[Federal Register Volume 89, Number 206 (Thursday, October 24, 2024)]
[Notices]
[Pages 84935-84936]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-24712]
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MILLENNIUM CHALLENGE CORPORATION
[MCC FR 24-11]
Notice of Entering Into a Compact With the Republic of Zambia
AGENCY: Millennium Challenge Corporation.
ACTION: Notice.
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SUMMARY: In accordance with the provisions of the Millennium Challenge
Act of 2003, as amended, the Millennium Challenge Corporation (MCC) is
publishing a summary of the Millennium Challenge Compact (Compact)
between the United States of America and the Republic of Zambia.
Representatives of the United States of America and the Republic of
Zambia executed the Compact on October 17, 2024. The complete text of
the Compact has been posted at: https://www.mcc.gov/resources/doc/agreement-zambia-farm-to-market-compact/.
(Authority: 22 U.S.C. 7709(b)(3))
Dated: October 21, 2024.
Peter E. Jaffe,
Vice President, General Counsel, and Corporate Secretary.
Summary of Zambia Compact
Overview of the MCC Zambia Farm to Market Compact
The Millennium Challenge Corporation (MCC), on behalf of the United
States of America, has signed a five-year Compact with the Republic of
Zambia (Zambia) aimed at reducing poverty through economic growth. MCC
funding of $458,000,000, together with a contribution of $33,750,000
from the Government of the Republic of Zambia (GRZ), will support
economic growth in Zambia through investments in the agriculture and
agro-processing sectors. MCC's investment aims to address the binding
constraints to economic growth of (1) poor roads and transport that
reduce market access, (2) inadequate private investment in capital
inputs needed to boost agricultural production, and (3) an uncertain
policy environment for inputs, outputs, and exports. The Compact will
address these constraints through four projects: (1) the Roads and
Access Project; (2) the Asset Finance Project; (3) the Agriculture
Policy Reform and Institutional Strengthening Project; and (4) the
American Catalyst Facility for Development (``ACFD'') Project.
Background and Context
The Republic of Zambia, a landlocked country of twenty million
people and 72 ethnic groups, stretches across southern Africa's central
plateau, occupying an area slightly larger than the state of Texas.
Categorized as a low-income country with gross domestic product (GDP)
per capita at around US $1,300, Zambia's annual economic growth
averaged 3.7 percent over the period 2011 to 2021. This growth has been
inconsistent, however, primarily due to Zambia's dependence on
exporting copper, a commodity known for its international price
volatility. Other vulnerabilities hampering Zambia's growth include
reoccurring drought shocks that harm its agriculture and energy
sectors. Further, Zambia's extensive public borrowing in the recent
past pushed its debt-to-GDP levels above one hundred and twenty (120)
percent, overwhelming the country's ability to deliver public services
and finance future investments. Meanwhile, the bulk of the country's
labor force remains engaged in low-productivity agriculture and
informal services, resulting in over half of the population living
below the poverty line and income inequality levels among the world's
worst. According to the World Bank, agriculture contributes to
approximately three (3) percent of Zambia's GDP yet employs over half
of its labor force.
Following the election of President Hakainde Hichilema in August
2021, the GRZ prioritized private sector-led growth, more market-
friendly policies, and a decentralization of authority and budgets to
local authorities. In a complementary vein, the GRZ also signaled, in
its national development plan, a renewed emphasis on economic
diversification led by investments in the country's underperforming
agriculture and agro-processing sectors. Zambia's agricultural sector
suffers from low productivity, with average maize yields hovering
around two metric tons/hectare, well below the eight tons/hectare
achieved by the country's leading commercial producers. Much of
Zambia's low input use is a result of the lack of irrigation, outdated
agricultural practices, and a highly inadequate rural road network.
This also constrains the expansion of labor-intensive agro-processors,
who often source inputs from local farms. Both agriculture and agro-
processing are significantly constrained by a lack of access to credit
to finance investment in small-scale irrigation and other inputs.
Given this sector context, the Compact program aims to address key
constraints along the country's agriculture and agro-processing growth
path through a combination of investments in rural road infrastructure,
programs to increase access to credit, and agricultural policy reform
initiatives. Investments in these areas will help the GRZ to
substantially diversify and grow its economy while reducing poverty.
Project Summaries
The compact program consists of four projects:
(1) The Roads and Access Project ($315,000,000) is designed to
decrease transportation costs in prioritized agriculture corridors by
improving approximately 338 kilometers (210 miles) of road and
transportation infrastructure, increasing rural population access to
markets and services, and strengthening Zambian road asset management.
