AfricaFocus (Washington, DC)

Mozambique: Poverty And Inequality

Washington, DC — "Donors need to believe in the Mozambique success story, so they do not look at anything which would challenge their comfortable picture and would force them to rethink their consensus development policy. But inequalities are growing and are now the major area of conflict in Mozambique." - Joseph Hanlon

Strikingly, in response to the recent violence in Maputo and Matola, the Mozambican cabinet decided Tuesday to roll back increases in the prices of bread and other essential goods, and to freeze any salary increases for top government officials and executives of any companies in which the government has controlling shares. Although the freeze is temporary, and the fundamental issues have not been resolved, this seems to indicate pressure not only from the demonstrators but from many others in the society.

This AfricaFocus Bulletin contains two background documents, one excerpted from a study earlier this year by Joseph Hanlon, and the other an update from Alcino Moiana of the Christian Council of Mozambique on the government decisions rolling back the price increases and taking other measures to respond to the crisis.

Another AfricaFocus Bulletin released today, not sent out by e-mail but available on the web (http://www.africafocus.org/docs10/moz1009b.php) gives a summary of events and a report from the Center for Public Integrity on the issues of police conduct in the demonstrations earlier this month.

Editor's Note

Related links:

John S. Saul, Mozambique: Not Then but Now"

AfricaFiles AtIssue Ezine, July 2010

http://www.africafiles.org/atissueezine.asp#art3

Additional background documents from Joseph Hanlon

http://www.open.ac.uk/technology/mozambique/

http://www.sarpn.org.za/CountryPovertyPapers/cppMozambique.php

UNDP, Gender, Poverty, & Inequality in Mozambique

http://www.sarpn.org.za/documents/d0002811/index.php

Afrobarometer Briefing Paper No. 87 August 2010

Economic Conditions, Living Conditions and Poverty in Mozambique

http://www.afrobarometer.org/abbriefing.html

For previous AfricaFocus Bulletins on Mozambique, visit http://www.africafocus.org/country/mozambique.php

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

Joseph Hanlon

Pambazuka News 470, February 18, 2010

[Brief excerpts only. For full text, including analysis of earlier periods, footnotes to sources, and additional background, see http://www.pambazuka.org/images/articles/470/mozambique.pdf Note: This paper was published in the March issue of the academic journal, Conflict, Security & Development 10:1 March 2010]

*Dr Joseph Hanlon, senior lecturer in development and conflict resolution at the International Development Centre of the Open University, Milton Keynes; a visiting fellow at the Crisis States Research Centre, London School of Economics and the editor of the Mozambique Political Process Bulletin.

Introduction

A return to war in Mozambique is highly unlikely, but the widening chasm between rich and poor and growing social exclusion are creating a 'serious risk' of conflict. This was the warning issued by the Peer Review Mechanism Forum in Mozambique's self-evaluation report to the African Union Peer Review in February 2009. Similarly, Mozambique's Institute for the Promotion of Peace--an association of former fighters from both sides in the 1981-92 war-- remarked in March 2009 that Mozambique seems at peace, but growing economic disparities and socio-economic injustice are weakening the peaceful transition. Mozambique's peace has been

remarkable--without any truth commission or international courts, the 1992 peace accord has held without retributions and with former foes serving together in parliament and the army.

One result is that Mozambique has become a 'donor darling', with relatively high levels of aid. In 2007 the World Bank talked of Mozambique's 'blistering pace of economic growth', while the IMF said 'Mozambique is a success story in Sub-Saharan Africa, benefiting from sustained large foreign aid inflows, strong and broad-based growth and deep poverty reduction'. ...

One million people died in Mozambique's 1981-92 war, and one third of the population had to flee their homes. In the aftermath there was an intense feeling of 'never again'--everything must be done to avoid violence. But 17 years later, there has been a subtle mood change. Those who fought gained nothing, while their leaders have become comfortable and prosperous. Furthermore, there is now a new generation of young people who do not remember the war. With a basic primary education they are moving into towns and cities to try to earn a living in the 'informal sector' on the margins of the law. ...

