Mozambique

Politics:

• Analysis

  Mozambique politics: Quick View - War veterans demonstrate to ask for highe

  Event

  On March 12th Mozambican riot police broke up a demonstration, the fourth at least since February, by war veterans requesting higher pensions.

  Analysis

  The spate of demonstrations by demobilised soldiers marks an intensification of a long-standing wrangle with the government. The forum of demobilised soldiers (known by its Portuguese acronym, FDGM), a gathering of former peasant militia and regular soldiers, is demanding a pension of MT20,000 (US$660) per month, several times the minimum wage for civil servants. Since February 2013 a few hundred of them have staged weekly demonstrations in the capital, Maputo, to obtain a meeting with the president or prime minister.

  The government, which is wary of the FDGM's nuisance capacity, both in terms of public security and votes, is struggling to find an appropriate response. It has publicly ignored the group's protests, beyond asking that the FDGM respect existing channels for negotiation and obey the law-a law granting veterans an official status came into force in 2011-and is unlikely to change its stance. Dialogue is under way between the Ministry of Veterans' Affairs and another representative group of former combatants, the Commission of Demobilised Soldiers. However, the authorities have deployed an increasingly hard approach to the FDGM, briefly detaining its leader, Hermínio dos Santos, in February, his third detention since 2010. The use of water cannon, a novelty in Mozambique, is an indication of efforts to develop non-lethal public-order capabilities, following criticism of a heavy-handed clampdown on food-price rioting in September 2010, which led to 13 deaths and over 500 injuries. Nonetheless, the deployment of the riot police to break up peaceful protests has also been condemned as disproportionate.

  The protests have underlined the potential for political volatility, particularly if expectations of rising incomes are disappointed and resentment of entitlement by the ruling elite continues to rise in throughout the nomination battle for the ruling Frente de Libertação de Moçambique (Frelimo) party's presidential candidate. Mozambique still counts thousands of demobilised soldiers, some of which retain an influence within high Frelimo circles. This year, former agents of the state intelligence service, Serviços de Informação e Segurança do Estado, have also demonstrated to demand higher pensions and have threatened to reveal classified information if their demands are not met.

  March 19, 2013

• Background

  Mozambique: Constitution and institutions

  New democratic constitution

  Mozambique adopted a new constitution in November 1990, to replace the authoritarian one-party state enshrined in the country's first post-independence constitution. The new document separated the functions of the executive, the legislature and the independent judiciary and contained a commitment to multiparty democracy. This provided for an electoral system based on a variant of proportional representation, with a majority voting system for presidential elections and a proportional system for legislative elections, allocating parliamentary seats on the basis of the percentage of national votes received by a party. Both the president and the unicameral 250-seat legislature, the Assembleia da Republica, were to be elected by popular vote every five years.

  The power of the executive remained considerable, however. Three "ministries in the presidency" were created (dealing with economic and social affairs, defence and security, and parliamentary affairs), ostensibly to keep the president in touch with government organs and to help implement presidential initiatives. The ministries were later reduced to two posts, dealing with defence and security affairs and parliamentary and diplomatic affairs. In January 2006 an 18-member Council of State, comprising current and former national leaders and members of parliament, was inaugurated with the aim of providing a non-partisan source of advice to the president.

  Constitutional reform

  An effort to improve civil liberties and entrench other democratic protections in the constitution, which was drafted by Frelimo and passed while the country was still at war, was made in the late 1990s. A new draft presented for public consultation in 1998—after protracted negotiations with Renamo—subsequently collapsed, in part owing to the obstruction and indecision of Renamo in what is now regarded as a lost opportunity. New constitutional amendments were finally accepted in 2004, but they excluded many of the earlier concessions made by Frelimo. However, attempts to replace the country's flag—which sports an AK-47 machine-gun and revolutionary iconography—and the Marxist national anthem with more neutral national symbols were only partially successful. A new anthem has since been adopted, but in 2005 Frelimo's parliamentarians rejected all 119 designs put forward by the public for a new flag.