The project includes upgrading road segments based on updated weather
projections, reducing the number of days a road would be impassible due
to flooding or the risk of washouts. The construction of trail bridges,
pedestrian amenities, and other physical infrastructure paired with the
application of an established
[[Page 84936]]
social behavior change system (Gender Action Learning System) will
reduce barriers to markets for rural communities, especially women and
youth. In addition, this project will include technical assistance and
capacity building to ensure the sustainability of these investments
through better road asset management.
(2) The Asset Finance Project ($45,000,000) aims to increase access
to finance for investments in electricity, irrigation, logistics and
processing (EILP) equipment and infrastructure for both men and women-
owned agricultural small and medium enterprises and project developers
across agriculture value chains. These investments will contribute to
Zambia's national development plan by increasing the adoption of
irrigation, agro-processing and value addition, grain and produce
storage facilities, and investments in energy sources. The project
addresses the affordability of financing for EILP equipment through
performance-based grants to financial service providers and equipment
providers to incentivize increased lending and financing to the
agriculture sector for EILP equipment and catalyzing impact investment
for agri-enterprises. The project will also include capacity building
and technical assistance to public and private project developers to
increase the number of EILP infrastructure investments in the
agriculture value chain that reach financial close.
(3) The Agriculture Policy Reform and Institutional Strengthening
Project ($25,000,000) is designed to improve institutional capacity to
facilitate private sector production and trade in grains. The Compact,
and its associated reforms, will contribute to creating a private
sector-driven agriculture and agro-processing market and support
broader efforts by the GRZ and other donors to address key policy
challenges constraining private sector production and trade in grain
markets. To this end, the project will strengthen the Ministry of
Agriculture's capacity to develop and implement reforms as well as
improve the Food Reserve Agency's capacity to carry out its core
functions efficiently, including managing the strategic grain reserves,
encouraging private sector involvement in grain trading, making timely
payments for purchases, and providing appropriate price stabilization.
It will also build the Food Reserve Agency's capacity for assessing,
monitoring, and analyzing the impact of its policies and practices on
food security, poverty, and vulnerability, and strengthen its
vulnerability response and mitigation functions. Finally, this project
aims to build transparency and trust among market players by
establishing an independent market observatory that collects timely and
accurate data on stocks and prices and conducts relevant market
analyses for the benefit of public sector policy makers and private
sector economic actors, and by supporting a commodity exchange.
(4) The American Catalyst Facility for Development (ACFD) Project
($8,000,000) is designed to facilitate the U.S. Development Finance
Corporation's (USDFC) investments in Zambia in the sectors identified
as constraints to Zambia's growth by MCC. DFC's current transaction
pipeline in Zambia, for example, includes several projects that are not
viable without additional de-risking. ACFD grant funding will enable
DFC-led projects like these, that would not otherwise be viable, to
reach financial close.
Program Budget
The table below presents the overall budget for the program of
$491,750,000, which includes MCC funding under the Compact of up to
$458,000,000 and a GRZ contribution of at least $33,750,000 (required
minimum of 7.5 percent, excluding ACFD).
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Project/activity Amount
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1. Roads and Access Project............................. $315,000,000
1.1 Improving Roads Activity........................ 285,000,000
1.2 Improving Access Activity....................... 12,000,000
1.3 Strengthening Zambian Road Management Activity.. 18,000,000
2. Asset Finance Project................................ 45,000,000
2.1 Agri-SME Asset Financing Activity............... 23,000,000
2.2 ZAMPPF Activity................................. 22,000,000
3. Agriculture Policy and Institutional Strengthening 25,000,000
Project................................................
3.1 MoA Institutional Strengthening Activity........ 13,300,000
3.2 FRA Institutional Capacity Strengthening 7,950,000
Activity...........................................
3.3 Establishment and Strengthening of Ancillary 3,750,000
Agricultural Market Support Institutions Activity..
4. American Catalyst Facility for Development (ACFD).... 8,000,000
5. Monitoring and Evaluation............................ 3,000,000
6. Program Administration and Control................... 62,000,000
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Total MCC Funding................................... 458,000,000
Government of the Republic of Zambia Contribution... 33,750,000
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Total Funding................................... 491,750,000
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[FR Doc. 2024-24712 Filed 10-23-24; 8:45 am]
BILLING CODE 9211-03-P