About Mozambique

Introduction

 Maputo bay city Mozambique capital city, Maputo (Photo UN Moz)

Mozambique – with a population of 21.4 million people, out of which 43% are under the age of 15 according to the National Statistics Institute (INE 2010) – emerged from civil war twenty one years ago as one of the most impoverished and capacity constrained countries in the world. Since then, its overall economic growth has been impressive with an annual gross domestic product (GDP) growth rate of over 7.5% in each of the last five years leading to an estimated GDP of 10.5 billion US$ for 2011 (IMF 2011).

 The country is also endowed with rich natural resources, including 36 million hectares of fertile land, out of which only about 10% are presently used for productive purposes having also numerous business opportunities. As part of its potential, the country has 2,470 km long coastline offering opportunities for fisheries and tourism. Three strategic ports and vital transport corridors serving its neighboring landlocked countries offer many opportunities for pro-poor economic growth.

 The Government has demonstrated strong commitment to addressing the needs of its population and achieves the Millennium Development Goal (MDGs) and pursue policies to end poverty. The national plan for poverty reduction - PARP 2011-2014 - aims at pursuing inclusive economic growth and reducing poverty and vulnerability by focusing on the three general objectives: increased production and productivity in the agricultural and fisheries sectors, employment creation, and human and social development. Good governance, macroeconomics and sound public financial management are the indispensable supporting pillars for the achievement of these objectives.

History

Mozambique stretches for 1,535 mi (2,470 km) along Africa's southeast coast. It is neighbored by Tanzania is to the north; Malawi, Zambia, and Zimbabwe to the west; and South Africa and Swaziland to the south.

 

Mozambique became independent from Portugal on June 25, 1975 after 500 years of colonial rule.  The first president, Samora Moises Machel, had been the head of the National Front for the Liberation of Mozambique (FRELIMO) in its ten- war for independence. He died in a plane crash in 1986, and was succeeded by foreign minister, Joaquim Chissano.

 

After a decade of independence, the government became locked in a paralyzing war with antigovernment guerrillas, the Mozambique National Resistance (MNR, or Renamo), who were backed by the white minority government in South Africa and Rhodesia (Zimbabwe).

 

The guerrilla movement weakened President Chissano's attempts to institute socialism, which he then decided to abandon in 1989. A new constitution was drafted calling for three branches of government and the granting civil liberties. A cease-fire agreement signed in Oct. 1992 between the government and Renamo  ended 16 years of civil war.

 

In multiparty elections in 1994, President Chissano won. The president's disciplined economic plan was highly successful, winning the country foreign confidence and aid. While Mozambique posted some of the world's largest economic growth rates in the late 1990s, it has suffered enormous setbacks because of natural disasters, such as the enormous damage caused by severe flooding in the winters of 2000 and 2001. Hundreds died and thousands were displaced.

 

In 2002, Chissano announced he would not seek a third term. FRELIMO's candidate, Armando Guebuza, was elected president and sworn in beginning of 2005. Economic growth continues in Mozambique. New coal and gas resources promise to support an estimated 7% growth in 2013.

Challenges

Government efforts to attain economic growth notwithstanding, Mozambique’s severe development challenges persist.  The growth has been inequitable and has not yet translated sufficiently into social and economic development.

 

According to the 2012 Human Development Report, Mozambique ranked 185th out of 189 (UNDP 2012) and the country remains one of the poorest in the world. Regardless of the high level of economic growth, progress towards achieving the MDGs and has been mixed.

 

For instance, while  the Third National Poverty Assessment published in September 2010 confirms important improvements in access to education and health services, consumption poverty still remains widespread. According to the report, the national poverty rate has not changed significantly since 2002/03 (54.1%) to 2008/09 (54.7%) though there have been some variations at the provincial level.

 

The report also confirms that households headed by women are generally poorer than those headed by men. About 70% of the population live in the rural areas and remain particularly vulnerable. The majority of the rural population depends on subsistence farming. The low productivity of the agriculture sector combined with still low quality of basic social services and the vulnerability of the sector to climatic shocks leads to persistently high levels of child malnutrition and food insecurity in rural areas. t.

Successes

 SCHOOL GIRL (Photo: UN Moz)

Mozambique is one of Africa’s best performers, and one of the fastest-growing economies in the world. Growth reached 7.4 percent in 2012 and is likely to remain at 7 percent this year. Like many developing countries, Mozambique has managed to offset weak demand from the euro area with growing links to the emerging market economies.

 

Mozambique’s achievements are all the more remarkable because they come despite the severe flooding this year. The human impact has been devastating, but the economy managed to avoid the worst. Even though food prices rose, initial signs are that inflation should remain close to the target range of 5-6 percent this year.  The country’s success is a clear illustration that sound policies work. The following are the changes since the end of the civil war in 1992:

  • ·       Per capita GDP has increased more than five-Key social indicators have improved substantially;
  • ·       primary school enrollment is now at 90 percent compared to just 56 percent in 1995;
  • ·       Child mortality has fallen from 183 per thousand to 103.

Although the challenges of natural resources are serious, they can be overcome. Mozambique’s largely unexploited natural resources present a huge opportunity—particularly the new offshore gas fields. Although abundant resources can be a mixed blessing—boom-bust cycles, poorly managed investments, and even massive corruption, it is possible to avoid the resource curse and reap the benefits.

 

It is crucial to establish appropriate policy frameworks and institutions at an early stage to transform natural resources into productive assets. The huge investments needed to develop the resources need to be managed carefully and transparently to ensure that new debt is used productively and remains sustainable.

 

 It is also important to compile high-quality statistics and develop strong analytical expertise to guide policy decisions in an increasingly complex environment. This calls for have high standards of governance. The bottom line is transparency in all aspects of the resource sector—regulation, taxation, and spending.

 

UNDP is working closely with Mozambique on these issues. We provide technical assistance to Mozambique to improve fiscal management in the mining and hydrocarbon sector. This can help maximize resource revenues without discouraging private investment. We are also assisting in strengthening public financial management.