Notice of Entering Into a Compact With the Government of the Republic of Mozambique, 40926-40953 [E7-14130]

Agencies

• Millennium Challenge Corporation

[Federal Register Volume 72, Number 142 (Wednesday, July 25, 2007)]
[Notices]
[Pages 40926-40953]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-14130]



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Part II





Millennium Challenge Corporation





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 Notice of Entering Into a Compact With the Government of the Republic 
of Mozambique; Notice

Federal Register / Vol. 72, No. 142 / Wednesday, July 25, 2007 / 
Notices

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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 07-06]


Notice of Entering Into a Compact With the Government of the 
Republic of Mozambique

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUMMARY: In accordance with Section 610(b)(2) of the Millennium 
Challenge Act of 2003 (Pub. L. 108-199, Division D), the Millennium 
Challenge Corporation (MCC) is publishing a summary and the complete 
text of the Millennium Challenge Compact between the United States of 
America, acting through the Millennium Challenge Corporation, and the 
Government of the Republic of Mozambique. Representatives of the United 
States Government and the Government of the Republic of Mozambique 
executed the Compact documents on July 13, 2007.

    Dated: July 17, 2007.
William G. Anderson Jr.,
Vice President & General Counsel, Millennium Challenge Corporation.

Summary of Millennium Challenge Compact With the Government of the 
Republic of Mozambique

A. Introduction

    Since emerging in 1992 from three decades of nearly continuous 
conflict, Mozambique has experienced one of the fastest growth rates in 
Africa, averaging eight percent per year over the last decade. To 
sustain this growth, it is necessary to unlock the potential of the 
economically lagging Northern provinces, which are home to 
approximately 10 million people. Moreover, given Mozambique's rapid 
urbanization, its next stage of economic recovery cannot succeed 
without well-functioning public services in its cities, where coverage 
levels for water and sanitation, for example, are declining.

B. Program

1. Goal and Objectives
    The $506.9 million Compact focuses on water, sanitation, roads, 
land tenure, and agriculture (the ``Program''), as summarized in the 
table below. The Program involves crucially needed investments in 
physical assets, policy reforms, capacity building, and institutional 
strengthening.

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                         Program                            CIF/Year 1        Year 2          Year 3          Year 4          Year 5           Total
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1. Water Supply & Sanitation Project....................     $16,250,586     $33,486,540     $60,354,509     $51,577,477     $41,916,281    $203,585,393
2. Roads Project........................................       5,430,562       4,420,542      39,733,884      79,578,499      47,143,993     176,307,480
3. Land Tenure Services Project.........................       5,261,274      12,369,941       9,541,389       6,823,931       5,071,772      39,068,307
4. Farmer Income Support Project........................       3,754,417       3,491,632       3,851,878       3,375,446       2,958,838      17,432,211
5. Monitoring and Evaluation............................       2,195,000         955,000       1,880,000         920,000       2,255,000       8,205,000
6. Program Administration & Oversight...................      23,577,473      11,014,974      10,086,885       9,009,757       8,636,572      62,325,661
                                                         -----------------------------------------------------------------------------------------------
    Total MCC Contribution..............................      56,469,312      65,738,629     125,448,545     151,285,110     107,982,456     506,924,053
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Program's goal is to reduce poverty in Northern Mozambique 
through economic growth. The Program's objective is to increase the 
productive capacity of the population in selected districts, with the 
intended impact of reducing the poverty rate, increasing household 
income and employment, and reducing chronic malnutrition in the 
targeted districts. The various interventions are designed to foster 
investment and increase economic opportunities for Mozambicans living 
in the North.
2. Program Rationale
    The Program addresses key constraints to growth in Mozambique, 
which include:
     An inadequate stock of infrastructure--particularly for 
roads, water, and sanitation--that has degraded because of years of war 
and lack of maintenance;
     A poor investment climate, including land tenure 
administration;
     Limited human capacity and poor health; and
     Low levels of productivity affecting agriculture.
    The Program is consistent with two key themes of the Government of 
Mozambique's (``GOM'') development strategy: (a) Decentralization and 
urban-based growth; and (b) meeting the Millennium Development Goals 
for water and sanitation. It also is consistent with and a key part of 
the United States Government's (``USG'') foreign policy and public 
diplomacy objectives.

C. Program Description

1. Water and Sanitation Project ($203.6 million)
    Lack of access to water and sanitation is a major barrier to growth 
and health. Mozambique has one of the lowest levels of per-capita water 
consumption in the world. With an average of less than 10 liters per 
day, the country is far below global benchmarks. Moreover, due to 
existing gender norms, girls and women are responsible for collecting 
most of the water at the household level. They spend hours fetching 
water, leaving little time for child care, attending school, or income-
generating activities.
    The Water Supply and Sanitation Project will improve access to 
safe, reliable water supply and sanitation services, thereby increasing 
productivity and reducing water-borne diseases--one of the causes of 
death in children under five. It involves: (a) Water supply and 
sanitation services in three large cities (Quelimane, Nampula, and 
Pemba) and three mid-sized towns (Guru[eacute], Mocuba, and Nacala) in 
the provinces of Zamb[eacute]zia, Nampula and Cabo Delgado; (b) water 
supply services in two small towns (Monapo and Montepuez) and 600 rural 
villages in the provinces of Nampula and Cabo Delgado; (c) capacity 
building of local institutions; and policy development.
    MCC's capital investments in water and sanitation will build on the 
pioneering work begun in the mid-1990s and funded by the World Bank to 
put in place the key sectoral institutions and regulatory frameworks. 
MCC funding will also address some key heretofore neglected market 
segments--small-town water supply and sanitation--and, in so doing, 
will help consolidate and advance the GOM's water sector strategy. In 
urban water supply, the strategy is based on a separation of asset 
ownership and operations and maintenance (``O&M''). Under the so-called 
system of delegated management, the state owns the water assets; O&M is 
carried out by the private sector; and an independent regulatory 
authority (``CRA'') sets service standards and regulates tariffs. 
Accordingly, the MCC program is predicated on private sector 
participation to reduce operating costs and improve service--factors 
that are key to sustainability.

