Compact Assistance

(in $ millions)	FY 2013 Pre-Sequester/ Rescission	FY 2013 Post-Sequester/ Rescission	FY 2014 Enacted	FY 2015 Request
Total Appropriation	898.2	852.7	898.2	1,000.0
Compact Assistance	678.2	643.8	676.2	766.0

For FY 2015, MCC plans to use $766.0 million for compact assistance to Liberia, Morocco, Niger, and Tanzania, which were selected by MCC’s Board of Directors in December 2012.

The final budget levels for compacts with these countries will be determined by a number of factors, including the types of constraints to economic growth in each country and MCC’s in-depth appraisal of project proposals.

The funding will enable MCC to submit compacts with these countries for Board approval during FY 2015, contingent on the countries’ ability to develop timely investment proposals that will increase incomes for beneficiaries and be implemented within a five-year compact period. The final budget levels for compacts with these countries will be determined by a number of factors, including the types of constraints to economic growth in each country and MCC’s in-depth appraisal of project proposals. Initial estimates for each country are below, and an overview of how MCC and an eligible country go from the initial analysis stage to negotiating the compact projects and budget, and to implementation is provided on the next page.

Compact Size Estimates (in $ millions)
Country	Prior Years	FY 2014	FY 2015	Total
Ghana	300	275		575
Liberia		232	168	400
Morocco*	75	169	186	430
Niger			360	360
Tanzania**	398		52	450
Total	---	676	766	---

* MCC is statutorily limited from spending more than 25 percent of compact funding from each year’s appropriation on compact assistance to Lower Middle Income Countries (LMICs). As a LMIC, Morocco is anticipated to rely on approximately 25 percent of FY 2014 and FY 2015 compact funding. Of the prior year balances, $45 million is from de-obligations that are anticipated to occur during FY 2014 and $30 million is from funds previously identified for a threshold program with Tunisia .

** The Tanzania Compact will rely on $398 million of prior year balances, $250 million of which was previously designated for a compact with Benin ($210 million from FY 2013 and $40 million from FY 2012 funding). Also, $66 million of the prior year balances is from de-obligations that are anticipated to occur during FY 2014.

In December 2013, the Board selected Lesotho as eligible to develop a proposal for a second compact. Lesotho successfully completed a five-year, $363 million MCC compact in September 2013, which helped expand water supply for household and industrial use, strengthened the country's health care system and removed barriers to foreign and local private sector investment. MCC also supported the passage of landmark legislation in Lesotho that ended the second-class status of married women and granted spouses equal rights.

For further information on MCC's selection process, please see Appendix B. The remainder of the section provides updates on the countries listed in the table on the previous page, as well as El Salvador, Benin and Sierra Leone.

Ghana | Estimated $575 million

Twelve evaluations are underway for the first Ghana Compact, including four impact evaluations, to assess its three projects in the agriculture, transportation and rural development sectors.

Selection: MCC’s Board selected Ghana as eligible to develop a proposal for a second compact in January 2011. Ghana passed 17 of the 20 indicators in the FY 2011 scorecard. Since then, Ghana has maintained stable and strong policy performance and remains in the top five percent of all low income countries in the Ruling Justly category, which measures control of corruption, political rights, civil liberties, and other areas of democratic governance.

Compact Development Status: Ghana completed an economic constraints analysis in June 2011 as part of the PFG initiative. Based on the analysis, the Government of Ghana identified the power sector as the main focus of compact development. Following consultations with a diverse group of stakeholders, the government submitted project proposals in November 2012, focused on power sector investment, governance, institutional and regulatory reform, reducing electricity distribution losses, improving reliability and access, and creating an enabling environment for private investment in the sector. Ghana is a Power Africa country, and MCC has worked closely with private investors and operators, including U.S. and Ghanaian companies that plan to make substantial investments flowing from the policy reforms and asset investments contemplated under the compact to ensure compact interventions complement and encourage private investment.

