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South Africa: Aid for Mozambique Offers Opportunities
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Business Day (Johannesburg)
ANALYSIS
4 December 2007
Posted to the web 4 December 2007
Andrew Maggs
Johannesburg
THE signing in July this year of a $506,9m compact (foreign assistance agreement) between the Millennium Challenge Corporation (MCC) and the government of Mozambique is set to provide South African contractors, consultants and suppliers of goods and equipment with substantial procurement opportunities as the compact moves into the implementation phase.
The MCC is a US government corporation designed to work with some of the world's poorest countries and is based on the principle that aid is most effective when it reinforces good governance, economic freedom, and investments in people that promote economic growth and the elimination of extreme poverty. Before a country can become eligible to receive assistance, the MCC assesses its performance based on 16 independent and transparent policy indicators including trade and fiscal policies, control of corruption and civil liberties. Thereafter, based on its scorecard, the MCC will decide whether a country qualifies for assistance.
Speaking at a seminar in Johannesburg last month to introduce the Mozambique compact to South African companies, Cassia Carvalho-Pacheco, the acting resident country director for the MCC in Mozambique, said after consultations involving the government of Mozambique, the private sector and civil society, it was decided that the compact would concentrate on bringing about sustained economic growth in the north , which in recent times has lagged behind the rest of the country. MCC activities would be carried out in the provinces of Zambézia, Cabo Delgado, Niasa and Nampula, with funding being made available for:
- Water and sanitation projects ($203,6m), including the provision of water supply and sanitation services in six cities and two mid-sized towns;
- Transportation projects ($176,3m), including the rehabilitation and reconstruction of 491km of key sections of National Route 1, which forms the backbone of Mozambique's transportation network;
- Land tenure services ($39,1m) aimed at securing access to land by improving the policy framework and upgrading of the country's land information systems and services; and
- Farmer income support ($17,4m) to revitalise the coconut industry in northern Mozambique, which has been affected by coconut lethal yellowing disease. MCC funding will help reduce the spread of the disease, improve productivity of coconut products, and encourage farmers to diversify into other cash-crop production.
The compact also includes $70,5m for programme management, oversight, fiscal accountability, monitoring and evaluation. Moreover, $40m will be allocated for capacity building and technical assistance to strengthen local institutions.
Integral to the compact is the role of implementing partners, which include Administração Nacional de Estradas (the National Roads Administration) and Direção Nacional de Aguas (the National Directorate of Water). However, at the centre of the procurement structure is the Millennium Challenge Account (MCA), an autonomous entity that serves as the core management unit for the compact.
The MCA is charged with signing all public procurement contracts and is served by a fiscal agent, who will administer payments, and a procurement agent that in some cases can also be the implementing partner. Underpinning the process is the principle of fair, open and transparent procurement, and to this end the MCC has based its procurement guidelines on those of the World Bank. Tendering for large value contracts will therefore be conducted largely by way of international competitive bidding.
A distinguishing factor of MCC assistance is the corporation's desire to move quickly once implementation gets underway. Therefore, South African companies seeking to participate in MCC-funded projects would do well to familiarise themselves sooner rather than later with the corporation's procurement guidelines.
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Andrew Maggs is an independent Africa consultant, providing business intelligence, desk and field research, and assisting companies with strategy compilation.
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