US embassy cable - 05MAPUTO75

UNCLAS SECTION 01 OF 05 MAPUTO 000075 
 
SIPDIS 
DEPT FOR EB/CBA - WINSTEAD, AF/S TREGER, and AF/EPS 
COMMERCE FOR RTELCHIN 
JOHANNESBURG FOR FCS RDONOVAN 
DURBAN FOR FCS - LKOHRS 
E.O. 12958: N/A 
TAGS: BEXP, BTIO, ECON, ETRD, ABUD, MZ, BFIF 
SUBJECT: Mozambique's FY05 BFIF Proposal 
 
REF: A. State 248715 
 
B. Dent-Winstead email on 01/10/05 with Mozambique 
Entrepreneurship Forum Draft Agenda Attachment 
 
1. Post requests funding in the amount of USD 30,223 under 
the Business Facilitation Incentive Fund (BFIF) for FY05. 
2. In order of priority, we propose the following three 
projects for FY05: 
 
--------------------------------------------- 
Project 1: Mozambique Entrepreneurship Forum 
--------------------------------------------- 
A. Justification: Mozambique lacks a healthy and well- 
developed small-to-medium-sized (SME) business environment. 
The lack of skilled labor, technological know-how, 
knowledge of export markets, and less than supportive 
government policies in labor, commerce, and finance 
(including customs) are considerable barriers for national 
and international investment. Although Mozambique is 
eligible for AGOA, it only exports USD 2 million of 
garments and seafood to the U.S. under AGOA each year. In 
order to further develop the Mozambican business 
environment and encourage a stronger trade relationship 
with the U.S., Post proposes a Mozambique Entrepreneurship 
Forum in March of 2005 (Ref B). 
The purpose of business development assistance through an 
entrepreneurship forum is twofold: to convince incoming 
government officials to continue with policy reform that 
will create a strengthened business climate and to 
demonstrate ways to increase the competitiveness of 
companies (existing and new) so that they may take 
increasing advantage of an improved business environment 
and begin to export. 
Mozambique's program will show the USG commitment to 
assisting the development of a business environment 
conducive to private sector growth. The government of 
President-elect Armando Guebuza will be in its initial, 
formative stages, and therefore, relatively open to policy 
reform discussions at the forum. Post also believes that 
private sector entrepreneurs would greatly benefit from 
technical assistance provided at such a forum. In this 
regard, much of the two-day seminar will focus on 
highlighting entrepreneurial success stories in Africa, 
including a few in Mozambique. 
B. Planning Milestones: Post has already enlisted the 
support of the U.S. Department of Commerce (USDOC), USAID 
Mozambique, and the Global Competitiveness Trade Hub in 
Gaborone, Botswana in planning an entrepreneurship forum. 
Planning milestones are as follows: 
+ Late January Confirm program agenda and contact 
presenters and forum moderator 
+ Early February Draft participant invitations, secure 
forum location, contract translation services, and confirm 
presenter participation 
+ Late February Send-out participant invitations 
+ Early March Confirm number of participants, draft 
opening speech to be given by the Ambassador, secure all 
presenter travel arrangements 
+ March 17 Mozambique Commerce Desk Officer arrives, AGOA 
Advisor from Global Competitiveness Hub arrives 
+March 17-21 Consultations for USDOC Desk Officer and 
AGOA Advisor; begin forum set-up; presenters arrive 
+March 22-23 Conduct Entrepreneurship Forum 
C. Performance Metrics/Anticipated Outcomes: Post expects 
officials, local businessmen, and prospective entrepreneurs 
will gain a greater knowledge of financial and technical 
assistance resources available to them in Mozambique. They 
will learn how various businesspersons were successful 
getting started in Mozambique and in other parts of Africa. 
In talks with U.S. and other international buyers, they 
will learn how to locate and work with specific export 
port 
markets. Proposed indicators to measure impact of the 
forum are listed below. 
+ Exports by sector 
+ Investment (foreign and national) 
+ Policy reforms approved (laws passed) 
+ Policy reforms implemented and corresponding procedures 
improved (service levels, time to complete requirements, 
e.g., days to start a business) 
+ Demand (number of clients) for business development 
assistance services 
D. Estimated Costs: Estimated Cost for the Mozambique 
Entrepreneurship Forum is approximately USD 15,000. 
+ USD 5100 Travel for three entrepreneurs from Gabon, 
Uganda, and Kenya to Maputo (USD 1700 per person x 3 people 
= USD 5100). 
+ USD 3000 USDOC Desk Officer Travel to Mozambique; Desk 
Officer will speak about finding markets in the U.S. and 
opportunities under AGOA 
+ USD 2220 Lodging (6 presenters x USD 185 x 2 nights = 
USD 2220) 
+ USD 1026 M&IE (6 presenters x USD 57 x 3 days = 1026) 
+ USD 1000 Simultaneous translation equipment 
+ USD 300 Translator 
lator 
+ USD 600 Conference space at the Hotel Avenida, Maputo 
+ USD 1000 Evening Reception featuring informational 
booths by USDOC, Global Competitiveness Hub Gaborone, 
International Finance Corporation (IFC), Technoserve, 
Corporate Council on Africa (CCA), and local banks 
+ USD 1200 Miscellaneous Expenses including printing 
program agendas, written translation services, etc. 
F. Leveraging Funding The Mozambique Entrepreneurship 
Forum will be a two-day event. The Department of State 
will host the first day of activities and the Global 
Competitiveness Hub in Gaborone, Botswana, will fund and 
host the second day of activities. The Hub has already 
submitted a proposal for funding the travel of two buyers 
from the United States. Additionally, the Hub will 
contract a consultant (proposed Phyllis Jones, former 
AUSTR under the Clinton administration) to provide a 
workshop on creating a business plan, marketing products, 
finding export markets, and other strategic business 
information to forum participants. USAID Mozambique is 
committed to funding in-country travel of specific 
participants whose presence at the forum will add 
significant value. This includes cashew producers in 
Nampula City that export to the U.S. (NOTE: USAID will 
only pay for in-country participant travel. In-country 
participant per diem is listed in the estimated cost budget 
above. END NOTE) USDOC has provided significant input to 
the proposed agenda and Post believes USDOC representation 
at the forum is critical. (NOTE: USDOC desk officer 
travel is requested in the estimated cost budget above. 
END NOTE) The Corporate Council on Africa (CCA) will travel 
to Mozambique and participate in the forum. 
G. Outcome/Success Criteria: The Entrepreneurship Forum 
will prove successful if working businessmen and aspiring 
entrepreneurs take advantage of financial and technical 
assistance resources available to them. Likewise, the 
seminar will be successful if the GRM continues current 
investment-friendly reforms of commercial, labor, and 
financial policies. 
H. Follow-up Strategy: Post will follow up with the host 
government by continuing to support commercial reforms to 
promote a more business-friendly environment. Post will 
manage this effort by supporting the Confederaao das 
Associaoes Econmicas de Moambique (CTA), a confederation 
of business associations that works directly with the GRM 
on legal reform. Post will also follow up with the local 
business community by gauging the request for financial and 
technical assistance. Additionally, Post will keep the 
business community informed of opportunities under AGOA and 
economic support available under various USG agencies. 
 
