LAUNCH OF MILLENNIUM CHALLENGE - ZAMBIA

UNCLAS LUSAKA 000648 SIPDIS E.O. 12958: N/A TAGS: EAID ZA SUBJECT: LAUNCH OF MILLENNIUM CHALLENGE - ZAMBIA ¶1. President Banda and the Ambassador launched September 11 the Millennium Challenge Account - Zambia (MCA-Z) initiative at State House, kicking off the long process to develop Zambia's MCC Compact. ¶2. In his remarks, the Ambassador delivered a strong statement emphasizing the necessity of maintaining eligibility through the MCA indicators as measured by third parties. He underscored the MCC philosophy that only through good governance, including effective anti-corruption efforts, investing in people, and expansion of economic and political freedom would investment in Zambia's development be sustainable and urged the Government of Zambia to remain focused on the opportunities presented by an MCA compact. ¶3. President Banda said, in his remarks, that Zambia had "made significant progress with regards to the (MCA) standards. We need not only maintain the standards but also build on this progress for Zambia, to remain eligible. This entails that a lot more effort must be applied." Banda noted his target was to sign the compact in April 2011. He called for widespread cooperation from within the GRZ as well as other Zambians to achieve this ambitious target, said he would hold National Coordinator Robert Liebenthal accountable for reaching it. Banda advised MCA-Z to focus on a) a few large projects that will have a large economic impact (vice many smaller ones),b) harmonization with Zambia's development plan as well as other cooperating partners, and c) projects that are already well advanced and can be implemented in a five-year timeframe. Banda specifically avoided identifying specific sectors for investigation. He acknowledged that questions had been raised about his government's commitment to anticorruption and its respect for civil liberties and the rule of law. Banda offered assurances his government is committed to tackling corruption and respective civil liberties and said it would demonstrate this through actions, not just words. ¶4. Deputy Minister of Finance and National Planning Kapepwe underscored the success of the MCC Threshold Program and the success of Zambia's anticorruption campaign thus far. She noted that in Zambia's recently released Mid-Term Expenditure Framework (its "rolling" budget projections),the GRZ intended to scale-up of efforts to promote economic diversification, with emphasis the agriculture, tourism and manufacturing sectors; expedite measures to reduce the cost of doing business; and further promote a growth enabling environment while addressing the constraints to broad based economic growth. Kapepwe asserted that these strategies are fully consistent with those of the MCC and hoped that the policy environment in Zambia would "support the identification and implementation of projects worthy of MCC support." ¶5. The GRZ's acknowledgement that recent governance issues could impact Zambia's eligibility for compact funding and its commitment to address eligibility issues was reassuring. Subsequently the Secretary of Treasury told P/E Chief that a special unit had been established to study the MCC indicators and develop a strategy for ensuring eligibility is maintained. BOOTH