The World Bank in Mozambique

Mozambique borders Tanzania, Malawi, Zambia, Zimbabwe, South Africa, and Eswatini. Its long Indian Ocean coastline of 2,500 kilometers faces east to Madagascar.

About two-thirds of its estimated 33 million (2022) people live and work in rural areas. The country is endowed with ample resources of arable land, water, and energy, as well as mineral resources and newly discovered natural offshore gas; 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). Frelimo won in a landslide in both the 2019 presidential and legislative elections, securing a two-thirds majority in the national assembly. Frelimo also won provincial elections, held for the first time in the same year, thus appointing governors in all the country’s 10 provinces. The last municipal elections took place in 2018. Frelimo came up largely victorious in these too, winning 44 out of 53 cities and towns across the country. Renamo won eight municipalities in the central and northern, most populous provinces, while MDM retained its stronghold in the strategic, central port city of Beira. Mozambique will hold its sixth municipal elections in October 2023, marking the beginning of another electoral cycle that will culminate in the presidential, legislative, and provincial elections a year later in October 2024.

District elections, initially planned for 2024, are in doubt. As part of the peace deal to end hostilities with Renamo, and which constituted a condition for Renamo’s military wing disarmament (the Demobilization Disarmament and Reintegration [DDR]), an amendment to the constitution introduced elections at the district level for 2024. However, in December 2022, during his annual briefing at the Assembly of the Republic, the president of the republic announced the creation of a consultative group to assess the feasibility of district elections.

The Government pledges to complete its DDR efforts of Renamo’s residual forces. The DDR process has made substantial progress albeit at a slower pace. It is estimated that it has now reached over 80% of its completion rate, paving the way for a definitive peace and an effective end to hostilities and attacks, mostly against civilians, perpetrated by Renamo's residual forces over the years in the central region of Mozambique. 

Mozambique is still grappling with a military insurgency in parts of the gas-rich province of Cabo-Delgado; the four-year conflict has caused an estimated 4,000 deaths and displaced nearly one million people. About four million people are likely to face high levels of food insecurity as a result of the combined effects of climate shocks and the conflict, which is also threatening the economic potential of lucrative Liquified Natural Gas (LNG) investments in the area. The arrival of regional troops has helped stabilize the situation to a degree. The government approved a reconstruction plan for the province, as well as the Programa de Resiliência e Desenvolvimento Integrado do Norte de Moçambique (PREDIN). The latter is a short- to medium-term approach to conflict prevention and conflict mitigation, social cohesion, and resilience, intended for Cabo Delgado, Niassa, and Nampula provinces.

Challenges related to civic voice remain. The civic space in Mozambique has gone from “obstructed” to “repressive,” according to the latest CIVICUS Monitor Report. The Freedom House (2020) classified Mozambique as partly free since 1994, while the Economist Intelligence Unit (2020) notes in its Democracy Index 2019 report that Mozambique is slipping from a hybrid to an authoritarian system based on indicators for electoral process and pluralism, functioning of Government, political participation, political culture, and civil liberties. 

Economic Outlook

The economy is recovering from the protracted slowdown in recent years, with growth reaching 4.4% in the first half of 2022. Mozambique experienced its first economic contraction in nearly three decades in 2020, with an additional 250,000-300,000 urban people pushed into structurally high poverty levels. It is estimated that overall, more than 60% of people live in poverty and more than one million people have been displaced by the conflict in Cabo Delgado. The instability in Cabo Delgado has slowed expected outcomes from investments in the liquefied natural gas (LNG) sector, and currently one offshore project, with an investment of $7 billion has started production. Larger projects, more than $50 billion of investment, are expected to start production in 2026 and 2028, an almost two-year delay.

According to the 2023 World Bank’s Mozambique Economic Update report, the medium-term economic outlook is positive, with growth expected to accelerate to 6% over 2023-2025, driven by continued recovery in services, increased LNG production, and high commodity prices. Downside risks remain. The uncertain global recovery, the war in Ukraine, the low levels of human capital, and the country’s vulnerability to climate disasters, risk further limiting Mozambique’s options for diversifying sources of growth.