As the peer review self assessment stresses, the risk is not a return to formal civil war, but rather the increased prevalence of inchoate violence in communities. There was an unprecedented riot in Maputo on 5 February 2008 and in early 2009 violent clashes erupted between communities and the police. Most Mozambicans cannot imagine a return to war, yet the poor and hungry may increasingly resort to violence when they feel their lives and livelihoods are threatened. ...

The third section [of this article] shows that economic restrictions have eased but that the 'peace dividend' has been modest. The article exposes the failure to reduce poverty and highlights the growing gaps between the better off and the poor. While Mozambique has been open to foreign investment and has witnessed substantial GDP growth, the poor majority have not benefited. ... Finally, the article draws the implications of the bubbling popular discontent and disrespect for a system that has not ended poverty or provided equitable opportunities to citizens.

It argues that Mozambique is not the success story that has been painted by donors who have singularly failed to address looming problems of increased poverty and jobless youth.

...

Rather than ethnic, language or regional divisions, the main differences that could lead to violence are between rich and poor and between urban and rural. Indeed, differences in economic and social development within ethnic and language groups and within provinces are much larger than average differences between groups or provinces. Ethnic and language issues have not triggered violence and seem unlikely to do so; rather very wide economic and developmental differences have been, and will be, causes of organised violence.

...

Twenty-first century--subservience and MDGs

After the turn of the century, concern began to grow about the failures of the adjustment programme and that IMF limits on social spending would prevent Mozambique meeting the Millennium Development Goals (MDGs). Caps were eased. Then another, more quiet, donor confrontation forced the IMF in 2006 to further lift caps on aid spending in health and education. By the early 2000s increasing numbers of donors were providing direct budget support, and the Budget Support Group became the main donor policy forum. By 2007 there were 19 members and they signed an annual contract with the government covering all policy areas, with donor representatives at the heart of decision making processes within government.

Mozambique truly is a 'donor darling' receiving US$ 65 per person per year in aid, compared to Tanzania and Uganda (which have almost the same GDP per capita as Mozambique and are often grouped with Mozambique as IFI showcases of 'success') and Malawi (which is much poorer than Mozambique), which each receive only US$ 42 per person per year.

A joint donor-government study in early 2007 said 'Mozambique is generally considered an aid success story', but that there is 'a widespread perception that Government leadership and ownership of the aid agenda has left donors in the driver seat'. A 2004 study said 'high aid dependence means that the budget process essentially involves only two actors, the executive and foreign donors. Accountability to donors is much stronger than it is to Mozambican society'.

...

'It's the economy, stupid'

Seventeen years after the end of the war, travelling through rural Mozambique, one still sees destroyed shops and government buildings. The Cold War may now be a dim memory in the US and Western Europe, but its results are still a very real presence in Mozambique. Two decades of structural adjustment and 17 years of peace have not brought prosperity. There was real economic growth after the war, as peasants reopened abandoned fields and the rebuilding of roads and bridges increased rural trade. ...

The most severe constraint was that the IMF forced a steady decrease in credit to the economy. An important policy shift was that under BWI pressure the grain marketing board was closed, ending storage facilities and guaranteed prices, and shifting all of the risk onto peasants still recovering from war. ... Agricultural technology and productivity levels remain low, and there is little rural credit.

The central problem appears to be that too little money is going into the rural economy and this is hindering economic development. Total useable post-war aid has been US$ 12 billion--just over half the cost of the 1981-92 Cold War proxy war. So the former 'West' has not even given Mozambique enough to repair the damage it caused. In addition to a simple lack of money, the BWI policy now adopted by Mozambique is that the role of donors and the state is to create human capital (through health and education) and build infrastructure (roads and electricity), and on that basis, the private sector will invest, develop Mozambique and end poverty.

...