A second compact in Ghana may present some of the best opportunities, not only for private sector engagement, but also for innovation in financing structures (like cash-on-delivery aid or performance-based aid mechanisms) as the need for action is clear, domestic political will within Ghana is building and the institutional framework for needed reforms is evident. The government and MCC have already agreed on the content and timing of the key reform agenda to support MCC and private Power Africa investment, including tariff reforms, assurance of gas supplies to fuel generation and more efficient utility operation.

MCC is working with the government and private sector investors and operators to refine the program with a goal of presenting the compact to the MCC Board for approval before the end of FY 2014.

Results of First Compact: From 2007 to 2012, Ghana successfully implemented a $547 million compact that invested in three major projects spread across three regions of the country:

The Agriculture Project focused on improving commercial agriculture for smallholder farmers by training over 66,000 farmers, assisting 1,700 agribusinesses and building 10 processing facilities to improve the quality and quantity of market-bound produce.
The Transportation Project complemented the compact’s agricultural investments by linking rural communities to markets to reduce transportation costs. More than 445 kilometers of trunk and feeder roads were completed, including an important section of the national highway around Accra.
The Rural Development Project supported basic services for rural farm communities, such as drinking water, schools, electricity, and banking. More than 27,000 households were given access to clean water, 250 schools that serve 41,000 students were constructed or rehabilitated and 547 rural bank branches now provide rural communities with access to the national payment system.

Twelve evaluations are underway, including four impact evaluations, to assess the compact’s projects. The impact evaluation results of the Agriculture Project’s Commercial Training Activity were released in the first quarter of FY 2013, describing the assessed impact of training on outcomes such as increased crop income, land cultivation, farmer access to credit, and farm employment. For example, in Ghana’s northern region, farmers’ annual crop income increased significantly relative to the control group above any impacts recorded in the other zones. The remaining evaluation results for Ghana are expected in FY 2014 and FY 2015.

Liberia | Estimated $400 million

The $15 million Liberia Threshold Program concluded with significant achievements in December 2013. It developed a first-ever national land policy, a girls’ scholarship strategy to increase attendance and completion and actions to begin addressing the critical issues of World Trade Organization accession, intellectual property rights and sub-regional trade harmonization.

Selection: Liberia passed the MCC scorecard for the first time in FY 2013, after years of improvements to the country’s economic governance and strengthening of its democratic institutions. Liberia has held two democratic elections since the end of the country’s civil war. Liberia’s efforts to combat corruption are widely recognized, including by MCC’s control of corruption indicator, and the country has made significant macroeconomic management improvements in recent years.

Compact Development Status: Liberia is in the early stages of MCC compact development. The country’s compact development team has completed its initial analyses on constraints to economic growth, private sector investment opportunities and social and gender inequality. These analyses suggest access to electricity and road transportation infrastructure as binding constraints to economic growth. MCC expects the Government of Liberia (GOL) to prioritize power and roads as areas for MCC compact proposals, consistent with the priorities in Liberia’s recent Poverty Reduction Strategy, the Agenda for Transformation.

The constraints analysis for Liberia revealed very significant data gaps. For example, initial analysis indicated that land management could be a binding constraint, in addition to electricity and road transportation. Due to data limitations, the constraints analysis could not demonstrate conclusively that lack of property rights are a binding constraint, resulting in possibly lost opportunities to realize the potential for significant returns from investing in land management in Liberia.

Liberia’s power and road infrastructure were significantly damaged during the 14-year civil war. Liberia has one of the lowest rates of access to electricity in the world with just 1.7 percent of the population having access, while those with access pay more per kilowatt hour than users in any other country on account of reliance on expensive diesel generation. With support from donor partners, Liberia is investing in new power generation capacity and is working to reform the legal and regulatory environment. Nonetheless, significant gaps remain to meet pre-war generation levels and assure transmission and distribution to the two-thirds of the population that live outside of the capital. Since Liberia is a Power Africa country, MCC’s engagement, aligned with other USG agencies, during compact development will focus on supporting a strong policy, institutional and regulatory environment in the electricity sector to lay the necessary foundation for private sector investments.

