Public investment in Mozambique has little effect on reducing the differences between urban and rural areas

5 February 2020

The public investment programme in Mozambique has had a limited effect on reducing disparities between rural and urban areas during the years of expansion of investments between 2008 and 2015, according to the Mozambique Economic Update Report from the World Bank.

“In general, the difference between urban and rural areas, especially in rural parts of central and northern provinces of Mozambique, which are the poorest, has widened,” said the document published recently.

The report added that the lower levels of investment in deprived areas have contributed to increasing the gaps in access, with inefficiencies in expenditure also playing an important role, noting that only 42% of the investment budget was spent on basic infrastructure for the provision of services between 2009 and 2015, with the remainder directed to non-capital expenditure, such as administrative costs and indirect costs.

According to the report, since 2016 the cuts in the budget for investments have improved the composition of investments, as consignments for administrative expenses decreased.  The report recommends the establishment of specific goals to reach needy areas in the Government’s Five Year Plan and the Economic and Social Plan, adopting a comprehensive approach to reach areas with growing populations and continuing to reduce inefficiencies in the consignment of funds.

The report said that economic growth is expected to fall to 2.3% in 2019, after standing at 3.3% in 2018, as lower charcoal production and the impact of cyclones, especially on agriculture, affecting the overall production.

“With the economic production growing at a slower pace than the population (2.8%), this translates into a decline in living standards in a context in which poverty has been further aggravated by cyclones,” said the document from the World Bank. (macauhub)