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World Bank Supports Mozambique’s Safety Net for the Poor and Capacity Building for Natural Gas, Mining Industries

March 28, 2013

WASHINGTON, March 28, 2013 – The World Bank Board of Executive Directors today approved two International Development Association (IDA)* credits totaling US$100 million to support the Government of Mozambique’s efforts to provide income support to extremely poor families and strengthen the capacity and governance of key public institutions to ensure that development of the country’s major offshore natural gas discoveries, as well as its mineral wealth results in poverty reduction.

The first US$50 million credit will assist the Government in scaling up the Productive Social Action Program (PASP) as an integral part of the National Basic Social Security Strategy (ENSSB). The PASP will provide timely and predictable cash transfers to rural and urban households affected by low income and unemployment due to economic or climate related shocks in return for their participation in labor-intensive public works.

“Mozambique has performed satisfactorily in reducing poverty over the years with a robust safety net strategy to address vulnerability and extreme poverty,” says Laurence C. Clarke, World Bank Country Director for Mozambique. “We are happy to continue supporting Mozambique’s efforts to better manage such important social programs, so that poor people can better cope with economic and climatic shocks and benefit from economic growth.”

Rural citizens in Mozambique are particularly vulnerable to shocks such as drought and high global fuel and food prices. It is estimated that more than 50 percent of the population in Mozambique faces the risk of food insecurity, and almost half of the children under 5 years old are chronically malnourished.

The second US$50 million credit will assist the Government’s strategy of improving the positive impact of resource-related projects on the Mozambican economy while tangibly reducing poverty.

The strategy includes five components. These will support activities such as building the capacity of civil society organizations; improving the links between mining and gas production and the country’s overall economy by helping to shape the industries into springboards for additional economic activities; and strengthening and establishing new staff positions, capacity, and infrastructure.

“Recent exploration points to as much as 100 trillion cubic feet of natural gas off Mozambique’s coast. This could mean potential export revenues of $300 billion,” said S. Vijay Iyer, Director of the Bank’s Sustainable Energy and Extractive Industries Department. “The challenge is the timely and systematic build-up of transparent policy, regulatory and legal systems to harness this historic opportunity for economic transformation and for prosperity of all Mozambicans. At another level, developing gas domestic markets to deliver access to modern energy to 20.6 million Mozambicans without it today is equally important.”


* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing loans (called “credits”) and grants for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 81 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change for 2.5 billion people living on less than $2 a day. Since 1960, IDA has supported development work in 108 countries. Annual commitments have increased steadily and averaged about $15 billion over the last three years, with about 50 percent of commitments going to Africa.


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