Mozambique News Agency

AIM Reports


No.327, 28th September 2006


President addresses UN General Assembly

President Armando Guebuza said in New York on 21 September that only a reformed United Nations will be able to respond to the new challenges facing the world. Addressing the United Nations General Assembly, President Guebuza stressed that no country, no matter how vast its resources, can on its own overcome the complexity of the challenges posed by the need to strengthen international law, multilateralism and the promotion of partnerships for peace and development.

President Guebuza drew his audience's attention to the fact that although underdevelopment may be identified with particular countries, its consequences are felt beyond those countries' borders. Those consequences would affect the population and the national security of other countries. They also raised new moral obligations and material challenges to richer societies, he said.

President Guebuza returned to one of his favourite themes since taking office in February 2005 - that of the need for the poor to believe in themselves and cultivate self-esteem. Poor people, he declared, need to restore their self-confidence and believe that, like other peoples, they too can get rid of misery.

He also warned those in the rich countries that they must overcome the fatalist belief that the poor will never be able to defeat poverty because they were thus predestined. The President also challenged them to fight against the prejudice that development must be imposed from the outside.

Acknowledging the potential of the United Nations to create partnerships, President Guebuza reiterated the Mozambican government's commitment to the success of the reforms of the world body, as proposed by Secretary-General Kofi Annan.

Prime Minister Luisa Diogo is one of the co-chairpersons of a High Level Panel, set up by Annan, to produce concrete recommendations on the coherence of the UN system in the areas of development, humanitarian assistance, and environment.

In his speech, President Guebuza stressed the strengthening of South-South partnerships, as part of global partnerships, as unavoidable, because "today we are living in an asymmetric world, where developing countries are in a vicious cycle of dependence and vulnerability", that must be reversed.

That "vicious cycle", he added, undermined all efforts to conquer the obstacles in the path of social and economic development, and "interferes with our capacity to combat, with greater efficiency and impact, the various expressions of poverty, and to fight harder against diseases such as malaria, tuberculosis and HIV/AIDS".

He said that Mozambique is striving to meet the Millennium Development Goals, set by the UN in 2000, and called upon the country's partners to continue providing substantial resources in due time to ensure that the goals can be met by the deadline of 2015.

Prime Minister calls for free reproductive health services

Prime Minister Luisa Diogo on 21 September urged African health ministers to make all efforts to ensure that reproductive and sexual health services should be free of charge throughout the continent. Opening a two day meeting of African Union health ministers in Maputo, to launch the Action Plan for the African Policy on Sexual and Reproductive Health, the Prime Minister said that only through services free at the point of delivery could disease and poverty be fought.

She added that Africa is well aware of the challenges that will be posed in implementing this plan, which will require additional financial resources.

The Prime Minister stressed that health is central for community development and well-being. This was clear from the fact that four of the eight Millennium Development Goals, adopted by the United Nations in 2000, are linked to health. These are: reducing infant mortality by two thirds, reducing maternal mortality by three quarters, halting and then reversing the spread of AIDS, and promoting gender equality and the empowerment of women. The target set by the UN is to achieve all these goals by 2015.

Luisa Diogo pointed out that "the spectre of HIV/AIDS has lacerated our continent, and particularly southern Africa", and had helped erode previous gains in the area of reproductive health. This, she said, implied that health ministers should "adopt a holistic, comprehensive and integrated vision of sexual and reproductive health matters", which included the fight against HIV/AIDS, as well as questions of poverty alleviation and gender equity.

A further speaker at the opening session was the former chairperson of the Chinese parliament, and head of the Chinese Red Cross, Penj Pei Yun, who pledged total Chinese support for health programmes in Africa.

Also attending the meeting was Diogo's predecessor as prime minister, Pascoal Mocumbi, who is the sole African candidate for the post of Director-General of the World Health Organisation (WHO).

Donors confirm $583 million for 2007

The latest round of meetings between the Mozambican government and most of its main donors have led to confirmation of $583 million of aid for 2007.

Since mid-August, government officials have been meeting with the 18 donors who provide at least some of their aid in direct support to the state budget, in the six-monthly review of their agreed programme.

According to the Aide-Memoire issued jointly by the government and this group of donors (known as the "Programme Aid Partners") at the end of the review on 14 September, so far these partners have confirmed $370 million in support for the 2007 budget. In addition, they have confirmed "sector support" (earmarked for various projects and programmes) of $213 million.

