Mozambique News Agency

No.143, 23rd September 1998


President speaks on globalisation

President Joaquim Chissano has warned that, far from meaning "global participation", the current globalisation of the world's economy may simply marginalise underdeveloped countries. Speaking in Kingston, Jamaica, on 20 September at the celebrations of the 60th anniversary of the founding of the Jamaican People's National Party, the President remarked that "as things stand now, we run the risk of remaining just as globalised countries deprived of any expression".

President Chissano noted that during the colonial epoch "our economies and those of the north were already globalised". There had always been "interdependence", but it was controlled from the north.

Interdependence between north and south "is like the interdependence between the cow and its owner", said Chissano. "The owner needs the cow because of its milk. The cow needs the owner because he provides it with hay. But when the cow ceases to produce milk, the owner may well decide to slaughter it. The cow cannot do the same to the owner".

No-one had asked African or Caribbean nations their opinion about the international division of labour, continued Chissano. Instead "circumstances have confined us to act as producers of raw materials and unprocessed goods for export to the rich countries of the north".

Imbalances on the increase

International political and economic imbalances, "far from narrowing, have become greater", he said. "Old and unfair relationships are reproducing themselves in a much wider, faster and dramatic way".

What had changed in the "unipolar world" that had succeeded the bipolar one of the cold war, was that "things have become more sophisticated".

"While we are pressed to open up our countries and streamline our methods of doing international business, so that the global economy may sink roots, invisible barriers are still making it difficult to for us to access resources and advanced technological know-how", Chissano accused. "Our manufactured goods can hardly find a place in the rich markets of the north."

"Currency speculators have a free hand world wide", he added, "and are rampantly depleting developing countries of the much needed resources for stable economic growth and sustainable development, thus seriously threatening their existence as viable nations".

Struggle to continue within "global village"

But Chissano stressed he was not suggesting any opt-out from globalisation. "There is no question of us seeking to survive outside the context of the global economy, with all that such an attempt could entail", he said. "It is within the Global Village that we must press for a more acceptable and fairer relationship between the developed countries of the north and the poor and underdeveloped countries of the south".

He called for the third world to fight together on the issue of foreign debt, and seek "not a reduction, but the total scrapping of our debt".

Hunger affects 300,000 after some poor harvests

Hunger has struck several areas of Mozambique, affecting more than 300,000 people, and it is feared that the situation will gradually worsen until the next harvest, around April 1999, reports the daily paper Noticias.

A senior official of the Mozambican relief agency, the Disasters Control Office (DPCCN), Joao Zamissa, said that of the 300,000 people at risk, 120,000 will receive food free of charge, because of the seriousness of their situation.

He explained that the hunger was caused either by the flooding that hit central Mozambique during the last crop year, or by exceptionally dry conditions elsewhere.

So far, emergency aid is benefiting about 22,000 people, in Sofala and Tete provinces, in the west of the country, and Cabo Delgado in the far north.

As for the quantities required to assist these needy people, Zamissa said that up to April, his institution will have to provide about 41,600 tones of maize and 3,700 tones of beans.

The agency wants to replace free aid, whenever possible, with food for work schemes, so that the beneficiaries do something useful, such as building access roads.

Government sets out its goals to donors

The Mozambican government's major goal over the medium term "is to facilitate as rapid growth in the economy and in individual incomes as is possible in a sustainable manner", according to the government document submitted on 23 September to a meeting of the World Bank's Consultative Group on Mozambique.

The Consultative Group, which brings together all the main donors and funding agencies who are supporting the Mozambican economy, is meeting for the first time in Maputo rather than in the World Bank's Paris office.

The document's stress is on rapid growth. "The reduction of poverty, and the sustainability of the actions that the government proposes to implement, depend to a great extent on the establishment of conditions that generate fast growth", it argues. "Maintaining economic stability, and keeping the inflation rate to a single digit, are key to promoting growth".

The government pledges that "economic stability will continue through tight control of fiscal and monetary policies combined with careful monitoring of foreign exchange and interest rate policies".

Several policy targets achieved

The document claims that over the past five years economic growth has averaged seven per cent, with an even higher rate of 12 per cent in 1997 (this scales down the government's July announcement that GDP grew by 14.1 per cent in 1997).

As for inflation, this has now stabilised, and the Maputo Consumer Price Index shows that this year prices are actually falling, at least in the capital. The accrued inflation from January through to July was minus 2.7 per cent.

The document states that the government has now privatised over 900 companies that were once in state hands. As for the few remaining large state companies, notably the insurance company EMOSE, the oil distribution company PETROMOC, and the national airline, LAM, the document promises that these will be opened "to private capital participation", while the memorandum on leasing Maputo port and the southern rail system out to private management should be signed later this year.

Rural problems addressed

Since around 80 per cent of the population live in the countryside, "agricultural development and road construction are critical to reducing poverty". The document pledges that the government's agricultural policies will aim at the continued "liberalisation" of markets and prices, and the development of "technologies that will improve the productivity of small-holder agriculture". It will also "design and implement incentives to enhance the rural marketing network and the storage of products".