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2. Roads Project ($176.3 million)
    The objective of the Roads Project is to: (a) Improve access to 
markets, resources, and services; (b) reduce transport costs for the 
private sector to facilitate investment and commercial traffic; (c) 
expand connectivity across the Northern region and down toward the 
southern half of the country; and (d) increase public transport access 
for individuals to take advantage of job and other economic 
opportunities. Specifically, MCC funding will rehabilitate 491 km of 
key segments of the National Route 1, which forms the backbone of 
country's transportation network, in three provinces. The road segments 
will include Rio Lurio--Metoro in Cabo Delgado (74 km); Namialo--Rio 
Lurio (148 km) and Nampula--Rio Ligonha (102 km) in Nampula; and 
Nicoadala--Chimuara (167 km) in Zamb[eacute]zia.
    These roads are part of the GOM's five-year master plan for roads, 
known as the Integrated Road Sector Program (PRISE), a sector-wide 
initiative for developing the national road network. The PRISE's first 
three-year rolling investment program (covering 2007-2009) is budgeted 
at more than US$1 billion, and includes: (i) The building, 
rehabilitation, and maintenance of roads and bridges; (ii) the 
development of pilot projects to test low-cost materials; and (iii) the 
implementation of a road-safety initiative.
    MCC funding will support the following types of interventions:
     Design, environmental assessment, and construction 
activities;
     Implementation of environmental and social mitigation 
measures, including compensation for physical and economic displacement 
of individuals and businesses affected by the rehabilitation and 
construction;
     Design, construction and rehabilitation of drainage and 
bridge structures;
     Posting of signage and incorporation of other safety 
improvements;
     Project management, supervision, and auditing; and
     Technical assistance and capacity building.
3. Land Tenure Services Project ($39.1 million)
    The objective of the Land Tenure Services Project (``Land 
Project'') is to establish more efficient and secure access to land by 
improving the policy and regulatory framework and helping beneficiaries 
meet their immediate needs for registered land rights and better access 
to land for investment. The Land Project--which would operate in all 
four provinces, but could have a national impact--is comprised of three 
mutually reinforcing activity areas: (a) A Policy Support Pillar to 
help improve the policy environment by addressing implementation 
problems in the existing land law and regulatory reviews to improve 
upon it; (b) a Capacity Building Pillar to build the institutional 
capacity to implement policies and provide quality public land-related 
services; and (c) a Site-specific Pillar to facilitate access to land 
use by helping people and business with: (i) Clear information on land 
rights and access; (ii) more predictable and speedy resolution of land 
and commercial disputes, thereby creating better conditions for 
investment and business development; and (iii) registering their grants 
of land use.
4. Farmer Income Support Project ($17.4 million)
    Coconuts and coconut products form an important part of the economy 
in Northern Mozambique. However, outbreaks of Coconut Lethal Yellowing 
Disease (``CLYD'') now threaten the industry and the livelihood of over 
1.7 million people in the provinces of Zamb[eacute]zia and Nampula. At 
the present rate of spread, more than 50 percent of the coconut area is 
likely to be lost over the next nine years. Affected trees cease 
producing and threaten the productivity of healthy trees; therefore 
they must be removed and replaced.
    The objective of the Farmer Income Support Project is to improve 
productivity of coconut products, and encourage diversification into 
other cash-crop production. The Project will eliminate biological and 
technical barriers hindering economic growth among farms and targeted 
enterprises, while supporting diversification into other cash crops and 
improved farming practices to assist smallholders and producers to 
recover lost income. In conjunction with tree removal and replacement, 
the Project will assist farmers in adopting new cropping systems and 
developing alternative sources of cash income during the time required 
for new coconut trees to reach productive age, i.e., seven years and 
beyond. The Project will also provide technical support to introduce 
better practices aimed at increasing crop yields.

D. Impacts

    Four strategic elements coalesce to form a platform to achieve the 
overall Program objectives:
     Increase the accessibility, reliability, and quality of 
water and sanitation facilities;
     Increase access to productive resources and markets;
     Make land access more efficient and secure for households, 
smallholders, and investors; and
     Improve productivity of coconut products and diversify 
into other cash crops.
    The four strategic objectives, if achieved, will result in 
increased investment and employment. Overall, the Program will increase 
regional gross domestic product across the targeted provinces in 
Northern Mozambique--Cabo Delgado, Nampula, Zamb[eacute]zia, and 
Niassa--by nearly $75 million in 2015 and $180 million in 2025. A 
projected 33 percent of the population of these provinces would have 
been poor in 2015 without the Program. The Program can be expected to 
reduce the projected poverty rate by over 7 percent by 2015 and by over 
16 percent by 2025. As a result of Program implementation, nearly 
270,000 persons will be lifted out of poverty by 2015 and 440,000 
persons by 2025. The net present value of the net economic benefits of 
the Program comes to more than $420 million discounted at the MCC 
hurdle rate for Mozambique.
    At the project level, the Water Supply and Sanitation Project is 
expected to assist some 1.9 million beneficiaries by 2015 through 
improved water systems, wastewater disposal, and storm water drainage. 
Around one-third of these beneficiaries are among the poor. The net 
present value of the net economic benefits for all of the water and 
sanitation activities (for large cities and towns, small towns, and 
rural stand posts) amounts to close to $360 million discounted at the 
MCC hurdle rate for Mozambique.
    By 2015, nearly 2.3 million people--of whom more than one-third is 
likely to be poor--will benefit from the Roads Project, by having 
improved access to markets and services. The net present value of the 
net economic benefits for all of the roads activities amounts to more 
than $20 million discounted at the MCC hurdle rate for Mozambique.
    The Land Project will assist anyone who has or acquires land-use 
rights. Improved land tenure services are projected to benefit 1.9 
million people by 2015, the first year after the end of the Compact, 
and to benefit 2.6 million people, 15 years after the end of the 
Compact. The net present value of the net economic benefits for the 
Land Project amounts to more than $4 million discounted at the MCC 
hurdle rate for Mozambique.

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    The Farmer Income Support Project will benefit 1.7 million 
smallholders as well as workers on coconut estates, which employ some 
5,000 workers. Half of these smallholders would be in poverty even 
without income losses from CLYD. The net present value of the net 
economic benefits for the Farmer Income Support Project amounts to $38 
million discounted at the MCC hurdle rate for Mozambique.

E. Program Management

1. Governance Structure
    The implementation and management arrangements are designed to 
ensure strong governance, oversight, management, monitoring and 
evaluation (``M&E''), and fiscal accountability in the use of MCC 
funds. The GOM will create MCA-Mozambique as a public institution to 
oversee and manage the program as an autonomous accountable entity. 
MCA-Mozambique will have: (1) A Board of Directors to oversee 
implementation, make strategic decisions, and ensure the execution of 
agreed policy reforms; (2) an Executive Committee, composed of a 
smaller working group of Board members or their representatives, to 
facilitate implementation by assisting in decisions regarding technical 
matters; and (3) a Management Unit to handle the day-to-day operations. 
The Board will be composed of representatives from government, private 
sector, and civil society. It will also include as non-voting members, 
a representative from MCC, a representative of an environmental NGO, 
and the Executive Director of MCA-Mozambique. The Management Unit will 
be composed of professional staff hired through an open and competitive 
recruitment. MCA-Mozambique will have an office in Maputo and a field 
office in Nampula.
    Stakeholder participation will occur at both the Program and 
Project levels. At the Program level, stakeholders will be able to 
provide feedback through participatory M&E fora. Mechanisms will also 
be structured at the Project-level to allow the private sector, civil 
society, and local/regional governments to provide advice and input for 
implementation.
2. Implementation Arrangements
    Line ministries and public institutions will serve as Implementing 
Entities (``IEs'') and service providers for the various projects. IEs 
will be responsible for developing the operational requirements for the 
Projects and performance monitoring of contractors. Teams will be 
located within the IEs to ensure institutional strengthening and close 
collaboration and communication. To help ensure Program success, the 
Compact has budgeted nearly $40 million for technical assistance, 
capacity building, and institutional strengthening. In addition, 
competitively selected external service providers will perform the 
Procurement and Fiscal Agent functions.

