Mozambique News Agency

AIM Reports


No.370, 29th December 2008




The face of the district is changing - President Guebuza

The face of Mozambique’s rural districts is changing, due to government interventions such as the allocation of district investment budgets, said President Armando Guebuza on 24 December. Giving his annual State of the Nation address to the country’s parliament, the Assembly of the Republic, President Guebuza said the establishment in 2006 of the Local Initiative Investment Budget (OIIL) “has brought a new social and economic reality to the local and central authorities, and to the local communities”. Under the initiative, at least seven million meticais (about $280,000) a year has been allocated to each of the 128 districts for projects to generate employment and increase food production.

“This is a reality that helps change the paradigms of rural development and induces changes in the attitudes of all”, he claimed. The work done by the District Consultative Councils in prioritising “in a logical and transparent way which projects should be funded out of the many that are presented is a new exercise, not only for those who must decide but for those who are the beneficiaries”.

President Guebuza said that the debates inside the Consultative Council, to reach consensus on which projects should be supported, “transforms this body into a school in sustainable development”. President Guebuza promised to continue with this investment fund, while “improving the management mechanisms, so that its impact grows in achieving the goals for which it was designed”.

There was now further financial decentralization, President Guebuza said, with a sum allocated to each district for the building, repair and maintenance of public infrastructures.

The computerized state financial management system, SISTAFE, was now being gradually expanded into the districts, the President said. 31 districts were now integrated into SISTAFE. At the same time commercial banks, previously almost completely absent from small towns and rural areas, were opening branches in the districts.

There were now 44 bank branches in districts said President Guebuza – but this also means that there are still 84 districts that are not served by any commercial banks. But where the banks did exist, teachers, nurses, civil servants, and companies that sell goods and services to the state, can be paid directly through the banking system, rather than in cash.

President Guebuza stressed the importance of district administrators improving their leadership skills in order to encourage local people “to make the best possible use of local resources and to transform their problems into challenges”.

The fight against “the obstacles to our development”, which he listed as red tape, the spirit of apathy and drift, corruption and crime, “must remain at the centre of our governance agenda”, including at district level, urged President Guebuza.

As the President spoke, all the deputies from the opposition Renamo-Electoral Union coalition staged a walk out. The Renamo deputies sat through about half of the speech, but then they all stood up and trooped noisily out of the chamber. Deputies of the majority Frelimo Party gave them an ironic round of applause as they left.

One of Renamo’s most prominent deputies, Antonio Muchanga, told AIM they had “heard enough”, and regarded President Guebuza’s speech as “empty”. Muchanga said the Renamo deputies felt “offended” because President Guebuza had not dealt with the matters that they regarded as priorities. In particular, he complained that President Guebuza had spoken about crime in only five paragraphs, and had not mentioned the alarming developments of this month, including the murder of police officers and the escape on 7 December of three assassins from the cells of the Maputo City Police Command.

Muchanga said the Renamo deputies had wanted to hear from President Guebuza what measures the government was taking to cope with the upsurge in crime. He concluded that, far from President Guebuza’s confident assertion that “the state of the nation is good”, it was in reality “not at all good”.

Assembly passes budget

The Assembly of the Republic on 23 December passed the second reading of the state budget for 2009, and the resolution approving the government’s Social and Economic Plan for the year, with deputies from the Renamo-Electoral Union opposition coalition voting against

In the “declaration of vote”, explaining why Renamo voted against the budget, Abel Mabunda claimed the budget was unconstitutional because it allocated money to the Ministry of Veterans’ Affairs (which looks after the interests of those whom fought in Mozambique’s war for independence), but gave nothing to “the fighters for democracy” – by which he meant the Renamo units that ravaged the country prior to the 1992 peace agreement.

Among demands raised by Renamo were that VAT should be reduced from 17 to 14 per cent. Lutero Simango also denounced alleged abuse of state property by Frelimo.

Frelimo deputies accused Renamo of continued attempts at destabilisation by other means. Raimundo Mapanzene claimed that Renamo was “proving that they are not prepared to govern”, and were “confusing the autocratic instincts of its leader (Afonso Dhlakama) with the interests of the people”.

Replying to claims heard frequently from Renamo and echoed in some of the media, that Frelimo uses “the dictatorship of the vote”, Feliciano Mata argued, “in democracy, decisions are taken by majority vote”. The plan and budget had to be passed “because the Mozambican people want the government to improve the quantity and quality of public services, and to decentralize powers to the provinces and districts”.

