online version available www.ecdpm.org/great at Volume 1 Issue 10 December 2012 TRADE ECONOMICS REGIONAL INTEGRATION AGRICULTURE GOVERNANCE

Regulars ...... Thematic Focus: 1 Editorial ...... 20 EPA Update Africa at a Turning Point? ...... 21 Monthly highlights from ECDPM’s The Case of Mozambique Talking Points ...... 21 Monthly highlights from ECDPM’s Exclusive interview with President Guebuza Weekly Compass newsletter ...... Africa is on the move. This is reflected 22 Calendar and resources for instance in strong economic growth that remained at around 5 per cent in Features spite of the global economic slow down; ...... but also in terms of gradual structural 2 Interview with President Guebuza of transformation, as recently documented Mozambique by the IMF. This gives rise to a legitimate ...... new sense of Afro-optimism, first and 3 EU Support to Mozambique foremost among Africans, but increasingly Paul Malin among international investors, notably from ...... emerging economies. 5 Mozambique: Between Stagnation and Growth António da Silva Francisco Yet, challenges are numerous. From South ...... Africa to Nigeria and Egypt, the traditional new dream and great economic potential? 7 Mozambique, Aid and Foreign Invest- African powerhouses have been confronted How will agriculture be developed? How ment: Trapped between Scylla and internally with diverse social, political, many and what kind of jobs will be created? Charybdis? Isabelle Ramdoo institutional and security turmoil. Poverty What is the vision of the government? And ...... and inequalities remain high in most African how can the international community best .8 The Recent Natural Resource Hype countries, while basic principles of good contribute to a positive transformation in in Mozambique: Putting it into Context governance are still too seldom pursued. Mozambique? Will donors still have a role, Gregory de Paepe and if so what will it be? ...... How can African countries, some of which 9 Mozambique at a Turning Point: remain among the poorest in the world, best While addressed in the context of from Aid Dependence to Development tap new opportunities to pursue effective Mozambique, these are issues that Effectiveness? Francesca Bruschi inclusive and sustainable growth? This reflect some of the potential and existing ...... has been an underlying theme in ECDPM’s challenges that all of Africa is confronted 11 Mozambique: Ready for a Rollercoaster new GREAT Insights, ranging from African with. Ride? Marc de Tollenaere ambitions towards regional integration ...... and trade linkages for development, to To shed light on some of these questions, 13 Has the Business Environment in ways and means to mobilize domestic this issue of GREAT Insights features Mozambique Improved during the resources, to harness private sector forces for an exclusive ECDPM interview with the Past 10 years? John Rand & Søren Schou development, and to unleash the potential Mozambican President Armando Emilio ...... of natural resources like agriculture and the Guebuza, who highlights some of his 15 The Maputo Corridor: Regional Inte- extractive sectors to stimulate balanced and ambitions and priorities for his country. In gration that Works Barbara Mommen sustainable development. addition, Mozambican and international ...... experts and officials share some of their 17 Mozambique’s Agriculture and Brazil’s For this last issue in its first year of insights on the various dimensions of the Cerrado ‘model’: Miracle or Mirage? publication, GREAT Insights focuses on development opportunities and challenges Lídia Cabral et al the case of Mozambique as an illustrative facing Mozambique...... example of an African country that has 19 Economic Growth and Ecological recently experienced high economic growth We would like to take this opportunity to Demise? Questions for Africa’s Marine and discovered vast extractive resources. thank all the contributors to GREAT Insights Ecosystems Alex Benkenstein How will the country tackle the challenge this year for sharing their perspectives in a of structural transformation in the coming candid and insightful manner, as well as the years? How can natural resources windfalls institutions that have joined us to produce be turned into a blessing and will the curse thematic issues of GREAT Insights. As always, European Centre for Development be avoided? Will the benefits be captured we welcome your suggestions, comments Policy Management by the ruling elites or will they effectively and contributions, and thank you all for your contribute to alleviating the endemic interest in the issues raised in this magazine. poverty and extreme inequality that characterize the Mozambican society today? In particular, how can the still mostly rural population share parts of the Mozambican San Bilal GREAT Insights Volume 1 | Issue 10 | December 2012 Governance, Regional integration, Economics, Agriculture and Trade Interview with President Armando Emílio Guebuza

of Mozambique

What does the recent discovery of to need more business and commercially important natural gas fields mean for oriented relations with those countries that development in Mozambique? have traditionally provided development The revenue we gather from these resources funding. It will shift as time passes; in about will complement the ones we currently enjoy 10 years time we will not be relying on from natural resources. The government will donations like we are today. We can expect a benefit from these revenues, and as a result gradual shift in the focus of the relationship. the people of Mozambique will also see the benefits in their daily lives. Secondly, it will How do Brazil, China and other emerging create conditions for Mozambicans to have players fit in that picture? more jobs, and particularly skilled jobs. We We connect with these countries. It is an will make sure training takes place to allow experience we did not have before. We do an increasing number of Mozambicans to nurture that relationship: they are investing work in this area. Thirdly, it will continue in Mozambique, creating more jobs, giving us to create problems of development – knowhow, and increasing trade. sustainable and inclusive development that is. This is one of our concerns, and we have to And in terms of regional integration with take appropriate measures counter this. And other African countries Mozambique finally, we are going to be on international is involved in the Southern African country so that your resources are better markets, increasing our international Development Community, in the Tripartite managed? exposure, raising the profile of Mozambique. Free Trade Agreement – what are your The thing is that I do not agree with that ambitions in the region? What do you try characterisation. This is just talk. How do you plan to transfer this wealth to to achieve with the multi-approach to the broader population, and link it to job regional integration? But Transparency International ranks creation? What is the plan to develop value We try to take advantage of the capacities Mozambique 120th on the corruption chains around these resources? and abilities that our partners and perception index. What is your We have created a state owned company neighbours offer, and at the same time government’s position on this? tasked with deal with developing upstream provide them with what we have to offer Whoever might be saying this, it is just talk. and downstream links. This company will ourselves. Increasing the trade relations I am not saying we have perfect governance encourage the private sector in Mozambique between African countries is key. We easily or that we have no corruption. We have to develop around the gas sector, a sector trade with Europe, the Far East and America, institutions that address these exact issues. that provides many business opportunities. which is good, but we need to trade with our These institutions do have problems, but We will also attract foreign investment, in neighbouring countries much more. they are working on them, improving the conjunction with Mozambicans, to develop way they tackle corruption. Our purpose is to the industry. The government as such is There were talks in the past of Mozambique work fast, but they don’t work as fast as you engaging with different companies and joining SACU. Is that still on the agenda? would like. But they are getting more and also using its own resources to increase our I do not know who talked about that! No, we more responsive, and have improved greatly. capacity to train people in high-tech, high- do not envisage this. What we do is try to We will continue to invest more in this area. skilled areas. learn and see how the Customs Union model We now have trained judges in almost all is working, and learn from that. Mozambique districts, a thing we did not have in the past. Our universities today are redirecting their is one of the countries that do not belong to curriculum in order to have more people several Free Trade Areas or Customs Union at You have been re-elected as the head of qualified for these new demands. But at the the same time. Overlapping membership can Frelimo, the ruling party. In the past, and same time, we are also sending people to do be counterproductive. traditionally, the Head of the Party and the their Masters and Undergraduate degrees President were the same people, but you abroad. Education is central to the effort. You are still negotiating Economic will not run for another term. Do you think Mozambique, at the time of independence, Partnership Agreements (EPA) in the SADC this will have political consequences? had only one university. Today we have 43 configuration. Do you expect a regional The Party is one thing, the Government of them. Education has improved, but, of deal soon? What will it take? another. The Government has to keep on course, it is not enough. It is concentrated on We will reach an agreement by 2016; at least working whatever happens. The party, for social studies. We need to have a shift. Not I hope so. We are pushing things so that we its part, is able to analyse and respond to necessarily reducing social areas in and of can address the issues are not resolved yet. new situations without being part of the themselves, but increasing the focus on more problem, and come up with constructive technical topics. And should South Africa or other partners solutions to whatever the matter might be. I in the region decide not to conclude an will not run again for elections, so in any case Mozambique has traditionally been quite Economic Partnership Agreement, would there will be a new head of state. But I am reliant on development assistance from Mozambique still sign an EPA? confident Frelimo will win the elections. donors. Now that you are discovering new I do not know why I should doubt their wealth and new resources, how do you intentions. We are discussing these issues think your relationship with development together. This interview was conducted in Brussels partners should evolve, notably with the on December 16th. It has been edited and EU? One of the key questions in Mozambique is condensed. I believe the relationship has to continue. But how to improve governance. Mozambique the relationship will probably change in the is still troubled with corruption problems sense that as time goes on, and as we have and lack of transparency. What is your more resources in our budget, we are going plan to improve the situation in the

2 www.ecdpm.org/GREAT GREAT Insights Volume 1 | Issue 10 | December 2012 Governance, Regional integration, Economics, Agriculture and Trade EU support to Mozambique Paul Malin

This is a fascinating time to be in Mozambique as the European Union (EU) plans its assistance for the years 2014-2020, under the 11th European Development Fund (EDF). The economy is on the move and one of the poorest countries in the world could graduate to middle income status within the next two decades. From being one of the most aid dependent countries, Mozambique should be able to support itself. The European Union can play a role in accompanying that transition.

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There is little doubt that the Mozambican peace was established, the Government bud- major constraints in terms of human economy will grow on the back of natural get was small and three quarters financed by capacity, limited infrastructure, over-regu- resource discoveries. The question, however, donors who set priorities by their spending lation and endemic corruption that we are is who will benefit? Will a resource curse of choices. Now, the government budget is planning EU assistance for the 11th EDF. This limited benefits, rent seeking by elites, high prudently managed and increasingly well is not a time for a premature with-drawal of exchange rates and import dependency accounted for. It is an instrument for sound aid, but rather to consolidate the gains made result? Or will revenue be shared and macro-economic management and poten- and help set the course for the next decade. employment created in agriculture and small tially a powerful instrument for provision of Europe, the EU and its Member States, is not businesses? social services and transfers to the poor. It is just the largest donor of aid to Mozambique, financed by growing domestic revenues and providing 80% of aid as President Barroso Impressive progress the donors’ share has fallen rapidly, from half emphasised on his visit in July, but also a 5 years ago to 40% this year and a planned major trading partner and investor. There The experience of the past 20 years has been 33% next year. Volumes of aid have been high is common cause between the European very positive. Since the conclusion of the and largely stable despite economic crisis in Union, European Governments and European General Peace Agreement and the ending of Europe. This has been achieved through prio- investors on the need for an appropriate a civil war, Mozambique has been recover- ritising Mozambique over less poor and less ing and growing at a fast pace, albeit from a well performing countries. The prospect is of very low base. After 30 years of support to substantial revenues from gas coming on- Mozambique, the European Union can share stream from the end of this decade and for in the credit for the advances made and can Mozambique to graduate from aid depen- As donor influence help shape the future. With extensive exter- dence. inevitably declines, nal aid, poverty has been reduced and the basis for a take off of the economy has been Limited progress on Governance the case for macroeconomic laid. 69% of the population was considered stability, simpler rules and poor in 1997 and 54% in 2003. Since then, While the economy may be changing rapidly, however, poverty reduction in terms of the political system is resistant to change. A stronger legal protection will consumption has stagnated even if access to multi-party democracy exists in which many be made by the private sector health services and schooling has continued of the practices of the one-party era continue. to improve dramatically. The Millennium Access to information is limited and accoun- Development Goals on child mortality and tability mechanisms weak. There is confusion gender equality are likely to be met. Net between party and state and dominance of enrolment in primary education has more the executive in which the judiciary and than doubled to 92%. Yet, high rates of ma- legislature are weak and the space for op- basis for development founded on good ternal mortality, chronic malnutrition among position is circumscribed. This analysis is not governance, democracy and respect for the children and of HIV/ AIDS as well as environ- just that of the European Union, but has been rule of law. As donor influence inevitably mental vulnerability and exposure to climate well identified by Mozambicans themselves declines, the case for macroeconomic stability, change demonstrate the enormity of the as part of the African Peer Review Mechanism. simpler rules and stronger legal protection development challenge that remains. The security apparatus is weak and this is will be made by the private sector. Donors conducive to cross-border crime and leads to like the European Union should work with EU Budget Support to Mozambique human rights abuses. Government to promote sound economic management, accountability mechanisms The EU has provided a large part if its aid to and the sharing of benefits through growth Mozambique in the form of budget support. The EU’s approach to the 11th EDF that creates employment and a budget that We are currently reviewing its impact, but I provides social services and a safety net for would argue that the benefits are clear. When It is against this background of high expecta- those who may be left out. I first worked on Mozambique, soon after tions of rapid economic change, but

