WORLD BANK WANTS CRUCIAL ROLE IN POST-ELECTION

UNCLAS KINSHASA 001857 SIPDIS SENSITIVE SIPDIS TREASURY FOR OWHYCHE-SHAW //C O R R E C T E D C O P Y - Text in para 4 & 5// E.O. 12958: N/A TAGS: EFIN ECON EAID KCOR PGOV CG SUBJECT: WORLD BANK WANTS CRUCIAL ROLE IN POST-ELECTION RECONSTRUCTION REF: KINSHASA 1396 ¶1. (SBU) Summary. The World Bank's (WB) current priorities in the DRC are to develop a coordinated donor strategy; support the DRC's balance of payments; to implement short-term, high impact development projects; and to revive its nearly-moribund Demobilization, Disarmament and Reinsertion (DDR) program. Simultaneously, the WB is facing substantial internal and external scrutiny, including three WB internal investigations. End summary. ¶2. (U) Ambassador and EmbOffs met December 11 with World Bank (WB) officials Pedro Alba, Washington-based Country Director for South-Central Africa and the Great Lakes, and Jean-Michel Happi, DRC resident representative. The three main topics were a proposed governance compact with the DRC, the WB's near-term funding plans, and recent internal WB investigations. GOVERNANCE COMPACT -------------- ¶3. (U) Over the past few months, some members of the international donor community, led by the WB, have drafted a "Governance Compact" that sets out priorities for DRC's governance reform for 2007-2010. The seven proposed priorities are security sector reform, transparency, public finance management, natural resource management, public administration reform, local governance and investment climate/public enterprise reform. ¶4. (SBU) Alba acknowledged the Ambassador's concern that the WB-initiated document was drafted with no Congolese participation or involvement and that, as a result, GDRC officials may perceive it as an effort of the international community to stand in the shoes of Congolese decision makers. Alba indicated the WB supports the document's principles, but would like to convert it to a more technical "note" and present it as only donors' recommendations. He also said the WB has not yet decided if it will propose a ceremonial signing with the GDRC. (Comment: The WB's back-peddling to repackage the document as a "note" for input is probably good, but the damage has already been done, as we know GDRC officials already have a copy of the current document. End comment.) Happi emphasized that the guiding document for the DRC's development must still remain the Poverty Reduction Strategy Paper (PRSP),submitted to the IMF and WB in July 2006. EMERGENCY FUNDING -------------- ¶5. (SBU) Alba and Happi said the WB plans to disburse USD 100 million as soon as possible in 2007. The WB will give USD 50 million directly to the GDRC to apply against its balance of payments, with a primary goal of freeing GDRC funds for the DRC's upcoming debt payments to external multilateral creditors. The other half is budgeted for a number of small "high-impact," rapidly-implemented, labor-intensive development projects in Kinshasa and Mbuji-Mayi, Eastern Kasai, locations the GDRC itself suggested. (Comment: It is probably not coincidental that the Presidency supports immediate WB programming in two cities in which President Kabila is unpopular. End comment.) Alba said the WB will soon send teams to the DRC to seek implementation partners, looking in particular to religious and NGO communities. ¶6. (U) Alba also said the WB is trying to restart its program to support public school teachers' salaries. (Note: The WB's attempted launch of this school-fees elimination program fell through in 2005, in part because the GDRC failed to provide its agreed-upon share of funding for it. End note.) Alba agreed with Ambassador that one of the primary obstacles is actually getting the payments into the hands of the teachers. (Comment: The WB correctly recognizes that the salaries of teachers and other civil servants is likely to be a contentious issue the new government will soon have to face. End comment.) DEALING WITH ITS PROBLEMS? -------------- ¶7. (SBU) The WB is also trying to reinvigorate its DDR program, which by its own admission has been plagued by mismanagement and corruption (reftel). Alba admitted that the WB and GDRC will not meet the initial December 31, 2006 goal of enrolling the estimated 30,000 to 40,000 who remain eligible for DDR. (Comment: Post estimates the figure is most likely even higher, and MONUC believes it is about 60,000 to 65,000. End comment.) Alba and Happi said although disbursements to the Congolese DDR implementer, CONADER (National Commission for Disarmament, Demobilization and Reinsertion),continue, the WB will make management changes within that body. The WB is also trying to raise additional funds for DDR, offering to match donor pledges. ¶8. (SBU) Additionally, the WB's DRC office is grappling with three internal investigations conducted earlier in 2006. One investigation focuses on BCECO, the GDRC's primary WB project implementer, while the other two concern CONADER and the GDRC's Social Fund. According to a WB official, the BCECO report should be completed and published soon. However, the CONADER and Social Fund investigations are not yet complete, and it is uncertain whether they will result in official reports. Alba and Happi said they are not yet privy to any details or findings of the latter two investigations. COMMENT -------------- ¶9. (SBU) For a variety of reasons, the WB has faced numerous internal and external problems that have hampered its work in the DRC. Now it seeks to revitalize its programs, remove some of its obstacles to progress and take a leading role among donors. Increasing its international DRC-based staff and maintaining its current emphasis on internal and external oversight and monitoring are important steps to realizing such goals. Further, in the upcoming months, it must be willing to work openly but cautiously with the new DRC government, neither being too slow to implement needed projects nor too hasty to disburse "quick impact" funds without some due diligence. End comment. MEECE