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Viewing cable 07DARESSALAAM168, MCC CEO VISITS TANZANIA: GREAT EXPECTATIONS

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Reference ID Created Released Classification Origin
07DARESSALAAM168 2007-02-06 08:43 2011-08-25 00:00 UNCLASSIFIED Embassy Dar Es Salaam
VZCZCXRO0092
PP RUEHAP RUEHBZ RUEHDBU RUEHDT RUEHKN RUEHLMC RUEHMJ RUEHMR RUEHPB
DE RUEHDR #0168/01 0370843
ZNR UUUUU ZZH
P 060843Z FEB 07 ZDS ZUI HSD 0011
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC PRIORITY 5462
INFO RUCNCLM/MCC CANDIDATE COUNTRY COLLECTIVE PRIORITY
RUEHDS/AMEMBASSY ADDIS ABABA PRIORITY 3124
RUEHAN/AMEMBASSY ANTANANARIVO PRIORITY 0085
RUEHKM/AMEMBASSY KAMPALA PRIORITY 2919
RUEHTO/AMEMBASSY MAPUTO PRIORITY 7454
RUEHNR/AMEMBASSY NAIROBI PRIORITY 0471
RUEHRB/AMEMBASSY RABAT PRIORITY 0296
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEHLMC/MCC WASHINGTON DC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RHMFIUU/CJTF HOA//J3 PRIORITY
UNCLAS SECTION 01 OF 03 DAR ES SALAAM 000168 
 
SIPDIS 
 
/// CORRECTED COPY -- CLASSIFIECATION MARKING PARA 11 // 
 
SIPDIS 
 
DEPT FOR AF/A B YODER AND D MALAC 
ALSO FOR MCC FOR G BREVNOV AND M KAVANAUGH 
 
E.O. 12958: N/A 
TAGS: EAID PREL PGOV EFIN ECON ETRD TZ
SUBJECT: MCC CEO VISITS TANZANIA: GREAT EXPECTATIONS 
 
 
DAR ES SAL 00000168  001.4 OF 003 
 
 
1.  (SBU) SUMMARY.  During his visit to Tanzania from January 
28-30, Ambassador Danilovich, Chief Executive Officer of the 
Millennium Challenge Corporation (MCC), commended Tanzania's 
engagement in the MCC Compact process.  Repeatedly, he 
expressed his confidence that the MCC would successfully 
conclude a Compact with Tanzania and that the Compact would 
be the largest Compact the MCC had ever signed.  Throughout a 
series of high-level meetings, key GOT officials including, 
President Kikwete and President Karume, underlined their 
appreciation for the MCC, their high expectations, and their 
hope that the Compact would be concluded as soon as possible. 
 Without specifying an exact date, Ambassador Danilovich 
assured the GOT that he expected the Compact to be concluded 
before the end of the calendar year.  In addition to 
discussions on the Compact, Ambassador Danilovich stressed 
the importance of the Millennium Challenge Account (MCA) 
Threshold Program as a "stepping stone" to a full Compact. 
The GOT assured MCC delegates that it would uphold its "end 
of the bargain", implementing all components of the Threshold 
Program including the Financial Intelligence Unit (FIU), 
which the GOT said would be operational by July 1, 2007. END 
SUMMARY. 
 
 
MCC CEO: Confident About Success in Tanzania 
--------------------------------------------- 
2.  (SBU) Ambassador Danilovich commended the President of 
the United Republic of Tanzania, Jakaya Kikwete, President of 
Zanzibar, Amani Abeid Karume, and Minister of Finance, Zakia 
Meghji, for submitting an "excellent" Compact proposal to the 
MCC.  He emphasized the dedication which the Government of 
Tanzania (GOT) had demonstrated and said he had every 
confidence the MCC would conclude a successful compact in 
Tanzania. 
 
3.  (SBU) "For MCC, we have only praise and appreciation," 
President Kikwete said, summarizing the GOT's sentiment to 
Ambassador Danilovich during their meeting on January 28. 
Kikwete assured Ambassador Danilovich that whatever remained 
on Tanzania's side of the bargain "would be taken care of," 
noting that any delays with respect to establishment of the 
Financial Intelligence Unit (FIU) were "merely bureaucratic." 
 Kikwete highlighted that he had signed the Anti-Money 
Laundering Bill and that he expected Parliament to pass the 
Anti-Corruption Bill in 2007.  President Karume, Minister 
Meghji and other ministers echoed this sentiment throughout 
the MCC delegation's visit, expressing gratitude and great 
expectations for the Compact to have a nationwide impact on 
economic growth. 
 
MCC in Tanzania: Largest Compact to Date 
---------------------------------------- 
4.  (SBU) In the first of several meetings with the MCC 
delegation, Minister Meghji expressed her hope that the main 
projects in the GOT's Compact proposal would "sail through." 
She noted that there were additional projects outlined in the 
addendum to the GOT's proposal which she hoped might also be 
considered.  Ambassador Danilovich cautioned Meghji on adding 
projects at this stage of the process, explaining that the 
MCC Investment Committee had already approved advancement of 
Tanzania's proposal to the due diligence phase.  Adding 
projects, he noted, could cause delay and raise difficulties 
given financial constraints facing MCC. 
 
