MCC Board of Directors Votes to Reinstate Compact with Malawi

WASHINGTON, DC
June 21, 2012

The U.S. Government’s Millennium Challenge Corporation (MCC) Board of Directors voted to lift suspension of the Malawi Compact during its quarterly meeting today.

MCC placed a hold on compact assistance to Malawi in July 2011 and formally suspended the compact in March 2012 due to a pattern of actions by the Government of Malawi that was inconsistent with the democratic governance criteria that MCC uses to select its compact partners. Since President Joyce Banda’s inauguration in April, President Banda and her government have taken clear steps to reverse this pattern of actions.

These steps have included efforts to improve the human rights environment and to ensure that laws and institutions support democratic rights and processes. The Government of Malawi has also demonstrated a commitment to providing accountability for the violent police response to demonstrations in July 2011. These steps, and the resumption of sound economic policy, restore MCC’s confidence in Malawi as a compact partner.

MCC Chief Executive Officer Daniel W. Yohannes stated, “In lifting the compact suspension, the MCC Board recognizes that the Government of Malawi has taken decisive action to restore democratic accountability, to demonstrate respect for the rights of individuals, and to implement sound economic management. As a result, I am pleased to move forward with this critical investment in Malawi’s energy sector. MCC expects Malawi to continue to demonstrate its clear commitment to strong democratic and economic governance.”

The planned $350.7 million Malawi Compact is expected to provide approximately $2 billion in benefits to an estimated five million Malawians. By reducing power outages and technical losses, enhancing the sustainability and efficiency of hydropower generation, and improving service to electricity consumers, the compact intends to reduce energy costs to enterprises and households and improve productivity in the agriculture, manufacturing, and service sectors.

The Board of Directors also discussed the status of the Mali Compact. On May 4, 2012, the Board authorized termination of the $460.8 million compact due to an undemocratic change in government in Mali. MCC is taking necessary steps to safeguard and preserve compact investments and protect the safety and well-being of individuals affected by those investments. The Mali Compact will terminate no later than August 31, 2012.

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