A Organisational Instability and Incapacity to Implement Plans and Policies

The organisational set-up in the agricultural sector has undergone almost constant change during recent decades in an effort to respond to a plethora of plans and policies. To illustrate, the ten-year period between 1995 and 2005 saw an excessive number of newly approved policies, strategies, and structuring laws, particularly in the area of natural resources, both renewable and non-renewable, including land, forests and wild fauna, land use planning, the environment, conservation, mines, and oil acts (Chiziane Reference Chiziane2015: 29), some with provisions conflicting with existing structures and ways of operating. Furthermore, from 2005 to 2013, a long series of plans and strategies for sectoral development were formulated and approved to bring about change in focus and priorities in the agriculture sector. They include:

• the Rural Development Strategy (EDR);

• the Green Revolution Strategy;

• the Strategic Development Plan for the Agricultural Sector (PEDSA) (MINAG 2011);

• the National Investment Plan for the Agricultural Sector (PNISA) (MINAG 2013; MASA 2018);

• the Support Plan for Intensification and Diversification of Agriculture and Livestock (IDAP),

• the Action Plan for Food Production (PAPA);

• the Agricultural Marketing Strategy;

• the Integrated Agricultural Marketing Plan (PICA), described as an instrument for the implementation of PEDSA;

• the Master Plan for the Development of Agribusiness (PDDA); and

• many others (Mosca Reference Mosca2011: 239–269; Granheim Reference Granheim2013: 47).

Along with these changes, government responsibilities and authority were frequently moved around among ministries and agencies, particularly in the areas of land, marketing, light industry, as well as food, irrigation, and promotion. The instability, often inconsistency, and overlapping or competing mandates cascaded down to the lower levels, with the set-up, closure, and transformation of commissions or national boards, state secretariats, and autonomous funds. Similarly, the duties of agricultural marketing, land and forest administration, and the promotion of rural development were regularly transferred between ministries.Footnote ¹⁶ A parallel process took place in the areas of domestic and foreign trade, industry, and tourism.Footnote ¹⁷

These vicissitudes totally overburdened the existing human and organisational capacity, and detracted attention away from the provision of core public support services for agricultural development at local level. In addition, there was deconcentration and decentralisation of powers and responsibilities, particularly at provincial, municipal, and district levels, from 2004, with the approval of the regulationsFootnote ¹⁸ for the Local Government Act (LOLE)Footnote ¹⁹ and other legal documents (Mosca and Bruna Reference Mosca and Bruna2016: 23–31).

The functioning of the agriculture sector has, as well, been influenced by favouritism and economic interests (Bruna, Reference Bruna2017) linked to powerful social groups. Indications are that this favouritism takes place through protected public officials who establish links between the central state and the regional law, on the one hand, and customary local and general rules, which are not always written down or democratic, on the other.

The Ministry of Agriculture and Rural Development (MADER)Footnote ²⁰ is the main public organisation responsible for the agricultural sector. The Ministry of Land, Environment and Rural Development (MITADER) coexisted with the Ministry of Agriculture and Food Security (MASA) until the new government took office in 2020. At this point in time rural development became the responsibility of MADER, while land and environment came under a separate ministry. While both MASA and MITADER were represented at provincial level, representation at district level has not been uniform, and there has been no direct subordination relationship in the ongoing decentralisation process in the country. The organisational changes in the agricultural sector reflect a bewildering combination of underlying factors, to which we return below.

In spite of all of the above, the state budget allocation to the agricultural sector has for decades hovered around 4 per cent, moving up to 6 per cent in 2019, which is well below the African Union commitment of 10 per cent (Nova et al. Reference Nova, Dadá and Mussá2019: 6).Footnote ²¹ Apart from the allocation being below the goal, the same authors (GdM and NEPAD 2017: 8–9) show that the investment aimed at institutional support and production support has been declining since 2012.

B Competing Approaches to Agricultural Transformation

We have already discussed the frequent restructuring of ministerial organisations and their policies. This has led to a sense of randomness that is associated with the existence of competing approaches to agricultural transformation. While there is widespread consensus around the desire to see rapid modernisation, there is, in fact, disagreement on how to promote agricultural development in practice.

In effect, there are two sides to this debate:

1. (i) One defends accelerated modernisation based on the industrialisation of agriculture and buying technology, with little attention paid to what it takes to transform small peasant farmers into commercial companies. The focus in this option is based on mechanical reading of experiences from elsewhere in combination with little attention to history and context. It is based in part on the belief that small family farmers do not really respond to economic stimuli, and that they are incapable of modernising without the intervention of the state. The other part of this perspective is that intervention should take place through projects and programmes where focus is on already established companies, whether agricultural, agro-industrial, state, cooperative, or private. It is systematically highlighted that medium-sized and large farms have higher yields than small farms (Mucavel Reference Mucavel2018: 6, 10), to highlight the importance of prioritising the former to the detriment of the latter.

2. (ii) The other side argues that the modernisation of agriculture comes as a result of the modernisation of the entire society, and that it is not exclusively sectoral and depends on the political, social, and economic context of the country. It is not enough to buy technology, no matter how successful this may have been in other contexts. Put differently, this approach is based on small farmers being capable of modernising, by participating in the development and adoption of the most appropriate technology for each place and time, to the point of increasing their participation outside the agricultural sector, provided they have access to the resources and the rights needed for this.

The first perspective has been gaining ground during the last decade. While we noted the lack of success of the attempts at modernisation and agrarian transformation in the immediate post-independence years, there are, in fact, recent programmes and projects with positive impacts in terms of increasing productivity. They are, however, linked to specific geographic locations and groups involved. National indicators show that these interventions and the associated changes in policies and organisations do not seem to have influenced family farming, when it comes to their productivity, the generalized adoption of environmentally friendly technologies, or developments in the total volume of food production.Footnote ²²

C Low Quality and Quantity of Public Service Delivery

With all of the above organisational efforts, the aim was that the Mozambican government should be able to assume and perform in its assigned role, guiding and supporting agricultural development in an effective manner, including having the capacity to plan, implement, and negotiate with other agents in the sector. This was so at least for the principles adopted in 2003 in Maputo, by the African Union (AU) Summit, when it made its first declaration on the Comprehensive Africa Agriculture Development Programme (CAADP) as an integral part of the New Partnership for Africa’s Development (NEPAD). The CAADP was established as Africa’s policy framework for agricultural transformation, wealth creation, food security and nutrition, economic growth, and prosperity for all, and was adopted with the full support of the Mozambican government. This included the broad targets of 6 per cent annual growth in agricultural GDP and an allocation of at least 10 per cent of public expenditures to the agricultural sector. This was followed in 2014 with the Malabo Declaration on Accelerated Agricultural Growth, adopted by the AU.

In practice, under-budgeting, poor use of the budget, and the lack of a clear, long-term vision for the sector undermined the capacity of the state apparatus. This weakness became associated with the outsourcing of agricultural contracting schemes and development projects to NGOs and companies and agribusinesses whose participation was usually short in duration and with very limited geographic scope. In addition, the efforts made to support farmers’ organisations so that they could have more bargaining capacity for negotiating prices and the terms and conditions of their production contracts were negligible.Footnote ²³

Assessing Mozambique’s performance against the goals of the Malabo Declaration, it stands out that, as already noted, the state budget allocation was well below the 10 per cent goal. Moreover, funding has been insufficient to put in place the necessary internal capacity as well as staff able to provide even the most basic state services in support of agriculture development. This is so for plant and animal health, agricultural research and extension, statistics, supervision and quality control, protection and development of genetic material, enforcing the law and addressing market distortions. All of these areas have not received the necessary attention whereas responding to vested interests has been in focus.

The distribution of ministry staff depends on the resources available at provincial and district levels, and Nova et al. (Reference Nova, Dadá and Mussá2019) note that Zambézia, Nampula, and Tete provinces, where 53 per cent of the country’s cultivated land is farmed, only receive an allocation corresponding to 31 per cent of the operating budget. As to the public investment budget, this is distributed with around 24 per cent for production support, 24 per cent for extension and research, and 24 per cent for institutional support. The remaining 28 per cent is earmarked for forestry, livestock, irrigation, and land administration services (2019: 8).

The biennial assessment report on the implementation of the aforementioned Malabo Declaration goals (MASA 2017) assesses the level of CAADP progress in the country to be at 57 per cent.Footnote ²⁴ Importantly, while noting some improvements, the report mentions that Mozambique is still far from reaching the goals of eradicating hunger and reducing poverty (2017: 32–34). More specifically, in relation to production assistance, the total number of extension staff was 2,025 in 2013 and 2,794 in 2018. This includes the public extension network – which increased from 1,137 to 1,863 – the network of companies – which went from 281 to 510 – and the NGO network, which fell from 607 to 421. The extension service currently provides assistance to around 20 per cent of farms in an irregular fashion and with few visits per farmer, for a goal of 100 per cent in 2018, according to the Malabo goals.

Overall, the poor ability to provide basic services to small farmers in the ‘family sector’ in a way that is reliable and focused on farmer needs stands out as a main shortcoming in the sector. Key associated weaknesses include a pronounced tendency to focus on the short term and rely on ad hoc, improvised restructuring at all levels rather than developing the longer-term vision and set of activities needed as part of a framework for sustained progress. The same can be said about the lack of attention to the needed decentralisation of public services, including services for development of appropriate technology with a view to increasing productivity, and the absence of appropriate credit systems for small farmers.

D Unequal Access to Justice, Conflict Resolution, and Law Compliance

Generally speaking, the legislative framework concerning the agriculture sector is clear, but compliance is not assured. As already noted, the ten-year period between 1995 and 2005 was rife with approvals of reformed policies, strategies, and new laws. The ambition was that the legislative framework, in combination with the majority of customary regulations, whose application is enshrined in the constitution, would ensure adequate access to justice and protection of farmers. Notable examples are the Land Act, frequently cited as one of the best in Africa (Tanner Reference Tanner, Anseeuw and Alden2010: 105), and the Forest and Wildlife Act. However, as we shall see below access to justice is, in practice, unequal due to the structure and regulation of the system. In combination with the disproportionate power of the government and large private interests in influencing the decisions of the courts, this is a source of uncertainty for farmers.

The majority of land rights are not registered, which is not required by law, and non-registration does not per se undermine this right. Currently, around 24 million hectares (DINAT 2018), or 30 per cent of the land area, is registered, of which 12.3 million hectares, up to March 2019, were registered to rural communities (Topsøe-Jensen et al. Reference Topsøe-Jensen, Ainadine, Calane and Macia2019: 59). The majority of land conflicts are resolved by non-judicial bodies, through mediation and seeking reconciliation, promoted by the district authorities or by the Provincial Services of Geography and Cadastre (SPGC). When private companies and investors are involved, the resolution is more favourable to the communities when they are assisted by civil society organisations (Mandamule Reference Mandamule2016: 24).

Many agricultural cases could be dealt with by the community courts, provided for in the constitution. While found in several districts, they lack guidance and regulation.Footnote ²⁵ Given their position between the formal and the informal and their links with alternative ways and means of conflict resolution (Alfazema Reference Alfazema2015: 8), extending their powers would facilitate the legal pluralism recognised by the constitution.Footnote ²⁶

Cases that have been through the local courts of mediation are normally sent to higher administrative bodies before being presented to the courts. This fact gives government bodies at various levels disproportionate power to determine the outcome of cases in which they are in conflict with citizens. Exceptionally, when the conditions are in place, cases can be taken to higher judicial courts. In some cases, when they have the support of the Mozambican Bar Association (OAM), they may get convictions, even against the government or the elite. Successful examples are the convictions against the global mining company VALE Moçambique and the Mozambican state in the case of forceful removal of local farmers from their land in TeteFootnote ²⁷, as well as the conviction of the ProSAVANA OfficeFootnote ²⁸, for engaging in secretiveness and lack of transparency regarding the plans for acquisition and use of land rights (OAM 2018).

Other cases, even with the support of the OAM, are faced with difficulties in being heard. An example is the case of the land irregularly attributed in Afungi, Palma District, to the Rovuma Basin gas project. This resulted in an illegal right to use and benefit from the land (direito de uso e aproveitamento da terra: DUAT), ultimately issued to the gas company two years after the legal opinion of its illegality was pronounced (Trindade et al. Reference Trindade, Cruz and José2015). The OAM appealed against the DUAT, but one year later, the Administrative Court refused to hear the case, alleging that the communities had accepted it and could be adversely affected (OAM 2019) by an interruption of the activities. This example raises questions as to the independence of the courts, as does the fact that lots of land lies idle, especially along major roads and other infrastructure, where the DUATs are held by non-residents, who are not obliged to use the land or lose it as the law stipulates.

Finally, some areas in the agricultural sector are regularly inspected (Topsøe-Jensen et al. Reference Topsøe-Jensen, Ainadine, Calane and Macia2019: 72, list land use inspection instruments). The ministries responsible for the sector also have inspectors that deal with complaints from the public. In this way, officials who abuse their power may be penalised. A conflict management department was set up in land administration in 2015. In Forest and Wildlife administration, the law provides for a strategy for the participation of community inspectors, which was actually developed (Bila Reference Bila2005). An inspection operation of national scope was implemented for monitoring timber harvesting (‘operation trunk’) and, occasionally, there has been news of combating poaching and trade in hunting trophies. The supervision of land use activities has resulted in the withdrawal of DUAT or rescaling of idle land. However, law enforcement powers are weak, partly due to the conflicts between legal regulations (Capaina Reference Capaina2019), the capture of the state by private interests, and the insufficiency of human and financial resources.

Thus, although the legislative framework is formally in place, some subsectors are subject to capture. This is more frequent for forestry plantations (Bruna Reference Bruna2017), livestock and game farms, and timber harvesting, where intensive logging is carried out (Afonso Reference Afonso2019: 9). The same goes for areas of interest to the elite with easy access to capital, who obtain land rights for areas where they only use a very small proportion and in conflict with the local population (JA and UNAC 2011: 58–59).

E Lack of Effective Voice, Participation, and Accountability (Weak Civil Society)

Community and public participation in decision-making is recognised in the legislation (OSISA 2009: 74 and following) and this extends to the agricultural sector. Turning to the right of association, it is governed by Law No. 8/91, of 18 July. However, the process of revising this law, in order to simplify it, with participation by civil society organisations, is not making progress.

Apart from public hearing mechanisms, where people can participate individually, there are also other types of participation through organisations. There are civil society organisations and consultation fora from community to central level.Footnote ²⁹ Some have a wide membership base.Footnote ³⁰ Others include product-oriented companies and/or institutions.Footnote ³¹ Some of these have local representation, taking part in consultations, work, and local assessment of policies (Topsøe-Jensen et al. Reference Topsøe-Jensen, Pisco, Salimo and Lameiras2015: 54 and following).

Some forms of participation are simply informational, opening up room for clarifications, others are for specific consultation on a topic or programmes, while others are for dialogue and working together, with operational results. Some operate independently, others are organized around topics or causes. Freedom of speech in the country favours the participation and accountability of the state and other formal organisations, as well as public assessment of their performance and the rules of the game that apply. However, public agricultural institutions have, in practice, shown little inclination to adopting accountability mechanisms open to their sector partners. For example, information on rights to use and benefit from the land is not available to the public.

On the positive side, community consultations in the application process for obtaining the DUAT might result in a record or document, such as a license or certificate, with legal value to the holder. Another example is the case of the Consultation Forum on Land or Forests. While any consensus is not binding, it is difficult to ignore, provided the consensus does not imply revision of the legislation. In addition, there are other consultation fora, which do not include representation of the state or the government, aimed at monitoring and advocacy, as is the case of the Budget Monitoring Forum (FMO), the Land Forum in Nampula, and the Women’s Forum. Some of these are formally constituted and are the object of a legal instrument.Footnote ³²

Local organisations are also invited to take part in the formulation of policies, as well as the monitoring of their implementation. The favoured participation channels are the Community Councils, which can have specific names – for example, the Participatory Management Councils (COGEP) for land resources, forests, and fauna. However, in the agricultural sector, this has not been a systematic practice common to all the public institutions. There are cases where there was effective participation by civil society organisations (CSO) but, in the majority of cases, either there was no involvement or there were only poorly prepared soundings to no effect. Additionally, occasions for cooperation are systematically postponed.Footnote ³³

Overall, the complex network of organisations participating in the agricultural sector allows for attendance and participation at different levels and at different occasions for complaint, consultation, advocacy, supervision, etc. However, the examples presented in the previous section show that their voice is not always heard (Salomão et al. Reference Salomão, Mário and Tanner2019a: 7) and they do not always fully represent the communities (Salomão et al. Reference Salomão, Mário and Tanner2019b: 6). In spite of this, their participation is of intrinsic value in the transfer of information and knowledge of the general positions of the players involved. This value is also present in events at regional and national representation levels. It is from these consultations that alliances and agendas are structured and more effective actions are initiated.

In sum, consultations and participation, as well as the mechanisms established for this purpose, are present in the daily routines in the agricultural sector. However, the efficiency of such participation is not reliable, generating uncertainty among the farmers as to whether all the parties involved will stick to agreements arrived at. Put differently, the ‘social contracť is still not binding.

A Political Instability, Violence, and Legitimacy of the State

Vast tracts of Mozambique have experienced a situation of political and military instability and violent conflict for 30–40 years. Peace was partially and temporarily restored for two decades, from 1992 to 2011, but political and military tensions returned to threaten peace and tranquillity. The impact on the agriculture sector has been devastating. Conflicts have caused people to abandon their areas of residence and production, generating pressure and situations of disputes over rights of use of resources and interrupting the provision of services to small farmers, delegated to medium-sized and large companies.

The war during the 1980s caused massive destruction of infrastructure and loss of human lives throughout the country. In addition, agricultural land was abandoned as millions of predominantly rural refugees sought shelter in neighbouring countries and urban areas. Furthermore, the war meant that resources were directed in very large measure to military purposes with long-term consequences. The war also undermined the Ministry of Agriculture preventing the creation of public services that are fundamental for a modern agriculture. Mozambique, in contrast to Zimbabwe, did not inherit rural extension services and the war broke down all marketing efforts.Footnote ³⁴ Similarly, national capacity for agriculture research did not take off, and the weak production of seed and inadequate use of fertiliser are just two examples that have roots back to the destabilisation of the 1980s. A final example refers to local district administrators who, because of the war, became state representatives with a certain style of authoritarian governance in detriment to a process of focusing on the welfare of the people and seeing themselves serving for this purpose.Footnote ³⁵ In addition, the turnaround in economic principles from the late 1980s led to an almost exclusive focus on getting prices right, market-based approaches, and the dismantling of state support for agriculture development in a country plagued by violent conflicts. Mozambique has not, so far, managed to escape from this heritage in any decisive manner, and population growth and its unbalanced territorial distribution have continued to generate conflict over scarce resources.

The armed conflicts in Mozambique and the intermittent violence in recent years (2012–19)Footnote ³⁶ involved and affected, due to their nature and location, rural communities and crop and livestock farmers, and also affected the sectors to which they were linked (Brück Reference Schick1998: 1047–48). The main areas affected have been the provinces in the centre and north of the country, which are also the ones with the largest farming population, working the largest cultivated area, including the ones with the highest productivity, growing both food and cash crops. The main private commercial investments in land and natural resources are also in these regions, with impacts on the farming rights and conditions of the rural society. In addition, conflicts in the centre of the country have brought with them the risk of damaging cuts in terrestrial communications between north and south, and the coast and the hinterland.

Armed violence severed sales channels, worsened the already weak capacity for providing agricultural services, and affected activities related to jobs outside of farming and consumption of farm produce, including tourism. In 2014, the National Farmers’ Union (UNAC) estimated that around 69,000 farming families had been affected by the war (UNAC 2014: 2). Political violence and the conflicts had an impact on people’s movement and on women in particular (ASFC et al. 2019: 44–48), the main segment of the rural population, as well as on the environment.

It is also clear that the combination of widespread flooding and the Renamo insurgency in 2013 caused massive drops in food production as reflected in Table 4.1. Traditionally, rural households have turned to the sale of forest products, as well as wild food and medicinal products as a coping strategy when facing production shortfalls. However, the migration caused by the armed violence has disconnected the communities from their environment, limiting their access to these natural products.

Political, military, and social violence has in recent years had a deteriorating effect on the stability of the farming population and on food security (Jornal Notícias 2018; TVM – Redacção 2020). The attacks by groups assumed to have ethno-religious roots in the extreme northern coastal area in Mozambique began on 5 October 2017 (Maquenzi and Feijó Reference Maquenzi and Feijó2019: 13), and are presently a major concern and security threat.

In sum, (a) faced with the existence of diverse armed groups, the state has no effective monopoly on the use of force; (b) local administrative structures have weakened; (c) the rural population, mostly farmers, have continued to be seriously affected by war and armed conflict; (d) the harshest hit regions are the ones with the highest agriculture and livestock production potential; and (e) these areas in the centre and northern part of the country are also those that have been affected most by extreme climate events during the recent episodes of armed violence. Moreover, the agreements between Frelimo and Renamo during the last decades have not led to the same sense of people’s safety and a return to peace as was the case after the 1992 Treaty of RomeFootnote ³⁷, which led to recovery of the agricultural sector in the 1990s.

Nation-building and building the legitimacy of the state is a long-term continuous process and certainly involves recognising the role of the state in assuring the safety of people and property, the protection of social rights, the structuring and provision of other public services and the promotion of development. In Mozambique, the inability of the state to assure the provision of agricultural public services and promote the development of a broad base in the sector, combined with growing spatial and group-based inequalities, has contributed to the erosion of the legitimacy of the state, facilitating the outbreak of violence with an impact on agricultural production and marketing.

B Regional Divides and Lack of Market Integration

Mozambique has been a transit country since colonial days. Infrastructure was built to provide transport services for neighbouring countries with limited focus on integrating the national territory. Accordingly, and as summarized by Tarp et al. (Reference Tarp, Arndt, Jensen, Robinson and Heltberg2004), while the connections between east and west in Mozambique are relatively good, infrastructure is generally poor. Moreover, domestic transport between the northern and central parts of the country – the areas with highest agriculture potential – and the urban south is very costly and severely constrains agriculture development.Footnote ³⁸

Since 1992, major programmes have been implemented with donor support to develop the transport network, which have resulted in improvements in the primary and secondary road system, especially in the southern regions. However, rather limited attention has in practice continued to be paid to developing north–south integration and a badly needed rural roads network, and this is so in spite of the extensive geographic diversity already alluded to above. According to the World Bank (2016), only 17 per cent of the rural population lives within 2 km of the nearest road in good condition.

Consequently, transaction costs are very high indeed, and markets for agricultural production are poorly integrated. This implies that improvements in agricultural technology alone are unlikely to be successful. Increasing production in local areas will be associated with falling prices if farmers do not have access to export markets and consumers in the south. This calls for coordinated investment in infrastructure and agriculture support services. This runs counter to the aspects discussed in Section B and the limited capacity of the state.

