Malawi reaps $350m reward from US after anti-corruption drive

By Julian Pecquet
Posted on Friday, 30 September 2022 14:58

Malawi's President Lazarus McCarthy Chakwera shakes hands with U.S. Secretary of State Antony Blinken at a signing ceremony at the State Department in Washingto
Malawi's President Lazarus McCarthy Chakwera shakes hands with U.S. Secretary of State Antony Blinken at a signing ceremony at the State Department in Washington, DC, U.S., September 28, 2022. Kevin Wolf/Pool via REUTERS

The southeastern African country of Malawi is reaping US benefits following a series of political and economic reforms under President Lazarus Chakwera.

The Malawian leader visited the State Department this week for the signing of a $350m grant to improve the country’s roads and land administration. This new Millennium Challenge Corporation (MCC) compact comes just one week after US Agency for International Development (USAID) chief Samantha Power held up Malawi as one of three African countries deserving of public-private investment to help serve its citizens.

Speaking at the MCC signing ceremony on 28 September, Chakwera credited his anti-corruption drive for helping unblock a second compact for Malawi. The MCC previously awarded the country a $350m grant to transform its power sector back in 2012.

“I’m aware that after Malawi’s selection for its first MCC compact in the energy sector before I came into office, progress had stalled for years in securing this second compact for the transport sector because of issues of corruption,” Chakwera said. “But in the past two years, my administration has taken a zero-tolerance stance against corruption, shielding no one from investigation and prosecution, as well as removing and suspending from office those with a case to answer before our independent and credible courts of justice.”

Secretary of State Antony Blinken echoed this sentiment.

“Like all MCC endeavours, these projects will be transparent, they’ll be collaborative, and built to meet the highest standards of quality,” he said. “They’ll provide grants to Malawi, not debt, and they’ll support Malawi’s development and its efforts to strengthen good governance, accountability, democracy – the hallmarks of the president’s administration.”

Pressure’s on

The Millennium Challenge Corporation is an independent agency that invests in low-income and lower-middle-income countries. Malawi is also contributing $26.25m towards the project.

The grant comes as Chakwera, who has been in office since June 2020, cracks down on graft, after his predecessors – Joyce Banda and Peter Mutharika – were plagued by corruption allegations. Back in June, he stripped vice-president Saulos Chilima of his delegated powers after the latter was named in a $150m corruption scandal.

“Our desire … is to ensure that everyone understands that on our list of obstacles [to] Malawi’s development, corruption ranks number one,” Chakwera said. “[…] so we consider it our biggest enemy. We will therefore continue to fight it and stand against it no matter how long it takes until it is defeated. The fight against corruption ensures that investments like the MCC compact fulfil their intended purpose and yield their intended benefits.”

At the same time, Chakwera’s own record is under scrutiny after his administration shut down three television and six radio stations over failure to pay annual licence fees.

Mahmoud Bah, the MCCs deputy CEO, tells The Africa Report that Malawi’s eligibility will be periodically judged according to the agency’s criteria throughout the life of the five-year contract.

“MCC works using data. We have a scorecard and anything that is happening is reflected in our scorecard,” he says. “For now, the government of Malawi is a great partner.”

In our case, as a land-linked country, securing a reliable and inexpensive link to the sea would de-risk our economy

The new compact calls for the construction of four corridor roads in the three regions of Malawi to reduce travel time and costs for smallholder farmers. It also seeks to improve Malawi’s land governance institutions and productive use of land.

Although not a focal point of the compact, Bah says it could help Malawi eventually wean itself off costly farm subsidies.

“What we are trying to do is to make a connection between farmers and markets. In doing so we want to lower the barriers that farmers have,” he tells The Africa Report. “If the sector becomes productive, then there is no need to have those subsidies. Subsidies are helping when the market has inefficiencies.”

Regional ambitions

Beyond the compact, Malawi is also pushing for US investment in regional integration. The landlocked countries of Malawi and Zambia rely on Mozambique’s Indian Ocean ports to export their products, and Chakwera pressed for US support for all three during his time as chairman of the Southern African Development Community (SADC) from August 2021 to August 2022.

“As the immediate past chair of SADC, I believe that enhancing regional integration with our neighbours through foundational infrastructure, such as rail and roads, will have phenomenal economic benefits as safe and reliable rail and road transport investments will certainly help reduce barriers to growth and create opportunities for all of our people,” Chakwera said at the signing ceremony. “In our case, as a land-linked country, securing a reliable and inexpensive link to the sea would de-risk our economy.  This is a[…] request that I’d like to leave with MCC to continue to mull over as we think ahead.”

Bah says the idea is part of the discussion. “We will explore those conversations as we make progress in the current investment,” he tells The Africa Report.

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