Award of $20.92 million intended to fight corruption, promote fiscal management
By Charles W. Corey, Washington File Staff Writer
Washington - The U.S. Millennium Challenge Corporation (MCC) and the government of Malawi September 23 announced the launch of a $20.92 million program aimed at fighting corruption and spurring long-term economic growth and development.
MCC Vice President Charles Sethness and Malawi Finance Minister Goodall Gondwe announced the agreement at the U.S. Foreign Press Center in Washington.
The MCC administers the Millennium Challenge Account (MCA), a supplementary aid program launched by President Bush to reward poor nations that invest in the education and health care of their citizens, fight corruption and promote good governance.
MCC's Threshold Country Plan is designed to assist countries that are on the "threshold" of the MCC process or committed to undertaking the reforms necessary to improve policy performance and, eventually qualify for Millennium Challenge Account Compact assistance.
In announcing the plan agreement, Sethness told reporters the United States is "particularly pleased that the people and the government of Malawi have put together a very ambitious program" that he called "integrated and comprehensive."
He praised Malawian President Bingu wa Mutharika for taking some "very bold and courageous stands .... We applaud him for his leadership in tackling the issue and we agree with Malawi that fighting corruption and improving fiscal management could be a catalyst for economic growth, for wealth creation and poverty reduction," Sethness told reporters.
Sethness said the plan has 14 specific steps, including preventing corruption to enhancing fiscal oversight; strengthening a free and fair press that can report on transparency and analyze corruption; and enhancing a legal system from police to courts that can identify, confront and prosecute corruption cases.
The U.S. departments of Treasury and Justice will be actively involved in the Malawi program, Sethness added.
"We really do believe that if successfully implemented, that this could be a model program approach to an important problem" that could be applied elsewhere in the region, he said.
"INSTRUMENT OF GROWTH"
Gondwe thanked the United States on behalf of the Malawian people for an "extremely innovative program" that he called an "instrument of growth."
The program, he said, fits with the world challenge to eliminate corruption. He said his country is willingly "taking up that challenge," calling corruption and fiscal mismanagement "the most glaring obstacles to growth."
Gondwe said that, prior to his country's involvement with the MCC, the Malawian people had challenged the government to rid the country of corruption and fiscal mismanagement that has had a "stagnating" effect on its economy and long-term development.
President Mutharika, on his inauguration on May 20, 2004, cited bad governance, fiscal mismanagement and corruption as the "glaring" issues that must to take place if the country is to achieve meaningful economic growth and development, Gondwe told reporters.
"So we are being challenged inside the country by our people" and by the government of the United States as well, he said.
When asked what makes the MCC program unique, Gondwe responded that other programs dictated specific action steps and timetables, but MCC asked Malawi to state its goals and its proposed strategy for reaching those goals.
"Therefore ... in this case, you do actually own what you want to be done. You take part in deciding how it should be done and the challenge here" is that you have the means to reach your objectives .... That is the difference!"
Gondwe also identified corruption as the country's Number 1 hindrance to long-term economic growth and development. He said corruption drains and diverts development programs of precious resources, and added that corrupt officials are often more "preoccupied with how they will profit from their jobs" than with helping the country achieve its development goals.
Corruption is also a "big disincentive" to productive investment, Sethness said. "When you get differential treatment; when there are incentives to government agencies to make things take longer and be more complicated than they need to be, you make it much more difficult for job creation, income increase, productive activity," he said.
The Threshold Country Program with Malawi is the second such agreement signed by MCC -- the first being one with Burkina Faso. The agreement with Burkina Faso focuses on supporting education for young women.
MCC has signed Compact Agreements with Madagascar, Cape Verde, Nicaragua and most recently Georgia. It has also signed a broad array of pre-compact grants and approved two Threshold Agreements to date, one each with Burkina Faso and Malawi. In the 13 months since MCC began receiving country proposals, it has approved nearly $1 billion in assistance.
The MCC is a U.S. government corporation designed to work with some of the most impoverished countries in the world. It was founded on the principle that aid is most effective when it reinforces good governance, economic freedom and investments in people that promote economic growth and the elimination of extreme poverty.
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)