Mozambique's FY05 BFIF Proposal

UNCLAS SECTION 01 OF 05 MAPUTO 000075

SIPDIS
DEPT FOR EB/CBA - WINSTEAD, AF/S TREGER, and AF/EPS
COMMERCE FOR RTELCHIN
JOHANNESBURG FOR FCS RDONOVAN
DURBAN FOR FCS - LKOHRS
E.O. 12958: N/A
TAGS: BEXP BTIO ECON ETRD ABUD MZ BFIF
SUBJECT: Mozambique's FY05 BFIF Proposal

REF: A. State 248715


B. Dent-Winstead email on 01/10/05 with Mozambique
Entrepreneurship Forum Draft Agenda Attachment


1. Post requests funding in the amount of USD 30,223 under
the Business Facilitation Incentive Fund (BFIF) for FY05.

2. In order of priority, we propose the following three
projects for FY05:

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Project 1: Mozambique Entrepreneurship Forum
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A. Justification: Mozambique lacks a healthy and well-
developed small-to-medium-sized (SME) business environment.
The lack of skilled labor, technological know-how,
knowledge of export markets, and less than supportive
government policies in labor, commerce, and finance
(including customs) are considerable barriers for national
and international investment. Although Mozambique is
eligible for AGOA, it only exports USD 2 million of
garments and seafood to the U.S. under AGOA each year. In
order to further develop the Mozambican business
environment and encourage a stronger trade relationship
with the U.S., Post proposes a Mozambique Entrepreneurship
Forum in March of 2005 (Ref B).
The purpose of business development assistance through an
entrepreneurship forum is twofold: to convince incoming
government officials to continue with policy reform that
will create a strengthened business climate and to
demonstrate ways to increase the competitiveness of
companies (existing and new) so that they may take
increasing advantage of an improved business environment
and begin to export.
Mozambique's program will show the USG commitment to
assisting the development of a business environment
conducive to private sector growth. The government of
President-elect Armando Guebuza will be in its initial,
formative stages, and therefore, relatively open to policy
reform discussions at the forum. Post also believes that
private sector entrepreneurs would greatly benefit from
technical assistance provided at such a forum. In this
regard, much of the two-day seminar will focus on
highlighting entrepreneurial success stories in Africa,
including a few in Mozambique.

B. Planning Milestones: Post has already enlisted the
support of the U.S. Department of Commerce (USDOC),USAID
Mozambique, and the Global Competitiveness Trade Hub in
Gaborone, Botswana in planning an entrepreneurship forum.
Planning milestones are as follows:
+ Late January Confirm program agenda and contact
presenters and forum moderator
+ Early February Draft participant invitations, secure
forum location, contract translation services, and confirm
presenter participation
+ Late February Send-out participant invitations
+ Early March Confirm number of participants, draft
opening speech to be given by the Ambassador, secure all
presenter travel arrangements
+ March 17 Mozambique Commerce Desk Officer arrives, AGOA
Advisor from Global Competitiveness Hub arrives
+March 17-21 Consultations for USDOC Desk Officer and
AGOA Advisor; begin forum set-up; presenters arrive
+March 22-23 Conduct Entrepreneurship Forum

C. Performance Metrics/Anticipated Outcomes: Post expects
officials, local businessmen, and prospective entrepreneurs
will gain a greater knowledge of financial and technical
assistance resources available to them in Mozambique. They
will learn how various businesspersons were successful
getting started in Mozambique and in other parts of Africa.
In talks with U.S. and other international buyers, they
will learn how to locate and work with specific export
port
markets. Proposed indicators to measure impact of the
forum are listed below.
+ Exports by sector
+ Investment (foreign and national)
+ Policy reforms approved (laws passed)
+ Policy reforms implemented and corresponding procedures
improved (service levels, time to complete requirements,
e.g., days to start a business)
+ Demand (number of clients) for business development
assistance services

D. Estimated Costs: Estimated Cost for the Mozambique
Entrepreneurship Forum is approximately USD 15,000.
+ USD 5100 Travel for three entrepreneurs from Gabon,
Uganda, and Kenya to Maputo (USD 1700 per person x 3 people
= USD 5100).
+ USD 3000 USDOC Desk Officer Travel to Mozambique; Desk
Officer will speak about finding markets in the U.S. and
opportunities under AGOA
+ USD 2220 Lodging (6 presenters x USD 185 x 2 nights =
USD 2220)
+ USD 1026 M&IE (6 presenters x USD 57 x 3 days = 1026)
+ USD 1000 Simultaneous translation equipment
+ USD 300 Translator
lator
+ USD 600 Conference space at the Hotel Avenida, Maputo
+ USD 1000 Evening Reception featuring informational
booths by USDOC, Global Competitiveness Hub Gaborone,
International Finance Corporation (IFC),Technoserve,
Corporate Council on Africa (CCA),and local banks
+ USD 1200 Miscellaneous Expenses including printing
program agendas, written translation services, etc.

