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Cablegate: Fy O4 Bfif Proposal

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 MAPUTO 000084

SIPDIS
DEPT FOR EB/CBA, AF/EPS, AF/S
JOHANNESBURG FOR FCS
DURBAN FOR FCS
E.O. 12958: N/A
TAGS: BEXP BTIO EINV ETRD ABUD MZ BFIF
SUBJECT: FY O4 BFIF PROPOSAL

REF: (A) 03 STATE 347748 (B) MAPUTO 70

1. Post requests funding in the amount of $30,322 under the
Business Facilitation Incentive Fund (BFIF) for FY 04.

2. In order of priority, we propose the following projects
for FY04:
A. Commercial Outreach, Market Development, and Export
Promotion. Proposed Funding Level: $15,322
Twice the size of California, Mozambique has ten provinces
and a capital city located in the southernmost province.
Maputo is far-removed from commercial and political activity
in a majority of the country, but dominates in attracting
foreign investment, entrepreneurs, and relies heavily on
access to the South African market. Because of its large
size, poor infrastructure, remote location from U.S. and
European markets, and commercial and labor codes that are
slow to reform, Mozambique has a long road ahead in
attracting significant foreign investment and achieving
regional competitiveness. However, the business community is
in constant communication with the GRM in order to reform
the business environment by creating more investment-
friendly policies and promoting competition. Firms currently
operating in Mozambique are in need of home country support
and outreach. Communication between firms, the GRM, and the
diplomatic community is critical to improvement of the
business climate and to ensure that fair treatment of firms
is achieved. Additionally, Post outreach to commercial
associations, entrepreneurs, agricultural institutes and
organizations, fishing associations, and industry is
critical to introducing U.S. products and programs to an
audience generally uninformed about U.S. opportunities and
the U.S. market.
Post travel to the provinces will focus on visiting U.S.
businesses in operation and offering continued support on
GRM relations and financial repayment of the VAT.
Additionally, econ/poloffs will take the opportunity to meet
with farmers, businessmen, entrepreneurs, academics, and
commercial associations to discuss U.S. export opportunities
and incentive programs such as AGOA. Discussions will focus
on how Mozambique can specifically benefit from AGOA in the
textile/garment and handicraft sector and how specific
sectors such as agriculture, construction, and aquaculture
may benefit from U.S. technology and market offerings.
Furthermore, Post would greatly benefit from consultations
at the regional FCS office in Johannesburg and USAID's
Southern Africa Global Competitiveness Hub in Gaborone. Post
works closely with FCS on various issues out of Durban and
Johannesburg such as joint research for commercial
inquiries, Gold Key Service requests, and local trade shows
and exhibitions. Additionally, Post works with Mozambique's
USAID private sector development team in weekly meetings,
focusing on issues such as labor, business registration, tax
administration, and import/export regulations and tariffs.
The opportunity to meet with officers in regional support
offices, shadow their work, and establish greater contact is
invaluable to Embassy Maputo and its operations, since it is
not home to a FCS office. Post would gain greater insight
on commercial resources and contacts, allowing for more
effective U.S. product promotion and program efforts in
Mozambique.
Commercial outreach, market development, and export
promotion is in line with Post's FY 2005 MPP Economic Growth
and Development Goal. Communication and establishment of
commercial contacts in-country will "promote trade openness
and exports to the region, the US, and the world" (Strategy
1). Additionally, Post's increased knowledge of U.S.
commercial resources, physical and virtual, will lead to
effective management of commercial inquiries, forging a
valuable relationship with Post and the Regional FCS, TDA,
and USAID Competitiveness Offices (Tactic 7). Key
performance indicators will be the rise in AGOA and other
U.S.-assisted exports to the U.S. and bilateral business-to-
business contacts established by the econ/commercial
section.
Post recommends the following commercial outreach travel:
Sofala/Manica/Tete Provincial Travel will include the
following site visits:
-Port of Beira, Mozambique's most active port
