SCENESETTER FOR GAC AMBASSADOR RANDALL TOBIAS'

C O N F I D E N T I A L SECTION 01 OF 03 MAPUTO 000541

SIPDIS
S/GAC FOR RTOBIAS AND WBRENCICK
BERLIN PLEASE PASS TO RTOBIAS AND WBRENCICK
E.O. 12958: DECL: 04/20/2014
TAGS: KHIV PREL EAID MZ HIV AIDS PEPFAR
SUBJECT: SCENESETTER FOR GAC AMBASSADOR RANDALL TOBIAS'
VISIT TO MOZAMBIQUE APRIL 28-30


Classified By: Econ/Pol Officer Elizabeth Jaffee for reasons 1.4 (b) and (d)


1. (C) Introduction and summary. Mozambique is at a critical
stage in its efforts to stem the HIV/AIDS epidemic. In
Southern Africa, Mozambique presents both the greatest
challenges and possibly the greatest opportunity to become
the next Uganda-like success in turning around the HIV/AIDS
threat. The Mozambican Government (GRM) has been outspoken in
the battle against HIV/AIDS and is a cooperative partner in
our HIV/AIDS efforts. The USG has been a leading player in
international HIV/AIDS efforts in Mozambique, working closely
with our implementing partners, other donors, and the
Ministry of Health (MOH) and the National AIDS Council (NAC).
While the MOH has welcomed the significant increase in USG
support to combat HIV/AIDS in Mozambique through the
President's Emergency Plan, there has been friction with the
Minister of Health over some aspects of our support (see
below). Likewise, bilateral and multilateral donors have
perceived the program as unilateral. Your visit can be an
important opportunity to inform key government officials of
the Emergency Plan's objectives and assure donors of our
sincere desire to coordinate efforts.

POLITICAL/ECONOMIC OVERVIEW:
============================

2. (U) Mozambique is rightly considered a post-conflict
success story. Since the signing of the 1992 Peace Accords
that ended sixteen years of civil war, Mozambique has made
significant progress in promoting economic reforms and
consolidating democracy. Yet, Mozambique faces enormous
development challenges. The HIV/AIDS epidemic puts at risk
much of the progress gained over the past decade. US
bilateral relations are strong. US government efforts in
Mozambique have focused on good governance, economic
development and health. The USG was also the major donor
contributing to reconstruction and rehabilitation activities
following the catastrophic floods in 2000.


3. (U) In late 2004, Mozambique will hold its third
multi-party presidential elections since independence in

1975. The current constitutionally-elected president, Joaquim
Chissano, will step down after having served two terms.
Chissano and the leadership of FRELIMO dominate policy-making
and implementation. Mozambique currently holds the Presidency
of the African Union (AU). President Chissano has been
actively engaged on broader African issues and has sought to
use his AU Presidency both to build stronger African
institutions and to find African-led solutions to African
problems. In February, Planning and Finance Minister Luisa
Diogo replaced Pascoal Mocumbi as Prime Minister (while
retaining the finance portfolio). Mocumbi, a medical doctor
and former candidate for Secretary General of the WHO,
resigned his post to serve as the High Commissioner of a new
European Commission health body, the Europe-Developing
Countries Clinical Trial Partnership. On November 19, 2003,
Mozambique held municipal elections which were considered
generally free and fair. However, many institutions, such as
the judiciary and the police, remain weak. Corruption remains
a problem in both the public and private sectors.


4. (U) Mozambique continues to be one of the most dynamic and
fastest-growing economies in sub-Saharan Africa, albeit from
a low base. Mozambique is one of the world's poorest
countries, with per capita GDP of less than $250. That said,
economic growth has averaged 8% over the last 3-4 years and a
recent household survey indicates that the incidence of
extreme poverty has declined from 70% to 55% over the past 5
years. Mozambique has significant but so far mostly untapped
natural resources, including coal, natural gas, titanium ore,
tantalite, graphite, iron ore, and semi-precious stones. One
third of the economy is based on agriculture, most of it
subsistence, but Mozambique exports cashews, cotton, sugar,
sorghum, tea, citrus fruit, and tobacco. Mozambique has
privatized over 1200 mostly smaller companies and 37 large
enterprises since the privatization program began 10 years
ago. Only 11 large state-owned or operated companies remain,
including the national airline, telephone, electricity,
insurance, oil and gas exploration, port and rail, airports,
water supply, and fuel distribution companies. US-Mozambican
trade, although quite small, is expanding, with the vast
majority of Mozambique's exports to the US entering under
either AGOA or GSP. South Africa and Portugal are the leading
foreign investors. Only 6 of the top 100 companies in
Mozambique are US: Coca-Cola, Mobil, Seaboard, Avis,
Colgate-Palmolive and KPMG In 2003, Mozambique was assigned
an international credit rating of B/B by Fitch Ratings,
reflecting Mozambique's positive track record on economic
reforms, political stability, strong economic growth,
openness to FDI, and expanding exports.


