MCC Terminates Mali Compact

The Millennium Challenge Corporation’s (MCC) board of directors has terminated Mali’s compact following the late-March military coup. The five-year, $460 million compact will end at least one month earlier than expected. Portions of the Bamako airport and Alatona irrigation projects won’t be finished.  And barring a major turn of events, the investments won’t yield the anticipated returns: two million beneficiaries and an estimated $400 million increase in household income.

There were just six months left in Mali’s MCA compact when the military coup occurred. One might assume the impact of a slightly early finish would be minimal. But the MCA compacts invest an enormous amount of energy setting up systems with the partner country in the early years and much of the final disbursements and construction takes place in the final months. Of the $460 million compact, the MCA had expended, but not yet paid or invoiced, $350 million as of December 2011. That means Mali has lost upwards of $100 million in MCA money and the anticipated benefits (most of which occur after a compact is finished) along with it.  The MCC will have to spend some of that money, instead, to extricate themselves from unfinished projects like the airport terminal construction site.Mali’s coup is an unwelcome reminder of how quickly events can change even in well-governed developing countries and the huge impact political upheaval has on a country’s economy. The U.S. government is rightly pushing for a quick restoration of constitutional civilian rule in Mali. Democracy prevailed in Senegal  (whose MCA compact is underway) and Malawi (whose MCA compact is currently suspended). Let’s hope things turn around in Mali, too (I need to ask my colleague Todd Moss how his prescient draft novel about a coup in Mali and the diplomatic efforts to reverse it ends).