  State ownership of land is enshrined in the constitution. However, a Land Law passed in 1997 allows private parties to acquire land-use rights, although the legislation does not apply to urban land. The government has drafted new legislation aimed at harmonising the rules on urban land tenure with the needs of urban expansion and development, which it plans to present to the National Assembly in 2007. Measures designed to strengthen community rights to rural land have been watered down by hardliners in the Frelimo party, many of whom have exploited opportunities to acquire land.

  Political decentralisation is weak

  Mozambique is a unitary republic. There are 11 provincial governments, including Maputo City (which has the status of a province), which are non-elected branches of the civil service, with governors appointed by the president. Elected municipal government was introduced in 1998 for 33 major cities and towns as part of reforms to provide representative government and promote the decentralisation of political authority. Renamo boycotted the 1998 elections, a decision regarded as a mistake, even by its supporters. Frelimo again won the November 2003 elections, although Renamo gained control of five cities. However, concerns remain over the government's commitment to this process, particularly after it announced plans in January 2007 to appoint a civil servant to oversee each of the elected councils. Long-delayed plans to establish elected assemblies in each of Mozambique's ten provinces were finally realised in November 2006, after new legislation was approved by the National Assembly. The assemblies will play an advisory role, with responsibility for monitoring the official programme of the provincial governments. The assemblies can be dismissed by the government, subject to approval by the National Assembly. According to the constitution, elections for these assemblies must be held by February 2008, but there is speculation that logistical difficulties—in particular the timing of the rainy season—could make it impossible to meet this deadline.

  The justice system

  The judicial system in Mozambique has for years been close to paralysis. There is a severe shortage of qualified legal personnel and a substantial backlog of cases. Enforcement of contracts and legal redress cannot be assured through the court system. Efforts are being made to address these issues, although many of the problems of the justice system are thought to be immune to substantial improvement for some time to come. Corruption in the justice system and in the state prosecutor's office has played a role in the failure to prosecute criminal activity in a range of high-profile drugs and fraud cases in recent years, most notably the trial of Nyimpine Chissano, the son of the former president, on charges of murdering the journalist Carlos Cardoso in November 2000. The lack of legal reform to date has been taken as an indication that Frelimo itself is divided over the issue; official corruption is believed to extend to senior levels of government and the party. Mr Guebuza's government has indicated that it wants greater progress on this issue.

  April 02, 2007

• Structure

  Mozambique: Political structure

  Official name

  República de Moçambique

  Form of state

  Unitary republic

  Legal system

  Based on Portuguese-Roman law and the 1990 constitution, updated in 2004

  National legislature

  250-member Assembleia da República (parliament) elected by direct, universal suffrage every five years

  National elections

  October 28th 2009 (legislative and presidential); next national, provincial and presidential elections are due in late 2014

  Head of state

  President, chosen by direct universal suffrage

  National government

  The president and his appointed prime minister and Council of Ministers; new cabinet appointed in 2009; last reshuffle in October 2012

  Main political parties

  Frente de Libertação de Moçambique (Frelimo) is the ruling party and holds 191 parliamentary seats; the main opposition party is Resistência Nacional de Moçambique (Renamo; 51 seats); the Movimento Democrático de Moçambique (MDM; 8 seats) was formed in March 2009 with the mayor of Beira, Daviz Simango, as its leader; it is drawing strong support from disaffected Renamo members and is bidding to replace Renamo as the main opposition party; another opposition party, Partido Humanitário de Moçambique (Pahumo), was launched by former Renamo members in April 2010