Liberia has the least dense road network of any country in West Africa and very high road transport costs relative to neighboring countries. Lack of access to markets hinders economic activity, connection to social services and development of the agriculture sector. Many areas of the country are inaccessible during the annual rainy season, when an average of 200 inches of rain makes many of the network’s unpaved roads impassable. The recent completion of a comprehensive roads master plan has attracted donor investment and will allow MCC to consider investing in priority segments.

Morocco | Estimated $430 million

The GOM reacted in a comparatively peaceful and responsive manner to the Arab Spring and its wake, including expanding democratic rights. And Morocco is entering a period of enhanced economic transparency, including the expected passage of a results-based finance law, which reflects the government’s interest in the MCC model of results-based, transparent management and its wider applicability to government investment programs.

Selection: Morocco was selected as compact-eligible in December 2012, passing 11 of 20 indicators.

Compact Development Status: The Government of Morocco (GOM) mobilized resources to start the constraints analysis process in April 2013. Given the GOM’s interest in using this report to inform its economic development strategy beyond the potential MCC compact, the GOM invited the African Development Bank to support the process. Consultations on the findings of the constraints analysis as well as complementary social/gender and private sector analyses completed by GOM have been completed and the government is currently engaged in project definition, with concept notes anticipated at the end of March 2014.

Results of First Compact: From 2008 to 2013, Morocco successfully implemented a $698 million compact that invested in the following projects.

The $338 million Fruit Tree Productivity Project assisted 110,500 farm households in shifting to more productive, profitable tree crops (olives, almonds, dates), sustainably managed soil and water resources, improved product quality, increased access to water, and strengthened links to national and international markets. Over 55,000 hectares of olive and almond trees have been planted for 40,000 beneficiaries, beginning production in new areas and preventing soil erosion. Over 660 kilometers of a new irrigation network have been constructed or rehabilitated, and 60 irrigation diversion works have been constructed, improving water and soil conservation for over 27,000 hectares.
The $123 million Small Scale Fisheries Project is beginning to improve the quality of this value chain for 15,000 small-scale fishers and for consumers; the quality of the fish moving through domestic channels is improving, and the project is ensuring the sustainable use of fishing resources at several coastal sites.
The $96 million Artisan and Fez Medina Project sought to stimulate economic growth by improving linkages between handicrafts, tourism and the rich cultural, historic and architectural traditions of the Fez Medina. While some activities under this project have faced significant implementation challenges, the Functional Literacy and Vocational Training Activity has been highly successful, training nearly 70,000 farmers, artisans and fishers in functional literacy.
The $44 million Financial Services Project has increased access to financing by providing subordinated debt through the Jaïda Fund, a non-banking financial institution launched in 2006 to provide loans for the micro-credit sector.
The $15 million Enterprise Support Project provided training and technical assistance to 588 small businesses and other income-generating activities newly created through existing government programs.

Four performance evaluations of different activities were completed in late 2013 and will be posted on MCC’s website in the near future.

Niger | Estimated $360 million

Niger was the first country to demonstrate that, with sufficient political will, countries can restore their MCC eligibility following suspension. Niger’s constitutional reform, competitive elections and peaceful transfer of power to civilian government prompted MCC to reinstate Niger’s threshold program eligibility in 2011.

Selection: Niger is one of the poorest countries in the world but has relatively strong policy performance, as indicated by two consecutive years of passing the MCC scorecard. In 2011, Niger was the first country to demonstrate that, with sufficient political will, countries can restore their MCC eligibility following suspension. Niger’s constitutional reform, competitive elections and peaceful transfer of power to civilian government prompted MCC to reinstate Niger’s threshold program eligibility. Since that time, Niger has pursued reforms to enhance democratic and economic governance and contributed to efforts to promote stability in the region. Niger has been a strong MCC partner in its threshold program, operating a dedicated program and policy analysis unit through both elected governments and even during its period of suspension.