F. Other Highlights

1. Transformational Change
    The Program has the potential for significant transformational 
change to help unlock the economic potential of the northern part of 
the country by addressing key binding constraints to growth. Overall, 
the Program is expected to reach a total of five million people, many 
of whom will benefit from multiple Projects. In addition, the Program 
will have an important qualitative developmental impact, by helping to 
develop and consolidate key sectoral institutions and improve water and 
sanitation services, road maintenance, and land tenure.
2. Consultative Process
    The Compact is derived from Mozambique's Poverty Reduction Strategy 
Paper, known as PARPA in Portuguese, which was submitted to a domestic 
consultation involving a wide variety of sectors and an extensive range 
of stakeholder groups, including the poor. For the MCC program, the GOM 
conducted a consultative process through two organizations: The Poverty 
Observatory, an umbrella group of non-governmental organizations 
(``NGOs''), and the Federation of Economic Associations (the ``CTA''), 
a private sector trade association. The Poverty Observatory and CTA 
together represent the preponderance of NGOs, not-for-profit, and 
domestic for-profit businesses in Mozambique.
Government Commitment and Effectiveness
    The GOM has demonstrated commitment by showing a willingness and 
flexibility to develop solutions for inefficient government procedures 
that affect implementation of donor-funded programs. It also has 
already initiated institutional reform and organizational restructuring 
processes in the water and sanitation and roads sectors and in land. 
The GOM is working with MCC and the World Bank to carry out the 
necessary policy reforms for program success, building on the crucial 
institutional developments identified by the GOM as part of the Compact 
development work funded by an MCC 609(g) grant. Over the past two 
years, the GOM has developed a new road strategy and investment program 
that includes an organizational restructuring of the road agency and 
performance-based disbursements linked to measurable indicators for 
routine maintenance, among others. To supplement this, MCC also 
successfully negotiated a commitment by the GOM to implement a rigorous 
periodic maintenance program covering the country's entire paved road 
network, upon which disbursement of MCC funding is contingent. In 
December 2006, the GOM passed a decree approving urban land 
regulations, which establish the rules governing the use and enjoyment 
of land in towns and cities.

G. Sustainability

1. Water and Sanitation
    For urban water, the Water and Sanitation Project will help promote 
the sector's evolution and solidify its institutions, while addressing 
the institutional capacity gap for smaller cities and towns and for 
sanitation. The sustainability of the water supply projects in the 
three large cities (Nampula, Quelimane, and Pemba) is assured through 
the existing state-owned asset-holding company for water (``FIPAG''), 
which operates on a self-sustaining basis. The proposed investments 
will help consolidate the financial sustainability of FIPAG by 
providing additional assets and water sales volume without adding 
additional debt. The GOM is establishing a FIPAG-like entity, the Asset 
Management Unit (``AMU''), as part of the National Water Directorate, 
with the assistance of World Bank funding to improve service delivery 
in the smaller cities and towns (Nacala, Guru[eacute], Mocuba, Monapo, 
and Montepuez). The AMU--along with the expansion of the scope of the 
independent regulatory authority--will provide the basis for cost-based 
tariffs to ensure commercially sustainable operations and maintenance 
services. For the largest cities, CRA will continue to set tariffs to 
ensure full cost recovery. In smaller towns and in rural areas, as well 
as for sanitation, tariffs will be set to recover, at a minimum, 100 
percent of O&M costs. This is projected to occur by 2015, after a 
period of tariff adjustments.
2. Roads
    The Roads Project's sustainability depends upon the functioning of 
the two major institutions in the sector--the National Road Agency 
(``ANE'') and the Road Fund. ANE is undergoing reorganization in order 
to provide more

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efficient maintenance and system management. On the financial side, 
responsibility for revenue collection, identifying sources of funding, 
and financial management is the purview of the Road Fund, which is 
under the Ministry of Finance. The Road Fund is capitalized by a fuel 
levy, which enables the roads sector to meets its routine maintenance 
requirements. Nevertheless, to help ensure asset preservation, MCC 
obtained a government commitment from the GOM during Compact 
negotiations to fully fund and execute periodic maintenance, which 
should occur on a seven-year cycle for paved roads. As a condition 
precedent to disbursements for civil works, the GOM will present--to 
MCC's satisfaction--a rigorous plan for periodic maintenance covering 
the entire paved road network. Under this plan, the near-term periodic 
maintenance funding will come from user fees, GOM funds, and donor 
funds. Over a 10-year period, however, the plan would phase out donor-
funded periodic maintenance and replace it with user fees.
3. Land
    The Land Project addresses sustainability by supporting the 
development of an overall strategy for modernization of land services 
that emphasizes client service, adoption of technology solutions 
adapted to the local context, and strengthening of financial and human 
resource capacity. Re-establishing trust and creating efficiency in 
public land services will increase citizen and business use of 
services, thereby contributing to high-quality, up-to-date records. The 
GOM's increased ability to collect land rents from leases of public 
land and expanded collection of rationalized service fees will provide 
a major improvement in capacity to fund public land services at the 
national, provincial, and municipal levels. Finally, the Project will 
enable significant progress to improving access to and security of land 
tenure, which will help facilitate sustainable economic development 
through increased investment.
4. Farmer Income Support Project
    Sustainability for the Farmer Income Support Project is linked to 
the overall market performance of coconuts and alternate crops. The 
market for coconuts and its processed products is growing domestically 
and internationally, as are markets for targeted alternate crops. Yield 
improvements should help foster sustainability, as should the adoption 
by smallholders of improved farming practices and crop diversification, 
which can help reduce their risks and vulnerability. The Project would 
also promote environmental sustainability, as coconut trees are 
particularly productive at carbon sequestration.
5. Environment and Social Impacts
    MCC requires that all Projects comply with national laws and 
regulations, MCC's Environmental Guidelines and Gender Policy, and 
World Bank Operational Procedure 4.12 on Involuntary Resettlement (WB 
OP 4.12). None of the Projects is likely to generate significant 
adverse environmental, health, or safety impacts. However, several of 
the Water and Sanitation Project (``Category A,'' according to MCC's 
Environmental Guidelines) activities have the potential for limited 
resettlement, alteration of river flows and aquatic habitat, and over-
extraction of surface and/or groundwater resources that may require 
mitigation. Since the Roads Project (``Category B'') involves the 
rehabilitation and paving of existing roads and not the construction of 
new roads, any negative environmental or social impacts are expected to 
be mitigatable. Similarly, any potential negative environmental and 
social impacts of the Land Project (``Category C'') and the Farmer 
Income Support Project (``Category B'') are expected to be mitigatable. 
The full scope of the impacts of each Project will be further examined 
through various environmental and social assessments that the GOM will 
conduct during the first year of implementation. Any negative impacts 
or risks identified through these assessments would be mitigated or 
managed through adequate approaches to implementation, including 
preparing and implementing environmental management plans, resettlement 
action plans, and gender analyses, as necessary.
    It is important to note that a number of positive environmental and 
social benefits should emerge from many of the Compact activities, most 
notably from the Water and Sanitation and the Farmer Income Support 
Projects. Furthermore, to maximize the positive social impacts of the 
Compact and ensure compliance with MCC's Gender Policy, the GOM will 
develop: (a) A Gender Integration Plan that includes approaches for 
meaningful and inclusive consultations with women and vulnerable and 
under-represented groups; and (b) Project-specific gender analyses, the 
results of which will be incorporated into final Project designs.
    To promote environmental and social sustainability, MCA-Mozambique 
will ensure that comprehensive public consultations are developed so 
that Project stakeholders, including women and vulnerable groups, are 
afforded consultation and an opportunity to provide their inputs to 
Project design and implementation. MCA-Mozambique will ensure that 
environmental and social mitigation measures are followed for all 
Project activities in accordance with the provisions set forth in the 
Compact and supplemental agreements.

