Mozambique, one of the poorest countries in the world at independence, has emerged from decades of armed conflict to become one of Africa’s best-performing economies. The country has enjoyed a remarkable recovery, achieving an average annual rate of economic growth of 8 percent between 1996 and 2008, the highest growth rate among African oil-importers. This has resulted in more than three million people being lifted out of poverty over the same period. The country also made substantial progress in achieving some milestones towards the Millennium Development Goals (MDGs). For instance, net primary school enrollment reached 95 percent in 2010, and infant and under-five child mortality reduced from 201 per 1,000 new born in 1997 to 138 per 1,000 in 2008.

However, the results of the latest household survey suggest that poverty reduction has stagnated and that growth has not resulted in job creation. In addition, the global food and fuel crises continue to cloud Mozambique’s economic outlook.The riots ofSeptember 2010, a rerun of 2008 price hike-related demonstrations, were  another reminder of the country’s vulnerability to external shocks, and underscore Mozambique’s chronic dependence on food imports, and the need to stimulate agricultural productivity and rural development in general, given that approximately 70 percent of the population live in rural areas.

Political Overview

The President of the Republic, H.E. Armando Guebuza, was elected for a second term in the October 2009 presidential race and was inaugurated in January 2010.  His ruling party, Frelimo, which has held power since independence, secured sizable majorities in the national parliament (about 75 percent), and provincial assemblies (80 percent) and controls the totality of municipal assemblies, and holds 42 of 43 municipal presidencies. The next municipal elections are set for 2013, while the presidential and legislative elections will take place in 2014. In the meantime, the ruling party will hold its congress in 2012, during which it will designate a presidential candidate.  
Besides the ruling Frelimo party, the largest opposition party is Renamo, followed by the Democratic Movement of Mozambique (MDM), a Renamo breakaway which gained seats in the national parliament for the first time in 2009 elections. MDM’s leader, Mr. Daviz Simango, had been elected in 2008 as mayor of Beira, Mozambique’s second largest city, after running as an independent, and thus becoming the first ever independent candidate to win an election in the country. Frelimo, originally a guerrilla movement, is credited for having liberated the country from colonial rule in 1975. Up to the introduction of a democratic system in the 1990 constitution and the holding of the first multiparty elections in 1994, Frelimo was an unchallenged political force under a one-party system. The two first multiparty elections were relatively easy victories by Frelimo, although its popularity started to crack under perceived corruption and an increasingly vocal independent media and opposition.  In the 2004 elections, the party replaced then President Chissano with Armando Guebuza who led a vigorous electoral campaign against corruption, a new theme in electoral campaigning, leading to an easy victory.  The election also marked a concurrent start of Renamo’s drop in popularity as it struggled with internal disputes.  Frelimo, under Guebuza, made it a priority to reinforce its political base, which led to another comfortable victory in the last elections.     

The government is led by President Armando Guebuza with the Cabinet headed by Prime Minister Aires Aly as comprised of 28 ministers.  The legislative elections resulted in the appointment of the country’s first female speaker for the national parliament, Ms. Veronica Macamo. The country has three legislative bodies: the Assembly of the Republic with 250 deputies; provincial assemblies with over 800 delegates; and municipal assemblies in 43 municipalities. The ruling party has large majorities in all three legislative bodies. In addition, there are 11 provincial governors appointed by the President and who are part of the executive. In recent years, there has been an effort toward greater decentralization and deconcentration of power to local levels with the introduction of municipalities in 1998, and provincial assemblies in 2009, whose roles are yet to be broadly understood by citizens and even some public officials at the municipal level.  

To date, Mozambique has held four general elections (1994, 1999, 2004, 2009); three municipal elections (1998, 2003, 2008); and one provincial election in 2009. Suffrage is universal at 18 years of age.

Development Challenges

Sustaining the country’s impressive performance over the last two decades will require further investments to expand the country’s infrastructure networks, including roads, railways, energy, water, and ports. Other major challenges include the need to step up job creation; accelerate and sustain economic growth in an inclusive manner; foster a competitive and diversified productive and export-based economy; boost production and productivity in labor-intensive sectors, with special focus on agriculture.

For a complete list of indicators, refer to the Mozambique Country Data Profile and to the Africa Quick Query.

