Jonathan Katzenellenbogen, International Affairs Editor
10 May 2004
Johannesburg — 1bn extra this fiscal year for selected countries
LESOTHO and Mozambique are among a group of eight African countries likely to get a substantial increase in US aid for pursuing what are viewed as sound policies.
The Millennium Challenge Corporation, the US government body distributing the extra aid, says Benin, Cape Verde, Ghana, Madagascar, Mali and Senegal are eligible to apply for aid under the account. Also eligible are Armenia, Bolivia, Georgia, Honduras, Nicaragua, Mongolia, Sri Lanka and Vanuatu.
Rather than give general political backing to initiatives like the New Partnership for Africa's Development (Nepad), US officials say the Millennium Challenge initiative is a way of backing countries that show commitment to Nepad-type policies.
The programme, which links democracy, good governance, and free-market policies to scaled-up aid, will see 1bn in extra funding for the selected group of countries this US fiscal year and possibly $2,5bn extra next fiscal year. If the US congress approves the $2,5bn it will mean a near doubling in US development aid.
In launching the account two years ago, US President George Bush said the Millennium Challenge account was "a call for a new compact for global development for both rich and poor countries".
"We must tie greater aid to political and legal and economic reforms. And by insisting on reform we do the work of compassion," said Bush.
For countries to be eligible for Millennium Challenge account assistance they must pass 16 indicators grouped in three categories: ruling justly, investing in people, and economic freedom.
SA and Botswana's levels of per capita income are above the threshold for eligibility under rules governing the account. Countries such as Malawi and Kenya have levels of corruption that exclude them from assistance.
US website Allafrica.com reports it was initially widely expected that Uganda would be eligible, but the country's rating on political rights and civil liberties has resulted in its exclusion.
To encourage countries that applied but did not qualify for extra funding, the US has launched the Threshold Country programme to act as an incentive for reforms.
Indicators used to assess governing justly are ratings of civil liberties and political rights conducted by Freedom House, measures of voice and accountability, government effectiveness, rule of law and control of corruption carried out by the World Bank Institute.
Criteria covered in the investing in people category cover public primary education spending as a percentage of gross domestic product (GDP), primary education completion rate, public expenditures on health as a share of GDP, and immunisation rates derived from World Bank, United Nations and national sources.
The category of promoting economic freedom is based on a country credit rating provided by Institutional Investor magazine, inflation, trade policy, regulatory quality and days to start a business as provided by the World Bank.
To qualify for assistance from the account, countries must score above average in all three areas. As scores tend to be related to income levels there are separate ratings for low- and lower-middle income countries.
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