5. (U) Mozambique faces significant development challenges.
The literacy rate is about 40 percent and infant mortality
rates are among the highest in Africa. Life expectancy is 46
and is expected to decline into the 30s by 2010 as a result
of AIDS. The country also lacks infrastructure, power, and
clean water for most of its citizens. The Government has
placed its Plan for the Reduction of Absolute Poverty (PARPA)
at the head of its policy agenda. PARPA emphasizes six areas
as the key reducers of absolute poverty: education; health;
basic infrastructure; agriculture and rural development; good
governance; and macroeconomic and financial management. The
donor community funds approximately 60 percent of the
national budget, though the HIPC and Enhanced HIPC (Heavily
Indebted Poor Countries) debt relief programs have permitted
increased budgetary support to alleviate poverty.

HIV/AIDS:
=========

6. (U) Mozambique's overall HIV/AIDS prevalence rate is
14.9%, though prevalence rates vary greatly by region, with
the highest rates occurring in the central provinces and near
the principal transportation corridors. The GRM's efforts to
combat HIV/AIDS are led by the Ministry of Health and the
National AIDS Council, chaired by the Prime Minister and
comprised of several ministries and civil society. In March
2004, the Ministry of Health approved a National Strategic
Plan for HIV/AIDS/STI, which presents an integrated and
comprehensive approach to scale up prevention, care and
treatment services through existing health facilities and
linkages with community support groups, to be provided
through an Integrated HIV/AIDS Network model. The political
environment in Mozambique is very favorable to accelerating
ARV treatment throughout the country, though Mozambique's
significant development challenges are a constraint for rapid
scale-up of treatment activities. The MOH already has
national guidelines for provision of ARV services, through
which all treatment programs, including NGO activities, are
expected to work. In addition to the Emergency Plan, funding
has been committed through the Global Fund, the World Bank
MAP and the Clinton Foundation (via several European donors)
to strengthen the MOH and its services to expand ARVs.


7. (U) Principal Challenges:
A - Mozambique's severely limited human resource capacity is
a principal constraint to improved and expanded treatment.
Currently, Mozambique has an inadequate number of physicians
and other health care providers to provide treatment. Given
the fact that the country has under 500 local medical doctors
to treat a population of over 17 million, training of health
care practitioners is a priority to ensure goals for
treatment are reached. Training support is needed at all
levels-- from curriculum development for universities and
technical schools, to support for development of short,
targeted training for service delivery, public health
programs, management and administration, monitoring and
evaluation, laboratory services, etc. To this end, the
mission has established a human resource capacity working
group to discuss programs that will enhance the country's
ability to provide ARV treatment. A number of Track 2
proposals will have training components and the working group
is planning for a human capacity technical assessment.
B - Another significant factor limiting rapid scale-up of
treatment programs is the country's inadequate laboratory
facilities. Currently, the country has only two
lab sites that have the ability to process CD4 counts. Year
1 Emergency Plan funding will be used to build and equip new
laboratory facilities and expand existing facilities. Post
has been successful in linking with other organizations such
as Sant'Egidio to more rapidly expand laboratory services
related to ARV treatment.
C- One of the major deficiencies of the health care system in
Mozambique is its coverage, which extends to less than 60% of
the population and concentrates services in urban areas. Over
98% of the population, however, report that they regularly
seek care from traditional healers. Emergency Plan funding
will be instrumental in expanding both geographic coverage
and activity scope.
?
OTHER ISSUES IMPACTING USG PROGRAMS:
====================================

8. (C) Ministry of Health. Our relations with Minister of
Health Francisco Songane, a medical doctor who has served as
Minister since January 2000, have been strained at times.
Like many GRM agencies, the MOH remains a highly bureaucratic
and centralized institution, where key decisions and policies
rest in the hands of the Minister. Qualified, competent human
resources within the Ministry are scarce and the flow of
information between the Minister and his staff appears
constrained. On occasion, Songane has attempted to dictate
the scope of USG programs. While Songane has welcomed the
significant increase in US funding being provided to
Mozambique through the Emergency Plan, he has raised concerns
over several aspects of the program. For example, Songane
expressed concern over the Track 1 award to Columbia
University, our principal implementing partner in the area of
treatment. As a new partner receiving funding under Track 1,
the MOH was not consulted in the development or awarding of
Columbia's proposal. Songane has stated that an agreement
should have been signed between Columbia and the MOH prior to
the award. Having said that, Columbia has been very flexible
in adjusting its program to address MOH concerns.


9. (C) Another issue has been the USG's decision not to fund
the MOH's Common Fund for Health. The US has been criticized
by both donors and the GRM for not using this sector budget
support mechanism to fund HIV/AIDS programs, with the
perception being that the USG is taking a unilateral
approach. However, until very recently, donors had not
contributed to the Common Fund and financial mechanisms did
not exist to enable financing of projects. One of the
explicit conditions of our Emergency Plan support going to
NGO and FBO partners has been demonstrated, close
coordination in the field with provincial MOH authorities.


10. (C) Donor Coordination. The role of USG in the Country
Coordination Mechanism for the Global Fund has also been a
sensitive issue for post in terms of coordinating efforts in
HIV/AIDS. Here, the USG's reluctance to contribute to the
Common Fund has been a principal issue. In addition, there
has been criticism of the Emergency Plan's exclusive focus on
HIV/AIDS and not broader health sectors concern.
LA LIME