Mega developments - Little benefit for poor

A 2007 study by the UN Development Programme's International Poverty Centre examined poverty, inequality and growth since Mozambique instituted economic reforms in 1992, at the end of the civil war. It found that Mozambique's indices of rapid economic growth were illusory at best. Although the economy grew by 7.9 percent last year, most of the growth in income and consumption occurred among the population's richest quintile, with less than 10 percent of growth affecting the country's poorest.

Growth in industrial production has been the main driving force behind Mozambique's rapidly growing exports the study's authors observed.Based on a few mega-projects, this growth has, however, created few jobs, while its contribution to public revenue has been marginal when compared to its value of production .
The Mozal aluminium plant is a symbol of Mozambique's red-hot economy, touted as a symbol of the investor-friendly environment that led the Wall Street Journal to declare the country "an African success story". Mozal's exports have increased Mozambique's Gross Domestic Product . by between 3.2 and 5 percent. Its output represents almost half the country's growth in manufacturing. Initial investment in the project amounted to approximately 40 percent of GDP, but only created around 1,500 jobs, of which nearly a third are held by foreigners.The smelters use more electricity than the rest of Mozambique combined, enjoys an extensive list of incentives ranging from discounted electricity to a prolonged tax holiday. Mozal pays a one percent tax on sales . It also has the right to repatriate profits. The result is an isolated economic enclave that uses large quantities of scarce resources without returning revenue or jobs to the economy.

The report pointed out that the southern provinces receiving the greatest percentages of foreign direct investment also saw the largest increases in poverty rates in recent years. Development strategies implemented since the end of the civil war neglected agriculture and fishing, the primary source of livelihood of more than 80 percent of Mozambicans.

Dependence on large projects, coupled with Mozambique's already heavy dependence on foreign aid, means top officials are more concerned with accountability to donors and financial institutions than the people they were elected to serve. The authors concluded that the result was not "pro poor".

"Following in the footsteps of the centralised colonial administration and the subsequent Marxist-Leninist party/state apparatus, the government continues to operate, through mega-projects put together by the top political leadership and respective donors and/or private investors, with very little public consultation or transparency," the study noted.

The Economist reports that the World Bank praised Mozambique for being among the region's top business reformers. Enthusiastic donors poured $1.3 billion into the country in 2005—about a fifth of its GDP . Carlos Castel-Branco, a local economist, says the economy is not really developing. Growth is driven by foreign aid and big capital-intensive foreign investments, which, he argues, create few jobs and contribute little to the public purse.

So far, the country's growing wealth has largely benefited a tiny elite .
“The tentacles of the ruling party are in almost every sector of the economy,” says a local journalist.

Renamo says its supporters in rural areas are being harassed and sometimes beaten up. The pressure on civil servants to join the ruling party is growing. Much of the extra money given to local authorities for economic development is said to end up in the pockets of Frelimo people. Until his death the former president Mr Chissano's son , Nympine , was being investigated in connection with the murder in 2000 of a journalist who had been investigating corruption.

Big Business calling the shots , and the local politicians filling their coffers , while the poor lose out . Same old news