Republic of Mozambique: Selected Issues
Author: International Monetary Fund
Publication Date:
05 Aug 1998
eISBN:
9781451827040
Language:
English
Keywords:
ISCR; CR; Mozambique; investment-to-GDP ratio; productivity of investment; ratio; wage compression ratio; poverty line; retail price; household expenditure survey; poverty profile; factor income; Income; Sub-Saharan Africa
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This Selected Issues paper on the Republic of Mozambique highlights that in the period 1987–97, the economy of Mozambique made impressive gains. Real GDP and exports grew on average by 6.8 percent and 15.6 percent, respectively, and the ratio of investment to GDP rose from 36.1 percent in 1987 to 45.2 percent in 1997. In the two years ended December 1996, the 12-month inflation rate fell dramatically from 70.1 percent to 16.6 percent.

Abstract

This Selected Issues paper on the Republic of Mozambique highlights that in the period 1987–97, the economy of Mozambique made impressive gains. Real GDP and exports grew on average by 6.8 percent and 15.6 percent, respectively, and the ratio of investment to GDP rose from 36.1 percent in 1987 to 45.2 percent in 1997. In the two years ended December 1996, the 12-month inflation rate fell dramatically from 70.1 percent to 16.6 percent.

VI. Poverty and Social Expenditures in Mozambique20

A. Introduction

77. Mozambique is one of the poorest countries in the world with an estimated GNP per capita of about US$90 in 1996.21 Given the modest income per capita, sustainable economic growth with low inflation is the only way to improve the living conditions of the population. The government’s poverty reduction strategy focuses on (i) promoting faster smallholder agricultural growth; (ii) developing the country’s human resources through increased provision and better quality of social services (health and education) and (iii) strengthening safety nets aimed at assisting the most vulnerable population groups. The government is committed to expanding the share of the social sectors in total expenditure and to improving the effectiveness of social sector expenditures through the development of integrated sector programs, such as those in agriculture and rural development (PROAGRI), health and education. Progress toward the medium-term social goals will be assessed by the use of objective indicators of the delivery of social services.

78. This chapter looks into three issues: the existing social conditions (Section B), the government expenditures in the social sectors (Section C), and the social safety nets that complement the government’s structural adjustment program (Section D).

B. Poverty and Social Indicators

79. Since the signing of the Rome Peace Accords in 1992, Mozambique is undergoing fast economic and social transformation. The end of the war has allowed the return of a significant part of the population to the land, the traditional source of its livelihood.22 In addition, the intensification of economic reform, including the near completion of the government’s privatization program has given new dynamism to the economy. Finally, the decline in inflation since 1995 should have contributed to a decline in poverty levels.

80. Even with adequate policies, the improvement in social and poverty indicators tends to be a gradual process, particularly in a country such as Mozambique where poverty is widespread. Moreover, it is often difficult to measure the progress made in poverty reduction as the compilation of socio-economic and demographic statistics poses difficult technical questions and can be an expensive undertaking, which a poor country can seldom afford. Mozambique’s poverty profile and poverty reduction strategy are based on data for the early 1990s (Fortes, 1995).23 For the urban population, the data source is a household expenditure survey of Maputo in 1991–92 and a similar survey of the provincial capitals in 1992–93 (Direcção Nacional de Estatisticas, 1992–94. For the rural population, the sources are regional or local agricultural surveys also conducted in the early 1990s. The first post-war nationwide household expenditure and income survey (HES) and the first nationwide health and demographic survey were conducted in 1996. Preliminary results from these two surveys became available early in 1998. This section makes inferences about social and poverty conditions on the basis of these preliminary results. It concludes that there has been some progress in improving social conditions and reducing poverty since the early nineties. This result should, however, be accepted with caution as the margins for error are large and considerable work remains to be done to complete data analysis.

