MCC DELEGATION VISIT TO MALAWI

UNCLAS SECTION 01 OF 02 LILONGWE 000793

SIPDIS

MCC FOR MALIK CHAKA
STATE FOR AF/S E PELLETREAU
DEPT PASS TO USTR/F LIZER

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EAID PGOV MI
SUBJECT: MCC DELEGATION VISIT TO MALAWI



1. (SBU) Summary: A three-person delegation from the Millennium
Challenge Corporation (MCC),led by Threshold Program Director Malik
Chaka, visited Malawi October 3-7, 2007. The delegation assessed
the implementation of the Malawi Threshold Country Plan (TCP),both
in terms of USAID management of the program, and the progress made
by implementing partners and the Government of Malawi (GOM). They
met with key GOM counterparts (including the Minister of Finance,
the Minister of Economic Planning and Development, and the Inspector
General of Police),MCC implementing partners, local business
leaders, and USAID and Embassy staff. Site visits were also made to
the newly established Financial Intelligence Unit (FIU) and the
IFMIS Disaster Recovery Site (both established with support from
MCC). Overall, the delegation observed that the four Malawi TCP
implementing partners have made strong progress in implementing a
wide array of anti-corruption activities, despite the challenging,
and often tense, political environment in Malawi.

Better Understanding of FIU
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2. (U) Despite the absence of a politically appointed FIU Director,
there has been substantial progress in establishing a fully
operational FIU, specifically in terms of budget support, staffing,
the provision of office space, and outreach to key stakeholders.
According to the FIU Legal Counsel, core duties of the FIU can be
carried without a full-time Director, in accordance with the
Anti-Money Laundering Act (AML). According to the Act, the FIU can
receive and analyze reports and enter into premises of financial
institutions, without specific reference to the Director. While it
is possible that a future Director might change staffing upon
arrival, the US Department of Treasury's Office of Technical
Assistance (an MCC implementing partner) decided that based on its
experience in other countries (and in consultation with the GOM and
USAID/Malawi),standing up the FIU without a Director was the most
practical course of action. It was also learned during this visit
that the FIU already received, and has begun processing, its first
report on a "suspicious" financial transaction.


3. (U) The delegation recognized that to successfully fulfill the
mandate of the AML Act, a fully functional FIU needs to be
complemented with strong investigative and prosecutorial capacity in
the GOM. MCC is currently addressing this with capacity-building
and technical assistance provided to the Fiscal and Fraud Unit of
the Malawi Police Service, the Malawi Revenue Authority, the Reserve
Bank of Malawi, the Director of Public Prosecutions at the Ministry
of Justice, and key committees in the National Assembly. While not
a direct MCC beneficiary, the Anti-Corruption Board (ACB) has
benefited by sending people to relevant training programs.

Gondwe: Opposition Blocking Anti-Corruption Nominees
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4. (SBU) Malik Chaka met with the Minister of Finance Goodall
Gondwe, who has played a leading role in pushing forward a robust
economic reform agenda. Gondwe acknowledged that the GOM has not
achieved as much as he had hoped in streamlining the process of
starting a business in Malawi. He also regretted that the GOM had
not been able to obtain Parliamentary approval for a number of key
officials in anti-corruption institutions, but the minister argued
persuasively that the agenda of the opposition majority in
Parliament is to block prosecution of high-level corruption during
the previous administration. Gondwe added that he did not expect
tensions between opposition leaders and the ruling party to diminish
significantly until after national elections expected in 2009.
Local, Parliamentary and presidential elections were likely to
happen simultaneously in 2009, he added, though a Constitutional
amendment would have to be approved by Parliament to approve the new
schedule.

Business Community Sees More Stability, Less Corruption
-------------- --------------


5. (SBU) The delegation met with representatives from the business
community, including the private media, the agriculture and banking
sectors, and financial services. There was a consensus that the
current government has played in instrumental role in promoting
macro-economic reform and stability, and in reducing corruption at
all levels. The GOM has also established a more pro-business
climate in the country, business leaders agreed. However, there was
a recognition that more needs to be done to create a truly enabling
environment for the private sector to contribute more fully to
economic growth and development. There was a general consensus
that MCC-funded investment in infrastructure, both road and rail,
would have the broadest benefits. Education/computer investments
and small-scale irrigation projects were mentioned as well as
potential areas for MCC programs.


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TCP Sustainability
--------------


6. (U) In all of the meetings, the delegation focused on the
sustainability of anti-corruption interventions supported by MCC.
Implementing partners and GOM counterparts shared their perspectives
on this. Regarding capacity-building, it was noted that in several
cases training sessions were led by Malawian beneficiaries of
MCC-supported "train-the-trainer" programs, with oversight and
mentoring by MCC USG resident advisors. It is anticipated that
Malawian ownership of these kinds of programs will deepen over the
next quarter. The Government of Malawi (GOM) also, ahead of
schedule, assumed the full responsibility of paying the salaries of
parliamentary committee clerks originally supported by MCC through
the State University of New York (SUNY),the MCC implementing
partner working on legislative strengthening in the NA. These
clerks provide the NA Secretariat with the capacity to manage a
robust committee system led by trained professionals, thus
facilitating informed legislative oversight of the executive
branch.

Conclusion: Strong Progress through TCP
--------------


7. (U) Overall, the delegation observed that the four Malawi TCP
implementing partners have made strong progress in implementing a
wide array of anti-corruption activities, despite the challenging,
and often tense, political environment in Malawi.

EASTHAM