H. Donor Coordination

    MCC has worked closely with various multilateral, bilateral, and 
private donors to facilitate Program design. MCC has not only built off 
existing successful programs, but has also catalyzed financial support 
from several donors. In water and sanitation, MCC coordinated closely 
with the water sector working group of donors throughout all stages of 
Compact development. For land tenure, MCC coordinated closely with many 
donors, including most extensively with USAID, DFID, and the World 
Bank. The Land Project is designed to build on prior schemes and to 
complement existing initiatives. Specifically, it will support a ``buy-
in'' to a multi-donor program called the Land Fund to allow its 
expansion into three more provinces. MCC funds will add greater 
emphasis on women's land rights. Finally, the Compact will support 
municipal cadastre work, and will draw lessons from the experience 
gained under USAID's local governance project, which is piloting 
cadastre work in five municipalities currently. In roads, MCC 
resources, like all major donor and GOM investments going into the 
sector, will fund road improvements in the context of the GOM's five-
year master plan, called the Integrated Road Sector Program 
(``PRISE''). MCC's participation in the PRISE would be in the form of 
project finance, while other donors will use a mixture of both project 
finance and pooled funding.
    MCC has also taken a proactive approach to coordinating with 
various USG agencies throughout the Compact development and due 
diligence process, including: USAID, State Department, USTR, USTDA, 
Africa Development Foundation, Treasury Department, Department of 
Commerce, Department of Justice, USDA Forest Service, OPIC, U.S. 
Export-Import Bank, and the HELP Commission.

I. The ``MCC Effect'' in Mozambique

    The ``MCC Effect'' has been pronounced in Mozambique in several 
different ways, including: (1) Creating space to increase the voice of 
civil society in developing the original proposal; (2) mobilizing other 
donor

[[Page 40930]]

activity; and (3) catalyzing the implementation of an urban water and 
sanitation strategy for small towns.
    In the water/sanitation sector, the prospect of a large MCC 
investment led the World Bank to assemble a package of up to $40 
million in funding to complement MCC's interventions and invest in 
areas beyond MCC's scope. This package will help leverage the impact of 
MCC's investments, and is estimated to reach approximately two million 
beneficiaries at the national level. Combined with MCC investments in 
water/sanitation, which will reach more than 1.9 million people, nearly 
four million people in total will benefit from improved water and 
sanitation services.
    In addition, through the 609(g)-funded Compact development process, 
MCC has already succeeded in pushing to develop further Mozambique's 
land policy and to make it more effective in practice. This was not 
easy given the post-war legacy of extreme sensitivity around land 
issues. As a result, other donors are contemplating ramping up their 
own initiatives to support interventions on land policy and to engage 
the government on needed policy and institutional reform.

Millennium Challenge Compact Between The United States of America 
Acting Through the Millennium Challenge Corporation and the Government 
of the Republic of Mozambique

Table of Contents

Article 1. Goal and Objectives
    Section 1.1 Compact Goal
    Section 1.2 Program Objectives
    Section 1.3 Project Objectives
Article 2. Funding and Resources
    Section 2.1 MCC Funding
    Section 2.2 Compact Implementation Funding
    Section 2.3 Disbursement
    Section 2.4 Interest
    Section 2.5 Government Resources; Budget
    Section 2.6 Limitations of the Use of MCC Funding
    Section 2.7 Taxes
Article 3. Implementation
    Section 3.1 Program Implementation Agreement
    Section 3.2 Government Responsibilities
    Section 3.3 Policy Performance
    Section 3.4 Government Assurances
    Section 3.5 Implementation Letters
    Section 3.6 Procurement
    Section 3.7 Records; Accounting; Covered Providers; Access
    Section 3.8 Audits; Reviews
Article 4. Communications
    Section 4.1 Communications
    Section 4.2 Representatives
    Section 4.3 Signatures
Article 5. Termination; Suspension; Refunds
    Section 5.1 Termination; Suspension
    Section 5.2 Refunds; Violation
    Section 5.3 Survival
Article 6. Compact Annexes; Amendments; Governing Law
    Section 6.1 Annexes
    Section 6.2 Inconsistencies
    Section 6.3 Amendments
    Section 6.4 Governing Law
    Section 6.5 Additional Instruments
    Section 6.6 References to MCC Web site
Article 7. Entry Into Force
    Section 7.1 Domestic Requirements
    Section 7.2 Conditions Precedent
    Section 7.3 Date of Entry into Force
    Section 7.4 Compact Term
Article 8. Additional Government Covenants
    Section 8.1 Designated Entity
    Section 8.2 Administrative Court
    Section 8.3 Certain Financial Practices
    Section 8.4 Procurement
Annex I: Program Description
Annex II: Summary of Multi-Year Financial Plan
Annex III: Description of the Monitoring and Evaluation Plan

