PRIME MINISTER DISCUSSES INVESTMENT, AID,

C O N F I D E N T I A L SECTION 01 OF 02 MAPUTO 001322

SIPDIS

SIPDIS

STATE PASS USAID/AFR/SA

E.O. 12958: DECL: 11/13/2017
TAGS: PGOV ECON EAID ETRD PREL MZ
SUBJECT: PRIME MINISTER DISCUSSES INVESTMENT, AID,
CORRUPTION


Classified By: Charge d'Affaires Todd C. Chapman, Reasons 1.4(b) & (d)


1. (C) Summary: The Charge and USAID Director met with
Prime Minister Luisa Diogo on 11/8 and discussed business
environment concerns, the important USG role in donor
assistance, efforts to reduce corruption in government,
peacekeeping and Zimbabwe. Clearly grasping how to make
bureaucracy more efficient, she was most comfortable with
investment and assistance issues, but she also said the right
things on anti-corruption and PKOs while avoiding Zimbabwe
altogether. End Summary.

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Business Environment
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2. (U) Charge noted continued USG interest in the private
sector in Mozambique, adding that recent conversations with
U.S. businesses had centered on obstacles they face in
investing. He observed that Mozambique's score was still
quite low in the worldwide 'Doing Business' ranking published
by the World Bank, and noted that the country of Georgia had
made the largest leap ever in the rankings when the PM of
that country took the initiative to focus on investment
reforms. USAID Director also noted that the USG sees much
activity by the Ministry of Commerce to support investment,
but not as much by other ministries, and asked Diogo if she
could play a role in focusing all Ministers on these reforms.



3. (U) The PM agreed, noting that many bureaucrats do not
understand the concept of customer service. She said that
the GRM was working to increase the number of 'one-stop'
windows for government services in the provinces, which could
help. She noted that the Doing Business rankings reflected
2006 data and did not include the significant progress that
the GRM had made this year. She also said that she had
convoked regular meetings of the permanent secretaries of
each ministry to reduce stovepiping and to increase
communication on cross cutting issues, which was increasingly
successful, and added that she wanted to learn more about
Georgia's experience.

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Development
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4. (U) Charge emphasized the USG's status as the largest
bilateral donor to Mozambique. USAID director highlighted
USG assistance in the tourism sector, particularly in the
Gorongosa, Pemba, and Niassa regions. The PM expressed great
interest in these projects. She noted hoteliers currently
enjoying commercial success in Pemba were evaluating a $400m
tourism complex in Inhambane. She also pointed to $50m in
Chinese financing for upgrades to Maputo's airport, set to
begin this year, while Spain was assisting in construction of
airport facilities in Pemba. She added that agricultural
projects in the banana and cashew sectors were underway.

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Anti-Corruption
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5. (SBU) Pointing to our role as a key donor, USAID Director
asked how we and other international players should support
anticorruption efforts in Mozambique. The PM immediately
responded that donors needed to support the GRM five-year
development plan, which included an anticorruption agenda.
She said that the international community and the GRM were
reacting 'just in time,' before the situation worsened. In
particular, she said the GRM, with World Bank assistance, was
considering ways to significantly increase public workers'
salaries in a bid to reduce graft.

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Zimbabwe, Peacekeeping
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6. (C) The Charge expressed concern about the situation in
Zimbabwe, and strong USG interest in GRM participation in
PKOs. He noted the opportunity to professionalize the
country's armed forces and raise the country's profile
regionally. Skipping over Zimbabwe, the PM said
participating in PKOs was important given the country's
history as a post-conflict success story, but made no
commitments. Alluding to the country's increased
international stature, she pointed to the Mo Ibrahim African
Leadership Prize recently awarded to former President

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Chissano, who she called 'more African now than Mozambican'
given his work in countries throughout the continent.

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Comment: Sophisticated on Economic and Aid issues
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7. (C) The PM showed a sophisticated grasp of how to work
the bureaucracy, how to make government systems work more
efficiently, and obviously understood the importance of the
USG's role as a key donor. Clearly most comfortable in
discussing assistance and economic issues, she delved deeply
into technical detail in these areas. Making all the right
statements about improving the business environment, she
seemed somewhat defensive about Mozambique's assessed ranking
in recent reports in this area. Her references to former
President Chissano seem to confirm the consensus view locally
that Diogo remains a close political ally of Chissano's, and
therefore on occasion at odds with President Guebuza and his
inner circle. Diogo, age 49, is a bright, articulate, and
impressive official often mentioned as a possible future
presidential candidate. Following this introductory call, we
better understand the reasons for this speculation.
Chapman