An Interview with Adriano Maleiane

Interview with Adriano Maleiane, former Governor of the Central Bank of Mozambique. (This interview was conducted in Portuguese by Rafale Saute, World Bank External Affairs Officer in Maputo.)

What is your opinion of the country’s progress since the end of the civil war in 1992?

Given my involvement with the World Bank for about two decades [as head of the Central Bank for more than 10 years], I may be suspect, but the data are self-evident: There has indeed been a very positive development in all domains, both economic and social. We started in a situation where the economy was sliding significantly; hence in 1986 it became necessary to introduce far-reaching reforms in the economic policy and in the macroeconomic objectives.

In this regard, the economic rehabilitation program was approved in 1987; but the war did not allow for any major gains. With peace in 1992, all the participating partners began to articulate better their support for the government’s priorities, and the economy started to gather momentum and experience growth. As someone would say, Mozambique needed peace to change.

Indeed, with peace, there was the movement of people and goods and with the support of our partners, especially the World Bank, with IDA funds, it was possible to reverse the degradation of the macroeconomic indicators as we turned into one of the fastest growing economies in the African continent.

The floods in 2000 disrupted the cycle of growth, but once again, thanks to the support our partners pledged at the Rome conference ― and especially the support in the amount of US$30 million we received from the World Bank ― it was possible in a short time to rehabilitate the damaged infrastructure and create conditions for the private sector to resume productive activities. We thus managed to have the economy growing again at an average annual rate of 7 percent.

It is not always easy to agree on the impact of growth in people’s lives. However, the undeniable fact is that today there are more schools, hospitals, more potable water, and more economic activity than during the war period. But we are also aware that much still needs to be done to root out poverty, despite its reduction from 70 percent to about 51 percent since 2001. The fight against poverty remains the government’s priority, and, naturally, this will require continued support from IDA’s funds.

What has been IDA’s main contribution towards growth over this period?

As I mentioned earlier, it was very important ― I could even say decisive. We received financial support for our imports and projects, amounting to US$ 3,135 million. Today [IDA’s portfolio] is estimated at about US$1,000 million, mostly for infrastructure and human development.

The support to the State budget, under the framework of G18 pool, constitutes an important innovation as this brings flexibility to the management of the general budget and enables the government to allocate funds in line with the national priorities.

The World Bank intervention through IDA funds, apart from being an important source for infrastructure funding, also demonstrates confidence in the country, which encourages investors and the other partners to establish better relationships and coordinated support to the country.

The World Bank's role also included the coordination of the donor Consultative Group (CG) meetings. The debt forgiveness was very important, allowing the government to allocate more funds to the PARPA (Poverty Reduction Strategic Paper) priority sectors. 

What makes you think IDA is in the best position to continue leading the development process and be useful to the country? Any suggestions?

IDA, over the next years, will continue to lead in terms of concessional loans to Mozambique. It is more able to fund infrastructure rehabilitation, sanitation, water supply, and budget support, among other things, for which funding is not available [we cannot afford] in the capital markets, since per capita income in Mozambique remains low, rendering it far more difficult to get access to such markets.

In terms of suggestions, I think that the current IDA structure does not require significant changes; it just needs to refocus on infrastructures ― that is, roads, telecommunications, water supply, and environment.

IDA should also review the structure of its projects and programs, allocating more funds to actual results and less to seminars and consultancies, which, although important, may create a general impression that while the country becomes indebted results are unclear.

In order to prevent delays in project implementation, IDA should no longer condition its project funding on counterpart funding by the State. For example, IDA support to the municipalities is more in terms of institutional capacity building, and it is demanding counterpart funding from the State, a factor that may slow down the pace of project implementation. Although institutional capacity building is important, this should be coupled with infrastructure rehabilitation; and environmental problems are extremely serious in virtually all municipalities of Mozambique.

But we have most of the loan channeled to other purposes and very little to these emergency actions. IDA should take the lead in funding and in mobilizing funding for the rehabilitation and construction of urban infrastructure.

IDA also needs to reformulate its strategy to support agriculture  development, given that most of the population lives in rural areas and depends on agriculture.

The private sector also needs support. IDA should explore the best ways to coordinate with IFC and MIGA to fund this sector in the various domains, and stimulate the public-private partnership, especially for infrastructure.

Maputo, 24.01.2007