Lesotho, an extremely poor, landlocked country is surrounded by mountains and the country of South Africa, one of the largest economies in sub-Saharan Africa. Despite being a part of the rapidly growing Southern African Development Community (SADC), the country historically has been unable to unlock the potential of its two greatest resources—its water and its people. Economic growth has remained sluggish for more than 20 years. MCC signed a $362.5 million compact with the Government of Lesotho designed to increase economic growth and reduce poverty in July 2007. The compact funded work with other international donors on one of the largest infrastructure improvement projects in Lesotho’s history, the Metolong Dam, as well as work with PEPFAR (the President’s Emergency Plan for AIDS Relief) to mitigate the negative economic impacts of poor maternal health, HIV/AIDS, tuberculosis and other diseases.
Development needs were jointly identified by the government and MCC as a result of broad collaboration with key stakeholders, including the private sector, non-governmental organizations and civil society. The Lesotho Compact funded projects in three areas:
- water sector;
- health sector; and
- private sector development.
The MCC compact integrated conclusions from Lesotho’s poverty reduction plan, the result of a three-year consultative process led by the government involving 20,000 people in 200 villages across the country.
By the end of the compact in September 2013, the government and MCC had spent nearly 99 percent of anticipated compact funds to improve water supply, increase access to essential health services, and remove barriers to private sector investment. Approximately 1 million people are expected to benefit from the investments.