81. Table 11 shows Mozambique’s and Maputo’s households according to the level of their monthly expenditures per capita in 1996. These results are compared to those obtained in a 1991 household expenditure survey for the city of Maputo. In order to translate the 1996 data into estimates of poverty levels, a poverty line needs to be defined. Two options are available: to update the poverty line estimated for Maputo in 1991 or the one estimated for the population receiving cash transfers in the provincial capitals and Maputo in 1995.24 Both these poverty lines were defined as the expenditures needed to purchase a basket that would provide a minimum caloric intake of 2,100 kcal per person per day and meet some other basic needs. When updated for inflation (using changes in the Maputo consumer price index), these two poverty lines amounted in 1996 to approximately Mt 217,000 and Mt 135,000 per capita per month. Because of differences in their definition and coverage, these two poverty lines provide upper and lower bounds for the actual absolute poverty line in Maputo today.25 The poverty line for Mozambique as a whole is lower than that for Maputo because of regional price differences.26

Table 11.

Mozambique: Households by Expenditure per Capita Interval

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Sources: Liquérito Nacional aos Agregados Familiares Sobre Condições de Vida. INE, Maputo 1996, Unpublished tables; Table 159. “Relatório Sobre os Resultados do 2° Modulo do Inquérito as Familias na Cidade de Maputo,” DNE, Maputo, Julho, 1992; and Fund Staff estimates.

The intervals 850,000–949,000 and 950,000–1,049,000 have been merged for comparability with the 1991 survey.

Numbers for the 1991 survey of Maputo refer to household in sample.

Expenditure intervals for Maputo in 1991 were adjusted by the average inflation March 96-April 97/ August -November 1991; to obtain the same interval spacing as in 1996, it was assumed that the distribution of households inside an interval is uniform.

82. Using the interval given by the two described poverty lines, the proportion of absolutely poor households in Maputo declined in the period 1991–1996 from 28–52 percent to 17–32 percent of the total.27 However, the proportion of the population that is poor is likely to be higher than the proportion of poor households in the total because poor households tend to be larger than the average household. The improvement in the purchasing power of Maputo’s households is evident across the entire expenditure spectrum. The percentage of households in each of the two lowest expenditure brackets declined by about a third, the percentage of households with expenditure below Mt 349,000 per month (about US$31) declined by close to 20 percent, and the percentage of households with monthly expenditures per capita higher than Mt 649,000 per month (about US$57). doubled.

83. The average household consumption over the rest of the country is much lower than that in Maputo, even after allowances are made for price differentials. About 65 percent of Mozambique’s households consumed less than Mt 149,000 (about US$13) per capita per month and nearly 90 percent consumed less than Mt 349,000 (about US$31) compared with only 20 percent and 54 percent of Maputo’s households respectively in these two brackets.

84. No comparison with earlier periods can be made for the country as a whole. Moreover, it is difficult to make an assessment of the figures available for 1996 because the per capita monthly expenditures of 47 percent of households belong to one single interval, that between Mt 50,000 and Mt 149,000. However, if one assumes that the distribution of households within each expenditure interval is uniform then a minimum of 35 percent and a maximum of 58 percent of all households in Mozambique were still below the absolute poverty line in 1996.28

85. Data on household income and its distribution are shown in Table 12.29 The average monthly household income in Maputo, at just over Mt 2 million (about US$189), is 2.4 times higher than the average for Mozambique, and it has increased by 49 percent since 1991.30 Of all households in Mozambique, 76 percent had monthly income below about Mt 1 million; in Maputo this proportion was only 37 percent.

Table 12.

Mozambique: Households by Monthly Income Interval

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Sources: Liquérito Nacional aos Agregados Familiares Sobre Condições de Vida. INE, Maputo 1996, Unpublished tables; Table 144. “Relatório Sobre os Resultados do 2o Módulo do Inquérito às Famílias na Cidade de Maputo,” DNE, Maputo, Julho, 1992; and Fund staff estimates.

Numbers for the 1991 survey of Maputo refer to percent of households in sample

Expenditure intervals for Maputo in 1991 were adjusted by the average inflation March 96-April 97/ August -November 1991; to obtain the same interval spacing as in 1996, it was assumed that the distribution of households inside an interval is uniform.

For 1991 Maputo survey interval is open. Upper limit is derived from information on average income for all households.

