In Mozambique—and In Africa—Rising Requires Resilience

IMF Blog, September 3, 2014

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In Mozambique—and In Africa—Rising Requires Resilience

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Bibliographic details

• Authors: Doris Ross
• Published: September 3, 2014

Overview

• Conference context:
  • "Africa Rising" conference organized in May by the IMF and the government of Mozambique in Maputo.
  • Attendees: nearly 1,000 officials, corporate executives, civil society representatives, and journalists.
  • Event duration: two-day.
• Framing:
  • Africa Rising characterized as strong growth tempered by serious challenges.
  • Emphasis on sustaining expansion and building resilience to shocks.
• Publication:
  • IMF African Department compiled a book titled Mozambique Rising: Building a New Tomorrow, available in English, French and Portuguese.

Growth and resilience: key observations

• Africa’s outlook remains strong, but individual countries have faced problems and the uncertain global outlook poses risks.
• "Rising" involves both sustaining expansion and managing the dimensions of growth.
• The extended process of African development requires increased resilience to shocks, which may be tested by economic problems in some African nations.

Mozambique—achievements and immediate priorities

• Historical turnaround:
  • Emergence from civil war in 1992.
• Immediate priorities:
  • Share the benefits of two decades of strong growth more broadly.
  • Shepherd the economy through transformation from a traditional agricultural base to one centered on mining, agro-business and processing, and services.
• Institutional needs:
  • Continued institutional and capacity building in public administration.
  • Improve foundations and structures of economic policymaking and governance; adapt them to a fast-changing world.
  • Create an environment conducive to private sector development as the primary source of future employment.
  • Government collaboration with small and large enterprises to make Mozambique more business friendly and competitive.

Natural resources and fiscal policy implications

• Resource-driven transformation:
  • Mozambique’s future tied to development of natural resources and foreign-financed megaprojects that are capital intensive and export oriented.
  • These projects have so far generated only limited employment opportunities and government revenues.
• Fiscal policy challenges and opportunities:
  • Resource revenues, while modest to date, are likely to become sizable in a few years.
  • Opportunity to close infrastructure gaps, invest in priority sectors such as health and education, and support more inclusive growth as the economy transforms.
  • Capacity constraints seem high; the pace at which resource wealth is anticipated and used should be gradual.
• To reap full returns on scaled-up public investment, reforms needed to:
  • Enhance the efficiency of investment through strengthened investment planning and coordination.
  • Improve project assessment, selection, and monitoring.
  • Strengthen governance.
  • Provide complementary infrastructure.

Social protection and inclusive growth

• Poverty trends:
  • While poverty in Mozambique has fallen significantly, a 2009 household survey showed that overall poverty rates had stagnated since 2003 at around half the population.
• Policy focus areas to promote inclusion:
  • Improving agricultural productivity.
  • Creating jobs through improvements in the business environment and training.
  • Developing more focused and better designed social protection programs.
  • Preserving macroeconomic stability.
• Implementation gaps:
  • Need to refine policy priorities, derive policy actions and sequencing, and measure results.
  • Policy coordination to ensure accountability has been lacking in areas that cut across ministerial jurisdictions.
  • Significant data gaps weaken analytical capacity and the basis for policy decisions.

Policy implications and recommended directions

• Prioritize institutional and capacity building in public administration to support policymaking and governance.
• Gradually manage and deploy anticipated resource revenues to avoid capacity overstretch.
• Reform tax regime and business environment to translate resource-led growth into broader employment and revenue gains.
• Strengthen investment planning, project selection, monitoring, and governance to improve the efficiency and impact of public investment.
• Design and implement focused social protection and labor-market policies to ensure more inclusive distribution of growth benefits.
• Improve data collection and analytical capacity to support policy design, coordination, accountability, and measurement of results.

Source: In Mozambique—and In Africa—Rising Requires Resilience, Doris Ross, September 3, 2014.

Content in this bundle

• afr1404f
  • afr1404f (Markdown version)
  • afr1404f (PDF)
• Moçambique em Ascensão: Construir um novo dia; Departamento de África; junho 2014
  • Moçambique em Ascensão: Construir um novo dia; Departamento de África; junho 2014 (Markdown version)
  • Moçambique em Ascensão: Construir um novo dia; Departamento de África; junho 2014 (PDF)
• Mozambique Rising: Building a New Tomorrow; IMF African Departmental Paper No. 14/4; June 2014
  • Mozambique Rising: Building a New Tomorrow; IMF African Departmental Paper No. 14/4; June 2014 (Markdown version)
  • Mozambique Rising: Building a New Tomorrow; IMF African Departmental Paper No. 14/4; June 2014 (PDF)