KIKWETE'S CABINET APPROVES MCA COMPACT PROPOSAL

C O N F I D E N T I A L SECTION 01 OF 02 DAR ES SALAAM 0Q4 SIPDIS SIPDIS DEPT AF/E FOR B YODER, AF/EPS, T HASTINGS ALSO PLEASE PASS TO TREASURY DEPT FOR ALEX SEVERENS E.O. 12958: DECL: 09/05/2011 TAGS: PREL PGOV ECON EFIN EAID ENRG EINT TZ SUBJECT: KIKWETE'S CABINET APPROVES MCA COMPACT PROPOSAL REF: DAR ES 0165 Classified By: D. Purnell Delly, Charge d'Affaires for reason 1.4(d) ¶1. (SBU) SUMMARY. On August 28, President Kikwete and Cabinet officially approved the Government of Tanzania's (GOT's) Millennium Challenge Account (MCA) Compact proposal for submission to Millennium Challenge Corporation (MCC) Washington. The GOT's proposal focuses on strengthening Tanzania's infrastructure network in three key sectors: transport, water and energy. The total cost of all proposed projects is USD 799 million, with 48 percent of the budget for road construction and airport upgrades, 30 percent for water and sanitation projects, and 16 percent for rural electrification. The recent submission signals that Tanzania is on track with the Compact process, meeting key target dates set forth by MCC. The GOT's Coordinator for the MCA Compact, Bernard Mchomvu, has proved skillful in working through Tanzania's bureaucracy, establishing an appropriate structure for the process, and identifying potential areas of sensitivity or concern. Important next steps include the internal presentation of an "Opportunity Memo" by the MCC Country Team to the Investment Committee and MCC's due diligence of all projects proposed by the GOT. END SUMMARY. Kikwete's Cabinet Approves MCA Compact Proposal -------------- -- ¶2. (SBU) On August 28, President Kikwete's Cabinet reviewed and approved the Government of Tanzania's (GOT) recently completed Millennium Challenge Account (MCA) Compact proposal. With Cabinet approval, the GOT formally submitted the proposal to the Millennium Challenge Corporation's (MCC) country team, led by Country Director, Gretchen Brevnov. The GOT managed to achieve submission within the six month time frame set by the MCC delegation after its initial visit to Tanzania in February 2006. ¶3. (C) According to the GOT's MCC Coordinator, Bernard Mchomvu, the Cabinet approved the proposal with no substantive changes and with the full support of President Kikwete and his Ministers. Mchomvu told Econoff on August 30 that President Kikwete had read not only the Cabinet paper summary but the entire MCA 70 page proposal. Mchomvu noted that "President Kikwete stressed his support for the proposal and asked his Ministers if they had any comments. The Ministers raised no objections and instead emphasized that they needed this development assistance 'yesterday'." Tanzania's Proposal: Improving Infrastructure -------------- - ¶4. (SBU) The GOT's proposal focuses on strengthening and expanding Tanzania's infrastructure network with projects in three primary sectors: transport, water and energy. The stated objective is to stimulate broad-based economic growth and poverty reduction by addressing supply side constraints and improving access to basic servQ. Based largely on Tanzania's recently completed National Strategy for Growth and Reduction of Poverty (known in Swahili as "MKUKUTA"),the proposal reflects discussions within the GOT's Ministries and between the GOT and Tanzania's private sector and civil society. ¶5. (SBU) Tanzania's proposed projects for transport, water and energy total USD 799.2 million. Projects in the transport sector amount to USD 386.6 million (or 48.4 percent of the total),while projects in the water and energy sectors amount to USD 243 million (30.4 percent) and USD 130.6 million (16.3 percent) respectively. The following chart outlines the proposed projects and associated costs: Sector Project USD Name (millions) -------------- -------------- Transport Tunduma-Sumbawanga Road (224.5km) 112.000 Transport Tanga-Horohoro (68km) 34.000 Transport Tunduru-Songea (263km) 130.000 Transport Songea-Mbamba (144.5km) 50.204 Transport Upgrade Kigoma Airport 9.000 Transport Upgrade Mafia Airport 8.570 Transport Zanzibar Rural Roads 42.818 TRANSPORT Total: 386.593 Water Kidunda Dam 126.000 *********************** * Missing Section 002 * ***********************