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Mozambique
>> Regional Overview >> Mozambique Overview
Previous Years' Activities
2002, 2001, 2000, 1999, 1998, 1997
Last updated: 21
THE DEVELOPMENT CHALLENGE: Mozambique remains a major African success story, sustaining strong gross domestic product growth -- reaching 14.8% in 2001 -- in the years since its model war-to-peace transition. The country continues to press forward with economic and political restructuring. The government's internationally endorsed poverty reduction action plan is the blueprint for policy changes and programs to accelerate broad-based economic growth and create economic opportunities for families to lift themselves out of poverty. There are six priority areas: agriculture and rural development; education; health; basic infrastructure (roads, energy, water); good governance, and justice; and macroeconomic and financial sector policies. Based on this strategy, in September 2001 the international community approved the reduction of Mozambique's international debt under the Enhanced Heavily Indebted Poor Countries initiative; other creditors followed suit with debt relief pledges at the October 2001 Consultative Group meetings.
Given Mozambique's importance in providing ocean access for several landlocked countries and its proximity to the industrial heartland of South Africa, political stability and economic growth in Mozambique contribute to U.S. national interests of peace, stability, and economic growth throughout Southern Africa.
As a rapidly growing economy, Mozambique provides an emerging market for U.S. exports and continues to attract significant U.S. investment in agriculture, fisheries, minerals, and natural gas reserves.
The Government of Mozambique's central objective is to reduce levels of absolute poverty from 70% in 1997 to 60% in 2005 and to 50% by the end of this decade. Its action plan emphasizes policies to stimulate investment and productivity, in order to sustain broad-based annual GDP growth averaging at least 8%. Still, the development challenges in this transition economy are daunting. Per capita annual GDP is still only about $220. The currency was devalued in 2001 by 31%. While inflation is low, it did reach double digits in 2001. In the political sphere, although both the influence of civil society and government transparency and accountability continue to grow, crime and pervasive petty corruption must be subdued to restore citizen and investor confidence in state institutions. Sixty percent of adults are illiterate, and while the majority of seven-year-olds now attend school, fewer than 20% of them are likely to reach secondary school. Despite increased vaccination rates and better access to basic health services, life expectancy remains 46 years. Even if successfully checked in the medium term, the costs of HIV/AIDS to Mozambique's economy are expected to be large, with: (1) the loss of economically active adults in their prime earning years; (2) increased dependency, i.e., more children, especially orphans, for each economically productive adult; and (3) increased costs of treating the ill and the dying, and reduced savings and capital accumulation capacity of family and friends. Donor resources and private investment are needed if Mozambique is to maintain its growth.
Continued U.S. assistance will speed Mozambique's recovery from natural and man-made disasters, foster accelerated and more broad-based economic growth through agriculture and increased international trade, reduce poverty, stem the spread of HIV/AIDS, and contribute significantly to overall peace and security in sub-Saharan Africa. Mozambique is a model of the continent's potential - a desperately poor country joining the global economic system through profound and sustained democratic and economic reform. U.S. assistance will play an increasingly critical role in the country's future.
THE USAID PROGRAM:
FY 2002 Estimate: $48.319 million FY 2003 Request: $62.362 million Both ongoing and new activities are summarized in the following four Program Data Sheets, which describe activities to achieve:
- Increased rural household income;
- Effective democratic governance;
- Increased use of essential maternal/child health and family planning services; and an
- Improved enabling environment for private sector-led growth and development.
Each of these programs makes a direct and significant contribution to one or more of the Administration's foreign aid pillars (economic growth, agriculture, and trade; global health; and democracy, conflict prevention, and humanitarian assistance). Together, they broaden participation in political life and economic growth for all Mozambicans.
USAID field activities target the most populous and high-potential areas of the country - Manica, Nampula, Sofala, and Zambezia provinces - through community-level investments in the agricultural sector. The agriculture program also works at the national level, refining the role of the public sector while building capacity in the private sector. The community level health initiatives also work in the same provinces, as well as Gaza and Niassa provinces, while HIV/AIDS interventions are delivered nationwide. The democracy program strengthens the national legislature and mechanisms for citizen participation, including political parties and civil society organizations. USAID's program to support a viable enabling environment for private sector-led growth facilitates the dialogue between government and the private sector to refine and implement a pro-trade and investment approach to economic growth. In FY 2002 USAID will continue implementation of a $132 million international disaster assistance funded post-flood reconstruction program in roads ($35 million), railroads ($55 million), and agricultural and commercial trade recovery ($42 million).
OTHER PROGRAM ELEMENTS: P.L. 480 Title II food aid continues to be an integral part of USAID's program in both FY 2002 and 2003 and complements the efforts to help rural poor households to raise incomes and improve food security.
OTHER DONORS: Overall donor assistance to Mozambique's economic growth and poverty reduction strategy is expected to total approximately $722 million in 2002, with $577 million in grants and the balance as concessional loans. The U.S. remains the largest bilateral donor, providing over $54 million in grants and monetized food aid in FY 2002. Other major donors include the World Bank, the International Monetary Fund, the United Nations agencies, the European Union, the Netherlands, Sweden, Denmark, Switzerland, Italy, France, and Norway. Portugal, South Africa, and the United Kingdom are major sources of private investment in Mozambique. Donor coordination working groups are active in all of USAID's strategic areas. A common and important aspect is Mozambican Government leadership of each working group. USAID is partnered with the World Bank, the European Union (EU) and other bilateral European donors, in close cooperation with the Ministry of Agriculture, to improve agricultural policy and restructure the agricultural public sector. USAID is a leading member of the Ministry of Health-chaired donor working group that includes Canada, the Netherlands, the EU, Japan, the World Bank and several other European Governments. USAID and the World Bank have also implemented complementary efforts to improve the environment for private sector growth. Of particular note are ten public-private forums to discuss and develop policies that foster private sector-led growth and development.
Program Data Sheets
- 656-001 Increased Rural Household Income in Focus Areas
- 656-002 Government and Civil Society Are Effective Partners in Democratic Governance at the National and Local Levels
- 656-003 Increased Use of Essential Maternal and Child Health and Family Planning Services in Focus Areas
- 656-004 Improved Enabling Environment for Private Sector-Led Growth and Development
Country Background Information Resources
CIA Factbook
National Geographic Country Maps
State Dept. Country Information
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Last Updated on: May 29, 2002 |