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We are still discussing with Government Agriculture for inclusive growth spreads out from cities and towns. Mozam- how the 11th EDF will look. Government bique is a place of constant debate about the have a poverty reduction programme which As part of our support to Government, Europe future, a laboratory for pilot programmes and identifies well the priorities. Based on the can also be a champion of agriculture. Our the focus of new initiatives. Most of all it is European Commission’s “Agenda for Change”, past experience in the sector is not encou- a testing ground for strategies to grow an it is clear that we will concentrate on fewer raging, as overly ambitious and centralised impoverished economy and share the wealth sectors, focus on achieving results in poverty initiatives dependent on Government had lit- equitably. Europe seeks to place itself among reduction and inclusive growth and mobilise tle impact on productivity, even as production those who make a hard-headed analysis of as appropriate grants and loans to respond to increased through increased cultivation. Ho- needs. Where the European Union managed wever, with three quarters of the population programme cannot respond to key priorities, dependent on agriculture for their livelihoods, European Member States will be present, as inclusive growth is only possible with growth may be the case in areas such as education in agriculture. There are many signs of vitality and health. in rural areas in Mozambique as commu- Most of all it is a nications improve, local infrastructure for testing ground for Towards better management storage and commercialisation is developed, finance is made available and the private strategies to grow an Europe has the weight as a donor and the sector expands. The potential for increased impoverished economy knowledge as an agency to contribute to a production is enormous. Only 15% of the Government budget that manages funds arable land is cultivated. The growing range and share the wealth more effectively and can act as a mechanism of higher value products being produced and equitably. for re-distribution of wealth. The challenge traded is showing the way. The EU supports of inclusive growth means that increasing the Comprehensive African Agriculture transparency and accountability have to Development Plan (CAADP) and will seek to be ensured. The political culture may not bring public and private sectors together and be conducive, but the Government’s com- focus on spreading the benefits and ensuring the risks, who understand the constraints mitment to achieving compliance with the the participation of poorer farmers. Safety of an economy with such limited domestic Extractive Industries Transparency Initiative nets for the most vulnerable will be neces- capacity, but who are also optimistic about (EITI), confirmed on 26 October, is a powerful sary. With agriculture greatly dependent on the prospects for success. Mozambique offers sign that Mozambique intends to take the the work of women, a focus in this sector can the chance for Europe not just to contribute right path. Publication of contracts for natural also be a focus on increasing gender equality to the development of others, but as the eco- resource development is part of the new and giving economic reality to the equality of nomy continues to grow at nearly 8%, to take minerals legislation and civil society takes a rights enshrined in Mozambican law. a stake in that growth through European in- growing and informed interest in revenues vestments generating revenue to bolster our from natural resources. Increased wealth Spreading the wealth own faltering economy. At a time when aid is brings increased incentives for rent seeking being increasingly questioned and the pres- and opportunities for corruption, so Europe is The good fortune of the North and Centre of sure for value for money in all areas of public supporting strengthening the legal basis for the country to have minerals and gas may expenditure is intensified, the case for using action against corruption and the capacity to counter a tendency to development centred of public funds to promote the development implement it. While we are often impa- on the capital, Maputo, and the South of the of Mozambique is stronger than ever. country and actually lead to more balanced growth. However, if Mozambique is to avoid creating islands of development, infrastruc- ...... Mozambique is a ture development has to promote not just case in which we natural resources, where the overwhelming Author pressure of private sector investment is ma- advise caution to proceed king itself felt, but also access to markets and Paul Malin is Head of the European Union with natural resource services for rural areas to increase agricultu- Delegation in Mozambique ral production. Inclusive growth means em- ...... developments only when ployment creation for the many and this will the best deals for the be an aim of the European Union through increasing access to energy, addressing skills Mozambican people can gaps and the provision of financial services. be ensured. Partners in development

For someone like me with experience in development going back 30 years it is tient to see change in our partner countries, invigorating to work in a country where the Mozambique is a case in which we advise regional linkages that have been planned caution to proceed with natural resource de- over decades are finally starting to function, velopments only when the best deals for the where progress is visible and rapid. There Mozambican people can be ensured. Prepa- remain parts of the country largely unchan- ring Mozambique to manage well increased ged since peace was established 20 years wealth is a key objective. ago, but they are shrinking as infrastructural links are completed and the market economy

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Mozambique: Between Stagnation and Growth António A. da Silva Francisco “Moçambique is maningue nice” has become an increasingly popular expression, especially within the urbanized Mozambican elite. However, the positive and promising image contrasts with another image, also true, but very different and not at all pleasant; the “Mozambique maningue nasty” concept, illustrated by the fact that about 60% of the population lives on less than $ 1.25 per day, while only less than 20% has more than $ 2 per day.

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Mozambique: maningue nice or… dominates rural Mozambique: low level take their desires, aspirations and interests maningue nasty? of productivity, lack of technology and as realities, and then take decisions or follow consequently very low production and options based on these desires, instead of Part of the expression’s popular appeal comes taking them on the basis of facts. from the fact that a rather brief sentence comprising four words mixes up three The first approach, whether optimistic or different languages relevant in everyday life. “Sadly, […] wishful pessimistic, can be called realistic. Regarding Besides the Portuguese word “Moçambique”, thinking has become the latter, one can only designate it as the official language, there is the word “wishful thinking”. In extreme forms it is “maningue”, meaning “very” in one of several the dominant a kind of self-illusion; in milder forms, an languages of the south of Mozambique, ideology in Mozambican unwarranted optimism. In its most absurd and the English word, “nice”, the dominating form, the approach consists of trying to make lingua franca in southern Africa. policymaking, amongst things happen merely by wishing for them political leaders, the to happen. Sadly, this last form of wishful No doubt. That Mozambique is “very nice” is thinking has become the dominant ideology not a mere nationalist imagination. It is real. Government, and donors in Mozambican policymaking, amongst Besides its idyllic landscapes, Mozambique is alike.” . political leaders, the Government, and donors one of the richest Southern African countries alike. due to its natural resources. Mozambique has also a privileged geo-strategic location, as An illustrative example of the current it provides access to the Indian Ocean to its income. Throughout the first decade of this Mozambican “wishful thinking”, converted landlocked neighbours. Furthermore, at least century, the daily average rural income was into the official ideology of the regime, in the past two decades, the formal economy about 10 Meticais (MT) per capita (circa 30 can be found in the recent speech held by has exhibited high rates of growth and is cents of an American dollar (USD), against a Armando Guebuza, President of Mozambique, expected to sustain buoyant growth in the median income of only 4 MT (approximately delivered in Brussels, on last October 16. future. 13 cents of an USD), suggesting that Particularly revealing is the concept of inequality is on the rise. “redistribution of wealth”, which Guebuza The “Mozambique maningue nasty” chose as an illustration of an experience concept refers to an entirely different reality. The contribution of the rural economy to “Made in Mozambique”. Rural Mozambique for example, which the national income, estimated by the Gross represents between 65 to 70 percent of the National Income (GNI), might have only been “For us, in Mozambique”, said Guebuza, “this total population, is mostly in an incipient a quarter of the total GNI or so. In other concept is translated into the empowerment demographic transitional phase. While the words, while the rural Mozambican produces of citizens for them to do their share in the mortality rate decrease began in the first an annual income of about US$ 120 per fight against poverty, because wealth is half of the twentieth century throughout capita, the urban or urbanizing Mozambican produced through work and one can only the whole country, the fertility transition is generates an annual wealth around ten distribute what one has”. To this, Guebuza occurring only in some parts of the urban times higher: about US$1100 per capita.1 added another very much cherished concept area. In fact, the total fertility rate remains among donors, “inclusive development” by above five children per woman of which; 6.6 Realism versus Wishful Thinking stating that, “… we identify the actions which children per woman in rural areas compared lead to the integration of more citizens in to 4.5 children per woman in urban areas. The two contrasting images of Mozambique the nation’s social and economic life, thus highlighted above inspire a multiplicity becoming active agents of their development The current slow demographic change is of analytical representations, opinions and its primary beneficiaries”. 2 consistent with a virtually stagnant rural and interpretations leading to different economy, predominantly dominated by perceptions and approaches. While some To be even more convincing to the audience, a primitive and precarious subsistence observers and analysts try to adapt their the Mozambican President illustrated his production. A Malthusian regime still representations to reality, others choose to views on Mozambican redistribution of

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wealth and inclusive development referring in mind that in international financial jargon the quagmire of economic stagnation and to the “decentralized financial resources to they are also living in a “junk” environment. financial bankruptcy, determining what other the rural districts … aimed at generating political and economic instruments can be employment and food production, also known Mozambique at a Turning Point? used remains the question. This is in fact the as the “7 million Fund”, approximately EUR big challenge that Mozambique is facing at 200.000”. There are several reasons to believe that this crucial time in its history. Mozambique is at a crucial turning point In reality, this has been a rather exceptional in several areas, but pointing in different Notes ad hoc financial funding, very much directions. It is always possible to improve centralized and monitored by the President and distribute wealth and available 1 Francisco, A. & Muhorro, S., 2011. Pauperização himself, allocated mainly to the districts linked resources better. What is more difficult, if Rural em Moçambique na 1a Década do to the Frelimo Party. In fact, these districts not impossible, is to distribute the wealth Século XXI. IDeIAS, Boletim No 34, 8 de Abril. are still ruled on one party basis, as they we have failed to produce and do not have. Available at: www.iese.ac.mz/lib/publication/ continue to be administratively ruled by the Not totally impossible, because in the case outras/ideias/ideias_34.pdf, and World State, without ever holding local democratic of Mozambique, the State and its Executive Bank, 2012. The World Bank: Data, Indicators. elections, contrary to what is prescribed by the have so far managed to distribute more than Available at: http://data.worldbank.org/ Constitution of the Republic. Mozambican society produces, thanks to indicator/SI.POV.DDAY?display=default donations provided by developed countries. 2 Guebuza, A., 2012. Speech by Armando Even when people do not call the “wishful Emílio Guebuza, President of the Republic thinking” approach by its name, it is easily However, without a sound economic and of Mozambique, Brussels, 16 October 2012. recognizable. One only has to pay attention financial framework, we will not be able to Eudevdays.eu. Available at: http://eudevdays. to the words, actions and attitudes of reduce poverty and promote the social and eu/node/5280 protagonists. In relation to the previously economic development that high growth 3 IMF, 2012. Republic of Mozambique: Fourth mentioned speech, those who looked forward rates have failed to do. Review Under the Policy Support Instrument to seeing President Guebuza outline his and Request for Modification of Assessment plans to manage the revenues from the In a recent study, the author of this text has Criteria. Country Report No. 12/148. mining sector had plenty of reasons to leave shown that the initiatives associated with the International Monetary Fund (IMF). Available the event disappointed. Citizens of Europe IMF’s Poverty Reduction Strategy Paper (PRSP at: www.imf.org/external/pubs/cat/longres. certainly did not find in the empowerment, and PARPAs in Mozambique) and with the UN aspx?sk=26002.0 employment and growth rhetoric provided (United Nations)’s Millennium Development 4 S&P, 2012. Ratings on Mozambique Affirmed by the Mozambican President, any inspiration Goals (MDGs) helped Mozambique to avoid at “B+/B”; Outlook Stable. Santandard & for their own struggling economies, or any the Failed State status, but will not free the Poor’s. Available at: www.standardandpoors. examples from the so-called Mozambican country from the country’s three-decade long com/prot/ratings/entity-ratings/en/us/?entit macroeconomic stability. state of Quasi-bankruptcy.5 yID=277554§orCode=SOV 5 Francisco, A., 2012. Política Pública e Unfortunately, when the International Now, a new initiative called the Social Intervencionismo: Porque Existe o PARP Monetary Fund (IMF) evaluates the Protection Floor (SPF) is said to aim at em Moçambique? In L. de Brito et al., eds. performance of Mozambican economy, replacing and continue the existing initiatives, Desafios para Moçambique 2012. Maputo: it often does so in a rather complacent namely the MDGs that go up to 2015. Its 259-294. and patronizing stance, as the following success will most probably depend on the 6 EC, 2012. Communication from the assertion illustrates: “Mozambique continues extent to which they will take reality into Commission to the European Parliament, to weather the global economic turmoil account, particularly the characteristics and the Council, the European Economic and remarkably well”.3 Without being totally structuring nature of prevailing demography Social Committee and the Committee incorrect, this assessment fails to point out and economics dynamics. of the Regions: Social Protection in the true vulnerability to which the external European Union Development Cooperation, accounts of the Mozambican State is exposed, When donors claim, as the European Brussels: European Commission (EC). knowing that it has relied so much on Commission (EC) did last August that “Social Available at: http://ec.europa.eu/ relationships and support from donors. transfer programmes … remain the dominant commission_2010-2014/piebalgs/headlines/ form of social protection with donors often news/2012/08/20120824_en.htm A much more realistic view of the internal and playing an important role in their design and external context was depicted by Standard funding”,6 they are well-intentioned, but dead & Poor last August, when it released its wrong. The reality in Mozambique of today is ...... ‘B+/B’ long- and short-term foreign and that for the time being having many children local currency sovereign credit ratings for is still the main form of social protection in Author Mozambique. First, Mozambique enjoys Mozambique. For all its shortcomings, old a relatively stable outlook, but in a highly forms of social protection need to be the Dr. António A. da Silva Francisco is Associate speculative market environment. Second, starting point of policymaking, rather than Professor of Economic Development at this “stable outlook”, is conditioned on the retracting to wishful thinking. Just because it the Economics Faculty, Eduardo Mondlane expectation that “donor support will continue would be nice if something were true will not University (UEM) in Maputo. He is Instituto de to help fund fiscal and external deficits, strong make it happen. Estudos Sociais e Económicos (IESE) Research economic growth will continue, and the Director. He can be reached at antonio. political situation will remain broadly stable Beyond that, recently the Mozambican [email protected] (…) We may lower the ratings if donor support Government and the IMF have opened a ...... wavers, fiscal or external deficits widen, window of opportunity by accepting to widen inflation returns to double-digit rates, or social the miniscule fiscal space for social protection unrest or political tensions escalate”.4 Even in the State budget. The PRSPs being unfit those who currently live in luxury need to bear to help Mozambique to free itself from