Millennium Challenge Compact

Preamble

    This Millennium Challenge Compact (this ``Compact'') is between the 
Government of the United States of America, acting through the 
Millennium Challenge Corporation, a United States government 
corporation (``MCC''), and the Government of the Republic of Mozambique 
(the ``Government'') (individually a ``Party'' and collectively, the 
``Parties'').
    Recalling that the Government consulted with the private sector and 
civil society of the Republic of Mozambique (``Mozambique'') to 
determine the priorities for the use of Millennium Challenge Account 
assistance and developed and submitted to MCC a proposal based on the 
integrated Government development strategy to reduce poverty and 
increase household incomes by increasing the productive capacity of the 
population in selected provinces in northern Mozambique (Cabo Delgado, 
Nampula, Niassa and Zamb[eacute]zia); and
    Recognizing that MCC wishes to help Mozambique implement a program 
to achieve the goal and objectives described herein (the ``Program'');
    The Parties hereby agree as follows:

Article 1. Goal and Objectives

Section 1.1 Compact Goal
    The goal of this Compact is to reduce poverty in Mozambique through 
economic growth.
Section 1.2 Program Objectives
    The objective of the Program (as further described in Annex I) (the 
``Program Objective'') is to increase the productive capacity of the 
population in selected provinces in northern Mozambique.
Section 1.3 Project Objectives
    The objectives of the Projects (as further described in Annex I) 
(collectively, the ``Project Objectives'' and each a ``Project 
Objective'') are to:
    (a) Increase the accessibility, reliability and quality of water 
and sanitation services;
    (b) Improve access to productive resources and markets;
    (c) Establish more efficient and secure access to land, 
particularly in the four provinces included in the Program; and
    (d) Improve productivity of coconut products and encourage 
diversification into other cash crop production.
    The Government will take all the steps necessary or appropriate to 
achieve the Program Objective and Project Objectives during the Compact 
Term (as defined in Section 7.4).

Article 2. Funding and Resources

Section 2.1 MCC Funding
    (a) MCC grants to the Government, under the terms of this Compact, 
an amount not to exceed Five Hundred Six Million, Nine Hundred Twenty-
Four Thousand, Fifty-Three United States Dollars (US$506,924,053) 
(``MCC Funding'') to help the Government implement the Program.
    (b) Annex II of this Compact describes the use of MCC Funding.
Section 2.2 Compact Implementation Funding
    (a) Of the total amount of MCC Funding, MCC will make up to Twenty-
Five Million, Three Hundred Forty-Six Thousand, Two Hundred United 
States Dollars (US$25,346,200) (``Compact Implementation Funding'') 
available to the Government under Section 609(g) of the Millennium 
Challenge Act of 2003 for activities which may include:
    (i) Fiscal and procurement administration activities;
    (ii) Administrative activities including start-up costs such as 
staff salaries and administrative support expenses such as rent, 
computers and other information technology or capital equipment;
    (iii) Baseline surveys for monitoring and evaluation;
    (iv) Additional work for feasibility studies and development of 
technical scopes; and
    (v) Other Compact implementation activities approved by MCC.
    (b) Notwithstanding anything to the contrary in this Compact, this 
Section 2.2 will provisionally apply, after MCC and the Government sign 
this Compact, without regard to whether this Compact has entered into 
force under Section 7.3.
    (c) Compact Implementation Funding is subject to (i) the 
limitations on the

[[Page 40931]]

use or treatment of MCC Funding set forth in Sections 2.6 and 2.7 as if 
such provisions were in full force and effect, and (ii) any other 
requirements and limitations as may be required by MCC in writing in 
accordance with this Compact, the Program and relevant legislation.
Section 2.3 Disbursement
    In accordance with this Compact and the Program Implementation 
Agreement (as defined in Section 3.1), MCC will disburse MCC Funding 
for expenditures incurred in furtherance of the Program (each instance, 
a ``Disbursement''). The proceeds of such Disbursements will be made 
available to the Government, at MCC's sole election, (a) by deposit to 
a bank account established by the Government and acceptable to MCC (a 
``Permitted Account'') or (b) through direct payment to a provider of 
goods, works or services under this Compact. MCC Funding may be 
expended only to cover Program expenditures as provided in this Compact 
and the Program Implementation Agreement.
Section 2.4 Interest
    The Government will pay to MCC any interest or other earnings that 
accrue on MCC Funding in accordance with the Program Implementation 
Agreement (including by directing such payments to the bank account 
outside Mozambique that MCC may from time to time indicate).
Section 2.5 Government Resources; Budget
    (a) The Government will provide all funds and other resources, and 
will take all actions, that are necessary to carry out the Government's 
responsibilities and obligations under this Compact.
    (b) The Government will use its best efforts during each year it 
receives MCC Funding to ensure that all MCC Funding it receives or is 
projected to receive in such year is fully accounted for in the annual 
budget of Mozambique on a multi-year basis.
    (c) The Government will not reduce the normal and expected 
resources that it would otherwise receive or budget from sources other 
than MCC for the activities contemplated under this Compact and the 
Program.
    (d) Unless the Government discloses otherwise to MCC in writing, 
MCC Funding will be in addition to the resources that the Government 
would otherwise receive or budget for the activities contemplated under 
this Compact and the Program.
Section 2.6 Limitations on the Use of MCC Funding
    The Government will ensure that MCC Funding will not be used for 
any purpose that would violate United States law or policy, as 
specified in this Compact or as further notified to the Government in 
writing or by posting on the MCC Web site at www.mcc.gov/
implementation, including but not limited to the following purposes:
    (a) For assistance to, or training of, the military, police, 
militia, national guard or other quasi-military organization or unit;
    (b) For any activity that is likely to cause a substantial loss of 
United States jobs or a substantial displacement of United States 
production;
    (c) To undertake, fund or otherwise support any activity that is 
likely to cause a significant environmental, health, or safety hazard, 
where the phrase ``likely to cause a significant environmental, health, 
or safety hazard'' has the meaning set forth in environmental 
guidelines delivered by MCC to the Government or posted by MCC on its 
Web site at https://www.mcc.gov/implementation or otherwise publicly 
made available, as the guidelines may be amended from time to time (the 
``MCC Environmental Guidelines''); or
    (d) To pay for the performance of abortions as a method of family 
planning or to motivate or coerce any person to practice abortions, to 
pay for the performance of involuntary sterilizations as a method of 
family planning or to coerce or provide any financial incentive to any 
person to undergo sterilizations or to pay for any biomedical research 
which relates, in whole or in part, to methods of, or the performance 
of, abortions or involuntary sterilization as a means of family 
planning.
Section 2.7 Taxes
    (a) Unless the Parties otherwise specifically agree in writing, the 
Government will ensure that each of the following is free from the 
payment of any taxes, duties, levies, contributions or other comparable 
charges (``Taxes'') of or in Mozambique: (i) The Program; (ii) MCC 
Funding; (iii) interest or earnings on MCC Funding; (iv) any Project or 
activity implemented under the Program; (v) goods, works, services and 
other assets and activities under the Program or any Project; (vi) 
persons and entities that provide such goods, works, services and 
assets or perform such activities; and (vii) income, profits and 
payments with respect thereto. The Parties acknowledge and agree that 
the foregoing includes, inter alia, value added and other transfers, 
property and ad valorem items and import and export of goods (including 
for goods imported and re-exported for personal use).
    (b) Before any Disbursement, the Government and MCC must have 
entered into one or more agreements setting forth the mechanisms for 
implementing this Section 2.7, including (i) Waivers of certain filing 
and compliance requirements relating to Taxes and (ii) an agreement on 
exceptions to paragraph (a) above for (1) Taxes on and contributions 
for certain individuals who are nationals or residents of Mozambique; 
(2) Taxes other than transfer Taxes and import and export Taxes on 
certain entities that are constituted under the laws of Mozambique; and 
(3) fees or charges for services that are generally applicable in 
Mozambique, reasonable in amount and imposed on a non-discriminatory 
basis.