 

The World Bank’s Evolving Strategy to Meet Mozambique’s Needs

Since the World Bank began operating in Mozambique in 1984, its assistance has evolved from helping to stabilize the economy in the 1980s, to post-war reconstruction in the early 1990s, to a comprehensive support strategy in the late 1990s, to the current strategy that involves close collaboration with the Government, development partners, and civil society.

The World Bank is currently revising its strategy for its support to Mozambique, and it will seek to gather a wide range of opinions from Government officials, local civil society groups, and donors in the process. The new strategy will be aligned with the new World Bank Africa Regional Strategy as well as the new Government’s plan for poverty reduction (PARP) that is currently being finalized.

World Bank Lending

In terms of lending, IDA is financing a total of 17 projects in Mozambique. In addition, the Global Environment Facility (GEF) is financing another three projects. The country portfolio also includes two regional projects as well as donor-funded Trust Funds under Bank’s administration. Together, the above operations represent a total net commitment of US$976.1 million, of which about 90 percent are credits and the remaining 10 percent are grants. The operations cover five sectors with the largest share of commitments going to infrastructure development (including rail, ports, roads, energy, and water), followed by human development, public sector and decentralization, agriculture, rural development and environment, and finance and private sector development.

World Bank Non-Lending Activities

Mozambique benefits from an important number of analytic work and technical assistance that are prepared in collaboration with the Government of Mozambique, development partners, and other stakeholders, and are widely disseminated once completed. The financing for these studies is from the World Bank’s administrative budget as well as from other development partners.

Recently prepared studies span topics such as Economics of Adaptation to Climate Change (2010); Prospects of Growth Poles in Mozambique (2010); Investment Climate Assessment (2009); the Municipal Development in Mozambique: Lessons from the First Decade (2009); the Country Economic Memorandum (2009); and the Country Procurement Assessment Review (2008). Other studies in the past have included: Value Chain Analysis; Poverty, Social and Gender Assessment; Labor Law Reform; Horticulture Development; Education Fee Reform Impact Analysis; and a National Water Resource Strategy.

In addition to country-specific activities, the World Bank offers a range of regional and global knowledge products relevant to Mozambique, including the Doing Business annual survey and report, and the Africa Development Indicators report that provides macroeconomic, sectoral, and social indicators of 53 countries.

The International Finance Corporation (IFC)

Mozambique also benefits from the International Finance Corporation’s support in the areas of tourism, mining and energy, and financial services. This support encompasses the cross-cutting issues of mobilization of both local and foreign direct investment to key sectors of the economy; improving private sector access to finance; developing infrastructure; improving the investment climate; increasing linkages between large investments and the local economy; increasing private sector awareness of HIV/AIDS issues; and supporting private sector involvement in the water sector. IFC’s main investments have been in the Mozal aluminum smelter near Maputo, and the Mozambique-South Africa gas pipeline. For more on IFC’s work, please visit http://www.ifc.org/africa

The Multilateral Investment Guarantee Agency (MIGA)

Mozambique is one of MIGA's largest host countries. MIGA cooperated with IDA in relation to the previous IDA-funded Enterprise Development Project (PoDE) by providing assistance to Mozambique’s Investment Promotion Center. MIGA is working on several applications for guarantee coverage of investments, and its newest program in Mozambique is a small investment guarantee program for investments of less than US$5 million. For more information on MIGA’s work, please visit http://www.miga.org

 

Ports and Railways

International Development Association (IDA) support has been instrumental in revitalizing the railway and port systems in Mozambique. Drawing upon IDA funding to the Government’s Ports and Railways Restructuring Project (1999-2009), the Mozambique port and railways system staff productivity increased seven fold by 2009; the port traffic in 2008 was 11.3 million tons compared to 8.5 million tons in 2002; the rail traffic in 2008 was 4.3 million tons compared to 3.4 million tons in 2000 when IDA initiated its support to the sector. Additionally, the restructuring of the public company CFM that runs the ports and railways system enabled the company to register a surplus for the first time in decades of more than US$50 million per year for the last four years (more than US$80 million in 2009).