Summing up, it is clear that the above characteristics have over the years deepened the historical and socio-economic divides between southern Mozambique, on the one hand, and the central and northern regions, on the other (see Egger et al. Reference Egger, Salvucci and Tarp2020; DEEF 2016).

C Lack of Interest of the Elite

At independence the nation-building project of Frelimo was closely associated with attention to agrarian transformation and priorities were focused on the promotion of state farms and communal villages. The inherent investment strategy was capital-intensive and proved in the final analysis to be a failure. As Frelimo priorities started to shift towards small-scale peasant agriculture before the Fourth Congress in 1983, war was in the making, literally undermining attempts at agriculture advance. After peace in 1992, peasant agriculture seemed to rebound almost automatically due to recovery from a very low base and the interests of the elite were elsewhere.

The economic liberalisation programme led to a privatisation process and a merger of private and political powers, which became the focus of attention. Agriculture was, with prominent exceptions in forestry, wildlife, and land, largely ignored. Generally, the sector did not offer really major opportunities for rent-seeking and capital accumulation though cases of corruption associated with, for example, the forestry sector have attracted attention in the popular press. Moreover, the elite did not depend on agriculture progress in the midst of major inflows of foreign aid and their reliance on food and other imports from South Africa.

Towards the end of the 1990s, interests started shifting further towards the opportunities inherent in the extractive sector rather than to agriculture, which, as described above, continued to be affected by natural calamities and emergency management instead of long-term priorities and needs. This, in combination with the poor use of the state budget in the agriculture sector, meant that the share of the budget remained very low until the present. This has been further influenced by the weakness of civil society organisations as advocacy organisations for public concerns, a role that goes beyond their function as pressure groups.

D Donors (Lack of Agency in Strategic and Policy Formulation)

The lack of economic and financial resources has greatly constrained autonomy in economic policy decision-making in Mozambique ever since independence. As stated by Mosca (Reference Mosca2011: 452), agricultural policies and strategies were from the beginning imported and based on the assumption of external funding. To illustrate, in the agriculture sector this explains in large measure the adoption of capital-intensive technology and approaches to agrarian transformation in the immediate post-independence period, which proved unsuccessful. Another stark example of donor influence is the economic reform programme introduced after economic collapse in 1986. While the programme was evidently inappropriate in a context of war and destruction, its longer-term consequences are hard to exaggerate. This is certainly so in relation to the dismantling of state presence in the sector and the need for public intervention to address evident market failures in areas such as input supply, marketing, and access to credit.

In their review of aid and development in Mozambique from 1980 to 2004, Arndt et al. (Reference Arndt, Jones and Tarp2006: 79) highlight that:

Put differently, the existence of numerous donors with competing interests and priorities contributed in the 1990s to a pronounced lack of strategic direction depending on which donor was the most influential at a particular point in time. Accordingly, aid agencies reinforced the lack of priority given to agriculture in sectoral budget allocations. We have referred above to the relative neglect of agriculture by the government in budgetary allocations. It should not be overlooked that the same was happening in the allocation of aid for agriculture development.

As emphasis shifted in aid modalities around the turn of the millennium from project and programme support to macroeconomic and budget support, an effort was made to ensure greater coherence and effectiveness. However, it is quite obvious that Mozambique’s dependence on external finance has led to lack of agency and the practice of using donor-funded consultancies as a conditionality has weakened national policy coordination and ownership to the point where mutual trust between government and the donor community started breaking down from late 2000s. The most recent example of this appeared in relation to the hidden debts scandal where donors froze all budget support to the newly appointed government in 2015 with drastic socio-economic implications. Fortunately, relations have recovered, but the interests of donor countries have started to change with the discovery of large gas deposits.

In sum, donors have played a very significant and volatile role in Mozambique since independence. External interventions have not always been unproductive, sometimes contributing to the transfer of knowledge and the stabilisation of the conditions under which farmers make their decisions as economic and social agents. In addition, we find that the dependence on aid should not excuse the lack of ability to formulate and implement policies, whether on the part of the state or on the part of civil organisations.

A Challenges

B Policy Considerations

A State Capacity and Independence from Private Interests

State capacity is a complex dimension with several inter-related components that are sometimes confused with other dimensions, such as the rule of law (Cingolani Reference Cingolani2013; Hanson and Sigman Reference Hanson and Sigman2013). Cingolani suggests the following components/capacities: coercive, fiscal, administrative, transformative, relational, legal, and political. Hanson and Sigman focus on three of these: fiscal, coercive, and administrative.

Fiscal capacity has to do with the efficiency and effectiveness of the state in acquiring the financial resources that will allow it to operate, and this efficiency could be extended to public expenditure, that is the state’s capacity to do more with fewer resources.

Coercive capacity is centred on the state’s capacity to be an agent for the defence of the rule of law (through the security forces, the judicial power but also, in this specific context, school administrative organs and structures in place within the education system). It is important to emphasise the role of state coercive capacity to enforce the rule of law in schools, in face of risks of possible child abuse, sexual harassment, gender-based violence, teacher absenteeism, corruption, and other offences.

Administrative capacity refers to the processes of policy implementation, the provision of public services, as in our example of education, and the regulation of private activities, pursuant to the law. The strength of this component of state capacity depends on a set of factors: the competence, independence, reliability, and professionalism of state officials; the existence and effectiveness of monitoring and coordination mechanisms; and effective territorial service coverage (presence of state infrastructures, sometimes used as in Acemoglu et al. (Reference Acemoglu, García-Jimeno and Robinson2015) as an instrument for measuring state capacity). We argue that the other capacities, reviewed by Cingolani (Reference Cingolani2013), while important, have less relevance in our case.

As the evidence is undeniable that the weaknesses in state capacity referred to above compromise the more fluid operation and growth of the economy, so too do they affect access to public services, such as health and education and human welfare (Halleröd et al. Reference Halleröd, Rothstein, Daoud and Nandy2013). However, as Halleröd et al. have found, sometimes, and remarkably in the case of education, if the weaknesses in the capacities of the state are significant, they could themselves be caused by the low economic performance of countries. As previously mentioned, the lack of state capacity to capture resources, in this case because of the low fiscal base and low human capital, can be a decisive factor for the creation and reinforcement of other capacities of the state.

To sum up, the level of state capacity, particularly in its fiscal and administrative capacity and coercion capacity, is clearly reflected in the capacity of the education system to serve the entire population, without leaving no one behind. We believe it is evident that state capacity thus defined is a key factor with serious implications for the quality of education and keeping pupils at school.

B Sovereignty and Independence

In the reality of cooperation for development, there is major discussion on the merits and limits of external intervention. In the education sector, the indisputable fact that international cooperation does not have a sovereign mandate, or even a partial one, over the countries where they operate, can delay the transformation processes they wish to contribute to. Focusing on the transitional administration period in East Timor by the United Nations (UNTAET) after independence, Millo and Barnett (Reference Millo and Barnett2004) clearly illustrate how the mitigated legitimacy of UNTAET, as an external player temporarily tasked with managing the country’s administration, delayed and weakened educational reform after independence. In this case, the Timorese were alienated by the transitional political and legal powers of UNTAET and the financial power of the World Bank. Strutt and Kepe (Reference Strutt and Keep2010) present a similar example in the context of the Ghana National Education Campaign Coalition (GNECC), which aimed at implementing the Education for All (EFA) agenda. Here too, the authors note in their analysis that the GNECC, a coalition begun through external initiatives, ended up operating only as a national NGO for implementing activities. It was linked to external donors but had very weak ties and funding at local level.

As added support for this, Miningou (Reference Miningou2019) shows that, given the institutional weaknesses in the education sector nationwide, development aid loses its efficiency and this loss could well be total. The results of this study comparing technical efficiency between countries show that factors like good governance, political stability, and national commitment (which implies the existence of fiscal capacity) reinforce the efficiency of external support to the development of education.

In short, development support, due to the limited legitimacy of a sovereign mandate that is evidently external to the country supported, is insufficient for stimulating development in the education sector. It can, however, be damaging, whether through alienating the fundamental stakeholders at local and national level or by inverting the nexus of accountability of the initiatives promoted, of the citizens to the international cooperation players that finance the initiatives.

C Voice, Participation, and Political Accountability

As discussed by Gaventa (Reference Gaventa2002), the possibility of having a voice and participating actively in social processes and interaction with public service providers and companies is an essential component of citizenship. The existence of effective communication and accountability of national and local governments in response to the voices of citizens is one of the characteristics that defines ‘good governance’. As stated by Paul (Reference Paul1992), political accountability processes are the set of approaches, mechanisms, and practices that allow the stakeholders to ensure performance and the correct level of public service provision. Of these stakeholders, Gaventa (Reference Gaventa2002) calls particular attention to the people who face economic hardship and marginalised people. Citizenship, whether in legal or sociological terms, is only experienced if the people feel they have the right to participate in social and political processes and if they are recognised as players who build and shape the services they use and are not just users or beneficiaries of these services. Gaventa (Reference Gaventa2002) stated that citizens’ rights to health could not be exercised if the citizens cannot exercise their democratic right to take part in the decision-making process about the services that are provided. This principle applies naturally to education. The way participation space is given to citizens and the degree of inclusion of disadvantaged or marginalised people or those not necessarily belonging to social groups close to power determine the degree of voice, participation, and accountability that exists.

The actual agents of the educational system, with different levels and responsibilities, must feel that they are participants and that their voices are recognised (Smith and Benavot Reference Smith and Benavot2019). Regarding the concept of structured democratic voice mechanisms, Smith and Benavot discuss and illustrate the need for teachers, local leaders, and pupils to be able to state their position on political initiatives or reforms. If the democratic expression of the voice of the local community, that is the pupils or teachers, cannot be expressed directly, one alternative could be through independent representatives drawn from civil society (Mungiu-Pippidi and Dusu Reference Mungiu-Pippidi and Dusu2011; Smith and Benavot Reference Smith and Benavot2019). This voice can only be effective if the central and provincial government system of education and even the governing bodies of each school are open to relinquishing part of their decision-making power. An exercise in voice promotion that is merely consultative, without recognition of authority, weakens its effectiveness. However, if it is actually implemented, it allows for the intersection of the interests of the fundamental players in the education system.

What the citizens and players inside a system, for example the education system, do with the voice and participation they are allowed is also important. Véron et al. (Reference Véron, Williams, Corbridge and Srivastava2006) indicate that democratic decentralisation and community participation are often recommended as instruments for controlling corruption. However, reflecting on the case of a social protection mechanism in the rural areas of East Bengal and Bangladesh, they suggest that not only are the communities not homogenous, but key members of local communities can themselves be accomplices or perpetrators of corruption. In this case, rather than combating corruption, decentralisation can make it take on decentralised forms. This is perhaps an example of where weaknesses in the rule of law converge with weaknesses in the voice and participation mechanisms, making it difficult to respond to problems such as the corruption that can be seen in public service bureaucracy, thus undermining performance.

In short, voice, participation, and accountability mechanisms are necessary in the education system, not only to monitor its operation, but also to lead to improvements and adjust reforms through combining the contextualised perspectives of its players, including pupils, teachers, and local communities. However, the inequalities and dynamics of power and the fact that institutional weaknesses reinforce each other must not be forgotten: the weaknesses in the capacities of the state can reduce the effectiveness of measures for promoting voice and participation, corrupting the actual accountability mechanisms.

In the next section, we will present the case of primary education in Mozambique, which, after it has been described, will be discussed in the light of the interpretation key we have presented.

A Deficient Allocation of Time for Teaching and Learning Tasks

The reform of the basic education curriculum, whose implementation began in 2003 (INDE 2003), highlights the acquisition of reading and writing skills as the fundamental pillars on which the acquisition of skills in the other levels and classes in the education system are based. A large number of Mozambican schools teach three daily rounds of classes, which means that children are only in school doing teaching and learning tasks for three hours a day. This reality is quite common in public schools especially in rural areas, where the majority of the population lives. Considering the long distances most children have to travel between home and school allows us to understand that the time these children have for reading and writing tasks is very limited, both inside and outside of school.

B Overcrowded Classes and Very High Pupil–Teacher Ratios

One of the direct consequences of the increase in numbers at primary schools and the absence of a sufficient number of teachers and facilities has been the need to extend the absorption capacity of the schools, which gave rise to overcrowded classes. Although the number of primary schools and teachers has shown a substantial increase, the first cycle EP classes and the pupil–teacher ratios remained practically unchanged between 2013 and 2018. In fact, a large number of EP2 schools are a result of the transformation of EP1 schools into full schools (EP1+EP2) without the addition of classrooms. Thus, in 2018, the average pupil–teacher ratio in full primary schooling (EP1+EP2) was around 55.27, compared to 64.2 in the beginners’ classes (EP1). The highest ratios were in Zambezia, Nampula, and Cabo Delgado provinces (over seventy pupils per teacher). This fact, combined with the lack of time for learning tasks both inside and outside the classroom, shows how limited the capacity of teachers is to deal with the learning needs of all the pupils in the areas of reading, writing, and arithmetic, especially pupils with special needs.

C Deficient Preparation, Allocation, and Monitoring of the Work of Teachers

It is not enough to introduce curricular reforms and increase the number of teachers in schools while maintaining other basic characteristics unaltered and/or allowing these to deteriorate. The implementation plan for the Basic Education Course Plan (INDE 2003) points to the teacher as a factor in its success. Recent studies (e.g., Díaz Reference Díaz2003; Sheerens Reference Sheerens2004; Makopa Reference Makopa2011) that examined the factors associated with the performance of the pupils highlight the importance of qualifications and the equitable distribution of teachers. Meanwhile, Darling-Hammond et al. (Reference Darling-Hammond, Holtzman, Gatlin and Heilig2005), McColskey et al. (Reference McColskey, Stronge, Ward, Tucker, Howard, Lewis and Hindman2006), and Rice (Reference Rice2003) go further and defend the existence of a strong connection between teacher qualifications and pupil achievements. Moreover, there is a global consensus that ‘to improve the quality of education, it is first necessary to improve the recruitment, training, social status and working conditions of the teachers’ (Delors et al. Reference Delors, Al-Mufti, Amagi, Carneiro, Chung, Geremek, Gorham, Kornhauser, Manley, Quero, Savané, Singh, Stavenhagen, Suhr and Nanzhao1996: 131). In practice, however, this reasoning is far from gaining the agreement of the majority of the political decision-makers and donors in the education sector.

It can be said, without doubt, that there is no other sector of education in Mozambique that has been subject to so many changes since independence as teacher training. In response to increasing pupil–teacher ratios, the government took the decision to reduce the number of years of training for primary teachers. This changed the training models in force (7th class + 3 years in Teacher Training Centres [CFPP] and 10th class + 2 years in Primary Teaching Institutes [IMAP]) and introduced a new model, called the ‘fast track training model’ (10th class + 1 year). With this alteration, the education sector was able to train 6,094 teachers between 2012 and 2018, around 80 per cent of whom were absorbed by the public sector (MINEDH 2018).

However, the introduction of the fast-track model is an example of how decisions on educational policy based almost exclusively on assumptions of a financial or economic nature can have devastating consequences for the quality of education of one or more generations, if not the entire nation. Sources that we contacted from the education sector, with long and proven experience in management at different levels, were unanimous in suggesting that the main motivation behind the introduction of this teacher training model was most likely the ‘excessive burden of salaries’ on the sector’s operating expenses in comparison to other expenses. According to these sources, this fact caused some important international partners to put pressure on the Ministry of Education to reduce the number of years for primary teacher training from three to just one. This was a means to help provide the necessary teachers in a short space of time and stop the increasing salary expenses, given that the salary of a teacher with a 10+1 profile would be less than a 10+3 teacher.

Despite this effort, the decline in the quality of education has not stopped. The 10+1 training model contributed only to containing the increase in pupil–teacher ratios, but it was also shown to be totally incapable of providing primary teachers with the skills required in the areas of reading, writing, and arithmetic and preparing them for dealing with very large classes. In addition to the problem of the deficient training of teachers, we have the perception of generalised non-compliance with teachers’ contractual obligations and a lack of monitoring during school hours by the school managers, which results in frequent tardiness and unjustified absences during school time, not only by the teachers, but also by a large number of school principals.

The phenomenon of chronic absenteeism among teachers has become a serious problem in many developing countries (Carron and Chau Reference Carron and Chau1996). UNICEF Mozambique has revealed that in Mozambique in 2014, many ‘pupils were losing more than 50 per cent of the potential learning time as a result of late start times, early closing and extended recesses’ (2014: 68). In a study prepared for the USAID, it is also pointed out that teachers are between 10 and 40 minutes late and ‘considering that the first class of the day is often Portuguese, where reading is taught, it is easy to see how teaching time is reduced by teachers being late’ (Raupp et al. Reference Raupp, Newman and Reves2013: 4). Altogether, these anomalies mean that pupils have less daily instruction time, with negative effects on learning to read and write. All told, according to estimates made by UNICEF Mozambique (2016: 2), the absenteeism rateFootnote ² for teachers is around 45 per cent, while for school principals, it is close to 44 per cent. If confirmed, these data indicate serious problems with school management and leadership and make us question the criteria for the selection and promotion of school principals and other holders of positions of responsibility at local and district levels.

D Shortages of Teaching Materials

The available literature indicates that the availability of and access to basic school supplies in the classrooms has a positive impact on teacher motivation (Carron and Chau Reference Carron and Chau1996; Díaz Reference Díaz2003) and the performance of pupils (INDE 2017; Makopa Reference Makopa2011). Material conditions include school infrastructures, classrooms, desks, schoolbooks, teachers’ guides, the blackboard, chalk, teacher’s table and chair, cupboards, maps, display cabinets for science materials, and other educational supplies. It is true that over the last twenty years, many schools and classrooms were built all over the country. However, there is no doubt that the construction of the schools and classrooms fell short of what had been planned and the expansion that took place in primary schools was at the expense of the ‘adoption of three rounds of classes, an increase in the number of pupils per class and the existence of outdoor classes’ (Duarte Reference Duarte2018: 41). In fact, the annual construction goal of 4,100 classrooms was later revised to 1,400 (CESO 2011: 11). This resulted in ‘almost 56.6% of pupils studying in schools with no water and 72.8% in schools without electricity, while only 16% study in schools with a library. With the exception of Maputo Province, over 60% of pupils sit on the floor and only 25% of pupils have the same teacher until they finish 2nd class’ (Duarte Reference Duarte2018: 42).

Similarly, data produced by the INDE (2017) reveal the existence of pupils who have classes outdoors. According to that study, the proportion of pupils having classes outdoors (outside the classroom) fell from 25 per cent in 2010 to 22.7 per cent in 2013. Despite this reduction, the situation is still worrying, given that, apart from studying outdoors, many of these children study sitting on the floor, with no physical support for their writing and arithmetic activities.

E Poor Involvement and Participation of Parents and the Community in School Management

A large portion of the anomalies already pointed to, particularly with regard to absenteeism by the teachers and school managers, could be prevented and minimised through the involvement of the local communities in school management, through school councils (CEs). Given the limited capacity of the state, through the ministry responsible for the area, for monitoring the activities carried out in all the schools, the CEs are still seen as a platform through which communities, parents, and guardians can demand accountability and put on some pressure for a change in direction towards the desired quality of education. However, there are indications that the performance of the CEs has fallen short of what was expected.

The education sector is structured in hierarchical levels. The Ministry of Education and Human Development (MINEDH) runs the sector at central level and below it are the provincial and district boards and, finally, the schools. However, between district level and the schools, there are so-called School Cluster Zones (ZIP), which are areas in the education sector that group together schools that are geographically close to each other in order to have pedagogical support between peers and promote teacher empowerment. At each one of the levels described above, there is a host of interested players, who mutually influence each other and are influenced by the system as a whole. At each one of the levels, the players develop specific dynamics because of the development of institutional practices or policies specific to the subsector they are attached to and because of institutionalised local practices.

At primary school level, which is at the centre of our analysis, the relevant players are the parents and guardians, the teachers, the school management body and the support service staff, pupils, and the community in general. There is a consensus that the greater the involvement of these players, the greater the degree of effectiveness of the practices in the schools, with positive effects on keeping pupils at school and improving the quality of education. This is an aspect formally recognised by the government, which is why the CEs have been revitalised as a participation platform for the different local players in school management.

As consultation bodies, the CEs are the main school body and their functions extend to monitoring and supervising school activities. The CEs, whose members are elected for two-year mandates, are made up of 13 to 19 members (according to the number of pupils in the school), representing the teachers, the administrative staff, parents and guardians, the pupils, and the community.

The list of powers of the CEs includes, but is not limited to, approval of plans, regulations, and projects, and the feasibility of their implementation in the schools; participation in financial decision-making and supervision; monitoring the execution of the budget (including Direct Support to Schools – ADE); monitoring the performance of teachers and the school management board; giving opinions on educational performance; and establishing mechanisms for resolving disputes, infractions, and the accountability of the offenders. In addition, it is also up to the CEs to propose the dismissal of school principals to the competent authority.

However, the idea according to which the CEs constitute a body that assures community participation in school management needs more scrutiny, given that there are cases where the CEs are taken over by local elite groups, based on the power relations characteristic of the communities where the schools are located. As an example, there are indications of the existence of a high number of cases where members of the CEs are co-opted by school principals without being elected by the community, which limits the pressure of accountability on the management body. According to this logic, once CEs are co-opted by some members of the school board with the aim of ensuring that these members remain in the positions they hold for an indefinite period, the CEs are no longer able to truly monitor teachers and the management body and hold them accountable. These practices raise questions as to the representative nature of the members of the CEs and their effectiveness in resolving school problems. Under these circumstances, the CEs serve only to rubber-stamp what has been previously decided by the school principal and his/her cronies without the CEs being involved in the decision-making process. This results in a lack of transparency in the use of the funds allocated to the school, bringing perceptions of misuse of the ADE (or lack of evidence as to its correct use) and of other public funds allocated to the school.

Interviews with staff of the District Education Services in Meconta (Nampula Province) led us to understand that they had been expecting the ADE to serve for paying subsidies to the members of the CEs also. As this did not happen, the CEs lost their motivation to effectively participate in the CE sessions because they could not see any material gain in this, particularly as there had been a general perception that the ADE would tend to benefit the managing body of the school and the President of the CE. In the same district, there were also situations where members of the CEs had to travel long distances to get to the school in order to take part in the CE meetings, which discouraged their participation.

