Old challenges, new answers?

Maputo, Mozambique

For anyone interested in development, it is impossible to avoid the study of post-conflict African countries, which too often reflect in text-book ways the struggle to combine growth with improved living standards. Mozambique is a good example of that, and two recent pieces of news portray the challenge beautifully.

The first came from the Africa Development Bank, which said in its latest Economic Outlook for the continent that the country is expected to grow by 7.5% this year and 7.9% in 2013. In 2011, the rate was 7.2%.

The second was about preparations for general strikes and riots against the rising costs of living in the country, particularly those of public transportation and food. Though the threats failed to materialize, they prompted increased policing and even made the State Department spread travel alerts about possible disruptions in the streets of Maputo, the capital. The memories of September 2010, when similar threats led to protests that ended in deaths and destruction, are still fresh, but have not prevented costs to continue to rise, punishing severely the 54.7% of Mozambicans that live below the national poverty line.

In spite of its privileged growth rates in the past decade, Mozambique, commonly mentioned as a success story, has been unable to tackle poverty. It has an unemployment rate of 27% and the fourth worse UN Human Development indicators in the world, better only than the DRC, Burundi and Niger. And the growth has not relieved the dependency on aid money: in 2011, donations were still responsible for 45% of the Mozambican budget.

It is a common plague of poor countries. Foreign investment can be part of the solution, but so far it has not helped that much for common Mozambicans. The country has huge infrastructure projects in place, but they continue to be foreign owned and utilize mostly foreign labor, including in construction. Local labor is kept at bay for lack of specialization.

The government has some initiatives in place to try to fight these trends. It is implementing capacitation projects and requiring some international companies to list shares at local stock markets. In fact, revisions on the current legislation could ask companies to reserve between 5 and 20 percent of their local companies for placements on the Mozambican bourse. Vale, a Brazilian mining giant, has allegedly been asked to reserve 10% of its local venture on the Mozambican stock exchange to “widen participation in a coal mining boom”.

Mozambique was one of the top five african countries in terms of growth in 2011, but as the African Development Bank has put it, “the main short term challenge is reconciling ambitious infrastructure investment with social safety nets”. That in itself is interesting – would the IMF put the need for social improvement in the same terms? And, regardless, will the current initiatives result in better conditions of living for at least part of the population?

In any way, there is still much hope. Mozambique is experiencing booms in many areas, not only in mining, and if wealth is ever to be shared, growth must continue to be high. The problem is how to decrease inequality. Isn’t that exactly what development experts attempt to do all the time? So, like I said before… for those in the development field, there is no escape to the study of post-conflict African countries.

Ps. I will be writing a lot more about Mozambique in the coming months, as I am heading to the country for some summer research projects. Stay tuned.