Compact Development Status: Government of Niger (GON) officials, including President Mahamadou Issoufou, cabinet ministers, and the President’s Chief of Staff, are engaged in the compact development process and are strongly committed to maintaining and improving performance on MCC’s indicators. While the GON is clearly both knowledgeable about and committed to improving its MCC scorecard and developing a high-performing compact, institutional capacity constraints and the tenuous security situation may impact the timeline, amount or duration of compact development.

Niger recently completed the analyses of constraints to economic growth, the investment opportunities analysis and the social and gender constraints to poverty reduction analyses. The following issues are binding constraints on economic growth: 1) access to water resources for agriculture and livestock production, 2) government regulation of business and 3) regulatory and institutional barriers to cross-border trade. Preliminary stakeholder consultations designed to define specific projects, locations and beneficiaries are underway and will continue through April 2014, with more in-depth consultations continuing through the end of the year.

The GON and other stakeholders have indicated their desire to see MCC engage in the “Nigeriens Nourishing Nigeriens” (3N) Initiative, which aims to sustainably mitigate the negative impacts of climatic variability on Nigerien food security. Illustrative project activities in the context of MCC’s analyses and GON priorities, such as the 3N Initiative, include a mix of tested interventions that are ready to be replicated or expanded, and innovations that would be rolled out as small-scale pilot activities:

Community-level cash-on-delivery, cash transfers to individuals and/or households for large-scale labor-intensive reforestation and soil and water conservation activities, which are responsible for “re-greening” portions of the Sahel;
Market-based scaling up of farmer-owned small-scale irrigation;
Public-private partnerships to establish supply chain(s) of packages of high-impact, low-cost agricultural inputs such as drought resistant seed varieties and fertilizer that can dramatically increase rain-fed crop productivity;
Nationwide land tenure project to implement the Rural Land Code and secure land rights for individuals, households and businesses;
Pilot crop and/or livestock insurance;
Improvements to and/or construction of relatively short sections of unpaved rural feeder roads to improve the efficiency of agricultural value chains;
Support for education on, and dissemination of, seasonal climate forecasts and real-time pasture/surface water conditions;
Cash-on-delivery for reforms related to trans-border trade and transport;
Enhancing the impact of activities in agriculture by leveraging cell phone technology in combination with basic literacy training as a means of disseminating agricultural extension advice;
Pilot Social Impact Bonds focused on key human capital development issues;
Increasing the capacity of the GON to collect, analyze, utilize, and publicize data relevant to evidence-based development; and
National-level integrated water resources management.

The instability in the surrounding region as well as GON’s active support of regional counter-terrorism efforts put the country at risk for security threats that could hamper MCC’s ability to develop and implement a compact. To ensure that MCC’s investments are as effective as possible, the illustrative activities described above could be rolled out in a modular fashion and scaled up or down to attain optimal value notwithstanding adverse security developments. Moreover, targeted activities in filling key data gaps and developing local data capabilities would enhance optimal targeting and execution of these investments. These types of investments, which provide opportunities for Niger’s poor, could help stabilize the country and contribute to enhanced regional security.

Tanzania | Estimated $450 million

Tanzania’s growth diagnostic highlighted constraints that stem from the lack of reliable electricity, among other concerns. Tanzania has worked on these constraints through the PFG joint country action plan and as a founding partner country of the Power Africa Initiative.

Selection: MCC’s Board selected Tanzania as eligible to develop a second compact in December 2012. At the time, Tanzania passed 15 of the 20 eligibility indicators, with a particularly strong showing in the Ruling Justly category, which measures political rights, civil liberties and other areas of democratic governance. The Board reselected Tanzania as eligible in December 2013.

