Overview

  • Mozambique borders Tanzania, Malawi, Zambia, Zimbabwe, South Africa, and Swaziland. Its long, Indian Ocean coastline of 2,500 kilometers faces east to Madagascar. About 70% of its population of 28 million (2016) live and work in rural areas. It is endowed with ample arable land, water, energy, as well as mineral resources and newly discovered natural gas offshore; three deep seaports; and a relatively large potential pool of labor. It is also strategically located; four of the six countries it borders are landlocked, and hence dependent on Mozambique as a conduit to global markets. Mozambique’s strong ties to the region’s economic engine, South Africa, underscore the importance of its economic, political, and social development to the stability and growth of Southern Africa as a whole.

    Political Context

    The Front for the Liberation of Mozambique (Frelimo) and the Mozambican National Resistance (Renamo) remain the country’s main political forces, followed by the Mozambique Democratic Movement (MDM). The former rebel group Renamo has maintained its militia after the peace accord of 1992, and in the recent past, has sparked sporadic armed conflicts.  Peace talks are underway, and the process aimed at integrating Renamo fighters in the army has started. If successful, may lead to a final disarmament agreement.

    Meanwhile, the government is grappling with a new, low-level so-called Islamic insurgency in parts of the gas-rich province of Cabo-Delgado. While localized, the risk that it will spread to other areas of the province and the country should not be underestimated.

    Last year’s municipal elections confirmed Frelimo dominance. Renamo gained ground, winning eight municipalities out of 58, the most it has ever held. MDM lost all the municipalities under its control but one.

    Presidential, legislative, and provincial elections are scheduled for October 2019. It’s expected that for the first time, provincial governors will emerge from provincial elections. This would be a radical departure from the current situation where provincial governors are appointed at the central level as members of the executive branch. Mozambique is currently defined as an “authoritarian regime,” with a rating of less than four out of 10 possible points, according to the most recent Democracy Index of the Economist Intelligence Unit (EIU). The report indicates a sharp drop in the ranking of the country’s electoral process due to “irregularities and violence against members of the opposition during and after the municipal elections held in October 2018.”

    Economic Outlook

    Mozambique continues in a slow growth trajectory that followed the 2016 hidden debt crisis. Macroeconomic conditions are improving, but the economic performance is yet to revert to the pre-crisis levels. Real gross domestic product (GDP) growth is estimated at 3.3% in 2018, down from 3.7% in 2017 and 3.8% in 2016. This is well below the 7% GDP growth achieved on average between 2011 and 2015. Small and medium enterprises have fallen back and their capacity to generate jobs has been restricted even further as credit supply and demand for goods and services remains constrained. A slight recovery in growth is expected, projections sit around 4% of GDP for 2019 and may be higher in the medium term if gas production investments are materialized.

    Inflation has eased to 3.5% roughly the pre-crisis levels, supported by a cautious monetary policy stance, stable currency, and stable food prices.

    Debt levels remain unsustainably high. External debt declined from 103.7% of GDP at end-2016 to an estimated 85.2% by end-2017, mainly due to the appreciation of the metical. In the meantime, central government domestic debt levels have increased due to budget financing needs. Further, contingent liabilities and debt costs continue to arrive from state-owned enterprises under operational and financial difficulties. Mozambique continues to be in default of its Eurobond and the two previously undisclosed loans. The government reached an agreement in principle with 60% of the Eurobond holders but final closure is still pending and may take time due to revived public appeals for the cancelation of this debt following the revelation of illegalities surrounding the borrowing process. 

    Development Challenges

    The main challenges include maintaining the macroeconomic stability considering exposure to commodity price fluctuations and upcoming general elections, and reestablishing confidence through improved economic governance and increased transparency, including the transparent handling of the hidden debt investigation. Moreover, structural reforms are needed in support of the currently struggling private sector.

    Another major challenge for the economy is to diversify away from the current focus on capital-intensive projects and low-productivity subsistence agriculture toward a more diverse and competitive economy, all the while strengthening the key drivers of inclusion, such as improved quality education and health service delivery, which could in turn improve social indicators.

    Last Updated: Mar 28, 2019

  • World Bank Group Engagement in Mozambique

    Since 1984, the World Bank Group (WBG) has been providing development assistance to Mozambique in accordance with the country’s needs and priorities, from economic stabilization in the 1980s, to post-war reconstruction in the early 1990s, to a comprehensive support strategy in the late 1990s.

