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Country analysis > Mozambique Last update: 2008-12-17  
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Organisation for Economic Co-operation and Development (OECD)

The Civil Society Organisation’s role in Global Budget Support in Mozambique

Viriato Tamele
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Organisation for Economic Co-operation and Development (OECD)

Prepared for Ownership in Practice, Informal Experts’ Workshop, Paris, 27-28 September 2007

SARPN acknowledges the author as the source of this document.
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The country

Mozambique is situated on the southeastern coast of Africa and it shares borders with Zambia, Malawi, Tanzania, Zimbabwe, Swaziland and South Africa and in the east the Indian Ocean.

The total land area of Mozambique is 801,590 sq. km.

For Administrative purposes, Mozambique is divided into 11 provinces.

Savannah and forests cover about 70 percent of the land area. By the constitution the land is owned by the state.

Mozambique has a coastline of 2,700 km in length with very rich marine resources. Mozambique is also endowed with over 100 rivers including the Zambezi, which is source for irrigation, power and other economic activities.

The population of Mozambique is estimated at 20 million. It grows at an annual rate of 7.5 percent. About 45 percent of the population comprises of young people below 15 years old. The working or active population (between ages 15 and 65) constitutes about 50 percent of the total population. About two thirds of the population lives in the coastal zone.

Economy

Mozambique is a Least Developed Countries (LDC) a United Nations category that comprises low socio-economic indicators. The economy was estimated to grow slightly faster in 2006, 7,9 percent, after the year 2005 when it expanded by 7,7 percent. Economic activity in 2006 was largely due to the recovery of agriculture sector following the return of the normal rains and re-construction. It’s reported that the economy grew by 10 percent during the first half of the 2006 (Standard Bank) with a high foreign debt (originally $5.7 billion at 1998 net present value) and a notably track record on economic reform.

According to the Human Development Report of 2004 of the United Nations Development Programme (UNDP), Mozambique ranks 171st out of 177 countries on the human development index, falling below Ethiopia and only ahead of Guinea-Bissau, Burundi, Mali, Burkina Faso, Niger and Sierra Leone. The poverty remains high by all standards; some progress in poverty reduction has been achieved in recent years as a result of economic growth coupled with the Government’s infrastructure development and rehabilitation programme and investment. In 2003 estimate on incidence of poverty that the percentage of total population falling below the absolute poverty line has decreased from 69 percent in 1997 to 54 percent.

Mozambique was one of the first African countries to receive debt relief under the initial Highly Indebted Poor Countries (HIPC) initiative in 1999. In April 2000, Mozambique qualified for the Enhanced HIPC as well and attained its completion point in September 2001. Mozambique, as a LDC has achieved outstanding levels of economic growth but still experiencing relatively high poverty rates. The people of Mozambique face not only the frustrating poverty rates but also significant levels of inequalities.

Aid dependency

Donors have seen Mozambique as a “ success ” story of peace, stability and growth since the end of its devastating war in 1992. Indeed, it has become increasingly important to the international community as one of the few so called successes were donors have invested a substantial amount of resources and effort in supporting economic and political performance.

Aid dependence in 2003, measured by total net ODA (excluding emergency aid and bilateral debt forgiveness) as a share of GNI, of 49 African countries for which data are available, was more than 10 per cent of GNI for 17 countries in 2003. Mozambique (21.8 per cent) is one of the top five aid-dependent economies including Sierra Leone and (23.3 per cent), Malawi (24.4 per cent), Guinea-Bissau (27.5 per cent) and São Tomé e Principe (51.8 per cent)

Mozambique continues to be highly aid dependent, having consistently met most donor conditions, while at the same time growing at an official average rate of about 8 percent per year since 1997. During the same period, poverty declined, but at a much slower rate. Notably Mozambique has also become a experiment by being a testing ground for so called “new aid modalities ”, such as GBS, in the context of the shifting international debates around aid effectiveness, enshrined in the Paris Declaration of March 2005. This has included an innovative mechanism for monitoring donor performance on harmonisation and alignment of their support to the countries.

Global discourse on aid over the past decade, reflected in the Paris Declaration have highlighted its effectiveness and government ownership may be undermined by the way in which is delivered, with its proliferation of projects responding to donor preferences rather than government priorities, and placing too heavy a burden on an unskilled bureaucracy.

Ministers and officials spend so much time in dealing with donors and they have insufficient time left for their responsibilities. And combined with the fragmentation of the planning and budgeting system, it makes very difficult for the GoM (Government of Mozambique) side to develop alternative strategies. This is further compounded by the lack of domestic analysis and critique — intellectuals and experts who could be developing alternative and innovative thinking and approaches being brain drained.

Mozambique’s aid dependence is highlighted by the fact that necessary resources cannot be easily raised domestically. Despite the emphasis that the GoM has put on increasing domestic revenues in PRSP (known as PARPA, Plano de Acção para a Redução da Pobreza Absoluta), between 1997 and 2004 revenues fluctuated around 12 percent of GDP, without any substantial increases. Reducing aid dependence has so far proved to be an elusive goal, despite a number of reforms such as the introduction of VAT and personal income taxes. Moreover, despite much inefficiency in government spending, there are no obvious areas that could be identified for large expenditure cuts. Any reductions in spending would therefore have negative impacts on expenditures. (such as the building and repair of roads, schools, hospitals, etc., currently financed by aid in any case), or tackle the much trickier of maleficiencies, wastage and corruption. (Hanlon J & Renzio P.)

The west drivers of the current development discourse and thinking need to show to the sceptical ones that there is a stories of success even is not a success at all is one of the reasons why Mozambique is portrayed as a donor’s “ concubine ”.

The relation between the government and the budget support partners structured by a Memorandum of Understanding, signed in 2004, which spells out the terms under which donors are willing to provide aid as GBS, the arrangements for periodic performance reviews, and the reciprocal obligations that the parties undertake to comply with.

The GoM is favourable GBS and other programmatic forms of donor support, in order to reduce aid fragmentation and increase the volume of resource, which flow through the national budget, there are series of costs and contradictions, which can be highlighted. First of all, as long different aid modalities coexist in Mozambique, the administrative burden of aid coordination is probably increasing rather than decreasing, as government officials need to devote more attention both to the large number of projects that still exist, while at the same time attending all the working group meetings created part of the GBS machinery.



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