Mozambique: Next MCC Compact will cover agriculture, rural transportation

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AGRICULTURE and rural transport will be the key areas covered by the next package of development projects financed by the US Government’s Millennium Challenge Corporation (MCC), according to a press release from the US embassy in Maputo.

In December 2019, the MCC selected Mozambique for a second package of development support (known as a ‘compact’). MCC compacts are for five years, and, according to the MCC Board, they are intended, ‘to reduce poverty through targeted investments that increase economic growth.’

The first MCC compact was signed in 2007 and ran for five years. It was a grant of 506.9 million dollars, of which only 447.9 million (88 per cent) was spent.

According to the embassy release, after ‘more than six months of interviews with hundreds of Mozambique-based stakeholders, intense economic analysis by MCC and its Mozambican partners, and a substantive review by an expert panel appointed by the Government of Mozambique, MCC and the Government jointly identified these two sectors (agriculture and rural transport) as the key constraints to more inclusive economic growth in the country.’

The next stage, the embassy says, will be ‘to analyse and identify the causes of Mozambique’s relatively poor performance in the agriculture sector and the high cost of rural transport.’

Based on these findings, the government’s compact development team led by National Coordinator, and former Minister of Agriculture, Higino de Marrule will draw up specific proposals that could be included in the new MCC compact.

Cited in the release, the US Ambassador, Dennis Hearne said, ‘This forthcoming MCC compact is an opportunity to make lasting investments in Mozambique’s agricultural sector, which plays a critical role in the development of the entire country.’

According to MCC Country Director, Kenneth Miller, ‘factors such as the low use of fertilizer and substandard seeds may contribute to the poor performance of Mozambique’s agricultural sector, while gaps in the rural road network raises costs for farmers and limits opportunities for export.’

The largest component of the first compact was a water and sanitation project budgeted at 203.6 million dollars intended to improve access to safe, reliable water supplies and sanitation services. According to the MCC’s own summary of the first compact, project teams constructed more than 614 rural water points (boreholes with hand pumps), upgraded and expanded two municipal drainage systems, and upgraded and expanded two urban water supply systems.

But although the median household year-round trip time to the primary water source fell by 62 minutes and dry-season roundtrip time fell by 129 minutes, the MCC admits that this project had ‘no statistically significant impact’ on health-related outcomes, household income or the poverty rate.

Road building and rehabilitation was to have taken $176.3 million  of the compact (although only $136.8 million was actually spent). The target was to rehabilitate 491 kilometres on key stretches of the main north-south highway (EN1), but this target was eventually cut back to 253 kilometres. The work was not completed until December 2014, well after the end of the compact.

$39 million was earmarked for a land tenure services project and $17.4 million to a farmer income support project.

The key aim of the latter project was to improve the productivity of coconut farmers in the central province of Zambezia by removing palm trees affected by lethal yellowing disease. MCC claims that more than 780,000 disease-resistant seedlings were planted and more than 15,000 farmers were trained in coconut pest and disease surveillance and control.

In the areas worst hit by the disease, the project ‘had a measurable and significant impact on households’ adoption of alternative crops,’ but MCC admits that “the magnitude of the increase was small and did not result in an impact on household income,’

The delay in completing some of the projects in the first compact meant that Mozambique did not become immediately eligible for a second compact.

The MCC now claims that the first compact was brought to a successful conclusion in September 2013, and that ‘a new compact would build on the country’s continued commitment to sector reform and MCC’s strong relationship with the country.’

So far, there is no indication of how much money will be involved in a second compact.

The MCC is an agency of the United States government, which was set up by the US Congress in 2004. It claims to be an independent agency that is not run either by the State Department or by the US Agency for International Development (USAID).

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