Article 3. Implementation

Section 3.1 Program Implementation Agreement
    The Government will implement the Program in accordance with this 
Compact and as further specified in an agreement to be entered into by 
MCC and the Government dealing with, among other matters, 
implementation arrangements, fiscal accountability, disbursement and 
use of MCC Funding and procurement (the ``Program Implementation 
Agreement'' or ``PIA'').
Section 3.2 Government Responsibilities
    (a) The Government has principal responsibility to oversee and 
manage the implementation of the Program.
    (b) With the prior written consent of MCC, the Government may 
designate an entity to implement some or all of the Government's 
obligations or to exercise any rights of the Government under this 
Compact or the PIA. Such a designation will not relieve the Government 
of any designated obligations and rights, for which the Government will 
retain full responsibility.
    (c) The Government will ensure that no law or regulation in 
Mozambique now or hereinafter in effect makes or will make unlawful or 
otherwise prevent or hinder the performance of any obligation under 
this Compact, the PIA or any other agreement related thereto or any 
transaction contemplated thereunder.
    (d) The Government will ensure that any assets or services funded 
in whole or in part (directly or indirectly) by MCC Funding will be 
used solely in furtherance of this Compact and the

[[Page 40932]]

Program unless otherwise agreed by MCC in writing.
Section 3.3 Policy Performance
    In addition to the specific policy and legal reform commitments 
identified in Annex I, the Government will seek to maintain and to 
improve its level of performance under the policy criteria identified 
in Section 607 of the Millennium Challenge Act of 2003 and the 
selection criteria and methodology used by MCC.
Section 3.4 Government Assurances
    The Government assures MCC that:
    (a) As of the date this Compact is signed by the Government, the 
information provided to MCC by or on behalf of the Government in the 
course of reaching agreement with MCC on this Compact is true, correct 
and complete in all material respects;
    (b) This Compact does not, and will not, conflict with any other 
international agreement or obligation of the Government or any of the 
laws of Mozambique; and
    (c) The Government will not invoke any of the provisions of its 
internal law to justify or excuse a failure to perform its duties or 
responsibilities under this Compact.
Section 3.5 Implementation Letters
    From time to time, MCC may provide information to the Government 
through implementation letters on the frequency, form or content of 
requests for Disbursements or on any other matter relating to MCC 
Funding, this Compact or implementation of the Program (each, an 
``Implementation Letter''). The Government will apply such information 
in implementing this Compact.
Section 3.6 Procurement
    The Government will ensure that the procurement of all goods, works 
and services by the Government or any Provider (as defined in Section 
3.7(c)) in furtherance of this Compact will be consistent with the 
procurement guidelines (the ``MCC Program Procurement Guidelines'') of 
which MCC will inform the Government in writing or by posting on the 
MCC Web site at https://www.mcc.gov/implementation, or otherwise make 
publicly available, as the guidelines may be amended from time to time, 
which MCC Program Procurement Guidelines will include, but will not be 
limited to, the following requirements:
    (a) Open, fair, and competitive procedures must be used in a 
transparent manner to solicit, award and administer contracts and to 
procure goods, works and services;
    (b) Solicitations for goods, works, and services must be based upon 
a clear and accurate description of the goods, works and services to be 
acquired;
    (c) Contracts must be awarded only to qualified contractors that 
have the capability and willingness to perform the contracts in 
accordance with their terms on a cost effective and timely basis; and
    (d) No more than a commercially reasonable price, as determined, 
for example, by a comparison of price quotations and market prices, 
will be paid to procure goods, works and services.
Section 3.7 Records; Accounting; Covered Providers; Access
    (a) Government Books and Records. The Government will maintain, and 
will use its best efforts to ensure that all Covered Providers (as 
defined in subsection (c) below) maintain accounting books, records, 
documents and other evidence relating to this Compact adequate to show 
to MCC's satisfaction the use of all MCC Funding (``Compact Records''). 
In addition, the Government will furnish or cause to be furnished to 
MCC upon its request all such Compact Records.
    (b) Accounting. The Government will maintain, and will use its best 
efforts to ensure that all Covered Providers maintain, Compact Records 
in accordance with generally accepted accounting principles prevailing 
in the United States, or at the Government's option and with MCC's 
prior written approval, other accounting principles, such as those (i) 
prescribed by the International Accounting Standards Committee (an 
affiliate of the International Federation of Accountants) or (ii) then 
prevailing in Mozambique. Compact Records must be maintained for at 
least five (5) years after the end of the Compact Term or for such 
longer period, if any, required to resolve any litigation, claims or 
audit findings or any statutory requirements.
    (c) Covered Provider. Unless the Parties agree otherwise in 
writing, a ``Provider'' is (i) any entity of the Government that 
receives or uses MCC Funding or any other Program asset in carrying out 
activities in furtherance of this Compact or (ii) any third party that 
receives at least US$50,000 in the aggregate of MCC Funding (other than 
as salary or compensation as an employee of an entity of the 
Government) during the Compact Term. A ``Covered Provider'' is (i) a 
non-United States Provider that receives (other than pursuant to a 
direct contract or agreement with MCC) US$300,000 or more of MCC 
Funding in any Government fiscal year or any other non-United States 
person or entity that receives, directly or indirectly, US$300,000 or 
more of MCC Funding from any Provider in such fiscal year, or (ii) any 
United States Provider that receives (other than pursuant to a direct 
contract or agreement with MCC) US$500,000 or more of MCC Funding in 
any Government fiscal year or any other United States person or entity 
that receives, directly or indirectly, US$500,000 or more of MCC 
Funding from any Provider in such fiscal year.
    (d) Access. Upon MCC's request, the Government, at all reasonable 
times, will permit, or cause to be permitted, authorized 
representatives of MCC, an authorized United States government 
inspector general, the United States Government Accountability Office, 
any auditor responsible for an audit contemplated herein or otherwise 
conducted in furtherance of this Compact, and any agents or 
representatives engaged by MCC or the Government to conduct any 
assessment, review or evaluation of the Program, the opportunity to 
audit, review, evaluate or inspect facilities and activities funded in 
whole or in part by MCC Funding.
Section 3.8 Audits; Reviews
    (a) Government Audits. Except as the Parties may otherwise agree in 
writing, the Government will, on at least a semi-annual basis, conduct, 
or cause to be conducted, financial audits of all disbursements of MCC 
Funding covering the period from signing of this Compact until the 
earlier of the following December 31 or June 30 and covering each six-
month period thereafter ending December 31 and June 30, through the end 
of the Compact Term, in accordance with the terms of the Program 
Implementation Agreement. As requested by MCC in writing, the 
Government will use, or cause to be used, to conduct such audits an 
auditor approved by MCC and named on the list of local auditors 
approved by the Inspector General of the Millennium Challenge 
Corporation (the ``Inspector General'') or a United States-based 
certified public accounting firm selected in accordance with the 
``Guidelines for Financial Audits Contracted by MCA'' (the ``Audit 
Guidelines'') issued and revised from time to time by the Inspector 
General and posted on the MCC Web site at www.mcc.gov/implementation. 
Audits will be performed in accordance with the Audit Guidelines and be 
subject to quality assurance oversight by the Inspector General. An 
audit must be completed