86. Income distribution is unequal, as can be expected in a country with virtually no middle class. Sixty-five percent of all households receive 25 percent of the income, and one half of these receive only 5 percent of the total income. The richest 5 percent receive nearly 50 percent of the income. The distribution is somewhat less unequal in Maputo. The Gini coefficients for Mozambique and Maputo in 1996 were 0.52 and 0.47 respectively. These results are comparable with the 1991 Gini coefficient for Maputo of 0.48. When compared with other countries in Sub-Saharan Africa these results, if confirmed, would indicate that Mozambique has an income distribution that is more unequal than the average (see Table 13 and Figure 12).31

Table 13.

Sub-Saharan Africa: Gini Coefficients

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Source: Deininger, K. and L. Squire, “Measuring Income Inequality: A New Data-Base,” Harvard Institute for International Development, Development Discussion Paper No. 537, Conference Paper Series, May 1996; INE, Household Expenditure and Income Survey, Preliminary Results, 1996.
Figure 12.
Figure 12.

Sub-Saharan Africa, Gini Coefficients, Frequency

Citation: IMF Staff Country Reports 1998, 059; 10.5089/9781451827040.002.A006

Source: Deininger and Squire (1996)

87. Most social indicators for Mozambique stand well below averages for Sub-Saharan Africa (see Table 14). Present estimates show a low gross primary enrollment rate (62 percent of the respective age group) and a very high illiteracy rate (60 percent); the corresponding figures for Sub-Saharan Africa are 71 percent and 43 percent. Health indicators also compare unfavorably; the life expectancy at birth is 47 and the infant mortality rate (per 1,000 live births) is 134, compared with respectively 52 and 92 for Sub-Saharan Africa.

Table 14.

Social Indicators for Mozambique and Sub-Saharan Africa33

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Source: Government of Mozambique and World Bank staff estimates.

88. Preliminary results from the 1996 health and demographic survey show that the infant mortality rate is somewhat lower than was expected and that the child mortality rate is somewhat higher than was expected (199 per thousand children under age 5). The preliminary results also show a prenatal coverage of 71.8 percent (43.5 percent of births are institutional) and full vaccination coverage of 47.1 percent.32 Box 1 presents a summary of the main findings of a rural poverty profile prepared by the Poverty Alleviation Unit of the Ministry of Plan and Finance in 1996.

C. Social Expenditures

89. In the last ten years, total social expenditures excluding foreign financed investment and grant financed medicines have fluctuated between 5.0 and 7.3 percent of GDP (see Tables 15, 35, and Figure 13). In 1993 and 1994, social expenditures declined sharply as available resources were diverted to resettlement, elections, demobilization and demining (special programs). Since then, however, social expenditures have accounted on average for 14.3 percent of total expenditures and net lending. Health and education expenditures have comprised the bulk of these expenditures (91 percent in 1997). The remainder has consisted of price subsidies, cash transfers (discussed below) and some rural development programs. Data on the execution of foreign-financed investment in health and education are not available. On the assumption that the proportion of foreign to local financing of such investment is the same as that projected in the government’s three-year investment program, in 1997 total expenditure on education and health was nearly twice that shown in Table 15.

Mozambique: Rural Poverty Profile-Main findings

  • Around 19 percent of the rural households are headed by women (30 percent in the south, 20 percent in the center and 12 percent in the north), and these households possess less land than those headed by men.

  • At the national level some 29 percent of rural households cultivate less than one hectare. In the north this figure is 20 percent, in the center 38 percent and in the south 40 percent.

  • Rural households in the south report an average of 5.0 months of food insecurity. The figure is 3.3 months in the center and 2.5 months in the north.

  • Although the incidence of growth faltering and malnutrition amongst children are high (15 percent and 25 percent respectively), they are similar to rates in neighboring countries.

  • About 25 percent of smallholder plots were allocated by traditional authority, 9 percent by formal authority, 9 percent is borrowed land, 28 percent is occupied land, 27 percent is purchased land mostly without titles (26 percent)

  • Estimated cotton yields range between 300–400 kgs per hectare, far lower than the 1100–1300 kgs per hectare obtained in West Africa.

  • Only 7 percent of all farming households use fertilizers. Only 5 percent of plots are irrigated, and of those that are, only 10 percent are mechanically irrigated.

  • The average rural household had between 4 and 5 persons according to the national demographic survey of 1991.

Source: Ministry of Plan and Finance (1996).
Figure 13.
Figure 13.

