Identifier
Created
Classification
Origin
09LUSAKA937
2009-12-14 14:24:00
UNCLASSIFIED
Embassy Lusaka
Cable title:
MCA-ZAMBIA'S CONSTRAINTS ANALYSIS ROAD SHOW
how-toVZCZCXRO5539 RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN DE RUEHLS #0937/01 3481424 ZNR UUUUU ZZH R 141424Z DEC 09 FM AMEMBASSY LUSAKA TO RUEHC/SECSTATE WASHDC 7505 INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE RUEHLMC/MILLENNIUM CHALLENGE CORP 0196
UNCLAS SECTION 01 OF 02 LUSAKA 000937
SIPDIS
E.O. 12958: N/A
TAGS: ECON EAID KMCA ZA
SUBJECT: MCA-ZAMBIA'S CONSTRAINTS ANALYSIS ROAD SHOW
REF: LUSAKA 206
LUSAKA 00000937 001.2 OF 002
SUMMARY
--------
UNCLAS SECTION 01 OF 02 LUSAKA 000937
SIPDIS
E.O. 12958: N/A
TAGS: ECON EAID KMCA ZA
SUBJECT: MCA-ZAMBIA'S CONSTRAINTS ANALYSIS ROAD SHOW
REF: LUSAKA 206
LUSAKA 00000937 001.2 OF 002
SUMMARY
--------------
1. (U) Zambia's Millenium Challenge Account office (MCA-Z)
presented its preliminary constraints analysis (CA) results
in a whirlwind 15-day road show to government and private
sector stakeholders. The report includes separate
employability and business environment analyses, and
concludes that economic growth is constrained by the poor
health, education and low productivity of the Zambian
workforce, by underdeveloped infrastructure services, and by
coordination failures. The MCA-Z team also presented its
compact project selection criteria and timeline. In addition
to general MCC selection criteria, the MCA-Z team presented
project selection criteria which it developed using lessons
learned from previous compact country plans successes and
challenges. MCA-Z has an ambitious timeline for project
identification and selection, with proposal outlines due
December 11. End Summary.
MCA-Z CONSTRAINTS ANALYSIS
--------------
2. (U) From November 23 to December 11, MCA-Z National
Coordinator Bob Liebenthal and Deputy Coordinator Pam Bwalya
barnstormed sector advisory groups (SAG) that represent
government and private sector stakeholders across Zambia's
economic and social sectors to present their preliminary CA
results. The CA is a key step in country compact
development. At a trade and industry SAG meeting on December
3, one of 15 SAGs that the team visited, Bwalya explained
that the MCA-Z CA team adopted a World Bank study on the
constraints to inclusive growth in Zambia as a key reference
document, explaining that MCC encourages the use of existing
studies to avoid "reinventing the wheel."
3. (U) MCA-Z analyzed why Zambia's economic growth has been
constrained, and what is constraining current growth from
being more inclusive and resulting in greater poverty
reduction in the country. The constraints analysis included
both an employability analysis, in which they examined the
factors determining the qualitative supply of labor, and a
business environment analyis, which includes a study of both
the access to and demand for finance, and factors determining
economic rates of return.
4. (U) The preliminary results show that Zambia suffers from
both employability and business environment constraints.
Labor constraints include poor health status, low education
levels, and low productivity levels, especially in
agriculture. The CA also found that a scarcity of
specialized skills in the workforce was a binding constraint
on economich growth. Poor infrastructure services,
especially in electricity, water and sanitation, rural feeder
roads, and railway transport, constrain economic growth. The
team highlighted high transport costs due to road conditions
and fuel prices as a binding constraint. Finally, Zambia
suffers from coordination and information failures, which
constitutes a binding constraint as those failures lead to
high indirect costs in business, undermining Zambia's ability
to innovate and become more competitive in world markets.
PROJECT SELECTION -- CRITERIA AND TIMELINE
--------------
5. (U) The MCA-Z team discussed MCC project selection
criteria and the next steps in the compact development
process. Bwalya also explained additional criteria that the
MCA-Z team developed using lessons learned from previous
compact country plans. The MCA-Z team plans to elicit
project proposals from across stakeholder groups that not
only meet MCC criteria, but are generally larger than USD 50
million and have had some preparatory work done, can leverage
other financing, either from the private sector or other
donors, and address binding constraints identified in the CA.
The team is looking to choose approximately six projects for
submission to the MCC as part of Zambia's compact.
6. (U) MCA-Z has an ambitious timeline for project submission
and selection. Projects were due on December 11, the last
scheduled day of the CA road show. MCA-Z plans to start
consultations with members of parliament, local chiefs, and
other stakeholders in late December, and to select up to six
projects for concept paper preparation. They intend to get
Cabinet approval by mid-January, and submit proposals to MCC
by January 22. As of December 3, MCA-Z had received no
proposals. SAGs were meeting ahead of the deadline to try to
create proposals that would fit the MCA-Z criteria. A donor
representative who attended a follow-on trade and industry
SAG meeting on December 10 told Econoff that the group was
LUSAKA 00000937 002.2 OF 002
hard-pressed to meet the deadline, and so their proposals
were short on detail and overlap with existing assistance
programs.
