Mozambique News Agency

No.209, 15th June 2001


National Human Development Report launched

Mozambique's Human Development Index (HDI) has grown steadily since 1994, but the country still has the lowest human development of any member of SADC (Southern African Development Community). The latest figures on Mozambican human development are contained in the National Human Development Report for 2000, launched in Maputo on 12 June, and written by a group of academics from the Eduardo Mondlane University. The report is sponsored by the Maputo office of the United Nations Development Programme.

The Human Development Index is composed of life expectancy at birth; educational level (measured by the adult literacy rate; and the combined enrolment rate for primary, secondary and tertiary education) and GDP per capita.

The maximum possible value for the HDI is 1, and the latest global Human Development Report from UNDP, ranks Canada as the most developed country with an HDI of 0.935. At the bottom is Sierra Leone, with an HDI of just 0.252.

The researchers have recalculated the Mozambican HDI from 1994 onwards, using the data from the 1997 census, and the latest GDP figures. This gives an HDI of 0.310 in 1994, rising to 0.312 in 1995, 0.325 in 1996 and 0.328 in 1997. The economic strides of the late 1990s pushed the HDI to 0.336 in 1998 and 0.344 in 1999. The estimate for 2000, based on preliminary data, is an HDI of 0.352.

Provincial break-down

The National Report estimates HDIs for Mozambique's 11 provinces. Maputo city has an HDI of 0.600 while the poorest province, Zambezia, has an HDI of 0.205.

In 1999, life expectancy at birth in Maputo city was 59.6 years, and in Maputo province, 52.8 years. In no other province did it reach 50. The provinces with the lowest life expectancy were Zambezia (38.1) and Nampula (40.5).

These figures correlate closely with infant mortality rates: in Maputo city (1997 figures) the rate was 60.4 per 1,000 live births, 83.2 in Maputo province, and in all other provinces over 10 per cent of children die in the first year of life. Zambezia is the worst off, with a rate of 182.9 per 1,000 births.

The 1997 census found an adult literacy rate of 85 per cent in Maputo city, and 65.7 per cent in Maputo province. At the other end of the scale, only 25 per cent of adults in Cabo Delgado could read, and 28.3 per cent in Nampula. The differences are even sharper when gender is taken into consideration. 92.9 per cent of Maputo city men could read in 1997, but only 11.5 per cent of Cabo Delgado women.

The gross enrolment rate at all levels of education varies from 46 per cent in Maputo city (2000 figures) down to 28.3 per cent in Nampula.

The concentration of industry and trade in Maputo means that in 1999 it accounted for 35.9 per cent of GDP. Nampula had 14.1 per cent of GDP. No other province accounted for more than 10 per cent of GDP. The result is that per capita GDP in Maputo was $1,189, in Zambezia it was just $96.

The poorest provinces are improving their indices quicker that the richer ones. Thus the Zambezia HDI grew by 7.73 per cent between 1998 and 1999, while the Maputo city HDI grew by only 1.63 per cent.

AIDS hits education

The Mozambican education sector has a vital role to play in protecting new generations against the lethal disease AIDS - but at the same time thousands of teachers are likely to fall victim to AIDS themselves over the next decade.

The National Human Development Report warns that, on current trends, the education sector will lose 17 per cent of its staff to AIDS in the period 2000-2010.

In absolute terms, some 9,200 teachers will die,along with 123 senior educational managers, planners and administrators. Basic teacher training will need to expand the number of trainees over the decade by 25 per cent to cover this.

An indirect effect of AIDS will be greater competition for skilled labour. The report warns of "the likelihood of an exodus of teachers attracted by companies suffering the effects of the epidemic who need to find replacements for their qualified staff who fall victim to AIDS".

A further impact on the education system arises from the increasing number of orphans. Currently there are an estimated 500,000 orphans in Mozambique, some two thirds of whom have lost their parents to AIDS. By 2010, there are likely to be over 1.5 million AIDS orphans. These children are at increased risk of dropping out of school, or of never attending school in the first place.

There are huge costs associated with AIDS. Over the decade the epidemic will impose additional costs of at least 1,900 billion meticais (over $90 million at current exchange rates) on the education system. That is an extra 6.9 per cent on the education budget, solely due to HIV/AIDS.

The report stresses the need for proper education on the dangers of HIV infection to children who are not yet sexually active. It therefore regards the current government strategy of targeting secondary school students (who only account for 3.1 per cent of the total school population of the country) as misguided. Instead, it suggests a concentration of efforts on children aged 6 to 15, who are mostly to be found in the two levels of primary education.

