarus Chakwera described the compact as an important programme for Malawi.