    The current strategy, renamed the Country Partnership Framework (2017-20­21), involved close collaboration with the government, development partners, civil society, and the private sector. The strategy’s focus areas are (a) Promoting Diversified Growth and Enhanced Productivity, (b) Investing in Human Capital, and (c) Enhancing Sustainability and Resilience. 

    The current International Development Association (IDA) lending portfolio to Mozambique is large and diverse. IDA activities are complemented by those of the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). 

    Last Updated: Mar 28, 2019

  • Protecting Mozambique’s diverse habitats

    Through World Bank support for the government’s Mozambique Conversation Areas for Biodiversity and Development Project (MozBio), protection of the country’s diverse habitats has been strengthened, improving the lives of the people who live in and around these areas. The first phase of MozBio (2015-2019) involved more than 20,000 beneficiaries in the Chimanimani, Maputo, Gilé and Quirimbas National Parks, almost half of which are women, in alternative income-generating activities such as honey production and conservation agriculture and piloted the establishment of girls’ clubs and environmental education campaigns in schools, that helped the community to invest in the future, by improving environmental awareness, reading and writing skills of youth. MozBio2, the second phase of the project, continues through 2023 and aims to further support rural communities through activities that increase jobs, business and income opportunities, while guaranteeing sustainable livelihoods and continued conservation and biodiversity efforts.

    Improving Service Delivery in Maputo’s Poor Neighborhoods

    The World Bank and Maputo city teamed-up to develop an innovative digital platform called MOPA, which radically improved solid waste management in underserved communities. The platform makes it possible for people to notify municipal authorities in real time, allowing for greater responsiveness and accountability in solid waste collection. In a little more than a year of implementation, as many as 186 informal dump sites across the city have already been eradicated and thousands of solid waste issues have been resolved.

    Supporting an enabling environment for sustainable fishery 

    Through several initiatives, the World Bank-supported SWIOFish Project is helping Tanzania and Mozambique fishing communities increase their fish stocks and restore livelihoods and fisheries. The project also helped significantly reduce the illegal fishing practices such as blast fishing in Tanzania. In Mozambique, the project is providing financing to fishing associations, and helping fishers, particularly women, save their earnings, borrow money and grow their businesses.

    Placing Results Front and Center in Health and Education in Mozambique

    Mozambique pioneered an IDA results-based-financing approach in health and education which served as an incentive for best practices and good governance in health and education. Thanks to the program, sectors created their own incentives to drive behavior change resulting in tangible improvements in the medicine supply chain and primary school management. The program also contributed to the reduction of medicine stock outs, the improvement of quality of care and treatment outcomes, as well as improved school governance and learning outcomes

    Providing Low-Cost Irrigation for Smallholder Farmers

    The World Bank is investing $70 million to help small farmers grow and sell rice and vegetables through rehabilitated and expanded irrigation schemes in the central provinces of Manica, Sofala, and Zambézia. More than 6,000 people have directly benefited from the Sustainable Irrigation Development Project (PROIRRI) so far. At completion, the project is expected to ensure irrigation more than 3,000 hectares, of which 1,700 ha are dedicated to rice production, 800 ha for horticulture, and 500 ha for contract production. 

    Supporting Rural Electrification in Mozambique

    The World Bank supports the expansion of photovoltaic solar energy programs, connecting over 500 rural health centers and 300 schools throughout Mozambique. The International Development Association funded projects which contributed to building new transmission lines and distribution networks, expanding access to electricity. The Bank also supports the use of environmental-friendly cooking stoves, which brings down pressure on wood fuels, reduces deforestation, and protects women and children against carbon monoxide and volatile particles emanating from coal. 

    Last Updated: Mar 28, 2019

  • The World Bank Group (WBG) works closely with other development partners to improve the quality and effectiveness of development assistance to Mozambique. Collaboration with development partners has also focused on education, health, roads, and fiduciary and monitoring and evaluation.

    Last Updated: Mar 28, 2019

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LENDING

Mozambique: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

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In Depth

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REPORT Jul 31, 2017

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Additional Resources

Country Office Contacts

Main Office Contact
Av. Kenneth Kaunda, 1224
Maputo, Mozambique
+258-21-482-300
For general information and inquiries
Rafael Saute
Sr. Communications Officer
+258-21-482-944
rsaute@worldbank.org
For project-related issues and complaints
mozambiquealert@worldbank.org