VZCZCXRO3821
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #0791/01 2321114
ZNR UUUUU ZZH
R 191114Z AUG 08
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 9258
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0217

UNCLAS SECTION 01 OF 02 MAPUTO 000791 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PGOV PREL MZ
SUBJECT: DECENTRALIZATION INITIATIVE INCREASES LOCAL 
PARTICIPATION 
 
¶1.  (SBU) SUMMARY:  A rural development/decentralization 
initiative using low-interest loans implemented by the GRM 
has brought resources to remote districts that often see 
relatively little state investment and has generated some 
increased local participation in decision-making regarding 
the projects to be funded and accountability by local 
administrators to oversee successful projects.  FRELIMO 
leaders also appeared to hope that the program would pay 
political dividends for the party in upcoming local 
elections.  As local administrators were unaware that funds 
need to be repaid however, and many projects funded were not 
income-producing, the news that repayment is required has 
produced an outcry that might undermine any political gains. 
END SUMMARY. 
 
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$280,000 FOR DISTRICTS, AND SOME ACCOUNTABILITY 
--------------------------------------------- -- 
 
¶2.  (U) The GRM Ministry of State implemented a program late 
last year to ensure central government resources reached each 
district of the country to address local development needs. 
The cornerstone of this initiative was the Local Initiative 
Investment Fund (OIIL), which awarded up to 7 million 
meticais ($280,000) to development projects at the district 
level (one step below provincial administration).  Some 
observers criticized the scheme for its lack of financial 
controls, suggesting that it would be easily pocketed by 
local officials or used to reward party faithful at the local 
level.  Nonetheless, in many districts, the process used to 
identify projects (through councils made up of local citizens 
before approval by local administrators appointed by the 
central-government) generated significant local participation 
in decision-making and citizen oversight of the use of funds. 
 While some favoritism occurred, funds were used in many 
cases to build public infrastructure such as health clinics 
or schools or finance loan programs for local citizens. 
 
--------------------------------------------- - 
GUEBUZA STRESSES DECENTRALIZATION EFFORTS... 
--------------------------------------------- - 
 
¶3.  (SBU) In order to gain favor with voters in rural 
areas--where FRELIMO did not fare well in previous national 
elections--President Guebuza has put great pressure on 
district administrators (mostly FRELIMO members appointed by 
the central government) to engage in rural development 
strategies at the grassroots level*of which OIIL plays a key 
part.  Guebuza has also made the program a fundamental part 
of his 'open government,' when he visits districts, and 
highlights particularly successful OIIL projects. 
 
--------------------------------------------- --- 
...BUT REPAYMENT REQUIREMENT COMES AS A SURPRISE 
--------------------------------------------- --- 
 
¶4.  (U) While originally defined as small-scale development 
funds, the parameters of the OIIL haven,t seemed clear, even 
to the central government.  In late July, the GRM clarified 
that OIIL funding did not constitute a grant, but must be 
repaid.  Guebuza responded to negative comments about the 
repayment requirement by citing the need for transparency in 
governmental processes and alleging that the repayment was 
necessary to create an on-going source of future funding. 
Following the announcement, several district-level 
politicians announced that they will not seek OIILs due to 
repayment concerns.  Others who have received OIIL funding 
threatened to sue over regulation changes. 
 
--------------------------------------------- -- 
COMMENT: POLITICAL MOTIVATION; POSITIVE RESULTS 
--------------------------------------------- -- 
 
¶5.  (SBU) Public claims to the contrary aside, the Guebuza 
administration likely intended the program to further FRELIMO 
influence, especially in rural areas where the party has been 
less successful.  There is no doubt that constituents in a 
country where the same party has been in power for so long 
see the line between FRELIMO and the government as blurred, 
and could equate funding as coming from the party and not the 
government.  However, if Guebuza persists in his message that 
the funds must be repaid and penalties will accrue if 
repayment is not forthcoming, FRELIMO stands to potentially 
lose much of the political gain generated by the program from 
the resulting backlash. 
 
¶6.  (SBU)  Irrespective of intentions however, the OIIL 
program ultimately appears to have had positive consequences 
in some districts by empowering local politicians, increasing 
accountability of those officials to their constituencies and 
 
MAPUTO 00000791  002 OF 002 
 
 
further decentralizing government, particularly in the 
creation of local district councils to manage programs. 
These councils provide governance experience at the local 
level, and help to engage local populations, bridging the 
distance between the central government and rural voters, and 
may act to empower local politicians outside of the central, 
Maputo-based FRELIMO structure. 
Amani