Identifier
Created
Classification
Origin
05LILONGWE709
2005-08-18 10:31:00
CONFIDENTIAL
Embassy Lilongwe
Cable title:
MALAWI TELECOM PRIVATIZATION ON HOLD
how-toThis record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L LILONGWE 000709
SIPDIS
STATE FOR AF/S DAN MOZENA AND KENDRA GAITHER
STATE FOR EB/IFD/ODF ELAINE JONES AND TED LYNG
STATE FOR EB/IFD/OMA AUDU BESMER
TREASURY FOR INTERNATIONAL AFFAIRS/AFRICA BEN CUSHMAN
PARIS FOR D'ELIA
E.O. 12958: DECL: 08/17/2015
TAGS: ECON EINV ECPS KPRV PGOV PREL MI
SUBJECT: MALAWI TELECOM PRIVATIZATION ON HOLD
Classified By: ECONOFF W. TALIAFERRO FOR REASONS 1.4B/D
-------
SUMMARY
-------
C O N F I D E N T I A L LILONGWE 000709
SIPDIS
STATE FOR AF/S DAN MOZENA AND KENDRA GAITHER
STATE FOR EB/IFD/ODF ELAINE JONES AND TED LYNG
STATE FOR EB/IFD/OMA AUDU BESMER
TREASURY FOR INTERNATIONAL AFFAIRS/AFRICA BEN CUSHMAN
PARIS FOR D'ELIA
E.O. 12958: DECL: 08/17/2015
TAGS: ECON EINV ECPS KPRV PGOV PREL MI
SUBJECT: MALAWI TELECOM PRIVATIZATION ON HOLD
Classified By: ECONOFF W. TALIAFERRO FOR REASONS 1.4B/D
--------------
SUMMARY
--------------
1. (C) The GOM has suspended the privatization of Malawi's
parastatal telecommunications monopoly at the last moment.
The privatization is a condition of two large World Bank
programs in Malawi. The President apparently made the
decision out of fear that the privatized company might
sabotage state-run media outlets for political purposes.
Embassy has expressed USG concern and recommends continued
pressure through the World Bank and Malawian Embassy in
Washington. End summary.
-------------- --
SUDDEN SUSPENSION, WITH CONFUSED PUBLIC SIGNALS
-------------- --
2. (U) The Government has suspended the impending sale of
Malawi Telecommunications Ltd. (MTL) at the last minute. GOM
was scheduled to approve the sale on August 10, but instead
it informally told the buyers and the Privatization
Commission that the deal had been "suspended pending further
clarification." On Monday, the Information Minister was
quoted in the press as saying the deal had been cancelled
outright, and that the GOM did not intend to privatize the
company.
3. (U) The suspension has caused a stir in the diplomatic
community, because the privatization is a condition for two
World Bank programs with a total value of $78 million. The
negotiations for MTL's sale have been under way since 2000,
and the MTL board has consistently opposed the sale. As
might be expected, the sale is not popular with Malawian
politicians, who generally oppose privatization.
4. (C) In recent conversations with the CEO of the main
buyer, Press Corporation Ltd., members of the Privatization
Commission, and the Minister of Finance, we have learned that
the deal was suspended personally by President Bingu wa
Mutharika for political reasons. Specifically, Mutharika
fears that Press Corporation is sympathetic to former
President Bakili Muluzi's United Democratic Front (UDF) party
and will use the outstanding debts of the Malawi Broadcasting
Corporation and Television Malawi as an excuse to unplug the
state-controlled media and hobble the government's
communications. Most informed observers find the political
fear irrational, though the risk of putting a strategic
utility into private hands is more widely shared.
--------------
FINANCE MINISTER WORKING TO CLOSE THE DEAL
--------------
5. (C) Finance Minister Goodall Gondwe is negotiating with
Press Corporation to accommodate the President's concerns,
and he has proposed diluting the Press participation from 52
to less than 50 percent. He believes this can be done
quickly, though others close to the deal doubt this. Another
possibility is to pay the media outlets' debts with proceeds
of the sale and offer the GOM a "golden share" veto over
disconnections of state news media. As for the Information
Minister's remarks, the Finance Minister has said the GOM is
looking for a face-saving way to retract them. Meanwhile, he
has indicated that World Bank and donor pressure on the issue
would help to ensure speedy resolution.
