Poor MCC Score Reduces Liberia’s Chances of Gaining Another Massive US Grant
Monrovia – Liberia is facing its most serious funding challenge since the inception of the George Weah administration and once the current situation is not remedied, the government could most likely struggle to deal with two of its existing challenges.
Report by Alpha Daffae Senkpeni / [email protected]
A new scorecard from the Millennium Challenge Compact (MCC) puts Liberia in the red. The scorecard is the most significant yardstick used to measure the possibility of a developing country to receive a certain grant from the United States government to fund the country’s development programs.
With the new score, this means Liberia is in a dismal position to regain another massive grant intended to solve its two most binding constraints – roads and electricity.
Ahead of 2019, the MCC has released its rating of countries that are already benefiting from the compact. The rating focuses on several important themes including economic freedom, ruling justly and investing in people.
In the new report, which highlights Liberia’s performance on economic freedom, the country obtained a scored of – 4.4, with an inflation rate of 15%; a regulatory quality performance of – 0.15% and 60.1 score in trade policy.
For ruling justly, which stresses the promotion and adherence of the rule of law, upholding democracy and human rights, Liberia also scored miserably in its fight against corruption, government effectiveness and rule of law.
For the fight against corruption, Liberia scored one of the lowest earning of 0.12; government effectiveness at – 0.45 while rule of law earned – 0.07%. Meanwhile, in this category, there are some impressive scores allotted to political rights that represent 84%, civil liberty 80% and freedom of information with 56%.
Liberia’s performance in promoting a suitable environment for business with special attention to the encouragement of women into business is poor. Gender in business scores only 7.0, while business startup and access to credit represent 0.9646 and 36 respectively.
Why the Scorecard
According to the MCC, its process to select beneficiaries of the compact is competitive and data-driven, which is a “transparent method for determining where the agency invests its development dollars”.
“To be considered for MCC funding, countries must first pass MCC’s scorecard – a collection of 20 independent, third-party indicators that measure a country’s policy performance in the areas of economic freedom, investing in its people, and ruling justly,” says the MCC on its website.
It’s standard is that even “after a country has been selected for compact or threshold eligibility, MCC regularly reviews its partner countries’ policy performance throughout the development and implementation of a compact or threshold program.
Added MCC: “The tool represents one of the many ways MCC is distinctive in how it works to combat poverty through economic growth around the world. This year, of the 82 countries MCC created scorecards for, 33 countries passed while 49 did not pass. Scorecards for all 82 low and lower-middle income countries, as classified by the World Bank, are now available.”
MCC partners only with select countries committed to basic principles like fighting corruption and respecting democratic rights – including the rights of women.
Once MCC partners with a country through a compact or threshold program, investments go toward projects like power, clean water, land rights and roads that lead to economic growth and help people lift themselves out of poverty.
Scary Liberia Scorecard
The numbers might be pretty much complicated to dissect but policy experts are aware that this means Liberia is on the brink of losing a possible US$200 million in grant from the United States government.
Before the released of the current scorecard, which is collated and released by an independent monitoring and evaluating agency hired by the MCC that has its head office in Washington D.C, there were concerns expressed by several observers about the likelihood of the Weah-led government falling short of keeping an impressive performance in the area of good governance.
In June this year, Jonathan Nash, the Chief Operating officer of MCC visited Liberia, held several meetings with top government officials and stressed the need for the government to successfully implement its part of the current compact and at the same time focus on maintaining its grades on the scorecard.
Mr. Nash also emphasized that if Liberia must regain another compact it must first perform on the upcoming scorecard.
Said Nash while in Monrovia in June 2018: “To obtain a second compact, the board looks at the extent at which a country was able to deliver and have a high-quality implementation of the first compact. The board generally looks for improved performance on the scorecard over time as well. I’m here to engage with President Weah and his administration to review the progress that has been made to date and to take a look ahead at the challenges and opportunities that lie ahead for the completion of the particular compact.”
Since the MCC Chief Operating Officer warned Liberia about the possibility of losing another compact, the government under President George Weah had appeared to be pretty lackadaisical about the ramifications of its policy action; consequently, these missteps might certainly disrupt the much-publicized Pro-Poor Agenda which would heavily relied on international funding from donor countries.
In 2016, Liberian received a grant of US$257 million from the United States through the MCC to enhance its electricity and road projects. The five-year compact is already into its half way stage and intends to impact an estimated half a million Liberians before ending in 2021.
Liberia first qualified in 2015 and signed the compact grant, which is now being used to support the energy sector, providing access to reliable and affordable electricity and build the foundation for the periodic maintenance of primary roads in the country.
These two sectors were earmarked as binding constraints – major factors hampering the growth of the country’s economy. The determination to invest in the two sectors was done after a rigorous and comprehensive survey.
The donor fund support the funding for the rehabilitation of the Mt. Coffee Hydroelectric Plant, development of a training center for technicians in the electricity sector, support for the creation of an independent energy sector regulator and support for the development of a nationwide road maintenance framework.
The US$257 million compact is largely supporting Liberia’s electricity project, ensuring power accessibility and affordability and helping to buttress the country’s road network.
Sluggish Monitoring, Performance
The compact was a landmark achievement for former president Ellen Johnson Sirleaf, which helped her administration put finishing touches on its electricity project.
With an already struggling economy and an increasing uncertainties of major exports on the world market, Liberia would struggling to deal with economic challenges in the absence of another compact.
Earlier, Monie Captan, CEO of the Millennium Challenge Account- Liberia (MCA-L) – the agency setup in country to manage the implementation of the grant – had hinted that there were opportunities for Liberia to pass more indicators.
Although he cautioned that a lot has to be done to earn an impressive score, while calling on the government to develop an action plan to ensure all of the ministries and agencies that are connected to these performances develop a clear policy action plan to boost performance.
“Sometimes we failed indicators because the reporting ministry did not provide the information that was needed to judge our performance,” he said
In September this year the government claimed to have initiated a plan to improve its performance ahead of the release of the scorecard; however, the new report has shown contradictions.
Apparently due the warning from MCC, twenty-six heads of ministries and agencies of the government gathered at the Ministry of Finance and Development Planning (MFDP) under the umbrella of the GoL MCC steering Committee. The meeting was chaired by Finance Minister Samuel D. Tweah.
Minister Tweah outlined the MCC eligibility program and implementation activities and pointed out the important role of the Steering Committee in ensuring that Liberia qualifies for a second MCC Compact grant.
Tweah outlined the MCC eligibility program and implementation activities and pointed out the important role of the Steering Committee in ensuring that Liberia qualifies for a second MCC Compact grant.
Already, Liberia risks forfeiting a US$15 million of the compact intended to fund road maintenance across the country if the government does not work within the timeframe of the compact which is scheduled to end in the year 2021.
According to the Compact, Liberia is obligated to providing US$15 million which will match with another US$15 million in grant for road and bridge maintenance across the country.
Recent unfolding has signaled that several petroleum importers in the country are expressing concerns about paying tariff intended for the road fund, and with the uncertainty of oil price on the world market, there would be other issues that could create further delays.
However, according to the compact, the share of compact fund will remain in the United States Treasury once Liberia fails to meet its end of the bargain as stipulated in the agreement.
Article 5.1(I) of the agreement, states that there shall be termination, suspension and expiration if “the Government (Liberia) fails to comply with its obligations under this Compact or any other agreement or arrangement entered into by the Government in connection with this Compact or the Program”.