Speeches

MCA Threshold Plan

June 2, 2005

Statement by David Gilmour
Chargé d'Affaires, US Embassy

 

The Millennium Challenge Account
Threshold Country Plan

The United States is pleased to be working with the Government of Malawi on the Millennium Challenge Account, as part of our effort to encourage Malawi to make concrete reforms that will lead to economic growth.

 

The Millennium Challenge Account (MCA) is different from traditional aid programs in two important ways:

 

First, it provides assistance only to countries that are already making reforms that promote economic growth.  The MCA aims to reinforce good political, economic and social policies, which are key to encouraging the investment of private capital and increased trade.

 

Second, the MCA gives developing countries control of their own development agenda.  The people of the country, not donors, know best what they need to solve their own problems.  They should decide how assistance will be used.  One reason that so many development aid programs have failed is that the receiving country did not play enough of a role in deciding how to use the assistance.

 

Because President Mutharika's new government undertook a rapid program of reform this past year, Malawi was invited to apply for the MCA "Threshold" program.  This means that Malawi has shown its commitment to make policy reforms, but its performance is lacking in key areas.

 

Last month the MCA approved Malawi's initial application for assistance in helping with these key areas.  The Threshold Country Plan being reviewed here today is a more detailed version of that proposal, and it will be sent to Washington next week.

 

If that proposal is approved, the MCA Threshold program will grant significant new resources to Malawi's top priorities-- fighting corruption and improving the government's fiscal management.

 

If Malawi improves its performance on corruption and fiscal management and continues making reforms, it will be invited to apply for full MCA assistance in the future.

 

Madagascar was recently the first country to receive full MCA assistance.  That country designed a proposal that MCA funded for US$110 million.

 

The MCA fits very well with President Mutharika’s development agenda, which is based on growth, self-reliance and reducing dependence on foreign aid.

 

I'd like to emphasize that the United States' goal for MCA is not to start a new aid program.  Our goal is to encourage Malawi to make the necessary reforms, to the running of its government and the economy, which will provide the conditions for creating jobs and prosperity.

 

Experience all around the world has shown that aid programs alone will not lift Malawi out of poverty.  Only economic growth will defeat poverty, and that growth comes through unleashing the power of the private sector to invest, grow businesses, and create jobs.

 

I'd like to take this opportunity to thank the professionals at the Ministry of Economic Planning who have led this process, along with officials from other government ministries, independent agencies, civil society, and the private sector who have contributed to this effort.

 

I also want to thank my colleagues at USAID, the team led by Martha Myers, who have worked so very hard over the past weeks and months to keep the MCA Threshold process moving forward.

 

Thanks to all of your efforts, Malawi is in the forefront worldwide in the Millennium Challenge process, and we expect continued good news from Washington as we move forward.

 

Thank you.