Compact Development Status: Tanzania completed an economic constraints analysis in FY 2012 under the PFG initiative. The growth diagnostic highlighted constraints that stem from the lack of reliable electricity and the limited network of market access roads, among other concerns. Tanzania has continued to work on these constraints through the PFG joint country action plan and as a founding partner country of the Power Africa Initiative. The GOT recognizes that considerable work will be needed to enhance reliability and reduce technical losses in its existing electricity network, expand opportunities for private energy investment and raise electricity access from the current level of approximately 17 percent of the country’s population to Tanzania’s 2015 access target of 30 percent of the population. In September 2013, the GOT submitted initial notes for projects to improve the technical, commercial and operational viability of the public power utilities, Tanesco and Zeco; expand access to modern electricity; and improve segments of the secondary road network that will help unleash the economic potential of key agricultural regions. These project notes were further refined in a revised submission in December 2013. In the coming months, the MCC team and its GOT counterparts will begin initial due diligence to aid additional program development and design.

Results of First Compact: From 2008 to 2013, Tanzania successfully implemented a $698 million compact that invested in the following projects.

The Transportation Project upgraded more than 465 kilometers of mostly primary roads throughout mainland Tanzania and Zanzibar to connect communities with schools and health clinics and increase the incomes of farmers and businesses by reducing transport costs. Additionally, the Mafia Island Airport was upgraded in order to increase its tourism potential.
The Energy Project improved electricity coverage, primarily through new power transmission and distribution. Specifically, MCC funded a new 100 megawatt submarine power cable from the mainland to Zanzibar, approximately 3,000 kilometers of new or rehabilitated distribution lines as well as 25 substations and other infrastructure components in seven underserved regions.
To address serious shortfalls in access to clean water that impact health and productivity of Tanzanians, the Water Project helped rehabilitate water intake and treatment plants and improved the existing distribution network in both Dar es Salaam and the city of Morogoro. These investments will result in an increase in treated water from 180 million liters per day to 270 million liters per day in the capital and 18 million liters per day to 33 million liters per day in Morogoro, benefiting 2.8 million people.

The first compact successfully closed in September 2013. Throughout implementation, the GOT was an excellent partner, fulfilling its policy reform commitments and strongly demonstrating country ownership through its commitment to use $132 million of its own funds to cover any cost escalation and to complete construction work that was not finished by September 2013.

MCC will conduct evaluations of each activity comprising the three projects. Within the Transportation Project, a performance evaluation of the airport upgrade on Mafia Island is underway, while the evaluation strategies for roads activities are undergoing further review. Within the Energy Project, performance evaluations of the Zanzibar Interconnector and Kigoma Solar activities are in progress, along with an impact evaluation of the Transmission and Distribution Activity. An impact evaluation of the Water Project in Morogoro and Lower Ruvu is being implemented. Baseline data for all activities has already been collected.

Additional Country Updates

El Salvador | $277 million (Board-approved)

Selection: MCC’s Board selected El Salvador as eligible to develop a proposal for a second compact in December 2011. El Salvador was reselected in December 2012 and passed 13 indicators on the FY 2013 scorecard, including strong performance on control of corruption and democratic rights.

Compact Status: MCC’s Board of Directors approved the $277 million compact in September 2013. MCC decided to defer signing of the compact to allow the Government of El Salvador time to undertake the reforms that are necessary to establish a policy environment that is conducive to a successful compact launch. MCC is monitoring progress on the crucial public-private partnership law and other reforms and will make a decision on the timing of compact signing accordingly.

MCC’s Board of Directors approved the $277 million compact in September 2013. MCC is deferring signing of the compact to allow the Government of El Salvador time to undertake the reforms that are necessary to establish a policy environment that is conducive to a successful compact launch.

In developing the compact, El Salvador completed an economic constraints analysis as part of the PFG process, finding crime and low productivity in internationally traded goods and services as binding constraints to growth. Consistent with the PFG Joint Country Action Plan, which establishes goals and activities to address the constraints, the proposed compact focuses on the goal of improving El Salvador’s productivity in the international trade of goods and services by promoting a business-friendly institutional environment, investing in human capital and improving infrastructure.

