Mozambique's Resource Curse

When Augusto Conselho Chachoka and his neighbors heard that the world's biggest coal mine was to be built on their land, a tantalizing new future floated before them. Instead of scraping by as subsistence farmers, they would earn wages as miners, they thought. The mining company would build them sturdy new houses, it seemed. Finally, a slice of the wealth that has propelled Mozambique from its war-addled past to its newfound status as one of the world's fastest-growing economies would be theirs. But to get to the coal, hundreds of villagers living atop it had to be moved. The company held a series of meetings with community members and government officials, laying out its plans to build tidy new bungalows for each family and upgrade public services. As the prospect of huge new investments in their rural corner of the world beckoned, villagers anticipated a whole new life: jobs, houses, education, and even free food.

Instead, they ended up being moved 25 miles away from the mine, living in crumbling, leaky houses, farming barren plots of land, far from any kind of jobs that the mine might create and farther than ever from Mozambique's growth miracle. The promised water taps and electricity never arrived. Earlier this year, the people of Cateme sent a letter to local government officials and Vale demanding that their complaints about the resettlement process be addressed, threatening to block the railway line that passes through their village carrying coal to the port. When they received no reply, they occupied the rail line. The police descended upon them, chasing them away and roughing up those who resisted removal. Eventually, contractors came to install electricity. The underlying lack of access to good land and water persist. Hopes that farmers would be able to sell their produce to feed the boom in this mining area have so far not been met: much of the food is flown in.

 Mozambique is one of the poorest nations in the world, broken by a brutal colonial legacy, a 16-year civil war and failed experiments with economic policy. But it is also one of the so-called African Lions: countries that are growing at well above 6 percent annually, even amid the global downturn.

Vale, the Brazilian mining company, is planning to invest $6 billion in its coal operation. The coal deposits in Moatize represent one of the biggest untapped reserves in the world, and the Brazilian mining company Vale has placed a big bet on it. Rio Tinto will soon begin producing coal in northern Mozambique. Gas projects could bring in far more, as much as $70 billion, according to World Bank estimates. Mozambique's location on Africa's southeastern coast means it is perfectly positioned to feed hungry markets in southern and eastern Asia.

Yet millions are stuck below the poverty line.  "You get these rich countries with poor people," said the economist Joseph Stiglitz, who recently visited Mozambique and has written on the struggle of resource-rich countries to develop. "You have all this money flowing in, but you don't have real job creation and you don't have sustained growth." 

 

 It is a problem in resource-rich countries across Africa. The World Bank said in October that rapidly growing economies powered by oil, gas and minerals have seen poverty levels fall more slowly than countries without those resources. In Gabon and Angola, the percentage of people living in extreme poverty has even increased as growth has spiked. 

In Mozambique, according to an analysis by the United States Agency for International Development, "The effects of megaprojects on living standards were found to be very modest," the report said. "These projects, over all, have created few jobs. And linkages to the public budget via tax revenues have also been small because of tax exemptions."

Strong economic growth almost completely bypasses the rural poor, and in some ways can leave them even worse off. "The rich get richer and the poor get poorer," Mr. Chachoka said. "That is what is happening here."