A delegation from the U.S. Government’s Millennium Challenge Corporation (MCC), led by MCC CEO Sean Cairncross, visited Malawi this week to discuss the development of a second MCC compact program to reduce poverty and promote economic growth in partnership with the Government of Malawi. Malawi was selected by MCC’s Board of Directors as eligible for an MCC compact program in December 2018.

During their visit, the U.S. delegation met with senior Malawi Government officials, civil society, private-sector leaders, other donors and project beneficiaries to discuss the conclusion of Malawi’s first compact and to provide a status update on the development of the second compact. As a requirement, the first stage of the development of a new compact commences with a constraints analysis process that seeks to identify the key binding constraints to sustainable long-term economic growth.

MCC CEO Sean Cairncross said, “I have had a great week in Malawi meeting with senior government officials, private sector leaders, and project beneficiaries. MCC’s first compact in Malawi has been a success, revitalizing the country’s power sector and paving the way for sustainable economic growth and regional integration into the Southern African Power Pool. MCC has high expectations for countries selected for a second compact and we look forward to working with the Government of Malawi to design a program that benefits all Malawians.”

The Millennium Challenge Corporation in partnership with the Government of Malawi recently completed a preliminary economic analysis and identified three binding constraints to growth: 1) lack of a stable macroeconomic environment as reflected in high and volatile inflation, 2) high price of road freight transport service and barriers to linking farms to markets in rural areas, and 3) difficulties with access to land for investment due to mismanagement of the estate sector and unclear/uncertain land rights, particularly for women smallholders. Any proposed second compact program will address all or some of these constraints to economic growth.

In August, a team of experts will come to Malawi to work with the Malawi Millennium Development Trust (MMD) to engage with key stakeholders in focus groups to better understand the constraints to growth. Together, they will start to develop project concepts that will shape the framework for the proposed second compact.

Compact development typically involves 2-3 years of analysis, stakeholder engagement and detailed project preparation before a grant agreement can be signed. The decision by MCC’s Board of Directors to select Malawi for a compact program is evidence of the government’s continued commitment to strengthening democratic institutions, maintaining sound economic policies, and investing in its people.

Using a country-led approach that reflects a country’s own priorities, MCC provides time-limited grants and assistance to developing countries that meet rigorous standards for good governance, from fighting corruption to respecting democratic rights. Working with local partners, MCC tackles some of the most pressing challenges that developing countries face, like access to electricity, clean water, land rights and roads.