Timor-Leste and Millennium Challenge Corporation sign a cooperation agreement worth 484 million
Today, July 19th, 2022, the Minister of the Presidency of the Council of Ministers, Fidelis Magalhães and the Acting Vice President of the Millennium Challenge Corporation (MCC), Cameron Alford, signed a cooperation agreement, with the global amount of US$ 484 million for the improvement of two very important areas for the development of Timor-Leste, sanitation and water supply, and education.
This program, with a total investment of US$ 484 million, one of the largest support agreements ever, demonstrates the confidence of the United States in our country, our Government, our institutions and our ability to implement an ambitious programme that will bring real benefits to our people.
The programme's intervention areas were defined by Timor-Leste with the support of the MCC and with the involvement of our civil society, our private sector and our development partners, which enabled us to create a programme with an approach based on the real needs of the country.
This investment in these two key areas renews the commitment of the Government of Timor-Leste to invest in its people and the recognition of the importance of a more qualified and healthier workforce to improve the national conditions for investment and to build a more sustainable economy.
Prime Minister, Taur Matan Ruak, in his speech, referred that this programme is "a multi-sector and transversal commitment, with positive impacts on all levels of our society and that has managed to mobilise the efforts of the Government as a whole, encouraging the spirit of belonging not only of the ministries with direct responsibility for Education, Youth, Sports and Public Works but also of other sovereign bodies, such as the National Parliament and the Presidency of the Republic, with the important contribution of civil society organisations”.
The Head of Government also highlighted that "the hard work for its implementation begins now, in order not to disappoint the expectations of the Timorese People, for its good execution, with effectiveness, responsibility and transparency".
The Minister of the Presidency of the Council of Ministers, Fidelis Manuel Leite Magalhães, in his intervention during the signing ceremony, congratulated and praised "the individual and collective work, effort and dedication of the Timor-Leste and MCC teams, whose hard work will benefit the people of Timor-Leste in the present and the future".
The Minister stressed that this "is a great opportunity to improve the physical, social, environmental and economic conditions of our population to effectively and efficiently create a more resilient community".
Acting Vice President for Compact Operations, Cameron Alford said "as the world responds to a growing list of challenges, including a global climate crisis, water security has become increasingly important". He further noted that "the Timor-Leste Compact agreement will strengthen water security by making safe, potable water available to residents in and around the capital city of Dili while improving high school education in all high schools in Timor-Leste."
Programme
The program will be executed over five years and will have a total amount of US$ 484 million, of which US$ 420 million will be provided by MCC and, in return, the Government of Timor-Leste will fund US$ 64 million, which will be managed directly by national institutions. This amount of the national co-financing highlights the will and commitment of the 8th Constitutional Government to ensure that infrastructures that can leverage the health of citizens are developed with quality, speed and following the best international practices. Of the total amount of US$ 64 million, US$ 34 million will be used for sanitation connections to households and to deactivate existing septic tanks. The remaining US$ 30 million will be used to support the installation of the conventional system and for the installation of water pumps.
Water, sanitation and drainage
The investment in this sector aims to reduce the contamination of drinking water and groundwater, which can cause diseases and impede the well-being and health of children and adults. The project includes the construction of a factory to produce chemical disinfectants for the city's water supply, construction of the country's first central wastewater system, improvement of the drainage network for the capital Dili and four neighbouring municipalities, policy and institutional reforms as well as social and behavioural changes to improve the sanitation system and water management at the household level.
The water, sanitation and drainage project, besides its direct impact on the health of our citizens, will also contribute to reducing the risk of flooding, which has affected our country so much in recent years, avoiding its environmental and socio-economic impacts by ensuring sustainable management of water and sanitation.
The water, sanitation and drainage component will have a total investment of US$ 372.2 million. The water treatment activities will cost US$ 8.3 million, the sanitation system will cost US$ 342.8 million and the drainage system will cost US$ 8.9 million. This project also includes around US$ 7 million for institutional strengthening and regulatory reform and US$ 5.2 million for social and behavioural change campaigns.
