PRESIDENT GUEBUZA PROMISES TO RESOLVE MCC PROJECT

C O N F I D E N T I A L MAPUTO 000188

SIPDIS

SIPDIS

STATE FOR AF/S AND AF A/S FRAZER
STATE PASS OPIC
MCC FOR HEWKO, HARRINGTON, AND GAULL

E.O. 12958: DECL: 02/13/2011
TAGS: EAID MZ
SUBJECT: PRESIDENT GUEBUZA PROMISES TO RESOLVE MCC PROJECT
COORDINATOR ISSUE

REF: 2/9 E-MAIL HARRINGTON - LA LIME WITH TALKING

POINTS ON MCC

Classified By: Ambassador Helen La Lime, for E.O.12958, Reason 1.4(d)


1. (SBU) The Ambassador, accompanied by MCC Country Director
Stephen Gaull, met with President Guebuza February 9 to
express concern over the GRM's progress towards developing
and implementing the Mozambican compact and to highlight the
need for the GOM to quickly appoint a Project Coordinator.
In opening the discussion of the MCC process in Mozambique,
the Ambassador traced the development of the program to date,
highlighting the President,s engagement last summer in
appointing a core team of four to work with the MCC in the
compact design phase. She also noted the $6 million in
funding MCC had made available for use in procuring
consultants to assist the GOM with designing the program in
the priority areas of business development, land tenure,
water and sanitation and the export processing zone for
Nacala. In addition to developing projects for a program
that is complex and broad in its scope, she stressed that the
GOM needed to be ready to engage with the MCC team on policy
reform issues that are necessary to achieving success for the
Mozambique program's effectiveness. These include such key
issues as the transactionability and collateralizability of
land, the labor law, and other improvements to the
investment/business climate. She also stressed the
importance of the success of the Nacala port/rail concession
to the overall potential for the northern provinces of
Mozambique and the export processing zone that would be
developed under the MCC program.


2. (C) The Ambassador then noted that the four-person core
team the President had designated had worked well with the
MCC, and that so far, all deadlines for grant/implementation
agreements for the $6M had been met. She stressed, however,
that the team was suffering now because of lack of progress
in appointing a Project Coordinator, a position for which MCC
had helped the GRM identify funding sources at the request of
Minister Cuereneia, and for which possible candidates had
already been identified. She cautioned that unless a Project
Coordinator were put in place immediately, the compact could
be delayed. She said that MCC was concerned that if the GRM
was having such trouble during the design phase, this did not
augur well for the implementation phase.


3. (C) President Guebuza thanked the Ambassador for her
report and stressed how much he values the U.S. engagement in
Mozambique and the partnership with the MCC. He promised to
resolve the issue of the Project Coordinator and asked a
number of questions to better understand where the
bureaucracy had been remiss in not acting. Clearly
understanding that policy reforms are part and parcel of the
private sector program, President Guebuza sought
clarification on what MCC expected as far as increased
transactionability and collateralizability of land. While he
appeared reassured when he heard that MCC was not seeking
land policy reforms that would require a change in the
constitution, he also fully grasped the need for more dynamic
senior level engagement from the Ministry of Planning and
Development, especially on policy matters, if progress is to
be made and program objectives are to be achieved. The
President also was attentive to the points made on the Nacala
corridor and to the link between the success of the proposed
MCC investment in the north and the success of the privatized
Nacala rail/port concession.


4. (C) Although this exchange took place in the context of a
discussion of other areas of US-Mozambican cooperation, the
MCC portion of the conversation was the focus of the morning
meeting. In addition to promising action, the President
asked that the Ambassador continue to keep him informed of
any issues affecting progress on the compact and established
a contact point at the presidency for further follow-up.
Embassy intends to translate referenced talking points into
Portuguese and to deliver them to the Presidency this week.
La Lime