Decentralization and Good Governance
IDA support to decentralization has helped bring the government closer to the people, empower citizens, and promote voice and accountability.  For instance, today at least 82 percent of the districts are implementing projects identified by the communities; the district administration has received a direct budget allocation for the first time ever; the districts have developed for the first time methodologies to improve collection of their local revenues. Given the political trend toward greater decentralization, the policy and legal changes in the country, the Government of Mozambique has decided to establish a single National Development Planning and Finance Project to support the implementation of the new policies, laws, and budget allocations for districts development. IDA has approved a total of US$30 million (2010) as a follow-on support to the sector, to scale up most achievements of the first phase of its support.
Water
Institutional reforms in the water sector started in 1995 with the formulation of an IDA-supported national water policy. The urban water sector has since made considerable progress in the introduction of a policy of delegated management framework - whereby assets are owned by the government and operations are managed by independent operators including the private sector. In addition, IDA supported the creation of an asset holding company and a regulatory board that laid the groundwork for improving service levels and attracting investment. Mozambique’s delegated private sector management approach has attracted about US$350 million of investments for urban water over the last six years. In addition, to private investments, IDA and other donors support between 2002 and 2008 resulted in increases of about 255 percent in expenditure to the sector. That resulted in an increase of the number of piped water connections by 40 percent between 2003 and 2008 in Maputo.

Higher Education

IDA support to higher education resulted in impressive changes in the sector: the number of students enrolled in higher education institutions increased from 9,800 in 2000 to 63,000 in 2007, and nearly 80,000 in 2010.  The share of female students enrolled in higher education institutions increased from 25 percent before implementation of the World Bank funded Higher Education Project to 38 percent in 2008. The number of higher education graduates increased from 800 in 2000 to 7,000 in 2010.  Female students also made up a larger share of those graduating in 2008 (41 percent, from 30 percent in 2003). Additionally, the share of students from northern provinces – historically an underrepresented group -- studying in universities in the south increased substantially.

Decentralization and Good Governance

IDA support to decentralization has helped bring the government closer to the people, empower citizens, and promote voice and accountability.  For instance, today at least 82 percent of the districts are implementing projects identified by the communities; the district administration has received a direct budget allocation for the first time ever; the districts have developed for the first time methodologies to improve collection of their local revenues. Given the political trend toward greater decentralization, the policy and legal changes in the country, the Government of Mozambique has decided to establish a single National Development Planning and Finance Project to support the implementation of the new policies, laws, and budget allocations for districts development. IDA has approved a total of US$30 million (2010) as a follow-on support to the sector, to scale up most achievements of the first phase of its support.

Water

Institutional reforms in the water sector started in 1995 with the formulation of an IDA-supported national water policy. The urban water sector has since made considerable progress in the introduction of a policy of delegated management framework - whereby assets are owned by the government and operations are managed by independent operators including the private sector. In addition, IDA supported the creation of an asset holding company and a regulatory board that laid the groundwork for improving service levels and attracting investment. Mozambique’s delegated private sector management approach has attracted about US$350 million of investments for urban water over the last six years. In addition, to private investments, IDA and other donors support between 2002 and 2008 resulted in increases of about 255 percent in expenditure to the sector. That resulted in an increase of the number of piped water connections by 40 percent between 2003 and 2008 in Maputo.

Building sound partnerships to meet country challenges

As part of its commitment to alignment and harmonization, the World Bank works closely with other development partners to improve the quality and effectiveness of development assistance to Mozambique.  Fundamental to the World Bank’s assistance strategy for Mozambique is the provision of general budget support to implement key policy and institutional reforms under the country’s poverty reduction plan. The budget support program is now on its eighth operation and is closely aligned through a common performance framework with the general budget support activities of eighteen other development partners, namely the African Development Bank, Austria, Belgium, Canada, Denmark, European Union, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.

In addition, the Bank has recently approved the National Decentralization Planning and Finance Program, which seeks to further advance the decentralization agenda in Mozambique by funneling US$30.4 million worth of IDA financing to a Common Fund agreed upon between the Government of Mozambique, the World Bank, the United Nations in Mozambique, Germany, Switzerland; Ireland; and the Netherlands. Collaboration with development partners has also focused on education, health, roads, and fiduciary and monitoring and evaluation.

The World Bank has a long-established partnership with UN agencies, but also recently with the African Development Bank and IMF in establishing a Development Information Center to further expand access to information produced by those institutions. The Center is meant to be a one stop shop for access to development related information and is housed at the premises of the National Public Library in Maputo.