-Commercial Association of Sofala (ACIS); represents 27
businesses operating in Sofala, 2 of which are U.S.
businesses
-Mobeira - flour-producing mill owned by the U.S.
corporation Seaboard
-Belita - currently the only textile and garment factory
operating under AGOA
-Agricultural Institute of Chimoio
-Coca-Cola Bottling Factory, Chimoio
-Vilmar Rose Plantation
-Pescamar Fishing Association
-Moatize coal mines
-Zambeze River Valley Authority
-Cahora Bassa Hydroelectric Company
-Technoserve - American agricultural NGO
Total for Econ/Poloff and Commercial FSN - $3220
Transportation: $1000 ($500/person)
Per diem: $1320 ($110/day, 6 days)
Conference Room Rental: $900 ($300/site)
Zambezia/Nampula/Cabo Delgado/Niassa Provincial Travel will
include the following site visits:
-Nakosso Business Center
- Tenga, Ltd - Mozambique's first macadamia nut farm;
involves U.S. investors from CA
-Port of Nacala
-Technoserve - American agricultural NGO
-Kenmare Resources (Moma Heavy Sands Project)
-Business Centers Inc., Nampula (US-investor owned and
managed)
-Miranda Cashews - working successfully to produce and
export cashews with help from Technoserve
-Cuamba University
-Indian Ocean Aquaculture - large shrimp farm project with
U.S. investment
Total for Econ/Poloff and Commercial FSN - $4980
Transportation: $1800 ($900/person)
Per diem: $1980 ($110/day, 9 days)
Conference Room Rental: $1200 ($300/site)
Inhambane/Gaza/Maputo Provincial Travel will include the
following site visits:
-Port of Maputo
-MOZAL Aluminum Smelter - Mozambique's largest revenue-
earning firm
-SASOL natural gas pipeline
-US-Mozambican Chamber of Commerce
-Center for Investment Promotion (CPI)
-Export Promotion Center (IPEX)
-Association of Business Confederations (CTA)
-Vilankulos Wildlife Sanctuary, Lighthouse Lodge (U.S.
investment)
-Eduardo Mondlane University
-CITRUM - Mozambican citrus-producing company
Total for Econ/Poloff and Commercial FSN - $2300
Transportation: $300 ($150/person)
Per diem: $1100 ($110/day, 5 days)
Conference Room Rental: $900 ($300/site)
Post recommends the following training/consultation travel:
Consultations at FCS and TDA Johannesburg - $2976
Bi-annual travel for two Econ/Poloffs and the Commercial FSN
to Johannesburg: Round-trip airfare $1800 (six trips) and
per diem $1176 (six two-day trips).
Consultations at Southern Africa Global Competitiveness Hub
in Gaborone, Botswana - $1,856
Travel for one Econ/Poloff and the Commercial FSN to
Gaborone: Round-trip airfare $1130 (two trips) and per diem
$726 (two three-day trips)
Post anticipates that this travel will produce critical
results for U.S. investment in-country and commercial
resource knowledge at Post. The rising number of commercial
inquiries Post receives and the increase of U.S. business
investment in Mozambique will measure commercial outreach.
Similarly, a rise in U.S. exports to Mozambique will signify
successful commercial work. An increase in the number of
local firms exporting under AGOA to the U.S. will also be a
quantifiable goal. Post travel to regional FCS, TDA, and
USAID competitiveness offices will improve Econ/Poloff and
Commercial FSN's knowledge of commercial resources, enabling
Post to deal more effectively and efficiently with
commercial inquiries. Performance metrics may include the
increased number of coordinated activities between FCS, TDA,
and Export Assistance Centers (EACs) and Post in FY04.
B. Key Investment Issues Seminar in partnership with
Mozambique-U.S. Chamber of Commerce. Proposed Funding
Level: $7000
A country in the midst of economic reform and development,
Mozambique has several issues that it must face in order to
increase foreign investment and increase regional economic
competitiveness. The following issues must be addressed by
the GRM: timeliness of business registration, tax
administration and VAT repayments to exempted firms and
donors, hiring of foreign labor, lack of available credit,
and land ownership. The private sector, donor communities,
and commercial associations engage in continuous dialogue
with the GRM to encourage the GRM to adopt more investment-
friendly policies and open up its markets to outside
investment. The GRM is slowly taking steps to see that
reform is made, but the current and prospective investment
community must be kept informed on such key issues affecting
business operations and market access.
Post proposes that a "Key Investment Issues Seminar" be
