business

May 13, 2022

NEO SENOKO

3 min read

Lesotho signs M4.8 billion US grant

Lesotho signs M4.8 billion US grant

The Minister of Finance, Thabo Sophonea

Story highlights

  • The country contributes M360 million
  • Minister convinced 2nd compact will make huge impact on economy

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LESOTHO on Thursday signed the US$300 million (M4.8 billion) second US Millennium Challenge Corporation (MCC) grant.

The Minister of Finance, Thabo Sophonea said following the approval of the US grant, Lesotho also allocated an additional US$22.5 million (M360 million), totaling US$322.5 million (M5.2 billion).

He told Parliament this week that he was satisfied that the approval of the second compact would make a huge impact towards economic development in the country.

“It’s a blessing for us to have signed the second compact because it will go a long way towards ensuring economic emancipation in our country,” Mr Sophonea said.

During its quarterly meeting in March this year, the US MCC board of directors approved the five-year compact programme.

The second compact consists of three programmes, including the Health Systems Strengthening (HSS) project, the Market Driven Irrigated Horticulture (MDIH) project as well as the Business Environment and Technical Assistance (BETA) project.

It is expected that the compact will spur private sector growth, increasing workforce productivity and improved health.

It will invest in the emerging horticulture sector and support the creation and viability of private businesses, providing technical assistance, incubation, acceleration services and access to finance.

The compact investment also targets poor people, especially women and the youth.

Mr Sophonea said the government was satisfied in partnering with the US MCC under the programme to support and build the country’s institutional capacity.

He said through select reforms, the compact would strengthen government’s efficiency and effectiveness, providing public goods and business services in health, irrigated horticulture and finance sectors.  

“Government has a responsibility to ensure important issues of good governance, which are also aligned to the success of the compact programme,” he said.

“As government departments, we have a responsibility to ensure the success of the programme as stipulated by the Americans. These guidelines are binding to us from now until the completion of the programme in 2029.”

Some of the guidelines include good governance, fight against corruption as well as continuous investment in local communities.     

MCC re-selected Lesotho as eligible for the second compact back in 2017. The signing of the compact is scheduled for this year while the implementation is planned for 2023 until 2028.

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The Millennium Challenge Corporation (MCC) is a United States Government agency committed to reducing poverty through economic growth. 

It was created by the US Congress in January 2004 to change the conversation on how best to deliver smart US foreign assistance by focusing on good policies, country ownership and results.

In its first compact completed in 2013, MCC invested $362.5 million (M5 billion) in Lesotho to increase economic growth and reduce poverty.

The US grant helped to improve water supply, increase access to essential health services and remove barriers to private sector investment.

The compact resulted in over 140 rehabilitated clinics and outpatient departments, 2 300 households water connections and the construction of the Metolong Water Treatment Plant as well as independent or joint land titles of over 17 000 women.

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