Development Challenges

Despite having one of the fastest growing economies in Sub-Saharan Africa from 2000-2015, job-creation, poverty reduction, and human capital accumulation are still limited, with most of the substantial wealth generated benefiting limited sections of the economy. With a human capital index of 0.36, extremely low levels of human capital are a structural constraint to rapid, inclusive, and sustainable growth in Mozambique. Basic services in education and health are unevenly delivered across the country, driving spatial inequalities, with limited mechanisms to protect the most vulnerable from the impacts of shocks, thus driving fragility, instability, and violence.

The lack of availability of good training and weak links between supply and demand compound a weak labor market and low productivity growth. Disempowerment among girls and women hinders growth through unfavorable levels of fertility, high child and maternal mortality, low levels of skills among women, and the poor productivity of women in the labor market.

Additional challenges include maintaining macroeconomic stability, considering the country’s exposure to commodity price fluctuations, and making further efforts to reestablish confidence through improved economic governance and increased transparency. Structural reforms are needed to support the struggling private sector. That, and diversifying the economy away from its focus on capital-intensive projects and low-productivity subsistence agriculture—while strengthening the key drivers of inclusion, such as improved quality of education and health service delivery—could in turn improve social indicators.

Last Updated: Mar 20, 2023

World Bank Group engagement in the country is defined under the Mozambique Country Partnership Framework (CPF) FY23-27, endorsed by the World Bank Group’s Board in February 2023. The overarching goal of the CPF is to support Mozambique’s progress toward greener, more resilient, and inclusive development. This will be achieved by setting the foundations for a transition to (i) an economic growth model that generates more and better jobs, with attention to women’s participation; (ii) a society that is more resilient to multidimensional shocks; and (iii) a future development path that is consistent with global climate goals. WBG support will help address the underlying causes of fragility, conflict, and violence. The CPF program emphasizes the importance of scaling up for impact, leading to fewer, larger, transformational investments, and paying greater attention to implementation. The World Bank portfolio for Mozambique stands at $5.3 billion (credits and grants), as of February, 2023.

Last Updated: Mar 20, 2023

Driving Spatial and Economic Transformation for Better Jobs in Mozambique

The World Bank supported farmers in Mozambique through the Integrated Growth Pole Project, which combines value chain support, financing, institutional support, and infrastructure development. Over 200,000 people—about 40% of whom are women, benefited from the operation, spurring economic transformation along the Zambezi Valley and Nacala Corridor, deemed areas of high agribusiness potential in Mozambique. With the project support, 200 kilometers of roads connecting farmers to markets were upgraded. The project improved water sources for 32,306 people and helped build 139.2 kilometers of improved water-distribution networks.

COVID-19

Mozambique had one of the best COVID-19 responses in Sub-Saharan Africa, an impressive achievement given its fragile health system. Its effective response was instrumental in minimizing deaths and in allowing the government to reopen the economy. To date, more than 96% of the population above 18 years of age and 46% of the total population have had two doses of vaccine.

The World Bank-funded Mozambique COVID-19 Response Project has supported large scale vaccine acquisition, including more than nine million doses of the single-shot Johnson & Johnson vaccines through the African Vaccine Acquisition Trust (AVAT), and eight million Sinopharm doses through COVAX Cost Sharing, respectively. With additional financing provided at the end of 2021, the project financing now totals $215 million, including $15 million in co-financing from the Global Financing Facility (GFF), out of which more than 60% goes towards vaccine procurement. This is providing critical support to operationalize the National Deployment and Vaccination Plan for COVID-19, to strengthen immunization systems, and to support continuity of essential health services. In addition to vaccinations, the COVID-19 Response Project also includes intervention to build stronger, more resilient health and immunization systems (e.g., through quality and use of data, genomic surveillance, cold chain and logistics, communication and citizen engagement, and community health systems).

