Mozambique

Insufficient Effort Made to Attract U.S. Suppliers Under AID Commodity Program Gao ID: NSIAD-94-73 February 28, 1994

This report reviews the Agency for International Development's (AID) procurement procedures and practices under a commodity import program established in 1984 to revitalize Mozambique's agricultural sector. Concerns had been raised about the amount of program funds spent on goods procured outside of the United States. For example, only 18 percent of total commodities and less than one percent of vehicles supplied to Mozambique during fiscal years 1985-93 were from the United States. GAO discusses (1) why this program has primarily benefitted U.S. trade competitors; (2) whether changes in law or regulation are needed to prevent this procurement imbalance; and (3) whether AID financing of commodity purchases from South Africa violated the sanctions imposed against that country.

GAO found that: (1) CIP has reduced the marketing opportunities normally available for U.S. suppliers and has caused a low rate of U.S. supplier participation in program financing; (2) political instability in Mozambique has also contributed to U.S. suppliers' lack of participation because U.S. companies have not established commercial ties to the local importers; (3) AID has failed to seek U.S. supplier participation or promote U.S. exports when certain market entry opportunities occur, particularly regarding the import of trucks; (4) to improve U.S. export opportunities, AID has restricted program financing to vehicles from U.S. sources, expanded the list of eligible commodities, and issued new guidance to improve procurement planning; (5) AID considers CIP to be a success, since it has helped revive Mozambique's agricultural sector; (6) no changes in law and regulation are needed to prevent the procurement imbalance, since AID policy is to procure commodities from U.S. sources whenever possible; and (7) AID financing of commodity procurements from South Africa did not violate the sanctions against that country, since none of the items imported were purchased from South African government entities.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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