Namibia became eligible for MCC funding on 8 November 2005 as one of three lower to middle income countries (LMICs). The other two countries in this group are El Salvador and Cape Verde. The preparation for a Compact for these countries was already at a more advanced stage when Namibia became eligible. On 4 July 2005 MCC signed a 5-year Compact with the Government of Cape Verde (with the Compact entering into force in October that year), followed by El Salvador on 29 November 2006 with a Compact of USD110 million with a further tranche of USD351 million anticipated. It is MCC policy to only allocate 25% of the total MCC budget in a fiscal year to lower to middle income countries. It is for this reason that Namibia closely follows the eligibility, proposal development and Compact signing by other LMICs.
To select countries eligible for MCA funding, MCC assesses the degree to which the political, social and economic policies in a country serve to promote broad-based sustainable economic growth. MCC applies measurements to identify countries with the policy environments that will allow MCA funding to be effective in reducing poverty and promoting economic growth. 18 policy indicators are measured in 3 key areas:
1. Civil Liberties
2. Political Rights
3. Voice and Accountability
4. Government Effectiveness
5. Rule of Law
6. Control of Corruption
Investing in People
1. Immunisation Rate
2. Public Expenditure on Health
3. Girls Primary Education Completion Rate
4. Public Expenditure on Primary Education
5. Natural Resource Management (new for Financial Year 2008)
Encouraging Economic Freedom
1. Cost of Starting a Business
2. Inflation Rate
3. Days to Start a Business
4. Trade Policy
5. Regulatory Quality
6. Fiscal Policy
7. Land Rights and Access (new for Financial Year 2008)
The indicators are produced and the data are collected by independent third party institutions. These are Freedom House, the World Bank Institute, the World Health Organisation, UNESCO, the World Bank, the IMF, the Heritage Foundation and national sources from Namibia.
Namibia needs to maintain eligibility throughout the MCC cooperation. In order to do so, Namibia needs to "pass" in each category, i.e. the score on at least half or more of the indicators in that category is above the median. Eligibility is a competitive process and Namibia's scores are relative to the performance of the other LMICs.