Similarly, data collected in Meconta and Murrupula district (interviews conducted by one of the authors in 2017) showed how the communities sometimes present a series of complaints regarding teacher absences and tardiness. These complaints are then forwarded to the local CEs by the community leader or through the parents and guardians. However, little change has been seen because of these actions by the communities, which also discouraged their participation. In addition, as mentioned by the president of the CE at one of the primary schools in Murrupula District, very often, when the presidents of the CEs are not part of the school administrative staff, they are advised not to interfere in internal school issues. Thus, if on the one hand the lack of information on the actual role of the CEs works as an obstacle to their effectiveness, on the other hand there is an absence of an appeals body for CEs to turn to should a school principal carry out duties heavy-handedly. The net result of this situation is the lack of incentive for the members of the CEs to continue being involved in actively monitoring the school management activities. As a result, the problem of absences and tardiness of teachers and principals and the misuse of the scarce resources placed at the disposal of the schools, which could be resolved at local level, remain chronic and unaffected.

Cases of parents and pupils fearing reprisals from the teachers and school managers are frequently reported. On the one hand, pupil representatives barely have an active voice at CE meetings, given the power relations established, where the teacher has the educational authority the pupil does not have, hence the fear of reprisal. On the other hand, parents and guardians often fear that their children will suffer reprisals if they report cases of abuse of power by the management (in the cases where this happens) or the teachers (absences, tardiness, abuse, extortion, etc.) in a classroom context.

Thus, with regard to the involvement and participation of local players (parents and other community members) in school management, a kind of pseudo-participation is observed, as the CEs are very often used as tools, with their members being forced to accept what has already been decided by the school board. At best, community participation in school management is limited to participation in CE meetings only, but they have little power to influence decision-making processes. As a result, many schools are still facing chronic and apparently unsolvable problems, which include unjustified absences and tardiness of teachers and school principals, a lack of transparency in the use of the ADE funds to improve material conditions in the schools, a high number of school dropouts (especially girls) before completing the 2nd cycle of primary education.

F Weaknesses in External Support to Education

Mozambique’s ambitions for education, given the budget difficulties it experiences as a low-income country, cannot be achieved without external support. With a view to coordinating the flow of external aid to the education programmes in Mozambique, in the context of the continued increase in school numbers, the international cooperation partners of the then Ministry of Education (MINED) proposed a funding mechanism known as FASE – Support Fund for the Education Sector to the government, as mentioned above. This paradigm shift came because of the idea put forward in 2001 of adopting the so-called Sector-Wide Approach – SWAp to the education sector. This can be defined as a ‘process where a sector strategy is formulated and budgeted, aligned with the available resources through an iterative process, converted into a working plan and formalised in agreements between the implementing agency and the funding sources’ (Mário and Takala Reference Mário and Takala2003: 6). The implementation of this approach, through FASE, implied the need to involve the partners in the different stages of implementation of the education programmes. This includes the discussion and the development of the initial proposals for educational policy documents and the negotiation and harmonisation of the formal arrangements for the implementation of the programmes in Annual Review Meetings (RAR) and other support bodies (ibidem).

Through FASE, the Ministry of Education was able to cover a considerable volume of current expenses and investment in the education sector, which would otherwise have remained without coverage or would have had inadequate coverage. In fact, FASE has made the purchase of schoolbooks for free distribution feasible, as well as the acquisition of laboratory materials, teacher training, district and provincial supervision, and the construction of classrooms in the districts.

Notwithstanding these positive developments, the sector approach via FASE faced (and continues to face) serious constraints. For example, the delays seen in the release of funds from the State Budget (OE) by the Ministry of the Economy and Finance, particularly during the first three months of each financial year, seem to have reinforced the perception of the role of bilateral funding projects as sources of flexible or ‘emergency’ financial support, especially for the provincial boards, the district boards, and the schools, clearly going against the principles of SWAp (Mário and Takala Reference Mário and Takala2003).

From 2014 to the present day, the amounts allocated to FASE by international partners have been decreasing steadily. For example, in 2014, the partners had committed to disburse US$149 million; in 2015, this had fallen to US$81 million and for 2016–18 disbursement commitments fluctuated between US$105 and 110 million per year (MINEDH 2015). However, in 2016, with the emergence of the ‘hidden debť crisis, the international partners found themselves confronted with the lack of measures to mitigate the risk of the flow of funds from FASE to the education sector, which is why they decided to suspend disbursements until the partnership instruments were revised and signed (MINEDH 2018). In 2017, disbursements to FASE were resumed but, that same year, a relatively low external investment budget was recorded (around 63 per cent), which was attributed to delays in contracting supervision for the construction work on classrooms (MINEDH 2018). Although it is a fact that the funds from FASE constitute the largest source of external resources available to the education sector, its contribution has never been able to break the 80 per cent barrier (MINEDH 2019).

Another point for reflection is how the reforms were implemented, clearly showing how dependence on external support can compromise the quality of the processes and the sustainability of the results. An example of this is the reform of the primary education curriculum (curricular plan for basic education) in 2003, which did not take into account the capacity to prepare, place, and supervise the qualified teachers needed to carry out the reforms set out in the new curriculum. Another example was the decision to abolish school fees and introduce free distribution of schoolbooks with the support of the FASE partners alone.

A State Capacity and External Influence

Throughout this subsection, we will attempt to show that, along with limited financial capacity to respond to the increasing demand and sustain the pace of increases in school numbers, the operation of the education sector is severely curtailed by its limited human and administrative capacity. Given these shortcomings, international support is fundamental, making the primary education system susceptible to external influence.

The demographic pressure on primary education revealed severe shortcomings in the administrative capacity of the state, which is particularly evident in the lack of the classrooms and, mainly, of the teachers that the system so badly needs. We believe these factors weaken the State’s capacity, resulting in overcrowded classes, very high pupil–teacher ratios and pressure on the learning process.

However, as discussed conceptually, we must not forget that these shortcomings in administrative capacities are closely related to the shortcomings in the fiscal capacity of the state. As we have shown, the Mozambican State’s focus on education is clearly seen in terms of the percentage of the budget it has been devoting to this sector, but it is also clear that there is a lack of financial resources in low-income countries like Mozambique.

This has led to pursuing options that compromise the administrative capacity of the state with regard to primary education, particularly an insufficient number of new classrooms built; an increase in the number of classes taught without any increase in the number of classrooms; teaching in three daily rounds of three hours/day; and reduction of the training time required to qualify as a primary school teacher (the fast track training model).

We also found evidence of factors that weaken the coercive capacity of the state, particularly in terms of administrative control and mitigation of absenteeism and other abuses by teachers. As we showed, this weak control of absenteeism suggests the existence of leadership and school management problems, which are also linked to other factors that weaken the voice, participation and political accountability of the institutional dimension. The combination of weaknesses in the coercive and administrative capacity of the state extends to the process of selecting and promoting school principals and other holders of local and district management positions as well.

Weaknesses in state capacities, which, like those we have found in primary education, can also be combined with other institutional dimensions. In particular, we have found clear interactions between weakened state capacities and the institution of sovereignty and independence in the way external support to the education sector operates. Given the limitations of the fiscal capacity of the Mozambican State, an initiative like FASE, as described above, is much needed and indeed admirable. Within the bounds of the limited legitimacy discussed in the conceptual framework, this initiative makes it possible to make up for financial shortcomings and even support the reinforcement of the administrative capacities of the educational system in the country.

However, the case of primary education reveals weaknesses too in the way external support can interact with central government structures. On the one hand, as mentioned above, the interaction with a weakened fiscal/budget capacity of central public administration in releasing funds to the provincial and district administrations in good time gives rise to dependency mechanisms and alienation of fundamental national governance structures.

On the other hand, by making financial support to the education sector conditional on political decisions with long-term and uncertain effects, the international partners risk exceeding the necessary limits that respect for Mozambican sovereignty should imply. This is clear in the influence of international partners on the decision to adopt the fast track teacher-training model in primary education. The discontinuity caused by the many teacher training models that have been introduced prevent the sector not only from learning about what works (or not), but also from building professional careers that will attract and retain the most talented young people in the teaching profession. As such, the imposition of giving financial criteria precedence over educational quality criteria by external partners fundamental for the actual funding of the education system proved to be problematic from the outset. Even more problematic is the imposition of a solution without others having been discussed openly and with the participation of players in the education system, in particular representatives of the school communities.

In the same way, the weaknesses that were probably behind the ‘hidden debť crisis were added to the imperative of being accountable to the external sovereignty entities that manage cooperation for development, creating problems for the support that FASE provides to education in Mozambique. Because Mozambique has ties to external sovereign entities, fundamental funds for reinforcing infrastructures, resources, and teacher training, aimed at improving the quality of learning, may then respond to the needs of the country in a disjointed manner.

To sum up, limitations and weaknesses in state capacities, sovereignty, and independence affect the epistemic quality of primary education. The scarcity of financial resources to make sector policies feasible, the small number of highly qualified professionals (whether teachers or technical or administrative staff), the problems of intra- and inter-sector coordination, and the limited capacity for monitoring, auditing, and inspecting the sector policies are just some of the aspects arising from the weak administrative capacity of the state, which have an impact on the quality of education.

Even though governments may choose educational reforms aimed at access to school because these generate immediate electoral gain, it is recognised that improving the quality of learning in school is more costly and difficult than increasing the number of schools (Nicolai et al. Reference Nicolai, Wild, Wales, Hine and Engel2014, cited by Hossain and Hickey Reference Hossain, Hickey, Hickey and Hossain2019: 2). As such, states with weak capacities tend to focus more on increasing access to education and less on its quality (Harding and Stasavage Reference Harding and Stasavage2014). This is particularly so in countries like Mozambique where the exponential growth of demand for education outpaces by far the state capacity to offer quality education in schools. An issue worth raising is the fact that there may not be a trade-off between quantity and quality if one considers that universal access to schooling must be reached first, before improving quality. On the other hand, weak state capacity to fund its educational development plans exposes it to the priorities set by the donors.

B Voice, Participation, and Political Accountability

Although systems for the promotion of voice and participation of the different players in the school community have been put in place, the evidence found reveals important weaknesses. The literature we reviewed states that voice, participation, and accountability mechanisms are necessary for monitoring the operation of the education system, but also for leading to improvements and adjusting reforms, through listening to the school community, including pupils, teachers, and local community representatives.

As we have seen, the CEs were set up and revitalised to be able to control and monitor the action of school management bodies, as well as teachers, with powers being assigned to them for resolving conflicts and holding them accountable. According to how they were designed, they should, in fact, be adequate voice, participation and political accountability mechanisms.

However, our study on primary education reveals clear evidence of factors that weaken these mechanisms, as is the case with other cases discussed in the literature. Cases where members of the CEs are co-opted by school principals or by other members, in the pursuit of their own personal interests, weaken the legitimacy and transparency of these bodies. The lack of clarity as to the duties of the members of the CEs, expectations of payment in some instances, and their lack of commitment to the public good undermine their operation. Consequently, the CEs do not fully carry out their duties of monitoring situations of absenteeism, the lack of punctuality of teachers and principals, and the misuse of school resources, which all have a tendency to be perpetuated.

Finally, concerns are reinforced through evidence of a lack of mechanisms for the CEs to appeal to district, provincial, or national bodies or the state or associations. This means that even those that operate correctly may not be able to exercise effective coercion over teachers or principals who are negligent or engage in abuses.

As mentioned above, Hanushek et al. (Reference Hanushek, Link and Woessmann2013) suggest that voice and participation mechanisms at local level can contribute to reinforcing the capacities of the state. However, for this to happen, the institutional factors found lead us to recommend that attention should be paid to the actual voice and participation mechanisms implemented in primary schools, the CEs. Otherwise, the weaknesses they induce will only intensify the perceived weaknesses in the administrative and coercive capacities of the state under the scope of primary education.

A Introduction

Mozambique is a country with a surface area of around 800,000 km², located in Southeast Africa. It became independent in 1975 after around five centuries of Portuguese colonisation. At the time of independence, Mozambique was one of the poorest countries in the world. Between 1976 (less than a year after the proclamation of independence) and 1992, the country was ravaged by a war that caused large-scale destruction of its economic and social infrastructure and affected over 5 million Mozambicans, of whom around 1 million lost their lives and 4 million were forcibly displaced from their homes (Pim and Kristensen Reference Pim, Kristensen, Page and Pim2007).

Thus, in 1992, when the war ended, Mozambique was the poorest country in the world, with a per capita GDP of only US$354 (2011 PPP) (Gradín and Tarp Reference Gradín and Tarp2019). The economic growth seen in Mozambique from 1995 onwards led to a reduction in poverty levels, with the per capita GDP trebling in only twenty-five years (Gradín and Tarp Reference Gradín and Tarp2019). Despite this economic growth, Mozambique remains one of the poorest and least developed countries in the world.

In Mozambique today, over half the population (estimated at around 29,000,000, 66 per cent of whom live in rural areas) lives below the poverty line (less than US$2 per person per day) (Gradín and Tarp Reference Gradín and Tarp2019). According to data from 2017, Mozambique has a per capita GDP of US$1,136 and a Human Development Index of 0.442, putting it in 180th place out of 189 countries (UNDP n.d.). According to data from 2019, Mozambique has a Sustainable Development index of 53 points out of 100, putting it in 136th place out of 162 countries (Sachs et al. Reference Sachs, Schmidt-Traub, Kroll, Lafortune and Fuller2019: 21).

The process of economic growth that is leading to a reduction in poverty has occurred and occurs at the same time as an increase in economic and social inequalities. These take place in a country with previous inequalities between urban and rural areas and between regions (North, Centre, and South).

B Concept of Health and Social Determinants of Health

To study the topic of health in Mozambique, it is first necessary to understand the concepts of health and social determinants of health. According to the World Health Organization (WHO), ‘Health is a state of complete physical, mental and social wellbeing and not merely the absence of disease or infirmity’ (WHO 2006). This means that a person might not be sick in the normal opinion of people (i.e. not suffering from fever, diarrhoea, cough, or headaches and going to work every day) and even so not enjoy good health.

There is a consensus that the living and working conditions of individuals and groups in the population influence their health situation. In other words, most illnesses and health inequalities – which exist in every country – are derived from the conditions under which people are born, live, work, and grow old. This is where the concept of social determinants of health comes from. For the WHO, social determinants of health are the social conditions under which people live and work (WHO n.d.).

Some examples of social determinants of health are – apart from the quality and accessibility to healthcare and services – the quantity and quality of food a person ingests regularly and the quality of the water and sanitation to which they have access. The same goes for housing and transport conditions, the education level, the working environment, the consumption or not of tobacco, alcohol and other drugs, and the state of mental health of individuals and community.Footnote ¹

One of the most important social determinants of health are the institutions in a country or a community. Institutions are the rules of the game (formal or informal) that the political, economic, and social players in the country or community are expected to follow. Each society operates with a set of political, economic, and social rules created by the state and the citizens together. In this chapter, we focus on the role institutions have in the state of health of Mozambicans.

C A Brief History of the Health Services in Mozambique before and after 1975

The history of the health services in Mozambique encompasses four different periods:

1. a) the period prior to the independence of Mozambique (1975);

2. b) the period immediately after independence (1975–80);

3. c) the period from 1980 to 1993;

4. d) the period from 1993 to the present day.

D Description of the Health Sector

In Mozambique, the health sector is called the National Health System and is structured in the following subsystems:

1. 1. a public subsystem run by the state and called the National Health Service;

2. 2. a private subsystem;

3. 3. a military and paramilitary health subsystem;

4. 4. socio-professional organisations such as the Medical Council, the Nursing Council, and the Medical Association of Mozambique, considered part of the National Health System.

The National Health Service is directly dependent on the Ministry of Health and is by far the largest provider of healthcare to the around 29 million Mozambicans. It includes four central hospitals (each one with over 600 beds), seven provincial hospitals (between 250 and 350 beds), two psychiatric hospitals, a little less than fifty district hospitals, and 1,585 health centres and facilities spread throughout the districts and communities in the country. It employs over 90 per cent of health workers in Mozambique.

The private subsystem is divided into (a) private for-profit; and (b) private not-for-profit medicine. The private for-profit sector is concentrated in the cities (mainly in the capital, Maputo) and includes two hospitals (both in Maputo City), a few dozen clinics, medical practices, pharmacies, laboratories, and imaging services. The for-profit private sector is devoted almost exclusively to curative activities.

The private not-for-profit subsystem includes religious organisations and non-governmental organisations (NGOs), mostly foreign and directly funded by the so-called cooperation partners (donors). It also includes health facilities in some large public and private companies and in educational establishments, such as the Eduardo Mondlane University.

The military and paramilitary health subsystem is in an early stage. Mozambique has no hospital to care specifically for paramilitary forces.

The National Health Institute (aimed at research) and the Traditional Medicine Institute are under the auspices of the Ministry of Health.

E Traditional Medicine

Traditional medicine exists alongside the National Health System. According to the WHO, ‘traditional medicine is the sum total of knowledge, skills and practices, used in the diagnosis, prevention or elimination of physical, mental and social illnesses, based exclusively on past experiences and observations handed down from generation to generation, orally or in writing’ (Ministry of Health 2015).

According to the Ministry of Health, around 70 per cent of the people in Mozambique use traditional medicine to treat physical, as well as mental and social, illnesses. The activity engaged in by traditional medicine practitioners, estimated at a ratio of 1 practitioner per 200 inhabitants, has more coverage of primary health services than the National Health Service.Footnote ⁵ This explains why there are still people in Mozambique who are born, grow up, and die using only traditional medicine for their healthcare. This fact is due, on the one hand, to the still poor geographic coverage of the National Health Service and, on the other hand, the intrinsic connection existing between traditional medicine and the defining traits of its users.

During colonial times, traditional medicine was perceived as associated with a lack of knowledge or superficial knowledge, superstitious, and based on folklore. Immediately after the proclamation of independence, the government of Mozambique recognised the importance of traditional medicine. In fact, Article 38(7) of the first decree-law of the government (Decree-Law No. 1/75, of 29 July), states: ‘Boost medical and pharmacological research and, particularly, studies on traditional medicine’. Since then, traditional medicine has been gaining ground and consideration in government policies. In 1977, the Office of Traditional Medicine Studies was set up under the Ministry of Health. In 2010, the Office of Traditional Medicine Studies was closed and gave way to the Traditional Medicine Institute, also set up under the Ministry of Health.Footnote ⁶

Despite these advances, the reality is that little is yet known about Mozambican traditional medicine (Tables 6.1 and 6.2).

F The State of Health of Mozambican People

The state of health of the majority of Mozambicans is precarious. The burden of disease is high. Endemic infectious diseases predominate, such as malaria, tuberculosis, AIDS, respiratory infections, diarrhoeal diseases (including cholera), and intestinal and bladder parasitosis, with the last three being very closely linked to access to drinking water and environmental sanitation.

Mozambique is one of the five countries in the world with the highest prevalence of tuberculosis (551 cases/100,000 inhabitants, compared to a world average of 140 cases/100,000 inhabitants) and among the 10 countries in the world with the highest prevalence of AIDS. Data for 2015 indicate that the overall prevalence of AIDS in people aged 15 to 49 was 13.2 per cent. Among women, it was 15.4 per cent versus 10.1 per cent for men, and AIDS is more prevalent in urban areas (16.8 per cent) than in rural areas (11.0 per cent) (Ministry of Health et al. 2013; Ministry of Health et al. 2018). Cholera is endemic, with outbreaks practically every year, varying only in the part of the country it appears. A study carried out between 2005 and 2007 and encompassing over 80,000 school-age children revealed a generalised occurrence of bladder infection caused by Schistosoma haematobium (national prevalence of 47 per cent) and intestinal helminths (national prevalence of 53.5 per cent) (Augusto et al. Reference Augusto, Nalá, Casmo, Sabonete, Mapaco and Monteiro2009). These diseases, related to lack of access to drinking water and basic environmental sanitation, are responsible for a higher number of deaths than malaria and AIDS combined. Mozambique is one of the few countries in the world where leprosy still exists.

At the same time – and as is the case in other African countries – an epidemiological transition is underway. Thus, the incidence and prevalence of non-communicable diseases, particularly high blood pressure and other cardiovascular diseases, diabetes, chronic respiratory diseases, cancer, and trauma (especially road traffic accidents) is increasing inexorably. A study on cardiovascular risk factors carried out in 2005 shows a high prevalence of high blood pressure (34.9 per cent).

Data from the UNICEF Annual Report 2019 entitled The State of the World’s Children 2019: Children, food and nutrition (UNICEF 2019) indicate that Mozambique has one of the highest rates of child malnutrition in the world (43 per cent of children under five suffer from chronic malnutrition and 8 per cent from acute malnutrition). Chronic malnutrition increases the morbidity and mortality rate in children aged under five and reduces their cognitive abilities. The same report reveals that, for the first time in many years, Mozambique reported cases of pellagra, a disease linked to niacin (vitamin B3) deficiency.

Other indicators reflecting the deficient nutritional situation of Mozambicans are the following (Ministry of Health et al. 2013; Ministry of Health et al. 2018):

• Fourteen per cent of newborns (whose birth weight was registered) weighed less than 2.5 kg at birth (underweight);

• Sixty-four per cent of children under five, and 54 per cent of pregnant women, were suffering from anaemia;

• in 2011, only 45 per cent of the families questioned used iodised salt;

• in 2015, the exclusive breastfeeding rate was only 55 per cent.

Mozambique is among the countries in the world with the highest birth rates (five children per woman) and gross mortality (11.8/1000 inhabitants) and a low life expectancy (53.7 years). Maternal mortality (452/100,000 live births) and infant mortality (68/1,000 live births) are also very high (INE 2019).

A Rule of Law and Judicial Independence

Despite it being enshrined in the constitution, Mozambique is still far from being a state under the rule of law.

With regard to the health sector, there are several factors – mainly related to non-compliance with the laws in force – which contribute to this:

• The process of contracting companies to carry out public works (such as building health centres, hospitals, human resource training centres and institutes, warehouses, housing for healthcare staff, etc.), as well as the acquisition of medicine, medical supplies, hospital equipment, and the like (such as ambulances), is very often done on the fringes of the law. There is frequent, abusive, and illegal recourse to what is called private treaties to the detriment of public tenders. This all leads to the construction of poor-quality buildings, the acquisition of medical supplies and equipment of inferior quality, and the unlawful siphoning of money to dishonest business people.

• In clear breach of the law, the processes of selecting people for jobs are frequently carried out without being offered for public tender. This gives rise to this selection being based on party political affiliation, nepotism, friendships, ethnic identity, and even the provision of sexual favours.

• With regard to promotions and career progression, it is common for the time periods provided for by law not to be complied with, allegedly due to budgetary restrictions.

• These practices are also contributed to by the fact that both trade union organisations (such as the Medical Association of Mozambique) and socio-professional organisations (such as the Medical Council and the Nursing Council) are weak and not very proactive.

The fact that these irregular situations persist – despite being frequently reported in the media and the repeated criticism in the annual report from the Administrative Court (Court of Auditors) to the National Assembly – gives citizens the feeling that the culprits can get away with anything because of the state’s lack of political will, calling the legitimacy of that very state into question in the eyes of its citizens.