[[Page 40933]]

and the audit report delivered to MCC no later than ninety (90) days 
after the first period to be audited and no later than ninety (90) days 
after each June 30 and December 31 thereafter, or such other period as 
the Parties may otherwise agree in writing.
    (b) Audits of United States Entities. The Government will ensure 
that agreements between the Government or any Provider, on the one 
hand, and a United States nonprofit organization, on the other hand, 
that are financed with MCC Funding state that the United States 
organization is subject to the applicable audit requirements contained 
in the United States Office of Management and Budget Circular A-133. 
The Government will ensure that agreements between the Government or 
any Provider, on the one hand, and a United States for-profit Covered 
Provider, on the other hand, that are financed with MCC Funding state 
that the United States organization is subject to audit by the 
cognizant United States Government agency, unless the Government and 
MCC agree otherwise in writing.
    (c) Corrective Actions. The Government will use its best efforts to 
ensure that Covered Providers take, where necessary, appropriate and 
timely corrective actions in response to audits, consider whether a 
Covered Provider's audit necessitates adjustment of the Government's 
records, and require each such Covered Provider to permit independent 
auditors to have access to its records and financial statements as 
necessary.
    (d) Audit by MCC. MCC will have the right to arrange for audits of 
the Government's use of MCC Funding.
    (e) Cost of Audits, Reviews or Evaluations. MCC Funding may be used 
to fund the costs of any audits, reviews or evaluations required under 
this Compact, including as reflected on Annex II.

Article 4. Communications

Section 4.1 Communications
    Any document or communication required or submitted by either Party 
to the other under this Compact must be in writing and, except as 
otherwise agreed with MCC, in English. For this purpose, the address of 
each Party is set forth below.
    To MCC: Millennium Challenge Corporation, Attention: Vice President 
for Operations (with a copy to the Vice President and General Counsel), 
875 Fifteenth Street, NW., Washington, DC 20005, United States of 
America, Facsimile: (202) 521-3700, Telephone: (202) 521-3600, E-mail: 
VPOperations@mcc.gov (Vice President for Operations), 
VPGeneralCounsel@mcc.gov (Vice President and General Counsel).
    To the Government: The Government of the Republic of Mozambique, 
Attention: The Honorable Minister, Ministry of Planning and 
Development, Av. Ahmed Sekou Tour[eacute] N. 21, Maputo, Mozambique, 
Facsimile: +258-21-495-463, Telephone: +258-21-492-268, E-mail: 
aiuba@zebra.uem.mz.
Section 4.2 Representatives
    For all purposes of this Compact, the Government will be 
represented by the individual holding the position of, or acting as, 
the Minister of the Ministry of Planning and Development of the 
Republic of Mozambique, and MCC will be represented by the individual 
holding the position of, or acting as, Vice President for Operations 
(each, a ``Principal Representative''), each of whom, by written notice 
to the other Party, may designate one or more additional 
representatives for all purposes other than signing amendments to this 
Compact. A Party may change its Principal Representative to a new 
representative that holds a position of equal or higher rank upon 
written notice to the other Party.
Section 4.3 Signatures
    With respect to all documents other than this Compact or an 
amendment to this Compact, a signature delivered by facsimile or 
electronic mail will be binding on the Party delivering such signature 
to the same extent as an original signature would be.

Article 5. Termination; Suspension; Refunds

Section 5.1 Termination; Suspension
    (a) Either Party may terminate this Compact in its entirety by 
giving the other Party thirty (30) days' written notice.
    (b) MCC may, immediately upon written notice to the Government, 
suspend or terminate this Compact or MCC Funding, in whole or in part, 
and any obligation related thereto, if MCC determines that any 
circumstance identified by MCC as a basis for suspension or termination 
(whether in writing to the Government or by posting on the MCC Web site 
at https://www.mcc.gov/implementation) has occurred, which circumstances 
include but are not limited to the following:
    (i) The Government fails to comply with its obligations under this 
Compact, the PIA or any other agreement or arrangement entered into by 
the Government in connection with this Compact or the Program;
    (ii) An event has occurred that MCC determines makes it improbable 
that the Program Objective or any of the Project Objectives will be 
achieved during the Compact Term or that the Government will be able to 
perform its obligations under this Compact;
    (iii) A use of MCC Funding or continued implementation of this 
Compact would violate applicable law or United States government 
policy, whether now or hereafter in effect;
    (iv) The Government or any other person or entity receiving MCC 
Funding or using assets acquired in whole or in part with MCC Funding 
is engaged in activities that are contrary to the national security 
interests of the United States;
    (v) An act has been committed or an omission or an event has 
occurred that would render Mozambique ineligible to receive United 
States economic assistance under Part I of the Foreign Assistance Act 
of 1961, as amended (22 U.S.C. 2151 et seq.), by reason of the 
application of any provision of the Foreign Assistance Act of 1961 or 
any other provision of law;
    (vi) The Government has engaged in a pattern of actions 
inconsistent with the criteria used to determine the eligibility of 
Mozambique for assistance under the Millennium Challenge Act of 2003; 
and
    (vii) The Government or another person or entity receiving MCC 
Funding or using assets acquired in whole or in part with MCC Funding 
is found to have been convicted of a narcotics offense or to have been 
engaged in drug trafficking.
    (c) All Disbursements will cease upon expiration, suspension, or 
termination of this Compact; provided, however, MCC Funding may be 
used, in compliance with this Compact and the PIA, to pay for (i) 
reasonable expenditures for goods, works or services that are properly 
incurred under or in furtherance of this Compact before expiration, 
suspension or termination of this Compact; and (ii) reasonable 
expenditures (including administrative expenses) properly incurred in 
connection with the winding up of the Program within 120 days after the 
expiration, suspension or termination of this Compact.
    (d) Subject to subsection (c) of this Section 5.1, upon the 
expiration, suspension or termination of this Compact, (i) any amounts 
of MCC Funding not disbursed by MCC to the Government will be 
automatically released from any obligation in connection with this 
Compact and (ii) any amounts of MCC Funding disbursed by MCC but not 
expended before the expiration, suspension or termination of