This vision of development is popular with donors. ... But foreign business people are not rushing in to invest in poverty reducing or labour intensive production, so jobs are not being created. Most foreign investment has been in mega-projects in the mineral-energy sector--a US$ 1.5 billion aluminium smelter, a gas pipeline for export to South Africa and titanium and coal mines. UNDP's International Poverty Centre (IPC) issued a report on Mozambique in September 2007 which argues that these mega-projects have created few jobs and, because of tax exemptions, contribute little to public revenue. ... The report concludes that the donor/IFI-promoted 'mega-project based development strategy relying on market opening has lost more jobs than it has created' and that 'its overall impact has arguably been to increase poverty'.

...

Increasing class differentiation and deepening poverty

GDP has grown at six to seven per cent per year for a decade. Government claims that the number of people living below the poverty line decreased dramatically from 69 per cent in 1997 to 54 per cent in 2003. These headline figures of high growth combined with a dramatic fall in poverty are quoted by donors and government as a mark of Mozambique's post-war success. But UNICEF points out that children have poor nutrition in the overwhelming majority of Mozambican households, and the rate of chronic child malnutrition is actually rising. For both UNICEF and the World Bank this is a 'paradox'. In fact, it is not paradoxical at all, for two reasons.

Firstly, the decline in poverty has been exaggerated, and is based on an effective change in the poverty line. If the line is not moved, the government admits, poverty still falls, but only to 63 per cent. Because of population increases, the number of people in poverty has increased from 11.2 million to 11.7 million. The government contested my view that this second figure is more accurate, but the African Peer Review Mechanism self-evaluation report confirms that 'the most credible indicators show an increase in absolute terms in the number of people below the minimum subsistence line'. No other study shows a big fall in poverty.

For example, the UNDP Mozambique Human Development Report 2005 estimated that between 2000 and 2004 'real GDP per capita' fell everywhere. Secondly, it is increasingly accepted that the gap between rich and poor is widening with the poor becoming steadily poorer and unable to properly feed their children. A series of rural income surveys in 1995-96, 2001-02 and 2004-05 provide a much more detailed picture. Officially, 70 per cent of the population is classified as rural, so this also includes people in smaller towns.

These show a huge increase in differentiation. There was a general increase in income between the first two surveys, but of the total increase in rural income, 73 per cent went to the 20 per cent of households with the highest incomes and less than three per cent went to the poorest 20 per cent. For the next period, differentiation accelerated, with the non-poor becoming better off, but the poorer becoming poorer. ...

Finally, the surveys show that the position of people near the poverty line is very precarious. Nationally, half of the rural families considered 'not poor' in 2001-02 had fallen back into poverty by 2004-05. Table II shows the high degree of insecurity; in 2002, 30 per cent of rural families nationally were not poor, but by 2005 half of them had fallen back into poverty, while 18 per cent of the population had been able to rise above poverty. The total change is small, just three per cent, but that hides a very large movement up and down.

...

Interviews in rural areas frequently draw the response: 'the war ended 17 years ago, but we are still poor'. The main conflict in Mozambique is between classes, between the better off and worse off, competing for the same resources. UNDP's International Poverty Centre issued a damning report on Mozambique in September 2007 (http://www.sarpn.org.za/documents/d0002811/index.php). It said that 'recent economic growth in Mozambique cannot be considered pro-poor', and that instead benefits of economic growth are going to 'a sharp rise in the consumption growth of the richest households in the midst of a large impoverished population'. Therefore, it called for 'a significant shift in the country's development strategy'.

...

Inequality 'may jeopardise stability'

'Rising poverty and inequality in Maputo [ . . . ] may jeopardise political stability', warned the Chr Michaelsen Institute (CMI) in a study for the British Department for International Development (DfID) in January 2008. 'In the bairros of Maputo, unemployment, crime and high costs of food, housing and land inhibit the poor from converting progress in education and health into increased income and consumption. [ . . . ] The large number of educated but unemployed and frustrated young men and women in the bairros, who cannot manage to live up to ideals of urban modern life, may jeopardise the current political stability'.

