Mozambique: New entity to manage $500M from Millennium Challenge Corporation

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Mozambique: New entity to manage $500M from Millennium Challenge Corporation

3:55 CAT | 20 Mar 2024

Image: MCC

Mozambique’s government on Tuesday announced the creation of an institution to manage more than $537 million (€494 million), of which $500 million (€460 million) from the Millennium Challenge Corporation (MCC).

“The Millennium Challenge Account (MCA) Mozambique is a temporary institution, and its operation is planned for the next seven years,” said Filimão Suaze, government spokesman, in statements to the media after a cabinet meeting in Mozambique.

In total, this is $537 million (€494 million), $500 million of which from the US agency Millennium Challenge Corporation (MCC) and $37 million (€34 million) from state coffers.

The US funding, called Compact II and signed on 20 September on Capitol Hill in Washington in the presence of the Mozambique’s president, Filipe Nyusi, includes a new bridge on the Licungo River in Zambézia and a ring road in that central coastal province, which has been hit by the cyclones that have affected Mozambique in recent years.

READ: Former minister takes office as coordinator of the Millennium Challenge Corporation programme in Mozambique

In December 2023, the Compact II Development Office in Mozambique, with US funding of $500 million, planned to launch the tender for constructing a new bridge over the Licungo River and a ring road in 2024.

The project includes the construction of a new 1,800-metre-long bridge, some 5,000 metres downstream from the current crossing, as well as 16 kilometres of new access road to connect the bridge to the N1 National Road.

The province of Zambézia, Mozambique’s second most populous, known for its tea plantations, mangroves and turquoise beaches, will be the focus of the new $500 million project by the US agency Millennium Challenge Corporation (MCC), The MCC is an external support agency funded by the US government that provides grants to developing countries. Last June, the board of directors announced the second funding compact since 2007, the Mozambique Coastal Connectivity and Resilience Pact.

Overall, the MCC allocates $310.5 million (€290 million) to Rural Connectivity and Transport (CTR) projects, including the bridge over the Licungo River and the construction of the Mocuba bypass, a project valued at $201 million (€187.7 million).

Almost $83.5 million (€78 million) is earmarked for the construction of rural roads and $11 million dollars (€10.3 million) for road maintenance, among others.

The Reforms and Investment in Agricultural Projects (PRIA) component has been allocated $30 million dollars, half of which is for the Agricultural Investment Tax reform package and the other half for setting up the Zambézia Province Commercial Aggregation Platform.

The third structural component, worth $100 million (around €90 million), is aimed at Coastal Livelihood and Climate Resilience (CLCR) projects to strengthen productivity “through sustainable increases in fish and shellfish harvesting and non-extractive activities”, but also using “sustainable ecosystem benefits, such as carbon credits and coastal protection benefits”.

Source: Lusa