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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  two-thirds of its population of more than 29 million (2018) 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.  A new peace accord was reached in August 2019, and has been violated several times by a Renamo breakaway military faction known as  Military Junta. The new peace deal aimed  at achieving  greater pacification of the country by integrating Renamo residual fighters into the national army, and  dismantling Renamo military bases splattered around the country. Meanwhile, the government is grappling with another 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 districts and towns  in the province. Recently (March 2020) the rebels attacked and occupied  successively the transport hub rural town of Mocimboa da Praia and the town of Quissinga. Recent estimates show the conflict has killed more than 1,000 people and forced 100,000 from their homes. The risk that violence can spread to other areas of the country should not be underestimated.

    Presidential, legislative, and provincial elections were held across the country on October 15, 2019, completing the country’s sixth successive general elections  since the introduction of multiparty elections in 1994. The incumbent party, Frelimo, won the presidency and the national parliament in a landslide. Frelimo also secured a majority in all 10 provinces, thus electing governors for each province.


    Economic Outlook

    The COVID-19 (coronavirus) pandemic reached Mozambique at a weak moment in its economic history, as the country attempted to recover from two major shocks: the hidden debt crisis and the devastating effects of cyclones Idai and Kenneth in 2019.

    In 2016, Mozambique’s track record for high growth was disrupted when large, previously unreported external borrowing came to light. The revelation of undisclosed debt dented confidence in the country, increased debt levels, and more than halved the average rate of growth.  In 2019, Cyclones Idai and Kenneth caused massive damage to infrastructure and livelihoods, further lowering growth and wellbeing of the population.

    The pandemic presents a further setback on the country’s economic prospects. The pandemic dims the short-term growth prospects of Mozambique. The COVID-19 crisis will have a heavy impact on economic activity as social distancing and travel restrictions (domestically and globally) affect demand for goods and services. At the same time, reduced demand and prices of commodities are slowing the pace of investment in gas and coal, two key industries for Mozambique. With this, growth is expected to decline to 1.3% in 2020, down from a pre-COVID forecast of 4.3%, with significant downside risks. Mozambique is also expected to experience large external and fiscal financing gaps in 2020 and 2021 in a context characterized by exposure to external shocks and limited fiscal space.

    Development Challenges

    The country’s main challenges include maintaining the macroeconomic stability considering exposure to commodity price fluctuations, 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 is diversifying the economy by moving away from the current focus on capital-intensive projects and low-productivity subsistence agriculture, 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: Jul 02, 2020

  • 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 focus areas of the current strategy, renamed the Country Partnership Framework (2017-20­21) are (a) promoting diversified growth and enhanced productivity, (b) Investing in Human Capital, and (c) Enhancing sustainability and resilience. In alignment with the country’s priorities set forth in the government’s five-year plan, the Bank’s program in Mozambique has expanded its support to the areas of agriculture, rural development, natural resources management, social protection, and disaster risk management. The latter has seen a large increase in response to natural hazards the country faces.

    Through the International Development Association (IDA), the Bank is also committed to supporting Mozambique mitigate the economic, fiscal and social impacts of COVID-19 through a Development Policy Operation (DPO) grant. The DPO will support the immediate COVID-19 response and help ease the impact on lives and livelihoods through support to reforms that will aid the recovery and enhance fiscal sustainability.

    The 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: Jul 02, 2020

  • Rebuilding Resilient Road Networks

    In March 2019, the government concluded and inaugurated road networks rebuilt in the province of Gaza, southern Mozambique, following the destruction caused by the 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, International Development Agency (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 constructed and repaired weather-resilient roads and three new bridges. 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 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. The project also piloted the establishment of girls’ clubs and environmental education campaigns in schools, which helped the community to invest in the future by improving environmental awareness and reading and writing skills for youth.

    Supporting an enabling environment for sustainable fishery 

    Through several initiatives, the 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 both sectors. 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 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. IDA-funded projects which contributed to building new transmission lines and distribution networks, expanding access to electricity. The Bank also supports the use of environmentally-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: Jul 02, 2020

  • The World Bank Group 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: Jul 02, 2020

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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

REPORT Jul 31, 2017

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CPIA Africa

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IDA in Africa

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Doing Business in Mozambique

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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. External Affairs Officer
+258-21-482-944
rsaute@worldbank.org
For project-related issues and complaints
mozambiquealert@worldbank.org