Mozambique: Social Expenditures, 1987–97

(as a percent of GDP)

Citation: IMF Staff Country Reports 1998, 059; 10.5089/9781451827040.002.A006

Source: Table 15.
Table 15.

Mozambique: Expenditure on the Social Sectors, 1987–1997

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Source: Appendix table 25.

Total expenditures refer to 1989 only.

GAPVU’s activities: transfers and administrative costs.

Capital expenditure includes locally financed expenditure only.

Includes special expenditures in 1994.

90. Current budgetary expenditure in the social sectors is the only available measure of the provision of social services in Mozambique.34 It is not a perfect indicator, however. Its coverage is incomplete, for it does not include social services in the areas of housing and communal services, recreation and culture, nor does it include services misclassified as investments in the social sector, and those financed outside the government’s budget—all believed to be significant.

91. Since 1987, current social sector expenditure has fluctuated in the range of 4.0–6.5 percent of GDP (Tables 15 and 35, and Figure 13). On average, expenditure in education and health has amounted to about 2.9 percent and 1.3 percent, respectively. Price subsidies accounted for 1.5 percent of GDP in 1987, but were gradually eliminated and have been less than ½ percent of GDP since 1991. The GDP share of the other social expenditure programs in Table 15 has declined from 0.9 percent of GDP in 1990 to 0.5 in 1997.

92. In real per capita terms, current social expenditure increased by 45 percent between 1987 and 1997 (Figure 14); it peaked in 1992, before declining 24 percent over 1993 and 1994, and gradually recovering thereafter.

Figure 14.
Figure 14.

Mozambique: Real Current Social Expenditures per Capita, 1987–1997

Citation: IMF Staff Country Reports 1998, 059; 10.5089/9781451827040.002.A006

Sources: Ministry of Plan and Finance; Fund staff estimates.

93. Real per capita social expenditures can be viewed as the product of four factors: real GDP per capita, the share of total expenditures in GDP, the share of social expenditures in total expenditures, and relative prices:

Ψ=y.E/Y.S/E.P/Ps

where ψ represents real current social expenditure per capita; S is nominal current social expenditure; E is nominal current total expenditure; y is real GDP per capita; Y is nominal GDP; P represents the GDP deflator; and Ps represents the social service price index.

94. Therefore, over any period the change in social expenditure35 (and thus the change in government social services per capita), can be decomposed as follows:

ΔΨ=Δy.(E/Y.S/E.P/Ps)0++Δ(E/Y).(S/E.P/Ps.y)0++Δ(S/E).(E/Y.⁢P/Ps.y)0++Δ(P/Ps).(E/Y.S/E.y)0++residual

where the first term represents the contribution of real income per capita, the second term represents the contribution of the share of expenditures in GDP, the third term represents the contribution of the share of social services in total expenditures, the fourth term represents the effect of relative prices and the last term is a second order residual.

95. The second panel in Figure 14 shows how these factors contributed to the increase in social expenditures from year to year, while the third panel shows their accumulated effects over the whole ten year period. The decline in social expenditures in 1993–1994 can be largely attributed to a temporary shift in budget priorities towards the special programs mentioned above. The increase in social expenditure since the early 1990s was also dampened by cuts in overall expenditure level and by very fast population growth (estimated at 22 percent over 1992–1996) owing to the return of refugees. The latter reduced the positive effect on social expenditures that the fast pace of GDP growth in this period had.

96. Over the whole period of economic reform, the strong growth of the economy (33 percent accumulated increase in real GDP per capita) was the main component of the increase in social expenditure, representing 74 percent of the total increase in social expenditures. The share of current social expenditure in total current expenditure increased by nearly 7 percentage points over 1987–97 and was also a large component of the increase in social expenditure (69 percent). The increase in the share of current social expenditure in total current expenditures more than offset the negative effect (40 percent of the overall increase in real current social expenditure per capita) of a decline in total current expenditures as a share of GDP. While the effect of relative prices was significant in some of the observed years (in 1988, for example, the component representing changes in relative prices was responsible for a sizeable decline in social expenditure), major changes in relative prices tended to reverse themselves within a few years, resulting in an insignificant cumulative effect.

