US embassy cable - 05MAPUTO106

UNCLAS MAPUTO 000106 
 
SIPDIS 
STATE FOR AF/S -- HTREGER 
E.O. 12958: N/A 
TAGS: PGOV, PREL, MZ, KCOR, ELAB, ESF 
SUBJECT: Mozambique: Request for FY 2005 ESF funding 
 
REF: STATE 4550 
 
1. Summary: Post requests USD 700,000 for FY2005 to fund efforts 
to combat official corruption by promoting integrity and 
transparency within the public sector and to improve the 
investment climate by making the regulatory framework for 
resolving labor disputes more investment-friendly. Anti- 
corruption projects will focus on strengthening institutions to 
enforce new conflict of interest and procurement rules. The 
labor component will help to develop a more flexible labor law 
and establish a labor dispute resolution function within the 
Attorney General's Office. End Summary. 
 
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Activity One: Expand Capacity to Combat Official Corruption 
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2. Senior GRM officials, including President-elect Armando 
Guebuza, have expressed growing concern over official corruption 
in Mozambique. Combating corruption featured prominently in 
President-elect Guebuza's campaign. In 2004, the National 
Assembly passed new anti-corruption measures due largely to 
increasing public pressure for action against rumored high-level 
stealing and bribery. The new rules arm prosecutors with 
legislation governing conflict of interest and procurement 
procedures areas where official corruption is particularly 
pernicious. At present, however, the GRM has very limited 
implementation and enforcement capacity for these new 
regulations. 
 
3. Post's Mission Performance Plan includes efforts to combat 
official corruption through effective implementation of these 
legal reforms. The strategies include educating targeted groups 
(e.g. individuals and companies that do business with donors and 
government officials involved in procurement) on legal and 
ethical issues related to conflict of interest and procurement 
rules; training government inspectors and Administrative Court 
auditors on implementing these rules; and providing technical 
assistance to strengthen the conflict-of-interest and 
procurement laws. 
 
4. Post requests USD 400,000 for this effort. The activity 
would be managed by USAID and implemented through contract(s) 
with local or international consultants and/or firms. 
 
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Activity Two: Create a More Flexible Regulatory Framework for 
Labor Mediation 
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5. Post's top priority in its Mission Performance Plan is 
working to improve the business and investment climate in 
Mozambique. The GRM urgently needs labor legislation that is 
more investment-friendly. A substantial backlog of unresolved 
labor cases now exists. As a result, there is a strong 
consensus among government, unions and private sector 
representatives on the need for labor arbitration mechanisms. 
Mozambique compares unfavorably to its neighbors in this 
respect, all of which have functioning labor courts and well- 
developed alternative dispute resolution (ADR) forums. It 
appears likely that the GRM will approve the labor mediation 
bill and implement new labor legislation by late 2005. 
 
6. Post requests USD 300,000 to help the GRM draft a new labor 
law and train lawyers working in the Attorney General's Office 
in labor dispute resolution. Using USD 150,000, Post would 
provide a grant for technical assistance to CTA, a confederation 
of business associations representing the private sector, to 
draft the employer's required input to labor legislation. 
Additionally, USD 150,000 would be used to provide training, via 
a private law firm, to lawyers working in the Attorney General's 
Office. This would serve to train public officials in labor 
dispute resolution in order to resolve the backlog of cases 
currently waiting to be heard in court. The activity would be 
managed by USAID. 
LA LIME