Maputo — Mozambique and the United States on Wednesday signed a memorandum of undertanding valued at 537.5 million dollars under the Millennium Challenge Corporation (MCC).
Back in September 2025, the United States government had announced that the foreign aid promised to Mozambique under the MCC will be disbursed, despite fears that the Trump administration would destroy the MCC, just as it had dismantled the US Agency for International Development (USAID).
Contrary to these fears, the aid package for Mozambique was reprieved. According to a September release from the US Embassy in Maputo, "following the foreign aid review, the MCC Board of Directors met in August and recommended that the Compact for the Connectivity and Coastal Resilience of Mozambique should go ahead'.
(The aid packages disbursed under the MCC are known as "compacts'. This is "Compact Two', since an earlier agreement between Mozambique and the MCC was implemented about 20 years ago. That Compact was budgeted at 507 million dollars).
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The resumption of MCC aid, added the release "reflects continued trust in the cooperation between the United States and Mozambique, stressing the commitment to generate tangible results for the two peoples'.
Cited in the release, the US charge d'affaires, Abigail Dresser, said "the decision to press ahead with the Compact shows the commitment of both countries to build a stronger and more prosperous future. In refining the focus of the programme, we are guaranteeing that American investment creates opportunities for Mozambicans, at the same time as it promotes the stability and economic growth that benefits both our nations.'
The Compact, continues the release, "is fully aligned with the priorities of US foreign policy, and seeks to produce concrete benefits for Mozambicans and Americans. These improvements stress the commitment of the US government to responsibility, transparency and measurable results, ensuring that the investment of American taxpayers promotes mutual prosperity'.
The Compact has been under discussion for several years. The Mozambique Connectivity and Coastal Resilience Compact, to give it its full name, was signed in Washington on 23 September 2023, and the total investment is valued at 537 million US dollars, targeted particularly at the central province of Zambezia.
A 2023 MCC document on the Compact noted that "two-thirds of the Mozambican population resides along the coast, which is impacted by frequent and increasingly intense cyclones, flooding, and natural disasters that overwhelm local transport networks, large and small-scale agriculture, community opportunity, and societal cohesion.'
The Compact, the MCC added, "aims to address these multifaceted risks through projects that will strengthen local economies that are reliant upon agriculture and fisheries yet limited by connectivity and reliable access'.
The Compact contains three projects - one on coastal livelihoods and climate resilience, one on connectivity and rural transport, and one on promoting reform and investment in agriculture.
Last year, it was believed that the "|Department of Government Efficiency' (DOGE) intended to shut down MCC. However, at that time far right billionaire Elon Musk was at the helm of Doge, and Musk subsequently fell out of favour with Trump, which may have saved the MCC and the Mozambican compact.
The MCC describes itself as "an independent US government agency working to reduce global poverty through economic growth'.
The agreement includes 500 million dollars in US contributions and 37.5 million dollars guaranteed by the Mozambican state, in a co-financing architecture geared towards concrete results.
According to the Minister of Planning and Development, Salim Valá, the signed memorandum of understanding represents a milestone in deepening cooperation relations between the two countries.
"The signing of the memorandum of understanding that we witnessed today constitutes a firm step in deepening cooperation between Mozambique and the United States,' he said.
Compact II is based on two central pillars -- connectivity and rural transport, and the promotion of investments in agriculture -- also integrating a complementary axis linked to coastal growth and sustainable management of natural resources.
In the field of connectivity, the program foresees the construction of a bridge over the Licungo River, the development of a ring road in Mocuba, the second largest town in Zambézia province, and the reconfiguration of strategic sections associated with the Nacala Logistics Corridor, with the aim of reducing transport costs and improving the circulation of goods.
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The Deputy President of the MCC, Alicia Robinson-Morgan, explained that the realignment of the program aims to strengthen regional integration and consolidate Mozambique's position in international trade circuits.
"The priority given to the Nacala Corridor aims to improve access roads to the port, essential for the flow of critical minerals, including to the United States,' she said.
In the agricultural component, the compact focuses on increasing the productivity and income of small producers, through the continuation of tax reform in the sector and the promotion of sustainable investments.
The project includes interventions aimed at strengthening the productivity and resilience of coastal ecosystems, including actions in the areas of fishing, environmental conservation, and governance of the mining sector.
