Transcript Julie Howard - AIARD Association for International Agriculture

Partnership to Cut Hunger and
Poverty in Africa
Mozambique’s
Extraordinary Journey from
War to Development
Presentation to Association for International
Agriculture and Rural Development 40th Annual Meeting
June 6-8, 2004
Outline
1. Introduction
2. Mozambique in 1975, 1992 and 2004
3. Key factors in Mozambique’s recovery
4. The continuing challenge of agriculture
and rural poverty
5. Conclusions
1. Introduction
Partnership to Cut Hunger
and Poverty in Africa
President Chissano co-chairs
An independent US-Africa coalition formed
in 2001
to generate public and private support in the U.S.
for increased levels of assistance to Africa
To create consensus among Africans and
Americans about steps needed to increase the
effectiveness of assistance and bring about real
progress in the fight to end hunger
MSU Food Security Project
USAID-funded
 Technical assistance to Ministry of Agriculture and
Rural Development
Major focus on training Mozambican policy analysts
Key research areas include
• Market information systems
• Constraints to technology transfer and agricultural input market
development
• Agricultural survey development, implementation, data analysis
and policy implications
2. Mozambique in 1975, 1992
and 2004
1975
 1975: Independence from Portugal
 Colonial rule characterized by low investment in
economic, social, human development
 1976-92: Devastating civil war largely fueled by outside
interests
By the end of the war, most rural infrastructure had been
destroyed or disabled, rural food processing and industrial
plants were non-functional, roads and railways damaged
> 4.5 million people (25% of the population) were internally
displaced or refugees in neighbouring countries
During the 1980s est. 80% of food needs met through imported
food aid
1992
1992: Peace Accords signed
Mozambique considered the poorest
country in the world
 Per cap. annual income <$75
 Per cap. GDP grew at 0.6% per year
1987-96
1994: first democratic multiparty
elections held
2004
 GDP growth of 7-8% annually 1997-2003
 80% of pop. living in absolute poverty in 1989-94
69% in 1997
54.1% in 2003
 Domestic food production supplies 78% of needs; food
aid 5%; commercial imports supply the rest
 1 of 8 African countries eligible for MCA assistance
 Venue for African Economic Summit because
Mozambique is “an excellent case study”
 Pres. Chissano will step down following December 2004
elections
3. Key factors in
Mozambique’s recovery
Extensive and sustained
economic policy change
 Other than South Africa, no country in Southern Africa has
reformed and stabilized its economy like Mozambique
 Gov’t adopted policies to open the economy and make it
more market-oriented, while maintaining some form of
economic and social safety net for the poorest
 Inflation over the past six years has averaged 8.5%, lowest
in the region
 Exchange rate is fully liberalized
 In agriculture
 Sustained commitment to open borders – Mozambique
benefits by importing maize for the south, exporting from the
north
 Minimum producer prices were abolished in the mid-1990s
 Grain marketing parastatal disbanded in the 1990s
Investments in infrastructure
Gov’t began to rebuild rural infrastructure
that had been destroyed or neglected
during the war
E.g.,in 2003 gov’t met over 75% of road
building/rehab target. 827 km of roads
were constructed or rehabilitated, mostly
rural access roads.
HIPC and PARPA
1998 -- debt reduced from US $5.6 billion to $1.3 billion
--Between 1996-2000 annual inflation rate declined from 47% to 2%
Successor HIPC 2 promised further debt relief if 4 conditions met
--Elaboration of PRSP (PARPA)
--Implementation of set of measures related to social development, public sector
reform, legal and regulatory framework for economic activities
--Maintenance of stable macroeconomic climate
--Participation of other creditors in debt relief
Mozambique qualified for HIPC 2 in 2001
--External debt reduced to US $750 million
--Debt service declined from US $100 million/yr (1988) to US $56 million/yr 2002-2010
--Savings allowed an increase of state disbursements toward PARPA – US $130
million/yr
PARPA public expenditures projected 2001-05
6% agriculture
32% education
29% infrastructure
19% health
12% governance
Active civil society

Land Campaign. Mobilization around the Land Campaign. Diverse group
of urban and rural organizations united in late 1990s to ensure that
mechanisms of land management rooted in custom would be recognized

State corruption. Following assassinations of Cardoso and Siba-Siba,
and Montepuez prison killings, various factions of civil society united “to
demand the moral regeneration of the state and an end to corruption.”
Journalists, socio professional associations and urban elites joined. As a
result, a Law was approved by which civil society is responsible for the
selection of three candidates for the Presidency of the National Elections
Commission, unique in Africa.

