Zambia Compact II - Constraints Analysis

MCC’s evidence-based approach to its investments begins with a mutual understanding of a country’s main growth challenges. During the first phase of the compact or threshold program development process, MCC and the selected partner country, jointly conduct a constraints-to-growth analysis (CA). This analysis identifies the constraints to private investment and entrepreneurship that are most binding to economic growth in the country. The results of this analysis enable the country, together with MCC, to select activities most likely to contribute to sustainable, poverty-reducing growth.

The Constraints Analysis Report for the second Zambia Compact highlights the following constraints related to the country's agricultural and agro-processing (AAP) activities: 

1. Inadequate agricultural inputs and policies, specifically its low rates of irrigation and the government’s distortive and inefficient subsidy  and food storage programs, limits the sector’s growth.
2. Poorly maintained roads impose prohibitive transport costs and add risks to investments.
3. Lack of gridded electricity, particularly in rural areas, compels farmers and processors to rely on costly diesel generators for irrigation and other manufacturing functions. 
4. Additional constraints include the high costs of bank finance and inadequately trained workers for AAP jobs.