Compact two finally here

…as Lesotho, US ink M4.5billion deal

Nthatuoa Koeshe

Despite Lesotho still being faced with the challenge of police brutality against citizens, a factor which almost put Lesotho in the risk of losing out on the multi-million-dollar second compact under the United States (US) Millennium Challenge Corporation (MCC), MCC and the government of Lesotho signed a $300 million (M4.5 billion) Lesotho Health and Horticulture Compact yesterday

The signing marks the second time the United States and Lesotho have partnered to build sustainable and inclusive economic growth for the people of Lesotho through an MCC compact.

In 2020, US warned that Lesotho risked losing out on the second compact due to concerns about human trafficking, police brutality against citizens and failure to implement the long-awaited multi-sector national reforms.

The MCC is a multilateral American foreign aid agency established by the United States Congress in 2004, with beneficiary countries expected to meet certain conditions with regard to good governance and respect for the rule of law to qualify.

In 2007, MCC and Lesotho signed the first US$362, 6 million (more than M3 billion) compact to reduce poverty and spur economic growth.

In 2015, the MCC stalled in renewing the compact programme over rampant human rights abuses under then Prime Minister Pakalitha Mosisili’s regime.

Lesotho’s eligibility for the second compact was first confirmed by the MCC Board in December 2017 after the ouster of the Mosisili regime in the June 2017 elections and the advent of former Prime Minister Thomas Thabane’s second coalition government.

However, the Thabane administration, which lasted until May 2020 when it was replaced by the current Moeketsi Majoro-led coalition, was accused of failing to tackle police brutality against citizens and corruption.

During his June 2019 visit, Jason Small, the MCC’s Managing Director in the Department of Compact Operations (Africa Programmes) said Lesotho and the MCC were “still at least a year away from a definitive agreement” on the size of the second compact which he said was most likely to be in the region of the first compact (US$362, 6 million).

Small had warned that failure to address concerns about human rights violations, including the alleged acts of police brutality against citizens, as well as the lack of political will to implement the reforms could scupper the granting of the second compact.

MCC Chief Executive Officer (CEO) Alice Albright and Minister of Foreign Affairs and International Relations Honorable Matsepo Molise-Ramakoae served as the compact signatories for the Lesotho Health and Horticulture Compact.

They were joined by U.S. Ambassador to Lesotho Maria E. Brewer, The Right Honorable the Prime Minister Dr. Moeketsi Majoro.

Speaking at the event, Ambassador Brewer lauded the compact as a means for the country’s economic development, since “…all three projects under the MCC compact represent a tremendous investment in the people of Lesotho, in particular women, youth, and rural communities. We intend for the projects to create tens of thousands of jobs and encourage public-private development.”

The Government of Lesotho committed to passing several key reforms that will help ensure the compact’s success, including reforms that address gender equality, working conditions, and worker safety, as well as land and water rights.

The Lesotho Health and Horticulture Compact which is an interest-free grant agreement  is comprised of three projects which are the Health Systems Strengthening (HSS) project which is aimed at improving primary healthcare services and standards of care, expand healthcare financial and management systems, and modernize health data systems.

It is also comprised of the Market Driven Irrigated Horticulture (MDIH) project which aims to increase rural income by investing in climate-smart irrigation infrastructure and attracting commercial farmers to collaborate with local, small famers to produce high-value crops and build strong value chains and  the MDIH project which will also support government reforms and capacity to sustain inclusive and sustainable growth of this sector and the Business Environment and Technical Assistance (BETA) project plans to increase profits for potential high-growth firms, including enterprises owned by women and youth and firms in rural areas.

The project will work across key productive sectors, including agriculture, creative industries, manufacturing, and tourism, to support the growth of existing and new firms through technical assistance, business development services, and linkages to financing opportunities. Grant funding will be available for select women- and youth-owned businesses to purchase equipment, goods, and facilitate business plan implementation.

MCC and the Government of Lesotho will now continue to work together on the compact’s administrative requirements, including establishment of the Lesotho government office that will manage the compact Millennium Challenge Account in Lesotho.