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Trapped between Scylla and Charybdis? Isabelle Ramdoo

Mozambique is set to become a global player in minerals and gas production, paving the way for large autonomous revenues from its extractive sector. In 2011, the first large exports of coal, coupled with strong economic growth, propelled by high foreign direct investment inflows, large infrastructure projects and strong agricultural growth, contributed to the impressive 7.2% real growth rate. In the coming years, the potential windfall gains from coal and gas is expected to reshape Mozambique’s economic and human development.1

New opportunities, new players The Golden Triangle: Balancing of state functions have shown some partnerships for better development positive results. But adapting aid strategies The new economic outlook of Mozambique outcomes to the changing economic and political and the future availability of rents and incentives will be a major challenge both for revenues are expected to have wider political Donors in Mozambique have so far engaged Mozambique and for its partners. This will ramifications, not only at the national level, in budget support modalities with the require fundamental paradigm shifts in their but also within the international community. objective of contributing to strengthening mindset and in their way of engagement. Considered as a donor darling, today, the core of state functions. But the new Mozambique entertains one of the most situation is likely to significantly reduce The way forward elaborate budget support partnerships, with the leverage donors have to influence annual aid flows averaging almost a quarter governance, resulting in the government The new architecture that is setting in place of annual gross national income and direct gaining more autonomy in policy making. calls for new forms of coalition between budget support accounting for almost half This potential swing between budget the Government, the extractive industries the budget (51.4%) until 2010. Since then, support and FDI brings about a fundamental and the donor community. As much as it with new revenues from its natural resources, question. Will investors then be a better is an opportunity for donors to re-think budget support decreased significantly, to trigger for Government to improve the and redefine their engagement with reach 39.6% in 2012 and that trend is likely to delivery of public goods and services or will Mozambique, it calls for the Government accelerate as of 2017 when revenues withering aid carry in its wake weathering to adopt an inclusive approach in order to from hydrocarbon sector will start to flow in. support to institutional building and better generate synergies and complementarities governance structures? with these actors that have so far played a Substantial mineral findings have attracted crucial role or are expected to do so in the significant foreign direct investment (FDI) The challenge for Mozambique will be to future. flows, enough to dwarf aid flows in the manage its partners: it will have to deal with short-to-medium term and ultimately wipe increasing investors courting for the best On the operational side, there has been little them out in the longer-term. Investments possible deals to exploit resources and with coherence and alignment with what the will certainly create opportunities that development partners that will have to engage industries attempt to do on their side to could potentially transform the Mozambican differently. And it will have to juggle with (new contribute to development, with what the economy if the political factors and forms of) engagement with the private sector. donors and the government agree to achieve business climate are favourable to such Traditionally, the track record of engagement together at the national or sub-national level, transformations. They are expected to create with large multinational extractive industries in particular to promote transparency and jobs, augment the capital stock, has not always been positive. Critics have domestic resource mobilisation. Mozambique boost infrastructure and generate revenues. emphasised the fact that extractive industries will need to bring all its partners to the But these are not without risks. have often operated in isolation and have table to engage constructively on concrete contributed little to job creation, to fiscal development outcomes if it wants to tap Past experience in Africa has shown that revenues and to industrialisation. Besides, their onto the value added of each partner. in the particular case of extractive sectors, engagements with the local communities investments by large multinationals have have sometimes been tense, hence the need produced isolated economic sectors, have to engage differently and constructively. Note created little jobs and value addition and 1 See Mozambique: African Economic Outlook have managed to negotiate favourable In parallel, Mozambique will need and will 2012 contracts, and have ultimately contributed receive less aid. But does that mean that insufficiently to government revenues. development partners will suddenly become ...... irrelevant? So far, the extensive experiences within budget support partnerships in Author strengthening gradual institutional reforms Isabelle Ramdoo is Policy Officer at ECDPM

www.ecdpm.org/GREAT 7 GREAT Insights Volume 1 | Issue 10 | December 2012 Governance, Regional integration, Economics, Agriculture and Trade The Recent Natural Resource Hype in Mozambique:

Putting it into Context Gregory De Paepe During the past decade Mozambique posted one of the highest and most sustained economic growth performances in Africa. According to the African Economic Outlook average economic growth over the past decade was 7.2% and is set to increase to 7.5% and 7.9% for 2012 and 2013 respectively, driven by the continuation of high foreign direct investment (FDI) inflows, together with strong agricultural growth and infrastructure investment......

The country’s recent high economic growth The challenge: this objective of economic diversification, the rates have largely been driven by a few, highly structural transformation development of its internal market and, last capital-intensive mega projects, particularly but not least, a better capturing of natural in extractive industries. Following the Central Providing a sustainable solution to both the resource rents by the authorities in order to Bank’s tight monetary policy inflation is unemployment issue and poverty calls for a finance these required changes over time projected to keep decreasing to 7.2% and transformation of Mozambique’s economic and reduce their dependency on external 5.9% in 2012 and 2013 respectively. This good model, from an “extractive economy” financing. performance should result in an average focusing on exporting raw commodities, annual increase of GDP per capita of over 5% towards an economic model that creates Mozambique’s government realizes the for the coming two years. value locally and increases the overall importance of updating the legal, regulatory economic productivity. This will require and institutional framework before the Growth with a limited impact on raising agricultural productivity in parallel actual exploitation of the resources starts. poverty with developing new, labour-intensive and In addition, the promotion of transparency more productive economic sectors, such as and accountability will need to be Despite these high growth figures the impact manufacturing and agro-business to absorb secured in order to avoid corruption and on poverty reduction has been limited, as excess labour from agriculture. mismanagement of resources down the road. shown in the last household budget survey. Very important, but often underestimated, In addition, it diverts away the attention to So far Mozambique has failed to embark is the need to ensure broad participation the country’s longstanding dependency on on this positive structural transformation. in decision making processes, in particular foreign financial flows and its weak human However, the exploitation of one of the with regards to the needs of the local capital. Although slightly decreasing, the world’s largest unexplored coal reserves communities. The recent frictions between share of ODA in the government’s budget is in Tete province since 2011 and, potentially Vale and the resettled villagers from still projected to be close to 40% in 2012. FDI much more important, the discovery of huge Cateme are a case in point that could have has mainly served enclave industries such as offshore natural gas reserves in the Rovuma been avoided through better dialogue and mining and has not lead to the development Bassin, North of Mozambique , in 2012 have managing local expectations. of a diversified productive base. The gradual the potential of initiating Mozambique’s increase of manufacturing as a share of industrialization process, through judicial In conclusion, Mozambique is greatly GDP mainly reflects the impact of MOZAL’s investment. Conservative estimates of future endowed with a wide variety of natural output, the largest aluminum producer in the annual resource revenues are equivalent resources, most of which are still unexploited country. to current ODA levels; yet, more optimistic or in an exploration phase. All stakeholders scenarios forecast a significant increase of acknowledge their potential to significantly There is an increasing sense of urgency for the budget in the medium term. speed up Mozambique‘s development the need to foster more inclusive economic process. Yet the quality of this spurred growth that results in employment creation Are authorities ready for the resource development, in terms of poverty reduction, and a better redistribution of the economic boom? employment creation and economic wealth. Indeed, getting a formal job remains diversification will highly depend on the difficult for the estimated 300 000 annual Up to which point these newly discovered quality of the foundations that authorities new labour market entrants. Challenges natural resources will facilitate or will lay in the short term for the sustainable in terms of vulnerability and urban rather delay Mozambique’s structural management of the resources in the long unemployment are mounting. The strong transformation remains open. Authorities term. social unrest in Maputo in September 2010, need to tackle several issues, including the following a small increase in the bread prices need for natural resource management ...... and the, more recent, light unrest following that is both environmentally and inter- the increase in the price of the “chapas” generational sustainable, a diversification Author provide an indication of the little room for of the productive base and available skills Gregory De Paepe is Policy Analyst at the maneuver authorities have left. of human capital, the development of a OECD Development Centre. macro-analytical framework conducive to

8 www.ecdpm.org/GREAT GREAT Insights Volume 1 | Issue 10 | December 2012 Governance, Regional integration, Economics, Agriculture and Trade Mozambique at a Turning Point: from Aid Dependence

to Development Effectiveness? Francesca Bruschi

Mozambique is considered a success story of post war reconstruction and economic reform. Since the end of the civil war in 1992 the country has benefited of several debt relief initiatives and of huge amounts of Official Development Assistance (ODA), hosting one of the largest donors’ joint programmes in Africa, both in terms of volume and donor agencies involved......

Until very recently a “donors darling” heavily particularly financing the expansion of in Mozambique. In fact, PAPs’ Performance dependent on external aid, Mozambique is social infrastructure. In an attempt to Assessment Framework (PAF) only covers rapidly reducing its aid dependence, mainly enhance national ownership and results- the G19 and associates, leaving aside Japan, due to increasing mining royalties on one based management, PAPs have progressively vertical funds and non-traditional donors like side, and squeezed aid budgets on the other.1 harmonized their development support and Brazil, thus reducing the inclusiveness of the In 2011, foreign direct investment (FDI) has aligned it to domestic planning, budgeting development partnership. roughly equalled total ODA to Mozambique, and monitoring frameworks. doubling to US$2 billion from US$1 billion Within a complicated but not sufficiently in the previous year. A sharp rise in FDI is After a banking crisis led to a suspension of inclusive aid architecture, 5 over time the expected for the years to come, mainly from budget support in 2001, Government and management of the GBS programme has South Africa, China, Brazil, India and Australia: partners agreed on the need for a more resulted in increasing transaction costs. Brazil’s mining giant Vale has announced transparent and structured approach to Political and technical dialogue mechanisms investments for US$6 billions, while the World programmatic aid. In 2004, a Memorandum structured along several layers, high donors Bank estimates that, by the end of this decade, of Understanding (MoU) was signed between staff turnover and not always efficient gas projects could bring as much as US$70 PAPs and the Government of Mozambique information flows seem to have progressively billion. (GoM), setting out the principles, terms diluted the effectiveness of PAPs’ support. It is and operations for the provision of budget in fact widely recognised that the complexity In 2011, external finance of the State budget support. Thanks to encouraging results in of the partnership has led to an excessive has dropped to 44.6% against 51.4% in poverty reduction, the number of partners focus on processes, weakening PAPs’ capacity 2010 and it is expected that foreign aid will adhering to the General Budget Support (GBS) and engagement with collective action. contribute for 39.6 % of public expenditure in programme gradually increased and a second 2012 and 32,8% in 2013.2 A substantial support MoU was signed in 2009, between the GoM, In addition, poverty monitoring is proving to the State budget is provided Programmatic the group of 19 donors providing GBS – the increasingly challenging due to data Aid Partners (PAPs), which in 2011 have G19 – and their associate members – the availability and quality. Progress in social channelled more or less US$1,7 billions in United Nations and the United States. Mutual indicators is considered fairly positive, but no grants and loans. Notwithstanding the efforts accountability mechanisms were progressively standardised results monitoring frameworks by traditional and new development partners, created to track and report on performance, are in place, for instance on public service total ODA to Mozambique has stagnated at with indicators defined as to keep the delivery. The GoM’s PAF is deemed too rigid more or less US$2 billion during the last three contracting parties accountable on agreed and unable to measure real progress on years and the Economist Intelligence Unit’s commitments.3 long-term outcomes and impacts in poverty projections indicate that, by 2017, mining reduction, while results have recently been revenue will have become substantially larger Challenges in the provision of budget below the expectations. Notwithstanding than donors support. The reduction of aid support growth rates above 7% in the last ten years, dependence and the geopolitical changes Mozambique’s competitiveness, governance associated to the mining boom pose new The rationale for channelling aid through and human development are stalling or challenges to the Government, as much as to budget support is to provide efficient declining in relative terms,6 and according to Mozambique’s development and commercial and effective financial assistance to the the last household survey, poverty has been partners. implementation of national poverty reduction stagnating between 2005 and 2009, having policies, while reducing the transaction gotten worse in some provinces. Programmatic aid and budget support costs linked to aid management. The GoM’s in Mozambique international cooperation policy identifies Lack of progress on poverty reduction and GBS as the preferred aid modality, followed by governance, financial mismanagement Since the 1990s, Mozambique has become a Sector Budget Support (SBS) and project aid.4 occurrences and internal organisational reference for the provision of programmatic GBS is generally seen as the “purest” way of inefficiencies have recently created a aid, with increasing proportions of ODA achieving the goals of the Paris Declaration widespread feeling of “aid fatigue” among channelled through the State budget. on aid effectiveness, but a strong focus PAPs. Budget support is being heavily criticized Development partners have substantially on this aid modality has probably led to a by several Mozambican and international contributed to the budget of Mozambique, narrowing of the debate on aid effectiveness civil society organisations and think tanks,