As most of the markets are in towns, road construction and maintenance are vital. The government document speaks of drafting a new roads programme, but makes no mention of the old one, ROCS (Roads and Coastal Shipping), which ran from 1992 to this year, in two phases, and was widely condemned for its expensive use of inappropriate technology.

The new draft programme, says the government, "tries to balance the need for new roads with the limits on available resources, as well as addressing the issue of sustainability over the medium term".

Whereas ROCS relied heavily on imported asphalt and foreign building companies, the new programme "includes the promotion of the use of local construction materials and contractors".

Key policy to improve human resources

The government lays a heavy stress on building up trained human resources, notably by improving access to, and the quality of, education. This entails huge expenditure in building more schools, and training more teachers (about 3,000 extra teachers per year).

From 1994 to 1998, education's share of total budget expenditure rose from nine to 14 per cent. But that is not enough: the document warns that, to meet the government goals, expenditure on education will have to increase by 50 per cent between 1998 and 2003. "This effort will only be possible if the donor community continues its valuable assistance to the sector", it adds.

Water charges proposed

The document proposes cost recovery in water supply. The government says it will "adopt the principle that water is a good with economic and social value, implying that the beneficiaries should, at least, pay for the operation and maintenance costs of the water system".

There is also a pledge to increase the availability of clean drinking water to "at least 50 per cent" of the urban population, and "above 50 per cent" of the rural population.

The government reiterates its pledge to privatise the management of the water companies in the five major cities of Maputo, Beira, Nampula, Quelimane and Pemba. Doubtless this will lead to higher water tariffs.

The document also repeats the government's pledge to modernise the civil service and improve its efficiency, through better pay, increased training and "adopting more rigorous recruitment and promotion procedures".

It admits that the chronically low wages in the state apparatus "make it difficult to retain skilled personnel, and often force civil servants to seek other sources of income. They also lead to poor capacity to manage public resources efficiently, and slow and unsatisfactory services from the state".

Funding requirements presented

The Mozambican government is requesting over $400 million a year in grants and credits from donors and funding agencies to cover its budget deficit over the next three years.

These figures are contained in the government document "A View into the Future" to be presented at the meeting of the World Bank's Consultative Group on Mozambique.

For 1998, the government needs $417.6 million, rising to $490.4 million in 1999, and then falling to $418.5 million by 2003.

The majority of the money requested is in the form of grants rather than credits - $277.2 million of grants, and $140.4 million of credits in 1998.

The government describes this as its "first medium-term budgetary policy programming framework". It is based on the assumption that Mozambique will receive, in mid-1999, the promised relief under the HIPC (Heavily Indebted Poor Countries) debt relief initiative.

Under HIPC, $1.442 billion of Mozambique's debt is cancelled, leaving the debt stock (in net present value terms) at about $1.1 billion, a figure the IMF and World Bank regard as "sustainable".

The government's calculations are that it "will still need to receive a volume of donations equivalent to an annual average of five per cent of GDP, varying from 9.1 per cent of GDP in 1998 to 4.5 per cent in 2003". As for credits, these should fluctuate from 6.3 per cent of GDP in 1998 to 4.1 per cent in 2003.

Such estimates are based on assumptions of continued high growth in the GDP. The document states that government measures are designed "to ensure that the economy will grow at an average of 9- 10 per cent a year in real terms over the medium term. Such growth would generate an increase in GDP per capita of approximately 85 per cent over the period 1998 to 2003".

Debt repayments slashed by over a quarter

Mozambique is paying much less out of its state budget to service its foreign debt, than was expected at the start of this year, according to Deputy Finance Minister Luisa Diogo.

Speaking on 21 September, Diogo said that the revised figure for 1998 debt repayments is 564 billion meticais (about $47.2 million). This compares with an initial provision in the 1998 budget of 773 billion meticais (about $64.7 million) for paying off the country's debts. Thus debt actually paid is 27 per cent less than the forecast of debt repayments.

Diogo stressed that these figures include payment of both interest on the debt and the debt stock itself.

The cut in debt payments has been achieved largely through the country's Debt Relief Fund. This is a mechanism whereby friendly bilateral donors pay off some of the Mozambican debt service, thus releasing funds from the state budget to be spent on the education and health services, and rural water supply.

This fund has been heavily supported by the Nordic countries, with Holland and Britain also making contributions. Diogo said that this year payments into the fund were running at over $45 million.

Trade balance deficit drops

The deficit on the Mozambican balance of trade dropped by $29.7 million during the first six months of 1998 to $367.5 million. According to the National Director of Foreign Trade, Egidio Paulo, this was possible because of a 12 per cent increase in exports compared to the same period in 1997. Export earnings in the first half of 1998 amounted to $113.7 million, compared with $100.8 million in the January-June 1997 period.

At the same time there was a fall in imports with goods valued at $497.8 million during the first half of 1997, compared with $481.2 million between January and June 1998.

The gap between imports and exports over the six month period was thus $367.5 million. Exports covered 23.6 per cent of imports.

Vehicles and capital equipment accounted for 37 per cent of imports, followed by raw materials, with 28 per cent, and foodstuffs, with 22 per cent.