The 18 "Programme Aid Partners" include the World Bank, the African Development Bank, the European Union, and most individual EU member states. Just two major donors - Japan and the United States - are still refusing to channel any of their aid as direct budget support.

The review drew up indicators and targets for a "Performance Assessment Framework" for 2007-2009. Speaking for the donors, Dutch Ambassador Lidi Remmelzwaal said this was a simplification - the previous framework contained 50 indicators.

There had also been close coordination with the International Monetary Fund (IMF). "We took advantage of the government's work with the IMF on the 2007 budget, and so there was no duplication of efforts", said Remmelzwaal.

Remmelzwaal said this time "the review was less arduous: there were fewer and shorter meetings. But we still have to improve and increase effectiveness".

For the government, Deputy Finance Minister Pedro Couto pointed out that this coordination with the donors is still extremely costly in terms of the time of government officials. "Direct budget support is supposed to reduce administrative costs", he said. "So we must look for more flexible methods, to reduce the risk of always being in meetings".

Positive economic indicators

The Aide-Memoire pointed to encouraging indications of growth and stability. In the first six months of the year, aggregate production grew by 10 per cent compared to the same period of 2005, with agriculture growing by 10.6 per cent, and services, taken as a whole, "performing better than expected".

Inflation was low (put at 2.6 per cent for the first half of the year), and the exchange rate of the currency was fairly stable. Indeed, while it lost 1.54 per cent of its value against the dollar, it gained 6.84 per cent against the South African rand.

The value of exports jumped by 40 per cent, while imports only grew by 24.9 per cent. The expansion of the money supply was on target, and the net international reserves of $1.159 billion at the end of June, were enough to cover 5.1 months of imports.

But several targets were missed. Thus 65 per cent of state expenditure should go to the areas defined as priority for poverty reduction: in fact, the figure for the first six months was only 61.9 per cent. Presenting the Aide-Memoire, the National Director of Planning, Momad Piaraly, said this shortfall could be made good in the second half of the year.

But in the two areas regarded as the top priorities, education and health, the targets were surpassed. The agreed indicator was that at least 50 per cent of expenditure should go to these two areas, and the figure reached was 57 per cent.

School enrolment has been higher than planned. The projected primary education net enrolment rate was 85 per cent: but the figure achieved was 90.3 per cent. For girls, the target was 82 per cent, but a figure of 87.5 per cent was reached.

However, the Education Ministry only spent 39 per cent of its budget in the first half of this year: the main problem concerned delays in making the capital budget available. So only 22.6 per cent of the capital budget was spent. There must be serious doubt as to whether the ministry will be able to spend the rest of its budget in the July-December months.

Some of the targets for the health service were missed. Thus only 45.8 per cent of births took place in health units, against a target of 51 per cent. 92 per cent of children were fully vaccinated in the first year of life: but the target was 95 per cent.

But the Aide-Memoire warns that these figures may not be fully reliable. Certainly the low rate of institutional births seems strange, given the Health Ministry's drive to build more "waiting houses" for pregnant women adjacent to health units.

The Health Ministry spent 37.8 per cent of its annual budget in the first six months: this looks poor, but is better than in 2005 when the figure was 32.9 per cent.

For water and sanitation, the budget implementation figures are extremely low. In the first six months only 17 per cent of the capital budget and 13 per cent of the recurrent budget were spent, thanks to "late disbursements from the treasury and from funding agencies, the normal trend for building of infrastructure to be concentrated in the second half of the year, and execution problems specific to some major capital projects".

The Aide-Memoire notes that while urban sanitation is on target, it seems unlikely that the targets for rural water supply and sanitation can be reached.

Government and donors agree that the business environment has improved, through such measures as the "single counters", where businesses should be able to find all they need for licences or permits in the same office.

But the Aide-Memoire criticises the delays in giving companies the Value Added Tax (VAT) rebates to which they are entitled, and echoes business criticisms of recent regulations issued by the Bank of Mozambique.

One of these is a new set of regulations on importing and exporting, which the Aide-Memoire claims increases the costs and time taken to import. It is surprising to find not only the donors, but also the government, lining up so uncritically behind businesses and against the Central Bank - which is merely taking measures to prevent capital flight, and thus protect the economy.

Minister dismayed at cashew factories

The Mozambican government is committed to producing and exporting processed cashew kernels, but not at the expense of the rights and health of cashew workers, Labour Minister Helena Taipo has warned. Taipo recently visited nine cashew factories in the northern province of Nampula, and was dismayed at some of what she found.