--------------------------------------------- -------- 
Project 2: Commercial Outreach and Export Promotion 
--------------------------------------------- -------- 
A. Justification: Mozambique has ten provinces, with a 
capital city located in the southernmost province. The 
The 
capital is far-removed from important commercial and 
political activity in the central and northern regions. 
Foreign firms 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. Additionally, Post 
outreach to commercial associations, entrepreneurs, 
agricultural institutes and organizations, 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. 
B. Planning milestones: Post will make two trips to key 
provinces in the central and northern regions. 
Econ/poloffs will visit U.S. businesses and 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 and how specific sectors such as 
agriculture, construction, and aquaculture may benefit from 
U.S. technology and market offerings. In December 2004, 
Mozambique qualified for Category 9 under AGOA. It is an 
opportune time to spread the word about how Mozambique can 
take advantage of this added export incentive. 
Furthermore, Post would greatly benefit from consultations 
at regional FCS, USDA, and U.S. Trade Development Agency 
(USTDA) offices in Johannesburg and Pretoria. Post's Econ 
Section works closely with all of these agencies on various 
issues such as joint research for commercial inquiries, 
Gold Key Service requests, and local trade shows and 
exhibitions. Through consultations, Post would gain greater 
insight into commercial resources and contacts, allowing 
for more effective U.S. product promotion and program 
efforts in Mozambique. 
Planning milestones for travel are as follows: 
+Sofala/Manica/Tete Provincial Travel (central region) 
April 2005. Travel will include the following site visits: 
-Port of Beira, Mozambique's most active port 
-Commercial Association of Sofala (ACIS); represents 30 
businesses operating in Sofala, two of which have U.S. ties 
-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, exporting to the European market 
-Pescamar Fishing Association largest in Mozambique 
-Zambeze River Valley Authority responsible for the 
development of the central region of Mozambique 
-Cahora Bassa Hydroelectric Company country's second 
largest revenue-producing company; supplies energy to South 
Africa and Zimbabwe 
-Technoserve American NGO lending technical assistance to 
agricultural and tourism projects 
+Zambezia/Nampula/Cabo Delgado Provincial Travel (northern 
region) July 2005. Travel will include the following 
site visits: 
-Port of Nacala Mozambique's only deepwater port; U.S. 
investment with OPIC financing 
-Indian Ocean Aquaculture Prawn aquaculture farm with 
limited U.S. investment; plans to export to the U.S. 
-Moma Heavy Sands Project a mineral sands mega-project by 
Kenmare Resources (Irish) 
-Business Centers, Inc. U.S.-owned and managed business 
consulting firm 
-Miranda Cashews successfully growing, processing, and 
exporting cashews with Technoserve assistance 
Post recommends the following training/consultation travel: 
+Consultations at FCS, FAS, and USTDA Johannesburg/Pretoria 
C. Performance Metrics/Anticipated Outcomes: Post 
anticipates that businesses across Mozambique will be well 
informed about exporting to the U.S. under AGOA. 
Additionally, the business community will be briefed on 
U.S. financing opportunities with agencies like OPIC, 
USTDA, and Ex-Im Bank. U.S. businesses in Mozambique will 
rely on Post's assistance with difficult issues plaguing 
the business-operating environment (VAT repayment, business 
registration process, judicial process, and others). Post 
will disseminate information on investment opportunities in 
Mozambique to firms in the U.S. Performance indicators 
include: 
+ Exports to the U.S. under AGOA 
+ Demand (number of clients) requesting USTDA, OPIC, and 
Ex-Im information and assistance 
+ Number of commercial inquiries received at Post (by U.S. 
businesses looking to invest in Mozambique and Mozambican 
businesses looking to work with firms in the U.S.) 
+ Number of issues resolved for U.S. businesses (VAT 
repayment, business registration procedures) 
D. Estimated Costs: Estimated Cost for commercial outreach 
and export promotion is USD 13,838. 
+Sofala/Manica/Tete Provincial Travel 
USD 4604 - Total for Econ/Poloff and Commercial FSN 
USD 1700 - Transportation ($600/person for air travel and 
USD 500 total for car rental) 
USD 2904 - Per diem (lodging and M&IE at $242/day, 6 days) 
+ Zambezia/Nampula/Cabo Delgado Provincial Travel 
USD 6956 - Total for Econ/Poloff and Commercial FSN 
USD 2600 - Transportation($900/person for air travel and 
USD 800 for car rental) 
USD 4356 - Per diem ($242/day, 9 days) 
+ Johannesburg/Pretoria Consultation Travel 
USD 2278 Total for Econ/Poloff and the Commercial FSN 
USD 1000 - Round-trip airfare ($500/person) 
USD 1278 Per diem ($213/day, 3 days) 
F. Leveraging Funding: Post has not leveraged funding from 
other agencies regarding the commercial outreach and export 
promotion project. 
G. Outcome/Success Criteria: Commercial outreach will be 
successful if Mozambican exports to the U.S. increase, 
particularly under AGOA. Outreach will also be successful 
if commercial work generates greater U.S. investment in 
Mozambique. 
H. Follow-up Strategy: Post will continue to conduct an 
AGOA digital video-conferencing (DVC) series between U.S. 
buyers and USG agencies and Mozambican officials and the 
business community. DVCs in 2003-2004 focused on the 
handicraft and textiles/garments sector. DVCs in 2005 will 
focus on more competitive sectors in Mozambique, such as 
agriculture/agro-processing and fisheries. 
 