Government approves road programme

The Mozambican government has approved a third major road rehabilitation and maintenance programme, budgeted at $1.7 billion, to be spent over a 10 year period. Prime Minister Pascoal

Mocumbi told reporters on 14 June that a high percentage of the money will be in from World Bank loans.

The programme has been discussed in detail with the World Bank and the "core funding" would come from the Bank.

In the 1990s there were two major roads programmes in Mozambique, known as ROCS 1 and 2, also heavily reliant on World Bank loans. They came under heavy criticism, including from a former World Bank representative in Mozambique, Roberto Chavez, for their use of inappropriate technologies, and lack of sustainability.

This time it will all be different, Mocumbi pledged. "We are trying to avoid the mistakes and shortcomings of the previous ROCS programmes, and improve the quality", he said.

He stressed the need to decentralise the programme as far as possible to provincial and local level, and to build up Mozambique's own road building and maintenance capacity.

The roads programme would also create jobs. Mocumbi said labour intensive methods will be used in upgrading tertiary roads.

One of the government's top priorities is to strengthen the north-south backbone of the road network. Key to this is building a bridge over the Zambezi at Caia.

Currently the main highway from Maputo to the north stops at Caia. There is then a ferry crossing to Chimuara, on the north bank of the Zambezi, where the road resumes again.

The argument against a bridge is that there is not enough north-south traffic to justify it: the argument in favour is that over time the bridge will generate traffic.

The bridge is tentatively budgeted at $80 million. Mocumbi thought this money would be available - but probably not from the World Bank, which has been among the sceptics querying the viability of the bridge.

Meanwhile, rehabilitation of roads in the southern city of Matola is under threat because the contractor, the Italian company CMC di Ravenna, has threatened to paralyse the work unless it is paid.

The rehabilitation of 15 Matola roads is costed at 37 billion meticais (about $1.76 million), but CMC has not had any payment yet, although the contract was signed in December.

CMC has accused the National Road Administration (ANE) of violating the agreement on disbursement of the money, and has warned that failure to pay the first tranche may lead to a total stoppage of work.

Mocumbi was not sympathetic to the Italian company. "It is natural that the contractor should exercise pressure to obtain his money", he said, "but blackmail is not a good idea".

There was a clear explanation for why CMC had not been paid, he added, and if it did abandon the work, "then it will go on a black list, and will not obtain any more contracts".

But Mocumbi pledged that the government would do all in its power to ensure that undertakings given by municipalities, backed up by central government finance, will be honoured.

Minister guarantees availability of anti-retrovirals

Health Minister Francisco Songane on 1 June guaranteed that generic anti-retroviral drugs (used to prolong the lives of people infected with HIV, the virus that causes the lethal disease AIDS) will be available later this year in units of the Mozambican national health service.

Songane stressed that, because there are Mozambicans already acquiring anti-retroviral drugs from abroad "it is imperative that we introduce anti-retrovirals this year. I am sure it will be possible". He warned that the treatment regime must be carefully controlled in order to avoid viral resistance to the drugs.

Songane also stressed that the state is in no position to pay for these drugs: the patients will have to support the costs out of their own pockets - which means that the treatment will out of the reach of the vast majority of HIV-positive Mozambicans.

The Health Ministry intends to import the drugs from countries such as India or Brazil which produce the much cheaper, generic equivalents of the brand-name drugs produced by the multinational pharmaceutical companies.

Whereas a year's anti-retroviral treatment for one person might cost $12,000 if branded drugs are used, the cost comes down to about $600 if the generic equivalent is used.

Songane said Ministry officials have already made two visits to Brazil, and a visit to India is planned within the next two months. In Brazil, the Mozambican team discussed training for the staff who will administer anti-retrovirals and other practical issues.

Songane told reporters that Mozambique is one of the few developing countries that spends a higher percentage of its budget on health care than the minimum recommended by the World Health Organisation (WHO) - but even so, the sums involved are very meagre.

This year 1,188 billion meticais ($58 million), or 13 per cent of the total 2001 state budget, has been allocated to the health sector. But this only covers 40 per cent of the running costs of the health service. Include the capital expenditure required, and the purchase of medicines, and this drops to 15 per cent.

The health service would need between $60 and $80 million a year just for the purchase of medicines, said Songane, but the figure in the budget is only $27 million.

Fire destroys oil factory in Inhambane

On 3 June a huge fire burned to ashes a new factory belonging to the Soap and Oils Company (SOMOIL), in the southern city of Inhambane.

The building of the factory had been completed a year ago, at the cost of over $900,000, and had been approved, on 1 June by the Provincial Directorate of Industry and Trade, after a one year experimental period.

