MCC suspends $350M compact with Malawi

A demonstration against Malawi President Mingu wa Mutharika in 2011. The Millennium Challenge Corporation's Board of Directors voted to suspend its compact with Malawi on March 22. Photo by: Travis Lupick / CC BY-NC-SA

The Millennium Challenge Corp. has formally suspended its compact with Malawi on the grounds of failing to meet the agency’s standard on good governance.

MCC froze its $350 million compact with Malawi in July last year following a spate of political violence in the country. And on Thursday (March 22), the agency’s Board of Directors voted to suspend its compact with the troubled nation.

The decision comes after a series of political arrests and “inflammatory rhetoric” by senior government officials in Malawi. In early March, Malawi President Bingu wa Mutharika boldly accused Western donors of funding demonstrations by political groups in the country. He said if donors wish to withdraw their assistance to Malawi, they can “leave and go.”

The government’s move to invite Sudan President Omar al-Bashir to a trade summit in Lilongwe also formed part of MCC’s suspension. Al-Bashir has a standing International Criminal Court warrant of arrest for alleged crimes against humanity.

The decision will be a grave loss to nearly 6 million Malawians, the majority of whom live on less than $2 a day. The agency’s suspended compact would have won them close to $2 billion in net income benefits resulting from the agency’s investment in the power sector.

Malawi, however, has a chance of winning back the compact — as in the case of Niger. MCC approved on Thursday an additional $2 million investment for Niger’s education sector. The country faced suspension in 2009 but won back its $23 million compact in June last year.

MCC also approved a $354.8 million compact with Zambia following the country’s elections in September. The compact will help address the growing demand for water in Lusaka, Zambia’s capital.

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About the author

  • Jenny Lei Ravelo

    Jenny Lei Ravelo is a Devex Senior Reporter based in Manila. She covers global health, with a particular focus on the World Health Organization, and other development and humanitarian aid trends in Asia Pacific. Prior to Devex, she wrote for ABS-CBN, one of the largest broadcasting networks in the Philippines, and was a copy editor for various international scientific journals. She received her journalism degree from the University of Santo Tomas.