Press Release For Immediate Release March 23, 2012 Contact: 202-521-3850 Email: info@mcc.

gov MCC Board Approves Zambia Compact, Suspends Compact with Malawi Washington, DC The U.S. Governments Millennium Challenge Corporation (MCC) Board of Directors, chaired by Secretary of State Hillary Rodham Clinton, held its qua rterly meeting yesterday. During the meeting the Board approved a new compact wi th Zambia, authorized Threshold Program assistance of $2 million for Niger, and voted to suspend the Malawi Compact due to a pattern of actions by the Governmen t of Malawi that is inconsistent with the democratic governance criteria that MC C uses to select its compact partners. The Board also discussed the unconstituti onal military seizure of power in Mali. (See Statement from MCC CEO Daniel W. Yoh annes on the Situation in Mali, March 22, 2012) MCC maintains compact partnerships only with countries that demonstrate a clear commitment to good governance, economic freedom and investing in their citizens. Through its actions over the past year, the Government of Malawi has failed to meet this standard. MCC CEO Daniel Yohannes stated, An MCC compact is a partnersh ip, and the commitment to democratic rights, accountable government and sound ec onomic management is fundamental to that partnership. In light of our ongoing co ncerns about democratic governance in Malawi, MCC has formally suspended the com pact. The future of this compact now rests on the actions of the Malawian govern ment leadership between now and June, when the MCC Board is next scheduled to me et. MCCs planned $350 million investment in the power sector was expected to provide close to $2 billion in net income benefits to nearly six million Malawians, the great majority of whom live on less than $2 per day. As a result of the Boards ac tion, all MCC assistance to Malawi is suspended. The MCC Board expressed very se rious concerns about the economic and political situation in Malawi, and emphasi zed the need for the Government of Malawi to respect the rights of its citizens and civil society organizations to assemble and speak freely. MCC will continue to monitor events in Malawi closely, and the Board will decide whether to termin ate the compact at its meeting in June, provided action is not required before t hen. While the Government of Malawi had taken initial steps in the right direction af ter the violence of July 2011, more recent events -- including the arrests of op position and human rights leaders and inflammatory rhetoric by senior government officials -- supported MCCs finding of a pattern of actions inconsistent with go od democratic governance. The lack of progress on economic policy to bring the c ountrys IMF program back on track has contributed to significant deterioration of the economic environment and put at risk the viability of MCCs planned compact i nvestments. Malawis decision to allow Sudanese President Omar al-Bashir to attend a trade summit in Lilongwe, despite the International Criminal Courts (ICC) outs tanding warrant for his arrest, further deepened MCCs concerns. During the meeting, the MCC Board also approved a $354.8 million compact with Za mbia. Zambia has demonstrated its commitment to democratic governance and the ru le of law, including free and fair elections in September 2011 and a peaceful tr ansition of power. The compact, which addresses one of Zambias most binding const raints to economic growth, invests in the water sector in the rapidly urbanizing capital city of Lusaka. The compact builds on more than 15 years of water secto r reform by the Government of Zambia. In addition to infrastructure investments in water supply, sanitation and drainage, the MCC investment will support the go

vernments reform efforts through institutional strengthening to improve the healt h and productivity of city residents. The project prioritizes social and gender integration and includes activities to expand project benefits for women and vul nerable groups. In addition, the Board approved an MCC investment of up to $2 million for educat ion activities in Niger, completing activities from a suspended Threshold Progra m. Nigers eligibility for MCC assistance was reinstated in June 2011 in recogniti on of Nigers return to democratic rule after a constitutional referendum and free and fair local, parliamentary and presidential elections. The funding, which fo llows on MCCs earlier $17 million investment that built 63 school complexes in Ni ger, will support school-based strategies to improve academic performance and to increase girls enrollment, retention and completion. MCC is working to develop a dditional Threshold Program activities with the Government of Niger under the ag encys revised program concept. For more information about MCC and its programs around the world please visit ww w.mcc.gov .