Provision of Social Services in Mozambique: Caveats

  • The analysis of real recurrent expenditures per capita in the social sectors is an attempt to assess the volume of social services provided by the government. It is not an assessment of the total government expenditures in the social sectors, which should include capital expenditures, nor is it an estimate of the total social services provided by the economy (as it excludes services provided by private clinics and schools, as well as those provided by non-governmental and religious organizations).

  • The data for recurrent social expenditures in Mozambique excludes:

    • recurrent expenditures recorded within investment expenditures.

    • the value of grant-financed medicines.

    • off-budget foreign aid-financed recurrent expenditures in the social sectors.

    • social expenditures other than those in health, education, price and social subsidies, and some rural development programs. Evidence from a new budgetary classification introduced in 1998 seems to indicate that the excluded recurrent social expenditures in the present data are not marginal.

    • expenditures on agriculture and sanitation that may have a direct effect on the well-being of the population, such as the provision of clean water.

  • Population statistics are projections based on the 1980 census. A new census was conducted in 1997, and together with a household expenditure survey recently completed, seems to indicate that fertility rates and population are overstated in the population series used in this analysis.

  • There is no available price index for recurrent social expenditures. The price index used was an average of a wage index for the public sector (weighted by share of the wage bill in recurrent social expenditure) and the consumer price index (weighted by the share of nonwage expenditure in recurrent social expenditure).

D. Social Safety Nets

97. Formal social safety nets are government schemes to protect population groups that are vulnerable to natural calamities or adverse circumstances, including those resulting from the implementation of structural reforms. Informal social safety nets serve similar purposes, but are provided by private bodies, such as NGOs, religious organizations, or families. For example, a traditionally important source of informal support has been the remittances of workers abroad. These remittances are estimated to have been in excess of US$60 million in 1996 and 1997. According to the 1996 household expenditure and income survey, these remittances represented over 5 percent of monthly household income of the surveyed population and were received by 12 percent of the population that had an income.

98. Early in 1997, the government completed an evaluation of the formal social safety nets in Mozambique (Ministério do Plano e Finanças, 1997). This section draws heavily on the findings of this evaluation. The government is also conducting a review of the informal social safety nets, but this review will only be completed by mid-1998. The review of the formal social safety nets is part of a larger effort to coordinate government assistance to the vulnerable population so as to ensure that their most pressing needs are met. While the government gives high priority to providing a safety net to the most vulnerable population groups, it is well aware that its resources are limited and that it needs to narrowly define the target groups for its assistance. Moreover, it needs to ensure that the operation of its social safety nets does not interfere with production incentives or with the operation of informal safety nets.

The Cash Transfer Program

99. In September 1990 the government instituted a program of cash transfers to very low-income households. Until 1997 the program was administered by the Office of Assistance to the Poor (GAPVU), a unit of the Ministry of Coordination of Social Action. In 1997 GAPVU was abolished and was replaced by the National Institute of Social Action (INAS). The latter remains under the umbrella of the Ministry.

100. The program’s principal objective is to reduce urban poverty. The target population is urban households with one or more of the following: pregnant women or children less than 5 years old, with nutritional deficiencies associated with health risk factors; unemployed persons more than 60 years old, living alone or with others of non-working age; physically disabled or chronically ill persons who are unable to work and who live alone or are heads of household with no one of working age; and single mothers with five or more children and who are heads of household with no other person of working age. Currently, such households must have a per capita income of Mt 32,000 (about US$3) per month or less, and no working-age family members living abroad. To ensure the program does not encourage rural-urban migration, household members must have been resident in the area for at least one year. Qualifying households are entitled to Mt 32,000 per month per family member, for up to five family members.

101. The identification of beneficiaries in the case of elderly and disabled people relies heavily on bairro (neighborhood) chiefs or quarteirão (block) secretaries, who inform households about the program’s existence and verify their income and residence in the absence of salaried employment and/or residence cards. The outreach for malnourished children and pregnant women, as well as the certification that they qualify for the program, is done by neighborhood clinics. INAS staff are required to visit applicants at home to verify the information provided, before approving an application.

