America sets terms for new aid

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Keiso Mohloboli

THE Millennium Challenge Corporation (MCC), the agency through which the United States has channeled more than US$10 billion in aid to developing countries to reduce poverty, has asked Prime Minister Pakalitha Mosisili’s government to explain “concrete, demonstrable actions” it plans to take to foster the “rule of law and accountability” in the Kingdom before the MCC makes a decision next week on Lesotho’s eligibility for new funding.

The MCC was established by the US Congress in 2004 as an innovative foreign aid agency to help lead the fight against global poverty by working with select partner countries to identify requisite areas in need of funding support.

Before qualifying for funding, countries need to meet a plethora of conditions such as good governance, respect for the rule of law, control of corruption, civil liberties, and political rights among others.

Lesotho received its first five-year MCC grant or Compact worth US$362.5 million in July 2007. Compacts are described by the MCC as large, five-year grants for countries that pass its eligibility criteria. Countries that come close to meeting the eligibility criteria and are firmly committed to improving their policy performance are not given Compacts but “threshold programmes”, which are smaller grants for specific interventions to fight poverty.

Lesotho’s initial $362.5 million Compact was used to fund poverty reduction interventions in three areas; water, health and private sector development. The MCC grant specifically helped fund the construction of Metolong Dam in Thaba-Bosiu, as well as the President’s Emergency Plan for AIDS Relief (PEPFAR) to mitigate the negative economic impact of poor maternal health, HIV/AIDS, tuberculosis and other diseases. It was also used to fund projects aimed at removing barriers to private sector development to boost job creation. By 2013, Lesotho had almost exhausted its Compact.

The Kingdom was expecting its second Compact this year after performing well in the first project, but on 16 December 2015, the MCC Board decided not to vote on the issue citing governance concerns, particularly after the killing of former Lesotho Defence Force commander Maaparankoe Mahao.

The MCC said at the time: “The (MCC) Board discussed the fact that due to on-going concerns over the rule of law and accountability in the country, and an expected report from the Southern Africa Development Community (regarding the Lesotho Defence Force’s fatal shooting of former army commander Maaparankoe Mahao on 25 June 2015 outside Maseru, allegedly while resisting arrest for mutiny) on these same issues, a vote on reselection would be premature at this time. The Board may revisit its decision over the course of 2016 as more information becomes available.”

The MCC’s Principal Deputy Vice-President, Africa Department of Compact Operations, Kyeh Kim, has since written to Finance Minister Dr ‘Mamphono Khaketla on the same issues asking her to explain the steps the government was taking to address the MCC’s concern on the rule of law and governance issues.
Ms Kim’s letter, written last week and copied to Foreign Affairs and International Relations Minister Tlohang Sekhamane as well as Lesotho Millennium Development Agency Chief Executive Officer Sophia Mohapi, reads in part: “As per the letter from my colleague, Beth Tritter, at the end of her visit in January, we look forward to hearing from your government on the concrete, demonstrable actions the government plans to take to address MCC’s concerns on the rule of law and accountability in Lesotho. We also welcome any update on these issues prior to the next MCC board meeting in late March. It remains our sincere hope that our partnership will get back on track so that we can continue to work closely with you and your colleagues on the second Compact that helps reduce poverty and spur economic growth in Lesotho.”

The letter further implies that unless the Americans get satisfactory answers and renew the aid programme, then they would not bother to replace Laura Rudert, who was leading the MCC’s team in the development of Lesotho’s Compact.

According to Ms Kim, Ms Rudert accepted to head the development of a second MCC Compact for Senegal effective from 6 March 2016.
“We will not be replacing Ms Rudert at this time. In the interim, MCC Managing Director for Africa, Mr Jason Small, will continue to provide oversight of MCC’s operational engagement with Lesotho, and Mrs Khalia Mounsey, our Lesotho point-of-contact, will manage day-to-day issues as necessary. Vice-President for Policy and Evaluation, Beth Tritter and Managing Director for selection and eligibility, Chris Maloney, will continue to engage from an eligibility standpoint.”
Ms Rudert’s full-time replacement would be appointed only after the MCC had made a decision to renew Lesotho’s Compact based on its interactions with the government, the letter suggested.

Contacted for comment yesterday, Dr Khaketla said she had not seen the letter in question because of her busy commitments in parliament.
“I cannot comment on the letter you are asking about because I have not seen it. Since last week, I have been in parliament from 9am to 6pm and I have not been able to go to my office if the letter was delivered there. Now that you have brought the issue up, I will check tomorrow if such a letter was delivered to my office,” said Dr Khaketla, who delivered her second budget as Finance minister last month.

Ms Mohapi would not comment on the issue yesterday, telling the Lesotho Times: “I am not the addressee of the letter; please contact the person it was addressed to, not me. The letter was copied to me for information purposes and that does not mean it was mine.”
Repeated efforts to contact Mr Sekhamane were not successful yesterday as his mobile phone rang unanswered.

Meanwhile, in an initial letter dated 15 June 2015 and addressed to Dr Khaketla, MCC Vice-President Tritter had noted: “The MCC appreciates the close partnership it has shared with Lesotho, including the successful completion of a first Compact and on-going efforts to develop a second Compact. The MCC’s partnership with Lesotho is founded on mutual commitment to good governance, which includes accountability and respect for the rule of law. These values are fundamental to the MCC, and are an essential foundation for successful investments that will drive economic growth.

“As MCC’s Deputy Vice-President Jonathan Bloom shared with you in May 2015, we continue to be concerned over the rule of law and accountability issues in Lesotho. While we recognise several government officials have spoken on some of these issues, both publicly and privately, there are some concerns which remain unaddressed”.

Observers say considering the vital importance of the original Compact in funding critical development interventions in the Kingdom, it would be a big blow for Lesotho if the Americans, for whatever reason, decide not to renew their funding. More so, after the recent decision by the European Union (EU) to withhold about M460 million in budgetary support citing Lesotho’s failure to “implement agreed policy reforms in the area of public financial management”.
“In light of the current national disaster induced by the devastating drought and because of all the uncertainties on the economic front due to global factors and other circumstances beyond our control, we need every loti we can get from whomsoever to foster fiscal stability and feed Basotho.
“The ball thus rests in the government’s court in terms of mollifying and maintaining the support of the country’s development partners….,” said an economist who refused to be named last night citing his work for the government.

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