Overview

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

    About 66% of its population of 28 million (2017) 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). Renamo has maintained a considerable arsenal and military bases after the peace accord of 1992, and ever since the end of the civil war, the country has registered flare-ups of armed confrontations and violence. In the past few years,  peace talks resumed with direct involvement of the president of the republic, culminating with a new peace accord (August 2019). The new peace deal aims to achieve greater pacification of the country by integrating Renamo residual fighters into the national army. It foresees a definitive disarmament and dismantling of Renamo military bases splattered around the country. Few weeks into its implementation, a series of well-documented events denote deep-seated divisions amongst Renamo’s military wing and its leadership over the terms of the peace accord, which prefigures a rather tumultuous implementation ahead.

    Meanwhile, the government is grappling with a new low-level so-called Islamic insurgency in parts of the gas-rich province of Cabo-Delgado. Initially circumscribed to one locality, the indiscriminate killing of civilians perpetrated by the insurgents has now spread to other localities in the province. The risk that violence can spread to other areas of the country should not be underestimated.

    Presidential, legislative, and provincial elections are scheduled for October 15, 2019.  For the first time, provincial governors will be elected, effectively ending their appointment by executive decrees. While Frelimo is expected to secure victory overall, opposition parties are expected to make strong showing, especially in provincial and legislative elections. Last year’s municipal elections (2018) confirmed ruling Frelimo dominance, but Renamo gained ground, winning eight municipalities out of 58 country wide, the most it has ever held.

    Economic Outlook

    While economic conditions have improved, Mozambique remains on a subdued growth trajectory following the 2015 commodity price shock and 2016 hidden loans crisis. The devastating impact of tropical cyclones Idai and Kenneth on agricultural production and falling commodity prices, motivates muted growth prospects for 2019. Real gross domestic product (GDP) growth is estimated to reach 2%, below the average of 3.7% experienced between 2016 and 2018, and the lowest growth recorded since 2000 when Mozambique experienced devastating floods in the south of the country.

    Economic growth will recover towards 4.3% by 2021 as rehabilitation efforts and continued easing in interest rates provide additional stimulus to the economy, although large-scale investments in gas production could push this further.

    Mozambique remains in debt distress. Progress has been made in debt restructuring, but the outlook remains unknown. Mozambique has yet to conclude its renegotiation on its defaulted debt and is accumulating arrears to private creditors. The government reached an agreement in principle with 60% of the Eurobond holders but final closure is still pending and may take time due given legal action taking place and public appeals for the cancelation of this debt following the revelation of illegalities surrounding the borrowing process. 

    Development Challenges

    The country’s 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: Sep 30, 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)’s, focus areas are (a) Promoting Diversified Growth and Enhanced Productivity, (b) Investing in Human Capital, and (c) Enhancing Sustainability and Resilience. 

    The International Development Association (IDA) current 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: Sep 30, 2019

  • Rebuilding Resilient Road Networks

    The Government of Mozambique concluded and inaugurated in March  2019 road networks rebuilt in the province of Gaza, southern Mozambique, following the destruction caused by the 2012/13. The program was implemented in two phases: Phase 1 aimed at restoring road connectivity between the various affected areas covering 632.5 km of roads and implemented from 2014 to 2016. The $12 million, International Development Agency (IDA)-funded emergency repair operation was completed satisfactorily in 2016. The second phase, concluded in March 2019, aimed at 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 constructed and repaired roads and three new bridges. The project ensured the sustainability of the intervened infrastructures by integrating concrete specifications to make the infrastructures weather resilient. For example, 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 Costal Cities Resilience

    For years, the coastal city of Beira has been hit by violent storms and recurrent flooding. With poorly planned settlements, inadequate housing and the effects of climate change worsening, large portions of the city’s residents were left 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 upgraded and built 11 km of drainage canals, installation of six flood control stations and the construction of a 170, 000 cubic meter large water retention basin, among other benefits.

    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.

    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: Sep 30, 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: Sep 30, 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