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MCC Learns from MCA-Malawi Compact Experience

Samuel Kwon

 

Economic growth and progress in Malawi is held back by the nation’s inadequate power supply. A five-year $350.7 million compact between the Millennium Challenge Corporation (MCC) and the Government of Malawi aims to address this constraint in order to reduce poverty through economic growth.

MCC is helping the Government of Malawi strengthen a foundation on which the nation’s power system can grow. The compact, implemented by the Millennium Challenge Account-Malawi (MCA-Malawi) on behalf of the Government of Malawi, consists of three projects designed to take a complementary approach to improving the sector, including infrastructure, policy and institutional reform, and environmental management.

The Malawi Compact was MCC’s first grant focused solely on the power sector. Samuel Kwon, MCC’s Practice Lead/ Senior Director (Acting) on Energy, recently led an agency mission to Lilongwe, as teams working on power in Nepal, Senegal and Burkina Faso look to learn from the Malawi experience. Our reporter talked to Kwon.

  1. 1.What is MCC?

MCC is an independent U.S. Government agency with a singular mission: to reduce global poverty through economic growth. MCC forms partnerships with low-income countries committed to good governance, economic freedom and investing in their citizens. Using a country-led approach that reflects a country’s own priorities, MCCprovides time-limited grants, called compacts, and assistance to specifically target conditions that hold nations back from economic progress.

  1. 2.How does investment in the power sector align with MCC's mission?

A reliable, accessible and affordable power supply is crucial to alleviating poverty and driving economic growth in any country. Many of MCC’s partner countries identify and prioritize electricity investments as a building block for the economic development of their countries and the well-being of their citizens. Malawi is one such country that identified intermittent power supply as a key constraint to economic growth. MCC is thus investing in the sector to create self-sustaining electricity systems to meet current and future electricity needs and attract private investment to stimulate economic growth.

 

  1. 3.What was the objective of the learning mission?

MCC investments address constraints to economic growth, and Malawi was the first compact focused on the power sector. The development of the Malawi compact— as are all MCC compacts—was driven by data, based on, among other things, priorities established by the Government of Malawi, economic analyses and consultations with stakeholders, including civil society and the private sector. Since implementation of the Malawi compact began in 2013, challenges in power infrastructure has been identified as a key constraint in other countries as well. MCC is committed to learning from our experience and we now have teams working to develop or implement energy-focused programs in Nepal, Burkina Faso and Senegal. The mission wanted to see what we can glean from Malawi’s experience to apply in other countries.

  1. 4.What has the delegation learnt from the visit to Malawi?

We had an opportunity to meet with our partners at MCA-Malawi to hear about their experiences—including operational discussions about MCC’s process and how MCA-Malawi is set up in country, as well as a great deal about implementation—what works, what hasn’t, what could we do better.

The site visit was important because it allowed MCC teams to appreciate, visually and viscerally, the logistical challenges in executing a large scale infrastructure project. This isn’t just a matter of building something at a site, but also all that goes into preparing a site, which can include building access roads to transporting equipment to begin project construction. Learning from each experience helps inform our approach in other partner countries as we assess the feasibility of new projects, a critical consideration given the constraints that come the five-year timeline of MCC compact investments.

Another helpful reminder as we work on developing new compacts is to see the importance of early planning for large scale infrastructure. The steps we take early on, even before a compact is signed, can do a lot to minimize delays later.

  1. 5.With the Malawi compact closing in September 2018, how can the country build on gains to transform Malawi’s power sector?

There is a lot to do and finish before the compact ends on September 20, 2018. At the same time, the Government of Malawi and its partners must be planning for the next steps. The compact was not designed to create a fully-developed power system in its five-year lifespan, but to ensure that Malawi has a solid foundation to build on, and the tools to build with. To do this, the investment focused on the elements needed to create a strong power sector, including infrastructure, effective and financially sound institutions, and a policy, legal and market framework that supports smart growth.

With these pieces coming together, it will be up to Malawians to build on the progress they’ve begun. New higher-capacity power lines present the opportunity to connect to other countries in the region and to bring in new private power producers to increase the electricity available in the system. New policies and practices, if observed, can help the country continue to access private sector capital for power generation and thus expand electricity access to new communities, and expand new opportunities in business, especially for women.

The foundation is there, but building a strong Malawian power sector will require a continued commitment to action and accountability from the Government of Malawi and its partners. After seeing the progress on the trip and meeting the team, I look forward to seeing where Malawi goes next.

More about MCA-Malawi’s work can be found at www.mca-m.gov.mw and at www.mcc.gov .