Legal and institutional reforms can lead to transformational change but often face political opposition. Use and enforcement of Conditions Precedent (CP) to obtain key reforms is an effective way to leverage MCC investments. The Legal Capacity of Married Persons Act (LCMPA) resulted in a monumental shift in women’s rights and passed largely thanks to the CP requirement for compact signature. Women’s groups had been pushing for the law prior to MCC’s engagement, and it had broad support but there was little motivation present the law to parliament. MCC’s engagement provided the impetus for its passage, which set the stage for ensuring a focus on women throughout Private Sector Development implementation. Beyond the LCMPA CP, there were also CPs requiring the Government of Lesotho to pass the Land Act and establish the Land Administration Authority. In particular, the Land Act included the removal of the minister’s consent on secondary land transactions like mortgages which was constraining the financial sector and politicizing mortgages. The process for processing and issuing leases also had to be streamlined to establish better more efficient customer service and enable land markets. MCC deferred the CPs twice amid political pushback; however, upon the third request for deferral, MCC suspended LARP for 45 days. The suspension of LARP funding and implementation, led to the passing of these key policy and institutional reforms, which led to the removal of constraints on land markets and mortgages and long-lasting benefits for women and the private sector.
In cases where MCC has enforced CPs, policy and institutional reforms have passed, yet in other cases where MCC does not have a related CP or drops the CPs, policy and institutional reforms have often not succeeded and limited expected project results. For example, in the Mongolia 1 Property Rights Project, MCC deferred the CP for buildings to be provided for the Property Registries, but in the end required the CP to be met, leading to the provision of these buildings and the related decentralization and efficiencies in Mongolia’s land registries. MCC also enforced the CP in Burkina Faso Rural Land Governance, only extending the project to additional communes after the government had passed key legal and institutional reforms. In contrast, MCC did not enforce the CP in Mozambique around land transfers leading to a lack of movement on policy reform in Mozambique and a revision to the related Economic Rate of Return model. When considering key policy and institutional reforms, MCC should consider whether a CP should be included and be ready to defer funding and implementation if the CP is not met.