According to the Labour Ministry, there were cases of companies paying less than the statutory minimum industrial wage, and of work contracts containing illegal clauses - including contracts that could be rescinded after a period of apprenticeship not agreed to beforehand.

Taipo found factories where workers' health was at risk, due to lack of adequate bathroom facilities or clean drinking water, lack of first aid services to deal with accidents, and lack of protective clothing. There were also cases in which workers were not covered by social security because the companies were not paying contributions to the National Social Security Institute (INSS).

At a meeting with Taipo, the employers promised to clean up their act, and to make the Nampula cashew industry "a model for all of Africa".

The Minister told the meeting that the government "wants to support the cashew industry, but demands that the employers establish basic health, hygiene and safety conditions". Workers, she pointed out, needed incentives if they were expected to increase their productivity.

Taipo stressed that Mozambique should set an example in complying with labour legislation, because the country currently sits on the board of the International Labour Organisation (ILO), and an ILO office will shortly open in Maputo.

She promised to return to Nampula within a month, by which time the cashew companies should have corrected all the anomalies she had discovered. Furthermore, no new cashew processing plants will be authorised to open before first verifying whether they are providing decent conditions for their workers.

Taipo also visited the Companhia Industrial de Monapo, which makes vegetable oil and soap. She discovered that this factory does not only endanger the health of its workers, but also that of surrounding communities by dumping untreated waste in the Monapo river. She ordered the factory to be closed for seven days while it is thoroughly cleaned.

The situation is not entirely bleak for Nampula workers. Taipo praised the AKAI biscuit factory in Namialo, and the construction work on the Moma titanium minerals mine in the coastal district of Moma - these were examples, she said, of industries that obeyed the country's labour legislation and offered decent conditions to their workers.

But why was it necessary for a Minister to come in person to inspect Nampula industries? The answer was clearly that labour inspectors in Nampula were not doing their jobs - and so, during her visit to the Companhia Industrial de Monapo, Taipo summarily sacked the Nampula Chief Labour Inspector, Pedro Amisse. She accused him of indifference and lack of knowledge of the generalised violation by employers of the Labour Law.

Taipo urged the other inspectors in the province to ensure that the law was obeyed, since the conditions to which many Nampula workers were subjected were "unacceptable".

Investment in irrigation needed

Mozambique is seeking investment to speed up the rehabilitation of irrigation schemes across the country and to train technical staff and farmers to ensure improved irrigation practices, rather than depending on rainfall.

Mozambique has currently about 78,000 hectares of irrigated land where the channels or other infrastructures were damaged, either during the war of destabilisation or by the devastating floods of 2000.

Speaking in Maputo on 18 September during a meeting of agriculture experts of Southern and Eastern Africa, the National Director of Agricultural Services, Boaventura Nuvunga, said that the cost of rehabilitating such infrastructures is very high and requires the mobilisation of both public and private investment.

Nuvunga told AIM that an inventory carried out in 2003 came up with the figure that on about 78,000 hectares of land the irrigation systems needed rehabilitation. "Special attention will go to those areas with a more severe shortage of rain", he said. "The costs of working on these infrastructures are estimated at about $5,000 per hectare".

Like many countries in Africa, agriculture in Mozambique is heavily dependent on rainfall, which makes it vulnerable to drought. Nuvunga explained that it is urgent to reverse this scenario by investing in irrigation, which implies proper management of the existing water resources.

Mozambique has a potential of two million hectares of irrigable land, of which only 120,000 have the necessary infrastructure, and of these only 40,000 hectares are currently being exploited.

It is estimated that Mozambique has 36 million hectares of arable land, but only 14 per cent of it is under cultivation.

Palaces of Justice for five districts

The Ministry of Justice, the European Union and the United Nations Development Programme (UNDP) have approved a plan of activities under which over euro 10 million (about $13 million) will be spent over the next four years to build "Palaces of Justice" in five Mozambican districts.

A "Palace of Justice" is a building that will contain a district court, a prosecutor's office, a police station, an area for holding suspects securely, and a branch of the Legal Aid Institute (IPAJ).

The districts chosen are Ribaue and Moma, in the northern province of Nampula, Cheringoma in the central province of Sofala, and Massinga and Morrumbene in the southern province of Inhambane.

The buildings will go some way towards relieving the desperate shortage of appropriate premises for courts and the prosecution services in rural Mozambique.

