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New threat to US$300 million MCC Compact

…as US gvt demands the enactment of three crucial laws before disbursement of funds…

Herbert Moyo

NEW Prime Minister Sam Matekane must ensure the passing of three crucial pieces of legislation if his new coalition is to get a US$300 million (M5.4 billion) United States grant to help it bankroll its stated agenda to improve the lives of Basotho.

The US and Lesotho governments signed the lucrative US$300 million second compact under the US-sponsored Millennium Challenge Corporation (MCC) in May 2022.  However, the start date for the compact implementation depends on Mr Matekane’s government meeting the conditions precedent, which include the passing of the three crucial pieces of legislation, the US has said.

There is no doubt that the disbursement of the money to fund the agreed socio, economic projects in the health, agriculture and business sectors will immensely boost Lesotho’s economic growth.  But all now depends on how fast Mr Matekane’s new coalition moves to meet the stated demands before getting the windfall.

In an interview with the Lesotho Times, the CEO of the MCC, Alice Albright, said the disbursement of the money to fund the various projects aimed at fostering socio-economic growth, was contingent upon the new government passing the pieces of legislation, mainly the Harmonisation Bill and the Counter Domestic Violence Bill. A third law which will establish the Millenium Challenge Account (MCA Lesotho) must also be enacted to create a local body that will lead the implementation of the second compact deal.

The Harmonisation Bill contains clauses aimed at economically empowering women married under customary law. The bill proposes that a widow shall “have ownership and control of the property of the joint estate after the death of her husband”, doing away with the current situation, wherein women are considered minors and accountable to their sons or late husband’s brothers. This has resulted in the erosion of women’s economic rights, as they are deprived of the right to administer their estates and dispose of their properties as they wish.

The Counter Domestic Violence Bill is meant to provide for the protection of the rights of victims, and prevention of domestic violence and related matters. This bill is expected to provide for the implementation of a family court, which will handle cases arising out of family squabbles and also hear cases of domestic violence. It also provides for the establishment of restorative justice councils, where proceedings will be guided by village chiefs.

Shelters for victims will also be established, as well as rehabilitation centres for perpetrators of domestic violence.

The bill proposes stiff penalties for domestic violence and sexual offences.

Both bills had been approved by the previous National Assembly, but they had not been enacted into law by the time the 10th Parliament was dissolved on 13 July 2022 by His Majesty, King Letsie III, to pave way for elections, which were subsequently held on 7 October.

The bills were then ‘approved’ after parliament was ‘recalled’ in August, following the declaration of a state of emergency to pass these, as well as constitutional amendments to facilitate the implementation of Lesotho’s much-delayed multi-sector reforms. However, the ‘laws’ were nullified by the Constitutional Court, which ruled that the state of emergency, the subsequent recall of parliament, and the enactment of laws were invalid.

Nonetheless, the US considers these laws important conditions that need to be in place before the start of the 5-year compact that was signed by the two countries in May this year.

Ms Albright drove this point home in an interview with this publication on the sidelines of her visit for Prime Minister Matekane’s inauguration on Friday.

Speaking on the issue, Ms Albright said the new parliament would have to move fast to enact the laws before the compact can “enter into force”, a term used to signify the start of the 5-year term for implementation of the compact.

“MCC and the Government of the Kingdom of Lesotho continue to work together to finalise the design of the Compact’s projects and prepare for implementation”.

“This includes conducting final studies and preparing for the establishment of the Millennium Challenge Account, or MCA, which is the institution to be established by the Government of the Kingdom of Lesotho to implement the compact. MCC will monitor and support MCA-Lesotho, but MCA- Lesotho will lead the compact’s implementation. This is in line with MCC’s core principle of country ownership.”

“I note that the Lesotho compact contained conditions precedent. These are requirements that must be achieved by the Government of the Kingdom of Lesotho in order for the compact to enter into force, which is when the five-year clock on the grant programme officially begins. “

“Two conditions precedent involve legislation passed by parliament earlier this year but their validity—and other laws receiving the King’s assent in August—were affected by the court’s decision in September on the constitutionality of the State of Emergency.  Once the new government is formed, I hope it will quickly enact the Harmonisation Bill and Counter Domestic Violence Bill, as well as the law that will establish the MCA-Lesotho.

The Harmonisation Bill is essential to the equitable implementation of the compact, so that it supports the economic empowerment of women and builds upon the Legal Capacity of Married Persons Act, a law passed under the first compact which established legal majority status of married women.

The Counter Domestic Violence Bill strengthens legal protections against domestic violence and complements the compact’s Health System Strengthening Project,” Ms. Albright said.

The MCC is a multilateral, American international development agency established by the US Congress in 2004. Beneficiary countries are expected to meet certain conditions with regards to good governance and respect for the rule of law to qualify and maintain eligibility for grant assistance.

In 2007, MCC and Lesotho signed the first US$362, 6 million (more than M3 billion) compact to reduce poverty and spur economic growth. That compact closed in September 2013.

The MCC Board of Directors selected Lesotho as eligible to develop a subsequent compact in December 2013.

In 2015 and 2016, the MCC limited compact development over  governance concerns under former Prime Minister Pakalitha Mosisili’s regime.

Compact development resumed in 2017 after the Government of Lesotho took steps to address MCC’s concerns. This came after the ouster of the Mosisili regime in the June 2017 elections and the advent of former Prime Minister, Thomas Thabane’s four party coalition.

The Thabane government and the opposition were also accused of dragging their feet on the multi-sector reforms process. His government was also flagged by the US for its failure to tackle the scourge of human trafficking. Compact development slowed between June 2020 and June 2021 after Lesotho was downgraded to Tier 3 on the U.S. Department of State’s 2020 Trafficking in Persons Report, as the issues covered in the report are central to good governance and the rule of law and are therefore key considerations for MCC. Lesotho was upgraded to Tier 2 Watch List in 2021 and to Tier 2 in 2022 due to government efforts to strengthen the fight against trafficking.

An agreement for US$300 million was eventually signed in May this year, partly in recognition of the previous Moeketsi Majoro administration’s “significant achievements” in fighting human trafficking. This included the prosecution of individuals suspected of involvement in trafficking activities, as well as mounting countrywide campaigns to raise awareness against the scourge.

It remains for the new Matekane administration to expedite the enactment of the laws as required by the US for the compact to begin. Implementation would then begin as early as the last quarter of next year, Ms Albright said.