  President: Armando Guebuza

  Prime minister: Alberto Vaquina

  Ministers in the presidency

  Parliamentary affairs: Adeleaide Amurane

  Social affairs: Feliciano Gundana

  Key ministers

  Agriculture: José Pacheco

  Defence: Filipe Nhussi

  Education: Augusto Jone

  Energy: Salvador Namburete

  Environmental co-ordination: Alcinda Abreu

  Finance: Manuel Chang

  Fisheries: Victor Manuel Borges

  Foreign affairs & co-operation: Oldemiro Baloi

  Health: Alexandre Manguele

  Industry & trade: Armando Inroga

  Interior: Alberto Mondlane

  Justice: Maria Benvinda Levi

  Labour: Helena Taipo

  Mineral resources: Esperança Bias

  Planning & development: Aiuba Cuereneia

  Public works & housing: Cadmiel Muthemba

  Science & technology: Louis Pelembe

  State administration: Lucas Chomera

  Tourism: Carvalho Muária

  Transport & communications: Paulo Zucula

  Women's affairs & social welfare: Iolanda Cintura

  Youth & sport: Fernando Sumbana

  Central bank governor

  Ernesto Gouveia Gove

  March 22, 2013

• Outlook

  Mozambique: Key developments

  Outlook for 2013-17

  • The ruling party, Frente de Libertação de Moçambique (Frelimo), will dominate the political landscape in 2013-17, winning national polls in 2014.
  • The succession to the presidency, currently held by Armando Guebuza, who according to the constitution is serving his final term, will be disputed between his allies and other Frelimo factions.
  • The main risk to political stability is the potential of spikes in consumer price inflation or public disappointment with Frelimo leading to violent disorder.
  • The fiscal deficit will widen from 4.4% of GDP in 2012 to 7.3% of GDP in the election year of 2014, before narrowing to 6% of GDP in 2017 as royalties from mining and natural resources boost revenue.
  • Economic growth will slow to 7% in 2013, from 7.4% in 2012, undermined by heavy floods. Real GDP growth will rebound to an average of 7.8% a year in 2014-17, driven by the minerals boom and investment in the gas sector.
  • After averaging 2.1% in 2012 inflation will rise to 6.4% in 2013, reflecting monetary loosening and negative price shocks following the floods. It will ease back in 2014 before accelerating again in 2015-17, in line with global fuel prices.
  • We expect the current-account deficit to widen in 2013-15, peaking at 19.6% of GDP in 2015, as foreign investment projects push up imports. It will shrink on the back of growing coal exports in 2016-17, falling to 17.5% of GDP in 2017.

  Review

  • The Mozambican authorities have denied entry permits to a number of Portuguese nationals, illustrating an apparent crackdown on suspected illegal immigration amid rising nationalist sentiment regarding expatriate workers.
  • Russia has announced plans to cancel US$144m of debt owed by Mozambique and to make the funds available for investments in the country, signalling growing interest in Mozambique's economic potential.
  • Traffic on the Sena rail line, the main export outlet for Mozambique's coal production, has been interrupted for three weeks owing to flood damage, undermining exports. Earlier train derailments have also disrupted traffic.
  • Mozambique's currency, the metical, depreciated to its lowest monthly average since May 2011 in February, to MT30:US$1. Further weakening is likely given lower export prospects and loose monetary policy.
  • Midal, a Bahrain-based firm, intends to build a plant in Mozambique which, by mid-2014, will use Mozal's aluminium to make cables, in what could become a milestone in the integration of mega-projects in the domestic economy.

  March 22, 2013

Economy:

• Background

  Mozambique: Education

  Education provision expands rapidly after the civil war

  After independence, the Frelimo government made a strong commitment to providing universal education and healthcare, as access to these services had been severely limited under Portuguese rule. However, progress could not be achieved, as around 60% of the primary school network—roughly 5,700 primary schools—were destroyed or closed during the civil war. Since the end of the conflict there has been a substantial improvement in both the quantity and quality of education provision. As part of the government's poverty reduction strategy, spending on education has risen sharply, reaching 19.8% of budgeted expenditure in 2006. As a result, the number of enrolled students has risen from 1.2m in 1992 to 4.8m in 2006, of whom 4.25m were in primary education. Thanks to these efforts the male literacy rate has risen from 49% in 1990 to 77% in 2004 and the female literacy rate from 18% to 49% over the same period. Overall, the adult literacy has risen to 47% in 2004, from 34% in 1992. However, at least 500,000 children aged between six and 12 are not attending school

  In 2006 the government launched a ten-year Action Plan for Accelerated School Construction, which by the end of its first year had built 526 new schools—452 primary and 74 secondary—creating places for an extra 300,000 pupils. The Ministry for Education estimates the plan's total cost at US$3bn, equivalent to US$300m per year, most of which is expected to be financed by donors. The overall aim is for every Mozambican child to receive full primary education by 2015, in line with the country's Millennium Development Goals (MDGs). As the percentage of children attending school has risen from 50% in 1999 to 83.4% in 2005, the government has a good chance of achieving its ambition.