B Voice, Participation, and Accountability

• Although it is provided for and heralded in the Constitution of the RepublicFootnote ⁷ (Articles 89 and 116) and in the Charter of Patient Rights and Responsibilities,Footnote ⁸ the right of citizens to healthcare is not clarified or sufficiently protected.

• In the National Health Service – and in clear breach of Article 116(4) of the Constitution – citizens are discriminated against by the state on a socio-economic basis. All but one of the central and provincial hospitals have special clinics, special consultations, and private rooms that are off limits to anybody who cannot pay the prices stipulated. It should be noted that there is no legal basis for the existence and operation of these special clinics, special consultations, and private rooms. All attempts made to close these special clinics, special consultations, and other special services have been thwarted due to resistance linked to the combined interests of the doctors, on the one hand, and the political and economic elite on the other.

• Even in the services considered to be free by law, citizens are frequently subject to unlawful charges.

• The involvement of citizens and communities in the management and monitoring of health sector activities is very poor. Despite there being regulatory documents on the connection between the health sector and the communities, it is the norm for there to be no accountability to citizens regarding health activities. The citizens know little or nothing about the annual budget for the health sector, from its preparation to resource allocation priorities and how these resources are spent. This is one of the reasons explaining why the Ministry of Health budget favours allocations to:

  1. a) central and provincial bodies to the detriment of district bodies, where primary healthcare takes place;

  2. b) spending mainly on curative actions to the detriment of health promotion and disease prevention actions; and

  3. c) money spent on needless bureaucracy (travelling abroad with the corresponding travelling expenses, expensive meetings at hotels and tourist resorts, acquisition of cars for leaders) to the detriment of the acquisition of medicine and medical supplies and equipment and ambulances that would improve the quality of healthcare.

• Particularly in rural areas – and because of fear of reprisal – citizens are afraid to report any abuses by health workers, such as absenteeism, non-compliance with schedules, ill-treatment, and unlawful charges.

C Political Instability, Violence, and the Legitimacy of the State

Over forty years after the proclamation of independence, the National Health Service still does not cover the entire country or respond to the basic needs of all citizens, both in cities and towns and in rural areas. As previously mentioned, there are three causes:

1. a) the colonial legacy;

2. b) the destruction of hundreds of health units during the war that ravaged the country between 1976 and 1992; and

3. c) the difficulty in moving forward more quickly, both in the replacement of the infrastructures destroyed and in the building of new infrastructures, due to the lack of human resources and financial constraints.

After a twenty-year period of calm, political and military instability re-emerged in the centre of the country in 2013. To further aggravate the situation, in October 2017, a military conflict broke out in Cabo Delgado Province, the cause of which is still not clear, and which is tending to spread.

The political and military instability:

• has negative repercussions on the lives of the people in towns and rural areas (where physical safety has been threatened and economic activities paralysed);

• negatively affects activities in the health sector and leads to stagnation or to setbacks in many health indicators. Two concrete examples of this negative impact are the temporary cessation of health promotion and disease prevention activities;

• ultimately calls the legitimacy of the state into question, either because the state cannot protect its citizens or because it does not assure the provision of basic health services, drinking water, basic sanitation, education, etc. in adequate quantity and quality.

D State Capacity and Independence from Private Interests

Since 1975, the government of Mozambique has generally outlined appropriate policies for the health sector. The main problem lies in the weak capacity of the state to assure the implementation of these policies. There are many examples of this deficient implementation and the following are of particular importance:

E Sovereignty and Independence

Now more than ever, it is clear that Mozambique needs help from the international community to improve the provision of quality healthcare to its citizens, especially the poorer ones. However, it is equally clear that this help must be given correctly to ensure that it does not have the opposite effect to what is intended.

Unfortunately, facts show that in the last thirty years, the government of Mozambique has not defined the public health policy independently. This applies both to the definition of priorities and particularly to the preparation of the budget for the health sector. The health policy is defined more by the international community (the cooperation partners or donors) than by the government of Mozambique.

This is the case because the international community (a) makes the largest financial contribution to the health budget and (b) orders and funds the ‘consultations’ where the diagnosis of the health sector is made and where health policy proposals are presented. It is based on these ‘consultations’ ordered and paid for by the international community that the government of Mozambique is pressured into prioritising selected strategies, programmes, and activities ‘proposed’ by the donors, not always coinciding with the strategies, programmes, and activities that are really a priority for improving the state of health of Mozambicans. We will cite examples of the negative role the cooperation partners play in the health sector in Mozambique.

First, human resources. Sufficient well-trained human resources are of vital importance for the correct operation of any health system. The shortage of human resources undermines the capacity of the health system to meet the health needs of the population. In Mozambique, the shortage of human resources is the biggest weakness of the National Health Service. Unfortunately, this shortage is aggravated by health workers (especially those more qualified and/or more experienced) leaving the National Health Service for work at embassies, NGOs, cooperation partner agents based in Maputo, and the private for-profit sector.

The main reason for this, but not the only one, is that these organisations pay higher salaries than the government. This is an internal brain drain, as opposed to the brain drain out of Mozambique. In Mozambique, the internal brain drain is at least three times higher than the brain drain out of the country. In other words, recruitment practices by the donor community in Mozambique undermine and weaken the National Health Service that this community claims it wants to strengthen.

At the same time, the macroeconomic policies imposed on Mozambique by the World Bank and by the International Monetary Fund mean there are tight limits to the contracting of human resources for the health and education sectors by the government. This is why, over the last fifteen years, the government has been unable even to hire and employ all of the doctors, nurses, and other health workers trained in Mozambique.

Secondly, almost all of the cooperation partners decided to channel the largest slice of their financial resources not into the National Health Service (which provides healthcare to over 90 per cent of the population), but rather to NGOs and other partners dedicated to the so-called vertical programmes for fighting diseases. While this is motivated in part by corruption, already discussed above, it leads to overlapping competencies adding another source of inefficiency.

These vertical programmes, dedicated at the most to three diseases or a specific segment of the population (such as mother and child health), and with bottom-up dynamics, contribute to the weakening of the public health sector due to the duplication of efforts, the distortion of national health plans, the ‘thefť of scarce human resources, and the chronic underfinancing of the National Health Service.

In addition to the above – and because the ultimate causes of diseases are not properly taken into account – these vertical programmes for combating diseases have a limited impact on improving the health conditions of poorer citizens and communities, despite the hundreds of millions of US dollars invested each year by the international community in health in Mozambique.

Thirdly, it is important to mention another nefarious aspect of the World Bank’s policy. From the 1980s, the World Bank began demanding that all developing countries should introduce user fees as an option for funding health services. It is now agreed that user fees punish the poor and constitute an obstacle to access to healthcare by citizens. According to the WHO, user fees are ‘the most unequal way of funding health services’ (OXFAM 2013: 11). Worldwide, around 150 million people incur financial catastrophe due to direct payments for healthcare, while 100 million are being pushed into poverty, the equivalent of 3 people per second (OXFAM 2013). Although the WHO has already taken a clear stance against user fees and the World Bank has issued a mea culpa (see the speech of the then president of the World Bank, Jim Yong Kim, at the World Health Assembly in 2013), the reality is that user fees persist in Mozambique.

Finally, it should be pointed out that the majority of the reforms and strategies proposed for the health sector by the so-called cooperation partners are unrealistic given the poor economic capacity of the country and because the cooperation partners are not willing to provide the necessary funds for the policies they themselves advocate as the most correct for Mozambique. There are many examples, the most important of which is the much-acclaimed universal health coverage, which is a constant in speeches by the World Bank, the WHO, UNICEF, and others in the United Nations and in other international forums. This is how a situation is created where a poor country like Mozambique is eternally ‘plagued’ by serious problems in terms of the credibility of the health sector arising from the poor quality of the healthcare provided.

The question that naturally arises is: what causes this state of affairs?

The starting point is that it is the political process, which determines the type of institutions existing, and that it is the institutions (mainly political), which influence how this process operates. It is the political institutions of a nation, which define the capacity of its citizens to control the politicians and influence their behaviour. In turn, this determines whether the politicians are representatives and defenders of the rights of the citizens who elected them or if they have the ability to abuse the power entrusted to them to achieve their own ends, even if this is to the detriment of the majority of the citizens.

Mozambican society is a profoundly unequal society, divided between a privileged minority that holds the reins of political and economic power and ‘the others’, that is a vast majority of poor, disadvantaged, and marginalised citizens, who have little capacity of controlling the actions of the political leaders and very little influence on the determination of the fate of the country.

The final cause explaining the weakness of the institutional factors with an impact on the health sector and, very particularly, on the poor capacity of the Mozambican state to prioritise the public health sector (which as we have seen is responsible for the healthcare provided to over 90 per cent of Mozambicans) lies in the lack of political will of the political leaders to put the satisfaction of healthcare needs in the poorer segments in first place. These leaders are part of, or have close connections with, the privileged minority groups in society, who relegated the public health sector to second place, largely because their own healthcare needs are met by going to organisations (such as hospitals, clinics, rehabilitation centres, etc.) abroad or, when this is not possible, the national private sector.

Another no less important aspect lies in the fact that in Mozambique there is limited and deficient understanding of the problems in the health sectors among political leaders, citizens, and the so-called civil society. There is confusion between the narrow concept of curative medicine and the broader concept of health and public health at all levels of Mozambican society. This results in the healthcare being predominantly curative and revolving around procedures in health centres and hospitals, with the consequent subordination of the promotion of health, the prevention of illness, community participation, and inter-sector cooperation. This is called medicalisation of healthcare. At meetings between the people and politicians, requests from the citizens revolve around the construction of more hospitals and maternity hospitals or at least requests for ambulances. This lack of knowledge results in there not being more interest or political merit in the promotion of public health on the part of political leaders.Footnote ¹¹

At the same time, both the opposition leaders and the majority of civil society organisations (including the media) do not give due priority to or show any ability to present concrete solutions for the most pressing health problems for the majority of Mozambicans.

To give an example, a Mozambican opposition force has never presented a duly prepared document on (i) the deficient implementation of the primary healthcare policy, (ii) the chronic underfinancing of the health sector, (iii) the inequities in health, (iv) the discrimination that poorer Mozambicans are subject to, even in the public health sector, the problem of leprosy (whose elimination in Mozambique was proven by the WHO in 2009, only to resurge due to the negligence of the government), or, (v) finally, on a coherent policy for the relationship of the government with the foreign donor community for the health sector.

The disputes and ‘contradictions’ between the party in power, on the one hand, and the opposition forces, on the other, revolve mainly around the sharing of resources by the different factions of the privileged elite.

It is interesting to note that these ‘contradictions’ always disappear when, for example, parliament is discussing increases in salaries and the allocation of more privileges to different party representatives. On these occasions, unanimity is the rule that has never been broken.

Finally, in Mozambique, the executive power controls and dominates both the legislative power and the judicial power. Under these conditions, there are no checks and balances, which would perhaps make the elite in power take interests other than their own into account.

These are the institutional factors that ultimately explain the poor performance of the health sector, particularly in the quality of the healthcare provided to the majority of poor, disadvantaged, and marginalised citizens.

A The Nosological Point of View

Over at least the next two decades, the burden of disease will continue to be very high in Mozambique. Although there is a trend towards a reduction in their incidence and prevalence, the infectious diseases referred to above (diarrhoeal diseases, respiratory illnesses, intestinal diarrhoeal diseases, schistosomiasis, tuberculosis, malaria, and HIV-AIDS) and child malnutrition will continue to predominate, all linked to the poverty that affects the majority of Mozambicans. At the same time, with the growth of the so-called middle class and the adoption of new and harmful lifestyles by an increasing number of Mozambicans (such as sedentarism, smoking, exaggerated and uncontrolled consumption of food high in fat, of alcohol, of soft drinks and sugary drinks, etc.) will continue to increase the incidence of non-communicable diseases.

If there is political will and better organisation, it will be possible to eliminate and then eradicate leprosy ad then substantially reduce the prevalence of other diseases that are now neglected, such as trachoma, lymphatic filariasis, scabies, and rabies.

B The Institutional Point of View

As previously mentioned, the Mozambican state is characterised by the weakness of its institutions, particularly political ones, which:

• on the one hand, make them vulnerable to the private interests of the privileged minority and the pressure from foreign organisations, whether international (the World Bank, the International Monetary Fund, etc.) or governmental, which, as we have seen, are commonly called cooperation partners; and

• on the other hand, they limit their capacity to respond adequately to the material and spiritual needs and desires of the majority of Mozambicans.

Ultimately, the aim is for there to be strong institutions in Mozambique, capable of outlining a health policy that puts the needs of the majority of its citizens in first place, provided with effective regulatory capacity, capacity to suppress all forms of crime, capacity to negotiate with the cooperation partners and make the interests of Mozambicans prevail, and that contribute towards balanced political, economic, and social development in the country.

With regard to the health sector, the ultimate aim is the provision of quality, free healthcare to all Mozambicans, without any economic, social, racial, ethnic, sexual, religious, or geographic discrimination.

Even in a country as poor as Mozambique, it is possible to advance progressively towards quality, free healthcare at all levels, and not just basic healthcare. Obviously, this is a long-term process, but it all depends on political will, a clear definition of what the priorities are and what can be achieved in health sector at each stage and the sustained implementation of an economic and social policy that will reduce poverty levels, as well as economic and social inequalities.

The crucial question is: how can this goal, which is as noble as it is ambitious, be achieved?

Our proposal focuses on six priorities:Footnote ¹²

1. 1 – Enshrining clearly in the constitution that: a) all Mozambicans have the right to quality, free public healthcare at all levels of care, without any economic, social, racial, sexual, religious, or geographic discrimination; and b) it is the responsibility of the government to progressively assure universal health coverage in Mozambique.

2. 2 – Based on the experience of other countries that made advances in political and administrative decentralisation, introducing changes to the structure and operation of the public health sector. One example that is a good source of inspiration is the Unified Health System (SUS) in Brazil, a country with social and anthropological characteristics similar to Mozambique.

Here, it is important at least to:

• Legislate the separation between the Ministry of Health (regulatory body) and the National Health Service (implementing body) with different budgets.

• Legislate the links between the National Health Service and the health services in municipalities and other local authorities.

All the aspects mentioned above should be contained in a law that defines a National Health Policy suitable for the next five decades, to be approved by the National Assembly (Parliament).

1. 3 – Clearly defining how to progressively increase funding for the public health sector so that – as recommended by the WHO – the goal of at least US$60 per inhabitant per year for health sector expenses is achieved by 2050. To do this, the government must:

   • Implement the Abuja Commitment (Nigeria) of allocating 15 per cent of the state budget to health instead of the present 8 per cent.

   • Institute a specific health tax (for example, through an increase in current taxes on tobacco, alcoholic drinks, soft drinks, luxury products like jewellery, cosmetic, perfume and cars, and charge a percentage fee on each airline ticket sold in the country).

   • Change the priorities in the health budget so that at least 50 per cent of the governmenťs health expenditure is allocated to districts and 25 per cent to primary healthcare.

   • Eliminate user fees and other forms of direct payment for the healthcare provided by the public sector.

   • Harmonise the different mechanisms for funding health under a universal coverage framework.

   • Be guided by austerity and strenuously fight against needless expenditure.

   • Significantly improve budget management at all levels.

It is important to clarify here that a national health insurance system set up and run either by the state or by private entities is not presently a viable option for Mozambique. And the reason is simple: Mozambique is one of the poorest countries in the world and with over half the population living on less than US$2 per person per day, who would pay that insurance?Footnote ¹³

On the other hand, we see no reason why private health insurance should not exist for the citizens who wish to have their healthcare provided by private health organisations.

1. 4 – Implementing the primary healthcare policy nationwide, comprehensively and at all levels of healthcare. To do this, the government must:

   • Progressively strengthen the National Health Service, which is the main subsystem of the National Health System.

   • Give due priority to health promotion and disease prevention activities, rehabilitation, and palliative care, as well as curative activities.

   • Implement effective coordination between the Ministry of Health and other sectors (Ministries, local authorities such as municipalities, NGOs, religious persuasions, unions, etc.) whose activities have an impact on the state of health of Mozambicans. As explained above, the health sector alone cannot assure an improvement in the state of health of Mozambicans. Many other sectors of governance and society play a crucial role in the improvement of living conditions – and, through this, the improvement of health conditions – of the people, through the provision of diversified food in quantity, drinking water, environmental sanitation, housing, transport, quality education, etc. The implementation of this inter-sector coordination should be inspired by the experiences in other countries.

   • For inter-sector coordination to be effective and efficient, it must be institutionalised. It is under this framework that an Inter-Sector Health Coordination Council (CCIS) should be set up, a body whose mission will be to ensure inter-sector coordination, with the aim of taking concerted action on the social determinants of health at the different levels. It is important to specify the mission, the tasks, and the composition of the CCIS.

   • Give priority to community participation. Community participation has two main aspects: (a) the right and duty of each citizen to participate individually and collectively in the planning and implementation of the healthcare aimed at them; and (b) the need for the entities responsible for the provision of healthcare to be accountable to the citizens (or their representatives) for their actions.

 In this framework – and based on the experience of other countries, such as Brazil (Cornwall and Shankland Reference Cornwall and Shankland2008) and Thailand (Rasanathan et al. Reference Rasanathan, Posayanonda, Birmingham and Tangcharoensathien2011) – community participation must be institutionalised through the set-up of bodies at all levels responsible for ensuring increasing involvement by the citizens and communities in health sector activities.

1. 5 – Boosting the activities of the Traditional Medicine Institute.

   Given the importance and the potential of traditional medicine in the provision of healthcare to Mozambicans, the government must further bolster the activities of the Traditional Medicine Institute, providing it with financial resources and qualified human resources at all levels. The Traditional Medicine Institute, working closely with the National Health Institute, must base itself on the experience of other African countries, as well as the experience in Asian countries (like China, Vietnam, North and South Korea, etc.) to define the best ways to stimulate research into traditional Mozambican medicine, seeking ultimately to make the most of its enormous potential.

2. 6 – Engaging the international community in the efforts with the aim of improving the quality of healthcare in Mozambique.

Such engagement implies, first, progressively reducing interference from cooperation partners in the formulation of health policies and the implementation of sovereign decisions made by Mozambicans.

On the other hand, if the international community does in fact want to help improve the quality of healthcare in Mozambique – so that the much-heralded universal health coverage that enshrines the values of universality, equity, and solidary can be achieved – it should undertake the following actions:

• Allocate a larger proportion of closely monitored aid in the form of direct support for the National Health Service budget. Government-to-government aid through direct support for the state budget or the Ministry of Health budget is the best way of helping the government of Mozambique to achieve the aim of universal health coverage.

• Cease the promotion of inappropriate approaches in the name of universal health coverage, especially vertical programmes.Footnote ¹⁴

• Help the government of Mozambique to make equity and universality explicit priorities from the outset. It is fundamental that poor people (i.e. the majority of Mozambicans) benefit at least in the same way as better-off citizens, at all stages.

• Help the government of Mozambique to measure and assess the progress and results of the actions aimed at universal health coverage, especially equity.Footnote ¹⁵

• Take steps to combat the tax evasion that prevents Mozambique from having access to the financial resources that are so necessary in order to ensure quality healthcare for all Mozambicans.

• Honour their commitment to allocate at least 0.7 per cent of their gross domestic product (GDP) to official aid for the development and improvement of the effectiveness of aid to the health sector.

A The Historical Trajectory of the Postcolonial State Building in Mozambique

The historical trajectory of postcolonial state building in Mozambique is largely confused with the internal dynamics of the constitution and the development of the anticolonial movement led by FRELIMO. These dynamics were marked by rifts, conflicts and violence, which became more acute particularly in the late 1960s and early 1970s, and structured the institution building process in the postcolonial period (Forquilha Reference Forquilha, Brito, Castel-Branco, Chichava, Forquilha and Francisco2017). In fact, the internal crisis within FRELIMOFootnote ¹ during the anticolonial struggle contributed significantly to the reinforcement of the rhetoric exalting national unity to the detriment of ethnic differences. These differences were very often regarded as tribalism or regionalism and therefore incompatible with the political project based on the idea of transformation of mentalities and social relations in the context of building the Homem NovoFootnote ² and a new society (Cahen Reference Cahen1987; Brito Reference Brito1991; Meneses Reference Meneses2015;).

With the advent of independence in 1975, the role of FRELIMO in the construction and transformation of Mozambican society was reinforced and enshrined in the Constitution of the Republic.Footnote ³ This fact contributed to the centralisation of the state, a process that soon gained consistency, particularly after 1977, when FRELIMO officially became a Marxist-Leninist party. In the programme presented for its 3rd party congress, FRELIMO’s role in the materialisation of the revolution and the centralisation of state power were important aspects, as can be seen from the extract below:

In this context, the centralisation of state power arose due to a combination of two important factors, namely the inheritance of the centralising nature of the colonial state and FRELIMO’s political project, culminating in the centralised Marxist-Leninist state at the service of the interests of the revolution. In the years that followed independence, the centralisation of state power significantly marked not only the functioning of the institutions, but also the operational practices and rationale of state employees and agents. This is an important aspect for understanding the result of the decentralisation process in the context of the market-oriented policy reforms underway in the county since the early 1990s.

B The Origins of the Decentralisation Reforms in Mozambique: Actors and Dynamics

The economic and political reforms taking place in Mozambique in the late 1980s and early 1990s, including the switch to a market economy, the structural adjustment programme, and political liberalisation, brought important consequences from the point of view of the institutional set-up of the state, resulting in the decentralisation process.

In the literature, the concept of decentralisation refers to the transfer of power, authority, functions, and competencies from the central state to lower levels (Rondinelli et al. Reference Rondinelli, Nellis and Cheema1983; Adamolekun Reference Adamolekun and Adamolekun1999; Manor Reference Manor2011). However, it is important to point out that the concept has different meanings. There are at least three. In fact, when authority and resources are transferred to agents of the central state located at different levels (region, province, and district), this is administrative decentralisation, which is also known as ‘deconcentration’ (Rondinelli et al. Reference Rondinelli, Nellis and Cheema1983; Adamolekun Reference Adamolekun and Adamolekun1999; Manor Reference Manor1999). When power and resources are transferred to elected, independent subnational units with a legal personality separated from the central state, this is political decentralisation (Rondinelli et al. Reference Rondinelli, Nellis and Cheema1983; Adamolekun Reference Adamolekun and Adamolekun1999; Manor Reference Manor1999). This is the case of local authorities (and, more recently, provincial authorities) in Mozambique. Finally, decentralisation can also mean the transfer of responsibilities regarding budgets and financial decisions (Rondinelli et al. Reference Rondinelli, Nellis and Cheema1983; Adamolekun Reference Adamolekun and Adamolekun1999; Manor Reference Manor1999; Forquilha Reference Forquilha, Brito, Castel-Branco, Chichava and Francisco2016). This is fiscal decentralisation. With regard to Mozambique, the Decentralisation Policy and Strategy (PED) states that ‘in Mozambique, decentralization is carried out through local authorities, local state bodies and institutions with community participation and consultation’ (Resolution No. 40/2012, of 20 December). According to the PED, the district development fund (known as ‘the 7 million’) is limited to the scope of the governmenťs willingness to decentralise to empower the communities in the fight against poverty’ (Resolution No. 40/2012, of 20 December). Therefore, when we speak of decentralisation in this chapter, we are referring primarily to the two main types of decentralisation, which are administrative decentralisation and political decentralisation.

