…As MCC Compact II shuts down
…causing the loss of 90 000 potential new jobs
Mathatisi Sebusi
IN a devastating blow to Lesotho, President Donald Trump’s administration has cancelled the US$300 million (about M6 billion) aid package, under the Millennium Challenge Corporation (MCC) Compact II programme, for this Kingdom.
The cancellation of this second Compact – that would have seen the United States pour at least M6 billion – in health and horticultural projects to help economic development and poverty alleviation in Lesotho is perhaps the most crushing and debilitating of Mr Trump’s measures against the Kingdom, since the US leader announced his measures to reconsider all American aid which he does not believe aligns with America’s global interests.
The first Compact (Compact I), which ran from September 2008 to September 2013, saw America pour US$362 million (about M7 billion) into the building of clinics and hospitals and educational facilities across Lesotho, significantly boosting access to services particularly in the most remote parts of the country.
After some delays, caused by concerns about Lesotho’s human rights situation, the second Compact (Compact II) was eventually put into force on 31 March 2024.
The M6 billion Compact II was intended to finance health and horticulture projects aimed at revitalising the economy and further enhancing healthcare services for hundreds of thousands of Basotho.
Compact II, was projected to create over 90,000 direct and indirect jobs across various sectors, while driving economic growth and reducing poverty.
The US government had committed US$300 million to the initiative, while the Lesotho government would contribute an additional US$22 million, bringing the total funding to US$322 million.
Planned outcomes of Compact II included a substantial reduction in food imports, enhanced self-reliance, greater private sector engagement in policy development, and the creation of thousands of jobs to spur inclusive economic growth.
The MCC – during the Joe Biden administration, had lauded Lesotho for the successful launch of Compact II, describing it as a transformative investment in health and agriculture with the potential to uplift lives.
Lesotho had been a longstanding partner of the MCC. Its collaboration with the American institution began in 2008 with the US$362 million investment under Compact I, which expanded access to basic healthcare, built or upgraded 183 health centers, and trained 200 health professionals in infection prevention and disease control, among other achievements.
Compact II was supposed to add on to these to further boost Lesotho’s development prospects.
The Lesotho Times can now confirm that Mr Trump has now shattered the whole Compact II project, a move that will negatively impact the country. The Compact II agreement had been reached after painstaking negotiations between Lesotho and United States officials.
Staff and contractors have since been notified by the Millennium Challenge Account – Lesotho II (MCA-Lesotho) – the body tasked with overseeing the project – that Compact II is no more.
A communication seen by the Lesotho Times, directed to contractors from MCA-Lesotho, confirmed the project’s termination.
“This serves to inform you that MCA-Lesotho II has received guidance from MCC on the final determination regarding the future of the Compact. Regrettably, the determination is that the Lesotho Health and Horticulture Compact will be closing. We do not have any guidance at this stage on how the closure process will unfold and await further instructions in the coming days,” the notice stated.
It further indicated that contractor services would remain in place until MCA-Lesotho confirms a definitive closure date. However, considering the chaos underpinning the running of the Trump administration, contractors, who had begun work on the health and horticultural projects, could be left in the lurch, with no guarantee of payment on work already done.
The Millennium Challenge Corporation (MCC) is an independent U.S. government foreign aid agency established in 2004. Its mission is to reduce global poverty through sustainable economic growth by partnering with countries that demonstrate a commitment to good governance, economic freedom, and investments in their citizens.
The MCC’s compact with the government of Lesotho aimed to enhance access to quality healthcare, foster business development opportunities, invest in high-value crop production, and increase profits and formal employment for women- and youth-owned enterprises.
Additionally, the Compact had been meant to address the unique challenges faced by women and youth in Lesotho by improving legal protections in land tenure and offering more skills training and business development opportunities. The Compact consists of three projects designed to tackle economic growth barriers by either boosting private sector participation or enhancing government coordination, capacity, and execution.
MCA-Lesotho is an independent entity responsible for implementing the MCC projects.
The move to can Compact II follows Mr Trump’s decision to cut funding to all foreign assistance programmes deemed not to align with his government’s foreign policy objectives. The decision to shut down the MCC was made through the Elon Musk-led Department of Government Efficiency (DOGE).
When contacted for comment, MCA-Lesotho Communications Officer, Palesa Motleleng, declined to definitively confirm the Compact’s closure, saying a press conference was being planned to formally announce its status.
Likewise, Ministry of Finance and Development Planning spokesperson, Keneuoe Mojaki, said a press briefing would soon be held to address the matter.
Meanwhile, the US Embassy in Maseru maintained its stance that it has been barred from addressing media enquiries.
It has remained largely silent since President Trump’s return to power in January 2025. Embassy officials often appear caught off guard by their own government’s pronouncements, suggesting a lack of prior communication on key decisions.
Mr Trump’s entire attitude towards Lesotho has been particularly concerning.
Last Thursday, Lesotho officials were left waiting after US Trade Representative Ambassador, Jamieson Greer, failed to attend a scheduled meeting to discuss reducing tariffs on Lesotho’s exports. According to the Minister of Trade, Industry and Business Development, Mokhethi Shelile, there was no prior notice that the meeting had been cancelled.
The meeting was intended to address the steep 50 percent tariffs imposed on Lesotho’s exports to America. Early last month, Lesotho was hit with the highest tariff among the 57 affected countries, a blanket 50 percent across all exports. In contrast, regional partners faced significantly lower tariffs: Botswana (38%), Eswatini (10%), Namibia (21%), and South Africa (30%). President Trump has since suspended the tariffs for 90 days to allow for negotiations.
With the US not taking negotiations with Lesotho seriously, Mr Trump’s tariffs, if maintained, threaten 12 000 of Lesotho’s 31 000 remaining textile jobs.
During a recent address to Congress, President Trump publicly dismissed Lesotho as “a country nobody has heard of” and announced the cancellation of a USD$8 million (M148 million) aid package aimed at promoting LGBTQ+ rights in the Kingdom.
There are now reports that the Trump administration is considering shutting down the US Embassy in Maseru altogether, an act that would further isolate this small impoverished nation. The US is one of a handful of countries that maintain direct embassies in Lesotho. The others being the United Kingdom and China. Most countries that have diplomatic relations with Lesotho cover it from Pretoria.
While the United States has been one of Lesotho’s most dependendable international development partners, pouring billions into the country’s development over many years, Mr Trump’s actions have effectively ended that long standing relationship.
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