  Number of schools and pupils
  				% change
  	2003	2004	2005	2004/05
  No. of schools
  Primary level 1	8,071	8,373	8,696	3.9
  Primary level 2	950	1,116	1,320	18.3
  Secondary level 1	125	140	156	11.4
  Secondary level 2	29	30	35	16.7
  Total	9,175	9,659	10,207	5.7
  No. of pupils
  Primary level 1	2,825,971	3,071,564	3,393,677	10.5
  Primary level 2	355,618	409,279	536,403	31.1
  Secondary level 1	141,795	168,798	311,716	84.7
  Secondary level 2	18,291	21,350	44,768	109.7
  Total	3,341,675	3,670,991	4,286,564	16.8
  Sources: Draft Programa Quinquenal do Governo 2006-10

  Download text file (csv format)

  The lack of teachers is a major constraint

  However, the lack of teachers is proving a major constraint on improving educational standards. As student numbers have risen, so has the pupil/teacher ratio, from 62:1 in 1999 to 74:1 in 2005. This is set to worsen as, according to the government, 17% of teachers were infected with HIV/AIDS in 2003, which is expected to lead to the deaths of 9,200 teachers by 2010. In addition, an estimated 44% of primary school teachers have no training.

  To address these issues, in 2007 the government plans to launch the "10 plus 1" plan, which will enable students who complete tenth grade to attend teacher training for only one year before receiving their qualification, rather than the current two years. The government hopes this will increase the number of primary teachers trained each year from 3,500 to 6,000. In addition, the government recruited 9,000 new teachers in 2006, as well as 32,000 "literacy teachers", who will teach 695,000 adults to read and write. Overall, the government plans to double the number of teachers over the next ten years, from an estimated 63,490 (of all levels) in 2005 to 144,295 by 2015, reducing the pupil/teacher ratio to 65:1 in 2010 and 54:1 in 2015.

  Higher education is sparse

  As a result of the paucity of technical and vocational training, there is a serious shortage of skilled labour. Mozambique has two public universities. Eduardo Mondlane University, located in the capital, Maputo, is the largest. The Catholic University of Mozambique was established in 1996 with two faculties, economics and management, in Beira, and law in Nampula. The Pedagogical University in Maputo is a teacher-training college, and there is one private university, the Instituto Superior Politecnico e Universitario. In addition, feasibility studies have been completed for the opening of higher education institutions in the provinces of Manica, Tete and Gaza.

  April 02, 2007

• Structure

  Mozambique: Economic structure

  Data and charts: Annual trends charts

  
  

  

  March 22, 2013

• Outlook

  Mozambique: Country outlook

  Mozambique: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: The ruling party, Frente de Libertação de Moçambique (Frelimo), is set to dominate the political and economic landscape throughout the forecast period. The president, Armando Guebuza, who was re-elected (standing unopposed) as Frelimo president at a party congress in September 2012, is keen to retain political power after the end of his second and final term as state president in late 2014. He will seek to put forward a close ally, and one he can influence, as the Frelimo candidate at next year's presidential election. However, Frelimo's candidate (who should easily win) needs to be selected by the party's 190-strong Central Committee, most likely before the end of 2013, and perhaps even at its next meeting in April. Mr Guebuza's rivals, who remain influential within the Central Committee, could unite behind another candidate. They successfully voted Aires Ali, the then prime minister and Mr Guebuza's perceived favourite, out of the 17-member Political Commission at the party congress, in effect removing his chances of contesting the presidential poll.