If it is a fact that the centralised state model had a significant impact from an ideological point of view, namely in terms of associating the population with FRELIMO’s political project, it is no less true that, from an administrative point of view, the results were modest. Indeed, the heavy centralisation of public administration, associated with the scarcity of financial, material, and human resources and the serious effects of the war of the 1980s, contributed to making the state distant from the citizens, particularly in rural areas, insofar that more and more difficulties arose in the provision of basic services, especially in the education, health, water, and sanitation sectors. In this context, in parallel to the process of implementation of the structural adjustment programme, which began in 1987, the Mozambican government took steps aimed at improving the functioning of public administration, underlining the need for less centralised management. That was how the law no. 2/87, of 30 January, on the general state budget for 1987 was approved. In fact, its preamble underlines the following:

With regard to decentralisation, it is worth mentioning Article 8 of Law No. 2/87, of 30 January, as it establishes the following:

At the institutional level, the law no. 2/87, of 30 January, in a way constitutes a break from the previous period in terms of the principle of administrative and financial management insofar as the aforementioned law uses expressions such as ‘involvemenť, ‘accountability’, ‘administrative and financial autonomy’, which have little to do with the state centralism established in the Constitution of 1975. It is true that the law no. 2/87, of 30 January, does not create autonomous structures separated from the central state for local management and administration. Even so, it advances towards the gradual transfer of certain central responsibilities to subnational levels. To this end, the law no. 2/87, of 30 January, marks an important step towards the decentralisation process, whose fundamental bases would be launched later with the approval of the Constitution of the Republic in November 1990.

In the literature, decentralisation processes frequently appear as the result of a combination of internal and external factors (Olowu and Wunsch Reference Olowu and Wunsch2004). This aspect makes it relevant to the analysis in that there is a tendency to reduce decentralisation processes in Africa to merely external factors, particularly the ‘demands’ coming from donors, especially the World Bank and the International Monetary Fund. It is true that the ‘good governance’ component has played an important role in the implementation of decentralisation reforms in Africa, including Mozambique. However, it is important not to lose sight of the fact that for certain African states, particularly Mozambique, decentralisation is a relevant process of conflict management and state legitimacy in the context of bringing peace and democracy to the country (Faria and Chichava Reference Faria and Chichava1999).

This does not mean that decentralisation reforms in Mozambique are a consensual and peaceful process. In fact, over the last thirty years, the implementation of the main legislative and administrative measures in the context of decentralisation have proven to be contentious, resulting in political divisions not only between the main political players, namely FRELIMO and the Mozambican National Resistance (RENAMO), but also in the very heart of the ruling party. Indeed, in all discussions that led to the approval of several laws on decentralisation reformsFootnote ⁴, conflict has been one of the most significant features, playing an important role in the structuring of the results of the reforms, insofar as party political interests end up putting issues of consolidating democracy and local development on the back burner. We will return to this aspect below when discussing how institutional dynamics shape the results of the reforms in the context of decentralisation.

A Dimensions of Institutions

Institutional dynamics are analysed based on five dimensions of institutions against the backdrop of the nature and the functioning of the Mozambican political system. These dimensions of institutions are rule of law; voice, participation, and political accountability; political stability, violence, and state legitimacy; state capacity and independence from private interests; and sovereignty and independence. Below, we will be analysing some elements for each one of the mentioned dimensions of institutions. The dynamics, which exist in each of the five dimensions of institutions, will allow us to discuss the decentralisation reforms we chose for analysis in this chapter.

B Municipalisation, District Development Fund (‘7 Million’)Footnote ⁶ and Challenges of Decentralised Provincial Governance

In this section, three cases will be discussed to illustrate the institutional dynamics in the decentralisation reforms. These are the municipalisation, the district development fund (‘7 million’), and the challenges of decentralised provincial governance. By taking these three cases, the aim is to analyse how institutional dynamics shape the results of decentralisation reforms from a political and economic point of view.

1 The Municipalisation Process: Between Breakthroughs and Setbacks

The first attempt at municipalisation in Mozambique after independence came in 1994 with the approval of the law no. 3/94, of 13 September, on municipal districts. Approved by the then People’s Assembly, before the first multiparty election in the history of the country, the law no. 3/94, of 13 September, called for municipalisation of the entire country. In practice, it was a question of transforming all districts in the country into municipalised spaces with regular elections. But this law was repealed even before its implementation. In its place, three years later, the law no. 2/97, of 18 February, on local authorities, was approved, introducing functional and geographic gradualism into the process of municipalisation of the country. As a result, the first thirty-three local authorities were set up and the first local election was held in 1998. Obeying the principle of gradualism, twenty more local authorities were set up in the following years, making a total of fifty-three local authorities, with regular elections every five years. According to the legislation, more local authorities could be set up once the conditions for these were in place, based on the criteria established, namely:

1. a) geographic, demographic, economic, social, cultural, and administrative factors;

2. b) national interests or the interests of the place in question;

3. c) reasons of a historical and cultural nature; and

4. d) assessment of the financial capacity for engaging in the tasks assigned to them (article 5 of the law no. 2/97, of 18 February).

However, in practice, the criteria contained in the legislation for setting up new local authorities have, over the years, shown themselves to be vague, giving plenty of room for manoeuvre to the central government, which is responsible for proposing the list of new local authorities to parliament. In fact, a study of the ten years of municipalisation in Mozambique made reference to this aspect in the following terms:

The policy framework for decentralization has not been transparent. Despite gradualism being an essential principle of local authority reform in Mozambique, there has been little transparency in the analysis and discussion process for the selection of new municipalities. The technical basis for planning the continued expansion of the local governance system is not defined using a clear and repeatable methodology that establishes standards and goals for the creation of new municipal towns and introducing small, rural local authorities (autarquias de povoação).

(ANAMM and World Bank 2009: 11)

The process of setting up the local authorities has been marked by conflicts in the context of space occupation and political influence from the main political players, namely FRELIMO, RENAMO, and the Mozambique Democratic Movement (MDM). But it is not only in geographic gradualism that there is little transparency and, through this, conflicts between the main political players. The same is true for functional gradualism, that is the transfer of functions and powers from the central state to local authorities. In fact, in 2006, the Government of Mozambique approved the decree no. 33/2006, of 30 August, which calls for the gradual transfer of functions and powers from the central state to local authorities. Article 5 of the decree provides the following:

The transfer of functions and powers from state bodies to local authorities should be gradual in order to allow for the creation and consolidation of the necessary technical, human and financial capacities in the local bodies; 3. The set of functions and powers established in this decree shall be progressively transferred to the local authorities in the three years subsequent to its coming into force. This may be extended for a further two years.

(decree no. 33/2006, of 30 August)

More than ten years later, the implementation of this decree has been marked by huge conflicts insofar as the state has been reluctant to transfer functions and powers to the local authorities, arguing that the local authorities still do not have the capacity to receive the services to be transferred by the state, particularly in the areas of health and education.

Apart from territorial and functional gradualism, another aspect that significantly affects the implementation of the municipalisation process is funding for the local authorities. The historical trajectory of the process of political institution building in the country has been marked by a strong centralising rationale, erecting barriers to the funding mechanisms for the local authorities. In fact, the law no. 1/2008, of 16 January, which defines the financial, budget, and patrimonial arrangements for the local authorities and the local authority tax system, does not facilitate funding adjusted to the needs of the local authorities. Not only are the intergovernmental transfers provided for in the law a far cry from the reality. The local authority tax system also has severe limitations, which are a consequence of the highly centralised nature of the state tax system. To date, the main intergovernmental transfers to local authorities are: (a) the Municipal Compensation Fund (FCA); (b) the Investment Fund for Local Initiatives (FIIL); (c) the Fund for the Reduction of Urban Poverty (PERPU); and d) the Roads Fund (Weimer and Carrilho Reference Weimer and Carrilho2017; Schiller et al. Reference Schiller, Forquilha, Bunk, Klawonn, Krull, Sennewald, Steinhilber, Boeselager and Forquilha2018).

With regard to the FCA, article 43 of the law no. 1/2008, of 16 January, states that:

The Municipal Compensation Fund is a fund aimed at complementing the budgetary resources of local authorities; The amount of the Municipal Compensation Fund is subject to its own funding, which is presented in the state budget, and consists of 1.5% of the tax revenue provided for in the financial year in question.

(article 43 of the law no. 1/2008, of 16 January)

In practice, however, the FCA and other state transfers represent the revenue with the heaviest weight on funding budgets of local authorities, particularly small- and medium-sized local authorities, namely Type D municipalities and towns,Footnote ⁷ which reveals high financial dependence of the local authorities on the central state. But it is important to mention that state transfers to local authorities have been marked by considerable variations over the years, as shown in Figure 7.1, which has put many local authorities into financial difficulties, given the low volume of own revenue in the funding of the budgets in question.

Figure 7.1 Transfers to local authorities as a percentage of national tax revenue (2009–2016)

Source: Authors’ calculation based on Ilal and Weimer (Reference Ilal, Weimer and Forquilha2018).

Contrary to what might have been expected, the local authority tax system has not been consistent and coherent enough to deal with the low volume of own revenue. In fact, when you look at the collection process for own revenue by local authorities, it becomes clear that:

The central powers in terms of taxation continue to lie with the central state. In certain cases, tax rates are set centrally, and the same is the case for the definition of the tax bases and other more general principles of taxation, established on the general principles and regulations of the Mozambican tax system. Along these lines, the degree of local autonomy in the definition of fiscal policy is much greater for tariffs and fees paid for services and for fines than for taxes.

(Schiller et al., Reference Schiller, Forquilha, Bunk, Klawonn, Krull, Sennewald, Steinhilber, Boeselager and Forquilha2018: 36–37)

In this context, the lack of local fiscal autonomy puts a financial stranglehold on the municipalities, and this has a significant impact on the funding of local basic services and weakens the decentralisation reforms, particularly with regard to the municipalisation process.

What institutional dynamics are present in the case of the municipalisation, and what dimensions of institutions are these dynamics linked to? How do these dynamics affect the outcomes of municipalisation? Based on the implementation process described above, there are three dimensions of institutions, whose dynamics shape the results of municipalisation reform. These dimensions of institutions are: (a) rule of law; (b) state capacity and independence from private interests; and (c) sovereignty and independence.

Concerning the first dimension of institutions – rule of law – the process of municipalisation brings to light institutional dynamics, which show the way difficulties linked to separation of powers hamper policy design and implementation. In fact, as happens with other reforms, the debate on relevant aspects of the municipalisation process in the country is structured and dominated by the positions of the executive power, which ultimately represents the interests of the ruling party – FRELIMO. Since then, and because of the proportional electoral system in force, where the representatives are elected from a party list,Footnote ⁸ and the parliamentary majorities that FRELIMO has had since the first multiparty elections in 1994, parliament has taken on a minor role in the debate, very often limiting itself to ‘rubber-stamping’ the government positions in this matter. An example of this is the debate on the geographic and functional gradualism mentioned above and the process of creating new local authorities.

As to the second dimension of institutions – state capacity and independence from private interests – institutional dynamics in this dimension show how the process of implementation of the reforms, in the context of municipalisation, is captured by party political private interests and, in some cases, delays the implementation of the reforms. This is the case, for example, with the delay in implementing the decree no. 33/2006, of 30 August, on the gradual transfer of functions and powers from the central state to local authorities. As mentioned above, this process is marked by conflict, which has been most visible in the municipalities that are ruled by political parties other than FRELIMO, namely the MDM and RENAMO (the cases of Beira, Quelimane, and Nampula municipalities). In this context, the political interests of the ruling party (FRELIMO) significantly structure the functioning of the state in terms of transfer of functions and powers to the local authorities, as also happens with the process of setting up new local authorities. This makes the process of implementation of the reforms more difficult and shape the outcomes of municipalisation, particularly when it comes to improving basic services (education, health, sanitation, transport) and strengthening democracy.

Finally, the dimensions of sovereignty and independence are probably the ones that stand out the most in the decentralisation reforms, particularly when it comes to municipalisation. It should be reiterated that the concept of sovereignty in this chapter draws on political science literature, and refers to the holding of authority by a state within a territory and over its population (Caramani Reference Caramani2017; Poggi Reference Poggi and Caramani2017; Sørensen Reference Sørensen and Caramani2017). From this perspective, sovereignty applies both domestically (the need for the state to exert authority within its territory and over its populations) and externally (in the context of international relations – non-acceptance of any interference from other states with regard to domestic affairs). In a decidedly centralised state, as was mentioned above, institutional dynamics linked to sovereignty and independence show how the debate on the municipalisation process was very much structured around the idea of the need to preserve the unitary nature of the state, in accordance with the Constitution of the Republic (article 8 of the Constitution of the Republic, as amended by the law no. 1/2018, of 12 June). In this sense, the choice of territorial and functional gradualism (gradual creation of the local authorities and gradual transfer of functions and powers from the central state to the local authorities) comes essentially as a result of institutional dynamics linked to sovereignty and independence. The same can be said about the low fiscal autonomy of the municipalities, the creation of the figure of a state representative in the municipalities and the establishment of districts in all provincial capitals, leading to territorial overlaps (municipalities/districts) and, in some cases, conflicts between the mayors and district administrators (Forquilha Reference Forquilha, Brito, Castel-Branco, Chichava and Francisco2016).

In addition, decentralisation is one of the areas that has had significant support from international cooperation partners, both in the area of deconcentration and the area of devolution (Borowczak and Weimer Reference Borowczak, Weimer and Weimer2012; Weimer and Carrilho Reference Weimer and Carrilho2017; Bunk Reference Bunk2018). In fact, since the late 1990s, bilateral and multilateral partners have been supporting decentralised planning and finance programmes, as well as municipal development. This is the case, for example, of the National Programme for Decentralized Planning and Finance (PNPFD); Thirteen-City Support Programme (P 13); Decentralization and Municipalization Support Programme (PADEM); Support Programme for Districts and Municipalities (PADM), Local Authority Development Programme (PDA); PRODEM. In all of these decentralisation support programmes/projects, the government has been a key partner in the implementation process, playing a delicate game while at the same time ensuring technical and financial support and maximising any room for manoeuvre with a view to affirming country’s sovereignty. In some cases, this delicate game has resulted in conflict between the government and the cooperation partners, significantly affecting the implementation process and the goals of the decentralisation support programmes.Footnote ⁹

A Independence and Central Planning and Management, 1975–1986

In 1975 the official public accounting system was based on the colonial frameworkFootnote ³, namely the Public Accounts General Regulations of 1881, the Finance Regulation (Regulamento da Fazenda) of 1901, and later legislation updates (Portarias dated 1947 and 1958). However, the exodus of Portuguese settlers and the very low level of education and experience with administration among Mozambicans at independence entailed significant challenges in managing the system. The point of departure for Mozambique in relation to PFM was a rather antiquated and little transparent system that had been managed by Portuguese bureaucrats, many of whom left the country at independence, not bothering to hand over or train their successors, sometimes even sabotaging the systems on their way out. Government accounts from the late 1970s were only reconciled and audited in the early 1990s with Swedish technical assistance.

During the first decade of independence, until the end of 1986, the PFM system was adjusted to serve Frelimo’s objectives of dismantling the colonial administration and promoting fast socio-economic development in the context of a Marxist-Leninist ideology (GoM 1981). At its 3rd Congress in 1977, Frelimo decided to implement an economic system of central planning and management (Frelimo 1977a, 1977b). The state planning system controlled the public financial system, the monetary system, wages and prices, and the material balance system. These institutional changes were driven by popular ideology distancing the new and sovereign Mozambique from its colonial past under a leadership that enjoyed widespread popular support. It involved the Mozambican population in a limited manner, but much more than any leadership had done before. Issues like transparency of public accounts were not at the centre of debate; it was about fuelling social transformation and increasingly how to finance the defence against an insurgency supported by the hugely superior neighbouring countries, Rhodesia and South Africa.

To improve internal revenue sources, the tax code was reformedFootnote ⁴ in 1978, increasing the weight of direct taxes, in line with a progressive system (Byiers Reference Byiers2005; Theodossiadis Reference Theodossiadis2004: Table 8.1). Especially taxes on company profits increased. In the category of indirect taxes, which was the major component of revenue (Table 8.1), unessential goods were subject to higher taxes than essential goods. This reform was successful for a few years, when the share of total current revenues over the GDP increased from 11.1 per cent in 1978 to 14.2 per cent in 1983 (CNP 1985; Sulemane Reference Sulemane, Rolim, Franco, Bolnick and Andersson2002).

Budget allocations served the purpose of promoting fast industrialisation, the collectivisation of agriculture, the expansion of state enterprises, and the expansion of primary education and health services. As the massive costs of the war in the 1980s aggravated,Footnote ⁵ a higher proportion of expenditures were allocated to military purposes (‘other’ expenditures in Table 8.2). The informal sector became gradually larger in the 1980s, reducing the share of revenue to GDP.

The share of total current revenues over the GDP declined from 14.2 per cent in 1983 to 8 per cent in 1986, and the overall deficit after grants as a percentage of GDP increased from 10.1 per cent in 1982 to 15.3 per cent in 1986 (CNP 1985: 40; World Bank 1989; Sulemane Reference Sulemane, Rolim, Franco, Bolnick and Andersson2002: 50;). The public debt including arrears rose to US$3.2 billion in 1986 (World Bank 1987).

Overall, the centralised economic model, including its PFM component proved inefficient. Viable companies were subject to foreign exchange restrictions and many public companies were loss makers. The violent conflict was a huge burden on the economy and Mozambique became heavily indebted. After a few years, the economic system collapsed and forced the government to switch to a market-oriented economy in 1987 and to move towards a democratic political system in line with conditionality of the international creditors and donor community.

B Economic Rehabilitation and the Market Economy, 1987–2009

We highlight three sub-periods in PFM reforms between the late 1980s and the discovery of natural gas reserves in 2010. The first started in 1987, when the government implemented a wide-ranging series of reforms aiming to shift the economy towards greater reliance on market mechanisms. Although the initial economic and PFM reforms were successful, in terms of reducing the public deficit as a share of GDP from 10.1 per cent in 1986 to 4.7 per cent in 1989 and recovering national production (8.1 per cent GDP annual average growth rate in 1987–89), the country remained at war under the one-party political regime opposed by Renamo. It was only after the multiparty and democratic elections in 1994 onwards – marking the beginning of the second sub-period – that the PFM reforms could proceed more systematically, in a more coherent and integrated manner.

The volume of internal revenue and foreign aid rose substantially, allowing for the creation of the State Financial Administration System (SISTAFE) in 2002, signalling the beginning of the third sub-period. Significant advances took place in the form of tax reforms, the creation of the Tax Authority (AT) in 2006 and the development of various budget cycle subsystems. However, the positive dynamics of PFM reforms, supported by foreign aid in the context of sustained economic growth and poverty reduction, changed when the existence of large reserves of natural gas was confirmed in the Rovuma Basin in 2010. Since then, government priorities have been focused on minerals and other natural resources. Before we discuss this shift, we describe the three stages in more detail.

C Extraction of Natural Resources, 2010–Present

The period since 2010 saw a shift in the PFM reform effort with the confirmation of the existence of natural gas reserves in the Rovuma BasinFootnote ¹⁰. The prospects of profiting from the extraction of hydrocarbon resources and other mineral resources prompted Frelimo and its governments to shift focus from PFM reforms and prioritise instead the quest for opportunities in mega projects related to mineral resources, especially oil and gas.

The inaugural message from donors to President Guebuza on the start of his second mandate was a freeze of general budget support, triggered by irregularities in the 2009 parliament and presidential elections. The decision came as a complete surprise and enormous disappointment to the government. The G19 had rarely been able to make radical decisions and the government found comfort in the fact that uniting 19 donors, some with very different agendas in Mozambique, on anything but status quo would be very difficult. The government also had informal observers in the G19 secretariat and some of the technical working groups who would catch any discords of significance. This time, however, a good handful of ambassadors knew that the geopolitical winds had changed and headquarters would welcome a harder line, including possible savings that could be spent in fragile and post-conflict states. They acted quietly and without support staff during the big Mozambican holidays after the New Year in 2010, and skilfully organised the motion in a way that would leave softer donor voices behind in the policy dialogue with the government as well as with a problem explaining headquarters why they were lenient and not positioned where the action was.

The event exposed Mozambique’s vulnerability to external shocks, and although ideas were certainly maturing already, the experience strengthened the Guebuza administration’s resolve to reduce donor dependency and move future revenues from gas forward. Moreover, Frelimo tightened the control of the state apparatus, and allegiance to the party became central, sometimes at the cost of a law-abiding behaviour. A series of laws and regulationsFootnote ¹¹ were put in place from the 1980s through the 2000s to dissuade civil servants at all levels from abusing public goods or benefiting illicitly from using public goods. Furthermore, it was expected that the investment in ‘sophisticated, modern and advanced’ electronic and informatics systems, with international and advanced PFM models with the audit and report mechanisms would increase the efficiency of the system and make it easier to control the misuse/abuse or illicit use of public funds. A further reference can be made to the Probity law (PoM 2012, Law 16/2012), which explicitly forbids the abuse of party powers in relation to the functioning of the state entities. However, reality was that these laws were regularly ignored and the practice of asking for bribes in relation to public tenders started escalating.

The first consequence of the above change of priorities was the decision by the government to issue state guarantees for the so-called Proindicus and MAM loans, not included in the budget submitted to the parliament for approval, and which only became publicly known in April 2016 (Hanlon Reference Hanlon2016a, Reference Hanlon2016b; IMF 2016b; Wirz and Wernau Reference Wirz and Wernau2016). They are widely referred to as the ‘hidden debť scandal and, together with the EmbraerFootnote ¹² case, reflect unlawful behaviour by high government officials (IMF 2018; Melo Reference Melo2018; RM 2021).

A second consequence of the change of priorities was a neglect of the factors that could keep peace with Renamo and prevent the economic speculation on the coast of Cabo Delgado that fuelled the eruption of armed conflict in the North and the occurrence of various waves of high-profile kidnappings (Hanlon Reference Hanlon2018, Reference Hanlon2021a, Reference Hanlon2021b; Orre and Rønning Reference Orre and Rønning2017; Pitcher Reference Pitcher2020).