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for strengthening external at detriment of quality of public services. Infrastructural domestic accountability and for reinforcing Besides improving the infrastructure upon projects and the effects of trade liberalisation the ruling party. which the mining boom depends, the GoM and regional integration should be analysed needs to progressively shift its policy towards taking into consideration the transformative Revisiting budget support in natural resource management. At the same potential for the domestic economy, Mozambique? time, the GoM will have to promote linkages particularly in relation to job creation. between local companies and mining and These factors as much as internal political hydrocarbon projects, and to improve the PAPs have a moral obligation to support decisions in donor countries have gradually delivery of social services, reducing the Mozambique in the ongoing transition, undermined the predictability of external existing skill gaps in order to create jobs. towards their constituents as much as the support. In the first quarter of 2010, increasing people of Mozambique. Besides strengthening concerns over governance led to a suspension Becoming heavily reliant on foreign national capacity and institutions towards of GBS, when, through temporarily freezing investment for financing infrastructure and achieving inclusive and sustainable growth, of disbursement, the G19 secured specific resource extraction, Mozambique will face in the near future PAPs will have to work with commitments on governance reforms. The risks similar to those associated with aid other donors, international institutions, and creation of a parallel assessment framework dependence. Over the medium term, it is other actors at the country and global levels on key policy reforms following the first expected that the fiscal deficit (6,7% of GDP to ensure integrity in public administration, “donors strike” was perceived as an undue in 2012) will reduce slowly, being mainly particularly in relation to natural resource conditionality by the GoM. Dialogue has financed by non concessional borrowing use, contract arrangements and financial resumed thereafter, but several members abroad and domestic bond issues, thus any markets. Fostering international cooperation of the G19 have decided to attach a variable unexpected decline in donor support or a and collective action, and capitalizing on the tranche mechanism to their decisions on GBS prolonged commodity price shock would put knowledge and skills accumulated so far, in disbursements. government finances under stress. collaboration with new development and commercial partners PAPs could effectively Because of high fiduciary risk and the Notwithstanding the fast transition towards contribute to a success story in phasing out economic slowdown in several donor a mineral economy, analysts agree that ODA from aid dependence. countries, GBS is becoming less attractive for will remain relevant in Mozambique over several members of the G19. The Netherlands the medium term. In a rapidly changing Notes and Belgium have formalized their decision international and domestic context, the 1 Economist Intelligence Unit, Country Report to abandon GBS starting from 2013, while sustainability of PAPs support to poverty Mozambique, October 2012: www.eiu.com due to budgetary constraints Spain will not reduction goes hand in hand with their (restricted access). be able to disburse already this year. For capacity to show continuity in their commit- 2 This decrease is also a consequence of the other members of the (former?) G19, such as ments, and change readiness at the same appreciation of the national currency, as the Germany and Sweden, internal procedures time. value of the national currency (Metical) has for commitments on GBS are becoming been rising over the last two years, meaning increasingly complex and demanding. Reforming budget support mechanisms that foreign aid has dropped if relation to the through an increased focus on results is a national currency, even though it may have With the exit of some members of the necessary step towards a more effective risen in foreign currencies. G19 and appearance of new donors and development partnership in Mozambique. 3 GoM’s performance is annually assessed commercial partners of the GoM, the The PAPs should engage in an open debate against a set of indicators measuring development partnership has come to a on the future of aid and of a more inclusive progress in poverty reduction, while PAPs are turning point in Mozambique. The progressive development model in Mozambique, involving assessed against the implementation of the reduction of aid flows and current transition new donor countries, central and local aid effectiveness agenda. to a resource-based growth model pose representative institutions, domestic and 4 Through GBS, US$523 million have been several challenges to the GoM, as much international civil society organisation and directly channelled to Mozambique in 2011, as to development partners and the private sector companies. The independent US$459 in 2010, US$488 and in 2009, while private sector. Mozambique’s third poverty budget support evaluation planned for 2013 SBS totalled US$303 USD million in 2011, reduction strategy (PARP 2011-2014) focuses will bring about evidence and hopefully help US$331 in 2010 and US$361 in 2009. on enhancing agricultural production bilateral and multilateral partners, to define a 5 A larger dialogue group between the GoM and productivity, fostering broad-based medium to long term individual and collective and partners – “the Development Partners employment creation and supporting human (dis)engagement strategy, also in view of the Group” – was created, working as an infor- and social development. These objectives preparation of the next MoU. mationsharing group rather than a coordi- will have to be prioritised by the GoM and nation mechanism. PAPs, notwithstanding bilateral commercial As stated in the Busan Partnership for 6 See the Doing Business 2013 by the World interests and the emergence of mining and effective development cooperation, total Bank, the Global Competitiveness Index by hydrocarbons as new dominant sectors. transparency in the use of public funds the World Economic Forum, the 2012 Ibrahim should be promoted and accountability Index of African Governance and UNDP’s The future role of donors: mechanisms reinforced at all territorial Human Development Index, where Mozam- accompanying the resource boom levels. Mozambique’s recent full compliance bique ranked 184 out of the 187 countries with the Extractive Industries Transparency considered According to IMF estimates, over a five-year Initiative (EITI) has sent a positive signal to ...... timeframe investment projects in the mining investors and donors, but the publication of sector could contribute to 12-13% of GDP payments will not in itself bring about good Author (against 3% in 2011), while the contribution revenue management and distribution. Social Francesca Bruschi is a Consultant at the of ODA would drop to between 2 and 1,5% and environmental impacts of mineral and Italian Cooperation’s General Budget Support of GDP. The development of the extractive hydrocarbon development projects should Programme in Maputo. sector poses serious challenges to the donor be continuously scrutinized, also enhancing communities and to the Government. citizens’ participation in monitoring the

10 www.ecdpm.org/GREAT GREAT Insights Volume 1 | Issue 10 | December 2012 Governance, Regional integration, Economics, Agriculture and Trade Mozambique: Ready for a Rollercoaster Ride?

Marc De Tollenaere

The prevailing sentiment in Maputo these days is similar to being pulled up the track of a rollercoaster: a combination of excitement and insecurity about what is to come. One is easily carried away by the speedy succession of economic events. Announcements of new gas, coal and mineral deposits, announcements of large investments, the chain of trade missions of countries from five continents, it all induces a sense of excitement......

The country is rich, wealth is within reach did it improve, despite multiple reforms and overriding goal of the Frelimo government. and finally one can do away with the despite the fact that it was consistently on The development rabbits are firmly stuck in dependency on patronizing donors. Bur there the top of the aid conditionality agenda. On the headlights of this overarching narrative, is also insecurity and even fear. What is this the political front, the household institutions but it turns a blind eye to other, even all going to do with the country? Are we, of democracy were all put in place, but the stronger, motivations for political decision- Mozambicans, master of our destiny? Will I, net result has been a gradual, and by now making. For the past twenty years, two such Mozambican, be able to get a share of the overwhelming, dominance of the ruling party. incentives can clearly be identified. wealth? While the main opposition party Renamo put up a major challenge in the 1994 and On the political front, all objectives were The track record 1999 elections, it shrank rapidly over the past made secondary to securing continued rule decade because it failed to turn itself in a by Frelimo. For Frelimo this is nothing less This rollercoaster stands in a country that functional political party. than complying with a historical mission has known consistent high economic growth resulting from the fact that it liberated the since the mid-90’s (7 to 8% GDP/annum) and country from colonial rule. Trying to stay in that received sustained high levels of aid (ca. power is a legitimate political objective. The 1,5 billion US$/annum). There are multiparty Trying to stay issue is whether this is achieved through elections since 1994 and basic freedoms are competition or through engineering. fixed constitutionally. An impressive number in power is a of policies and strategies were formulated legitimate political While there was a tendency to split party and approved, almost all as part of creating and state after the first multiparty elections an enabling environment for the aid sector. objective. The issue is in 1994, this trend was entirely reversed as whether this is achieved from 2003, when Armando Guebuza was Yet, all these inputs and assets only partly appointed as secretary general of the party. delivered the anticipated outcomes. Poverty through competition or The split between party and state was seen reduced between 1997/8 and 2002/3, but this through engineering. as the cause of a near electoral loss in 1999 can no doubt to a great extent be attributed and had to be reversed. Guebuza revitalized to the “peace dividend” that allowed a return the party structures from top to bottom and to normal economic life. Poverty reduction made it no secret that the state was the was not sustained as demonstrated in the principal instrument to reproduce the power 2008 assessment (improvements in some of the party. urban areas were balanced out by a fallback Looking back in some rural areas). Mozambique’s Human Adherence to the ruling party became a Development Index improved since the mid- Why was there not more and better progress, necessity to get access to the public service, 90’s, but is still among the lowest worldwide considering the considerable growth, the or to get access to loans, scholarships, and the country could not get closer to external resources and the “right” policies? housing etc. Membership increased from the Sub-Sahara average. The Worldwide From a development logic there is no real 1.6 million in 2003 to staggering 3.6 million Governance Indicators show pretty much explanation for this. So most agencies in 2012. In 2009, Frelimo secured a qualified steady lines for the period 1996 to 2011 for 5 would say this is just a matter of time. The majority in the Parliament (giving it the of the 6 indicators. country is on the right track. Here and there freedom to change the constitution), won the some policy adjustments need to be made Presidency with 3/4 of the votes, a majority in Only political stability and absence of and results will eventually, unavoidably, be all provincial assemblies and it governs 41 out violence shows continued improvement produced. of 43 municipalities. over the interval. Clearly, the governance What is called here the development logic is situation did not deteriorate, but neither the conviction that reducing poverty is the

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From a practical point of view, this process further states that in the presence of required time and resources, at the expense extractive political and economic institutions, of fighting poverty effectively. From a It is possible all outsiders do is reinforce the plunder principled point of view it has produced a that the absence machine. In Mozambique, “the ownership state apparatus that is not geared towards and control over mineral and energy the production of collective goods and of a political resources, as well as natural resources securing equal rights and protection for all contender (low threat) and (land, water and forests) and infra-structure citizens. The state is turned in an executive (roads, bridges, communications, energy, etc) branch of a party. This has detrimental the prospect of a sharp associated with the mineral-energy complex effects. An example is the “open and inclusive increase in income gear the are increasingly concentrated at the hands presidential visits” Guebuza carries out since of large multinationals and a small group he was elected. Although it is objectively political incentives of the of domestic partners”, as says economist laudable that the president leaves his elite towards inclusiveness Carlos Nuno Castel-Branco in Challenges for palace and visits towns and villages all Mozambique – 2011.2 over the country, there are serious side- and redistribution. effects: the visits consume budgets that are Possible, but not likely! All this happens at a time of an international intended to stimulate local development economic crisis that changes the incentives and accountability tends to be concentrated on the side of the development partners. on one single institution, the presidency. An Despite successive drops in the Ease of increase of presidential authority comes at platform for the take off of a natural resource Doing Business Index and the Global the cost of the credibility of lower and middle boom. It is possible that the absence of a Competitiveness Index, investors are literally level institutions. political contender (low threat) and the lining up. The core activity of embassies is prospect of a sharp increase in income gear quickly shifting from aid to business. The On the economic front, there was, certainly the political incentives of the elite towards good governance agenda has been put on since the liberalization of the economy, inclusiveness and redistribution. Possible, but hold, or transferred to the business sector. a strong conviction that somehow not likely! The assumption is that business needs good Mozambican ownership or partnership governance and will therefore enforce it. had to be guaranteed. Discussions on the A main reason for this is that society and need for a national bourgeoisie to secure state are detached. A handful of intellectual Going back to the rollercoaster, all indicates the Mozambican stake in the economy activists do a great job in pointing out that a few will thoroughly enjoy the new are still ongoing, but in the meantime it problems with the current political economy, ride, while the crowds stand and watch, has already happened. The privatization but the silent majority has retracted, away murmuring and hoping, but, at least in the of state property (houses, companies) and from politics (only 30% of the voting age short term, without the power to join. bureaucratic decision-making power laid the population actually voted in 2009) and basis for the creation of a Mozambican elite is surviving in the informal sector. When Notes (right out corruption not to be discarded). tolerance levels are challenged, there This produced an economic model that was has been a violent reaction (2008 and 1 Daren Acemoglu and James Robinson increasingly driven by the need to control 2010), but the government contained it (2012), Why Nations Fail. The Origins of access to the national economy and the drive with repression and concrete measures Power, Prosperity and Wealth, Crown to seek rent. (for example a currency inflation to keep Publishing Group. food import costs under control and fuel 2 Carlos Nuno Castel-Branco et al. (eds.) One of the characteristics is the preference subsidies to transporters). The riots were (2011), Challenges for Mozambique – 2011, for large investments and for business that upsetting, but no threat to the system. The IESE, Maputo. guarantees a quick return. Frelimo old-hands matter is that there is for the time being will argue that there was no other option. If not enough organized pressure from society not, by mere lack of cash when liberalization to do things differently. The legitimacy and ...... started, the economy would have been representativity of critical voices is contested entirely in foreign hands. Rent seeking was by the powers that be and there simply are also required to feed the ever-widening no organized social forces that can voice Author network of patronage. If not based on alternatives and weigh on policy. ideological conviction, loyalty and allegiance Marc De Tollenaere is an ECDPM Programme need to be bought. There are of course also other reasons. Associate. He is writing in his personal Literature abundantly demonstrates that a capacity. The point made is not that Frelimo resource blessing is subject to transparency intentionally tries to keep a majority of the (upstream on licensing and contracts; Mozambicans poor. The point is rather that downstream on different kind of income there are stronger political incentives than from the sector) and to capable and credible poverty reduction that have shaped the institutions before wealth arrives. None of political economy of Mozambique and an this is sufficiently present. emergent property of that political economy is that it does not produce inclusive growth. In Why Nations Fail, Acemoglu and Robinson argue that the more concentrated political Looking forward power is, the more a small group in society tries to extract wealth for itself to the The overly summarized fundaments of detriment of the rest: this is a world of Mozambique’s political economy sketch the “extractive” institutions.1 The argument

12 www.ecdpm.org/GREAT GREAT Insights Volume 1 | Issue 10 | December 2012 Governance, Regional integration, Economics, Agriculture and Trade Has the Business Environment in Mozambique

Improved During the Past 10 Years? John Rand and Søren Schou Private sector expansion remains one of the main key development objectives of the Mozambican government, while economic competitiveness is a stated concern of President Guebuza. As such, in 2007 a Presidential International Advisory Board was set up to advise the government on changes needed in the business environment in order to improve international competitiveness. So the question is: have Mozambican entrepreneurs experienced any changes/improvements in the conditions for doing business in the last 10 years? ......

