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Country Brief

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Mozambique: Country Brief

Over the past 20 years since the end of a two-decade long and bloody civil war that left the country in ruin, Mozambique has emerged to become one of Africa’s best-performing economies. Macroeconomic stability, foreign direct investments, structural reforms, and reconstruction drove post-conflict growth which has been sustained over the past decade by enclave mega-projects in mining and energy production. The country has weathered the global economic and financial crises, with economic growth dipping to 6.3 percent in 2009 but rising to 7.2 percent in 2011.  Infrastructure spending as well as foreign investments in new mega-projects are expected to drive economic growth to eight percent over the medium-term. However, this impressive trajectory of growth is not resulting in poverty reduction and job creation as anticipated, prompting questions about the current development model and the need for a greater inclusiveness and diversification of sources of growth.

Political Overview

Following independence from Portugal in June 1975, the country underwent a 16-year armed conflict that ended in 1992. A slow but successful transition to peace, political stability, and democracy ensued, culminating with the realization of the country’s first democratic elections in 1994. The Front for the Liberation of Mozambique (Frelimo) edged out its civil war rival, the Mozambican National Resistance (Renamo).  Frelimo has remained in power ever since, most recently winning the fourth presidential and parliamentary elections in 2009 by 70 percent of the popular vote (an increase from the 60 percent garnered in the 2004 elections).  Frelimo has a two-thirds majority in the national parliament, 80 percent of the seats in the provincial assemblies, and majorities in all elected municipal assemblies.  Such control over the elected and politically appointed state positions is unparalleled in the country's recent history.  Political analysts predict it could undermine the government's ability to respond to the needs of its citizens. 

Looking ahead, the next three years will be marked by several political milestones. The well anticipated Frelimo’s party convention in 2012 has been accompanied by discussions over the future ideological tilt of the party, given the emergence of a new generation of leaders. The 2013 municipal elections will also be highly anticipated and will determine whether the Democratic Movement of Mozambique (MDM), an off-shoot of Renamo, can build on its control of two of the largest municipalities (Beira and Quelimane) and emerge as a serious force in Mozambican politics. Both Renamo and MDM’s power base lies in the central provinces of Sofala, Manica, and Zambezia – often referred to as “Mozambique’s breadbasket.”   

Development Challenges

The deceleration of poverty reduction in the face of robust economic growth is the defining development challenge in today’s Mozambique.  The challenge is to diversify the sources of economic growth; integrate capital-intensive mega-projects with the Government’s poverty reduction strategy; and develop the agriculture sector which employs close to 80 percent of the workforce but remains largely unproductive, subsistence-based, and where there is a growing “feminization of poverty.”  More broadly, Mozambique needs to accelerate investment climate reforms; improve provision of public goods to facilitate inclusive growth (e.g., infrastructure, education, health); set up well-targeted safety nets for the most vulnerable; and promote greater voice and citizen participation while building transparent and accountable systems, including those related to extractive industries.   

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 current World Bank CPS for FY12-15 takes as its starting point the Government’s PARP, with its theme of inclusive and broad-based growth. The Africa Regional Strategy also provides an overall framework for setting priorities and managing the proposed program.  Like the Africa Regional Strategy, the CPS has two cross-cutting pillars and a foundation:

Competitiveness and employment. In view of structural issues and growth and poverty trends, the Bank looks to help improve the regulatory environment; prioritize investments through spatial planning; enhance agricultural productivity and employment in potential growth sectors; improve provision of transport, water, energy, and other infrastructure; and promote an educated, skilled, and healthy workforce.

Vulnerability and resilience. Given the country’s susceptibility to idiosyncratic and exogenous shocks, the Bank aims to help improve health services for the vulnerable; strengthen social protection; and encourage climate change adaptation and reduce vulnerability to natural disasters.            

Governance and public sector capacity. Key to achieving the country’s development objectives is improved public financial management, particularly at the sector and local levels; improved citizen participation in service delivery monitoring; greater contribution of wildlife conservation to the economy; and improved transparency in extractive industries.

In addition, the CPS aims to mainstream gender, social accountability, and nutrition in the portfolio.  On gender, the Bank will build on an already solid track record of addressing gender equality during project preparation and implementation.  There is broad scope to introduce social accountability mechanisms, particularly in projects seeking to improve service delivery. A parallel strategy to incorporate social accountability is currently under discussion.  Similarly, with chronic malnutrition among the worst in the world, nutrition-related activities are planned for active and pipeline operations, as appropriate.    

World Bank Lending

The CPS for FY12-15 will be supported by IDA 16: the notional envelope is US$1.04 billion for the first three years of the CPS period.  IDA resources will continue to be supplemented by trust funds, parallel and basket financing, and used strategically to catalyze and leverage donor and private sector financing.  Given the potential for the mineral and gas sectors, agribusiness, tourism, and other sectors, as well as the Government’s desire for the Bank to be a catalyst for large and complex infrastructure projects, the Bank will look at the range of instruments, including IBRD enclave financing, and will ensure coherence and complementarity with IFC and MIGA.  The Bank will also generate greater knowledge products, including South-South knowledge exchange across a range of areas. 

The World Bank has invested a total of 4.1billions in Mozambique to date, and its current portfolio is comprised of 18 projects in all major sectors, including budget support, transport infrastructure, energy, water and sanitation, agriculture, business environment and  SME support, spatial planning, decentralization, governance and municipal development, and education and health. 

World Bank Non-Lending

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. 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

 

Supporting Expansion of Higher Education in Mozambique

IDA support to higher education (HE) contributed to impressive improvements in the sector: the number of students enrolled in HE institutions increased from 9,800 in 2000 (before the project) to 63,000 in 2007, to 105.526 in 2010 at the completion of the World Bank-funded Higher Education Project. The project helped increase the share of female students enrolled in HE institutions from 25 percent to 38 percent in 2008. The number of higher education graduates increased from 800 in 2000 to 13.083 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.

Helping Implement Public Private Partnerships to Enhance the Capacity of the Maputo Municipal Council (CMM) to Deliver Services

Through the IDA funded ProMaputo I, and with strong support from the Public Private Infrastructure Advisory Facility (PPIAF), the CMM developed a set of successful Public and Private Partnership (PPP) initiatives in Maputo city as follows: introduction of private management of public parks; development of municipal parking lots; construction of transport terminals and commercial facilities in high traffic public transit areas, as well as introduce a private operator to establish paid hourly parking in the central commercial and business district; and mobilized private investors to rehabilitate degraded municipal buildings. In addition, with IDA credit support, the CMM prepared a municipal bylaw to adapt new national PPP legislation to the specific legal and institutional situation of the municipality.

Helping Bring the Government Closer to the People

IDA support to decentralization has helped bring the Government closer to the people, empower citizens, and promote voice and accountability. For instance, through the Bank-funded ProMaputo I, Report Cards, whereby citizens score to the quality of services delivered by the Municipality (CMM), were conducted and their results disseminated annually. Those reports have contributed to greater dialogue between the CCM and the residents of Maputo and its suburbs. This process has led to a significant increase in demand from citizens for improved services. Staffs of the CCM participate in forums with citizens to discuss the findings of the report cards. They report that this interaction has motivated them to improve the delivery of municipal services.

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.

 

Last updated April 2012




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