The US Millennium Challenge Corporation (MCC) board has lifted its suspension on the $350.7 million (about K88 billion) energy grant which was halted during the late Bingu wa Mutharika administration.
In a statement released on Thursday, MCC said the suspension was lifted following satisfactory progress by Malawi to address USâ€™s concerns over democratic and economic governance.
â€œThe US governmentâ€™s MCC board of directors voted to lift [the] suspension of the Malawi Compact during its quarterly meeting today [Thursday].
â€œMCC placed a hold on compact assistance to Malawi in July 2011 and formally suspended the compact in March 2012 due to a pattern of actions by the government of Malawi that was inconsistent with the democratic governance criteria that MCC uses to select its compact partners,â€ reads the statement in part.
Among others, US suspended the compact due to Malawiâ€™s hosting of war crimes indicted Sudanese president Omar Hassan al-Bashir last October, enactment of bad laws and pursuance of bad economic policies.
â€œSince President Joyce Bandaâ€™s inauguration in April, President Banda and her government have taken clear steps to reverse this pattern of actions,â€ says MCC.
It says US has noted improvements in the human rights environment and efforts to ensure that laws and institutions support democratic rights and processes in the country.
â€œThe government of Malawi has also demonstrated a commitment to providing accountability for the violent police response to demonstrations in July 2011. These steps, and the resumption of sound economic policy, restore MCCâ€™s confidence in Malawi as a compact partner,â€ reads the statement.
The statement quotes MCC chief executive officer Daniel Yohannes saying: â€œIn lifting the compact suspension, the MCC board recognises that the government of Malawi has taken decisive actions to restore democratic accountability, to demonstrate respect for the rights of individuals, and to implement sound economic management.
â€œMCC expects Malawi to continue to demonstrate its clear commitment to strong democratic and economic governance.â€
President Joyce Banda on Friday said Yohannes informed her about the lifting of the suspension on the phone, adding she was pleased that her administration has secured the compact which will help reduce power outages, energy losses and enhance efficiency in electricity generation in the country.
â€œ[The compact will] improve service delivery to electricity consumers, lead to increased productivity in the agricultural and manufacturing sectors, and provide approximately $2 billion (about K500 billion) of benefits to an estimated five million Malawians.
â€œMr. Yohannes has informed me that he will be sending a team into Malawi to work on the Malawi compact with our Malawi office,â€ said Banda.
Minister of Energy and Mining Dr. Cassim Chilumpha said government is yet to get more details on when the MCC delegation will jet into the country. He, however, added there was little work done in Malawi on the compact before it was stopped last year.
â€œIt was just setting up of the office and the general framework which was done. There was no substantive physical work done,â€ said Chilumpha.
He said the grant will help upgrade Malawiâ€™s electricity transmission system, adding the work will also enhance efforts on the Mozambique-Malawi power interconnection deal and investment in other new electricity generation points.
US Ambassador Jeanine Jackson said:” MCC plans to send a technical mission in coming months to update the investment programme after nearly one year on hold. In practice, this means some administrative start up funds would soon be available, but the bulk of the funds may not begin to flow for another year.”