The budget envisages state revenue in 2009 from taxes and other domestic sources of 46.2 billion meticais (about $1.85 billion). Government expenditure for the year, however, is estimated at 98.1 billion meticais, leaving a deficit of 51.9 billion meticais that must be covered by foreign grants and loans. Thus 53 per cent of public expenditure in 2009 will depend on foreign aid.

The budget will allow the state to recruit 16,000 new staff. Of these the great majority – 12,000 – are teachers. 1,200 are health workers, and 1,600 are for “security and public order” – essentially police recruits.

The priority areas for the government’s Action Plan for the Reduction of Absolute Poverty (PARPA) – which include education, health, infrastructures, agriculture, governance and public order – are allocated 68.7 per cent of total expenditure, excluding debt servicing and financial operations. This is a significant increase on the 65.5 per cent allocated to the priority sectors in the 2008 budget.

The percentage of expenditure allocated to education rises from 18.5 to 19.5 per cent, on health from 11.9 to 14.9 per cent, and on agriculture and rural development from 3.9 to 7.3 per cent. Expenditure on infrastructure falls from 21.2 per cent of the 2008 budget, to 17.1 per cent of the proposed budget for 2009 – this is mostly a fall in the share allotted to roads from 11.4 to 7.9 per cent.

The judiciary sees its share rise slightly from 2.4 to 2.5 per cent, while expenditure on security and public order (mainly the police) slips from three to 2.9 per cent.

Debt servicing has fallen to 1.4 billion meticais, compared to 1.65 billion in the 2008 budget – a decline from 1.85 to 1.43 per cent of the total budget. This is largely because the state did not issue any domestic debt in the shape of treasury bonds, in the first six months of this year.

Plan for 2009 hinges on high growth, low inflation

Introducing the government’s social and economic plan for 2009, the Minister of Planning and Development, Aiuba Cuereneia, on 19 December told the Assembly that the economic growth target for the year was 6.7 per cent, while average annual inflation should be held to eight per cent. The estimate for inflation this year is 9.8 per cent.

Cuereneia said that export earnings in 2009 should reach $2.926 billion, which is an increase of 8.9 per cent on the projected figure for this year. Exports remain dominated by three products – aluminium ingots produced by the MOZAL smelter on the outskirts of Maputo, electricity from the Cahora Bassa dam, and the natural gas exploited by the South African petro-chemical giant Sasol. Together these three products accounted for 74 per cent of export earnings in the first nine months of this year.

The government hopes to attain a level of net international reserves sufficient to cover five months imports of goods and services. This is the much the same as over the last three years. Cuereneia noted that this is much more than the three months advocated in the Southern African Development Community Macro-economic Convergence Programme. As of 15 December this year, Mozambique’s net international reserves stood at $1.576 billion.

Cuereneia said that the target for agricultural growth is 14.9 per cent. Key to this will be the construction or rehabilitation of 3,000 hectares of irrigation schemes, and the production of over 7,500 tonnes of certified improved seeds (mostly for maize and rice).

As part of its Food Production Action Plan, the government will import a further 110 tractors. 2,500 head of oxen, accompanied by 1,250 ploughs, will be distributed for purposes of animal traction. A further 193 extensionists will be hired, and the extension services should reach over half a million rural producers.

As a result of such measures, Cuereneia predicted a substantial increase in grain production, rising from 2.3 million tonnes this year to 2.7 million tonnes in 2009.

The plan also envisages a 10 per cent growth in the construction industry, resulting from increased public investments in roads, bridges, dams, and water supply. Two key bridges will be completed in 2009 – the new bridge over the Zambezi at Caia, which will be a vital component in the main north-south highway, and the “Unity Bridge” over the Rovuma river, linking Mozambique and Tanzania.

Electricity and water production are targeted to rise by seven per cent. In rural Mozambique, 2,439 wells and boreholes will be opened, and 943 existing ones will be rehabilitated. 1.2 million people will benefit from this, and it will raise the number of people with access to safe drinking water to 55 per cent of the rural population – which is the target the government set for itself in its five year programme for 2005-2009.

In the cities and towns, 200 new public standpipes will be built, and 27,518 homes will be connected to the piped water systems, thus supplying a further 260,000 urban Mozambicans with safe drinking water. That means that 60 per cent of the urban population will have ready access to safe water by the end of 2009.

Cuereneia said that the transport and communications sector should grow by 12 per cent. He stressed the growth in the public bus fleets in the main cities - 100 new buses were acquired in 2008, and a further 29 will be imported in 2009.

The government plans continued expansion of the education and health networks. A further 809 schools will be built over the year – 393 for first level primary education (grades one to five), 380 for second level primary education (grades six and seven), but only 36 for secondary education.

