Mozambique’s annual Gross Domestic Product (GDP) growth averaged 7.4% over the past two decades. Sound macroeconomic management, large-scale foreign-investment projects, political stability, and significant donor support have contributed significantly to such performance. However, the rapid growth of the past decades has not always translated into significant poverty reduction. Strong economic growth was accompanied by large decreases in poverty until the early 2000s. The national poverty headcount fell by 14 percentage points between 1997 and 2003 to 56%, while income per capita grew by 36% during the same period. In contrast, poverty fell by only 4% between 2003 and 2009, a much slower rate of decline. The weakened relationship between growth and poverty reduction is due to the changing pattern of growth, which in the past decade was driven by capital-intensive, import-dependent sectors. This pattern of growth is also reflected in labor markets, which continue to be dominated by low skilled labor in the agricultural sector; meanwhile, the rest of the economy is unable to offer better-remunerated jobs for the 300,000 new workers entering the labor force every year.
Furthermore, the geographical distribution of poverty remains largely unchanged, with both moderate and extreme poverty concentrated in rural areas and in the Central and Northern regions. Regional differences have increased over time, as the moderate reduction in poverty observed in the mid- and late-2000s was led by declining poverty rates in the less poor Southern region and in urban centers, especially the Maputo area. Nationwide, rural poverty continues to be severe and pervasive. In places where rural poverty reduction has occurred it has been concentrated in the southern provinces, reflecting spillover effects from the rapid growth of urban centers in the region. Elsewhere in the country rural poverty rates remain unchanged, and in Central Mozambique the poverty headcount actually increased between 2003 and 2009.
Recent discoveries of large deposits of coal and gas may transform Mozambique into a significant player in global markets. However in order for Mozambique to reap the benefits of a growing resource sector it will need to develop the capacity to manage the country’s extractive industries and ensure that they contribute to sustainable and broad-based growth. Recent “megaprojects” in coal, mineral-sands and natural-gas extraction and processing have thus far had only a limited impact on employment and poverty reduction. Some of the challenges ahead include the formulation of strategies for developing Mozambique’s coal and natural gas reserves, determining how these industries interact with other economic sectors, and ensuring that the expected increase in natural resource revenues are used in the most effective way, avoiding the fate of many other natural resource rich countries.
Following independence from Portugal in June 1975, the country underwent a 16-year armed conflict that ended in 1992. The transition to peace, political stability, and democracy culminated in the country’s first democratic elections in 1994 and the emergence of the Front for the Liberation of Mozambique (FRELIMO) as the dominant political force in the country, a fact that still holds true today.
Since January of 2015 Mozambique has a new president, Filipe Nyusi; the winning ruling party Frelimo candidate of October 2014 general elections. His party also secured a strong majority in the parliament (144 seats out of 250 in total), though in sharp decline compared to the previous election in 2009 when it garnered 75% of the vote. Renamo, the largest opposition and former rebel group, more than doubled its seats to 89 seats, and MDM, a third political party with parliament representation, obtained 17 seats, also doubling its presence.
Mozambique’s rapid economic expansion over the past 20 years has had only a moderate impact on poverty reduction, and the geographical distribution of poverty remains largely unchanged. Mozambique also needs to improve its social indicators. The country ranked 178th out of 187 countries in the Human Development Index (HDI) in 2014. The adult literacy rate is 56%, and average life expectancy at birth is just 50.3 years. Infant and child mortality rates and child vaccination rate have progressively improved, placing Mozambique on track to achieving Millennium Development Goal 4, Reduce Child Mortality. Mozambique faces other challenges such as increasing malnutrition, with large negative impacts on physical and mental development. Malaria remains the most common cause of death, responsible for 35% of child mortality and 29% for the general population. HIV prevalence among adults shows a downward trend, stabilizing at a relatively high rate of 11.5%.
In education, important progress has been in access and gender parity. Between 2009 and 2014, net enrolment of six-year-old children increased from 67 to 82%, and Mozambique compares well with peer countries such as Ghana and Namibia. Further, every year more children are in the education system overall. Challenges still remain in school retention and quality of learning outcomes. Progress has not been even across all dimensions of social development, with slower progress in water and sanitation.
The social progress index for access to improved sources of water and sanitation ranks Mozambique 128th and 119th, respectively, out of 135 countries. Indeed, Mozambique has one of the lowest levels of water consumption in the world. Further, overall, it is estimated that approximately 41% of the population practice open defecation. As a response to such challenges, the Mozambican authorities have considered the social sectors as priority ones and funding has been increasing for the sectors in general.
Last Updated: Apr 16, 2015