LMIC Namibia Approved for Compact

The MCC Board of Directors approved $304.5 million compact with Namibia, the fourth and final compact to be completed in FY08 based on agency funding levels. Namibia is the second lower-middle income country (excluding those countries that graduated from lower to lower-middle income status after signing compacts) to receive an MCC compact. The Compact has three main components - in order from largest to smallest they address education, tourism, and agriculture.Namibia’s program is one of the few to place emphasis on projects other than transportation infrastructure – which should provide an interesting contrast to such compacts which have been hard hit by rising construction and oil costs coupled with the depreciation of the dollar. The most innovative aspect of the compact is tourism – which is the first to be a stand-alone component in any MCC compact. Cape Verde, Vanuatu, and Morocco each have tourism activities in their compacts but do not dedicate a commensurate level of direct funding ($67m) and strategic link to growth as does Namibia. Tourism can be a risky means of poverty reduction for developing countries, as former CGD-er Sarah Lucas has noted. But I think it’s a smart area for MCC to push the envelope and deepen the debate on the means to reduce poverty through job creation and growth diversification. As the Namibia project progresses, MCC can contribute to the growing literature on the role of tourism in development through evidence-based assessment of both the merits and the challenges of reducing poverty through economic growth in a non-traditional sector.