--------------------------------------------- ------ 
Project 3: Regional Econ/Comm Officer Conference - 
Gaborone 
--------------------------------------------- ------- 
A. Justification Post would like to send the Econ/Comm 
officer to attend the regional Economic/Commercial officer 
training in Gaborone at the Global Competitiveness Hub on 
March 30-31, 2005. Econ/Poloff would benefit by learning 
about different economic, commercial, and trade resources 
and contacts available in the region. 
B. Planning Milestones: 
+ March 30-31 Econ/Poloff attends regional 
econ/commercial officer training 
+ April/May Econ/Poloff meets with various business 
groups, including the U.S.-Mozambique Chamber of Commerce, 
local business associations, and officials from the 
Ministry of Industry and Commerce to speak about economic, 
trade, and financial assistance in the region 
C. Performance Metrics/Anticipated Outcomes Econ/Commoff 
will be more effective in communicating the objectives and 
availability of USG economic and trade-related resources 
when speaking with local businesses and government. 
Additionally, Post's increased knowledge of contacts and 
resources in the region could lead to more economic and 
trade-related programs in Mozambique. Specific performance 
indicators are as follows: 
+ Increased number of businesses referred to USG agency 
contacts (FCS, USTDA, Ex-Im Bank, OPIC) 
+ Increased number of joint economic and trade-related 
programs in Mozambique(involving Post, the Hub, and FCS) 
D. Estimated Costs: 
USD 1385 Total for Econ/Poloff to attend training 
USD 800 - Round-trip airfare 
USD 585 Per diem ($195/day, 3 days) 
F. Leveraging Funding: Post has not coordinated with other 
agencies to leverage funding for this proposed project. 
 
3. POC for the above-mentioned activities is Econ/Poloff 
Loren Dent. She may be reached at 258-1-492-797, ext. 3422 
22 
and at dentln@state.gov 
LA LIME