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USAID Information:
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Mozambique
Please note: All linked documents are in PDF format
| Objective |
SO Number |
FY 2004 |
FY 2005 |
FY 2006 |
| Rural Incomes |
656-006 |
15,780 |
11,367 |
12,088 |
| Exports |
656-007 | 6,981 |
3,811 |
3,801 |
| Maternal and Child Health |
656-008 | 9,830 |
12,530 |
10,430 |
| HIV/AIDS |
656-009 |
10,550 |
0 |
0 |
| Municipal Governance |
656-010 |
2,211 |
1,907 |
2,430 |
| Total (in thousands of dollars) |
45,352 |
29,615 |
28,749 |
Excludes P.L. 480. See Program Annex.
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The Development Challenge: Mozambique's independence from Portugal in 1975 was followed by nearly two decades of civil war and a decade of one-party Marxist-Leninist rule. In 1992, peace was achieved and a new constitution was adopted, enshrining a multi-party system of democracy. After 18 years in power, President Joaquim Chissano of the Frelimo party stepped down and voters elected a new president, Armando Guebuza, in December 2004. During municipal elections held in 2003 and national elections in 2004, Mozambique continued to demonstrate its capacity to conduct increasingly free and fair elections.
Although the Government of the Republic of Mozambique (GRM) is committed to democracy, it is also characterized by a strong executive branch, a parliament dominated by political wrangling between the two main parties, Frelimo and Renamo, and a judiciary short on skills, understaffed, underfunded, and corruptible. Government institutions are generally improving, but suffer from a lack of skilled personnel due to low salaries and the extreme scarcity of trained citizens. The legacy of Portuguese colonial and post-independence command-and-control economic systems is gradually yielding to a more private-sector friendly environment, although corruption remains a problem.
Mozambique has shown outstanding economic growth since the civil war ended. Gross domestic product (GDP) growth has averaged 8% per year over the last ten years. In 2003, inflation dropped to 13.8%, and it is projected at 11% in 2004. Although Mozambique is still one of the world's poorest countries, with 2004 GDP per capita of $290, it is on an upward trajectory. However, many challenges remain. In a country of 18 million, over 60% are without access to health care, with only 650 doctors nationwide. The projected HIV prevalence rate for 2004 is 14.9%. Although maternal mortality has declined sharply, from a high of 1,000 deaths (1997) to 408 deaths (2003) per 100,000 live births, it remains high.
Poverty reduction is the central focus of the GRM's development plan. Mozambique's Poverty Reduction Strategy Paper, known by its Portuguese acronym PARPA, is under revision; the revised version will cover the 2006-2010 period. Poverty reduction results were better than anticipated under the first five-year plan. Household consumption survey results show a 15.3% drop in the incidence of poverty, from 69.4% in 1996-1997 to 54.1% in 2002-2003. PARPA's goal was to reduce the incidence of poverty to 60% by 2005 and to 50% by 2010, so Mozambique is making better than expected progress on this front.
According to the International Monetary Fund (IMF), the Mozambique economy is very open to foreign trade. Traditional exports such as cotton and cashews have experienced almost no growth, but total exports have risen dramatically due to large investments in an aluminum refinery and a natural gas pipeline to South Africa. Growth prospects are considered favorable; several major projects are on the horizon, including development of coal mines at Moatize, exploitation of titanium sands in the north and south, and a hydro-electric dam to meet South Africa's power deficit. Two American companies have made substantial agro-processing investments. Other large projects planned for the near future are a highway bridge over the Zambezi River and reconstruction of the Beira-Moatize railway.
Mozambique is committed to the Southern African Development Community (SADC) free trade protocol, and the plan is to extend these concessions to all SADC countries on a most-favored nation basis. Mozambique's debt service situation improved considerably after achieving the "enhanced completion point" under the Heavily Indebted Poor Countries Initiative in 2001, after implementing key policy reforms, maintaining macro-economic stability, and implementing the PARPA. The IMF now considers Mozambique able to "sustainably" maintain a manageable debt service. While banks and other businesses were privatized after the 1992 peace agreement, state-owned infrastructure monopolies have proven harder to privatize due to market conditions. However, competition does exist in telecommunications due to the entry of new private firms.
Mozambique is an essential link to global markets for several neighboring landlocked countries, and it has substantial growth potential through its economic ties to the industrial heartland of South Africa. These links reinforce the importance of the country's successful economic, political, and social transitions to the U.S. national interests of peace, stability, and economic growth throughout southern Africa. As a rapidly growing economy, Mozambique is increasingly a potential market for U.S. exports and U.S. investment.
The USAID Program: The data sheets cover four objectives for which USAID is requesting FY 2005 and FY 2006 funds. Two objectives focus on increasing economic growth and reducing poverty through rapid rural income growth -- improved agricultural production and marketing and increased labor-intensive exports. A third objective is to improve the health of women and children. The fourth objective is to create models of democratic governance at the municipal level and to reduce opportunities for corruption.
All of USAID's programs seek to benefit women and men equally, to reduce corruption, to build Mozambican capacity, and to prevent the spread of HIV/AIDS. Both the commitment and the capacity of the GRM to reduce poverty and encourage economic growth are good and are growing stronger, in part due to the country's long-standing and effective partnership with USAID.
Other Program Elements: USAID's Economic Growth, Agriculture, and Trade Bureau (EGAT) is assisting Mozambique in a number of areas. EGAT is helping to develop natural gas for household energy use, replacing firewood and charcoal. Through EGAT, the World Wildlife Fund has a grant for conservation activities, including creating fish sanctuaries in the Quirimbas National Park. Through EGAT and the Regional Center for Southern Africa, Mozambique benefits from assistance for sanitary and phyto-sanitary policies, customs training, and trade-related studies. EGAT also assists banana variety improvement research and provides hands-on training for prospective banana farmers. EGAT's farmer-to-farmer project provides up to seven volunteers a year through several cooperative and nongovernmental organizations. USAID's Democracy, Conflict, and Humanitarian Assistance Bureau provides support for emerging entrepreneurs and civil society.
Mozambique is a focus country under the President's Emergency Plan for AIDS Relief. FY 2005 funding will be provided from the Global HIV/AIDS Initiative under the policy direction of the U.S. Global AIDS coordinator. The FY 2006 HIV/AIDS request for this country is contained in the Global HIV/AIDS Initiative account justification. For further details please see the Department of State FY 2006 Congressional Budget Justification.
Other Donors: Mozambique is expected to receive $735 million from over 20 donors in 2004; representing about 14% of GDP, and similar levels are expected in future years. About 40% of donor assistance is general budget support, accounting for 45%-50% of the GRM budget; the remainder is project support. Almost all bilateral aid is in the form of grants, while multilateral credits are on very concessional terms. The largest program is that of the World Bank International Development Association (IDA), and the European Union also is a significant donor. In addition to the United States, the larger bilateral donors include the United Kingdom, Switzerland, the Netherlands, Norway, and Sweden. The UNDP and IDA chair a monthly meeting of mission heads to coordinate donor activities. The GRM and 15 donors (including IDA) have agreed on a general budget support program to further donor harmonization objectives. This group of 15 donors work closely with other donors, such as USAID, in 14 sector-specific working groups. USAID currently chairs the private sector and foreign trade policy working groups. Donor relations are close, cooperative, and collegial.
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