  ELECTION WATCH: Municipal elections are due in November 2013 and will be most fiercely disputed in Beira and Quelimane, the only two (out of 43) city councils that are not currently controlled by Frelimo. The next national election, due in late 2014, should be comfortably won by Frelimo, which can rely on a strong party machinery and membership base. This will make it hard for the weak opposition parties to channel growing popular dissatisfaction with the Frelimo elite. Renamo's demographic support base--rural populations in the centre and north--is eroding or turning away from politics, frustrated with the leadership of Afonso Dhlakama, who is viewed as being out of touch and whose bellicose threats largely fail to resonate with public opinion. Renamo is also losing talent and support to a new challenger, the Movimento Democrático de Moçambique (MDM). Despite its commendable management of the Beira and Quelimane municipalities, the MDM lacks the historical legitimacy and popular and financial backing to represent a credible government alternative.

  INTERNATIONAL RELATIONS: Bolstered by its natural resource potential, the government is seeking a more prominent position internationally. Mozambique is set to reduce its aid dependency on the back of rising mining royalties and in response to stagnating aid flows, which are a reflection of economic austerity in donor economies as well as growing donor concerns about standards of governance in Mozambique. The government will become more assertive towards donors and its historical partner, Portugal, including on issues such as migrant workers. Nonetheless, strong commercial, political and personal ties will ensure continued close relations with Portugal. Ties with South Africa, Mozambique's main trading partner, will remain strong, driven by foreign direct investment (FDI) inflows and long-standing commercial links. Investment from China, Brazil, India and Australia, particularly in railways and mining, will help to strengthen ties with those countries. Sizeable gas reserves will attract major foreign investors in liquefied natural gas (LNG) facilities and related infrastructure, while also bringing forward new trading partners, especially among Asia's major LNG-importing countries.

  POLICY TRENDS: Policy during the early part of the forecast period will continue to be guided by the three-year policy support instrument (PSI) agreed with the IMF in June 2010, as well as the government's five-year strategy paper, Programa Quinquenal do Governo para 2010-14. The PSI aims to keep the primary deficit stable and to guarantee public debt sustainability, while also improving public financial management and banking supervision. We expect broad policy continuity under a new PSI that is likely to be agreed upon in the second half of 2013. Infrastructure programmes will aim to address structural poverty and major social and regional inequalities. Policy will increasingly focus on the management of Mozambique's natural resources boom. Resource rents from coal mining will begin to have a significant impact on state revenue from 2013.

  ECONOMIC GROWTH: While the full consequences of the January floods are still being assessed, we have lowered our 2013 economic growth forecast to account for their adverse impact on agriculture, transport, electricity generation and the coal sector. We now expect real GDP growth, estimated at 7.4% in 2012, to slow to 7% in 2013 (previously 7.8%), before gradually accelerating, to 8% a year in 2016-17. Coal mining and investment in new transport infrastructure will drive economic growth throughout the forecast period. Increasing LNG investments will lift the growth rate further from 2015 onwards, although we do not expect production to begin until 2018 at the earliest. Transport, communications, tourism, industry and financial services will continue to grow strongly. While agriculture will benefit from investment in commercial cash crops, growth in the traditional smallholder sector is likely to remain subdued.

  INFLATION: Annual average inflation, as measured by the consumer price index of the capital, Maputo, moderated to 2.1% in 2012 on the back of a good local harvest, declining international food prices and monetary tightening in late 2011. However, in January heavy floods destroyed crops and disrupted transport, leading us to revise up our inflation forecast for 2013 to 6.4% (previously 5.5%). The BDM's more expansionary monetary policy, a one-off increase in the price of public transport and currency depreciation will further support inflation. Assuming normal weather conditions, inflation will ease to 5.5% in 2014, before edging back up to an average of 6.5% in 2017, driven by rising international oil prices and growing domestic demand. Major disruptions to the local or regional food supply could lead to upward revisions to this forecast.

  EXCHANGE RATES: In line with a downward revision to our forecast for exports and investment inflows, we now expect the metical, which averaged MT28.4:US$1 in 2012, to weaken in 2013-15, to an average of MT30.6:US$1 in 2015. Supported by an improving trade balance and investment in the gas sector, the metical will nudge back up towards the end of the outlook period, to MT28:US$1 in 2017. The major risks to this outlook are that a global drop in demand for the country's mineral exports could lead to a fall in the price of Mozambique's main exports or cause the investment boom to stall. In that case, however, intervention from monetary authorities is likely owing to fears about the risk to social stability from imported inflation.