F. Leveraging Funding The Mozambique Entrepreneurship
Forum will be a two-day event. The Department of State
will host the first day of activities and the Global
Competitiveness Hub in Gaborone, Botswana, will fund and
host the second day of activities. The Hub has already
submitted a proposal for funding the travel of two buyers
from the United States. Additionally, the Hub will
contract a consultant (proposed Phyllis Jones, former
AUSTR under the Clinton administration) to provide a
workshop on creating a business plan, marketing products,
finding export markets, and other strategic business
information to forum participants. USAID Mozambique is
committed to funding in-country travel of specific
participants whose presence at the forum will add
significant value. This includes cashew producers in
Nampula City that export to the U.S. (NOTE: USAID will
only pay for in-country participant travel. In-country
participant per diem is listed in the estimated cost budget
above. END NOTE) USDOC has provided significant input to
the proposed agenda and Post believes USDOC representation
at the forum is critical. (NOTE: USDOC desk officer
travel is requested in the estimated cost budget above.
END NOTE) The Corporate Council on Africa (CCA) will travel
to Mozambique and participate in the forum.

G. Outcome/Success Criteria: The Entrepreneurship Forum
will prove successful if working businessmen and aspiring
entrepreneurs take advantage of financial and technical
assistance resources available to them. Likewise, the
seminar will be successful if the GRM continues current
investment-friendly reforms of commercial, labor, and
financial policies.

H. Follow-up Strategy: Post will follow up with the host
government by continuing to support commercial reforms to
promote a more business-friendly environment. Post will
manage this effort by supporting the Confederaao das
Associaoes Econmicas de Moambique (CTA),a confederation
of business associations that works directly with the GRM
on legal reform. Post will also follow up with the local
business community by gauging the request for financial and
technical assistance. Additionally, Post will keep the
business community informed of opportunities under AGOA and
economic support available under various USG agencies.

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Project 2: Commercial Outreach and Export Promotion
-------------- --------------

A. Justification: Mozambique has ten provinces, with a
capital city located in the southernmost province. The
The
capital is far-removed from important commercial and
political activity in the central and northern regions.
Foreign firms operating in Mozambique are in need of home
country support and outreach. Communication between firms,
the GRM, and the diplomatic community is critical to
improvement of the business climate. Additionally, Post
outreach to commercial associations, entrepreneurs,
agricultural institutes and organizations, and industry is
critical to introducing U.S. products and programs to an
audience generally uninformed about U.S. opportunities and
the U.S. market.

B. Planning milestones: Post will make two trips to key
provinces in the central and northern regions.
Econ/poloffs will visit U.S. businesses and meet with
farmers, businessmen, entrepreneurs, academics, and
commercial associations to discuss U.S. export
opportunities and incentive programs such as AGOA.
Discussions will focus on how Mozambique can specifically
benefit from AGOA and how specific sectors such as
agriculture, construction, and aquaculture may benefit from
U.S. technology and market offerings. In December 2004,
Mozambique qualified for Category 9 under AGOA. It is an
opportune time to spread the word about how Mozambique can
take advantage of this added export incentive.
Furthermore, Post would greatly benefit from consultations
at regional FCS, USDA, and U.S. Trade Development Agency
(USTDA) offices in Johannesburg and Pretoria. Post's Econ
Section works closely with all of these agencies on various
issues such as joint research for commercial inquiries,
Gold Key Service requests, and local trade shows and
exhibitions. Through consultations, Post would gain greater
insight into commercial resources and contacts, allowing
for more effective U.S. product promotion and program
efforts in Mozambique.
Planning milestones for travel are as follows:
+Sofala/Manica/Tete Provincial Travel (central region)
April 2005. Travel will include the following site visits:
-Port of Beira, Mozambique's most active port
-Commercial Association of Sofala (ACIS); represents 30
businesses operating in Sofala, two of which have U.S. ties
-Mobeira flour-producing mill owned by the U.S.
corporation Seaboard
-Belita currently the only textile and garment factory
operating under AGOA
-Agricultural Institute of Chimoio
-Coca-Cola Bottling Factory, Chimoio
-Vilmar Rose Plantation, exporting to the European market
-Pescamar Fishing Association largest in Mozambique
-Zambeze River Valley Authority responsible for the
development of the central region of Mozambique
-Cahora Bassa Hydroelectric Company country's second
largest revenue-producing company; supplies energy to South
Africa and Zimbabwe
-Technoserve American NGO lending technical assistance to
agricultural and tourism projects
+Zambezia/Nampula/Cabo Delgado Provincial Travel (northern
region) July 2005. Travel will include the following
site visits:
-Port of Nacala Mozambique's only deepwater port; U.S.
investment with OPIC financing
-Indian Ocean Aquaculture Prawn aquaculture farm with
limited U.S. investment; plans to export to the U.S.
-Moma Heavy Sands Project a mineral sands mega-project by
Kenmare Resources (Irish)
-Business Centers, Inc. U.S.-owned and managed business
consulting firm
-Miranda Cashews successfully growing, processing, and
exporting cashews with Technoserve assistance
Post recommends the following training/consultation travel:
+Consultations at FCS, FAS, and USTDA Johannesburg/Pretoria