The Human Capital Project will enhance the competiveness of El Salvador’s labor force by improving the quality of education and better matching the skills demanded by employers.
The Investment Climate Project seeks to catalyze investment by both streamlining El Salvador’s regulations and fostering innovative partnerships between the government and the private sector. This will include eliminating burdensome regulations, implementing the public-private partnership law and matching private investments with public goods through the El Salvador Investment Challenge.
The Logistical Infrastructure Project will address constraints on transportation efficiency by relieving bottlenecks along key transportation corridors for tradable goods and services.

By improving the quality of education, improving the business environment and reducing transportation and logistics costs, MCC’s proposed investments are intended to increase the productivity of current firms, which will increase production and subsequently employment. Firms then invest new revenues in more productive technology to realize greater returns on future production. Through this self-reinforcing feedback loop, higher employment and output are expected over time.

Results of First Compact: El Salvador successfully implemented a $461 million compact from 2007 to 2012. The compact focused on development of the impoverished northern region through three projects:

The Connectivity Project rehabilitated more than 220 kilometers of a transnational highway to help improve connectivity with the rest of the country.

The Human Development Project provided over 33,000 households with electrical services, 7,190 households with improved water and sanitation services and 30,000 students with enhanced education through scholarships, improved educational facilities and teacher training.
The Productive Development Project assisted an estimated 17,500 producers by providing training, seeds, equipment, and technical assistance. In addition, the project supported work to improve more than 23,500 hectares on which producers planted short-season vegetables and fruits and to improve pasture lands.

Ten evaluations are underway, including six impact evaluations, to assess these three compact projects. The interim impact evaluation results of the Productive Development Project’s Production and Business Services Activity were released in the first quarter of FY 2013, describing the assessed impact of training and technical assistance on outcomes in three value chains (horticulture, dairy and handicrafts) such as use of improved practices, land cultivation, and farm income. The remaining evaluation results for El Salvador are expected in FY 2014 and FY 2015.

Benin (engagement is limited)

Selection and Limited Engagement: Benin was selected as eligible to develop a proposal for a second compact in December 2011. Benin was reselected in December 2012, having passed 11 of 20 indicators in the FY 2013 scorecard, including key indicators for control of corruption and democratic rights.

In December 2013, the Board discussed the fact that Benin did not pass MCC’s control of corruption indicator, which is a hard hurdle for passing the scorecard, and therefore did not reselect them. After reviewing supplemental information on anti-corruption efforts in Benin, the Board urged MCC to pursue limited engagement. Under limited engagement, Benin may continue to develop compact investment proposals, but with less direct support and resources from MCC. The Board indicated that a compact will not be approved until Benin passes the scorecard. In addition, MCC will continue to engage with Benin on its efforts to improve performance in the policy areas measured by MCC’s scorecard, particularly control of corruption.

Compact Development Status: In July 2012, Benin completed an integrated analysis of constraints to growth, drawing upon consultations with over 1,000 representatives of civil society, women’s organizations, businesses, and local and national government. The constraints analysis found that the business environment, transport and access to energy were the principal constraints to growth. In April 2013, the Government of Benin (GOB) submitted project proposals focused on improving the business environment and enabling infrastructure to reduce the cost of doing business and improve competitiveness of agribusinesses in two focus regions. MCC initiated the appraisal and due diligence phase and, in July 2013, notified Congress of assistance under section 609(g) of MCC’s authorizing legislation to support detailed design, pre-feasibility and feasibility studies.

Following the Board’s decision to pursue limited engagement, MCC has redirected its efforts and is working with Benin on a more limited work plan for compact development. For example, MCC is proceeding with completing the analysis of the country’s tax system and agricultural value chains but is delaying the preparation of a facility for enterprise development. MCC is also coordinating closely with the GOB as it seeks to improve its policy performance in critical areas. MCC has received a letter outlining specific steps that Benin will be taking to address MCC’s policy concerns, including control of corruption.

