March 2, 2010 / 2:43 PM / in 8 years

Malawi, Zambia set for big US infrastructure aid

JOHANNESBURG (Reuters) - Malawi and Zambia are set to win hundreds of millions of dollars in U.S. infrastructure grants in the next two years due to steady improvements in the way they are run, U.S. aid officials said on Tuesday.

<p>The new African Union (AU) Chairman and Malawi's President Bingu wa Mutharika addresses a news conference after the closing ceremony of the AU summit in Ethiopia's capital Addis Ababa, February 2, 2010. REUTERS/Irada Humbatova</p>

Elsewhere, an anti-gay law being tabled in Uganda is likely to hamper the east African country’s progress from ‘threshold’ partner with the U.S. government’s Millennium Challenge Corporation (MCC) aid arm to fully-fledged grant-receiver.

Last month, U.S. President Barack Obama described the Ugandan bill, which could mean the death penalty for some homosexuals, as “odious”, and MCC officials said they were watching its progress carefully.

“How a government deals with its human rights situation is definitely an indicator that we think is important,” said Cassandra Butts, senior adviser to the MCC’s chief executive.

“That will be something we will review and we will make a determination of our continued investment in Uganda,” she told reporters at an investment conference in South Africa.

The MCC, which has committed $5.1 billion to Africa over five years -- most of it in infrastructure investment -- has a $10 million project to reduce corruption and help civil society in Uganda, which it regards as a ‘threshold’ country.

Formal ‘compact’ partners, seen as being better run, are eligible for much larger grants. Tanzania, for example, has signed a five-year deal worth $698 million, Ghana for $547 and Mozambique $507 million.

Malawi and Zambia, both of which are democracies committed to opening their economies to trade and investment, were on track for promotion, allowing grants into the hundreds of millions of dollars, MCC officials said.

“Malawi will probably be signed later on this year as a compact and Zambia is in line for a compact for next year,” said senior procurement officer Gerry Nash. “There is some major, major money coming out in the next five years.”

The MCC was set up in 2004 with the goal of helping lift incomes in poor countries through infrastructure grants. Although the deals are government-to-government, work is carried out by private firms after an open tender process.

Last year, the MCC cancelled a deal worth $110 million with Madagascar after an army-backed disc jockey overthrew the elected president. Niger, whose president was booted out by the army last month, has also had its $23 million grant suspended.

The World Bank says Africa needs to invest more than $90 billion a year dragging its dreadful roads, railways and power grids into the 21st century. In November, China announced a $10 billion, three-year infrastructure investment and aid package.

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