C. Performance Metrics/Anticipated Outcomes: Post
anticipates that businesses across Mozambique will be well
informed about exporting to the U.S. under AGOA.
Additionally, the business community will be briefed on
U.S. financing opportunities with agencies like OPIC,
USTDA, and Ex-Im Bank. U.S. businesses in Mozambique will
rely on Post's assistance with difficult issues plaguing
the business-operating environment (VAT repayment, business
registration process, judicial process, and others). Post
will disseminate information on investment opportunities in
Mozambique to firms in the U.S. Performance indicators
include:
+ Exports to the U.S. under AGOA
+ Demand (number of clients) requesting USTDA, OPIC, and
Ex-Im information and assistance
+ Number of commercial inquiries received at Post (by U.S.
businesses looking to invest in Mozambique and Mozambican
businesses looking to work with firms in the U.S.)
+ Number of issues resolved for U.S. businesses (VAT
repayment, business registration procedures)

D. Estimated Costs: Estimated Cost for commercial outreach
and export promotion is USD 13,838.
+Sofala/Manica/Tete Provincial Travel
USD 4604 - Total for Econ/Poloff and Commercial FSN
USD 1700 - Transportation ($600/person for air travel and
USD 500 total for car rental)
USD 2904 - Per diem (lodging and M&IE at $242/day, 6 days)
+ Zambezia/Nampula/Cabo Delgado Provincial Travel
USD 6956 - Total for Econ/Poloff and Commercial FSN
USD 2600 - Transportation($900/person for air travel and
USD 800 for car rental)
USD 4356 - Per diem ($242/day, 9 days)
+ Johannesburg/Pretoria Consultation Travel
USD 2278 Total for Econ/Poloff and the Commercial FSN
USD 1000 - Round-trip airfare ($500/person)
USD 1278 Per diem ($213/day, 3 days)

F. Leveraging Funding: Post has not leveraged funding from
other agencies regarding the commercial outreach and export
promotion project.

G. Outcome/Success Criteria: Commercial outreach will be
successful if Mozambican exports to the U.S. increase,
particularly under AGOA. Outreach will also be successful
if commercial work generates greater U.S. investment in
Mozambique.

H. Follow-up Strategy: Post will continue to conduct an
AGOA digital video-conferencing (DVC) series between U.S.
buyers and USG agencies and Mozambican officials and the
business community. DVCs in 2003-2004 focused on the
handicraft and textiles/garments sector. DVCs in 2005 will
focus on more competitive sectors in Mozambique, such as
agriculture/agro-processing and fisheries.

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Project 3: Regional Econ/Comm Officer Conference -
Gaborone
-------------- --------------

A. Justification Post would like to send the Econ/Comm
officer to attend the regional Economic/Commercial officer
training in Gaborone at the Global Competitiveness Hub on
March 30-31, 2005. Econ/Poloff would benefit by learning
about different economic, commercial, and trade resources
and contacts available in the region.

B. Planning Milestones:
+ March 30-31 Econ/Poloff attends regional
econ/commercial officer training
+ April/May Econ/Poloff meets with various business
groups, including the U.S.-Mozambique Chamber of Commerce,
local business associations, and officials from the
Ministry of Industry and Commerce to speak about economic,
trade, and financial assistance in the region

C. Performance Metrics/Anticipated Outcomes Econ/Commoff
will be more effective in communicating the objectives and
availability of USG economic and trade-related resources
when speaking with local businesses and government.
Additionally, Post's increased knowledge of contacts and
resources in the region could lead to more economic and
trade-related programs in Mozambique. Specific performance
indicators are as follows:
+ Increased number of businesses referred to USG agency
contacts (FCS, USTDA, Ex-Im Bank, OPIC)
+ Increased number of joint economic and trade-related
programs in Mozambique(involving Post, the Hub, and FCS)

D. Estimated Costs:
USD 1385 Total for Econ/Poloff to attend training
USD 800 - Round-trip airfare
USD 585 Per diem ($195/day, 3 days)

F. Leveraging Funding: Post has not coordinated with other
agencies to leverage funding for this proposed project.


3. POC for the above-mentioned activities is Econ/Poloff
Loren Dent. She may be reached at 258-1-492-797, ext. 3422
22
and at dentln@state.gov
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