Mozambique is a rapidly growing country that has experienced significant economic recovery since the end in 1992 of a devastating fifteen year civil war. The recent discoveries of vast gas deposits in the northern part of the country give Mozambique the perspective of a major economic growth. The challenge will be to translate such wealth into equitable and inclusive growth. Currently, Mozambique still remains a poor country, ranking 178 out of 187 in the 2014 Human Development Index, and has to deal regularly with natural disasters, mainly floods, droughts and cyclones.
Mozambique is one of the most dynamic economies on the African continent, with an economic growth rate of 7% in 2015, although this has not yet been translated into improved living conditions for the majority of the population. More than half Mozambicans live in absolute poverty with less than $1 a day. About 80% of the population remains hit by chronic underemployment and malnutrition; 39% of Mozambicans are undernourished, and half of the children under five are stunted. Going forward, Mozambique’s development is linked to the recent huge gas discoveries and the full exploitation of other existing natural resources, but also to a coherent diversification agenda that involves agriculture transformation, since this is the sector where 80% of the people work.
So far, EU support to Mozambique was able to deliver the following achievements, among others:
Agriculture and Rural development: Improved food security and market access, improvements in production technology and access to inputs;
Transport infrastructure and regional integration: Improved road infrastructure and reduced transport costs to increase access to services and support regional and national trade and economic development;
General Budget Support: Increased fiscal space without crowding out the expansion in domestically financed development spending (domestic revenue mobilisation effort); expansion of public spending in the education and good governance sectors; continued progress in public finance management reforms; reinforced budgetary systems, enhanced empowerment of domestic accountability actors, advances on new anticorruption legislation.
The 11th EDF National Indicative Programme (NIP) for Mozambique for the period 2014-2020, which amounts to € 734 million, was signed in November 2015 with the national authorities. The main objectives of the NIP 2014-2020, in line with the Government of Mozambique's priorities, are:
i) to promote the deepening of the democratic system, transparency, accountability and the rule of law and prepare public institutions to manage, allocate and spend future revenues,
ii) to reinforce poverty alleviation through sustainable and inclusive growth, income redistribution, and the promotion of social stability and
iii) to promote a conducive business environment to thrive and contribute to growth and inclusive economic development.
Two areas have been selected for future support from 2014-2020:
1) Good governance and development (€367 million), providing overall support to the national public policy and its priorities, through a 'Good Governance and Development Contract '(General Budget Support instrument) as well as complementary actions.
EU support in this area will aim at capacity strengthening core government systems, control mechanisms, domestic accountability and macroeconomic management. It will also promote a conducive environment to support political and economic governance.
2) Rural development (€325 million), adopting a two-pronged approach to the support of inclusive growth and poverty reduction in rural areas. EU interventions will help, on one hand, to improve food security and nutrition, through production improvement, access to food and to markets through appropriate transport infrastructure, further to nutrition-specific interventions. On the other hand, the EU support will aim at enhancing rural competitiveness by fostering the conditions for sustainable growth of micro, small and medium-sized enterprises in rural areas. Improvement in the physical access to markets and energy will form an essential component of the support.
Support to Civil Society Organisations (€22 million) is also envisaged in order to strengthen domestic accountability mechanisms and will complement both the Governance and the rural development focal sectors.
Finally, the NIP 2014-2020 foresees measures (€20 million) to support or accompany the programming, preparation or implementation of actions.
The first set of operations funded by the EU under the 11th EDF was adopted at the end of 2015 and includes the following:
- The 2015 Annual Action Programme will fund two actions for a total of € 207.5 million that will be mainly channelled through government systems.
1) €200 million will be provided in form of enhanced general budget support through a so-called "Good Governance and Development Contract" (GGDC). The GGDC is a predictable financial commitment over a 4 year period and fully aligned with the country's procedures and policy priorities, focussing on poverty eradication and sustainable and inclusive growth. The programme will also address challenges in the areas of good governance and accountability, public finance management and efficient service delivery.
2) The EU will support the Mozambican Government in the management of the EU financed programmes, for an amount of €7.5 million. The objective of the programme is to boost the National Authorising Officer's, embedded in the Ministry of Foreign Affairs and Cooperation, to tackle poverty issues and to effectively implement all projects and programmes.
- In addition to the 2015 Annual Action Programme, the EU decided to top-up with €16 million the ongoing EU-financed Road Development Project of the Milange – Mocuba Corridor, Zambezi Province (initially € 81 million). Following the extensive floods in the beginning of 2015, the EU reconfirmed its commitment to the importance of this corridor, facilitating a safe and sustainable national road network and an integrated economic, social and rural development of the areas surrounding the Milange - Mocuba Corridor.
Dialogue related to Joint programming with EU Member States is ongoing and is centred on one side, on the use of existing Government-led coordination mechanism, and on the other side, on the shared analysis of the main challenges in Mozambique and joint monitoring with a view to working towards coordinated and integrated programmes of the EU and member States in those provinces and areas where there are funding measures.
The 10th European Development Fund (EDF), detailed in the Country Strategy Paper for Mozambique (2008-2013) , signed in December 2007, focused on addressing two priority sectors: firstly transport infrastructure and regional economic integration, and secondly agriculture and rural development to promote sustainable economic growth in rural areas, enhance food security and promote trade flows.
Approximately half of the EU 10th EDF resources were provided through general budget support, sustaining Government’s efforts to ensure progress towards the Millennium Development Goals (MDGs). The EU has also funded additional activities in favour of justice, anti-corruption, inclusion of non-state actors, trade as well as Mozambique's health sector.
The final total allocation for Mozambique in this period amounted to €747.6 million, including both bilateral cooperation and an allocation amounting to €19 million to support cooperation among ACP (African, Caribbean and Pacific) Portuguese speaking countries (also referred to as “PALOP-Timor Leste” cooperation - a similar allocation was also made available to the other concerned Portuguese speaking countries).
Mozambique was nominated as the single National Authorising Officer, mandated to manage the implementation and the overall coordination of the 11th EDF PALOP-TL programme.
Mozambique is also benefiting from Development Cooperation Instrument (DCI) thematic programmes in several areas (Non-State Actors and Local Authorities in social sectors, Gender, Environment, Human and social development, Sugar, Food security, Health, European Instrument for Democracy and Human Right –EIDHR). An EU and partners' country Roadmap for engagement with civil society in Mozambique (2016-2019) was published in July 2015.
Mozambique benefits from other EU external action instruments such as ERASMUS (ERASMUS Mundi programme and Intra-ACP Academic Mobility). The European Commission's Humanitarian Aid and Civil Protection department (ECHO) is present in Mozambique through relief operations (for example the ECHO-funded emergency response to recent floods that took place in Mozambique in 2015) and disaster risk reduction interventions (Disaster Preparedness ECHO programme – DIPECHO). The European Investment Bank is currently financing energy and infrastructure projects in Mozambique. Mozambique also benefits from Intra-ACP funds in the areas of higher education, health and culture. On 15 July 2014, the EU concluded negotiations with the Southern African Development Community (SADC) Economic Partnership Agreement (EPA) Group comprising Mozambique. The Agreement is now being translated and prepared for signature and subsequent ratification.