Mozambique: Sharp Increase in Inequality as the Better Off Consume Much More

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Wider Says Secret Debt Intensified Poverty; Inequality Is Increasing As Better Off 'Eat' More

There were 1 million more poor people in Mozambique in 2018 than in 2015, largely due to the secret debt, according to research published by the United Nations University - Wider on 3 June.

Two other recent Wider publications, show that inequality is increasing and that Mozambique is failing to tackle child poverty in rural areas and in the north. All of the studies show rural areas in general and all of the centre and north are being left behind; Maputo city and province and Gaza dominate. Urban-rural gaps and gaps between the south and both the centre and north have been increasing since 2009 for all indicators except access to clean water.

Poverty deepening

"Overall improvements in access to basic services, asset ownership and housing conditions seem to have stalled in recent years" and the number of households who are not deprived is not increasing. "At the same time, a large share of the population even lost some of their assets, increasing their deprivation, which drives the rise in poverty intensity," write Eva-Maria Egger, Vincenzo Salvucci and Finn Tarp in the Wider paper. The gap between urban and rural areas and between north and south is wide and increasing.

There are two ways of measuring poverty - monetary, from income or consumption, or household welfare. The last national poverty survey was in 2015 but the Wider team are able to use the 2018 Demographic and Health Survey to estimate welfare poverty. Mozambique's population is increasing at the rate of 3% per year, so any annual poverty reduction of less than 3% means the number and share of poor people increases.

This study assesses welfare poverty ("multidimensional poverty" in the jargon) based on sanitation, water, electricity, assets, housing and cooking fuel. The data is from four Demographic and Health Surveys.  The results (in the table) show that the poverty rate is falling so slowly that the number of people in welfare poverty is increasing by more than 300,000 each year.

In the 2018 survey only 37% or urban people were poor (in welfare terms) and 42% of people in the south were poor, compared to 93% of rural people and 86% of those in the north. "The north and centre show much higher levels of deprivation", and the gap increased in the period 2015-18. This was, in part, due to a global economic crisis and falling commodity prices. But the "factor that most contributed" to the intensification of poverty was the $2 bn hidden debt, which caused the IMF and donors to halt direct budget support which caused a cut in GDP which led to a depreciation of the Metical which raised prices of imported goods, the authors say.

Children Poorer Than In Neighbour Countries - And It's Getting Worse

"A significant, and striking, result of our analysis is that rural poverty incidence for children aged 0-17 is more than three times that of urban areas, and the four poorest provinces are about 50 times poorer than the richest," write Kristi Mahrt, Andrea Rossi, Vincenzo Salvucci and Finn Tarp in a paper published 23 April.

"Mozambique continues to have multidimensional poverty levels that exceed those of its neighbours - Malawi, Tanzania, Zambia, and Zimbabwe - by a large margin. Notwithstanding the improvements observed, performance in primary enrolment, water, and sanitation indicators seems to be particularly poor, which also influences nutrition and other indicators.  … It is difficult to explain the different pace at which Tanzania managed to reduce its poverty index compared to Mozambique (4.1% per year versus 2.4%). One explanation comes from the fact that Mozambique’s development in recent years has been highly unequal. Rural areas and most central-northern regions have experienced much lower gains in terms of welfare than urban areas and southern provinces."

Compared to its neighbours, "Mozambique achieved the greatest reduction in urban poverty index, which once more confirms the impression of an uneven development process" and particularly excluded children in rural and central/northern regions. The study looked at multidimensional or welfare poverty, but used a set of indicators more appropriate for children.

Sharp increase in inequality as the better off consume much more

Inequality in Mozambique jumped between 2009 and 2015, after having been relatively steady for a decade, the 6 May update of the Wider World Income Inequality Database (WIID) shows. A June 2019 research paper by Carlos Gradin and Finn Tarp highlighted "a substantial increase in inequality, especially in most recent years. This was due to consumption disproportionally increasing among the better-off." They say "this growth pattern is characterised by the emergence of a non-subsistence economy in Maputo and other urban areas, in a resource-based country, with a shrinking public sector, the expansion of education and the emergence of a small but highly educated elite." Inequality is low in rural areas and highest in Maputo city.

The standard measure of inequality is the "Gini coefficient", where 100 is totally unequal (one person has all the money, and 0 where everyone is equal. And the graph below shows the huge jump after 2015; a rise of 6 points is 3 years is very large. The data base and article uses the household budget survey, conducted every 5 or 6 years, which measures consumption.

The WIID also shows income ratios and the changes are dramatic. The top 5% of the population consumes 56 times as much as the bottom 5%. Over 12 years (1997-2009) the consumption of the top 5% moved from 30 to 38 times the bottom 5%, but then in just 6 years it jumped to 56 times.

And Malawi's former President Joyce Banda has told a campaign rally that the country has no Covid-19 cases and accused the government of "faking" numbers, in order to increase aid. (BBC 10 June). Just ten weeks ago, Banda accused the government of hiding Covid-19 cases. Banda is a candidate in the re-run of the presidential election on 23 June ordered by the High Court.

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