When Henry Costa, Chairman of the Council of Patriots, appeared on OK FM Tuesday, January 3, 2023, he said (52:31- despite the country passing the Millennium Challenge Corporation MCC scorecard, Liberia did not receive money from the MCC.
The MCC is an independent U.S. foreign aid agency created in 2004 under Republican President George W. Bush to promote economic growth, open markets, and increased living standards in select countries.
MCC applies specific criteria in focusing its work abroad, using indicators regarding countries’ commitment to good governance, economic freedom, and investing in their citizens.
MCC provides selected countries with large-scale grants to fund projects for reducing poverty through sustainable economic growth.
These projects include building infrastructure, reforming institutions, and promoting access to healthcare and education.
MCC grants may complement other U.S. and international development programs. The MCC utilizes two primary types of annuities: compacts and threshold programs.
Compacts are large, 5-year grants for countries that pass MCC’s eligibility criteria. At the same time, threshold programs are smaller grants awarded to countries that come close to passing these criteria and are committed to improving their policy performance.
Liberia began benefiting from the MCC in July 2010, with the launch of a three-year, US$15 million threshold grant, which ended in December 2013 under the Ellen Johnson-Sirleaf administration.
Under the Compact, electricity tariffs were reduced from US$0.56 per kilowatt-hour to US$0.35 per kWh, representing a 37.5 percent decrease. While this is a very high tariff, this decrease has made electricity more affordable for ordinary consumers, particularly marginalized households and small and medium enterprises.
Besides the hydro, the MCC compact also funded the construction of a new 48-inch diameter Raw Water Pipeline between Mt. Coffee and the White Plains Water Treatment Plant to replace a damaged 36-inch diameter pipeline that had not been used since before Liberia’s civil war.
Then in January 2016, under Johnson-Sirleaf’s administration, the MCC and Liberia launched a five-year, US$257 million compact aimed at encouraging economic growth and reducing poverty in Liberia.
It also addresses the inadequate access to reliable and affordable electricity in the country and the poor quality of road infrastructure.
Most of the money was spent on renewing the Mt. Coffee Hydropower Plant. The Compact was completed in 2021.
Since its inception in 2017, the current administration under President George Weah has been opting to secure a second compact, but that has not happened.
What Passing The Millennium Challenge Account Means For Liberia?
When the decision by the MCC in January 2021 announced that it was folding its Compact with the Government of Liberia, it came as a significant blow to the administration of President George Manneh Weah.
The compact ended with a grant of US$257 million that contributed to the rehabilitation of the Mount Coffee Hydroelectric dam.
Countries highly rate MCC Compact for its focus on relaxing constraints to private sector growth.
Over the past years, the Compact had contributed US$146.3 million to the rehabilitation of the Mt. Coffee Hydro Power Plant, the single most significant support of any donor to the power plant, constituting 40 percent of the total US$350 million spent to rebuild the hydropower plant.
The 88 Mega Watts power generating capacity at Mt. Coffee represented the most significant power and renewable energy supply source for the Liberia Electricity Corporation (L.E.C.).
Liberia has failed five years in sequence, but in MCC 2022 scorecard shows the Weah administration met the threshold that enables it to qualify for a possible return to the Compact.
In the Fiscal Year scorecard released by the MCC, Liberia earned an unprecedented pass of twelve of the 20 indicators for the first time since 2008.
The MCC scored Liberia high in Control of Corruption and Democratic Rights. Under Economic Freedom, Liberia scored 38 percent under Fiscal Year, with a score of 4.1, while recording 7.0 under Inflation.
Under Regulatory Quality, Liberia secured a 38 percent mark while at the same time obtaining 38 percent in Trade Policy, with a score of 60.8.
The country scorecards consolidate each country’s scores of each policy indicator, including Economic Freedom, Ruling Justly, and investing in people.
Liberia passed according to the MCC scorecard but is not among the countries selected for assistance.
The MCC, in a release, said the Board selects those eligible countries with which the United States, through MCC, will seek to enter into a Millennium Challenge Compact under section 607 of the Act (22 U.S.C. 7706).
This led to the selection of Senegal, the Gambia, and Togo as eligible countries for such assistance for F.Y. 2023.
The Board previously selected countries for compact assistance for F.Y. 2023, including Côte d’Ivoire, Mozambique, Sierra Leone, and Zambia.
The MCC Board sees the selection as an annual opportunity to determine where MCC funds can most effectively support poverty reduction through economic growth in relatively well-governed, developing countries.
Conclusion: The talk show host is correct that though Liberia passed the 2023 scorecard, it is not listed among countries for the fiscal year 2022/2023 to benefit from the MCC funds. Hence, it did not receive a compact or assistance.
According to Economist Wilfred Taylor, passing the MCC scorecard does not immediately qualify Liberia for a compact. Still, it represents a necessary first step that puts Liberia in a poll of 66 countries that advance to the following evaluation stage to determine qualification for Compact.
During this evaluation period, the MCC Board decision will be based on the trend in governance and scorecard indicators, Post Compact assessment-evaluation of the first Compact, and the Government’s plans to invest in human capital.
By Melvin Jackson [email protected]