Today the Millennium Challenge Corporation (MCC) placed an operational hold on compact activities in Malawi, signaling that a continued commitment to good governance is of paramount importance within MCC partnerships. The immediate hold gives the MCC the opportunity to review its partnership with Malawi and determine whether it should continue, suspend, or terminate MCC assistance. The MCC’s actions follow as a result of the Malawian government’s use of force against peaceful demonstrators last week that left 18 people dead.The MCC’s $350 million compact with Malawi focuses on enhancing the sustainability and efficiency of Malawi’s power sector. The compact was signed on April 7, 2011, having been delayed due to proposed penal code reforms that would have restricted media freedoms and individual human rights. Malawi also receives U.S. government assistance as a part of the Feed the Future program, the Global Health Initiative, and PEPFAR, among others.The MCC is not the first to halt aid resources as a result of recent governance problems. On July 14, the United Kingdom indefinitely suspended contributions in budget support to Malawi. Both actions, the U.K.’s suspension and the MCC’s hold and review, send powerful messages that development partnerships must be based on continued good governance and respect for human rights.So what comes next? Any final decisions on the future of MCC’s compact with Malawi will have to be approved by the board of directors who next meet in September. How the government of Malawi positions itself in the coming months will be key. If the Malawian government continues a downward trajectory of poor governance and disregard for human rights, the MCC’s board of directors will face a tough decision as it ensures that the MCC makes good on its mandate of only working with well-governed, poor countries.