Agreement on funding for rural bank

The creation of a Mozambican bank specialising in financial services for rural producers took a step forward on 20 September when the Dutch government granted Euro 1 million (about $1.3 million) in institutional support for the new, and as yet unnamed, bank.

Dutch ambassador Lidi Remmelzvaal signed the memorandum of understanding on this grant with the two main shareholders in the new bank - the Mozambican financial institution GAPI (Small Scale Industry Support Office), and its strategic partner, the Dutch Rabobank.

The ceremony also saw the establishment of an Advisory Committee for the new bank, consisting of representatives of the Mozambican and Dutch governments, GAPI, Rabobank, and NOVIB, one of the main Dutch development organisations.

Planning and Development Minister Aiuba Cuereneia told the ceremony that this initiative fits well with the government's strategy for reducing poverty, stimulating "rapid and inclusive economic growth", and favouring the development of the business class, particularly in the countryside.

"Most of our producers are in the rural areas, and they depend on agriculture, livestock and forestry", said Cuereneia. "This is where the greatest concentration of poverty is to be found".

The transformation of the Mozambican countryside, he argued, depended on technological change in agriculture, which in turn depended on financing mechanisms. "In the government's view", said Cuereneia, "financial institutions aimed at rural areas are important for establishing small and micro enterprises, providing credit, encouraging savings, and promoting the monetarisation of the national economy".

He called for overcoming "the African paradigm that it is honourable not to be in debt". On the contrary, loans and the consequent indebtedness were key for development, the Minister argued.

Details of the new bank were hammered out a meeting in Oslo in late August. There will be four shareholders - Rabobank with 30.7 per cent, GAPI (29.3 per cent), the German Development Bank KfW (20 per cent) and Norfund of Norway (20 per cent). Rabobank started life a century ago as a bank for Dutch farmers, and has wide-ranging experience in agro-business operations. It has recently expanded into Zambia and Tanzania.

The intention is to sell shares to Mozambican investors. Souto hoped that within the first decade most of the shareholders would be Mozambican.

The initial capital will be $7 million, rising to $10 million. Souto expected the bank to be launched formally by mid-2007, and to be implanted across the country within five years.

The initial credit portfolio of the new bank will come from GAPI. Many of GAPI's current clients will be encouraged to switch to the new bank.

Souto dismissed the habitual claims that rural banks are a hopeless proposition because peasant farmers don't have any money, and agriculture is such a high-risk occupation. GAPI currently has about 1,000 clients, and 50 per cent of its loans go to agriculture. It was in agriculture that "we have some of our best clients". GAPI's experience, he added, already included working with self-help groups and credit cooperatives.

The real problem in the countryside, he suggested, was that farmers were unable to save because of the lack of banks. "If they don't save, the level of monetarisation will be fragile", he said.

Concluding the ceremony Cuereneia stressed that while this was the first rural bank, it should not be the only one, and urged other investors to follow in GAPI's footsteps. The existing commercial banks should also look to the countryside, he added, rather than "limiting themselves to the urban and peri-urban zones".

Constraints on Maputo water supply

Late and irregular disbursement of funds, combined with the high cost of the geophysical studies and the poor quality of the manual water pumps available on the national market, are the main constraints on implementing the water supply programme in the southern province of Maputo.

A document presented during a session of the Maputo provincial government on 20 September, pointed out that despite such constraints, the coverage, in terms of access to clean drinking water, is estimated at 72 per cent of the population, which is about the target fixed in the National Water Policy.

Maputo province has a variety of hydrological characteristics in different regions, which determines different levels of accessibility to drinking water.

To deal with the shortage of drinking water in the province, work is underway to rehabilitate 48 wells in the districts of Moamba, Matutuine, Boane, Magude, Manhica, Marracuene, and Matola. According to the document, "the physical work will be preceded by social activities to revive or create Water Committees in every beneficiary community".

The same report adds that other programmes are under preparation to set up small water supply systems in the various districts of the province. "Thus, in October the rehabilitation of the Matutuine water supply system, the design and building of another in Motaze, in Magude, and the rehabilitation of another in Moamba are planned", reads the report.

According to the Maputo provincial government, work is under way to automate the Small Water Supply Systems of Mahubo, in Boane, Ressano Garcia, in Moamba, and others in Manhica and Magude towns, and at Xinavane, in Manhica district. Maputo province is also planning to establish, by December, the Water Supply Provincial Forum, and Regulating Councils in Boane, Namaacha and Moamba districts.

This is a condensed version of the AIM daily news service - for details contact

email: Mozambique News Agency

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