To improve the teacher/pupil ratio, 12,000 new teachers will be hired, 10,000 of them to teach the first five grades of primary education.

72 primary and secondary health units will be built or rehabilitated in 2009. The Maputo Provincial Hospital, in the city of Matola, will be built, and four other provincial hospitals will be rehabilitated. 2,078 newly trained health staff will be placed in the districts, and it is expected that 29 specialist doctors will graduate from the medical faculties.

Cuereneia said the government’s priorities remain centred on “expanding citizens’ access to legal services, and on strengthening the independence of the judiciary”.

New appeals courts should start operating in 2009, thus relaxing the pressure on the Supreme Court that so far has heard all appeals from decisions of the 11 provincial courts.

The government wants to see the productivity of the courts improve significantly, with a 15 per cent increase in the number of cases heard.

Human Rights Commission established

The Mozambican parliament, the Assembly of the Republic, on 26 December passed a government bill setting up a National Human Rights Commission, in the teeth of noisy opposition from Renamo deputies.

The commission envisaged by the bill consists of 11 people – four appointees of the civil society organisations working in the human rights area; three figures active in the areas of education, justice and health appointed by the Prime Minister, after consulting with the relevant ministers; three figures “of recognised suitability and merit, with knowledge or experience in the promotion and defence of human rights” elected by the Assembly, on the principle of “parliamentary representation” (which means that Frelimo will appoint two of them and Renamo one)’ and one representative of the Mozambican Bar Association.

The bill passed its final reading with 151 deputies of the majority Frelimo Party voting in favour, and 56 from the opposition Renamo-Electoral Union coalition voting against.

Giving the Renamo “declaration of vote”, Sebastiao Temporario described the human rights commission as “another tentacle of the monster”. For Frelimo, Ernesto Cassimuca retorted that Renamo’s rejection of the bill “is in line with its own past – it is not in favour of human rights, but of dictatorship”.

Assembly approves simplified tax system

The Assembly of the Republic on 17 December passed the first reading of a government bill introducing a simplified tax system for small and micro companies. On 26 December it received its second and final reading.

Under this measure, any company or individual trader or producer with a volume of business no higher than 2.5 million meticais (about $100,000) a year may opt for the simplified tax instead of the current income, corporation and value added taxes.

The simplified tax (known as the ISPC) is charged at 125,000 meticais a year in towns, and 75,000 meticais a year in rural areas. Alternatively, small companies can opt to pay five per cent of their revenue, if in towns, or three per cent in the countryside.

Introducing the bill, Finance Minister Manuel Chang declared that small and micro companies “play a vital role in the national economy since they create jobs, and make products available for the market, thus increasing the competitiveness of the economy”.

But most of these small businesses are in the informal sector and the government is trying to persuade them to formalize their activities. The survey of the informal sector carried out in 2004, showed there were 497,900 “informal economic agents”, employing between one and ten workers, and that are completely outside the tax system.

Chang said the government was hoping to bring these businesses into the tax system by offering them a simple system, with minimum accounting and reporting requirements, and low tax rates.

Deputies of the opposition Renamo-Electoral Union coalition abstained in the vote, arguing that a tax of 75,000 meticais a year was too much to demand from a small rural business. However, it is expected that most small business will choose to pay either the five or three per cent of gross revenue.

Assembly passes fiscal benefits law

The Mozambican parliament, the Assembly of the Republic, on 26 December passed the second and final reading of a government bill revising the country’s fiscal benefits code, despite claims by the opposition Renamo-Electoral Union coalition that it is “discriminatory”.

The new code scraps many of the tax breaks that investors have enjoyed since the previous code was passed in 1993, and future mega-projects will no longer enjoy “exceptional” fiscal benefits. Instead, benefits are concentrated on those areas of the country to which the government wishes to attract investment.

The bill introduced the concept of a “Rapid Development Zone”. Renamo claimed there were no criteria for defining such zones – but in fact they are defined as “geographical areas of the national territory, characterised by great potential in natural resources, but lacking infrastructure and with a low level of economic activity”.

The bill passed its second reading with the 151 deputies of the ruling Frelimo Party present supporting it, while the 56 Renamo deputies abstained.

Justifying the Renamo vote, Elisa Silvestre complained that areas she favoured, such as the valley of the Save river, and Nhamatanda district in the central province of Sofala, had not been given “Rapid Development Zone” status. She regarded this as “a policy of exclusion”, which was “against national unity” and would “unbalance the development of our country”.

