INTERNATIONAL INSTITUTIONS

Mozambique 2020 | ECONOMY | B2B

The World Bank and the African Development Bank stand ready to strengthen the capabilities of Mozambican institutions and plan for economic development.

Mark Lundell
MARK LUNDELL
Former Country Director
World Bank
Pietro Toigo
PIETRO TOIGO
Country Manager
African Development Bank (AfDB)

What lessons can you infer from the World Bank's long history in the country?
MARK LUNDELL Over the course of our presence in Mozambique, we have learned the importance of institutional capacity, which will be key in the preparation of the public machinery as the country gets closer to the period when revenues will increase substantially from the natural gas sector. Although we do not directly support the state budget, we have had productive dialogues with the government on issues such as public financial management, public investment management, debt management, and the regulation of state-owned enterprises. Moreover, we have been increasing our engagement with public institutions that have shown the ability and willingness to be more dynamic and improve efficiency, guided by the overall goal of maximizing institutional impact. We are committed to supporting such institutions and helping them maximize their capacity at planning and executing. We provide financing on a two-year basis, based on demonstrated results; this has proven a great incentive to boost the capacity building of Mozambican institutions, bringing young fresh result-oriented professionals. It is a significant change to reform the whole system, but we are on the right trajectory through these incentives.

How does the AfDB articulate its mandate in Mozambique?
PIETRO TOIGO The AfDB focuses on five priorities at the continental level: Feed Africa, which involves turning Africa into a net exporter of processed agriculture commodities; Light up Africa, or achieving universal energy access; increasing industrial GDP; integrating Africa, namely interconnecting African economies and standardizing regulatory frameworks; and improving the quality of life for the people of Africa, creating jobs, and developing skills for the youth. Our focus is to support the government in developing a sufficiently diversified economic base to generate inclusive growth and avoid the resource curse scenario. One of the main pillars of our strategy is agricultural transformation. A key concern for the transformation of agriculture is climate resilience, which was made obvious by Cyclone Idai and the major floods in 2019. These include investments in water harvesting and technologies for basin and reservoir water collection and the distribution of solar-powered irrigation kits. Most of these projects are directed at small-scale farmers and farmers' associations. Looking forward, we want to move one notch up the value chain to have full-fledged agro-industrial parks. To support agricultural transformation, our second pillar of investment focuses on enabling infrastructures, notably transport, to connect producers to markets, and energy, to support processing.

What have been the highlights of the World Bank's commitment to Mozambique?
ML The focus of our presence in Mozambique is to reduce poverty and increase the incomes of the bottom 40% of the population. Thus, we have been redirecting increased lending into human capital development; primary, secondary, and vocational education; and the health sector. As part of our response to catastrophes, we have set up an apparatus for quick payments to people who need to get back on their feet. In a more long-term perspective, we have pursued a central focus on energy access, whereby we are participating alongside other donors in financing the extension of the national grid by a 2% annual rate. As part of our inclusive growth agenda, we are focusing on sub-national economy growth, in areas such as forestry, fisheries, and agriculture as well as road infrastructure to boost rural connectivity. Finally, we have an upcoming USD117-million municipal project to see the public sector match private-sector investments in growth goals across the country.

Can you explore in detail one of the projects you support?
PT We invested USD300 million of our own resources in the USD5-billion Nacala Corridor Railway, which connects Moatize Mines to Nacala Port through Malawi. The railway enables the transportation of coking coal, used for steel production, from the mines to the port for export. Crucially, while the capacity of the railway is 18 million tons of coal per year, it also has a capacity of 6 million tons of general cargo per year. This is a private-sector investment, done entirely on a banking basis without any government money or public guarantee; revenues from the coal mine will finance the railway, a public service. The idea is to fundamentally create a logistics corridor to ship commodities out of Malawi, Zambia, and Mozambique; there is great potential for resource interconnection between these countries. We need to create direct linkages.