Remarks by MCC CEO Ambassador John Danilovich at the Outreach Event on the Lesotho Compact

Tuesday, July 24, 2007
9:30 a.m. to 11:00 a.m.
Capitol Hill
Washington, DC

Introduction

Thank you, Fran.

The Right Honorable the Prime Minister Mr. Pakaliithe Mosisili,
Distinguished ministers and members of the delegation from Lesotho,
Congresswoman Watson,
Distinguished Members of Congress,
Friends of Lesotho,

I’m delighted to join you here this morning, and thank our friends in Congress for making this venue possible for our meeting.

Yesterday, the people and government of Lesotho took a tremendous step toward their own development with the signing of a nearly $363 million compact with the Millennium Challenge Corporation that will:

improve the water supply for industrial and domestic uses,
strengthen the health care sector,
and bolster private sector activity.

It is a momentous milestone, marking Lesotho’s resolve to tap into the potential of its two greatest resources—its water and its people—in order to reduce poverty through growth.

Compact’s Significance

Today’s panel will go into greater detail about the compact’s specific components and expected results. What I would like to do is share a few thoughts on the significance of the MCC-Lesotho compact.

Reflecting input from the

private sector,
NGO community,
and civil society organizations—at the national, district, and sector levels—

the MCC-Lesotho compact captures the top development priorities identified by the Basotho themselves. These priorities build on the outcomes of an extensive consultative process, involving 20,000 people in 200 villages, that led to the Lesotho Poverty Reduction and Strategy Papers and Lesotho Vision 2020. In a country

where the vast majority of the people are poor,
and where the number of HIV/AIDS cases is the third highest in the world,

such participative consultations to capture the will of the people are remarkable.

Equally commendable is Lesotho’s commitment

to good governance,
to investments in the health and education of their citizens,
and to promoting economic freedom.

On the

political,
economic,
and social criteria

we use at MCC to select which countries would make our best partners based on how they do in these 3 areas, Lesotho’s performance is excellent, passing all but one of our 16 indicators.

Four Areas of Success

MCC’s model helps countries help themselves. We are fulfilling the mandate given to us by the U.S. Congress when they created MCC in 2004. And, only with Congress’s support for sufficient funding will MCC be able to continue to fulfill our mission throughout the world.

MCC is a bilateral, American program—our grants are rewards for countries that are doing the right things for the right reasons. MCC rewards good government, good governance, countries that invest in their people, and provide economic freedom—all of this being the foundation upon which we can build programs for the reduction of poverty and sustained economic growth and the creation of stability and security.

Lesotho is an outstanding example of how our MCC model and how our incentive effect are working—

working in Lesotho,
working in Africa,
and working throughout the world.

The success of MCC’s investment in Lesotho is tied to the fact that Lesotho is

taking the difficult steps,
enacting the tough reforms,
and building the necessary capacity to invest in itself.

MCC is furthering what Lesotho has started already. The MCC-Lesotho compact will be successful. Let me highlight 4 areas where the compact will have a transformative impact on reducing poverty and stimulating growth.

First, water. The MCC-Lesotho compact improves supply and delivery of this critical resource to meet industrial and domestic needs. Textile and garment operators with employees to urban and rural homes will benefit.

Second, health. The MCC-Lesotho compact will help mitigate the alarming economic fallout from an HIV/AIDS pandemic. Nearly a quarter of the population between the ages of 15 and 49 in Lesotho is HIV/AIDS positive. Leveraging and building upon the work underway by other donors in the country, including the President’s Emergency Plan for AIDS Relief—or PEPFAR—the compact will extend the productive life-years of those living not only with HIV/AIDS but also with tuberculosis and other debilitating diseases that take a toll on the country’s economy.

Third, women. The MCC-Lesotho compact includes training and a public awareness campaign to further gender equality in economic rights and practices. For instance, banks will be trained to improve women’s access to credit. During compact development—and after nearly 6 years of debate—Lesotho’s parliament enacted a law at the end of last year to confer equal legal status on married women, so as to engage them fully in the country’s economic life. In keeping with our MCC gender policy, we welcomed this groundbreaking policy reform as critical to the success of the compact.

A bipartisan resolution in the U.S. Senate—sponsored by Senator Lugar along with 15 other senators—and a similar measure in the House of Representatives—sponsored by Congresswoman Watson with 47 other representatives—recognizes this achievement and commends Lesotho and MCC’s role in leveraging policy change for women’s equality.

And, fourth, private sector. The MCC-Lesotho compact will energize this engine of sustainable growth. MCC’s investment in private sector development contributes to Lesotho’s existing reform program, not only by stimulating the growth of Basotho-owned companies but also by attracting foreign investment. It will also allow Lesotho to more actively participate in the regional economy.

Conclusion

Much is expected of the MCC-Lesotho compact—poverty reduction and growth through investments

in water,
in health,
and in private enterprise development,

including expanding the role of women in the country’s economy. It is through the determination and diligence of Basotho—guided by your visionary leadership, Mr. Prime Minister—that the compact will deliver tangible, meaningful results in the lives of the poor. We are honored to partner with you and your country and to move forward now with the implementation of the compact between Lesotho and the Millennium Challenge Corporation.

Introduction of Minister of Finance Timothy Thahane

Looking ahead, the leadership of Minister of Finance and of Development Planning Timothy Thahane is instrumental for implementation.

Prior to his appointment in 2002, Minister Thahane served as Deputy Governor of Lesotho’s Reserve Bank. He also served as his country’s Ambassador to the United States and as Vice President and Secretary for Lesotho to the World Bank.

It is my privilege now to yield the podium to Lesotho’s Minister of Finance Timothy Thahane.

Mr. Minister…