Lesotho II Governance Study

MCC works with developing countries to promote sustainable economic growth to reduce poverty. Since its establishment in 2004, MCC has deployed more than $10 billion in development grants through compact and threshold programs across 40+ countries. Compacts are five-year agreements between MCC and a country to fund specific programs targeted at reducing poverty and stimulating economic growth. One of MCC's guiding principles is a focus on measurable results. After a country is selected to begin developing a compact, MCC and its country partners undertake an evidence-based analysis to identify the binding constraints to economic growth in the local economy. Prior to signing a compact, MCC quantitatively assesses the likely impact of investment proposals on economic growth and poverty reduction, as well as their level of risk. During and after compact implementation, MCC seeks to measure results by monitoring program execution and conducting rigorous independent evaluations that seek to learn and quantify the projects' actual impact on household welfare. MCC strives for transparency in all of its programs and posts many of these analyses on the agency's public website. MCC initially reselected Lesotho for a second compact in December 2013, and MCC and the government of Lesotho (GOL) began second compact development in June 2014. From 2014-2015, MCC and the compact development team at the Lesotho Millennium Development Agency (LMDA) undertook a number of initial studies to objectively prioritize the binding constraints to private-sector led investment and entrepreneurship in Lesotho. These initial studies identified health, skills, land, and government regulatory and legal frameworks as binding constraints.