[[Page 40934]]

this Compact, plus accrued interest thereon will be returned to MCC 
within thirty (30) days after the Government receives MCC's request for 
such return; provided, however, that if this Compact is suspended or 
terminated in part, MCC may request a refund for only the amount of MCC 
Funding allocated to the suspended or terminated portion.
    (e) MCC may reinstate any suspended or terminated MCC Funding under 
this Compact if MCC determines that the Government or other relevant 
person or entity has committed to correct each condition for which MCC 
Funding was suspended or terminated.
Section 5.2 Refunds; Violation
    (a) If any MCC Funding, any interest or earnings thereon, or any 
asset acquired in whole or in part with MCC Funding is used for any 
purpose in violation of the terms of this Compact, then MCC may require 
the Government to repay to MCC in United States Dollars the value of 
the misused MCC Funding, interest, earnings, or asset, plus interest 
within thirty (30) days after the Government's receipt of MCC's request 
for repayment. The Government must use national funds (and no assets of 
the Program) to make such payment.
    (b) Notwithstanding any other provision in this Compact or any 
other agreement to the contrary, MCC's right under this Section 5.2 for 
a refund will continue during the Compact Term and for a period of (i) 
five years thereafter or (ii) one year after MCC receives actual 
knowledge of such violation, whichever is later.
Section 5.3 Survival
    The Government's responsibilities under Sections 2.4, 2.6, 2.7, 
3.7, 3.8, 5.1(c), 5.1(d), 5.2 and 5.3 of this Compact will survive the 
expiration, suspension or termination of this Compact.

Article 6. Compact Annexes; Amendments; Governing Law

Section 6.1 Annexes
    Each annex attached hereto constitutes an integral part of this 
Compact.
Section 6.2 Inconsistencies
    In the event of any conflict or inconsistency between:
    (a) Any annex to this Compact and any of Articles 1 through 8, such 
Articles 1 through 8 will prevail; or
    (b) This Compact and any other agreement between the Parties 
regarding the Program, this Compact will prevail.
Section 6.3 Amendments
    The Parties may amend this Compact only by a written agreement 
signed by the Principal Representatives and subject to the respective 
domestic approval requirements to which this Compact was subject.
Section 6.4 Governing Law
    This Compact is an international agreement and as such will be 
governed by the principles of international law.
Section 6.5 Additional Instruments
    Any reference to activities, obligations or rights undertaken or 
existing under or in furtherance of this Compact or similar language 
will include activities, obligations and rights undertaken by, existing 
under or in furtherance of any agreement, document or instrument 
related to this Compact and the Program.
Section 6.6 References to MCC Web site
    Any reference in this Compact, the PIA or any other agreement 
entered into in connection with this Compact, to a document or 
information available on, or notified by posting on the MCC Web site 
will be deemed a reference to such document or information as updated 
or substituted on the MCC Web site from time to time.

Article 7. Entry Into Force

Section 7.1 Domestic Requirements
    The Government will take all steps necessary to ensure that (a) 
this Compact and the PIA and all of the provisions of this Compact and 
the PIA are valid and binding and are in full force and effect in 
Mozambique and (b) each such agreement along with any other agreement 
entered into in connection with this Compact to which the Government 
and MCC are parties, if stipulated in such agreement, will be given the 
status of an international agreement.
Section 7.2 Conditions Precedent
    Before this Compact enters into force:
    (a) The Government and MCC must have executed the PIA and it must 
be effective;
    (b) The Government will have delivered to MCC:
    (i) A certificate signed and dated by the Principal Representative 
of the Government, or such other duly authorized representative of the 
Government acceptable to MCC, that the Government has completed all of 
its domestic requirements in order that the requirements of Section 7.1 
have been satisfied;
    (ii) A legal opinion from the Attorney-General of Mozambique (or 
other legal opinion acceptable to MCC), in form and substance 
satisfactory to MCC; and
    (iii) Complete, certified copies of all decrees, legislation, 
regulations or other governmental documents relating to its domestic 
requirements for this Compact to enter into force and the satisfaction 
of Section 7.1, which MCC may post on its Web site or otherwise make 
publicly available; and
    (c) MCC must determine that after signature of this Compact, the 
Government has not engaged in any action or omission that is 
inconsistent with the eligibility criteria for MCC Funding.
Section 7.3 Date of Entry into Force
    This Compact will enter into force on the later of (a) the date of 
the last letter in an exchange of letters between the Principal 
Representatives confirming that each Party has completed its domestic 
requirements for entry into force of this Compact and (b) the date that 
all conditions set forth in Section 7.2 have been satisfied.
Section 7.4 Compact Term
    This Compact will remain in force for five years after its entry 
into force, unless terminated earlier under Section 5.1 (the ``Compact 
Term'').

Article 8. Additional Government Covenants

Section 8.1 Designated Entity
    The Government affirms that:
    (a) If and to the extent the Government elects to designate an 
entity to implement some or all of the Government's obligations or to 
exercise any rights of the Government under this Compact or the PIA 
(any such entity the ``Accountable Entity''), the Government will 
create such entity in accordance with the terms described in Annex I.
    (b) The Accountable Entity will have the authority to bind the 
Government to the full extent of the powers delegated thereto.
    (c) The Accountable Entity will be a public institution under 
Mozambican law with distinct legal personality and administrative and 
patrimonial autonomy within the meaning of Law n[deg] 9/2002 of 12 
February (the SISTAFE Law) and the regulations made thereunder. The 
Accountable Entity will have the power fully to control its financial 
management as required by the PIA and any related agreement 
notwithstanding anything to the contrary in the SISTAFE Law.

[[Page 40935]]

Section 8.2 Administrative Court
    The Government affirms that under the law of Mozambique:
    (a) This Compact is a ``cooperation agreement'' within the meaning 
of Article 4, paragraph 1, clause c of Law n[deg] 13/1997 of 10 July 
(the ``Administrative Court Prior Review Law'').
    (b)