Mozambique is a success story in sub-Saharan Africa. It has benefited from sustained large foreign aid inflows, strong and broad-based growth, and deep poverty reduction. Since its civil war ended in 1992, Mozambique’s growth record has been impressive, and its growth has especially benefited the poor: consumption among people below the poverty line has grown strongly, thanks to an expanding agricultural sector, increased nonfarm activities in rural areas, and higher wages. Today, Mozambique has one of the lowest levels of income inequality in Africa, and its absolute poverty and the poverty gap (which takes into account the distance separating the poor from the poverty line) have decreased substantially. (See Figure 1.1.) This remarkable growth performance was made possible by prudent macroeconomic policies, structural reform, and substantial donor assistance. On the political side, Mozambique has succeeded in bringing about reconciliation and solidifying its nascent democracy through three general and presidential elections.1
Mozambique has experienced impressive economic growth over the past decade. GDP growth has averaged about 8 percent a year, which compares favorably with the growth takeoffs of Indonesia, Malaysia, the Philippines, and Thailand (the four members of the Association of Southeast Asian Nations referred to in this book as the ASEAN-4) and other Asian countries in the mid-1970s (see Chapter 1).