A third consequence is a generalised lower quality of public services, and increasingly evident corruption. To illustrate, Mozambique fell to 149th position out of a total number of 180 countries in the 2020 corruption perceptions index (Transparency International 2020). VAT refund delays and the excessive bureaucracy and non-transparent procedures that taxpayers face when dealing with the tax authority created further opportunities for corruption and abuse of power (Cortez Reference Cortez2014; IMF 2019b).

Put differently, while the PFM reform programme continued in the 2010s and Mozambique was declared compliant with the EITI in 2012 (EITI 2020), this happened in a political environment that increasingly jeopardised both economic and institutional progress. As a result of the 2014 general and presidential elections, Filipe Nyusi replaced Armando Guebuza as the new President in 2015, becoming later in the year also President of Frelimo. The Ministry of Finance and the Ministry of Planning and Development were merged in the Ministry of Economy and Finance in 2015. Planning and Budget functions were merged again into the same directorate. As the public became aware of the ‘hidden debť decisions taken in 2013–14, the group of nineteen donors interrupted all budget support in 2016, and the IMF interrupted its policy assistance. Mozambican public and international partners lost confidence in the country and in the PFM reforms.

Contradictions between Frelimo and Renamo intensified, and the Constitution of the Republic was amended in 2018. The declared aim was to advance the decentralisation process (PoM 2018). However, introducing the position of provincial state secretary has also been interpreted as a move to take away key political and management functions from the elected provincial governor on the one hand, and as Frelimo’s pre-emptive action should opposition parties win the provincial governors’ positions on the other. Should Frelimo lose in local elections, the party would keep political control in provinces through the provincial state secretary.

While presidential, parliamentary, and provincial elections took place in 2019, they were controversial. In parallel, specific PFM reforms continued. The SISTAFE law was revised (PoM 2020) and a pilot planning and budget module and social and economic planning and state budget simulation were carried out in 2020.

A Building a PFM System: Successes and Constraints

Having outlined the main events that influenced the PFM system and marked its different periods, we now put this analysis in perspective and evaluate the PFM reform process. During the period 1975–86, the PFM system was adjusted to the purpose of national revolution, Marxist-Leninist ideology, and war, within a political framework of a one-party state. The government successfully managed the transition from the colonial period to post independence years and started implementing a development strategy based on the industrialisation model of the socialist countries led by USSR. Until 1980–81, the economy and state revenues were under control. There was popular support for the political and economic system adopted by Frelimo government, and political leaders were trusted. They were the national liberators and were adopting policies favouring rural and lower income families. Also, there was no evidence of private enrichment using public resources.

After 1981, Mozambican GDP and state revenue started declining each year, until 1986. The economic system based on central planning and management, the failure of the socialist countries to replace western countries and the rest of the world as commercial and investment partners, and the ongoing war were the main factors for the economic decline, and the PFM system started failing. The lack of separation of powers and non-transparent management prevented external and internal auditing, efficient budget management, effective revenue collection, and appropriate fiscal policy analysis. The Popular Assembly, Supreme Popular Court, CNP, the Ministry of Finance, sectoral ministries, and other public entities were unable to critically identify and correct the public financial system and management distortions for about a decade.

During 1987–94, the PFM system changed substantially, adapting to the market economy and becoming more efficient and transparent. Reforms took place through the approval of new legislation, the change in administrative structures and procedures, and training. Accordingly, this period saw key general reforms that contributed to overcome many PFM system constraints, a new 1990 Constitution, the peace agreement in 1992 and the first democratic and multiparty elections in 1994. However, reform efforts were initially constrained by the war, the lack of separation of powers, a weak rule of law, and the political system with a single party. Some of this was part of the underlying deal between Mozambique and western donor countries.

The sequencing of the reforms introduced by the Bretton Woods was less than optimal in economic terms, as the liberalisations of prices happened at a time where no supply response was possible due to the war. However, the early onset of economic reforms, before peace and armistice, allowed Frelimo to gain and maintain control of the reforms, including privatisations, before Renamo got demobilised and installed as opposition party. The protracted peace process from 1992 to 1994 also reduced the likelihood that Renamo could reject defeat at the first multiparty elections, as farmers, including Renamo supporters, and indeed Renamo’s own rank and file combatants had settled and gotten used to a much more comfortable life than bush fighting and queuing for food in refugee camps.

The sequencing of reforms also meant that the government maintained control of the banking system during this first phase of fiscal reforms. Privatising the banking system was difficult and slow because the state banks were not commercially interesting to foreign banks. The same could be said for the Mozambican market until a credible peace was achieved and economic growth had been sustained for some time. As the PFM-reforms progressed and subsidies were exposed and subsequently suppressed, much of the problem with subsidies to loss making state entities moved to the banking system through loans to companies that would never become viable entities in a market economy. The subsequent cost to the economy of this mining of the banking system has been felt for decades in Mozambique. Moreover, as the fiscal subsidies moved to the banking system as unrecoverable loans, it increased net credit to the economy just as much as it would have if handed out from the budget. This limited the expansion that otherwise could have been accommodated on the fiscal side, including in the social sectors, where expenditure, such as salaries to teachers and nurses in rural areas, was much more likely to generate strong multipliers than the loans to state corporations under privatisation.

B A Feverish Frenzy of Initiatives

In 1994–2009, the PFM system started to change and systematically reformFootnote ¹³ in what can best be characterised as a feverish frenzy of initiatives. There was political commitment at the highest levels within Frelimo and Government, expressed through the main government programmes and budgets. The Ministry of Planning and Finance (1995–2004), and from 2005 onwards, the Ministry of Finance and the Ministry of Planning and Development were in charge of reforming the PFM system. The government was in agreement with international funding partners, bilateral and multilateral, such that aid financing was allocated to PFM reform programmes, technical assistance was provided, and formal and on-the-job training was carried out.

The tax administration body was reformed over time concluding in the establishment of the Tax Authority in 2006. Tax revenue collection capacity increased substantially (Figure 8.1). The budget reforms completed the cycle components, by improving the formulation, approval, execution, accounting, and external audit. Civil society gained access to budget information and had the opportunity to publish independent budget analyses. Internal audit and procurement improved.

Figure 8.1 Tax revenues net of ‘capital gains’ increased from 2006 to 2011 (share of GDP)

Source: Authors’ illustration based on IMF (2007, 2009, 2010, 2013, 2016a, 2019a).

The TA contributed to improving the recording of external funds entering the country for financing investment projects.Footnote ¹⁴ As a weakness, TA was auditing the State General Account (CGE) up to two years after the close of the fiscal year at the beginning, 1998–2002 (Hodges and Tibana Reference Hodges and Tibana2005: 65). With the SISTAFE law this deadline was shortened, making parliamentary scrutiny of the budget execution more meaningful.

The multiparty composition of the parliament led the executive to respond to the public representatives about the management of public resources. However, the parliament remained quite weak in effectively overseeing the executive. Frelimo maintained absolute majority in parliament and most opposition politicians did not have experience with or technical insight to really scrutinise fiscal management and challenge the government. The limited parliamentary oversight was also in part due to the high proportion of external aid in the budget, combined with the fact that aid funded projects and programmes were discussed directly between donors and the executive. Moreover, big parts of the aid funds were regularly off-budget. Other limitations included the fact that tax rates were not part of the budget legislation submitted to the parliament, and by law, the executive had a wide latitude to reallocate the expenditure after parliamenťs approval of the budget (Hodges and Tibana Reference Hodges and Tibana2005: 9–10).

Civil society gained more space for monitoring the executive within the multiparty democracy environment. Nevertheless, in the late 1990s and early 2000s civil society remained weak in demanding information on the management of public resources and in checking the legality of executive actions. One cause for this weakness was the lack of interest due to the narrow domestic tax base of the economy. Another factor was the low analytical capacity to analyse budget issues.

International partners played a significant role in the PFM reforms, investing resources, providing technical assistance and advice, as well as close monitoring. PARPAs, many public programmes and projects, and the respective reports were elaborated with close donor involvement. In 2004, fifteen aid partners signed a Memorandum of Understanding with the government to monitor government performance, decide their disbursements, and plan the application of funds in two annual joint sessions, the Midterm Review and the Joint Review (Batley et al. Reference Batley, Bjornestad and Cumbi2006).

The World Bank also collaborated to a certain extent with the government in preparing their credit programmes and projects and carrying out assessments and studies, like the Public Expenditure Review and the Country Policy and Institutional Assessment (CPIA). The IMF used to carry out at least three missions per year to Mozambique under the various programmes, like the Policy Support Instrument or the previous Poverty Reduction and Growth Facility, and also under the Article IV when an IMF team discusses with officials the country’s economic developments and policies. In these missions, the IMF considered as structural benchmarks some of the PFM reforms, including the e-SISTAFE roll-out for all budgetary operations for goods and services to twenty-two additional ministries and organs in 2007 (IMF 2007). In many ways, these reforms were very successful, which can be seen not only from external technical evaluations, but also from the dynamics of political economy and relations with donors. When rent seeking and party finance moved away from public finance and donors increasingly focussed on the contacts the government and Frelimo kept, it was a sign that PFM reforms had progressed, at least to some extent. Some of the last areas covered were not surprisingly procurement audits, which were not mandatory and the patrimony (assets register) module in E-SISTAFE. However, even these areas advanced eventually.

The downside of the amount of aid was a high degree of donor dependency. Mozambique failed to integrate these resources, policies, and PFM procedures in the interests of local producers. Moreover, aid incentives were very generous but biased towards, for example, low quality investment in human resources. Some achievements were made, but in a fragile process (Cruz and Mafambissa Reference Cruz and Mafambissa2020). An inclusive and sustainable productive environment remained lacking and difficulties in the donor–recipient relationship discussed by Flentø and Simão (Reference Flentø and Simão2020) intensified. The overwhelmingly benign alliance for social transformation between western donors and the government of Mozambique started cracking in the mid-2000s as both parties changed their ways. One reason was a change of personalities and political line as Guebuza took over from Chissano, but there were strong underlying drivers pushing the divide.

On the donor side the re-securitisation of aid was significant after 9/11 and western military intervention in Afghanistan and Iraq. Aid budgets came under pressure and donors simply changed their yardstick in relation to the underlying principles guiding aid flows. As the unipolar world came to an end, donor countries wanted to spend more aid in fragile states, both post-conflict and the ones they were still bombing, as Afghanistan. Under such circumstances, where western security was on the line, donors would support any government regardless of its democratic and governance credentials. Large flows of harmonized aid to peaceful countries as prescribed in the Paris Declaration on effective aid management became an easy target for revenue collection. These programmes were not very popular with many politicians in donor countries, due to reduced visibility and low possibility of combining aid with commercial efforts. Mozambique was especially vulnerable as all aid was coordinated around GBS, which many donors had joined to get a seat at the dialogue table and not in true pursuit of aid effectiveness. All it took to reduce aid to countries like Mozambique was to interpret compliance with conditionality a little stricter and expose things that western security services had known for a long time about the ruling party’s business finance.

In contrast to the governments in, for example, Kenya, Uganda, and Ethiopia, Frelimo did not comply with the new more or less explicit conditionality. Guebuza strengthened relations with China, did not respond to western concerns over piracy, and maintained friendly relations with private businessmen whom the west believed were drug lords. Realising that conditionality would only get tougher, top Frelimo leaders moved in the first half of the 2000s to strengthen the main party structures and their influence. Frelimo started to assert its dominance over state structures. This meant that policies were increasingly defined by Frelimo and not by foreign interests, which eventually led to tensions with the donor community. It also meant that activities to empower local producers would have to find their way through a centralised system of oligarchs who used their political influence in the executive to dominate the legislature and the judiciary. These oligarchs controlled positions in major public companies and obtained rents from large companies extracting natural resources.

Meanwhile, in the second half of the 2000s, PFM reforms did continue on the previously defined course, backed by aid resources. Mozambique had no star record on human rights and democracy, but in macro-economic management, including PFM, it was considered a very good performer as expressed by IMF in 2007. To keep the GBS and significant sector budget support flowing, the PFM reforms had to continue, even intensify. However, they concentrated on the management and transparency of flows and auditing of an ever-larger part of government entities and not least, the new priority of many donors, tax collection. In the medium term, few of these reforms would seriously reveal or hurt the way top party officials and oligarchs increasingly accumulated wealth. Elite accumulation had much more to do with acquiring land and other assets as well as exclusive licenses to team up with foreign partners in large scale infrastructure, extractive industries, power generation, and telecommunications. Some of these partners were from non-western countries like China and India, others were private corporations from the exact same countries that were providing the bulk of aid to Mozambique.

C The Hope from Gas, but All That Glitters Is Not Gold

With the confirmation of large natural gas reserves in the Rovuma basin, and after a harsh reminder of donor dependency by the GBS-freeze after elections in 2010,Footnote ¹⁵ critical decisions were taken by the government to increase the use of commercial loans to finance a whole series of public investment projects and to provide hidden state guarantees to commercial investments in the Proindicus and MAM companies. Ematum became publicly known because a French shipyard gave interviews to their local press on new orders the company had received from Mozambique. Meanwhile, PFM reforms continued, but they became more tentative and fragile in light of the increase in the public deficit and debt. Roe (Reference Roe2018) characterises the process as one of ‘bust before boom’ and Henstridge and Roe (Reference Henstridge, Roe, Addison and Roe2018) discuss macroeconomic management of natural resources. Expectations of large natural gas revenues put pressure on the PFM system, but the system as such prevailed. When fiscal discipline was blatantly undermined, it was not by embezzlement, gross neglect, or mismanagement, which would be revealed by the system and the checks and balances built in during many years of reform. It took outright fraud committed secretly by the most senior government members to override the system, in an operation where the financial flows out of the system would only ensue several years after the crime had been committed. This is a kind of a hallmark for PFM reforms in Mozambique.

Even a good PFM system cannot discover three secret letters signed by senior ministers in breach of their mandate, but when such letters entail financial flows of public funds it will. Therefore, decisive rupture between the top party/government interests and the PFM reforms agenda only occurred in the first half of 2016 when the ‘hidden debť scandal became known by the public. That happened when the creditors announced they would call in the state guarantees signed by senior ministers in secret letters 3–4 years earlier.

The G19 group of international aid partners stopped all budget support (general and sector) and the IMF suspended its assistance to the government until 2019. When the Nyusi government took over in 2015, it inherited an economic crisis that was further deepened by a series of climatic and political shocks, and the mitigation measures taken came with a heavy cost to the economy. Expectations that economic progress could continue as in previous decades became an illusion and the GDP growth rate declined to very low levels.

To understand why donors reacted so rigorously and relatively united, it is useful to understand how the guarantees issued by the Guebuza administration were conceived by many of Mozambique’s partners.

Having believed they had practically full insight with the governmenťs fiscal policy and budget and after several years of hardening of policy dialogue, the donors discovered that they had not had insight with state finances where it really counted. Especially IMF was disappointed, and logically questions were asked: ‘How could we not know this, have we done a proper job?’ Such questions trigger reactions from people whose career is in the balance and also questions the almost blind confidence donors have in IMF knowing what goes on in an aid dependent economy with large amounts of general budget support.

Originally, donors were not primarily concerned with the real crime of the secret guarantees – the fact that they were not disclosed to and approved by the Mozambican parliament. It was the case of misreporting to the IMF that concerned many donors most. Such misreporting occurs from time to time and although misreporting of this magnitude (almost 10 per cent of the GDP) is rare, it was not unprecedented (the Democratic Republic of Congo, for example, had known worse cases).

However, in Mozambique donors discovered that the government had contracted debt that would consume more funds than the entire G19 budget support would provide over the medium term. The government of Mozambique had secretly mortgaged the donors’ confidence-based financial assistance for years to come. It was all possible because of the future gas revenues, but the extraction of gas was still too far away for those flows to service the debt. Some capital gain taxes from gas companies could probably be collected during the time the debt was to be serviced, but the really big financial flows from gas would only materialise after the loan were repaid.

This timing was probably not the initial intention of the government, which, together with many others, including IMF and donor countries, had very optimistic expectations in relation to how fast the gas fields could be operational. However, the Guebuza administration was sitting on its second and – according to the constitution – last mandate. Whether it was to finance an exit strategy and retirement or to swing constitutional reform in favour of a third mandate, waiting for the funds from the gas exploration was not an option. There was, however, also another reason the loans were urgent.

The loans were not just a bogus operation for personal enrichment of the elite, including foreign bankers and banks with little social conscience. What the government tried was fundamentally to finance its way into the security architecture that would surround the future gas and oil extraction in northern Mozambique. That was a significant additional concern to some donor countries.

By acquiring what looked like a fishing fleet and fast going inspection and patrol boats as well as shipyard service facilities for those vessels, the government of Mozambique, or rather the security sector of Mozambique’s government, could be an important partner in future security operations around the extractives industries in the north. Such a Mozambican structure could arguably be strong enough to choose its foreign partner. That is relatively rare in Africa, where many governments, just like Mozambique’s, lack the resources to do so, among other reasons because security expenditure had been restrained in highly donor-dependent countries.

When a government cannot guarantee the safety of extractive operations in its territory, there are only two other options. One is to let another country do it, which is often highly controversial and directly unthinkable in Mozambique. The other option is privatising the security operations, which is most often the outcome. Contracts for the services (often labelled security and logistics advice and training) are somehow overwhelmingly awarded to a handful of western companies.

All along, the PFM reform agenda continued to be pursued. There was a reform schedule to improve various procedures, correct more recent weaknesses (restructure MEF bodies, improve debt management, and public sector risk assessment), and roll out the system to all public entities and all spatial levels. Moreover, there were previously committed resources available, whether internal or external, and a sense of credibility by advancing with the reforms. In sum, the continuation of the reforms represented a professional commitment from those officials directly in charge and all those entities, both local and international partners, dedicated to the improvement of mechanisms and management of public financial resources.

Nevertheless, internal, and external trust in the state became very low. A former Minister of Finance and member of the Mozambican parliament has at the time of writing been in jail since 2018 in South Africa (Hanlon Reference Hanlon2019).Footnote ¹⁶ Moreover, in the beginning of 2019, a former Treasury National Director and Deputy Minister of Finance was dismissed due to her links to the hidden debt. These and other events contributed significantly to demoralising civil servants working directly on improving the PFM system. More broadly, the ‘hidden debť scandal and its aftermath contributed to the decline in moral authority of high-ranking state officials. The quality of public services deteriorated and opportunities for corruption increased and became endemic. The continuing economic and political shocks that hit the country from 2015 onwards, including the insurgency in Cabo Delgado since 2017, have moved policy focus away from the more detailed needs of the PFM agenda, which has become less of a priority.

What we described above is reflected in a series of Public Expenditure and Financial Accountability (PEFA) reports.Footnote ¹⁷ Overall progress in PFM indicators has deteriorated in recent years reflecting the reduction of available resources and the need to respond to urgent priorities, such as the natural disasters and since early 2020 COVID-19. Moreover, the enabling environment for PFM reform clearly deteriorated due to the abrupt stop to Budget Support in 2016.

A The Role of Donors

The story of PFM in Mozambique shows that donor prompted reforms will only work in the long run, if they are truly owned and exercised by the host government. Even the best reforms from the technical point of view will not solve the fundamental challenges if they are imposed in exchange for amounts of aid so large that the government cannot afford to decline. As alluded to by Bourguignon and Gunning (Reference Bourguignon and Gunning2016), aid can be for pure finance or in exchange for reforms. In practice they overlap but conceptually they are very different. When aid is used to promote reforms, the fundamental difference in objectives between the government and donors is the key reason for conditionality. If there is no disagreement, conditionality is pointless, in the other extreme aid acts as a bribe.

The donor community applying GBS shared a belief that well-coordinated GBS could be used as a lever for almost any reform and starvation of the security sector. This has proven unrealistic in relation to reforms on governance and democracy that would entail severe risks to the holding power of sitting governments. The PFM reforms in Mozambique basically avoided this and were allowed to progress and improve fiscal management for more than two decades. When Mozambique’s government no longer could pursue key priorities due to the PFM-reforms and donor dependency, they circumnavigated the PFM system by secret, illegal action.

This was possible because reforms were not comprehensive across sectors. Many laws and decrees had been passed, as well as procurement, installation, and training in new systems, in what had been a true and continuous upgrade of PFM during more than two decades. It looked good, also to donors, which believed they had assisted the reform-friendly parts of government against the hard-lines in Frelimo by providing generous amounts of aid, including GBS. But the fundamental anchorage was missing. Donors were to a large extent deceived by a phenomenon referred to by biologists as isomorphic mimicry. When a non-venomous snake looks like a very poisonous relative, it can help frighten enemies and predators. Yet it cannot hunt like a venomous snake if it has no poison. PFM reforms in Mozambique can be characterised as isomorphic mimicry. The reforms did help in directing the economy and provided the basis for critical scrutiny and exposure of mismanagement and embezzlement. But without an independent legal system – state prosecutor and courts – to back it, the fundamental challenges could not be addressed. The snake had no venom.

B The Separation of Powers and the Rule of Law

The necessary checks and balances for a democratic system to work were formally introduced in the 1990 Constitution of Mozambique but became gradually dysfunctional from 2005 onwards. In a presidential system, the role of the president in the government is key. In addition, in Mozambique, the president of the Frelimo party has also been the President of the Republic. The president appoints and dismisses the presidents of the Supreme Court, the Constitutional Council, the TA (external auditor), and the attorney general. As such, the incumbent holds significant power. Moreover, in parliament, Frelimo has had an absolute majority since 1994, and party members in parliament respond to centralised party instructions. In such a tightly controlled environment it is not surprising that when members of the elite decided to increase the demand for non-concessional credit, there was no effective mechanism to prevent systematic breach of the law and illegal actions.

The Mozambican parliament has a good track record in producing legislation and organising the legislatures, and the many PFM reforms have contributed significantly to this being possible. In the case of the hidden debt parliament could not exercise full oversight in the management of the budget, because senior ministers committed fraud secretly. In 2013–14, the government in effect bypassed parliament illegally and contracted direct liabilities by issuing state guarantees for debt. Subsequently, in 2016, when this information became public, parliament could have, but did not act upon it. There were no immediate or direct consequences for those responsible for violating the constitution and the budget laws. The lack of action in response to the infringement of key laws implies that the majority of the members of the parliament and the Budget Committee were either co-opted politically on this specific issue and did not aim to enforce the law, or lacked the effective power to do so, just as it was the case for the judiciary (Orre and Rønning Reference Orre and Rønning2017).

