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Aid fails to alleviate poverty in Mozambique

A young labourer harvests coconuts near Maxixe, Mozambique. The majority of the population relies on agriculture but donors put to much focus on mega-projects at their expense / Fred Hoogervorst - Panos pictures

Mozambique’s dependence on foreign aid and investment has led to rising social inequality and discontent amongst the country’s youth, a new report claims. Despite receiving US$12 billion in aid since peace was established 17 years ago, the report says there has been no real poverty reduction. It claims high levels of aid have left the country’s government accountable to donors rather than the people.

“Mozambique receives such substantial amounts of aid because of its subservience to donors,” says the author of the report, Dr Joseph Hanlon, a Mozambique specialist at the UK’s Open University.

Dr Hanlon, who describes Mozambique as “a donor darling”, says the country receives $65 per head in aid, compared with Uganda – a country on a similar level of development – and Malawi, which is poorer, which both receive $45 per head.

Yet Dr Hanlon highlights the fact that even though the country has received US$12 billion in usable aid in the last 17 years (not including debt relief, emergency aid and technical assistance), UNICEF reports that rates of child malnutrition are actually rising.

“Various studies show that the fruits of Mozambique’s ‘blistering pace of economic growth’ have gone almost entirely to the better off and, in the past few years, the poor have become poorer,” the study claims. “Interviews in rural areas frequently draw the same response: ‘the war ended 17 years ago, but we are still poor’.” The report claims the main conflict in Mozambique is between classes: “between the better off and worse off, competing for the same resources”.

The study, which is published in this month’s edition of Conflict, Security and Development, claims a high dependence on aid means the budget process essentially involves only two actors – the executive arm of the government and foreign donors. This means that the political space to formulate development policies leaves little room for “the government to insist on its own priorities” and those of Mozambican society.

Mega-projects versus rural investment

Rather than investing in the rural economy, the government is pursuing direct foreign investment because it is popular with donors, Dr Hanlon claims.

“Mozambique remains a predominantly agricultural country, and economic growth and job creation in the medium term will be agricultural”, says Dr Hanlon. “Donors do not allow this for Mozambique,” he explains.

Seventy per cent of Mozambique’s population live in rural areas. With the majority of people working on the land, overseas aid and foreign investments need to target the rural economy, Dr Hanlon claims.

Instead, much of foreign investment has been in mega-projects in the mineral sector, including a US$1.5 billion aluminium smelter. The report highlights a study by UNDP’s International Poverty Centre which claims these mega-projects have created few jobs. Also, they are exempt from tax, meaning they contribute very little to public revenue.

There is little credit for the rural economy and there has been little agricultural growth. The report claims that “90 per cent of farmers still prepare their land by hoe and food crop yields have not changed over the past decade”.

According to OECD figures, in 2003 US$33 million was spent on the agriculture sector, whereas US$116 million was spent on education. Although by 2008 agricultural funding had risen by 80 per cent, Dr Hanlon claims it is still an under-funded sector.

“There needs to be more emphasis on the economy and less on the social sectors … such as supporting marketing and raising agricultural technology,” Dr Hanlon suggests. “The government should stress job creation and the domestic market – less emphasis on foreign investment”.

Youth discontent

“There has been a huge expansion of education and healthcare in Mozambique that has meant that more young people are getting at the very least a basic education,” explains Dr Hanlon. “However, there has not been a similar increase in jobs that may explain why the young are frustrated.”

On 5 February 2008, demonstrations were held around Maputo to protest against the high cost of living. Hundreds of young people, mainly unemployed or scraping a living from the informal sector, took to the streets.  At least five people were killed and more than 100 injured, the majority of whom were shot by the police, the study claims.

Dr Hanlon points out that although the youth are more educated than their parent’s generation, there are no jobs available for them, creating frustration and discontent.

He concludes: “Inequalities are growing and are now the major area of conflict in Mozambique. As some prosper, allegedly because of party or other connections, the lack of jobs and agricultural support for the majority are becoming sources of grievance… Preventing violent conflict requires Mozambique to become an activist, developmental state which intervenes in the economy, and gives all Mozambicans a stake in the future.”

Further reading

Title: Mozambique: The war ended 17 years ago, but we are still poor

Author: Dr Joseph Hanlon

Author’s email: j.hanlon@open.ac.uk

Link to journal: http://www.tandf.co.uk/journals/titles/14678802.asp

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03/01/2010

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