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Mozambique hauling itself out of economi... Kenya's credibility goes up in smok... |
Mozambique hauling itself out of economic quagmire
A remarkable economic U-turn by the formerly Marxist ruling party has succeeded in getting one of the world's poorest nations on the long, hard road to reform and reconstruction, writes ROGER MATTHEWS
Mozambique, one of the world's poorest countries, is a nation in the throes of transformation. The process carries with it more than the future of 18-million people. If successful, it will set an example to the rest of sub-Saharan Africa, and is already being held up by the World Bank and IMF as a model of economic structural adjustment. The new Mozambique is emerging from one of Africa's most disastrous experiences. "We are climbing up from the bottom of a very deep well," says President Joaquim Chissano. It was a well in part dug by the Portuguese, the former colonial power, in part by the Rhodesians and South Africans who crudely undermined the newly independent nation and fomented a 17-year civil war. And, in part, it was dug by Mozambique's new rulers who erroneously believed Marxism was the future. The combined impact was devastating. War destroyed much of the country's infrastructure. Land mines still litter the countryside. Life expectancy at birth is less than 47 years. Millions live close to starvation. Some 60% of rural households, and 30% of those in urban areas, have consumption levels below the poverty line. Health care across large swathes of this predominantly agricultural nation is minimal. Illiteracy is rife, and many children fail to receive even the most basic education. The long road back began with a peace accord and an ideological somersault. In 1992, Frelimo, the ruling party, and Renamo, which had been created and sustained by Rhodesia and white-ruled SA, agreed to end the conflict and establish democracy. Elections in 1994 legitimised Frelimo's role in government, and the party responded with a U-turn in economic policy which would have impressed even Baroness Thatcher, the former British prime minister. The old socialist dogma was finally dumped and in its place came rampant free-market policies. "We felt it was no good to go just halfway," says President Chissano. "If the doctor prescribes a medicine then you must take it, and not just part of the dose." To treat such a desperately sick patient, President Chissano had no choice of practitioners other than the World Bank, the International Monetary Fund and global donors. After five years of peace, Mozambique still needs external aid, before debt relief of $560-million this year, to cover more than two-thirds of its budget. Total external financing requirements are put at $5.5-billion for 1997. Mozambique's accumulated public external debt is nearly four times its gross domestic product, and 13 times its exports. However impressive the current stride, the country will require external aid well into the next century. These relatively early stages of rebirth may turn out to be the easiest. Starting from such a minimal base, each step forward tends to be measured against the past, rather than placed in the context of the huge task still ahead. A degree of political stability has been achieved that was unthinkable at the turn of the decade. Parliament is functioning better than many expected, Frelimo has increasingly promoted younger, technologically capable members, and the Renamo leadership, while struggling to find an ideological niche, has generally distanced itself from the occasional threats of a return to conflict from its more excitable members. Local elections in the next nine months will provide a test of Mozambique's political development, while also starting the process of devolving power and giving Renamo a taste of regional administration. Relative political peace at home has been further reinforced by peace with its neighbours. South Africa's transition to democratic rule in 1994 was most important for Mozambique. The economic fruits are already being felt, while the close friendship between President Nelson Mandela and Graca Machel, the widow of Mozambique's former president, has ensured a sympathetic ear in Pretoria for Maputo's problems. Machel, who has declined marriage because she does not wish to change her name, is likely to be among the leading contenders for the Mozambique presidency should it become vacant. More immediately, plans are well advanced for developing a privately-financed transport and industrial corridor linking Gauteng with Maputo. This in turn is linked to several large-scale industrial projects in the Maputo area, while electricity exports from Cahora Bassa, which could be worth up to $100-million a year, will have a huge impact on Mozambique's balance of payments. Last year, the country's exports jumped 30% but still hit only $225-million. Nothing has grabbed international attention more emphatically than Mozambique's embracing of privatisation. More than 700 state companies have so far been sold off, or restructured, and more are in the pipeline, including the national airline. The agency responsible for the programme is already awaiting the day, perhaps next year, when it will have worked itself out of a job. Results have been mixed in line with the potential of the enterprises. And although the disposals have done little to swell the state's coffers, the government saw little alternative in order to attract capital to kick-start industry. The government mapped out the next stages of development in its presentation to the World Bank Consultative Group meeting in Paris last month. The predictable aim is to stimulate growth and thereby reduce dependence on external aid. Immediate targets are 5% annual non-energy GDP growth over the next two years, a reduction in inflation from last year's 17% to single digits, a substantial increase in domestic savings, an improvement in the efficiency of investment and a cut in the budget deficit. Reaching many of these targets will depend to a significant extent on the success the government enjoys in reforming the public service, which it freely admits lacks skills, is poorly paid, heavily bureaucratic, often corrupt, and always severely overloaded. Just how serious the problems can be was underlined when Crown Agents, a British company which provides a range of services to governments and development agencies, was appointed to take over the entire customs service for the next three years. The modernisation of the country's entire taxation system will be no less challenging, with the government pledged to introduce a value-added system during the course of next year. Juggling so many requirements against the availability of skills is no less daunting than maintaining social cohesion as the impact of free-market policies begins increasingly to be felt. Visually, Maputo has been transformed in he past three years, with the arrival of expensive cars and the opening of restaurants emphasising the gulf between the few and the masses. An increase in crime, though nothing like South Africa, has been a worrying accompaniment. Geographically this division is repeated in the differences between the south with Maputo and its hub, and the poorer central and northern regions which have yet to see significant change. Such disparities offer fertile ground for political exploitation unless Frelimo can ensure that its links with the grassroots remain strong. The satisfaction expressed by the international community at Mozambique's progress should guarantee continued assistance, and there could be no more appropriate response to the strides taken by the government than writing off the rest of Mozambique's substantial foreign debt. But for that to happen, the government will have to pay close attention to the message which came from many of the speakers at last month's donors' meeting in Paris: "Well done, but there can be no slipping back." - Financial Times.
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