102. From its inception until 1996, the program expanded rapidly, reaching 92,000 households in thirteen cities in the latter year (though some of the expansion was fraudulent) (see Table 36). However, in early 1997 the government completed an audit of the scheme, which uncovered a number of irregularities in administration. On the basis of the evaluation, the number of household beneficiaries was reduced to 39,964 in September 1997 and the program is being reformed.

103. The government’s evaluation of the program was largely based on a 1995 survey of the consumption of beneficiary households (Datt and others, 1995). The survey looked at the contribution of the cash transfer to consumption, the distribution of the transfer among types of beneficiary households, and the demographic and economic characteristics of these households. It was based on a sample of 515 households in all the towns were the scheme is operating. It did not compare beneficiary and non-beneficiary households, and so could not give definitive conclusions on the scheme’s success in reaching the targeted social groups. Moreover, its conclusions have to be interpreted with caution, because the sampling was based on lists of beneficiaries that were later found to have been fraudulent.

104. At the time of the survey, the target population was defined as those households with a monthly per capita income of Mt 24,000 or less. This was a very restrictive amount, since it was only 27 percent of the estimated poverty line for Maputo in 1995 (Mt 89,000). For this reason, the income test seems to have been largely ignored in practice. Since the survey, the threshold qualifying income was raised to Mt 32,000, but as a percentage of the poverty line updated to 1997 prices it declined to 23 percent.

105. While no definitive judgment can be made on the effectiveness with which the targeted population was reached, indicators of nutrition, morbidity, housing conditions, access to potable water, and use of electricity all indicate that the beneficiary households were more deprived than the urban population in general. For example, only 7.5 percent of beneficiary households in the survey had electricity and 79 percent had access to safe water, compared to 22 percent and 89 percent, respectively, in the general urban population; and nearly 50 percent did not own a table. Twenty-nine percent of beneficiaries were estimated to be non-poor, but in the absence of comparisons between the beneficiary and the non-beneficiary populations the significance of this leakage cannot be assessed.36 There are other indicators of lax implementation, however. For example, households of elderly beneficiaries were found to have on average 0.7 working-age adults; and the majority of preschool children receiving assistance were not malnourished.

106. The survey found that the actual transfer received per capita (US$1 per month) was 35 percent below the entitlement.37 This may have reflected weaknesses in administration. Only 7 percent of beneficiaries knew the amount of the transfer they were entitled to; 31 percent of the beneficiaries experienced an average of 2 months of interruption in their receipts; and 90 percent of beneficiaries walked to INAS offices to receive their monthly payments and, once there, had to wait an average of 7 hours to collect them. The high cost of collection (in terms of time and inconvenience) of the transfer, combined with the small amount, probably discouraged some households from collecting. This may have been particularly true of disabled persons or those in poor physical condition, and may explain why the number of recipients with severe disability was so small.

107. Nevertheless, the survey concluded that the transfer had a significant impact on the consumption of beneficiary households, accounting for 15 percent of the beneficiaries’ mean net (before-transfer) consumption expenditure. The contribution to expenditure was as much as a third for the bottom three deciles of the beneficiary population. However, the transfer received was insufficient for it raised beneficiaries’ daily caloric intake from 1,300–1,400 kcal to only 1,700 kcal compared with a normative minimum of 2,100 kcal per day. The survey estimated that 65 percent of the beneficiary population lived in absolute poverty, that is, their income was below that needed to secure the normative caloric intake. In the absence of the transfer, this proportion would have been 71 percent.38 The entitlement was raised to its current level after the survey.

108. The government attributes the program’s weaknesses to shortcomings in design and to the extremely low cost of operation. It is inherently difficult to implement a program whose goal is to reach two very different types of population (one being the malnourished and the other being the elderly and severely disabled). The adequacy of addressing nutrition problems with a cash transfer is also questioned, as little can be done to ensure that the transfer reaches the undernourished family members or that it is spent on food. These problems were compounded by the unrealistically low administrative cost of the program (2.1 percent of total transfers in 1995 and an underpaid staff of only 92). The latter concern was underscored late in 1996 when widespread fraud was discovered: program administrators had been adding fictitious names to beneficiary lists.