Although efforts have been made to improve raised about sustaining strong industrial to growth in Mozambican manufacturing. the Mozambican business environment it still productivity growth as Mozambique has a relatively low ranking in international approaches its production frontier. Moreover, Access to land has moved from not comparisons. Mozambique dropped 7 places efficiency dispersion has recently been shown constraining businesses to being among in the latest Doing Business report of the to be high emphasizing that a large set of the most pressing constraints. This result is World Bank and now holds a global 139th relatively inefficient firms are still able to driven by firms in Maputo, Matola and Beira, place, below the average for Sub-Sahara stay in business alongside highly efficient while the issue seems to be far less pressing Africa. Moreover, early studies have shown ones.6 This questions whether the current in smaller cities. This is probably due to a that many inefficient firms are nonetheless business environment provides an equal combination of rapid urbanization, inadequate able to survive in the manufacturing sector in playing field for firms in the manufacturing urban infrastructure and land speculation. Mozambique.1 At the same time, data from sector and ensures that natural firm turnover Moreover, access to credit remains a very the late 1990s showed that Mozambique mechanisms are allowed to take place. serious constraint to doing business, but also lagged behind in terms of absolute comparing results in Tables 1 and 2 suggests productivity, questioning the regional The Research Project: early findings that financing problems are more serious for competitiveness of the Mozambican economy. younger and newly established firms. The Eifert, Gelb and Ramachandran (2005) To shed some light on these problems, the Mozambican Central Bank has recently cut its confirm this result showing that Mozambican Confederation of Mozambican Business interest rates quite significantly (falling from productive efficiency is among the lowest in Associations (CTA) in collaboration with the 15 % at the beginning of 2012 to less than 10 Africa.2 National Directorate for Studies and Policy % in November), but this has failed to pass Analysis (DNEAP) in the Ministry of Planning through to commercial lending. Corruption However, several studies suggest that and Development (MPD) and the National remains a serious obstacle to growth – productivity has improved since the first Statistical Office (INE) in 2012 conducted an tentative results from the survey indicate that post-war productivity studies. DNEAP (2006) industrial survey covering 800 manufacturing some 50 % of manufacturing companies pay suggests that capacity utilization improved SMEs in 7 provinces, 220 of which were also bribes and that bribes are often very high – to significantly between 2003 and 2006 within interviewed in earlier surveys, creating the the tune of 10 % of revenue. manufacturing. 3 The growth accounting possibility of panel data analysis.7 exercise done by Jones (2006) also concludes Limits to perceived business environment that the annual average contribution of Total To facilitate a discussion of how industrial as an indication of productivity Factor Productivity (TFP) to economic growth policies may help improve firm level constraint has been significant and that these changes productivity, Tables 1 and 2 provide summary in TFP were largely driven by improvements statistics on constraints to doing business Although perceptions from business people in productive efficiency.4 Finally, a recent case available in previous surveys data.8 All regarding constraints to doing business are study (Warren, 2010) reveals that important constraint variables take values {0, 1, 2, 3, 4} an important policy tool, Bila and Rand (2011) industries are producing relatively efficiently where 0 = no obstacle, 1 = slight obstacle, 2 show that only a few of these perceived given the skill-level and technology at = moderate obstacle, 3 = major obstacle, 4 = constraints are significantly associated with hand and are improving productivity, but serious obstacle. Table 1 shows the percentage firm efficiency, when applying appropriate the limited level of knowledge and simple of firms answering 3 or 4 to each constraint estimation techniques. Research therefore production systems are insufficient to support for each survey without considering whether needs to go beyond traditional doing a process of sustained technology and we are following the same firms over time business indicators in order to understand industrial development.5 (unbalanced panel) whereas Table 2 shows the what improves firm level productivity.9 results of following the same firms over time These results highlight that late 1990s/ (balanced panel). In particular, the fact that skills and education early millennium productivity improvements of workers does not appear as an important are largely explained by changes in The main conclusion from the tables is that constraint should be interpreted with caution. capacity utilization and not technological credit, access to land and corruption are The average education level in Mozambique advancement. Concern has therefore been perceived to be the most serious constraints remains very low, meaning that firms that

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Table 1: Developments in Constraints to doing Business (all) Table 2: Developments in Constraints to doing Business 2003 2006 2012 (Balanced panel) 2006 2012 Access to finance and cost of credit 83.6 72.4 55.9 Competition from illegal imports/contraband 53.5 56.6 Access to land 26.7 18.3 51.5 Customs and trade regulation administration 38.5 49.1 General corruption 64.4 45.3 47.3 Access to finance and cost of credit 69.2 48.6 Crime, theft and disorder 54.4 34.4 45.8 General corruption 50.7 46.6 Macroeconomic instability (inflation, exch. rate) 63.0 63.0 43.7 Access to land 21.4 43.4 Customs and trade regulation administration 49.4 37.8 43.5 Anti-competitive practices (e.g. monopoly) 30.0 41.2 Anti-competitive practices (e.g. monopoly 60.4 32.4 41.4 Opening up to international markets (SADC etc.) 13.6 39.7 Tax rates 54.9 49.7 32.9 Transportation 25.3 37.2 Tax administration 47.3 35.3 31.6 Crime, theft and disorder 34.9 36.1 Transportation 27.3 25.7 31.2 Skills and education of workers 34.9 32.9 Skills and education of workers 33.9 35.7 28.6 Macroeconomic instability (inflation, exch. rate) 63.9 32.9 Labor regulations 37.9 48.4 28.5 Tax rates 52.9 32.1 Electricity 64.7 46.2 21.8 Electricity 44.2 31.4 Tax administration 35.3 24.4 Note: Factors problematic for the operation and growth of businesses (per cent having respon- ded “major obstacle” or “serious obstacle”). 192 observations in 2003, 159 observations in 2006 Labor regulations 45.3 22.6 and 827 observations in 2012. Note: Factors problematic for the operation and growth of businesses (per cent having responded “major obstacle” or “serious obstacle”). 86 observations require highly skilled workers are less likely in its new industrial strategy. This is fortunate, 3 DNEAP (2006). “Enterprise Development in to set up business in Mozambique. A higher since a well-defined industrial policy may Mozambique: Results Based on Manufac- education level among Mozambican workers be even more important for Mozambican turing Surveys Conducted in 2002 and 2006”, could attract highly productive firms that for development in the next 10-20 years, since it DNEAP discussion paper 33E, Mozambique. good reasons cannot answer this survey, as will have a serious impact on how the giant 4 Jones, S. (2006) ”Growth Accounting for they are not part of the population. coalmines in Tete and the gas off the shore of Mozambique”, DNEAP Discussion Paper 22E, One area that is currently receiving attention Cabo Delgado will transform the Mozambican Mozambique. is the promotion and expansion of export- economy. While mining projects most likely 5 Warren, A.N. (2010). “Uncovering Trends in oriented agro-industrial and labor-intensive will bring a lot of money to the state coffers, the Accumulation of Technological Capabi- manufacturing activities, seen as having history tells us that they are unlikely to create lities and Skills in the Mozambican Manu- the greatest potential for enhancing many jobs. Moreover, the potential Dutch facturing Sector”, Oxford Development overall industrial productivity and creating Disease problem needs to be taken seriously, Studies, 38(2), 171-198. new jobs. However, the manufacturing if the competitiveness of the manufacturing 6 See Bila, S. and Rand, J. (2011). “Reconsidering sector is relatively small and production is sector is not to suffer from the great natural the Association between Firm-Level Technical highly concentrated in a few sectors. Most resource adventure. It is thus as important Efficiency and Constraints to Doing Business: manufacturers source inputs from abroad, as ever to get industrial policy right in The Case of Mozambican Manufacturing”, and the industrial sector in Mozambique is Mozambique. DNEAP discussion paper 71E, Mozambique. generally characterized by having a relatively 7 Cleaning processes of the data are still taking low degree of sector linkages. Excluding In our view, research is fundamental for place, so in the following we only present very megaproject exports, the contribution of the getting these policies right. For example, preliminary results related to perceived doing export sector to the Mozambican economy behind current policies to improve firm level business indicators. has been modest. The lack of diversity in productivity by promoting and expanding 8 ICA (2003). “Mozambique Industrial Perfor- manufacturing exports therefore raises export-oriented industries lies two implicit mance and Investment Climate 2003”, concern about whether potential learning assumptions; (i) some kind of learning by Investment Climate Assessment World Bank/ effects from exports (if present) have the exporting (LBE) actually takes place and (ii) IFC, Washington D.C., DNEAP (2006), op. cit., necessary conditions for “spilling over” to the there are significant productivity spillover and DNEAP (2012). “Enterprise Development in remaining economy. effects from exporters to the local industry. Mozambique: Results Based on Manufactu Whether conditions for LBE are present ring Surveys Conducted in 2012”, forthcoming A new drive for industrial policy? or whether value chain conditions enable DNEAP discussion paper, Mozambique. spillover effects from exporters to the local 9 Bila and Rand (2011), op. ct. What is the reason for the continued “under- industry still needs to be explored in detail 10 Krause, M. and Kaufmann, F. (2011). “Industrial development” of the manufacturing sector and is some of the work to be done using the Policy in Mozambique”, Discussion Paper in Mozambique twenty years after the end new DNEAP (2012) database. 10/2011, German Development Institute. of the internal conflict? Arguing that a well- designed and well-coordinated industrial Notes ...... policy is one of the most crucial instruments to foster inclusive economic growth, Krause 1 RPED (1999). “Structure and Performance of Authors and Kaufmann (2011) conclude that past Manufacturing in Mozambique”, RPED Paper industrial policies have lacked the necessary No. 107, World Bank, Washington D.C. and ICA John Rand is Professor at the Institute of vision and leadership.10 This has prevented (2003). “Mozambique Industrial Performance Food and Resource Economics, Department the development of a policy mix aimed at and Investment Climate 2003”, Investment of Economics, University of Copenhagen, both (i) improving the overall competitive Climate Assessment World Bank/IFC, Denmark, where Søren Schou is a teaching level of the nation and the general investment Washington D.C. assistant. climate and (ii) providing specific targeted 2 Eifert, B., Gelb, A. and Ramachandran, V. (2005)...... interventions to accelerate productivity “Business Environment and Comparative growth and enhance firms’ competitiveness. Advantage in Africa: Evidence from the Invest- However, the Government of Mozambique ment Climate Data”, CGD working paper (GoM) may be taking past critiques seriously number 56, Washington DC.

14 www.ecdpm.org/GREAT GREAT Insights Volume 1 | Issue 10 | December 2012 Governance, Regional integration, Economics, Agriculture and Trade

The Maputo Corridor: Regional Integration that Works

Barbara Mommen

In 1996, the governments of Mozambique and South Africa, in a renewal of cooperation and in order to re-establish trade and investment ties and to rebuild their flailing economies launched the Spatial Development Initiative programme. The key objectives were to rehabilitate the key elements of the Maputo Corridor, to maximise investment in the potential of the corridor, to maximise social development and employment opportunities, and to ensure policy and strategy frameworks for sustainable development......