The first two Rapid Development Zones are the Zambezi Valley and the area around the northern port of Nacala. The bill allows the government to give this status to other areas when it deems appropriate. “Better to start in some regions than not at all”, Finance Minister Manuel Chang told AIM.

Renamo’s claim of “social exclusion” normally means that the government is supposedly discriminating against areas that vote for Renamo. But in this case Nacala, and much of the Zambezi valley, are traditionally areas that have supported Renamo.

Economy resisted international crises - PM

Prime Minister Luisa Diogo declared on 27 December that the Mozambican economy managed to resist the 2008 international fuel, grain and financial crises and has ended the year in reasonably good shape. As evidence for this, Diogo cited the fact that, in the first nine months of the year, the country managed to export $2.3 billion worth of goods, and attracted $500 million of foreign investment.

Speaking, alongside several other members of the government, in a three hour long Radio Mozambique phone-in programme, Diogo said that, despite the recession in the developing countries, when the final figures for the year were available, Mozambique is likely to have met the target for the year of $2.6 billion worth of exports – a significant achievement for a country whose annual exports 16 years ago only amounted to $300 million.

On the fuel crisis of mid-2008, when the price of a barrel of crude oil reached almost $150, Diogo said the government decided to sacrifice tax revenue, rather than penalize the public. Measures taken to keep the domestic price of fuel down included suspending customs duties and value added tax (VAT) on diesel and kerosene. The fuel costs of licensed urban transport operators were subsidized for the greater part of the year.

Energy Minister Salvador Namburete said that the suspension of these taxes on fuel had cost the state over $100 million.

Diogo noted that, in addition to international crisis, Mozambique had faced internal crises, arising from the floods that had struck the central provinces, and Cyclone Jokwe that had hit Nampula province, in the initial months of the year. These natural disasters had forced the government to divert resources to support the hundreds of thousands of people affected.

Despite these challenges, Mozambique had maintained a high growth rate - The current estimate for 2008 is for growth of 6.8 per cent, not far short of the target of seven per cent.

Health Minister Ivo Garrido told the radio audience that one of the main problems in dealing with the HIV/AIDS epidemic was that most Mozambicans are unaware of their HIV status. He said that around 90 per cent of AIDS sufferers admitted to Mozambican hospitals were only aware that they were HIV-positive when they fell ill – which meant that the virus had been silently destroying their immune systems for several years, completely undetected, because these citizens had never taken an HIV test. Garrido said it was lamentable that so many people were still refusing to take the HIV test, and only went for treatment when they were at an advanced stage of AIDS. Faced with this situation, often resulting from such factors as ignorance and fear of being tested, Garrido said that as from 2009 the government would lay greater stress on HIV testing. He believed that when more Mozambicans knew their HIV status, many thousands of lives could be saved.

“All Mozambicans should understand the importance of testing”, he insisted. “So the challenge for 2009 is to ensure mass testing for HIV. This will allow those who test positive to save themselves, and those who test negative will be aware of the fact, and will take measures to keep themselves protected”.

The current estimate is that 16 per cent of all Mozambicans aged between 15 and 49 are infected with HIV.

The number of HIV-positive Mozambicans receiving the life-prolonging anti-retroviral therapy rose from 88,000 at the end of 2007 to 127,000 at the end of November, and may reach over 130,000 by the end of the year.

Surtax on cement imports suspended

The Mozambican government on 23 December suspended, for a period of two years, the surtax on cement imports. The surtax was fixed at 10.5 per cent, and the measure, introduced in 1997, was designed to protect the Mozambican cement industry. But today the local industries do not produce enough to meet demand, and as a result cement prices have been soaring.

When cement imports were needed in the past, the obvious option was to buy cement in South Africa. But with the South African construction industry in full swing to build all the infrastructures required for the 2010 football World Cup that option may no longer be open, and Mozambique’s cement may have to be acquired much further afield.

President sacks police commander

President Armando Guebuza on 18 December sacked the general commander of the police force, Custodio Pinto, immediately replacing him with the man who had been his deputy, Jorge Khalau. Khalau had earlier been commander of the riot police, and, like Pinto, he has a military background.

As is normal with dismissals and appointments, the presidential dispatch gave no reasons for the sacking of Pinto or the promotion of Khalau. However, the move came after a dramatic fortnight, in which three dangerous criminals escaped from the cells of the Maputo City Police Command in broad daylight, and three police officers were murdered in Maputo and Matola.

The latest victim was Felicano Juvane, director of public order in the Maputo command. He was gunned down on 16 December at his home by assassins.


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