Malawi’s $350 million (K612.8 billion) Transport and Land Compact has collapsed after the Millennium Challenge Corporation (MCC), a US foreign aid agency, moved to terminate funding, leaving critical road projects in limbo.
In an interview yesterday, Minister of Transport Jacob Hara confirmed that MCC has cancelled contracts for ongoing road works, blaming the development on the abrupt US policy shifts.
He said: “The shutdown has affected the current funding as the MCC has communicated to us that they have now cancelled the contracts. We didn’t know about the shutdown in advance. MCA kept our hopes high that the MCC could survive the funding chop.”
directive: Phillipp
According to the minister, no road construction project gets backup donors adding that government did not include the projects in the just-passed 2025-26 National Budget.
“We already had funding. We shall have to start from scratch looking for new financing,” he said.
In an e-mailed response, the US Embassy in Lilongwe through public affairs officer Grant Phillipp attributed the move to a federal directive.
He said: “Under direction from the Department of Government Efficiency, a recommendation has been made that the Millennium Challenge Corporation (MCC), a US foreign assistance agency, wind down all programmes, including the MCC Malawi Transport and Land Compact. This recommendation will go to MCC’s Board for its decision on this recommendation.”
Malawi’s second five-year compact, active since May 6 2024, aimed to fix 287 kilometres (Km) of roads to cut transport costs for farmers, modernise city revenue systems and attract agri-investments.
International media outlets like Reuters reported MCC’s impending closure due to US budget cuts.
“Foreign aid is not a priority for the administration and so MCC’s work needs to wind down,” Reuters quoted MCC senior official Kyeh Kim as having told staff.
Reuters further reported that Kim told the staff that officials from Department of Government Efficiency headed by multi-billionaire Elon Musk visited MCC early last week and entered in talks with the leadership, who were attempting to save the agency.
Millennium Challenge Account (Malawi) II Annual Recap official website shows that the office began road construction under the Accelerated Growth Corridors Project in September 2024.
The first phase targets upgrades to the Chileka-Likuni Road in Lilongwe and Chantulo-Mkutumula Roads in Mangochi and part of Ntcheu to help farmers reach markets.
The targeted four roads have a combined length of 287 km. They are Chileka through Malingunde to Likuni in Lilongwe covering 53km, Chamtulo-Mkutumula Road covering 79km, Euthini in Mzimba to Chikwawa in Rumphi covering 67km and Mkanda in Mchinji to Linga in Kasungu covering 88km.
At least $244 million is budgeted for the roads while $44 million is for the land project and another $8.5 million will go towards a project called American Catalyst Facility for Development.
Meanwhile, Farmers Union of Malawi president Mannes Nkhata has warned that rural farmers, especially women and persons with disabilities would suffer most from the shutdown.
Malawi qualified for the second compact towards the end of 2018 and MCC formalised the award with a signing ceremony in September 2022 which President Lazarus Chakwera attended in Washington DC, United States of America.