Hopes for increased harvest

Mozambique is hoping to harvest about 1.68 million tonnes of food crops this year, which represents an increase of about 14 per cent when compared with the 2000 harvest of 1,474,772 tonnes, reports "Noticias" on 11 June.

These figures are contained in a preliminary report on the agricultural situation in the country, presented in Maputo by the Early Warning Department for Food Security, and drafted by a team encompassing representatives of the government and of the World Food Programme (WFP), that worked in the field between 21 and 28 May.

According to the report, the largest production is of maize, estimated at 1.1 million tonnes, followed by millet, with 313,787 tonnes, while the rice harvest is not expected to exceed 166,945 tonnes. The production of beans, another basic foodstuff, is estimated at 153,825 tonnes, and that of groundnuts at 109,175 tonnes.

National Agriculture Director Sergio Gouveia says that the better harvest is thanks to the increase in the area cultivated. The increase would have been larger, had it not been for adverse climatic conditions in several parts of the country.

Gouveia said that southern and central Mozambique had swung from one extreme to the other during this agricultural year. In December and January there was a pause in the rains which led to drought conditions in parts of the interior. This was followed by torrential rains and severe flooding in the central region from late January through to the end of March.

But the heavy rains did at least allow a recovery of crops in those areas that are normally semi-arid, thus bringing production close to the target figures.

The assessment team identified areas threatened with hunger as a result of floods in parts of Tete, Manica and Zambezia provinces.

The WFP team recommended the establishment of an emergency plan to supply seeds in affected areas for the 2001/2002 agricultural campaign.

It found that the harvest from the second planting in areas where first season crops were completely lost to the floods will not be satisfactory because the planting was too late or because the seeds used were of poor quality.

A source in the Agriculture Ministry told reporters that funds for the emergency plan have already been pledged by donors and the seeds will be distributed before the beginning of the next first season planting, which starts in October.

In an emergency intervention, about 50,000 kits of seeds were distributed for the second plantings in the flood hit areas in the provinces of Tete, Zambezia, Manica and Sofala.

Of this quantity, 30,500 kits were distributed by the seed company SEMOC and the remainder by NGOs.

For the next campaign, the number of households to benefit from free seeds has risen from the initial 55,000 to 111,000, following a closer assessment. These households lost to the floods a total of 79,000 hectares of crops.

Food for flood victims guaranteed

The Natural Disasters Management Institute (INGC) has guaranteed that there will be sufficient food aid to distribute to the 235,000 victims of flooding in the central provinces for the next three months, reports "Noticias" on 6 June.

INGC director Silvano Langa said that two weeks ago, his institution had about 3,000 tonnes in stock, and this figure has grown due to arrivals of donations from international partners, as well as purchases on the local market.

The World Food Programme (WFP) has already bought 7,000 tonnes, particularly maize, from farmers in Nampula and Tete provinces.

"We hope that with the reinforcement that we are to receive from Japan of 4,000 tonnes, we would be speaking of between 10 and 11,000 tones for the next three months", said Langa.

He explained that his institution is distributing an average of 3,000 tonnes of foodstuffs a month.

In the flood-stricken provinces, namely Sofala, Manica, Tete and Zambezia, the distribution of agricultural inputs, which is now completed, has gone alongside the free distribution of food, with each family receiving enough for the next 15 or 30 days.

Langa expressed hope that the number of needy people will soon drop if one can count on a good harvest from the second season planting.

"We hope that the second sowings will produce good results and that some of the affected population will have enough production of their own so that we can reduce dependence on donations", said Langa.

Some cases of malnutrition have been reported in the centre of the country, and the government has decided to conduct a nutritional enquiry in these areas to assess the seriousness of the situation, and determine whether it is caused by food shortages or the result of poor dietary habits.

Mobile phone network to cover country by 2002

The publicly owned telecommunications company (TDM) hopes to have the mobile phone network extended to the entire country by 2002, reports "Noticias" on 2 June.

Addressing a press conference during the ceremony to inaugurate the mobile phone network in Nampula province on 1 June, the chairperson of the TDM board of directors, Rui Fernandes, said that by the end of the year the mobile phone network will be extended to Inhambane and Zambezia.

He estimated the cost of installing the system in these two provinces at one million Euros (about $850,000).

In 2002 Cabo Delgado and Niassa will be added to the network for an additional cost of 1.5 million Euros. Calls on mobile phones can already be made in the other six provinces.

In Nampula the company Telefonia Movel de Mocambique (TMM), a joint venture between TDM and the German firm Detecon, has invested about $3.2 million in technology, plus a further $2.8 million in infrastructures and human resources.

