Context

Mozambique with a population of nearly 28 million has a relatively high rate of inequality and poverty.  According to the international poverty line the poverty rate was around 69% in 2008, but there has been rapid economic growth since around 1995 (average 8.5% a year from 1995 – 2015), leading to rapid increases in per capita incomes. Despite the rapid economic growth, the country remains relatively poor and requires economic growth to reduce poverty further.

According to the African Development Bank Mozambique has yet to recover from the economic downturn that started in 2015. The combination of declining prices for traditional export commodities, persistent drought effects from El Niño, internal military confrontations, and large decreases in foreign direct investment (FDI) nearly halved the past decade’s 7% GDP historical average growth to 3.8% in 2016. This drop was compounded by the 2016 governance crisis, which reduced external financing and donor support. The recovery of GDP growth to an estimated 4.7% in 2017 and a projected 5.3% in 2018 is due to increased coal exports and agricultural production; other sectors are likely to underperform.

BERF’s Work in Mozambique

DFID Mozambique has been a significant client for BERF.  Following a scoping study early in 2016, a range of interventions were identified.  These have included work across three of the work streams of BERF.  Under Evidence and Learning we have completed a study on what works in Business Environment Reform in Sub Saharan Africa and South Asia.  Under Technical Support, we have undertaken Diagnostic Studies in the areas of Youth, Forestry, and Renewable Energy with further work planned for Agriculture and Construction.  Under Stakeholder Engagement we have undertaken scoping reviews for two Business Membership Organisations and hope to undertake further implementation support.

BERF Mozambique Projects

  1. Mozambique:  Innovative Stakeholder Engagement for Two Business Membership Organisations, December 2016
    1. Innovative Stakeholder Engagement for ACIS Mozambique
    2. Innovative Stakeholder Engagement for ANJE Mozambique
  2. Business Environment Constraints on Youth Entrepreneurship in Mozambique 
  3. Mozambique Renewable Energy
  4. Mozambique Forestry Sector Business Environment
  5. Mozambique Scoping Assessment for Economic Governance

 

World Bank Doing Business

Mozambique’s World Bank Doing Business indicator position fell 3 places – to 137 – between 2016 and 2017, and a further one place in 2018 to 138.  The business environment is only slightly better than the average for Sub-Sahran Africa.  The distance to frontier score in 2018 was 54, up slightly on the previous year (53.03).  The Doing Business 2017 report references improvements in access to credit through the passing of legislation allowing the establishment of a credit bureau, but conversely a worsening situation for starting a business as a result of increased fees. In 2018 Mozambique made progress on getting electricity and trading across borders.

 

DFID Mozambique Strategy

Humanitarian and building resilience to crises: DFID is strengthening Mozambique’s systems and capacity to respond to floods and droughts. In 2017, the UK provided humanitarian assistance to 250,000 people affected by El Nino.

Basic services: By 2020 the UK will have provided access to clean water and better sanitation for 1.7 million people, family planning to 150,000 adolescent girls and women and have contributed to reducing malnutrition for 1.3 million people.

Economic development: The UK will improve access to financial services for 2 million people, access to solar power for 2 million people, support 20,000 businesses and create jobs for 25,000 young people.