coordinated with the Mozambique-U.S. Chamber of Commerce to
bring to light current business and investment issues.
Currently, Post works closely with the Chamber of Commerce
and is establishing joint programs with the Chamber on
investment, health, and education. Members of the Chamber
are influential players in the local business community and
can bring their expertise in working in the Mozambique
commercial and labor systems to the table. Participants
would include potential and current investors, donors,
commercial and labor associations, and government
representatives.
Exact figure costs are not yet available, but our best
estimate for Post expenditure is $7000 for conference room
facilities and promotional materials. The Chamber may have
some funding available for this project, but is not able to
carry the event alone without USG help.
Post may measure project impact by progress achieved in
lessening the time it takes to register a business in
Mozambique and the increased willingness to liberalize labor
and commercial regulations. However, since movement requires
a dialogue between the GRM and the private sector, the GRM
must be ready and willing to implement liberal reform
changes. Due to the nature of such political processes
(especially in third world countries), achieving success in
this area will take time. Regardless, reform in these areas
must be achieved for Mozambique to open its markets to U.S.
investors who would be willing to come in and operate,
promoting and selling U.S. products.
Hosting a Key Investment Issues Seminar in coordination with
the Mozambique-U.S. Chamber of Commerce is in line with
Post's FY 2005 MPP Economic Growth and Development Goal.
Specifically, it will encourage "improvement in the business
and investment climates" (Strategy 2). A performance
indicator would be the amount of "red tape" eradication
achieved.
C. USDOC Catalog Show in Beira - Proposed Funding Level:
$8000
In order to promote U.S. products and market opportunities
in Mozambique's second largest commercial center, Post
proposes a DOC catalog show in the central Province of
Sofala, the city of Beira. Beira is home to Mozambique's
most active port and sees significant transit trade with
Zimbabwe and Malawi. The central provinces rely heavily on
the Beira development corridor that consists of railway and
road transportation from Harare to Beira. Commercial
activity along the corridor is vital to the survival of the
central provinces.
Post believes that the business community, investors,
producers, and suppliers would greatly benefit from a
catalog show showcasing available U.S. agricultural,
technical, and industrial products. Since most of the trade
fairs and catalog events take place in the capital city of
Maputo, often the Beira community is excluded from
participation because of the distance and cost of travel to
attend such events. An active commercial association, ACIS,
is working in Sofala to support businesses operating in that
area. Organizing in 2000, ACIS represents the interests of
27 businesses working in Sofala and is keen to investment
and commercial-related programming. Post can rely on the
expertise and strong participation of ACIS in the catalog
show, as they represent two U.S. firms already established
and working in the Sofala Province.
Exact figure costs are not yet available, but our best
estimate for Post expenditure is $8000 for space rental,
promotional materials, and Pol/econoff and Commercial FSN
travel to Beira.
Program success may be measured by the dollar increase of
U.S. exports as a result of increased U.S. product awareness
in Mozambique's second largest commercial hub. Additionally,
Post will make valuable business contacts by administering
the catalog show and will likely receive many more inquiries
regarding contact with U.S. firms for U.S. equipment and
business partnerships.
Presenting a USDOC Catalog Show is in line with Post's FY
2005 MPP Economic Growth and Development Goal. Such a
program will "promote trade openness and exports to the
region, the U.S., and the world" (Strategy 1). In
particular, a catolog show would showcase U.S. companies
looking to invest (Tactic 7). Performance indicators would
be the dollar increase of U.S. investment in Mozambique.

3. POC for the above-mentioned activities is Econ/Poloff
Loren Dent. She may be reached at 258-1-492-797, ext. 3422
and at dentln@state.gov
La Lime

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