When it became clear to donors that no amount of withheld aid would make the Mozambican judiciary perform in this case, the US government acted to encourage the Mozambican judiciary to react by issuing international arrest mandates for the officials involved. Due to the risk of those arrested to enter plea-bargains with the US courts, the Mozambican state prosecutor acted in February 2018. Once legal action was finally taken against the culprits, the way was paved for declaring the guarantees and debt illegal. In May 2020, the Constitutional Court ruled on the secret debts, considering them ‘null and void’ (Hanlon Reference Hanlon2020).

Similarly to the first historical phase in post-independence Mozambique, when political power was overly concentrated and the system of checks and balances was not operational, recent economic policy decisions can have large and lasting effects on the economic performance of the country and on the welfare of most citizens. In sum, Mozambique is a case where the party in power has held excessive political control, confronted by a weak opposition, a parliament and a judiciary that has been either unable or unwilling to act against obvious attempts to undermine the otherwise respectable progress during the 1990s and 2000s in the PFM system. Socio-economic consequences have been dire.

C Decentralisation

Principles of decentralisation were embedded in the legislation at the very beginning of the democratisation era in Mozambique. The new Constitution of the Republic of Mozambique in 1990, the Local Public Administration Reform Programme (PROL) in 1991, and the Constitution’s Amendment through the Law 9/1996 allowed for the creation of municipalities composed of an executive organ, the Municipal Council, and a legislative organ, the Municipal Assembly (Fernandes Reference Fernandes2007; Simione et al. Reference Simione, Matos and Ckagnazaroff2018).

The decentralisation process did lead to greater autonomy in urban areas, thus giving more power to the local authorities responsible for improving the livelihoods of their citizens (Weimer Reference Weimer2012). The gradual increase in the number of municipalities has meant that decentralisation was understood as a process of expansion of urban structures to rural areas. However, the transformation of the rural areas into municipalities, as part of the decentralisation process, has been seriously lacking. There were only 33 cities and villages considered to be municipalities in 1997, 43 in 2008, and 53 in 2013 (Brito Reference Brito2019), and this number has remained unchanged since. Rural areas that are not included in municipalities are governed by the government branches at provincial, district, administrative post, and locality level, meaning that Mozambique has effectively a highly centralised organisational system.

Since 1993, a pilot decentralisedFootnote ¹⁸ planning and budgeting exercise was carried out through the Decentralized Planning and Finance Programme (PPFD), which was replicated in other provinces. Capacity building, including training, application of new procedures, and investment in equipment, has been provided for more than twenty years in this field. The results are positive, but the process is far from complete, and it is necessary to further develop the model of decentralisation suitable to the country.

A further dimension of the decentralisation process was the establishment of provincial assemblies in 2009 and the election of provincial governors in 2019 (Brito Reference Brito2019). These are reforms of a primarily political nature, but their viability relies on a well-performing PFM system (PoM 2018). Political, military, and civil society activities have been leading to decentralisation reforms, including the PFM system. However, the success of these reforms will depend on the allocation of quite large amounts of financial resources and current organisations in the state apparatus, elected assemblies, and political positions have been under severe budget constraints since 2015.

PFM reforms should help ensure that provinces and districts are entitled to decide over and manage public funds. Law 8/2003 of State Local Authorities and Decree 11/2005 established legal principles and norms for the decentralised levels of government (PoM 2003; GoM 2005a). This legislation allowed for greater budgetary autonomy at the provincial and district levels and has been implemented since then. However, the unequal distribution of the budget in per capita terms among provinces remains a core challenge (UNICEF 2017).

Political instability and military conflict are partially explained by the insufficient degree of decentralisation. This has been happening possibly due to a perceived risk by the party in power of losing political power at the local level and potentially at the national level. The political bottlenecks in the decentralisation process, the per capita inequalities in budget allocations, and the political interference in the budget execution criteria at local levels, in particular at district level, distorts the proper functioning of the PFM system.

A The Creation of Higher Courts of Appeal and Commercial Sections in Provincial Judicial Courts

The most recent constitutional revision in 2004, as with the preceding reforms in 1990, brought important changes to the justice area, bringing renewed hope of a qualitative leap in its operation. We believe one should highlight the recognition of legal pluralism as an undeniable sociological reality; the redefinition of the categories of courts existing in Mozambique, including community courts, which would now be formally endowed with constitutional dignity; the opening of a space for rethinking the hierarchy of the courts and jurisdictional specialisation; the introduction, finally, of new management and disciplinary bodies for the judiciary – the Superior Council of the Judiciary of the Public Prosecutor’s Office and the Superior Council of the Administrative Judiciary.

However, the new Judicial Organization Law (Law No. 24/2007, of 20 August)Footnote ⁸ fell very short of expectations. The slow and uncoordinated way in which its implementation happened shows, once again, some signs of lack of strategic sense in the management of the public policies of justice. It is enough to mention, for example, that, with the law having set a deadline of one year after publication for the higher courts of appeal to come into operation, these only began being set up in 2011, under extremely precarious conditions, and it was only in 2015 that they began operating at full capacity in three regions in the country.

The higher courts of appeal saw their response capacity constrained because they were suddenly being expected to deal with the overwhelming majority of the cases pending in the Supreme Court, thus becoming congested from the outset.Footnote ⁹ And as the changes to procedural law and the management and internal organisation of the courts were also unable to break down the existing barriers, it cannot be said that there were any substantial improvements, either in terms of speed or in the quality of the service provided.

If we look at Table 9.1, which compares the statistical data for the proceedings recorded in 2012 and 2013 (the first two years of operation of the higher courts of appeal) and the two most recent legal years (2018 and 2019), we see that, generally speaking, there is a constantly increasing trend in the number of cases handled. With regard to the higher courts of appeal, it was only in 2019 that a slight reduction happened. Even so, it remains significant that, after only seven years of operation, pending cases in these courts stand at around 5,000.

As to the commercial sections of provincial courts, they usually deal with enforcement procedures for consumer debts but, even so, they still face a progressive increase in pending cases. Around twenty years ago, the study undertaken by the partnership between the CEA-UEM, the CFJJ, and the CES had reached essentially identical conclusions (Santos et al. Reference Santos and Trindade2003, vol. I: 397). This is an indication that the more complex disputes could be settled by extrajudicial means (national and international arbitration, mediation, etc.) and that the confidence of investors in the quality of state justice remains very low.

A careful and attentive analysis of the information collected by the Doing Business programme by the World Bank (2019: 66) makes it possible to conclude, with no great surprise, that despite the extremely important role it plays in the actual volume of legal cases and the human and material resources available to deal with them (quantitative data), it is the good or bad management and organisation practices and the quality of the work done by its agents (qualitative data) that the performance of the justice system depends on, whether in the commercial jurisdiction or in other jurisdictions.

B The Introduction of New Alternative Means for the Resolution of Commercial and Labour Disputes

The transformations that took place in the country following the adoption of the market economy model and the intensification of international trade relationships in the late 1980s and early 1990s justified the approval of the first Law of Arbitration, Conciliation, and Mediation (Law No. 11/99, of 8 July), aimed at allowing legal subjects to use these different means and methods for conflict resolution, before, or as an alternative to, taking the case to court.

The law grants the freedom to set up and administer institutions for arbitration, conciliation, and mediation, as long as their articles of association provide for: (a) the representative nature of the institution responsible for the centre to be set up and (b) the reason for the constitution of the specialised centre of arbitration, conciliation, and mediation (Article 69).

Two centres of arbitration stand out in the national panorama, set up to intervene in two different areas of conflict: the Centre of Arbitration, Conciliation and Mediation (CACM) of the Confederation of Economic Associations of Mozambique (CTA), set up in 2002, and the Commission for Labour Mediation and Arbitration (COMAL), an institution under public law under the authority of the minister responsible for the labour area, in operation since 2011.Footnote ¹⁰

In addition, the bodies operating in the area of legal and judicial assistance, such as the Institute for Legal Representation and Assistance (IPAJ), the Institute for Access to Justice (IAJ) of the Mozambican Bar Association, and the Centre for Legal Practices (CPJ) of the law faculty at Eduardo Mondlane University, have been carrying out, in practice, dispute resolution work using mediation and conciliation techniques, but on a much smaller scale and without very significant results because the actual agents of these institutions recognise that they are not duly qualified or equipped for using such techniques (Fernando et al. Reference Fernando, José, Soares and Gomes2019: 72).

This is a factor that must not be neglected, as any initiatives for reducing judicial involvement that are not accompanied with the required assurances of quality and professional work run the risk of leading to the institutionalisation of justice of a lower quality for the economically and socially more vulnerable sectors and, what is worse, the ‘enshrining of factual situations of repressive conciliation’ (Fernando et al. Reference Fernando, José, Soares and Gomes2019: 73).

C The Fight against Corruption, the Public Prosecutor, and the Current SERNIC

The process of moving from a centrally planned to a free market economy, with the consequent process of privatisation of public companies and financial participation by the state, price liberalisation, monetary contraction, drastic cuts in social expenditure, and making labour relations more flexible, as well as other measures, paved the way to the progressive spread of the phenomenon of corruption in Mozambique.Footnote ¹¹

To deal with the problem, while at the same time promoting the transparency and integrity of the public sector, which is essential for achieving political, economic, and social stability and the reinforcement of legal security and certainty, the Anti-Corruption Unit was set up in 2002, under one of the specialised departments in the Office of the Attorney General. However, it was short-lived, as a result of not having foreseen an independent judicial-legal framework that would allow it to carry out its duties adequately. And so, following the restructuring measures from the Public Prosecutor’s Office, determined by the constitutional revision in 2004, the GCCC – Central Office for Fighting Corruption (Law No. 6/2004, of 17 June) was set up, under the auspices of the Attorney General and with specific powers under the scope of criminal investigation and preparatory investigation of the crimes of corruption and unlawful economic participation.Footnote ¹²

In its 2019 Corruption Perceptions Index,Footnote ¹³ the Transparency International organisation gave Mozambique 26 points, putting the country in 126th place (in 2018 it had been given 23 points and was in 158th place) on a list of 180 countries. According to the Public Integrity Centre (CIP) – an NGO set up in 2005 with the aim of contributing to the promotion of transparency and integrity in Mozambique – the fact that the GCCC had taken significant steps in the criminal proceedings related to ‘hidden debts’Footnote ¹⁴ and, consequently, was able to make various arrests of the people accused in the case, decisively contributed to this improvement in results. In addition, there was also a positive change in the political anti-corruption discourse, given the fact that the President of the Republic is apparently placing the problem of corruption at the top of his governance agenda (CIP 2020: 1).

But more must be done. The CIP has called attention to the fact that these arrests were neither accompanied by the recovery of the assets unlawfully diverted nor by the approval of a criminal policy to make the fight against this phenomenon more effective. This is recognised by the Attorney General herself as one of its weak points (Buchili Reference Buchili2020).

An essential instrument for supporting the investigation work and criminal prosecution by the Public Prosecutor’s Office is its excellent auxiliary body, the criminal police, which was known in Mozambique for many years as the Criminal Investigation Police (PIC). The main judicial players – courts, Public Prosecutor’s Office, Bar Association, IPAJ – and the civil society organisations interested in the prevention and repression of criminal groups – the CIP, human rights and women’s human rights organisations, etc. – have been calling for sweeping reforms of the PIC that would return the institution to the ‘dignity and grandeur of the Criminal Police’ (Correia Reference Correia2014: 86).

For a long time, one of the most hotly debated issues on this topic was the institutional inclusion and the internal organisation of the PIC. Some believed that:

In a text published in 2012, which analysed the implementation of the Strategic Policing Plan, Francisco Alar says that:

In 2017, with the approval of Law No. 2/2017, of 9 January, and in what seems to have been a political compromise solution, the PIC ended up being discontinued and gave way to a new structure, the SERNIC. Criminal investigation went from being a branch of the PRM to being a ‘public service of paramilitary nature, an auxiliary of the administration of justice, endowed with administrative, technical and tactical autonomy, without prejudice to the authority of the Minister responsible for the area of public order, security and tranquillity, in matters that do not affect its autonomy’ (Article 3 of Law No. 2/2017). It remained functionally subordinate to the Public Prosecutor’s Office (Point 4 of the same law), as had been the case, but did not advance towards organic integration.

The main constraints to the operation of SERNIC in its three years of existence, despite the removal of criminal investigation as a branch integrated into the General Command of the PRM, were, and all indications point to these continuing, the lack of financial autonomy, the shortage of staff with the necessary qualifications, and the insufficiency of resources and instruments for adequately carrying out the duties they are responsible for.

D The Widening of Access to Law and to Justice: Institutionalisation of Structures for the Administration of Justice and Legal and Judicial Assistance and Extension of the Network of Judicial Courts

If any doubts remained about the coexistence of different regulatory and conflict resolution systems in Mozambican society, they were dissipated by the constitutional recognition of legal pluralism. Therefore, any analysis of the administration of justice in Mozambique must take into account the two axes or dimensions it is divided into: state, including the courts, the Public Prosecutor’s Office, the Bar Association, the IPAJ and other institutions in the judiciary, and non-state, involving community courts and other local dispute resolution tribunals.Footnote ¹⁶

The development of state justice has had its ups and downs, on a winding road. In the year when the 45th anniversary of national independence (or, if preferred, the 42nd anniversary of the first Judicial Organization Law) was celebrated, it remained far from enjoying the confidence of society and achieving the level of performance that citizens and legal entities demand. Its coverage remains deficient, and the quality of the service provided is far from satisfactory for those who resort to it.

In the last opening session of the legal year, the President of the Supreme Court did not refrain from admitting that ‘we still have twenty-four districts in our country without courts operating locally, which means the citizens have to go to other nearby districts in order to resolve their disputes’ (Muchanga Reference Muchanga2020). For our part, we continue to argue that the problem is not the coverage of twenty-four districts that still do not have courts. More important is rethinking the legal map, providing more rational coverage of the country, taking into account the real needs of legal and judicial authority, the size of the population, the nature of the disputes and their degree of complexity, and not working from abstract criteria on the political and administrative organisation of the country. A careful study could lead to the conclusion that there are districts whose level of economic and social development, population density, infrastructures in place, etc., would justify the existence of more than one court with the powers due to the district courts in their geographic area, while others would only need a more organised and better distributed network of non-state or community tribunals.

The intense efforts that are being made by the managing bodies of other institutions in the judiciary in the task of concluding the slow process of physical establishment of the courts and support structures in the field are neither being ignored, nor are those of the entities charged with training the judges, court officials, and system managers. We know that there are now 157 courts, of different levels, operating all over the country and that the ratio of courts to 100,000 inhabitants has improved slightly, going from 1.1 in 2014 to 1.3 in 2019. The average time taken for dispute resolution fell from 17 months in 2014 to 12 months in 2019, and the resolution rate, which was 37.6 per cent in 2014, was always higher than 45 per cent in the following four years.Footnote ¹⁷ But these figures cannot hide the fact that there is still a lot to be done and consolidated so that the universal principles of the rule of law may be achieved.Footnote ¹⁸

As to the provision of legal consultancy and assistance services, this is the responsibility of two bodies: the Mozambican Bar Association (OAM), constituted by Law No. 7/94, of 14 September, as a legal person under public law, representing the people holding law degrees and practising law, independent of the state bodies, having administrative, financial, and patrimonial autonomy and the Institute for Legal Representation and Assistance (IPAJ), set up by Law No. 6/94, of 13 September, as a state institute aimed at ensuring the right to defence, providing lower income citizens with the legal representation, and assistance they need.

Since it was set up in 1994, the OAM has grown exponentially. Ten years later, more precisely on 20 May 2005, 246 lawyers were registered with the bar association, with 226 of them having offices in Maputo, 9 in Beira, 6 in Nampula, 2 in Tete, 1 in Chimoio, 1 in Matola and 1 in Quelimane (OAM 2005). In late February 2020, the database on the Bar Association’s webpage (www.oam.org.mz/advogados-inscritos/) had 1,856 lawyers, with around 73 per cent practising in Maputo. Despite the rapid growth in the list of lawyers practising in the provinces (Sofala, Nampula, and Tete have the highest figures), over recent years, one of the greatest challenges to the Bar Association has been to offer private legal services at district level, as well as in less populous urban centres.

The IPAJ in turn went through an initial period with enormous operating difficulties, whose main causes were the absence of political priority, poor management, and budget insufficiency (Santos et al. Reference Santos and Trindade2003, vol. II: 56). In 2007, when a survey was carried out on the IPAJ, this institute had 80 legal assistants and 400 other staff. It also had ten provincial offices and fifty-seven district offices (Bila Reference Bila2008). The following year, the approval and establishment of the Strategic Plan for Legal Defence for Disadvantaged Citizens (PEDLCC) was decisive for the institution to be able to grow and consolidate itself, promoting organisational and institutional development and improving the efficiency and effectiveness of legal assistance and representation (Lauris and Araújo Reference Lauris and Araújo2015: 94).

A new organic statute was adopted in 2013,Footnote ¹⁹ with the aim of making the operational structure adequate to the new conditions that had since been provided. However, the challenge of reaching the more disfavoured populations, mainly in the regions far from large urban centres, will require continued efforts towards institutional growth and consolidation.

But access to justice is not only through state mechanisms or institutions. In recent years, particularly since the early 1990s, some civil society organisations have assumed increasing importance in access to justice and the law, seeking to make up for the difficulties faced by the state. These are organisations that provide different kinds of support to citizens, in particular legal assistance and representation, legal information and advice, and conflict resolution. They have a wide field of intervention. Some are general in scope, while others specialise in certain rights or in providing support to more vulnerable citizens, or work in particularly problematic areas, such as cases of human rights, women’s human rights, access to land and other natural resources.

With regard to community courts, it is worth mentioning that within the many non-judicial mechanisms for dispute resolution that interact in Mozambican society, they are the ones that appear to be best placed to promote local justice and contribute to desirable links between state and non-state systems and for the administration of justice. They are different from all the others, fundamentally because they emanate from the actual state, through a formal regulatory act – Law No. 4/92, of 6 May – which was enacted to allow citizens to resolve minor disputes within the community, contribute to the harmonisation of different legal practices and to enriching the rules, habits, and customs that ‘lead to a creative synthesis of Mozambican law’ (see the Preamble to this act).

As it happens, although this law has been in force for thirty years, it has never been implemented through the necessary regulations. And there was no shortage of alerts from different sectors of society as to the risk of this lack of regulation and the unfeasibility of the application of the law without it. There is a set of related organisational issues, for example, with the procedure for electing the members of community courts (Article 9(2) and Article 13), with the establishment of these courts (Article 12) or the forwarding of the ‘appeals’ left unresolved to the district courts (Article 4). The incomprehensible legislative inertia of the government served, after all, as a pretext for the generalisation of the illegal practice of substituting elections for member (judge) co-option processes, with the involvement of agents of local authorities (heads of administrative posts, neighbourhood secretaries, village presidents, etc.), without the direct intervention of voters – the people.

We see this situation as highly problematic, with no explanation other than serving for the purpose of ensuring party political control of the community structures. This is controversial (and, from our point of view, unconstitutional), as is the current framework of the community courts under the authority of the Ministry of Justice, Constitutional, and Religious Affairs. This is so mainly because the Constitution of 2004 included them in the list of type of courts in the Republic of Mozambique (Article 223(2)), with all the guarantees of independence, impartiality, and objectivity these sovereign bodies should enjoy. It is unclear what legal basis the Civil Registry services use to organise and manage the establishment of the community courts when this responsibility is assigned to the district courts (Article 14 of Law No. 4/92).

These serious deviations from the spirit and the letter of the law, to which we could add disrespect for other regulations, such as articles 10 (on the mandate of the members of the community courts), 11 (on the payment of the members), and 12 (on the establishment of these bodies), contribute largely to their becoming discredited in the eyes of citizens and to the crisis of legitimacy that has taken over the system (Trindade and José Reference Trindade and José2017: 31).

A Shared Strategic Vision

In the first place, the effectiveness, speed, and accessibility of justice can only be sustainable if the different entities in the sector share a systemic, integrated vision that permanently links the formal, professional judiciary, and the different non-judicial mechanisms for conflict resolution recognised by the State, under Article 4 of the Constitution. For this to happen, it will be necessary to pursue ‘the committed quest for solutions so that justice in Mozambique will be predictable and accessible to all, administered within an economically and socially tolerable time and with standards that are more aligned with the collective conceptions of justice that are prominent in our society’ (Correia Reference Correia2014: 108).

As we have seen, there were successive attempts at judicial reform over the last thirty years. The worldwide reformist movement arrived in Mozambique through programmes and initiatives almost always focused on searching for solutions to solve the unfathomable problems of celerity and procedural simplification, providing the organisations with more human, material, and infrastructure resources and introducing alternative dispute resolution methods.

Nowadays, there seems to be some tacit recognition that the results did not live up to expectations. The complexity of litigation, the scarcity of resources, and the absence of this strategic vision superseded the greater or lesser desire for change, whether genuine or feigned.

Accordingly, it is necessary to definitively break this cycle; it is necessary to go beyond ‘more of the same’ measures (more courts, more judges, more resources …) and look at the judicial system from another perspective.

Structural reform will only introduce greater efficiency, effectiveness, and quality in the administration of justice if it is looked at as a complex, integral system. The focus will have to be aimed at a gradual, but persistent, change in work methods, better, more streamlined management of human and material resources and processes and better coordination between all the participants in the system. This can only be achieved if, with every change that has to be made, we look at the various constituent components, as the system is distributed among different state bodies and the community and requires the definition of common medium- and long-term objectives.

As stated by Gomes (Reference Gomes, Rodrigues, Garoupa, Magalhães, Gomes and Fonseca2018: 746), ‘it is fundamental to lend substance to the idea that legal proceedings take place in a very broad, polycentric framework, with both internal judicial players (judicial magistrates and magistrates from the Public Prosecutor’s Office, employees) and external players (police, social workers, experts, etc.) playing a part in them. Some of the time taken in court, indeed a significant amount in some proceedings, is the time of these latter professionals’.

B Consensus between Relevant Players

This shared vision assumes the agreement to a broad consensus between the different state powers, the police forces, the judiciary, and society in general so that justice is understood as a public good of primary importance, the discussion and formulation of which should be above all the differences and private or corporate interests of each one.

This is a fundamental agreement that, in some cases, has been called a Regime Pact (Santos Reference Santos2005: 77; Figueiredo Reference Figueiredo2017) and, in others, a State Pact (Representatives of the PP and PSOE-Spain 2007) and which, bearing in mind the scope and scale of the reform, will necessarily imply a specific revision of the constitution. This will have to be a constitutional revision broadly recognised as necessary, one that is patiently refined and not imposed by any de facto power for the benefit of private and conjunctural interests.