Imports mainly came from South Africa, with 35.2 per cent, followed by Portugal with 10.4 per cent.

Other countries that exported to Mozambique over this period were, in order of decreasing importance, the United States, Japan, India, Saudi Arabia, Italy, Swaziland, Britain, China, Brasil and Malawi.

Paulo said that in terms of grain production, Mozambique is expected to produce about 1.6 million tonnes in the 1998-99 agricultural campaign, which will reduce the grain deficit from 300,000 tonnes last year to about 200,000 tonnes.

Glassware factory to restart production

The privatised glassware factory, Vidreira de Mocambique, will resume production of bottles and other forms of glass packaging in September.

Vidreira was privatised in December 1996. Its new owners, the Portuguese glassware company, Barboso e Almeida, then invested $10 million in rehabilitating the factory and increasing its capacity.

At the time of privatisation the company's installed capacity was ten tonnes of glassware per day. The new Vidreira furnace will produce up to 120 tonnes a day.

It will have an estimated production of 35,000 tonnes: the equivalent of five per cent of the southern African glassware market. There was already a guaranteed market for Vidreira produce: it would supply bottles for alcoholic drinks, fruit juices, mineral waters and other soft drinks. The factory is expected to export 40 per cent of production to other southern African countries.

Defence Ministry out to conscript 3,000

The Mozambican Defence Ministry intends to conscript 3,000 young Mozambicans into the armed forces in 1999, according to a ministry source cited in the daily paper Noticias on 15 September.

Currently the Mozambican Defence Force (FADM) is less than 12,000 strong, and contains more officers than privates. The planned intake will thus boost the size of the army by more than 25 per cent.

A 1997 law passed by the Mozambican parliament, the Assembly of the Republic, against strong opposition from Renamo states that all young Mozambicans must register for military service in the year they are 18th.

The army then selects those whom it wants, submits them to medical tests, and trains them for the two year period of compulsory military service.

This year the government decreed an "extraordinary period" of military registration, running from 1 August to 31 September. This is supposed to cover all Mozambicans aged between 18 and 22, thus catching those who could not register during the five years in which there was no conscription. Those who failed to register prior to 1992 are also expected to do so now.

The total number of people who should register is over a million. But by the end of last week just 51,634 had done so: about five per cent of the total.

Record set for customs revenue at Maputo port

Customs revenue at Maputo port in August was the largest ever recorded for a single month, according to the National Customs Board.

Customs collected 42 billion meticais (about $3.5 million) in duties at the port. Together with revenue from the adjacent rail passenger terminal, the total for the month was almost 43 billion meticais, which is a 48 per cent increase on the revenue collected at that customs post in August 1997.

Increased revenue collection has accompanied improved clearance times. The release said that nearly 70 per cent of imports at the port are now cleared within 48 hours, and most of these within 24 hours.

Other customs posts in and around Maputo have comparable clearance times. The release says "65 per cent of air cargo, 84 per cent of rail cargo and 85 per cent of road cargo is cleared within 48 hours at Maputo airport, Mahotas Rail Terminal and Matola Road Cargo Terminal respectively"

Part of the increased revenue is attributable to increased levels of traffic which in Maputo port has risen by 30 per cent over the past three months.

In the country as a whole, customs revenue for August was over 151 billion meticais ($12.6 million dollars), the highest monthly total for the year, and 30 per cent higher than the figure for August 1997.

Milling company doubles production

The installation of new, modern equipment costing $300,000 has allowed the privatised milling company, the "Companhia Industrial da Matola" (CIM), to increase its production capacity, as from this week, from 6,000 to 15,000 tones of wheat flour a month.

With these production levels, the company is planning to explore new markets within the Southern African Development Community (SADC), and even further.

The company is studying the possibility of exporting to South Africa's Mpumalanga province, and to countries such as Malawi, Burundi, Madagascar, Tanzania and Zimbabwe.

Government raises licence fees to reduce deforestation

The Mozambican government has decided to hike both the license fees for the exploitation of forest resources, and the fines for illegal logging, as a way to reduce the number of operators and halt growing deforestation.

Fees have been increased by over 400 per cent. The old fees had been in force since 1991, when licensed operators paid 20,460 meticais (about $1.6 at current exchange rates) for every cubic metre of timber classified as precious, 10,230 meticais for first grade timber, and 7,161 meticais, 5,115 meticais and 3,069 meticais for second, third and fourth grade timber respectively.

The revised tariffs are 105,000 meticais, for a cubic metre of precious timber, and 65,000, 45,000, 30,000 and 20,000 meticais for the first, second, third, and fourth grade timber.

The new document also stipulates that no precious, first or second grade timber may be used for firewood, charcoal production, railway sleepers, or for construction posts and poles. Third grade timber also may not be used for firewood or charcoal production.

Besides the normal tariff, the licensed operators are also to pay a surtax, estimated at 15 per cent of the normal rate, to be applied in reforestation programmes.

Currently there are about 70 companies and 730 individuals licensed to exploit forestry resources. But there are also an unspecified number of unlicensed operators who are essentially felling for firewood and charcoal production.

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