The focus of the Millennium Challenge Corporation (MCC) US$500 million project in Mozambique will be on Zambézia. The final version of the project has already been submitted to congress and includes plans for a new bridge over the Licungo river.
According to the notification that the MCC sent to the North American Congress on August 16, and consulted today by Lusa, the province located in the center of Mozambique, which is already known to be excessively destitute, is located 1,600 kilometers away from the epicenter of the conflict in Cabo Delgado. This northern province has been the target of terrorist attacks over the past six years and is the intended investment area for the MCC's next project.
MCC, a support agency funded by the US government that provides temporary subsidies to developing nations, is expected to finalize the agreement for this funding on September 21st. The signing of the agreement will take place in the presence of the Mozambican President, Filipe Nyusi
Last June, the MCC board of directors released a funding agreement known as the Mozambique Coastal Connectivity and Resilience Pact – the second agreement of its kind since 2007. This pact focuses on improving transport networks in remote regions, promoting commercial agriculture through political and fiscal reforms. and improve the livelihoods of coastal communities with climate resilience initiatives.
The financing of the projects identified by the MCC will be 500 million dollars (465.7 million euros). The disbursement of this amount is expected to begin during the 2023 fiscal year. In addition, the Mozambican Government will also contribute an amount of 37.5 million dollars (35 million euros).
MCC sent a communication to congressmen, emphasizing the importance of the new bridge over the Licungo River and the establishment of the Mocuba bypass as a main focus for the transport sector in Zambézia.
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Thanks to MCC funding, it will be possible to build a new, significant, first-rate bridge. This bridge will replace the current crossing, which is almost eight decades old. The new bridge will redirect traffic from the city of Mocuba to a different location and will be connected via a 16-kilometer bypass.
At a global level, the MCC allocated a budget of 310.5 million dollars (290 million euros) to several projects related to Connectivity and Rural Transport (CTR). This budget includes the development of the Mocuba bypass, a project with an estimated value of 201 million dollars (187.7 million euros), as well as the construction of a bridge over the Licungo river. In addition, around 83.5 million dollars (78 million euros) were allocated to the construction of rural roads, while road maintenance efforts receive 11 million dollars (10.3 million euros) and other developments also receive financing.
The component dedicated to Reforms and Investment in Agricultural Projects (PRIA) received an allocation of 30 million dollars. Half of this amount is allocated to the implementation of the Agricultural Investment Tax Reform package, while the remaining half is allocated to the development of the Commercial Aggregator Platform in the province of Zambézia.
According to the document, the PRIA initiative aims to assist the Government of the Republic of Mozambique in implementing political and technical reforms that will reduce costs and increase the ease of conducting business in the national agricultural sphere. The proposed measures include the introduction of a new tax code for agricultural taxpayers, as well as strengthening the VAT and refund model in the sector.
One of the main components of the investment is the Coastal Livelihoods and Climate Resilience (CLCR) projects, which are allocated a budget of 100 million dollars. The focus of this component is to increase productivity by promoting sustainable practices in fishing and shellfish harvesting, as well as in non-extractive activities. Furthermore, it aims to harness sustainable ecosystem benefits, such as carbon credits and coastal protection, to enhance productivity.
The CLCR consists of two distinct initiatives: “Coastal Livelihoods” and “Climate Resilience”. The first activity is aimed at helping neighboring communities manage their fishing industry, through the implementation of updated techniques, equipment and supply chains. The second activity, “Climate Resilience”, aims to safeguard and rehabilitate crucial habitats through co-management with local communities, the establishment of conservation and protected areas, reforestation programs and carbon financing opportunities.
The document states that the government has committed to refrain from granting licenses or allowing mining operations in the CLCR project areas, due to the different development approaches between the CLCR project and the recent expansion of heavy sands mining in Mozambique's coastal regions. Furthermore, the government is committed to complying with all laws currently in force in Mozambique, especially those that safeguard vulnerable ecosystems. The government will also intensify inspection and monitoring of ongoing mining activities in areas close to these sensitive ecosystems.
The MCC stated that it has created initiatives aimed at strengthening economies dependent on agriculture and fishing. These projects are designed to address areas where connectivity and access to security have been limited.
According to the rating, the Compact features three projects that meet MCC's extensive investment standards, with an approximate economic rate of return of 14.7%.