Education
This component aims to improve the quality of high school education for students by improving high school education and school leadership. The project will establish the country's first formal initial teacher training certification institution, the Centre of Excellence, which will offer professional training and certification for future and current high school teachers and leaders. Investing in teacher training will lead to better high schools, with students who will be better prepared for jobs or a post-high school education and thus improve their ability to contribute to the economic growth of the country.
In the education component, US$ 40.2 million will be used. US$ 14.6 million has been earmarked for the Centre of Excellence, US$ 14.7 million for teacher training, US$ 5 million for training school leaders and US$ 5.9 million for certification of excellence.
Other activities in the programme
US$ 6.8 million will be provided for monitoring and evaluation of the program. US$ 49.6 million will cover the costs of the Timor-Leste team that will coordinate and monitor the implementation of MCC-funded projects. US$ 7.3 million for procurement management and US$ 7.3 million for fiscal management. Finally, US$ 640 thousand will be used for auditing.
Next Steps
Following the signing of this agreement, the next step will be to set up the institutional conditions for the management, implementation and development of the programmes to be implemented in these two areas and to fulfil the necessary criteria to receive the said MCC funds.
It is, therefore, appropriate to constitute a public legal entity, with administrative, patrimonial and financial autonomy, with the necessary attributions and competencies to ensure the coordination and monitoring of the implementation of the projects financed by the MCC, as defined in the Compact Agreements signed between both States.
The constitution of a public legal entity with specific responsibilities for coordinating and monitoring the implementation of the Compact Agreements will allow a better allocation of resources for the achievement of their goals and more effective supervision and execution of the financial plan that must necessarily be approved, namely due to simpler and faster procedures for the approval of expenditure and public procurement.
Background
Each year, the Millennium Challenge Corporation (MCC) Board of Directors selects countries as eligible for MCC cooperation programs. To be eligible, countries must meet a set of requirements and criteria, including an assessment of each country's commitment to fair governance and its investment in people and economic freedom. These indicators are evaluated annually and in the last report, launched at the end of 2021, Timor-Leste had the highest value ever with 15 positive indicators out of the 20 under analysis.
In December 2017, Timor-Leste was selected by the MCC Board of Directors as eligible for the implementation of a programme to promote economic growth, aligned with national development priorities and the 8th Constitutional Government's commitment to delivering sustainable economic growth and poverty reduction.
On July 21st, 2018, Minister Fidelis Magalhães and MCC Deputy Vice President Jonathan Brooks signed an initial funding agreement of US$ 750,000 for the establishment of a national team embedded in the Millennium Challenge Compact programme, with the mission to identify economic sectors to be developed during the implementation of the programme.
This Compact Development Team - Timor-Leste (CDT-TL) was officially established on March 25th, 2019 and Ambassador Constâncio Pinto was appointed National Executive Director of CDT-TL.
On May 3rd, 2019, Minister Fidelis Magalhães and the Executive Director of MCC, Caroline Nguyen, signed a US$ 7.38 million funding agreement aimed at preparing and conducting studies on the areas to be covered by the programme. Later additions were made to this grant agreement, bringing the total to fourteen million and fifty thousand US dollars.
Despite the constraints imposed by the pandemic of COVID-19, a programme specifically addressing national challenges was developed, with the focus of both projects directed at addressing issues related to the high disease burden from contaminated water and the lack of highly skilled workers.
This process of preparing and identifying the areas of the programme involved civil society, the private sector and development partners in Timor-Leste.
Between April 11th and 17th, 2022, Minister Fidelis Magalhães led a high-level delegation, comprised of 14 representatives from various Government entities - Ministry of Finance, Ministry of Education, Youth and Sports, Ministry of Higher Education, Science and Culture, Bee Timor-Leste (BTL, EP) and CDT-TL - that visited Washington, United States of America (USA), for the negotiations of the compact agreement with MCC.
MCC's Executive Director, Alice Albright, led the delegation appointed by the President of the United States of America, Joe Biden, to the celebrations of the 20th anniversary of the restoration of independence of Timor-Leste, and had the opportunity to meet with the President of the Republic, José Ramos-Horta, with the Prime Minister, Taur Matan Ruak, and with the Minister of the Presidency of the Council of Ministers, Fidelis Manuel Leite Magalhães.