The Maputo Corridor is a transport corridor negative perceptions about the Port of to service the demands of the region and linking the east coast port of Maputo in Maputo and the corridor were multifarious: a throughput of 48million tons by 2033. To Mozambique with the highly industrialised there were few shipping lines calling the Port, date, just under US$300million has been and productive regions of the Gauteng the economies of scale for cargo to attract invested in infrastructure, equipment and province in South Africa. The key elements shipping lines was very limited, the lack of training and throughputs in the port have of this transport corridor are the N4 toll rail capacity and delays in the rehabilitation increased from 3 million tons in 2003 to a road, the rail corridor, the Lebombo/Ressano of the rail line between Ressano Garcia and projected 16 million tons at the end of 2012; Garcia border post and the port and Maputo, the limited border post operating 2 billion tons over the initial projections of 12 terminal facilities at the Port of Maputo. hours resulted in severe congestion and million tons for 2012. Short by African corridor standards, the delays and increased costs to cargo owners, Maputo corridor is only 590kms by road operational inefficiencies on the corridor The rehabilitation of the rail line from from Johannesburg, and 581km by rail, but and a lack of an institutional framework on Ressano Garcia to Maputo was completed at is increasingly strategic in that is presents the corridor. All of these factors mitigated the end of 2008 with significant investments the shortest route to a port for South against a successful and efficient transport in excess of US$80million in rail and rolling African exporters on the corridor and moves and logistics corridor. MCLI was established stock rehabilitation. As with most of Africa, a variety of commodities including coal, to address these issues and to unlock these the challenges of rail capacity and services timber, agricultural produce, granite, chrome, barriers to the movement of cargo and to remains a key challenge, but one which is cement, containers, steel, magnetite, sugar, provide ease of access for cargo moving on being addressed jointly by the South African maize, gasoline, pulp, fertiliser and citrus. The the corridor. MCLI is a non-profit membership and Mozambican rail service providers, Port of Maputo provides the shortest access organisation and currently has 170 members Transnet Freight Rail (TFR) and Portos e to the Indian and Far Eastern markets and from the three corridor countries of Caminhos de Ferro de Mozambique (CFM), complements the South African regional port Mozambique, Swaziland and South Africa. in a programme which is geared towards hubs in a multipurpose port of 15 terminals. ensuring that existing assets are maximised It is an extremely busy trade corridor, despite Effective PPPs and railway and investment prioritised to ensure that the its short distance. Trade between South Africa development rail services support port growth. Swaziland and Mozambique totalled R25,1 billion in 2011 Railway has also entered into partnership (approximately US$2.96billion with 38% of The Maputo Corridor boasts some of the with TFR to provide complementary services that trading through the Lebombo/Ressano continent’s most effective public private for commodities moving to the port of Garcia border post). Annually a total of 4.6 partnerships (PPPs) in infrastructure delivery. Maputo. million people, 730 000 vehicles and 87 000 The N4 Trans Africa Concession, one of the trucks cross the border into Mozambique at most successful bilateral road infrastructure Lebombo/Ressano Garcia border post: the Lebombo/Ressano Garcia border post. PPPs on the continent, has invested R4billion remaining challenges Trade is largely outward bound. in the first phase of a Build, Operate, and Transfer agreement and will invest Commercial relations between the two The need for an institutional setup: another R3billion over the next 20 years. governments are good at a number of Maputo Corridor Logistics Initiative The privately concessioned Maputo Port levels. However, the disconnect between Development Company has had its initial the excellent political will at executive level In the absence of an institutional framework, 15-year concession agreement extended after and the capacity for implementation at the Maputo Corridor Logistics Initiative just 8 years, to 2033. This is indicative of the administrative level is no more evident than (MCLI) was established in 2004 by users, confidence in the port to bring the necessary in the current status of the border post at infrastructure investors, cargo owners returns on investment for investors. Its Lebombo/Ressano Garcia. As early as 2007, and service providers looking for logistics 20-year master plan will see US$1,7 billion the Heads of State of South Africa and solutions on the corridor. At the time, invested in port growth and development Mozambique signed a bilateral agreement

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giving a directive for the implementation of solutions to the infrastructure challenge provide a workable platform for introducing a 24-hour One Stop Border Post at Lebombo/ required for the one stop operation and to a user pay principle on the corridor, which Ressano Garcia. This agreement was ratified the complexity of aligning the legislation would provide sustainable funding in by the Mozambican parliament in 2008 and of the myriad of government agencies balance with ensuring the least possible only this year passed through the Standing operating at on both sides of the border. costs on this corridor. Committee on Finance in the Parliament of South Africa. This process is a precursor to Despite the bottlenecks which result Future prospects at national, regional the signing of the bilateral agreement and from the 24h00 to 06h00 closure, certain and continental levels further delays are inevitable as we draw to commodities are moving by road on the the end of the parliamentary programme for corridor with very efficient turnaround times A significant development in the region is 2012. due to the completion of a truck bypass road the imminent implementation of amended in June 2011 which effectively allows a one transit customs regulations in Mozambique. stop operation for road cargo. This must be During 2011, MCLI worked closely with the extended to passenger and business traffic. Port of Maputo to address the bottlenecks to ...the disconnect transit trade on the corridor. This legislation Reviewing the MCLI’s institutional was gazetted last week and by reducing between the status and in some cases, eliminating, the need excellent political for bonds and guarantees on transit cargo, The Maputo Corridor is one of Africa’s paves the way for increased bidirectional will at executive level and key success stories in terms of regional cargo flow on the corridor. Not only is the the capacity for implemen- integration between the regions of port of Maputo excellently situated to Swaziland, southern Mozambique and service transit trade into the SADC region, tation at administrative the Mpumalanga province. In this case, but the sound infrastructure, on the back level is no more evident infrastructure investment has paid huge of fairly advanced trade facilitation systems dividends in supporting the regional and processes make it an attractive option than in the current status integration imperatives of the SADC region. for corridor stakeholders. An increase in of the border post at The buoyancy of the regional economy backhaul cargo will significantly reduce the throughout the onset of the economic crisis costs of transport in the region and will Lebombo/Ressano Garcia in 2008/9 is largely as a result of the ability bring economic benefits. This will require of the corridor to provide access to trade and significant effort on the part of MCLI to to the MCLI’s ability to successfully create promote this benefit, but the environment the interface between the government and is increasingly more favourable for servicing This five-year delay remains unfathomable the private sector on issues affecting trade transit trade. and points clearly to the lack of legitimate and trade efficiencies. A key element of this understanding of the challenges faced is the enormous network of readers, which The imminent implementation of the daily at the border post by truckers, cargo MCLI has accumulated over the years in Tripartite Free Trade Area in 2014 and the owners and business people and those in providing key information to stakeholders on intention of the Continental Free Trade the corridors of decision-making. While corridor related issues. MCLI’s key functions Area to be operational by 2017, have huge the customs modernisation programmes of facilitation, coordination, integration implications for trade facilitation systems implemented by the South African Revenue and information have been crucial to and facilities and legislative amendments Service and the implementation of the Single providing users a platform for engagement which facilitate ease of trade and create the Electronic Window by the Mozambican with service providers and to ensuring enabling environment for trade, are crucial customs authority, Alfandegas, have been that workable solutions are found to the for this corridor to maintain its strategic fundamental to speeding customs clearing challenges which affect this African logistics corridor role. processes at the border post, the congestion corridor. and delays due to the lack of a 24-hour The Maputo Corridor has enormous operation is now at crisis levels. With the The institutional structure of MCLI is, opportunities for growth and continues to port operating 24/7, the backlog of traffic however, also currently under review. While be a vital catalyst for regional integration backed up between midnight and 06h00 has the private sector nature of the organisation and in so doing, continues to contribute to far reaching implications for all users of the has been its greatest benefit until now, increased trade and investment in the region. border post and the cost implications of the the lack of a formalised relationship with delays run into millions of Rands on a daily its government partners is problematic...... basis. The initial needs driven strategy must Author now be moved towards a more long- This is both inconceivable and unconscio- term approach, which is built around the Barbara Mommen is the Chief Executive nable in a region with significantly high development needs of the region. It is crucial Officer of the Maputo Corridor Logistics unemployment rates and poverty levels; that the organisation partners with the Initiative more especially since there is excellent corridor governments in order to ensure transport infrastructure is in place. The the integration of long term planning and ...... current border facilities are drastically in interventions on the corridor. A formalised need of upgrading and figures show that PPP seems, at this stage, the most difficult double (12000 people per day) the intended option, but the option most likely to succeed capacity (6000 people per day) are is in ensuring that the partners remain crossing through the border post on a daily accountable at every level for the efficiencies basis. Between 300 and 400 trucks cleared on the corridor. The financial sustainability through the border post on a daily basis. A of the organisation has always been one stop operation will require innovative problematic, but a formalised PPP would

16 www.ecdpm.org/GREAT GREAT Insights Volume 1 | Issue 10 | December 2012 Governance, Regional integration, Economics, Agriculture and Trade Mozambique’s Agriculture and Brazil’s Cerrado

‘model’: Miracle or Mirage? Lídia Cabral, Alex Shankland, Anna Locke and Jimena Duran

When it comes to agriculture, Mozambique’s story is largely one of unfulfilled promises, uneven performance and untapped potential. Will Brazil, the latest arrival in Mozambique’s crowded agricultural cooperation field, be able to turn the story around? ......

We address this question by considering employment and livelihoods. Yet, in 2010, less ProSavana is inspired by Brazil’s Cerrado what is currently Brazil’s most ambitious that 14% of the 36 million hectares of arable Development Programme (PRODECER), a agricultural cooperation initiative in Africa – land were farmed, mainly by smallholders, programme that received Japanese support ProSavana, a programme aiming to replicate and of these only 2% were irrigated. Domestic from the late 1970s till the 1990s and is Brazil’s renowned ‘cerrado transformation’. markets remained severely underdeveloped, claimed to be responsible for turning the With such an ambitious agenda, it is no with food production surpluses in many rural cerrado, Brazil’s vast tropical savannah wonder that the programme has recently districts failing to reach urban consumers. belt accounting for about 204 million become a hot topic in development circles and hectares and 24% of the country’s territory,6 is quickly grabbing the attention of the press, Why? The physical constraints hindering into a breadbasket and a world-leading academia and civil society. the development of the sector have been soybean producing region.ProSavana is widely noted.4 These include inadequate being implemented through a triangular Snapshot of Mozambique’s technology and extension services, poor cooperation arrangement between Brazil, disappointing agriculture story infrastructure and lack of markets for inputs, Japan and Mozambique.7 services and outputs. Such constraints in Unfulfilled promises. Mozambican agriculture turn reflect a combination of factors, which ProSavana has three main components: (i) has not become the driver of poverty include the legacy of civil war, a succession improvement of research and extension reduction, as the various poverty reduction of inappropriate policies, weak governance capabilities for the agriculture development strategies put forward by the Mozambican institutions, mismanagement of aid and of the Nacala Corridor, focusing particularly government over the last 12 years have lack of private capital. Recent research on on strengthening the institutional capacity recurrently announced. Food insecurity the political economy of agricultural policy of Mozambique’s Agrarian Research Institute and malnutrition continue to affect the suggests that politics is the key explanation (IIAM); (ii) implementation of pilot productive Mozambican population and rural poverty has, for the sector’s poor performance and for projects for small and commercial growers; (iii) at best, been marginally reduced, although failure to address some of the persistent design of an integrated agro-industrial master increasing in central regions.1 constrains in the sector, leading to policies plan for the development of the Nacala which have generally “discriminated against corridor, looking not only at agricultural Uneven performance. Mozambique’s crop the majority of agricultural producers, production and productivity, but also at output has remained stagnant over the last who continue to be poor, vulnerable and broader regional development issues, such as decade.2 Sorghum and cassava, the main crops dependent from handouts from government, infrastructure and markets. The programme produced by the predominant smallholder donors and NGOs”. 5 envisages support for both commercial large- sector, continue to have poorly developed scale production systems and smallholder value chains. Productivity remains low across subsistence agriculture, through adaptive the board and most growth recorded by the Enter ProSavana technology (improved varieties of soya, sector is explained by farmed land expansions maize, rice and other crops, suitable for rather than efficiency gains. There are some ProSavana, Brazil’s latest flagship South-South Mozambican soils) as well as conservation positive stories – production and yields for cooperation project in agriculture, promises agriculture techniques (e.g. no-till techniques). sugar, cashew nuts, tobacco and horticultures to address some of Mozambique’s persistent Implementation started in 2011 and about have been rising steadily – although calling agricultural malaises. It aims to transform US$13 million have been committed by Brazil, them successes might be premature. parts of the savannah spreading along the Japan and the Mozambican government, to Nacala Corridor, in northern Mozambique, support the first component for a period of Untapped potential. Mozambique is still into highly productive agricultural land, while about 5 years. Additional resources will be largely agriculture-based economy but addressing food insecurity in a sustainable provided by Japan to Mozambique through agriculture continues to fail to meet its manner. The Nacala Corridor is currently a combination of grants and concessional enormous potential. Although the sector receiving major investments in transport loans to support developing complementary contributed 31.5% to the country’s GDP in infrastructure, mainly from Brazilian mining infrastructures across the Nacala Corridor. The 2009, only 20% of the total export value giant Vale, which plans to use it to move the overall timeframe for the programme is at originated from agriculture.3 About 69% of coal it is extracting in landlocked Tete Province least 20 years. the country’s population remain rural-based to the deep-water port of Nacala. and largely dependent on agriculture for

