Maputo — The Mozambican government must return to the United States eight per cent of the 506.9 million dollars (about 41 million dollars), made available by the US agency, the Millennium Challenge Corporation (MCC), because it was unable to spend it in time.
The “compact” between the government and the MCC was signed on 13 July 2007, and took effect on 22 September 2008. It involved grants from the MCC of 506.9 million US dollars to be used in northern and central Mozambique in areas intended to promote economic growth and reduce poverty.
The director of the Millennium Challenge Account-Mozambique, Paulo Fumane, cited in Thursday's issue of the independent newsheet “Mediafax”, said that by the time the Compact closes, on 22 September, 92 per cent of the money will have been spent. The rest must be returned.
The MCC admits no exception to its rule that the money must be spent within the five year life span of the Compact, and not a day later. It has publicly warned that, after 22 September, “there will be no possible extension of funding by MCC due to the regulations that govern the Millennium challenge Corporation”.
The main reason for the underspend is that contractors hired to carry out some of the projects failed to meet deadlines. The worst delays were in the rehabilitation of a 75 kilometre stretch of Mozambique's main north-south highway, between Mecutuchi and the Lurio river in Nampula province, which was in the hands of a Portuguese consortium, and the construction of a new water supply system for the port city of Nacala, where the tender was won by an Indian contractor.
Despite these problems, the government is optimistic that Mozambique will qualify for a second compact. Mozambique is competing against a large number of other developing counties for the American funds, and the list of beneficiaries will be announced in December. For each country approved, a package of around 300 million dollars will be available.
All will depend on an assessment made by the MCC Council. In allocating funds, the MCC takes 20 criteria into account and, according to MCC-Mozambique, the country is well placed in most of these. However, it is pulled down by its scores for education, health and fiscal policy.