  EXTERNAL SECTOR: After falling in 2012, the price of aluminium--currently Mozambique's largest source of export revenue--is expected to slowly nudge up throughout the forecast period. Production is expected to fluctuate around an average of 560,000 tonnes per year, masking some variations related to changes in domestic consumption of aluminium. Coal, Mozambique's second-largest source of export revenue since mid-2012, could top aluminium by 2015. However, owing to ongoing infrastructure constraints, we expect export volumes to grow from 4m tonnes (previously 5.2m tonnes) in 2013 to 19.5m tonnes in 2017. Assuming an upward trend in coal prices, export receipts from the commodity could reach US$3.5bn that year. Gas, currently only exported through a crossborder pipeline to South Africa, will become a major source of export earnings after 2018. Agricultural export volumes, especially tobacco, cotton and cashew nuts, will increase in response to investment in the sector. Overall, we expect total exports to rise from an estimated US$3.8bn in 2012 to US$8.5bn in 2017.

  March 28, 2013

• Forecast

  Mozambique: 5-year forecast summary

  Outlook for 2013-17: Forecast summary

  Forecast summary
  (% unless otherwise indicated)
  	2012a	2013b	2014b	2015b	2016b	2017b
  Real GDP growth	7.4	7.0	7.5	7.8	8.0	8.0
  Consumer price inflation (av)	2.1	6.4	5.5	6.0	6.2	6.5
  Lending interest rate (%)	16.9c	17.5	18.0	18.0	17.5	17.0
  Government balance (% of GDP)	-4.4	-7.0	-7.3	-6.9	-6.4	-6.0
  Exports of goods fob (US$ m)	3,791	4,256	4,994	5,866	7,097	8,523
  Imports of goods fob (US$ m)	-5,495	-6,199	-7,003	-8,115	-9,412	-10,834
  Current-account balance (US$ bn)	-2,493	-2,848	-3,271	-3,918	-4,553	-5,307
  Current-account balance (% of GDP)	-18.5	-19.0	-19.0	-19.6	-18.5	-17.5
  External debt (year-end; US$ bn)	4.6	5.4	6.4	7.4	8.7	10.2
  Exchange rate MT:US$ (av)	28.4c	30.0	30.4	30.6	29.4	28.0
  Exchange rate MT:¥100 (av)	35.5c	32.3	32.2	31.8	30.2	29.0
  Exchange rate MT:€ (av)	36.5c	39.9	39.9	38.9	37.0	35.3
  Exchange rate MT:SDR (av)	43.8c	45.7	46.0	45.7	43.7	41.7
  a The Economist Intelligence Unit estimates. b The Economist Intelligence Unit forecasts. c Actual.

  Download the numbers in Excel

  Download text file (csv format)

  March 22, 2013

View detailed map

Country Briefing

Land area

799,380 sq km

Population

23m (2012, World Gazetteer estimate)

Main towns

Population, 2012 (World Gazetteer):

Maputo (capital): 1,966,674 (a)

Nampula: 575,587

Beira: 441,723

Chimoio: 272,875

Nacala: 230,229

Quelimane: 212,519

Tete: 181,806

Pemba: 174,517

(a) Including Matola and Maputo province

Climate

Tropical and subtropical

Weather in Maputo (altitude 59 metres)

Hottest month, February, 22-31°C (average daily minimum and maximum); coldest month, July, 13-24°C; driest months, July, August, 13 mm average rainfall; wettest month, January, 130 mm average rainfall

Languages

Portuguese (official) and three main African language groups: Makua-Lomwe, Tsonga and Sena-Nyanja

Measures

Metric system

Currency

Metical (MT)

Time

2 hours ahead of GMT

Public holidays

January 1st (New Year's Day), February 3rd (Heroes' Day), April 7th (Women's Day), May 1st (Labour Day), June 25th (Independence Day), September 7th (Victory Day), September 25th (Armed Forces Day), November 10th (Maputo City Day-Maputo only), December 25th (Family Day)

January 17, 2013