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The ‘master plan’ component of ProSavana communities are also raised, drawing on the expertise of ProSavana? Probably not, as is likely to be used to identify opportunities perceived failures of the Brazilian model. these drivers were quite specific to Brazil in for the deployment of Brazilian and a particular moment in time. Mozambique’s Japanese capital in the region. The recently What’s in Brazil for Mozambique and agricultural governance, institutions and launched ‘Nacala Fund’ is expected to the challenge of transferability politics are all quite different to the context attract investment of US$2 billion into the that hosted the cerrado transformation. And Corridor, mainly for agribusiness projects. The trajectory of Mozambique’s agriculture in any case, the social and environmental Its promoters, the consulting wing of will continue to be shaped by a number of record of such transformation remains a Brazilian business school Fundação Getúlio factors, not least domestic politics, but in matter of dispute. Looking out from the Vargas (FGV), claim that it will benefit 10 looking at Brazil for inspiration it is important Mozambican savannah, the miracle of the million Mozambicans by supporting family to bear in mind at least three issues. cerrado looks increasingly like a mirage. farming as well as medium-sized and large agricultural projects.8 Based on Brazilian 1. Brazil’s contested cerrado model: The Notes experience, they argue that small-scale extent of Brazil’s agricultural success, 1 Azzarri, C. and V. Molini (undated) ‘Evidence producers can be successfully integrated and of the ‘miracle of the cerrado’ in from Three Household Survey Rounds: 1996- into export-oriented agriculture value chains particular, need to be fully understood. 2009’. via contract farming and the promotion of Despite its achievements, Brazil’s 2 FAOSTAT 2008. cooperatives. agricultural development story is filled 3 World Bank – http://devdata.worldbank.org. with disputes over natural resource 4 See MozSAKSS (2010) ‘Monitoring Agriculture Early impressions from the field access and over environmental Sector Performance, Growth and Poverty sustainability and social inclusion, Trends in Mozambique’, Mozambique Strate ProSavana is packaged in a compelling suggesting that UNAC’s concerns are gic Analysis and Knowledge Support System. narrative of success. In less than three legitimate.10 5 do Rosário, D. (2012) ‘From negligence to decades Brazil turned itself into a major food 2. Brazilian agriculture is not just populism: an analysis of Mozambique’s exporter and the world’s largest producer the cerrado!: Brazil’s agricultural agricultural political economy’, Working Paper of a variety of agricultural commodities, development is not only about large- 34, Future Agricultures Consortium. including soybeans from the cerrado. scale agribusinesses, the cerrado and 6 See http://www.cpac.embrapa.br/unidade/ Technological innovation, and the work of soybeans. There are also stories about ocerrado/. Embrapa in particular, is argued to have wide-ranging public policies supporting 7 The partnership was initially established played a key role in the ‘miracle of the family farming, about promoting between Japan and Brazil at the L’Aquila G8 cerrado’. Embrapa is today a world leader on linkages between family farms and meeting in 2009. tropical agricultural science and technology. agribusinesses, about land reform, about 8 http://allafrica.com/stories/201207061132. the rights of landless workers, and, html. From the Mozambican government’s underlying all of these, there are stories 9 See http://www.unac.org.mz/index.php/7- standpoint, expectations about ProSavana about social movements claiming space blog/39-pronunciamento-da-unac-sobre-o- are high and there is much optimism about in the policy debate and pushing for programa-prosavana. having Brazil as a development partner. policies catering for their needs. 10 See Mueller, C. C. (2003) ‘Expansion and Brazil’s agricultural transformation and 3. The drivers of agricultural change inside modernization of agriculture in the Cerrado Embrapa are looked up to as role models, Brazil and implications for transferability: – the case of soybeans in Brazil’s Center- with the hope that Mozambique will be Irrespective of what particular Brazilian West’, Department of Economics Working able to replicate them. The promise of model or models inspire Mozambique’s Paper 306, Brasília: University of Brasilia. foreign direct investment to complement farmers, policy-makers and investors, 11 Hosono, A. and Y. Hongo (2012) ‘Cerrado Agri technical cooperation, through the Nacala it is important that when attempting culture: A Model of Sustainable and Inclusive Fund for example, is seen as a more tangible replication the issue of adaptation or Development’, Japan International Coopera alternative to typical donor initiatives aiming transferability is not understood simply tion Agency Research Institute, Tokyo. to create an ‘enabling environment’ for as a technical matter. It ought, first of private sector development. all, to be about understanding all the ...... factors and conditions that have driven Authors But a number of questions have started a certain experience and have led to a Lídia Cabral is Doctoral Researcher at the being raised by farmers’ organisations certain outcome within Brazil. It should Institute of Development Studies, Sussex, and activists operating in the region then also be also about questioning Alex Shankland is Research Fellow at the targeted by ProSavana. The Mozambican the extent to which the same formula Institute of Development Studies, Anna National Farmers Union (UNAC), for can be applied outside of Brazil. The Locke is Research Fellow at the Overseas instance, has condemned first of all the cerrado’s transformation into a highly Development Institute, London, and Jimena lack of transparency on the part of the productive agricultural zone is not only Duran is Visiting Researcher at the Institute governments of Mozambique, Brazil and the result of innovative technology of Social and Economic Studies, Maputo. Japan in the ProSavana process and the lack (which can no doubt be adapted to suit of involvement of civil society organizations the Nacala Corridor’s soils and climate), This paper draws on the work being developed and farmers in particular.9 It also has but also of a myriad of factors related to by a team of researchers as part of the ERSC- voiced concerns about land grabbing by human agency, institutional capability funded research programme ‘China and Brazil large Brazilian agribusinesses, and the and the alignment of interests across in African Agriculture’, hosted by the Future expected unequal distribution of benefits politicians, investors, farmers and Agricultures Consortium: http://www.future- from the envisaged model of savannah researchers.11 agricultures.org/research/brics. transformation, seen as biased towards large- ...... scale production of cash crops for exports. Can the political, social, institutional and Concerns about food security, environmental human drivers of the cerrado story be sustainability and social inclusion of native packaged along with the technological

18 www.ecdpm.org/GREAT GREAT Insights Volume 1 | Issue 10 | December 2012 Governance, Regional integration, Economics, Agriculture and Trade Economic Growth and Ecological Demise? Questions from Mozambique for Africa’s Marine Ecosystems Alex Benkenstein

Mozambique in many respects exemplifies the new optimism about Africa’s economic future. GDP growth, albeit from a low base, has averaged 7.2% during a decade in which the global economy experienced the worst financial crisis since the 1930s. In September 2012 Mozambique exported its first shipments of coal – within five years these exports are expected to increase to about 40 million tonnes annually, climbing to 100 million tonnes annually within a decade......

Some of the world’s largest global energy zation. By 2020 Africa is expected to have activities in its waters. Small scale fisheries, companies are vying for a stake in Mo- 70 cities with populations over 1 million, however, continue to expand, and in the zambique’s gas reserves, estimated at 130 including eleven mega-cities with popu- future fisheries officials will need to strike trillion cubic feet. The country’s mineral lations of five million or more, while Lagos a fine balance between the need to limit and energy resources dominate reporting will be the continent’s largest city with a pressure on the stocks targeted by small on the country, but significant public and population of 20 million inhabitants. scale fishers and the important role that private investments are also being made these fisheries play in providing employ- in the country’s ports, roads, airports and Is the boom environmentally ment, fuelling local economic activity and other infrastructure, while investments by sustainable? serving as a social safety net in times of retail, manufacturing and trading compa- socio-economic crises. nies are also growing rapidly. Clearly Africa is likely to undergo signifi- cant transformation over the coming half Africa’s marine ecosystems are productive Putting Mozambique’s growth in the century, yet as African economies, popu- and resilient, providing a range of servi- African context lations, and cities grow, it is essential to ces to African populations over centuries. consider the implication of these trends More recently these ecosystems have faced Mozambique is one of the ten economies for the continent’s ecological systems, as increasing demands, as reflected in dwind- that have been growing fastest over the well as the societies that rely on various ling fish stocks, deforestation of coastal past decade, but the list also includes five services provided by these ecosystems. In forests and biodiversity loss. As optimism other African counties. From 2000-2008 Mozambique Rio Tinto has proposed using mounts regarding Africa’s burgeoning the continent’s real GDP grew by 4.9 barges to transport coal from its mines in economies, therefore, it will be essential to percent annually, more than twice the rate Tete Province to the coast on the Zambezi question the paradigms through which we of the 1980s and 1990s. While mineral and River. The scheme would require extensive view economic growth and ensure that the energy resources have undoubtedly played dredging of the river, which may increase integrity of Africa’s natural ecosystems are a central role in this impressive growth, the risk of flooding and have significant preserved through sustainable develop- analysis by the McKinsey Global Institute implications for the mangrove forests of ment paths. indicates that resources accounted for the Zambezi delta, the single largest stand ...... only about a third of Africa’s growth, while of mangroves on Africa’s Indian Ocean the remaining two-thirds resulted from coastline. Mangrove habitats in Mozambi- Author investments in other sectors including que and elsewhere in Africa face numerous retail, transportation, telecommunications threats including unsustainable exploi- Alex Benkenstein is a senior researcher and manufacturing. Africa’s population is tation of timber for construction and the with the South African Institute of Inter- growing faster than any other region in conversion of mangrove habitats for agri- national Affair’s (SAIIA) Governance of the world. The continent’s rapid population culture, urban expansion and aquaculture. Africa’s Resources Programme. His research growth is bound to result in challenges Population growth, rising food demand focuses on the fisheries and mining relating to food security, urbanization and and technological advances are also likely sectors, particularly in Southern and East infrastructure, yet it is also likely to drive to place further strain on fish stocks, which Africa. Alex graduated from the University economic growth through rising domestic in many cases are already being exploited of Stellenbosch with a Master’s Degree in demand, as well as swelling the Africa’s at unsustainable levels. Mozambique, International Studies (cum laude). He has labour force. In 2009 Africa’s population like most African states, faces significant worked as a researcher in the nonprofit surpassed 1 billion, doubling since 1982. resource constraints in implementing sector and the private sector, completing By 2050 Africa’s population is projected to effective fisheries governance strategies, projects for various clients, including the reach 2.1 billion, with a labour force of 1.2 yet the country’s lucrative shrimp fishery Parliament of South Africa. billion – by which time one in four working is relatively well managed. Increasingly, ...... age people in the world will be in Africa. the government is able to address illegal, Africa also has the highest rate of urbani- unreported and unregulated (IUU) fishing

www.ecdpm.org/GREAT 19 GREAT Insights Volume 1 | Issue 10 | December 2012 Governance, Regional integration, Economics, Agriculture and Trade EPA Update This section covers recent EPA developments in the African Union, West-Africa and SADC regions. Stay tuned for coverage of negotiations in other regions. Quentin de Roquefeuil