5.  (SBU) Ambassador Danilovich pointed out that while the 
amount was not yet final, Tanzania's Compact was likely going 
to be the largest Compact the MCC had ever signed.  To date, 
Ghana's Compact is the largest, totaling USD 547 million.  In 
the final wrap-up meeting on January 30, Minister Meghji 
assured Ambassador Danilovich that the GOT understood the 
resource limitations facing MCC and said that the GOT would 
not seek to add any projects from the addendum project list. 
She reiterated the GOT's great expectations for the Compact 
and the transformational impact it would have on economic 
growth.  She stressed Tanzania's interest in quickly moving 
through the due diligence process and arriving at the point 
of Compact signing as soon as possible. 
 
 
 
DAR ES SAL 00000168  002.4 OF 003 
 
 
Compact Timing: Balancing Speed and Quality 
-------------------------------------------- 
6.  (SBU) On timing for conclusion of the Compact, Ambassador 
Danilovich stressed the need to "balance speed and quality." 
Without predicting a specific date, Ambassador Danilovich 
told President Kikwete, President Karume and Minister Meghji, 
that the Compact would be concluded before the end of the 
year.  Ambassador Danilovich explained to Kikwete that the 
USG was currently facing a continuing resolution in Congress 
but that the MCC was hopeful to deal with any budget 
constraints and move forward.  President Kikwete said that he 
had heard about various issues related to MCC in the press 
and was very relieved to hear that the Compact for Tanzania 
was on track for 2007. 
 
 
MCA Threshold: A Stepping Stone to Compact 
------------------------------------------- 
7.  (SBU) In addition to the MCC Compact, Ambassador 
Danilovich held discussions regarding the MCA Threshold 
Program, reminding the GOT that the Threshold Program was an 
important "stepping stone" to a full Compact.  He stressed 
the need to reach targets in each area of the Threshold 
program including establishment of the Financial Intelligence 
Unit (FIU), stating that the Compact "cannot happen without 
the FIU."  Gray Mgonja, Permanent Secretary at the Ministry 
of Finance and the GOT's point of contact for the Threshold 
Program, told Ambassador Danilovich that he understood the 
MCA Threshold was a sort of "trigger" for the Compact. 
 
8.  (SBU) With respect to establishment of the FIU - one of 
the four main components of the MCA Threshold program - 
Mgonja told Ambassador Danilovich that the FIU would be 
operational by July 1, 2007.   Ambassador Danilovich noted 
that having an operational FIU was crucial to the Compact and 
repeated the need for the FIU to meet the international 
standards set by the Egmont Group.  Mgonja said the GOT would 
move quickly toward making the FIU operational and added that 
the FIU Stakeholders, Roundtable discussion, which the GOT 
had postponed in January 2007, would be held in March 2007 
after the February session of Parliament.  Mgonja admitted 
that the GOT, together with the USG and other stakeholders, 
would need to define "operational" and determine the best use 
of resources and expertise to ensure a fully functioning, 
well-equipped FIU. 
 
9.  (SBU) Ambassador Danilovich also met with the newly 
appointed Director General of the Prevention of Corruption 
Bureau (PCB), Edward Hoseah, to discuss anti-corruption 
efforts in Tanzania.  Hoseah explained to Ambassador 
Danilovich that strengthening the legal framework was of 
paramount importance to improving the environment to 
prosecute corruption.  Hoseah noted that the Anti-Corruption 
Bill would be presented to Parliament in February 2007 for a 
first reading and would most likely be passed by Parliament 
during the April 2007 session.  By covering areas such as 
procurement, tendering, and abuse of position, and including 
a whistle-blowers provision, Hoseah said that the new 
legislation "would give the PCB teeth." 
 
10.  (SBU) With regard to the Threshold targets, Hoseah said 
he had full confidence that the GOT would reach the target of 
28 prosecutions in 2007.  Highlighting that the MCC was 
gearing up to bring in hundreds of millions of dollars to 
Tanzania, Ambassador Danilovich emphasized the importance of 
a strong, well-functioning PCB.  Hoseah agreed, stating his 
primary goal was to make corruption a high-risk activity and 
to make sure that money given to Tanzania reached the 
intended beneficiaries. 
 
Comment:  Honeymoon Before the Wedding 
-------------------------------------- 
11. (U) The MCC and the GOT did not get into detailed 
discussions of specific Compact projects or implementation 
mechanisms.  Rather, Ambassador Danilovich's visit affirmed 
that the Compact process was on track in Tanzania and due to 
be concluded before the end of the year.  The GOT made no 
secret of their high expectations for the MCC grant and 
 
SIPDIS 
demonstrated that securing this grant was high priority. 
 
DAR ES SAL 00000168  003.4 OF 003 
 
 
President Kikwete, who returned to Tanzania between his trips 
to Davos and Addis Ababa, told Ambassador Danilovich, "I 
could not miss this meeting! I needed to be here."  While at 
the due diligence and implementation stages there will 
inevitably be some complications, this visit reflected the 
good will and enthusiasm on both sides for the MCC venture. 
There was no trace of discord regarding the GOT's progress on 
the Threshold Program, but Ambassador Danilovich, together 
with his team, did provide an unambiguous reminder that 
Compact funds are contingent upon successful implementation 
of the Threshold Program.  END COMMENT. 
RETZER