“I never thought I’d become a successful commercial farmer. I’ve learned new techniques to increase my production of litchis and avocados.” These are the words of Abel Ferreira, a farmer and member of the Fruit Farmers Association of Báruè in Manica Province, central Mozambique. Abel has reasons to be upbeat. His farm is making profits, and he is optimistic about the future. “My income improved significantly,” he said. “Today, I can send my children to school and even contemplate sending them to university."
Poverty reduction through broad-based growth is Mozambique’s defining challenge. Despite achieving among the strongest growth performance in Africa in past decades (annual average growth rate of 7 percent between 1998-2018), the benefits generally did not translate into broad development outcomes for most of the population. This is partly due to heavy reliance on the extractive industry, with limited linkages to the broader economy, and to low productivity in agriculture—the primary source of livelihood for the poor, which employs over 70 percent of the population (2019). Investments in labor-intensive sectors such as agribusiness were hampered by the high cost of doing business; infrastructure gaps in irrigation and connectivity; and lack of capital and extension services. Local businesses had limited access to technology and ability to meet the quality standards of export and corporate markets.
The Integrated Growth Pole Project aimed to improve the performance of enterprises and smallholders in the Zambezi Valley and Nacala Corridor and was born out of a need to spur inclusive growth and jobs creation at scale. It adopted a spatial development approach, focusing on locations with high growth potential (called “growth poles”), where investments in critical infrastructures, targeted policy and institutional reforms, and firm-level support were combined to increase farm- and firm-level productivity, improve incomes, create better jobs, and prompt positive spillovers to the local and broader economy. An innovative dimension was to support smallholder farmers at scale by partnering them with large anchor firms under an Innovation and Demonstration Catalytic Fund (FCID). This helped farmers like Abel learn climate-responsive techniques and acquire new technology to increase production and receive support along the entire value chain, from production all the way to market.
- Overall, over 200,000 people— of whom about 40 percent are women —benefited from the project (2013-2020).
- The project helped encourage smallholder farmers (grouped in producer associations) to partner with medium and large private firms under an innovative matching-grant mechanism called the Innovation and Demonstration Catalytic Fund (FCID).
- World Bank support was provided through FCID, which helped to mobilize $26.5 million from the private sector to develop agriculture service centers, processing plants, warehouses and cold-storage facilities, mechanization, improved seeds, training programs, and quality certification. By supporting 18 anchor firms, the FCID reached over 21,000 smallholder farmers (33 percent of whom were women), whose agricultural output increased on average by 79 percent by project end.
- Over 200 kilometers of roads were upgraded, connecting farmers in the Angonia, Tsangano, and Macanga districts to markets in Tete.
- 139 kilometers of water distribution networks were upgraded, thus improving water provision of over 32,000 people in the Nacala region.
Bank Group Contribution
The project was financed with a credit from IDA of $100 million, of which approximately 98 percent was disbursed. Through the FCID matching grant, the project was able to mobilize $ 26.5 million from the private sector to develop agriculture service centers, processing plants, warehouses, and cold storage facilities, mechanization, improved seeds, training programs, and quality certification. IFC provided technical support in helping identify a pipeline of potential candidate firms to participate in the FCID matching grant.
The implementation of this project was the result of close collaboration between several government authorities in Mozambique: The Ministry of Economy and Finance, the Ministry of Industry and Commerce, the Zambezi Valley Development Agency (ADVZ), the Investment Promotion Agency (APIEX), the roads authority (ANE), the water management agency (FIPAG), among others.
Building on the success of this project, the World Bank launched in 2021 the Southern Africa Trade and Connectivity Project a $380 million IDA-financed regional project between Mozambique and Malawi and a new $300 million Access to Finance & Economic Opportunities Project financed by IDA was approved on March 30, 2023. These new projects replicate the spatial development approach of the Growth Poles and scale up its catalytic fund (FCID). Beyond Mozambique, the Jobs and Economic Transformation approach is being expanded in other operations across African countries—including Angola, the Democratic Republic of Congo, and Madagascar.