Donor strike ends

By Joseph Hanlon

Budget support donors have ended their strike. Members of the G19 budget support group have instructed their capitals to release funds, blocked since mid-December. Money should start flowing next month.

Planning and Development Minister Aiuba Cuereneia, the government’s chief negotiator with the G19, confirmed this morning (Thursday 18 March) that agreement had been reached. He said a document on the consensus reached at recent negotiations would be signed next week.

The two top issues were the “blurred distinction between party and state” and electoral reform. On the first, government appears to have successfully refused to meet donor demands for a ban on Frelimo party cells in state institutions. On the second, government has probably agreed to donor demands for a rushed, government-led revision of electoral laws, bypassing and ignoring at least two civil society initiatives to draft a new electoral code from scratch.

Donors have demanded that parliament’s rules be revised to allow the MDM (Mozambique Democratic Movement) to have a formal party bench (bancada) in parliament (AR). Present rules require 11 deputies (MPs) to form a bench, and MDM has only 8. When this was not done in the first parliament sessions, the issue was pushed higher up the list of demands – as a “confidence building measure”. Frelimo has a large majority in parliament, and MDM will surely be given its bancada.

Corruption and conflict of interest are the other key areas for the donors. Here donors seem prepared to accept government moving faster, and with more noise, on commitments already made. In his letter of 5 February, Cuereneia stressed that the government already planned a number of law revisions.

The G19 are the 19 budget support donors. Some of Frelimo’s oldest friends took the hardest line in pushing for the strike in December. But five members of the group have not supported it. Two large donors, the World Bank and European Union, released large amounts of money in December just before the start of the strike. And three of the smallest donors – Portugal, Italy and Spain – publicly committed themselves to continuing budget support.

The strike only withheld budget support – money going directly to the state budget. All other aid, to projects and ministries, continued normally.

Three articles on the end of strike are attached.

More details of the donor demands and government response are posted on my website.

http://www.tinyurl.com/mozamb

Aid to Mozambique

Official aid data through 2008 has now been published by the OECD Development Assistance Committee (DAC). Full tables are available on www.oecd.org/dac/stats and I have extracted some data for Mozambique, which is attached in an Excel file.
In 2008 aid to Mozambique finally exceeded the post-war peak. In real terms (that is, excluding debt relief and in constant 2007 US$ to account for inflation), aid to Mozambique peaked in 1992 at $1.8 billion, then fell by more than a third to $1.1 bn in 1996 and stayed near that level for the next five years. Aid rose from $1.3 bn in 2003 to $1.8 bn (the 1992 level) in 2007 and up to $1.9 bn in 2008.
The five year rise in aid came entirely from budget support (up $280 mn) and aid to the social sectors (up $432 mn, most to health), while aid to economic sectors remained constant. Aid in 2008 was 49% social sectors (including government and civil society), 24% budget support, and 16% economic sectors (including infrastructure and agriculture)

Fourteen donors gave or lent more than $50 million in 2008. In 2008 millions of dollars:
280 World Bank (IDA)
227 United States
198 United Kingdom
161 EC
120 Sweden
106 Netherlands
97 Norway
87 Denmark
78 Spain
77 Canada
75 Germany
74 Ireland
67 African Dev. Fund
54 Global Fund

The attached Excel file contains:
+ Two charts and a table of total aid to Mozambique, 1979-2008, excluding debt relief, done both in current prices (that is, US$ at the time) and in constant 2007$ (which gives the real value, for comparison).
+ Two tables of aid to Mozambique, excluding debt relief, by donor, 1979-2008, again one at current prices and the other at constant 2007$.
+ A table of aid to Mozambique by key sectors, 2003-2008, at constant 2007$.
Note that data come from two different sets of DAC tables, which do not agree precisely on the amount of aid.

The poor are getting poorer

Preliminary data is now available from the 2008 rural income survey (TIA, Trabalho de Inquérito Agricola, which covers 70% of the population). The attached paper gives more details, but three points are important to note:
+ Most rural Mozambicans have a cash income of less than $1 per week. The poorest 10% have no cash income at all, while the best off 10% have a cash income of more than $3 per day.
+ Most rural Mozambicans were poorer in 2008 than in 2002.
+ From 2002 to 2008, mean total income increased while median total income fell – in other words, most people became poorer but the best off became richer. The total income of the richest 10% is 44 times that of the poorest 10% (up from only 23 times in 2002 and 35 times in 2005)

MOZAMBIQUE 156, News reports & clippings, 22 February 2010, by Joseph Hanlon