109. The government was quick to act, replacing and reorganizing the entire administration of the scheme. The pay and number of administrators has been increased, and work has been organized around teams to ensure that single staff are not in control of information. Separate teams of workers have been charged with addressing the information campaign, verification that recipients meet the program’s requirements, and verification that payments are actually being made. The information system has been computerized. The system of rewards for nurses and local leaders in charge of identifying potential program beneficiaries has also been overhauled, to reduce the incentive for delivering households that do not meet the criteria.

110. The reforms have increased the program’s administrative cost per transfer to nearly the value of the transfer amount. This high relative cost probably reflects the low amount of the transfer at present, and the fact that the program is operating below capacity following the elimination of unqualified and fictitious households from beneficiary lists. The total annual cost of the program (including transfers) in 1996 was US$4.1 million (1.3 percent of recurrent fiscal expenditure); in 1997 it declined to US$2.9 million (0.8 percent of recurrent fiscal expenditures) as the increased cost of operation was more than offset by the reduction in household coverage.

111. INAS is also improving the program’s design. The goal is to separate assistance provided to people capable of working from that provided to the elderly and severely disabled, who cannot work and to find new modalities of addressing nutritional problems. Cash transfers to those who can work will not be terminated until new programs are put in place. A work-for-food program is being developed, aimed at single mothers and mothers of malnourished children. Also, a tender has been issued for projects that would attract destitute urban residents back into rural areas where they are more likely to be able to provide for themselves. The tender is inviting projects in the areas of agriculture, food-for-work, informal trade, and artisan industries.

Caixa Escolar

112. The Fundo de Acção Social Escolar (Fund for Social Action in Education), or Caixa Escolar (School Fund) was established in 1989 to encourage better enrollment and attendance rates in schools at all levels of education. The program was expected to provide aid in kind, consisting of books, educational tools, and food and clothing to students in need. However, little was done until 1995 owing to lack of financing. In 1995 the distribution of free textbooks to approximately 15 percent of pupils enrolled in the first and second grade of elementary school was made possible by Dutch and Swedish grants. In 1996, the coverage of first and second grade students increased to over 95 percent (approximately 3 million pupils) while IDA financing made possible the distribution of texts for an estimated 70 percent of pupils in grades 3 through 7. The books in the later grades are considered a loan to be used by the students over a period of three years.

113. The texts were distributed to pupils regardless of the need criteria stipulated in the statutes of the School Fund. It was deemed that a vast majority of pupils do not have the capacity to buy books. The estimated total cost of the program in 1996 was US$8.1 million, financed mainly by bilateral donors (US$5.2 million) and by IDA (US$2.9 million). The Ministry of Education administers the program with its regular resources. While the costs do not appear to be high, particularly considering the logistic problems involved in a nationwide operation of this scale, the program did suffer from problems such as low quality of the books for the older grades (they are not expected to last three years), distribution of wrong titles, and delays in delivery.

114. The evaluation report recommended that the distribution of books should continue, but that the beneficiaries should be selected according to need, so that savings could be applied to educational tools and food for the poorest pupils. To make such discrimination possible, the assessment envisages greater involvement of local communities and a reassessment of the needs criteria stipulated in the program’s statute. In 1997 the coverage of first and second grade students attained 98 percent. The distribution of books was more timely than in earlier years and some of the low quality books for the older grades were replaced.

School Lunch Program

115. The school lunch program, consisting of the free distribution of lunches to elementary school pupils in Maputo City, operated during 1990–95 with the exception of 1994. In 1994 and since 1996, the program has been dormant because of lack of financing. Coverage peaked in 1992 when lunch was distributed to 203,586 pupils during all 195 school days. In subsequent years the coverage of schools increased but the number of days when lunch was distributed declined owing to problems with the logistics of lunch production, distribution, and financing. Lunches were distributed to all pupils and teachers in a school, irrespective of need, but some targeting was achieved by selecting schools in poorer neighborhoods. The lunch, which consisted of a bun enriched with oil and sugar, provided about 370 kcal, a considerable amount for a child’s daily diet. While no formal survey was conducted, the program is believed by all those involved to have had the desired impact on children’s application and productivity in school. In all but the first year of operation the program was financed by external aid, and its costs are estimated to have been low. The cost per pupil for the school year was as low as US$2.29 in 1992, the year when the greatest number of lunches was distributed. The evaluation report recommended that the program should be continued and expanded to other areas of the country, that it should be applied selectively to pupils in need, (in accordance to the criteria defined by the School Fund), and that the contents of the lunch should be diversified.