It was a prescient comment: demonstrations in Maputo on 5 February and then four other towns against the high cost of living shocked Mozambique. At least five people were killed and more than 100 injured, many shot by the police. Hundreds of young people, mainly unemployed or scraping a living from the informal sector, co-ordinated by mobile telephone text messages and blocked all the roads into Maputo and many streets inside the city, quickly closing the capital. Frelimo dismissed the rioters as marginals and vandals. But it became clear that the young demonstrators had the tacit support of their elders, and the government-owned daily newspaper Noticias published a series of more thoughtful articles. Editor-in-chief Rogerio Sitoe led the way with a column arguing that the root cause was 'the religious way we applaud and accept the prescriptions of the World Bank and International Monetary Fund', when these are really 'poison prescriptions'. ... A subsequent letter to the editor was published saying the demonstrations were not vandalism, but a strike by the people demanding their rights.

...

'Mozambique's present development model, based on free individual initiative and the principles of a economic liberalism', is seen as creating unemployment and leaving many families with not even enough to survive, especially in urban areas, said the self-evaluation for the African Peer Review in February 2009.77 The principal beneficiaries of growth have been a tiny group. This is polarising society, and creating 'serious risks' of conflict.

Conclusion

...

Donors need to believe in the Mozambique success story, so they do not look at anything which would challenge their comfortable picture and would force them to rethink their consensus development policy. But 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. The poor feel under threat and fear for their lives; they implicitly understand that they are subject to structural violence.

Few people who suffered in the wars would voluntarily return to war. But half of Mozambique's population is too young to remember them. Their experiences and expectations are very different from those of their parents. Increasingly people in their late teens and 20s at least have some primary education and speak the national language, Portuguese. They see themselves as better educated and more 'modern' than their parents, and have more contact with a wider world through mobile telephones, videos and more travel (even if only to the nearest market town, with electricity and discos). Many young people do not see themselves as hoe farmers like their parents.

...

Preventing violent conflict requires giving the young and poor a future and a stake in society--not a trickle down free market that might, some day, perhaps, solve their problems, but active intervention to tackle grievances and create jobs and agricultural markets. Is the donor herd so mesmerised by a few good statistics that they cannot see the growing poverty outside the capital? 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.

Update from Alcino Moiana

Alcino Moiana

Country Program Manager/Gestor de Programa

Economic and Social Justice Desk

Conselho Cristao de Mocambique

1584 Agostinho Neto Ave

P.O.Box 108

Maputo - Mozambique

Tel. (+258) 21 325 103; Fax (+258) 21 492 702;

Mobile (+258) 82 3827 200

Email: alcinomoyana@gmail.com

website: http://www.ccm.co.mz

September 8, 2010

Dear Friends and Economic Justice activists

I must quote a very old popular adage which says : " After the storm comes a calm", I am saying this due to the last happenings in Mozambique, which most of you have been following related to the current riots, which resulted in 15 human loss and more that 250 injured people, thousands of Meticals (local currency) in prejudice. It is said that this was the first most violent protest ever seen in the history of the country followed by the very first one which took place on 5 February 2008, where the protesters claimed the same issue related to the rise of price for basic goods. The current one were more violent since the government did not realise the impact of raising at the same time the price on bread, electricity, petrol and water, which were going to have their extensive impact on other goods such as public transport, basic food products and other commodities. So through the power of new technologies, I am talking about the SMSs the unknown face of the riots spread the message all over the Mobile users and the message was multiplied for many other calling for demonstrations of 1 September which were extended till 2 September and in very minor proportion in some provinces for the subsequent days.

The very first day of the riots, most of the citizen expected the President to have a saying on television which did not happen till the end of the day when the sun was going down, but even though he did not say much than sympathize with the bereaved families and those injured or those who have seen their properties vandalised by the riots, but maintain the speech that there is no point to knock down or reduce the prices, he said it with arrogance and frustrated a lot of citizen that were looking forward for the going back of the government in its measurements of rising the prices. A day after the president address in the television, the cabinet held an extraordinary meeting (2nd of September), and during the briefing the spokesperson of the Cabinet maintained the same speech as the President. The ordinary citizens were patiently looking forward to seen and reverse from the government and it took like 7 days to happen, just yesterday during the public holiday when the country was celebrating 36 years of Lusaka agreement with the Portuguese colonialist, well known in Mozambique as the VICTORY'S DAY.

