VZCZCXRO0558
PP RUEHLMC
DE RUEHLS #1184/01 3540824
ZNR UUUUU ZZH
P 190824Z DEC 08
FM AMEMBASSY LUSAKA
TO RUEHC/SECSTATE WASHDC PRIORITY 6569
RUEHLMC/MILLENNIUM CHALLENGE CORP PRIORITY 0085

UNCLAS SECTION 01 OF 02 LUSAKA 001184 
 
SENSITIVE 
SIPDIS 
 
STATE FOR AF/S - M. SHIELDS 
STATE ALSO FOR EEB/IFD/ODF - K. ENSTROM 
MCC FOR J. HEWKO, D. TETER, AND S. RHOADES 
 
E.O. 12958: N/A 
TAGS: EAID ECON PREL KMCA ZA
SUBJECT: ZAMBIA ENTHUSIASTICALLY EMBRACES MCA COMPACT 
PROCESS 
 
¶1. (SBU)  In a December 18 meeting, the Ambassador briefed 
President Rupiah Banda on Zambia's newly announced Millennium 
Challenge Account (MCA) compact eligibility.  The Ambassador 
stressed that the Millennium Challenge Corporation (MCC) 
board had selected Zambia because of its commitment to 
governing justly, promoting economic reform and investing in 
its people, particularly in the areas of health and 
education.  The Ambassador described the first phases of MCA 
compact development that would begin with an introductory 
visit by MCC officials early in 2009.  He cautioned that 
Zambia must remain vigilant to maintain its eligibility 
status throughout the approximately two year compact 
negotiation process and it should pay particular attention to 
anti-corruption efforts.  (The Ambassador made a pitch to 
pass long-stalled asset disclosure, whistleblower protection, 
and anti-money laundering bills, but the President seemed not 
to be well briefed on these.)  The Ambassador underscored 
that a focused, integrated, and rational MCA program that 
reduces poverty through income generation, job creation and 
sectoral and/or regional economic growth should "solve 100 
percent of one or two problems rather than 10 percent of 
several issues."  The Ambassador urged the President to 
appoint an empowered MCA Compact Coordinator and to include a 
two to three million U.S. dollar line item in the Zambian 
government's (GRZ's) 2009 budget (which will be presented to 
parliament by February 2009) to fund the Zambian core team 
and the compact negotiation process, including consultative 
mechanisms and analyses of constraints to growth.  Banda took 
down a note and agreed to discuss it with the Finance 
Minister.  The Ambassador emphasized that an MCA compact was 
a Zambian plan, led by the GRZ.  To ensure broad ownership, 
it should reflect the interests and positions of all Zambian 
stakeholders.  A clearly engaged, enthusiastic, and 
interested Banda said MCA was "important" and indicated it 
would definitely be a national priority over the coming 
months.  Banda did ask whether the negotiations could be 
accelerated to cut the negotiation time to less than two 
years.  The Ambassador said that thorough preparation and 
good organization on the Zambian side would certainly help, 
but that compacts traditionally take 18 to 24 months to 
complete. 
 
¶2.  (U)  Also on December 18, DCM, P/E Chief, and USAID FSN 
met with working level Ministry of Finance officials to 
deliver similar messages.  DCM reviewed expectations for the 
MCC's initial introductory visit, previewed the MCC's 
upcoming tasking to name a full-time, empowered POC and to 
assembly a team comprised of an economist, a monitoring and 
evaluation expert, and a person to design and implement a 
consultative mechanism.  DCM also underscored the urgency and 
importance of including two to three million U.S. dollars in 
a FY 09 budget line for conducting MCA compact negotiations. 
After hearing the proposed timeline for constraint analysis, 
consultation, concept preparation, appraisal and funding, GRZ 
officials asked whether the two-year timeline could be 
accelerated.  P/E chief and DCM said that proper preparation 
and organization could facilitate early phases, including the 
introductory visit.  Pamela Bwalya from the Finance Ministry 
said that in October, MCC officials in Washington told her 
that GRZ consultative processes in developing Zambia's (now 
three year old) Fifth National Development Plan (FNDP) could 
mean that the consultative phase might be curtailed.  Another 
official noted that both the preparation of the FNDP and the 
ongoing mid-term review are analyzing the constraints to 
growth in Zambia; she hoped to coordinate this process with 
MCC's anticipated requests.  P/E Chief provided MCC website 
information to help GRZ officials prepare for the earliest 
stages of the compact process. 
 
¶3.  (SBU)  Comment:  From top to bottom, the GRZ is anxious 
to begin the MCA compact negotiations and eager to accelerate 
the two-year process.  The President and working level 
Finance Ministry contacts were grateful for the briefings and 
for the vote of confidence implied by eligibility.  In the 
coming days, Finance Ministry officials will travel to Dar es 
Salaam to consult with Tanzanian officials on their 
experiences negotiating an MCA compact.  The Zambians are 
also planning to consult with Namibian counterparts.  The 
request for a budget line item was sobering.  One Finance 
official, noting the U.S. request for a GRZ budget line item 
commitment, pressed DCM for a USG commitment to MCA funding 
in outyears given the change of administration in the United 
States, new budgetary realties, and a looming recession. 
Nonetheless, all got the message that Zambia must make this a 
national priority or a compact is a "no go."  Post would 
welcome an MCC visit as early as possible in 2009, preferably 
in the second half of January. 
 
LUSAKA 00001184  002 OF 002 
 
 
 
BOOTH