All ACP taken place. The most immediate hurdle in the SADC negotiations appears to be in, inter alia, Market ACP-EU Joint Parliamentary Assembly Access (MA) issues. SADC EPA negotiations: SADC tables meets in Paramaribo additional agricultural goods The 24th ACP-EU Joint Parliamentary Assembly As far as we know, two specific issues appear After having been delayed, the EU-SADC (JPA) took place in Paramaribo, Suriname, at particularly problematic in the MA discussions technical working group on Market Access the end of the month of November. On trade last April: the percentage of liberalization of the and Senior Officials met from December 3rd issues, Dr. Mohamed Ibn Chambas, Secretary West African market that negotiations should to December 7th in Johannesburg. Readers General of the ACP Group, declared that the aim at, and the level of detail in the statistical will recall that this meeting was delayed in CARIFORUM-EU EPA could be used as “a model basis to be used during these negotiations. On order for SADC to refine and consolidate its for other ACP regions”, but warned that “ if the latter, the region continues to argue for agricultural Market Access (MA) offer at the there are too many difficulties in implementing negotiations to take place at the 10-digit level regional level, after the EU had judged its initial the CARIFORUM EPA – well, it could either of the Harmonized Commodity Description offer tabled in insufficient. discourage or encourage the other regions”. (HS) and Coding System, while the EC argues that they should take place at the HS 6 level A number of agricultural tariff lines were The JPA Co-Chair, Hon. Musikari Kombo of aggregation. An HS 10 negotiation would added to SADC’s proposal, after arduous from Kenya questioned if the “obsession” of guarantee consistency with the region’s regional consultations. It seems that both sides EU negotiators on “a narrow liberalization nascent Common External Tariff (CET), but are confident that the latest SADC agricultural agenda which focused only on trade aspects, the EC argues that the HS 6 level is the level offer and the EU’s earlier “minimum request” including issues that definitely inimical to the usually used in international negotiations since provide a solid basis for further negotiations. development aspirations of ACP States”, was it is harmonized internationally. The region is Indeed, some of the goods added by the region not one of the reasons why EPA negotiations planning on holding consultations in February. in its offer overlap with the EU’s earlier request. have dragged on. Peter Thompson, Director Additionally, the region reportedly agreed to of Trade and Development Policy at DG Trade, Meanwhile, the region is currently holding the negotiate a deal on Geographical Indications for his part reminded the audience that the 12th round of talks between the West African (GIs), a longstanding EU demand. institutions in charge of implementing and Economic and Monetary Union (WAEMU, overseeing the agreement were in the process more commonly know by its French acronym, Nevertheless, the region’s offer does come with of being implemented, and that the EPAs were UEMOA) and ECOWAS states on the region’s fine print. The exact nature of concessions to no “magic pill” for development. Common External Tariff (CET). The CET is the be made still has to be determined: neither precondition for achieving the region’s planned the Tariff Rate Quotas nor the preference Additionally, with the “Banana Dispute” coming customs union, and, ultimately, a common margins to be provided for these goods are to an end at the WTO, Rabin Parmessar, the market. WAEMU states already have a CET explicitly spelled out. Furthermore, the offer Surinamese representative at the JPA, voiced implemented; the negotiations therefore take is conditioned on several points: no export concerns over the disbursement of funds under place between the WAEMU block and other subsidies or refunds, seasonal access, exclusion the “Banana Accompanying Measures”, an aid ECOWAS states. from the standstill clause and the possibility program designed to cushion the erosion of of adding specific “comfort measures”. With ACP preferences for banana exports. The CET is organized around five tariff bands this in mind, the SADC offer should be refined (0, 5, 10, 20 and 35%) into which goods are during regional internal meetings in February African Union classified. The challenge lies in determining 2013, after which it will be negotiated with the what good goes into which band given that, EU in March and “finalized”. African Union Trade Ministers Meeting Issue the current country rates differ widely in some Declaration on EPAs cases amongst countries in the region. With regards to Rules of Origin (RoOs), In a veiled reference to the amendment of cumulation appears to remain problematic, MAR 1528 governing Market Access to the EU The CET, by now almost finalized for the despite some progress. Seniors Officials came for Interim EPA countries, whose exact cut- exception of a few keys goods, has been to an agreement that user-friendliness, the off date for implementation and ratification submitted to the WTO and the World Customs risk of circumvention and clear timeframe of Interim EPAs is still under discussions in Organization (WCO). Problems with individual and targets for the reduction of goods in the Brussels (see our previous EPA updates on the country commitments at the WTO are foreseen exclusion list should guide future efforts. The issue), the Trade Ministers of the African Union since, in some cases, the reclassification of addition of a clause in the agreement aiming called during their meeting in Addis Ababa for goods into higher bands means that countries to review the exclusion list after a number of EPA negotiations to be “substance-based and will have tariffs levels above their bound WTO years is an option. With regards to Rules of not time-based”. The declaration, issued on rates. Yet, in a recent article published by the Origin in fisheries, the EU has yet to respond to November 30th at the end of a four day long International Center for Trade and Sustainable the region’s clarifications. It should do so before Joint Conference of the African Union Ministers Development (ICTSD), El Hadji Abdourahmane the end of the year. of Agriculture and Trade, further stated that the Diouf, Director of Agence Africaine pour le aforementioned regulation needs to “remain commerce et le développement, argues that Notes unchanged” until development oriented EPAs legal solutions to the problem are within reach 1 http://www.acp.int/content/all-eyes-carifo were in sight, and that “high level political under WTO law. rum-epa-benchmark dialogue” was needed to “persuade the EU to 2 http://www.caribbean360.com/index.php/ take into account African concerns”. The outcome of this meeting, currently news/638506.html#axzz2EpZtdBIh ongoing until Friday, December 14th, will feed 3 See West Africa’s new common external West Africa into ECOWAS’s decision making bodies, which tariff and the individual WTO commitments will meet to review the matter in the first half of ECOWAS member states: No insurmoun West Africa: EPA negotiations on hold, of 2013. table incompatibilities, available at http:// region conducts crucial talks on Common ictsd.org/downloads/bridges-africa-review/ External Tariff 1-5.pdf EU negotiators have not met their West African 4 http://appablog.wordpress.com/2012/12/10/ counterparts since last April. A meeting was vers-ladoption-du-tarif-exterieur-commun- foreseen in Accra in June, but it has still not de-la-cedeao/

20 www.ecdpm.org/GREAT GREAT Insights Volume 1 | Issue 10 | December 2012 Governance, Regional integration, Economics, Agriculture and Trade Monthly highlights from ECDPM’s Talking Points www.ecdpm-talkingpoints.org

African trade and agriculture ministers sow a seed for closer cooperation, Facing up to realities: DG DEVCO introduces new organigram for 2013, Talking Talking Points, Francesco Rampa, December 7th, 2012 Points, Florian Kraetke, November 30th, 2012

Dan Lui co-authored this article. For the first time, African Union ministers Staffing issues are all the talk in Brussels at the moment amid heated of trade and agriculture gathered last week at a joint conference in Addis discussions over the next EU budget. EU Member States want the Ababa. Originally scheduled for late October, the conference had been European Commission (EC) to reduce its staff by more than 5 % over the postponed since not enough ministers from AU member states had next 5 years, more than Council President van Rompuy recently proposed. confirmed their attendance. Also this time the conference did not manage In particular, Member State officials have made critical observations about to attract a full turnout of high-level representatives from all African states the size of the Directorate-General for Development and Cooperation – and Regional Economic Communities – yet it still represented a significant EuropeAid (DG DEVCO). Counting 6.5% of the EC’s Brussels-based staff, it moment with officials and experts from the two traditionally separate is the second largest of the EC’s offices in Brussels. However, DEVCO staff sectors and from both regional and (...) manages relatively (...)

MDGs matter only minimally for development in Côte d’Ivoire, Talking Points, Employment – it’s what we’ve always wanted!, Talking Points, Bruce Byiers, Bruce Byiers, November 30th, 2012 November 23rd, 2012

This article was published on 6 December and is available on the European “Jobs” are the focus of the recently launched World Development Report Report on Development blog. ++ SERIES: BUILDING THE POST-2015 2013. This year’s edition of the World Bank’s annual flagship publication DEVELOPMENT FRAMEWORK++ Preparation of the European Report on raises a host of interesting issues. Key points and take away messages I got Development 2013 is now well underway. It will focus on “Elements for from the London launch event earlier this month are: 1) Although labour a Post-2015 Agenda” and aims at feeding into the debate about what market functioning is important, labour market policies in developing development framework should replace the Millennium Development countries matter much less for employment than other policies because of Goals after their expiry date in 2015. As part of the background research implementation difficulties and the fact that most employment is informal. work for this report, the ERD team is conducting four country case studies 2) Relatedly, although most people in developing countries are informally (in Nepal, Peru, Rwanda and Côte d’Ivoire) to ensure that the report reflects self-employed on farms and in micro-enterprises, it (...) (...)

Monthly highlights from ECDPM’s Weekly Compass Update

www.ecdpm.org/weeklycompass ......

How to achieve policy goals despite corruption, Weekly Compass, Issue 130, 30 Aid cuts on EU leaders’ agenda next week, Weekly Compass, Issue 128, 16 November 2012 November 2012

A new book from the World Bank looks at why corruption and a lack of A leaked document reveals that European Council President Van Rompuy good governance emerge and persist in many countries and which effect this week proposed huge cuts to EU development aid. Analysis by the it has on achieving reform goals. The book provides the political economy advocacy group ONE shows an 11 percent decrease to the European tools necessary to understand and integrate the analysis of how political Development Fund and a 9 percent cut to the external spending section and social factors influence the success of policy goals. The publication also of the budget. Both reductions are higher than those in all other areas of provides practical advice on how to organize and use these tools based on EU spending. Eloise Todd, Brussels Director of ONE said “Next week, [EU] stakeholder mapping, which helps decide what reforms and projects are leaders [attending the summit on the future EU budget] must be prepared feasible given the circumstances. to stand up and fight for these life-saving funds.” According to Laura Mayer on ECDPM’s Talking Points blog, cuts will also have implications for the current process of programming EU development instruments and EEAS: scepticism dissipates, but no full endorsement, Weekly Compass, Issue 129, differentiating levels and types of aid to partner countries. 23 November 2012

There is general recognition that collective European foreign policy is preferable to individual member states “going it alone”, especially in their relations with major powers, according to a new study by the Centre for European Policy Studies. The paper, which includes articles from 9 EU Member States shows, however that many still question the capacity of the EEAS to act effectively, diplomatically, and strategically, when required to do so. It cites a French observation: “the bureaucratic machinery obviates ambition and the development of strategic policies; and the right expertise is sometimes lacking.”

www.ecdpm.org/GREAT 21 Calendar and resources

ACP-EU Trade Calendar December 2012 February 2013 3-7 EU-SADC Technical Working Group on Market Access and Senior Officials 11-15 ACP-EU JPA - Regional Meeting (Caribbean) 10-14 Pacific-EU Joint Technical Working Group, Brussels, Belgium (TBC) PACP Trade Officials meeting 10-15 Meeting of the Joint ECOWAS-UEMOA Committee for the (TBC) West Africa regional consultations on EPA Management of the ECOWAS Common External Tariff, Abidjan, Ivory (TBC) SADC EPA Working Group on Market Access Coast March 2013

(TBC) Pacifc EPA Joint Technical Working Group 11-16 EU-SADC Technical Working Group on Market Access and Senior Official

GREAT Insights is published by ECDPM ...... Countries?, Axel Berger and Julia Harten, DIE Briefing Resources Paper, December 2012 Editor: Sanoussi Bilal Editorial team: The Impact of EU Bilateral Trade Agreements with Quentin de Roquefeuil Third Countries on the Caribbean Rum Sector, Nicola Trade Liberalisation and Fiscal Adjustments: The Case Cantore, Jane Kennan and Dirk Willem te Velde, of EPAs in Africa, Sanoussi Bilal, Melissa Dalleau and HEAD OFFICE Commonwealth Secretariat Trade Hot Topics 94, SIÈGE Dan Lui, ECDPM Discussion Paper 137, November 2012 November 2012 Onze Lieve Vrouweplein 21 6211 HE Maastricht Monitoring The Effects Of The Common Agricultural The Netherlands Pays Bas 2012 DAC Report On Predictability. Survey On Donors’ Tel +31 (0)43 350 29 00 Policy In Developing Countries. A Review Of The Forward Spending Plans And Progress Made On Fax +31 (0)43 350 29 02 Institutional Options, Niels Keijzer and Michael King, Predictability Since the HLF-4 at Busan, OECD DAC, Overseas Development Institute, November 2012 December 2012 BRUSSELS OFFICE BUREAU À BRUXELLES Rue Archimède 5 A review of stakeholders’ views on CAP reform. What On The Relevance Of Relative Poverty For Developing 1000 Brussels Bruxelles they say and what they have achieved, Henrike Klavert Countries, Christopher Garroway and Juan R. de Belgium Belgique and Niels Keijzer, Overseas Development Institute, Laiglesia, OECD Development Centre, November 2012 Tel +32 (0)2 237 43 10 November 2012 Fax +32 (0)2 237 43 19

Avoiding Middle-Income Growth Traps, Pierre-Richard ...... Impact of EU Common Agricultural Policy reform on Agénor, Otaviano Canuto, and Michael Jelenic, World Uganda, Ole Boysen and Alan Matthews, Overseas Further information or to subscribe to our Bank Economic Premise 98, November 2012 Development Institute, November 2012 E-newsletters, visit www.ecdpm.org/infocentre The New Face of Poverty: How has the Composition To order a hard copy of an ECDPM Impact of the Common Agricultural Policy on food of Poverty in Low Income and Lower Middle Income publication, e-mail [email protected] price volatility for developing countries, Nicola Cantore, Countries (excluding China) Changed since the 1990s?, Overseas Development Institute, November 2012 photocredits: Andy Sumner, IDS Working Paper Volume 2012 No 408, page 2: World Economic Forum taken by Aly November 2012 Ramji / Mediapix Impact of EU Common Agricultural Policy reform on page 5: attributed to Kaysha Uganda’s food trade with EU, Othieno Lawrence and http://www.flickr.com/photos/kaysha/ What Drives Tax Morale? Christian Daude, Hamlet Musa Luwanga Mayanja, Overseas Development 715628936/ Gutiérrez and Ángel Melguizo, OECD Development Institute, November 2012 page 15: Photo courtesy of the MCLI Centre Working Paper No. 315, November 2012 page 19: attributed to Magnusfranklin http://www.flickr.com/photos/ The EU’s Common Agricultural Policy and adjourned/6281291471/ Unpacking the International Technology Transfer Development, Dirk Willem te Velde, Sheila Page, Nicola European Centre for Development Debate, Padmashree Gehl Sampath, Pedro Roffe, ICTSD Cantore, Alan Matthews, Michael King, Ole Boysen and Policy Management Issue Paper 36, November 2012 Niels Keijzer, Overseas Development Institute Project Briefings 79, November 2012 Models for Trade Related Private Sector Partnerships for Development, Shannon Kindornay and Kate What Opportunities Do The New EU International Higgins with Michael Olender, North-South Institute, Investment Agreements Offer For Developing October 2012