The government did not celebrate with other Mozambican since, I think there was no reason to celebrate. Celebrate what???? exactly. The cabinet met and came out with very interesting measurement, which shows its yielding to social movement pressure exercised by the people. It is interesting because the protests in Mozambique did not have any face, the Trade Union which is well known as FRELIMO's wing did not say a word till today, which made everyone wonder about its muteness.

What we know is that the riots where convened by the people who feel the pain of the prices rising. Following the Cabinet meeting the announced measurement though are band-aid solution for they will be reviewed on December to see their sustainability, but they meet the expectation of most of those the government called them bandits, vagabond, marginal, unemployed army and many other names, now the same government admitted its mistake. the measurements are as following;

  • To remove the tariff on electricity for the consumer of social level till 100 kwh;
  • Reduce the announced tariff of electricity for the consumers of domestic levels from the pre-paid system;
  • to eliminate the double collection of the waste tax in the electricity bill for the pre-paid consumers;
  • Facilitate the new connections of electricity power for the families of poor background living in the Outskirt of the cities, paying a promotional amount of 875 mts that could be paid in form of installment
  • Reduce the tax for domiciliary water connection in 50% from 4.000,00 Mts to 2.000 mts with possibilities of paying in installment;
  • Maintain unchanged the water tariff of 150 Mts/Month for the consumers till 5 cubic meters equivalent to 5 thousand litres;
  • Maintain the previous price of bread through introduction of subsidies;
  • Maintain the fiscal measurements in force for potatoes, tomatoes, eggs, onion, namely, setting up the price of reference below the real ones for the collection of customs duties and VAT;
  • To reduce the price of rice of 3rd quality in 7.5% delaying the customs rights on this product;
  • To suspend temporary surtax on the sugar imports;
  • To freeze and salary increase and subsidies for the senior government staff till the government conclude its assessment in course;
  • To freeze the increase of salaries and subsidies for the members of the board of trustees of the Public companies and the companies that government largely have shares, obliged to pay their salaries in local currency;
  • To negotiate commercialization limits for the products covered by these measurements; The freezing of indicated increase of salaries aim to obtain savings for further orientation for the necessary subsidies. Then the fiscal measurements have a transitory power till December 2010, having in account their unsustainibility at medium and long term, conditioned by the international state of affair;

Macro-Economic Measurements

In order to secure the sustainability of the taken measurements, the government decided, equally, to accelerate the implementation of the action if the macroeconomic areas namely:

  • To hold the public expenditures for the sake of savings for further orientation and for the subsidy of the essential products, through rationalization of the running costs, in particularly in the budget lines on: Flight tickets (reduction of trips locally and abroad and redefinition of the use of Executive class), perdiems, petrol, lubricants and communications;
  • Not deliverance of obligatory fund for the budget line of goods and services;
  • Not approval of supporting funds without compensation;
  • Not establishment of new state bodies which result in additional expenses to the state budget;
  • Reinforce the measurement aiming to stabilize the local currency Metical;
  • Discipline the bank activities intensifying the oversight in the financial institutions;
  • Reinforce the monitoring mechanism of entry and exit of foreign currencies;
  • Reinforce the obligatory character of fixation, invoicing and payment of expenses in local currency what contributes for the preservation and valorization of Metical;
  • Reinforce the oversight on the pricing of products within the commercial shops;
  • To privilege the consumer of low income in the review of electricity and water tariff;
  • Maintain and guarantee the subsidies for public urban transport;
  • To analyse the structure of imported products to mind for incomes of different social structures;

So this is a summary of the measurements announced by the government Yesterday. However, there is a need to monitor and advocate for more comprehensive social policies to avoid future embarrassment.

A Luta Continua.

With Blessings

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