--------------
COMMENT AND RECOMMENDATION: CONTINUE PRESSURE
--------------
6. (C) Embassy has expressed our deep concerns over the delay
in meetings with Gondwe and with the resident World Bank
country manager. We recommend continued pressure on the
World Bank, and perhaps on the Malawian Embassy, to ensure
that the GOM does everything it can to move the deal along.
This will certainly be of value to those within the GOM,
including Gondwe, who are arguing for quick closure. To the
extent that the USG can reinforce Gondwe's representation to
Mutharika that the world is expecting a transparent and
rational process, it should strengthen his hand on this and
similar issues in the future.
EASTHAM
SIPDIS
STATE FOR AF/S DAN MOZENA AND KENDRA GAITHER
STATE FOR EB/IFD/ODF ELAINE JONES AND TED LYNG
STATE FOR EB/IFD/OMA AUDU BESMER
TREASURY FOR INTERNATIONAL AFFAIRS/AFRICA BEN CUSHMAN
PARIS FOR D'ELIA
E.O. 12958: DECL: 08/17/2015
TAGS: ECON EINV ECPS KPRV PGOV PREL MI
SUBJECT: MALAWI TELECOM PRIVATIZATION ON HOLD
Classified By: ECONOFF W. TALIAFERRO FOR REASONS 1.4B/D
--------------
SUMMARY
--------------
1. (C) The GOM has suspended the privatization of Malawi's
parastatal telecommunications monopoly at the last moment.
The privatization is a condition of two large World Bank
programs in Malawi. The President apparently made the
decision out of fear that the privatized company might
sabotage state-run media outlets for political purposes.
Embassy has expressed USG concern and recommends continued
pressure through the World Bank and Malawian Embassy in
Washington. End summary.
-------------- --
SUDDEN SUSPENSION, WITH CONFUSED PUBLIC SIGNALS
-------------- --
2. (U) The Government has suspended the impending sale of
Malawi Telecommunications Ltd. (MTL) at the last minute. GOM
was scheduled to approve the sale on August 10, but instead
it informally told the buyers and the Privatization
Commission that the deal had been "suspended pending further
clarification." On Monday, the Information Minister was
quoted in the press as saying the deal had been cancelled
outright, and that the GOM did not intend to privatize the
company.
3. (U) The suspension has caused a stir in the diplomatic
community, because the privatization is a condition for two
World Bank programs with a total value of $78 million. The
negotiations for MTL's sale have been under way since 2000,
and the MTL board has consistently opposed the sale. As
might be expected, the sale is not popular with Malawian
politicians, who generally oppose privatization.
4. (C) In recent conversations with the CEO of the main
buyer, Press Corporation Ltd., members of the Privatization
Commission, and the Minister of Finance, we have learned that
the deal was suspended personally by President Bingu wa
Mutharika for political reasons. Specifically, Mutharika
fears that Press Corporation is sympathetic to former
President Bakili Muluzi's United Democratic Front (UDF) party
and will use the outstanding debts of the Malawi Broadcasting
Corporation and Television Malawi as an excuse to unplug the
state-controlled media and hobble the government's
communications. Most informed observers find the political
fear irrational, though the risk of putting a strategic
utility into private hands is more widely shared.
--------------
FINANCE MINISTER WORKING TO CLOSE THE DEAL
--------------
5. (C) Finance Minister Goodall Gondwe is negotiating with
Press Corporation to accommodate the President's concerns,
and he has proposed diluting the Press participation from 52
to less than 50 percent. He believes this can be done
quickly, though others close to the deal doubt this. Another
possibility is to pay the media outlets' debts with proceeds
of the sale and offer the GOM a "golden share" veto over
disconnections of state news media. As for the Information
Minister's remarks, the Finance Minister has said the GOM is
looking for a face-saving way to retract them. Meanwhile, he
has indicated that World Bank and donor pressure on the issue
would help to ensure speedy resolution.
--------------
COMMENT AND RECOMMENDATION: CONTINUE PRESSURE
--------------
6. (C) Embassy has expressed our deep concerns over the delay
in meetings with Gondwe and with the resident World Bank
country manager. We recommend continued pressure on the
World Bank, and perhaps on the Malawian Embassy, to ensure
that the GOM does everything it can to move the deal along.
This will certainly be of value to those within the GOM,
including Gondwe, who are arguing for quick closure. To the
extent that the USG can reinforce Gondwe's representation to
Mutharika that the world is expecting a transparent and
rational process, it should strengthen his hand on this and
similar issues in the future.
EASTHAM