Supporting the Poorest Throughout Successive Crises

The World Bank has been supporting the government’s social protection programs, which now cover about 23% of those living in poverty in Mozambique. Key among them is Basic Social Assistance, covering about 460,000 households containing vulnerable members, like the elderly and children in poverty; the Productive Social Action program, for 135,000 families involved in public works to support the social and economic infrastructure; and the Direct Social Assistance program, supporting families affected by emergencies

 These programs have been sustained, gradually increasing their coverage, especially during emergencies, such as the following:

• In 2016, there were 18,500 families affected by drought in the southern province of Gaza.
• In 2019, social protection programs covered 135,000 families in the wake of Cyclones Idai and Kenneth.
• In 2020 and 2021, social protection programs aimed at covering almost 1.7 million families affected by the COVID emergency, the Eloise cyclone, and the economic crisis precipitated by the war in Ukraine.

Investing in the Future by Supporting Education With support from FASE (a pooled fund) provided through the Improving Learning and Empowering Girls in Mozambique Project—$160 million International Development Association (IDA) and $139 million GPE—the World Bank and other development partners finance over 95% of the investment budget in Mozambique’s primary (elementary) and secondary (high) school education sectors. However, much work remains, as Mozambique is behind its peers on school completion rates, is far from universal primary completion, and has low learning outcomes. Since 2000, enrollment has increased, with near universal primary enrollment. Secondary school enrollment rates increased steadily until recently, when they stagnated at around 40% (33% for girls). Th pupil (student)-to-teacher ratio has improved but remains high, with too few teachers for the numbers of students.

Expanding Water Access in Urban and Rural Areas

The World Bank is supporting Mozambique to expand its provision of water in urban and rural areas. The 2021 inauguration of a new treatment facility, which will expand water supply services to around 560,000 more people in the Greater Maputo Region, was made possible through about $178 million for the construction of a new Water Treatment Plant in Sabié. This has increased the supply of treated water by 60,000 m3 a day. This investment complements other World Bank funding for a new pipeline, the expansion of distribution networks, and work towards increasing water storage capacity at the Corumana Dam. The Bank is also supporting the government's efforts to expand access to safe water to some 370,000 people in the more northern cities of Pemba, Nacala, Tete, Moatize, Beira, and Dondo, with $165 million in funding provided to the government project known as Water Services and Institutional Support, WASIS II.

Rebuilding Resilient Road Networks

In March 2019, the government inaugurated road networks, rebuilt in the province of Gaza, southern Mozambique, following the destruction caused by 2012 and 2013 floods. The first phase of the Roads and Bridges Management and Maintenance Program restored road connectivity between the various affected areas, covering 632.5 km of roads. The $12 million IDA-funded emergency repair operation was completed satisfactorily in 2016. The second phase aimed for a more in-depth reconstruction of roads and bridges. The project benefited from a total of $102 million of IDA funds in direct investment and resulted in a total of 198 km of weather-resilient roads and three new bridges. To increase rainwater flow and reduce overtopping in the rainy season, 115 aqueducts were built, and 15 others repaired along the project's various roads and bridges.

Improving Coastal Cities' Resilience

For years, the coastal city of Beira in central Mozambique has been hit by violent storms and flooding. With poorly planned settlements, inadequate housing, and the effects of climate change worsening, large portions of the city’s residents are vulnerable to climate-related disasters. Through the Mozambique Cities and Climate Change Project, funded by $120 million IDA credit, the city has strengthened its resilience to weather-related hazards. The project included upgrading or building 11 km of drainage canals, installed six flood control stations, and built a 170, 000 cubic meter water retention basin.

Supporting an Enabling Environment for Sustainable Fishery 

The Bank-supported SWIOFish Project is helping Tanzanian and Mozambiquan fishing communities increase their fish stocks and restore their livelihoods and fisheries. The project has also helped reduce illegal fishing practices, such as blast fishing (with dynamite) in Tanzania. In Mozambique, it is providing financing to fishing associations, and helping fishers, particularly women, save their earnings, borrow money, and grow their businesses.

Last Updated: Mar 20, 2023

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

Last Updated: Mar 20, 2023