Today is a busy day for the Millennium Challenge Corporation: its $395 million compact with Georgia officially closes and it is set to sign a $350 million compact with Malawi.Georgia’s five-year compact focused on rehabilitating regional infrastructure and enterprise development (particularly in agribusiness). Initial findings show that the compact reached its output targets including reconstructing over 222 km of road and improving the economic performance of 280 agribusiness and farm production projects, resulting in 2,867 jobs. As I noted in a recent Report from the Field, Georgia also successfully delivered on the MCC model by embracing country ownership to achieve better and more sustainable results and ensuring that all compact projects built capacity in Georgian institutions. The MCC compact in Georgia utilized an innovative new financing mechanism and leveraged compact resources to attract new development partners, including from the private sector.As a testament to the success of compact implementation and good policy performance, the MCC board of directors deemed Georgia eligible to apply for a second compact. It is one of only three countries to become eligible for a second compact. (Cape Verde and Ghana are also currently eligible for second compacts.)As Georgia’s compact closes, Malawi and the MCC will sign a new five-year, $350.7 million compact today in Lilongwe. The compact will focus solely on developing infrastructure and capacity in the energy sector. (This is the first time an MCC compact has focused on only one sector.) Previously, Malawi successfully completed a $21 million threshold program aimed at controlling corruption and improving fiscal policy.This signing date, however, has been months in the making. To recap: the MCC board of directors approved the compact with Malawi in January. Shortly thereafter the government of Malawi finalized some 200 amendments to its historic penal code, two of which were particularly worrisome to the MCC. One potentially restricted media freedoms while the other criminalized female homosexual conduct. The MCC immediately halted the signing process and began a high-level dialogue with the government of Malawi.As a result of this engagement, the government of Malawi issued a clarifying statement on the media freedoms amendment which noted that the law was not designed to restrict political speech and that judicial protections are in place to prevent the misapplication of this law. On the second amendment, the MCC made it clear to the Malawian government that eligibility criteria includes the freedom of all groups. Thus, application of the law would prompt the MCC to initiate the investigation required for suspension or termination of the compact.The MCC’s compact with Malawi is expected to generate some $2.4 billion in income for the citizens of Malawi. The MCC’s continued engagement with the government of Malawi should ensure that robust economic growth and good policy performance are results of this new compact.
