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Compact ll Development
Malawi was selected by MCC's Board of Directors as eligible to develop a new MCC compact program in December 2018 and re-selected in December 2019. Selection is required every year to continue compact development. The selection was based on: i) Malawi's excellent implementation of the first compact and ii) For meeting rigorous standards for good governance and economic management according to MCC's scorecard.
The Malawi Millennium Development Trust (MMD) was established as a successor institution to MCA-Malawi to complete projects under the first compact and facilitate the development of the new compact on behalf of the Government of Malawi. In developing a compact program, selected countries follow a process that includes five distinct phases discussed below:
Early in the process, MMD recruited a Compact II Development Core Team. This Team together with its counterparts from MCC undertook initial consultations across the country to identify binding constraints to Malawi's economic growth. Three binding constraints were identified:
-High price of road freight transport service and barriers linking farms to markets in rural areas Difficulties with access to land for investment due to mismanagement of the estate sector and unclear/uncertain customary land rights, particularly for women small holders; and Lack of a stable macro-economic environment as reflected in high and volatile inflation
A structured assessment of the underlying factors, challenges, or problems that give rise to the binding constraints, (the root cause analysis) was undertaken. In addition, a Value Chain Analysis was also carried out to get an in-depth understanding of market logistics and linkages in rural Malawi.
Deliverable 1: Core problems identified through the root-cause analysis were prioritized and presented in form of problem trees.
-Deliverable 2: Using the core problems that were identified through the root cause analysis, concept papers were developed-.On February 6, 2020, MCC Investment Committee approved Malawi's Concept Notes. The approved Concept Notes focused on "Increasing land productivity and strengthening road transport and farm to market linkages". With this approval the Government of Malawi (GoM) to start preparing project proposals that will further refine, and prioritize the endorsed investment ideas
Increasing Land Productivity Concept Paper
Investment Idea 1
Catalyzing More Effective Demand for More Efficient, Transparent Allocation of or Access to Land
Investment Idea 2
Strengthening Institutional Capacity of Land Actors to Regulate and Manage Land System
Investment Idea 3
Enhancing Resource Mobilization Strategies to More Effectively Finance Land Administration and ManagementInvestment Idea 4
Developing a Land Use Plan for Effective Coordination and Public/Private Investment Decision MakingStrengthening road transport and farm to market linkages Concept Paper
Investment Idea 1
Capital-intensive investments in transport and logistics network expansion, upgrading and maintenance of roads.Investment Idea 2
Facilitate private sector-led growth through inclusive models that link firms and smallholder farmers to markets and create an environment promoting fair tradeInvestment Idea 3
Policy, institutional and/or regulatory reforms in the transport, agriculture, trade or environmental sectors to improve planning, coordination and effective delivery of the public sectorTo kick-start the development of project proposals, a delegation from MCC led by Mr. Joel Wiegert (Malawi's Country Director) was in Malawi from February 10 to February 26, 2020 to work with the GoM and MMD. The project proposals will provide a coherent logic for the proposed compact program for Malawi.
Feasibility and other independent studies will be undertaken. The feasibility studies will inform the design of the second compact for Malawi. The following studies have already been undertaken:
Due diligence on Out grower schemes in Malawi the private sector opportunity study and District Commissioners mapping exercises is under way.
MCC country team in collaboration with MMD will carry out Corridors of Excellence Mapping.
MCC will review project proposals and provide feedback to MMD and GoM
Phase IV: Project Development: Target June Report 2021 Plans for the agreed-upon projects developed Budget developed Location for implementation identified detailed plan for the monitoring and evaluation (M&E) developed |
Phase IV: Negotiations: Target Sept 2021 Technical, financial, and legal terms of compact negotiated Implementation unit created MCC's Board of Directors reviews Compact signed |
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