Results of First Compact: Benin successfully implemented a $307 million compact from 2006 to 2011 through the following four projects.

The Access to Markets Project expanded the Port of Cotonou, a key transit point for Benin, Burkina Faso and Nigeria. MCC’s investment was conditioned on the GOB competitively awarding the management of the wharf to a private operator, which ultimately resulted in a 25-year concession that is expected to generate $1.5 billion in economic benefits for the country. The International Finance Corporation and Infrastructure Journal recognized the south wharf concession as a “top 40 public-private partnership” and with a “bronze” award among sub-Saharan African projects. The port was also awarded the gold prize of the International Association of Ports and Harbors Information Technology Award 2013 for systems modernization financed by the compact.
The Access to Land Project had mixed results. While the certificates of rural landholding and title numbers fell significantly short of compact targets, the government continued titling after the compact ended, made significant progress in rural areas and passed the Land Code supported by the compact in January 2013.
The Access to Financial Services Project finished in a largely satisfactory manner, including strengthening supervision of microfinance institutions and providing cost-sharing grants to support microfinance and entrepreneurship.
The Access to Justice Project made improvements to Benin’s legal and judicial environment through reformed court processes and a new code of administrative procedure, the construction of five courts, training of judges and clerks, the establishment of a public legal information center, and the establishment of additional one-stop shops for business registration.

Three performance evaluations and one impact evaluation are underway to assess Benin’s four compact projects. The impact evaluation early results for Benin’s rural land activities will be released in FY 2014 in collaboration with the World Bank. The evaluation focuses on changes in income, management of resources, conflict and land tenure. The remaining evaluation results for Benin are expected in FY 2015.

Sierra Leone (engagement is limited)

Selection and Limited Engagement: In FY 2013, Sierra Leone passed MCC’s eligibility scorecard for the first time, passing 12 out of 20 indicators.

For FY 2014, the Board discussed the fact that Sierra Leone did not pass MCC’s control of corruption indicator, which is a hard hurdle for passing the scorecard, and therefore did not reselect them. After reviewing supplemental information on anti-corruption efforts in Sierra Leone, the Board urged MCC to pursue limited engagement. Under limited engagement, Sierra Leone may continue to develop compact investment proposals, but with less direct support and resources from MCC. The Board indicated that a compact will not be approved until the country passes the scorecard. In addition, MCC will continue to engage with Sierra Leone on its efforts to improve performance in the policy areas measured by MCC’s scorecard, particularly control of corruption.

Compact Development Status: In October 2013, Sierra Leone completed an economic constraints analysis, a supplemental social and gender analysis and an initial investment opportunity assessment, in each case drawing upon input from nationwide consultations with representatives of civil society, women and youth organizations, business associations, and local and national government stakeholders. Access to power, improved water and sanitation, rural and secondary roads, and government policy and institutional ineffectiveness were identified as binding constraints to economic growth.

In November 2013, the Government of Sierra Leone (GOSL) submitted initial project proposals focused on opportunities in the power and water and sanitation sectors, including support for infrastructure rehabilitation and expansion, for policy and institutional reform and for enabling private sector investment. In each case, needs are profound. Grid-based electrification is virtually non-existent outside of the capital city of Freetown (9 percent nationwide, 3.9 percent in rural areas) with households and business relying on expensive diesel-powered generators, resulting in extremely high power costs. Poor access to water and sanitation contributes to Sierra Leone’s exceptionally high stunting and maternal, infant and child mortality rates, as well as high incidences of water-related diseases and associated costs.

Given the implications of limited engagement, MCC does not intend to directly fund feasibility or similar detailed design work. However, the MCC team is continuing to work with the GOSL to assess, shape and refine these initial proposals. In addition, MCC is actively working with the GOSL and its donor partners to coordinate efforts and leverage ongoing and pending studies that may inform or complement compact development.