COMMENT
--------------
7. (SBU) The MCA-Z team has set an ambitious timeline for
themselves. They have made significant progress since
opening the MCA-Z office in summer 2009, and were quick to
produce a CA. However, many of the stakeholders at the SAG
meetings were somewhat unaware of the MCA-Z compact
development process before the briefing. MCA-Z will be
hard-pressed to maintain its pace, receive quality project
proposals and prepare concept papers for approval by Cabinet
and submission to MCC by January.
BOOTH
SIPDIS
E.O. 12958: N/A
TAGS: ECON EAID KMCA ZA
SUBJECT: MCA-ZAMBIA'S CONSTRAINTS ANALYSIS ROAD SHOW
REF: LUSAKA 206
LUSAKA 00000937 001.2 OF 002
SUMMARY
--------------
1. (U) Zambia's Millenium Challenge Account office (MCA-Z)
presented its preliminary constraints analysis (CA) results
in a whirlwind 15-day road show to government and private
sector stakeholders. The report includes separate
employability and business environment analyses, and
concludes that economic growth is constrained by the poor
health, education and low productivity of the Zambian
workforce, by underdeveloped infrastructure services, and by
coordination failures. The MCA-Z team also presented its
compact project selection criteria and timeline. In addition
to general MCC selection criteria, the MCA-Z team presented
project selection criteria which it developed using lessons
learned from previous compact country plans successes and
challenges. MCA-Z has an ambitious timeline for project
identification and selection, with proposal outlines due
December 11. End Summary.
MCA-Z CONSTRAINTS ANALYSIS
--------------
2. (U) From November 23 to December 11, MCA-Z National
Coordinator Bob Liebenthal and Deputy Coordinator Pam Bwalya
barnstormed sector advisory groups (SAG) that represent
government and private sector stakeholders across Zambia's
economic and social sectors to present their preliminary CA
results. The CA is a key step in country compact
development. At a trade and industry SAG meeting on December
3, one of 15 SAGs that the team visited, Bwalya explained
that the MCA-Z CA team adopted a World Bank study on the
constraints to inclusive growth in Zambia as a key reference
document, explaining that MCC encourages the use of existing
studies to avoid "reinventing the wheel."
3. (U) MCA-Z analyzed why Zambia's economic growth has been
constrained, and what is constraining current growth from
being more inclusive and resulting in greater poverty
reduction in the country. The constraints analysis included
both an employability analysis, in which they examined the
factors determining the qualitative supply of labor, and a
business environment analyis, which includes a study of both
the access to and demand for finance, and factors determining
economic rates of return.
4. (U) The preliminary results show that Zambia suffers from
both employability and business environment constraints.
Labor constraints include poor health status, low education
levels, and low productivity levels, especially in
agriculture. The CA also found that a scarcity of
specialized skills in the workforce was a binding constraint
on economich growth. Poor infrastructure services,
especially in electricity, water and sanitation, rural feeder
roads, and railway transport, constrain economic growth. The
team highlighted high transport costs due to road conditions
and fuel prices as a binding constraint. Finally, Zambia
suffers from coordination and information failures, which
constitutes a binding constraint as those failures lead to
high indirect costs in business, undermining Zambia's ability
to innovate and become more competitive in world markets.
PROJECT SELECTION -- CRITERIA AND TIMELINE
--------------
5. (U) The MCA-Z team discussed MCC project selection
criteria and the next steps in the compact development
process. Bwalya also explained additional criteria that the
MCA-Z team developed using lessons learned from previous
compact country plans. The MCA-Z team plans to elicit
project proposals from across stakeholder groups that not
only meet MCC criteria, but are generally larger than USD 50
million and have had some preparatory work done, can leverage
other financing, either from the private sector or other
donors, and address binding constraints identified in the CA.
The team is looking to choose approximately six projects for
submission to the MCC as part of Zambia's compact.
6. (U) MCA-Z has an ambitious timeline for project submission
and selection. Projects were due on December 11, the last
scheduled day of the CA road show. MCA-Z plans to start
consultations with members of parliament, local chiefs, and
other stakeholders in late December, and to select up to six
projects for concept paper preparation. They intend to get
Cabinet approval by mid-January, and submit proposals to MCC
by January 22. As of December 3, MCA-Z had received no
proposals. SAGs were meeting ahead of the deadline to try to
create proposals that would fit the MCA-Z criteria. A donor
representative who attended a follow-on trade and industry
SAG meeting on December 10 told Econoff that the group was
LUSAKA 00000937 002.2 OF 002
hard-pressed to meet the deadline, and so their proposals
were short on detail and overlap with existing assistance
programs.
COMMENT
--------------
7. (SBU) The MCA-Z team has set an ambitious timeline for
themselves. They have made significant progress since
opening the MCA-Z office in summer 2009, and were quick to
produce a CA. However, many of the stakeholders at the SAG
meetings were somewhat unaware of the MCA-Z compact
development process before the briefing. MCA-Z will be
hard-pressed to maintain its pace, receive quality project
proposals and prepare concept papers for approval by Cabinet
and submission to MCC by January.
BOOTH