Liberia Misses Out on Another MCC Compact

The failure of President George Weah’s government to pass the  Millennium Challenge Corporation’s (MCC) ‘investing in people’ category has caused the country to miss out on a multi-million dollar deal that would have been used to fuel his dream infrastructure development agenda. 

If the Weah government had secured the US government MCC funding, it would have been the country’s second. The administration of former President Ellen Johnson Sirleaf secured the compact funding of US$257 million to rebuild the country’s war-ravaged electricity utility, the Mt. Coffee hydropower plant.

However, Liberia, having gone close to getting another compact, missed out due to the Weah administration only passing one indicator in the ‘Investing People Category’, a key policy area of interest to the MCC Board.

Data on Liberia's human capital investment, as it stands, indicates that the country is amongst the worst in the world largely due to slow progress in education and health.

At just 0.32, Liberia is ranked at the bottom of the Human Capital Index, performing better than only three African countries in the world — namely, the Central African Republic, Chad, and South Sudan. That is, out of 174 countries assessed and also the lowest human capital in ECOWAS, together with Mali and Niger.

This is despite the fact that the Weah administration has met the threshold that enables it to qualify for a possible return to the compact, earning an unprecedented pass of 12 out of the 20 indicators, which was the highest score the country has ever achieved since it started applying for the MCC compact.

“In accordance with the Act and the criteria and methodology for determining the eligibility of candidate countries in Fiscal Year 2023, the selection was based primarily on a country’s overall performance in three broad policy categories: Ruling Justly, Encouraging Economic Freedom, and Investing in People,” the MCC’s Board, chaired by the US Secretary of State, Antony Blinken, said in a report on 2023 compact selection criteria. 

“Where appropriate, the Board took into account additional quantitative and qualitative information, such as evidence of a country’s commitment to fighting corruption, investments in human development outcomes, or poverty rates.”

The MCC compact is an independent US foreign assistance agency created by the US Congress in January 2004 to deliver smart foreign assistance by focusing on tackling some of the most pressing challenges people face in developing countries, like electricity or infrastructure development.

In Liberia, a compact of US$257 million was invested to encourage economic growth and reduce poverty in Liberia by addressing the inadequate access to reliable and affordable electricity and the poor quality of road infrastructure. 

Its impact at the end of the project in 2021, was the rehabilitation of Liberia’s largest power source — the Mt. Coffee Hydropower Plant, reconstruction of the LWSC raw water pipeline, support for LEC’s management, training, and operational capacity, the establishment of the Liberia Electricity Regulatory Commission, and development of a road asset management system to support road maintenance planning. 

Since then, Liberia has been trying to get another round of compact but, for five years, the country’s performance was poor, dampening its chances of acquiring another compact. 

But in the Fiscal Year 2023 MCC scorecard, Liberia earned an unprecedented pass in policy areas covering economic freedom and ruling Justly: passing 11 out of the 14 combined indicators in these two categories.

Under ruling justly, Liberia passed 5 out of 6 policy indicators, including the must-pass indicator on control of corruption and other political governance indicators which include rule of law, freedom of information, civil liberties, and political rights.

Also, Liberia for the first time passed in the trade policy indicator, as well as control of inflation indicator and the new indicator called Employment Opportunity, which gauges attempts by countries and economies to solve employment challenges. These indicators fall under economic freedom indicators. 

However, Liberia could only pass one indicator out of the six indicators under the Investing People Category, which points to the need for more investment in human capital — education and health.

In 2020, 50 percent of Liberia’s loss of human capital was due to poor education, an increase of 9 percentage points, the World Bank said in the report, Liberia Economic Update with the theme: “Investing in Human Capital for Inclusive and Sustainable Growth.”

The country's human capital gap, according to the report, was mainly driven by poor education (contributing 50 percent), poor health (12 percent), and survival (7 percent). 

The underlying factors contributing to the country’s low human capital outcomes include weak institutions, ineffective service delivery, demographic pressures, and low and inefficient social spending, resulting in unresponsive or suboptimal service delivery, the Bank said. 

The Index considers five variables that could be grouped into three components — survival, school, and health — that are likely to affect the earnings of the future generation of workers. 

Meanwhile, the MCC Board in a release said it has selected The Gambia, Togo, Senegal, and Mauritania to develop new MCC grant programs while applauding the agency’s historic new regional partnership. 

The MCC’s Board then selected The Gambia and Togo as eligible to develop compacts, with a focus on large-scale infrastructure investments, and policy, and institutional reforms. 

The Board also chose Senegal as eligible to develop a concurrent regional compact as well as Mauritania for a threshold program. Threshold programs are MCC’s smaller grant programs designed to support policy and institutional reforms that address the factors constraining a country’s economic growth in countries that may not yet be meeting MCC’s strict compact eligibility criteria.  

Along with selecting countries for new grant programs, MCC’s Board also reselected Côte d’Ivoire as eligible for a concurrent regional compact program; Mozambique, Sierra Leone, and Zambia for compact development; and Kiribati for threshold program development. The Board also reaffirmed its support for continuing compact development in Belize. MCC regularly reviews its partner countries’ policy performance throughout the development and implementation of a compact or threshold program.