The Millennium Challenge Corporation (MCC) of the US and the Malawi government Friday exchanged letters signifying the official commencement of the five-year “Compact”, a US$350.7 million grant programme focused on energy sector revitalisation for the southern African country.
The Millennium Challenge Account – Malawi (MCA-Malawi), an entity established by the Malawi Government, will implement and manage the MCC Compact, while the MCC Resident Country Mission will provide oversight and technical assistance in implementation.
The MCC programme has strict good governance conditionalities. Washington suspended the programme following unprecedented July 20, 2011, anti-government demonstrations when thousands of Malawians poured into the streets protesting former president Bingu wa Mutharika’s excesses of power. At least 20 unarmed protesters were killed by police.
The programme was restored following Mutharika’s sudden death from cardiac arrest in April last year and the assumption of power by Joyce Banda.
“It is important that government works closely with the leadership of our MCA [Millennium Challenge Account] and MCC Malawi teams to achieve the compact’s noble objectives to improve the provision of electrical power to the Malawian people and attract new investment,” said US ambassador to Malawi Jeanine Jackson at the signing ceremony.
The Compact will focus on investments in infrastructure development, power sector reform and in environmental and natural resource management to mitigate the impact of aquatic weed infestation and sedimentation affecting hydropower generation in Malawi.
Friday’s event marks the official start of Compact implementation and the programme’s five-year timeline, as well as the point at which the government of Malawi will begin to access the full US$ 350.7 millio Compact budget.
“With Entry into Force, more progress will follow – including, over time, the construction of a 400KV transmission line from Blantyre to Lilongwe, the rehabilitation of Nkula A hydropower plant, the development or rehabilitation of over two dozen substations, and technical assistance and capacity building for the sector’s key institutions,” said Oliver Pierson, MCC Resident Country Director for Malawi.
The Compact aims to directly benefit nearly one million Malawians and significantly increase transmission and distribution capacity, thereby reducing power outages.
The Principal Secretary for Energy, Winford Masanjala, said: “The Malawi government recognises that by encouraging good governance, economic freedoms and investing in people, the spirit of the Compact is consistent with Government’s goals of sustainably Reducing Poverty and encouraging Economic Growth as articulated in Vision 2020, the Malawi Growth and Development Strategy and the Economic Recovery Plan.
“Investments envisaged in the Compact will be pivotal in enabling Malawi to evacuate and distribute more power, whether domestically generated or imported, increase efficiency of existing system and institutions, and further position the energy sector for expansion by catalysing private sector investment.”
According to MCC, the success of the programme will see a major reduction in the cost of doing business, expanded access to electricity for the Malawian people and businesses, and an increase in value-added production in the country.
With only 8 per cent of its population having access to electricity, Malawi has the lowest electricity penetration in southern Africa.