The Implementation of MCA Compact II Gains Momentum

Writes Bereng Mpaki

Lesotho’s development agenda received a shot in the arm with the signing of the US$300 million Millenium Challenge Corporation (MCC) compact in May 2022 as the country endeavours to diversify and stabilise active sectors that are earmarked to grow the country’s GDP.

However, despite signing the second MCC compact, Lesotho must meet certain governance-related conditions to facilitate the disbursement of funds towards the compact implementation.

Also known as the Health and Horticulture Compact, the US$300 million compact, is a five- year programme focusing on health and horticulture to improve access to quality healthcare and support business growth, in particular the agricultural industry, while also ensuring equitable distribution of benefits and opportunities across all sectors.

Following last May’s compact signing between the government of Lesotho and MCC, the compact is currently at the design stage, according to the Lesotho Millennium Development Authority (LMDA).

The compact has since received further approval from the Lesotho parliament through the enactment of the Millennium Challenge Account-Lesotho Act, 2022. The Act provides for the establishment of the Millennium Challenge Account – Authority (MCA-L), an accountable entity responsible for the implementation of the compact, setting up the MCA-L Board and recruitment of staff to carry out essential compact projects.

“After signing, the Compact enters the pre-implementation phase well known as Pre-Entry into Force; at this stage, detailed designs of the signed projects commence and a number of procurements are launched that will pave the way for smooth compact implementation,” LMDA states.

LMDA also stated that during this stage, the Compact will also start to apply the provisional facilitation of funds’ release. This stage also includes the setting up of the MCA-L office. This phase is expected to run through until March 2024. The compact is expected to start implementation in March 2024 and close out in 2029 for the five years of implementation. The compact consists of three projects, namely: (i) the Health Systems Strengthening (HSS) Project; (ii) the Market Driven Irrigated Horticulture (MDIH) Project; and (iii) the Business Environment and Technical Assistance (BETA) Project.

The HSS project’s contribution to Lesotho’s economy will be expected to reduce the disease burden and as a result, a healthy labour force that will participate effectively in the economy. This will be for all the individuals expected to receive treatment through the project wherever they are in the country.

The BETA Project is meant to stimulate an increase in firm-level profits and formal employment including micro-, small and medium-sized enterprises (MSMEs), and MSMEs which are owned by women and youth and in rural areas, with a special focus on agriculture, mainly horticulture.

The MDIH Project aims at increasing rural income from commercial horticulture, including for women, youth, and the rural poor, and improving irrigation, water resources, and land management. This intervention is meant to increase private sector growth and investment in horticulture as well.

The MDIH project will focus on the following four project sites: Peka- Manka Community Council, Leribe:  600 hectares; Kolonyama- Tsoili-Tsoili Community Council, Leribe:  760 hectares; Likhakeng- Ramapepe Community Council, Leribe:  100 hectares, and, Phamong- Lithipeng Community Council, Mohale’s Hoek:  120 hectares. Site selections were influenced by the soil suitability, proximity to adequate water resources, and proximity to road areas; 100 metres from the main roads.

As a compact beneficiary, Lesotho is therefore required to meet some of the rigorous standards for good governance, fighting corruption and respect for human rights to unlock the disbursement of the funds. These conditions are expected to be met by April 2024, when compact implementation takes off.

Lesotho is also expected to review the outdated Labour Code of 1992.  A draft Labour Bill has already been cleared by the office of the Parliamentary Council.

“The government of Lesotho needs to review the Labour Code, 1992 to include regulation of the agriculture sector and provide for a safe work environment through the adoption of comprehensive labour legislation, and a separate occupational health and safety law,” LMDA says.

The country must also revise the Water Act to secure water rights and water allocation for irrigation purposes by strengthening the water permitting regime. This will also promote improved water resources management (WRM), and support the implementation of key WRM activities; strengthen the legal basis for integrated catchment management (ICM); foster and facilitate inter-ministerial collaboration; promote better data collection and management; and address dam safety.

Lesotho must also adopt the irrigation policy and irrigation act, to implement and sustain compact II investments and help clarify the institutional arrangements by the government to manage irrigation development in the country.

“Land Act, needs to be further reviewed to ensure that land rights are protected for all its citizens, particularly women. The Land Act of 2010 and the Land Administration Authority Act of 2010 were passed with the aim of streamlining land registration and administration processes.

“However, to ensure that co-owned immovable property can be registered and that women’s land rights are fully protected, the Lesotho government has had to clarify the regulations associated with these acts.”

This is to facilitate joint titling requirements and to enable addition of a spouse’s name to a Registered Land Lease or Certificate of Land Allocation; a crucial step in ensuring that land ownership is not only equitable but also encourages economic and social development for all, LMDA said.

Lesotho has to date made notable progress in satisfying several conditions needed to pave the way towards undisrupted implementation of the compact.

The enactment of the Harmonisation of the Rights of Customary Widows with the Legal Capacity of Married Persons Act, 2022, was done in December 2022.  This law will support or strengthen the participation of women in the MDIH project components. The government has also enacted the Counter Domestic Violence Act, 2022 for the protection of the rights of victims and prevention of domestic violence and related matters. It strengthens ongoing efforts by the responsible entities for prevention, care and providing support and justice for survivors of domestic violence. The Act supports the Health Systems Strengthening component of the compact.

Other notable achievements have also been made in the engagement of a private sector engagement consultant in December 2022, tasked with attracting foreign and local commercial farmer investors onto the four irrigation schemes to partner with local landowners on joint production, marketing and access to markets for the horticulture products in a manner that is responsive to fair requirements.

The Problem Driven Iterative Adaptation (PDIA) approach is being used to address problems plaguing crucial sectors like water, health systems, and gender inequality, with focus teams consisting of experts in these areas.

The health systems team has made a major breakthrough in securing the support of the Ministries of Finance and Development Planning and that of Health to pilot the Integrated Financial Management System (IFMIS) within four identified District Health Management Teams in four districts rendering this service beyond Sub- Accountancies.

The Market Driven Irrigated Horticulture Feasibility Study has been successfully completed. This was a major study of over 12 months which assessed the potential investment opportunities in irrigated agriculture, as well as other associated agronomic, engineering, economic, environmental, and social assessments.

The second MCA compact for Lesotho will open new investment avenues in the country, especially with guaranteed policy shifts and a refreshed vision for implementation. With many rural villagers having access to suitable land and water resources, it can only be said the sky is the limit, with appropriate and strategic strategically relevant investments geared towards food production and security for the Kingdom.