Nutritional Rehabilitation Program

116. This program distributes milk, oil, and sugar throughout Mozambique to people hospitalized for acute malnourishment. It was developed in response to the intensification of malnutrition during the war, as a supplement to regular clinical treatment. It is financed by FAO, and in the period May 1995–December 1996 its cost was US$13,817 per month. It is not, strictly speaking, a safety net for its effects are entirely clinical and, in the absence of other preventive measures, likely to be of temporary nature. The evaluation report underlines the need to develop a program that would take a preventive approach to malnutrition.

Social Fund for Medicines (FSM)

117. This is a program of free distribution of medicines. In principle, eligible patients should be referred by health services staff to pharmacies in the National Health System (NHS). In practice, the operation of the program is haphazard, with decisions on eligibility usually made by pharmacy staff on an ad hoc basis. The costs are born by the NHS, which covers them largely from foreign aid. Data on costs are not available, for the program is integral to other NHS operations. The rationale of the program is questionable, since medicines in the NHS are already highly subsidized. More problematic is that medicines are often not available in NHS pharmacies, in which case patients have to use the far more costly commercial pharmacies.

Emergency relief

118. Up until the end of the war, the government’s poverty alleviation effort was largely absorbed by the need to provide emergency assistance to the population affected by the war or by natural disasters, as Mozambique is recurrently affected by floods, cyclones and droughts. Emergency relief operations reached a peak in 1992, the last year of the war, benefiting approximately 3.8 million people. The bulk of the aid was provided by international organizations and NGOs but its delivery was coordinated by a special government relief department, Departamento de Prevenção e Combate às Calamidades Naturais (DPCCN). The DPCCN shared with the United Nations the coordination of humanitarian aid during the resettlement of displaced population until 1995. Since then, the agency has been significantly downsized, and its focus re-oriented to its original purpose, the provision emergency relief in the face of natural disasters.

Table 16.

Mozambique: Gross Domestic Product, 1993–97

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Sources: Mozanbican authorities; and Fund staff estimates.

Grant-financed technical assistance not included.

Volume growth rates based on growth of value at previous year’s prices.

Table 17.

Mozambique: Savings and Investment, 1993–97

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Sources: Mozambican authorities; and Fund staff estimates.

GDS = GDP - total consumption = gross investment + exports of goods and nonfactor services - imports of goods and nonfactor services.

Current budgetary revenue less current budgetary expenditure net of net factor income from abroad.

Residual.

External interest payments on a commitment basis.

GNS = GDS + net factor income from abroad + net unrequited transfers.

External current account deficit.

Grant-financed technical assistance not included.

Table 18.

Mozambique: Availability and Uses of Resources, 1993–97

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Sources: Tables 1 and 2.

Imports of goods and nonfactor services minus exports of goods and nonfactor services.

(3)=(1)+(2)=(4)+(5).

Grant-financed technical assistance not included.

Table 19.

Mozambique: Gross Output 1993–97

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Sources: Ministry of Plan and Finance; and staff estimates.

Volume growth rates based on growth of value at previous year’s prices.

Table 20.

Mozambique: Production of Major Marketed Crops, 1992/93–1996/97

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Source: Ministry of Plan and Finance.

Metical-dollar conversion made at official annual average rates up to 1995/96; market exchange rates used thereafter.

Table 21.

Mozambique: Commercialized Crop Production by the Family Sector, 1992/93–1996/97

(As a percentage of total marketed production)

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Source: Ministry of Plan and Finance.
Table 22.

Mozambique: Prices of Major Marketed Crops, 1992/93–1996/97

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Sources: Ministry of Agriculture; and Ministry of Plan and Finance.
Table 23.

Mozambique: Marketed Livestock, 1993–97

(In units stated)

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Sources: Ministry of Agriculture; and Ministry of Plan and Finance.

Meticais per kilogram.

Meticais per unit.

Meticais per liter.