Poverty Observatory. To compensate for weak consultation during the
PARPA formulation, civil society organized the Poverty Observatory to
oversee the implementation of the PARPA. 3 groups of actors – gov’t
donors, and civil society. Representatives from religious denominations,
trade unions; private sector associations; other membership
organzations
Mutual donor-government confidence has allowed an
unusual level of experimentation in institutional
structures and programs
 PROAGRI
 Historically donor projects in agriculture have been highly fragmented. In 1997 of $48
million in Min. of Ag and Rural Development (MADER) budget public expenditures, only $5
million came from the government – rest from donors in 42 different projects.
 PROAGRI conceived as a consultative process to combine donor contributions into single
funding mechanism and reduce admininistrative/strategic overload on MADER. Aimed at
shifting from donor-driven project mentality to a more integrated and coordinated planning
system – oriented towards common objective of alleviating poverty and increasing food
security.
 Conceived as 15-20 year program. Donor support contingent on institutional reforms. Initial
funding 1999-2003 was $202 million; $30 million from Gov’t.
 Response to 1999/2000 floods – GOM played very strong role in conceiving,
implementing coordinated response
 USAID’s Resettlement Grant Activity
 Cash grants of US $92 were distributed to women of more than 106,000 affected rural families Dec
1999-April 2000.
•
•
•
Families chose for themselves which goods or services were their highest priority
Grants were primarily spent on household goods and spent near local distribution points.
Thus program contributed to the revitalization of retail distribution networks in affected areas. Extra income
allowed local retailers to restock their stores and repair damage caused by the floods.
Mega-industrial projects

Mozambique’s strong real GDP growth is driven by output from
industrial mega-projects.


Mozal aluminum smelter outside Maputo. Now produces half a
million tons of high quality aluminum ingots per year
Completion of gas export pipeline by South African synthetic fuel
company, Sasol

Mozambique’s largest exports are now aluminum (53%) and
electricity. By end of 2004, gas will become the third largest
export

Traditional agricultural and seafood exports have been overtaken
by rapid growth of exports from the capital-intensive sectors

In 1999 traditional exports made up 87% of total exports of US $280
million. By 2003 -- 32%; 2004 -- 19%
4. The continuing challenge of
agriculture and rural poverty
Mozambique’s two-speed
economy?
 Growth of new capital-intensive sectors, aided by large inflows of
foreign direct investment masks faltering economic activity in
traditional sectors
 Agriculture and fisheries are underperforming, leading to weak
growth in purchasing power in rural areas
 Three-quarters of Mozambique’s population lives and works in rural
areas. Rural income data reveal the persistence of income poverty
in rural Mozambique.
 Robust economic growth is disguising serious supply-side
constraints in the economy, including high transaction and unit
costs caused by bureaucratic obstruction, weak competition, low
sales volumes, the small domestic market and a generally adverse
domestic operating environment.
Very low levels of agricultural
technology adoption
 Huge increases in post-war production
due almost entirely to expansion of
cultivated area after farmers were able
to return to their land
 With the exception of cassava, yield
trends for major food commodities have
been flat over the past decade


Fewer than 10% of farmers use improved seeds
Mozambique has one of the lowest fertilizer use rates in the world
 1.84 kg/ha of NPK vs. 16.6 kg/ha average in West Africa
and 8.89 kg/ha throughout sub-Saharan Africa
Traditional cash crops are declining in
importance, others taking their place

During 1960s and 70s Mozambique was the largest
cashew exporter in the world.





Today it has only 6% of the world market due to production
constraints, market issues
Cotton production peaked in 1998/99 at 117,000 tons
seed cotton but has declined sharply since
Strong growth in tobacco, sugar cane
Emerging cash crops: paprika, pigeon pea, sesame
seed
Mozambique’s research and extension services are
extremely weak


Extension services reach only 18% of farm households
How will smallholders adapt?
5. Conclusions
How can Mozambique and Its Partners Bring the
Rural Poor into the Boom Economy?
Strengthening public
institutions and functions
 Increased, sustained investments in public institutions that will help rural households
increase agricultural productivity and access to markets
 Research, extension and support for input market development to bring technology within
reach
 Investment in rural communications and transport infrastructure to bring down the costs of
marketing
 Training and education – primary, secondary but also technical and university training and
institutional development to train tomorrow’s teachers, extensionists, health workers,
businessmen and leaders
 Removing barriers to regional and international trade of raw and processed agricultural
goods
 Investments to bring down the cost of starting and doing business in rural areas




Streamlined registration process and regulations
An effective judicial system that can enforce contracts
Investment in education at all levels
Improved access to credit and savings programs
Broad-based or bimodal
development?
Mozambique’s progress is very impressive, but it
faces serious capacity constraints in the
ability of public institutions to carry out
priority tasks efficiently
How well it is able to redress this in the future
may determine whether Mozambique will have
broad-based or bimodal economic development