President Bush and Tanzanian President Jakaya Kikwete have signed a nearly $700-million grant to improve Tanzanian roads, energy, and water. VOA White House Correspondent Scott Stearns has the story from Tanzania.

This is the largest-ever grant from the Bush Administration's Millennium Challenge Corporation, which ties assistance to good governance, rule of law, and free-market economics.

President Bush says it is money well spent.

"I will just put it bluntly. You know, America does not want to spend money on people who steal the money from the people. We like dealing with honest people and compassionate people. We want our money to go to help the human condition and to lift human lives," he said.

At a signing ceremony on the lawn of Dar es Salaam's State House, President Kikwete says the money will help reduce poverty and stimulate economic growth by improving the nation's energy supply and transportation network.

"This funding will go a long way to addressing some of our critical infrastructure challenges which have for a long time been an obstacle to our growth and development," said President Kikwete.

The five-year, $698-million grant will rehabilitate rural roads and improve the airport on Mafia Island to reduce travel times and transportation costs.

"The investment in roads will have a substantial impact on people in providing opportunities for farmers to get their goods to market but also to give the average Tanzanian better opportunities to get to health centers and to get to schools," said Darius Mans, who is the Millennium Challenge Corporation's vice president for compact implementation.

The grant funds new power generation with a hydropower plant on the Malagarasi River and a new under water transmission cable to the largest island in the Zanzibar archipelago.

It will also expand the capacity of Tanzania's main water treatment plant and boost distribution, which Mans says will improve health and education.

"Our investment in water supply and sanitation, for example, will reduce the prevalence of water-borne diseases,' said Mans. "They also will lead to a substantial reduction in the amount of time that women and young girls spend on fetching water so that they can invest in girls' education and economic opportunities."

In addition to making U.S. assistance dependent on good governance, the MCC also requires recipient countries to identify their own needs and demonstrate results.

Joyce Cacho is the director of agrobusiness initiatives at the U.S. Corporate Council on Africa, a private research group promoting investment on the continent. She says it is a fundamental shift in U.S. aid.

"It ensures that U.S. development assistance is in line with what countries want. And that is a point of agreement that used to have to be negotiated," said Cacho. "As a start-off point, that means more energy both from the U.S. side and the recipient country's side can be put to actually doing something."

The Tanzanian compact brings MCC's total commitment in Africa to $3.8 billion with programs in Benin, Cape Verde, Ghana, Lesotho, Madagascar, Mali, Morocco, and Mozambique.