Concerning investments in both mobile and fixed telephone systems, Fernandes said that international partners prefer the mobile system, but at domestic level there is the mobilising of investments to ensure a fixed system through digital exchanges in the main population centres.

Fernandes said that expending digital exchanges in the main cities across the country will allow greater access to the internet, and will also modernise the phone network in the most remote parts of the country. For this expansion, TDM needs at least $10 million of new investment.

Despite losses, Austral Bank expresses optimism

Mozambique's third largest commercial bank, the Austral Bank, made a loss of 1,370.7 billion meticais ($65.3 million US dollars at today's exchange rates) in 2000, but the bank's board of directors is convinced that it will turn in a profit this year.

Austral was once the state-owned People's Development Bank (BPD), but it was privatised in 1997. A private consortium headed by the Malaysian Southern Bank Berhard (SBB) bought 60 per cent of the bank, while the Mozambican state kept the remaining 40 per cent.

At the bank's Annual General Meeting in early April, the private investors, unwilling or unable to participate in the recapitalisation required to bring Austral within the central bank's solvency limits, pulled out, and their shares reverted to the state.
The Bank of Mozambique stepped in, appointing a provisional board of directors charged with keeping normal business going, ascertaining the true state of Austral, and looking for other foreign partners willing to invest in the bank.

On 8 June the chairman of the Austral board, Antonio Siba- Siba Macuacua, distributed the bank's accounts for 2000 at a press conference.

He blamed the 2000 losses on the repeated delays in increasing the bank's share capital, and on "the deterioration of the credit portfolio".

As of December 2000, 34 per cent of the outstanding credit was non-performing loans. At first sight this is a sharp decline from the figure of December 1999, when non-performing loans only accounted for 12.88 per cent of total credit.

But the 1999 figures were deceptive. Macuacua said that during 2000 the entire credit portfolio was "reclassified" in accordance with the norms of the central bank. As a result loans which had been regarded as performing were shifted into the list of bad debts.

This led to an enormous increase in the provisions the bank needed to make to cover bad debts. Indeed, the line "provisions" in the Austral accounts jumped from 61.9 billion meticais in 1999 to 644.1 billion in 2000. "Provisions" is the largest single item on the debit side of the 2000 accounts.

Austral now claims that everything that represents a potential risk "has been 100 per cent provisioned for". The board says that it has been more cautious than demanded by the central bank, and has included 100 billion meticais of provisions over and above the figure demanded by the Bank of Mozambique.

Macuacua said Austral has been contacting its debtors, demanding that they pay up, and that in April and May 60 billion meticais was recovered.

The debtors had reacted "positively", he said. "We are appealing persistently to our clients to collaborate in reorganising their debts. We are open to negotiations within reasonable parameters, and we don't want to take extreme measures".

His fellow director, Arlete Patel, was rather harsher, and made it clear that, if necessary, Austral would take debtors to court. "We hope the state will not treat this matter lightly", she said. "We want the courts to show greater speed in dealing with such debts".

None of the Austral management would say who the debtors are. The third member of the board, Benigno Parente, could not confirm the persistent rumour that among the debtors are companies in which the former chairman of the board, prior to the April AGM, Octavio Muthemba, has interests.

One source of worry had been the Austral pension fund. The legal deductions from the workers' wages were far from enough to cover requirements - in the days when it was the BPD, the bank had the most extensive branch network of any Mozambican financial organisation. As a result, it has a large number of retired workers, many of them on what are, by Mozambican standards, generous pensions.

To guarantee the pension fund, the bank's management had to strengthen it with a further 263 billion meticais.

Patel made it clear that this had nothing to do with the state pensions that are channelled through Austral. State pensioners (such as retired civil servants or demobilised soldiers) collect their pensions from Austral branches. But the state's accounts with Austral, where this money is deposited, were quite unaffected by the crisis, said Patel.

The Austral board is confident that the bank will be re- privatised. Macuacua said 11 potential buyers had been identified, all of them "internationally known banks of good repute". He would not name them, but said they included South African and Portuguese banks. Macuacua expected the sale to be concluded by August.

The board also revealed the latest figures, as of April, which show an improvement in Austral's performance. The bank is still making a loss, but the losses of May 2000-April 2001 are over 90 per cent lower than the losses of the previous year. By December this year, Austral should be making a profit, the board predicted.

The state has already raised money for Austral and for recapitalising the second privatised bank to run into major difficulties, the BCM, by issuing public debt - treasury bonds equivalent to about $80 million, and bearing interest of around 22 per cent.

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