C Central Role of the Judiciary in the Different Stages of Reform

The success of reform can only be attained if the participants from all the bodies, entities, or institutions in the justice administration system play a central role as active agents of change, as they are the main vehicle for conveying knowledge between the judicial reality and the common citizen (Garoupa Reference Garoupa2008: 2). The commitment of these agents and the setting aside of a period of adaptation to the reform measures, accompanied by targeted training courses are of prime importance and should not be neglected (Gomes Reference Gomes, Rodrigues, Garoupa, Magalhães, Gomes and Fonseca2018: 747). One of the weaknesses pointed to in the case of the reform initiatives so far undertaken is, precisely, the lack of preparation of the conditions necessary for their later implementation, both in terms of training and in terms of technical and financial resources.

These weaknesses will make it difficult to break resistance, alter routines and change obsolete methods of work.

D The Independence of the Judiciary as a Fundamental Right

Contemporary legal systems are broadly grouped around two fundamental models of organisation of the judiciary: the legal profession model seen in countries with an Anglo-Saxon tradition (common law)Footnote ²³ and the judicial career seen in countries with a tradition of European continental law (Romano-Germanic family).Footnote ²⁴

Despite their differences, the conceptual framework regarding the independence of the judiciary, according to Carvalho (Reference Carvalho2016: 16), makes a distinction between substantial independence, personal independence, external independence, and internal independence. Substantial independence refers to the circumstance of judges, when acting in their judicial role, being subject only to the law and their conscience, free from any and all outside influence. Personal independence means the judges cannot be held accountable for their judgements and decisions, except in the cases where this is especially provided for by law, and they enjoy the assurance of their irremovability from office. External independence means the removal of executive control from the system management mechanisms and the preparation of their budgetary assumptions. Finally, internal independence assures judges of their freedom to directly or indirectly disregard pressure from other judges when making their judgements.

This conceptual framework helps to understand that only a judicial power with a high capacity for operation, free of excessive formalities, and endowed with functional autonomy from the other powers can meet the demands for greater efficiency, independence, impartiality, speed, and proximity that are required of them. Therefore, the right to have independent courts is also a fundamental human right, which should not be looked at as a privilege of judges, but rather as an assurance for society and a primary condition for citizens, organisations, and companies to be able to trust the judicial system, the law, and the state.

E Paradigm Shift in Legislative Production

Legislative production in Mozambique is also in need of substantial improvements. As is the case in other latitudes, whose model has served as an inspiration, and in the words of Garoupa (Reference Garoupa2008: 3), Mozambican legislators have shown themselves to be frenetic (legislating everything even when it is not necessary), schizophrenic (legislating erratically) and sloppy (legislating and repealing without regulating).

This impulse to legislate is followed without first assessing the existence of other legislation already in force and which might only need to be amended or have its application improved. Or without pondering another solution that does not include adding to the normative or regulatory burden.

Those who have the power to create regulations should, first of all, analyse the legislative framework in force and see if there are other solutions for achieving the desired aims, respecting the different phases of the legislative process. Charles-Albert Morand proposes that this process should be in seven stages: (i) identifying the problem; (ii) determining the aims; (iii) choosing the options; (iv) ex ante assessment; (v) adopting the legislation; (vi) implementation; and (vii) ex post assessment (Morand Reference Morand1999).

The quality of the laws made depends on various factors and it is very true that there are no perfect laws. However, it is possible to improve the legislative process, provided those procedures and methodologies, which will certainly contribute to making the laws more comprehensive, less difficult to interpret and apply, more effective and suitable to the reality they are intended to regulate. Of these methodologies, ex ante and ex post assessment studies of the legislative impact and the participation of citizens, legal persons, and companies at the law preparation stage and in access to the elements that are the grounds for the political decision take on special importance. As stated by Sónia Rodrigues, ‘if easy access to the law that regulates their daily lives is crucial for citizens, simplification and the reduction of context costs is vital for the economic competitiveness of companies’ (Rodrigues Reference Rodrigues2017: 1038).

A step that we deem to be indispensable for assuring this methodological development includes the creation of a Law Reform Commission, not like the old Inter-Ministerial Law Reform Commission (CIREL),Footnote ²⁵ but rather according to the model for the South African Law Reform Commission. It is presided over by a judge and is made up of law professors, magistrates, and lawyers with the power to carry out studies and research into all the branches of law, or have these carried out. These studies aim at presenting recommendations and projects for the improvement, modernisation, or reform of national and provincial legislation, including the repeal of obsolete or unnecessary provisions, the standardisation of laws all over the country, the consolidation or codification of any branch of the law and measures aimed at making the laws more readily available to the public. In short, the Law Reform Commission is an advisory body whose aim is the reform and the continued improvement of the legislation in South Africa.Footnote ²⁶

F The Judicial Government: Fundaments and Management

In an interesting publication that discusses what should be understood by judicial government, Alberto Binder, a law professor at the University of Buenos Aires, argues that it is necessary to clearly differentiate the judiciary from other state powers, as well as from the different duties and tasks existing within judicial organisations, which are more or less diverse according to the country (Binder Reference Binder2006: 12).

In his opinion, the true fundament that sustains the idea of judicial government is the need to preserve the independence of each one of the judges, taken individually. All the other reasons that might be invoked, such as assuring efficient management of the resources allocated, monitoring activity programmes, preparing budget proposals, planning campaigns, being answerable to society, etc., can only indirectly or tangentially justify the call for a judicial government. On the other hand, the implementation of the judicial government, like any other political institution, cannot be done in a vacuum, but rather under the scope of the historical setting of the specific judicial systems.

Therefore, Binder considers that any judicial government should be radically separated from the Supreme Courts, given that there is no reason for a judge from the higher courts to have the prerogative of acting and making decisions on behalf of the other members of the judiciary. In a judiciary with a democratic government, the president of the judiciary, apart from being completely separate from the President of the Supreme Court, should be an elected official. Each magistrate (irrespective of their seniority or the court they serve in, as these qualities do not give them special qualifications for administration or government) should have one vote and elect the president of the judiciary for a certain period of time. To those who raise the spectre of internal politicisation of the judiciary, he replies that this is not necessarily negative because, although politicisation is impossible to avoid, it is not harmful in itself,Footnote ²⁷ it does exist, and it is better for it to be transparent and accountable. A democratically elected president of the judiciary has more power, legitimacy, room for manoeuvre, and a greater ability to defend the independence of the judges than any other person taking up the position merely because it is part of the job.

In short, the author proposes the following configuration of the judiciary:

1. a) A president of the judiciary without a judicial role, elected by all the judges, with no qualified votes and without excluding any judge, for a mandate lasting from four to five years, not coinciding with general elections (presidential, parliamentary, or local authority elections);

2. b) A set of technical offices under the president, responsible for ordinary administration, planning, budget management, the internal disciplinary regime, the development of the information system, the management of human resources and infrastructures, etc., with sufficient scope to combine greater legitimacy with greater efficiency and feasibility;

3. c) A supervisory and monitoring body, also elected for the same mandate, of collegial composition, with the responsibility for approving accounts and managing and assessing complaints, in other words intervening in ex post situations. This monitoring board should consist of a certain number of judges (percentages can be established per areas, courts, etc., but never by categories), according to the characteristics of the judicial system. In this context, the President of the Supreme Court will continue to be first among equals in the highest court of the land, but will no longer be the representative of the judiciary, unless democratically elected as the President of the Superior Council of the Judiciary, on the same footing and with the same opportunities as any other judge.

In general, we agree with this proposal. From what we have found in the literature and in judicial practices around the world, there is, to our knowledge, no more democratic configuration model that has better assurances of safeguarding the independence of the judiciary. The absence of an important mechanism can be mentioned, which is external control of the judiciary, but there too, this issue can be circumvented, allowing for some members of the monitoring board to be individuals outside of the judiciary, with a certain number of requirements and elected separately, while always maintaining a majority of judges on the judicial government bodies.

We are aware that in a country where the idea of centralisation and a tight hold on political power is widely predominant, it will not be easy to put a project like this into practice. But the idea is there, as our aim is to find innovative ways to ensure effective and sustainable judicial independence.

G A Democratic Judicial Culture

The conceptual underpinning on which this chapter draws refers to the aim of scrutinising the roads that could lead to positive institutional change, in other words, the way the institutions could contribute to growth and an improvement in economic and social results.

We have attempted to show that changes in the Justice area will only be possible with structural reform based on a systemic vision, shared and coordinated by the entire judiciary. But it is important to be aware that reform – any reform – cannot resolve the problems found if it is not based on a judicial and organisation culture that is open and receptive to innovation. A system where the main players resist change is doomed to isolate itself and protect itself from opinions and criticisms aimed at it from outside.

Around twenty years ago, the Research Project on the Plurality of Justice in Mozambique concluded that Mozambican courts ‘are dominated by a regulatory, technical and bureaucratic culture, based on three main ideas: the autonomy of the law – an idea that the law is an autonomous phenomenon in relation to society; a restrictive view of what that law is or which proceedings the law applies to; and a bureaucratic or administrative view of the cases’ (Trindade and Pedroso Reference Trindade, Pedroso, Sousa Santos and Trindade2003: 64–65). Despite some developments since then, resulting from the initial and continuous training programmes set up by the Centre for Judicial and Legal Training, this kind of technical and bureaucratic culture still persists in many judges and others working in the system and it is seen in different and varied ways. One of these, perhaps the one with the most perverse effects, is confusing independence with self-sufficient individuality and, consequently, being extremely averse to teamwork, resisting the introduction of management by objectives in court, rejecting interdisciplinary cooperation and fuelling an idea of exclusivity that is not willing to learn and benefit from other abilities and areas of knowledge.

It is vital to oppose this idea through a democratic, political, and judicial culture that uses justice as a strategy. Justice must be at the service of social cohesion and democratic development. The complexity of the new duties will require a long learning process. The sociology of law has shown that, as new social relationships are given legal status – and this phenomenon is increasingly present in society – the gloss on the legal view of these relationships will get thinner and thinner and be released from dogmatic rigidity. Therefore, it is important to search in other areas – economics, psychology, anthropology, political science, etc. – for analytical tools that will help understand the reality, and this is part of the democratic culture.

H Reinforcement of Training for Judicial Agents: Judges, Court Officials and Other Employees

In the context of the new democratic judicial culture, training can neither continue to have the same general profile, nor can it remain shackled to old, obsolete teaching methods. It needs to be differentiated. There is an increasing need for people engaging in activities in the courts requiring specialized skills to have specific training, with specific access conditions and specific examinations – this is the case of the criminal and supervisory courts, as well as administrative, maritime, commercial, arbitration and tax courts. Specialisation must then be accompanied by closer monitoring of the quality of the training process throughout all its phases.

Universities, which are where jurists, future agents of justice, are trained and graduate, will have to include this reality and undergo more or less in-depth transformations. Transformations of a political nature, which will make them look at law as a social phenomenon and the broadening and defence of human rights, as well as the transparency of democratic life, as the main objectives. Transformations of a sociological nature, which will allow knowledge of society as a constituent part of the law (ubi societas ibi jus) to be broadened. Practical transformations that will lead to their modernisation, so that part of the course programme – normally the last year or the last two years of degree courses – may be devoted to practical work, in the form of ‘legal clinics’ or similar initiatives, where the students are given the opportunity to experience and learn about social problems first hand. Then, these are transformations to the actual course structure and teaching and learning methods, covering not only the graduation phase, but also the post-graduation phase.

At the Centre for Judicial and Legal Training, it is necessary, on the one hand, to pursue – or resume in those areas where it has been lost – a multidisciplinary approach to the programme content, capable of revealing the social contexts underlying legal regulations and relationships and, on the other, to experiment with new working methods that will encourage the trainees to participate actively in the teaching and learning process, through teamwork, seminars and research activities.

It would also be a good idea for the main objectives of the training to be aligned with the particular learning or skills development needs of the students, whether they intend to go into the judiciary or any other legal profession. To this end, it is important to be aware, insofar as possible, of their training experiences, their interests and future specialisation projects, in order to bring about a participatory reaction in them and ensure that the ‘results of the training were not acquired superficially or temporarily, but rather have become […] engrained in the habits and learning abilities of the actual studenť (Guadagni Reference Guadagni2000: 8).

And, for this teacher/student interaction to occur, it is also a good idea to develop an environment conducive to their relationship being one of ‘dialogue and cooperation, of equality where there is mutual respect, where opinions are consciously respected. Because they know more about and have more skills in certain areas, [teachers] have the role of supporting and facilitating the acquisition of new knowledge or perfecting the knowledge of others’ (Cabral and Soares Reference Cabral and do Carmo Soares2000: 4).

More than just absorbing knowledge about legislated law and becoming aware that they live in a reality that is plural in the sense that they come into contact and interact with the different regulatory systems within it, these future professionals must be prepared to take on the implementation of the ideal of justice, constantly updating this. To this end, training that values a structural understanding of the institutions of justice and legal institutes will serve to show them to be an integral part of a certain political project. Thus, each act, each procedure, each way of interpreting the rules, each decision, will not be limited to itself alone, it will not be neutral, rather it will be the practical implementation of an ideal of justice, in other words, the construction of a certain type of state.

I Management of Alternative Conflict Resolution Mechanisms and Community Justice

We have already expressed our opinion on the current inclusion of community courts in the Ministry of Justice, Constitutional and Religious Affairs and the role the Civil Registry services have been playing in their management. We believe that this authority is, at the very least, illegal, because it is contrary to the provisions of Article 5 of Law No. 24/2007, of 20 August,Footnote ²⁸ if not actually unconstitutional, as it violates the principle of separation of powers proclaimed in Article 134 of the Constitution.

Around fifteen years ago, the former Law Reform Technical Unit (UTREL)Footnote ²⁹ asked the CFJJ for a set of legislative projects which had as its objective, precisely, to embody a broad reform of the administration of Justice. Among these, we highlight the preliminary proposals of the Basic Law of Judicial Organization and the Organic Law of Community Courts, as these have a more direct bearing on the point being analysed.

The first of these preliminary proposals defined a structure for the judicial system, according to which, without prejudice to the powers of the Constitutional Council, common justice would be assured by the Supreme Court and other courts, by community courts and, under the terms of that law, by courts of arbitration.Footnote ³⁰ And it recommended the enshrining and materialisation of a principle of proximity and access to justice, through adequate coverage by legal institutions, in particular courts, community courts, agencies of the Public Prosecutor’s Office, of the Public Institute for Access to Justice and the Law (which was replaced by the current IPAJ) and the entities that would be associated with compliance with their duties.

Community courts would deal with conciliation, processing, judging and implementing: a) cases arising from family relationships resulting from unions constituted according to traditional rules and not registered according to the Family Act; b) cases of other natures whose debt value, compensation requested or damages claimed were not greater than three times the national minimum wage; c) offences against property where the damage caused was not greater than two times the minimum wage and bodily injury, except in cases involving: i) a risk to life; ii) permanent disability; iii) temporary inability of the victim to work or to carry out their normal activities for longer than 15 days. Nor would they be permitted to decide on issues attributed by law to other courts, or cases regarding people’s ability, the validity or interpretation of wills, the dissolution of civil marriages or adoption.

The management and administration of community courts and the disciplining of their judges would be in the hands of the bodies entitled Provincial Councils for the Coordination of Community Justice, to be set up in each province in the country. These councils would be run by the presidents of the provincial courts and would have the following composition: a) a provincial prosecutor, appointed by the Superior Council of the Judiciary of the Public Prosecutor’s Office; b) two district court judges, appointed by the Superior Council of the Judiciary; c) one representative of the legal assistance public service, appointed by the Director of the Public Institute for Access to Justice and the Law; d) eight representatives of the community courts, elected by their peers, with mandates of two years; and e) three representatives of the community authorities, elected by their peers, with mandates of two years.

The preliminary proposal for the Basic Law also enshrined the principle of non-prohibition of the remaining local conflict resolution mechanisms unless their actions or the type of penalties applied violated the principles, standards or values contained in the constitution.

Another important and innovative measure that this preliminary proposal included was a reform Monitoring Commission, which included representatives of the institutions with specific duties of monitoring the operation and quality of the system of administration of justice and the Centre for Judicial and Legal Training. The function of the commission – inspired by the British law commissions model – was to prepare the entry into force of the reform, and monitor and assess the degree of achievement of the aims and implementation of the measures established in the Basic Law.

Under the terms of the preliminary proposal for the Organic Law, the material powers of community courts would be defined bearing in mind the type of cases that these courts traditionally deal with, in conjunction with constitutional requirements and the need for jurisdictional effectiveness. Thus, these courts would deal with conciliation, processing, judging and implementing: a) cases arising from family relationships resulting from unions constituted according to traditional rules and not registered according to the Family Act; b) cases where the compensation requested or damages claimed were not greater than three times the national minimum wage; c) offences against property where the damage caused was not greater than two times the minimum wage and bodily injury not resulting in serious injuries.

Even though around a decade and a half has passed since these proposals were prepared and presented, it seems unquestionable that they are current and relevant. If they were to be adopted – irrespective of any improvements or updates to be introduced – we would have better justice as the basis for the judicial system, there, where the vast majority of Mozambicans live.

A Donor Characteristics

The rhetoric around donors and aid is strong. Donors like to be portrayed as do-gooders who administer funds in an attempt to alleviate poverty. They are concerned with the effectiveness of the aid they provide to help poor people. However, this is only a partial understanding of the true nature of donors.

To figure out what drives donors, we find good guidance from the Danish philosopher Søren Kierkegaard and former French President Charles de Gaulle. According to Kierkegaard (1855, cited in Hong and Hong Reference Hong and Hong2009), ‘all true helping begins with a humbling’:

The first thing to remember when studying donors and their behaviour is that they are foreign governments, or international institutions, which foreign governments influence and control. Some bilateral donor agencies are relatively independent institutions, separate from their governmenťs foreign service, either as separate ministries or agencies (e.g., until recently the UK’s Department for International Development and the United States Agency for International Development (USAID)). Others are integral parts of their governmenťs foreign ministries (e.g., the Netherlands and Denmark). However, whatever the institutional set-up is, or appears to be, development aid is an integral part of any donor country’s foreign policy, though rarely the most important one. Security and commercial concerns normally far outweigh the aid considerations, and the question relates rather to the extent to which aid is instrumentalised in donor countries’ pursuance of the other two.

The differences between countries’ institutional set-ups of foreign policy formulation and management lie only in the level at which, and in how much detail, the co-ordination between aid and other foreign policy areas is pursued. To maintain the cash flow, donors must satisfy the interests, values, and incentives of their governments while at the same time providing them with the expected results. Therefore, one cannot understand donor behaviour and the institutional development around aid (instruments, architecture, conditionality, and volume) without analysing the evolution of donor countries’ foreign policy concerns. For any country, foreign policy is a derivative of domestic policy. To understand donors, a good point of departure is to remember the words of President Charles de Gaulle: ‘Les etats n’ont pas d’amis, ils n’ont que des intérets’ (translation: ‘States do not have friends; they only have interests’) (Haskew Reference Haskew2011: 187). Such interests may change from time to time, leading the same donor countries to adopt different policies over time. Their behaviour, but not always their narrative, will reflect this.

In the following, we discuss trends and defining moments in Mozambique’s relations with its donors. What has driven the donor agenda, and how has Mozambican society absorbed this? How has it mitigated and adapted to donor demands, and how has it influenced key institutions for economic development?

A The First Decade after Independence – A True Alliance

After independence, Mozambique sought help from the socialist bloc, because its leaders believed in and wanted Mozambique to aspire to their development model. Mozambique served as a frontline player in the cold war, in exchange for which the Soviet bloc provided economic and military assistance. This was a true alliance founded on shared visions and foreign policy concerns. The donors exercised little coercion in political, economic, and social policy, and when some donors occasionally tried to impose military conditionality, Mozambique was able to resist itFootnote ⁶ (see Veloso Reference Veloso2007).

Mozambique’s donors were few and, although they sometimes included co-founding programmes (especially the UN and the Nordic countries), they can be grouped into four clear groups: (i) the Soviet/Eastern bloc including Cuba, (ii) the UN agencies, (iii) non-governmental organisations (NGOs) from Europe and the USA (mostly left wing and faith based), and, increasingly, (iv) the Nordic countries, the Netherlands, and Switzerland (the like-minded group).

Socialist development models were dominant at the time. Although some of the policy choices in economic development and agricultural strategies followed in this period failed to produce positive results and prosperity, they were not seriously contested. The Soviet Union, GDR, Bulgaria, and the UN agreed with the GoM on the way forward for agriculture. Price controls (inherited from colonial rule), accelerated mechanisation, and state farms, including conscripted labour in some cases, were the recipe everyone agreed on in the policy circles in Maputo.

Extensive consultation and other forms of interaction with the peasants were common practice in the framework of a ‘people’s democracy’. Likewise, central planning was the norm at that time, but the State Central Plan was a harmonised set of sector policies and provincial plans created through exercises that started at the district level. These exercises were undertaken and predominantly led by Mozambicans. The plans, particularly at district level, included the contributions of communities and workers.

Up to 20,000 foreign technical advisers and volunteers, known as cooperantes, helped to implement the policies and strategies. Unlike donor-funded consultants and advisers decades later, they did not usually coordinate and prioritise policy. Policy was formulated and controlled by FRELIMO and the government, whereas implementation was heavily assisted by donors, as testified by Mutemba and Salomao.Footnote ⁷

The policies and institutions of price controls (even on traded stables), mechanisation, and state ownership of the production apparatus developed under conditions of extremely high state legitimacy. There were no issues around voice, participation, and political accountability. President Samora Machel enjoyed extraordinary popular support (Newitt Reference Newitt1995). The high degree of political instability and violence, successfully attributed to foreign countries funding insurgencies, did not affect state legitimacy. The local media labelled the Mozambican National Resistance (MNR) insurgency as ‘armed bandits’, and donor countries knew that the MNR had been created and funded by elements from ex-colonial rule, Rhodesia, and South Africa, with a view to destabilising and eventually provoking regime change. Mozambique’s very sovereignty and independence as a state were at risk, and the image of the enemy was clear. The war effort was justified, and low state capacity and lack of economic progress were explained by external destabilisation and colonial heritage.

Even in the early 1980s, when the Nordic countries established embassies in Mozambique, there was little debate about legitimacy, accountability, and participation. Mozambique was a front-line state and important in the struggle against apartheid, which is probably the strongest and most resilient political solidarity project between Western Europe and Africa ever known. The anti-apartheid solidarity project at large commanded broad-based political backing in most European parliaments and populations as well as in the UN, and criticism of Mozambique was rare. The few concerns that did arise among donors typically related to human rights. The concept of judicial independence was not recognised by the socialist regimes, and when dissidents to the FRELIMO government were sentenced to death or long prison terms by executive order (or courts under direct instruction from the executive), Nordic donors were uncomfortable and faced questions. However, the brutality and cruelty of the MNR insurgency and the apartheid regime’s brutality at home overshadowed this and were debated much more in European capitals. Gersony’s account expressed the common understanding of donor countries about the insurgency in Mozambique:

To understand where the Mozambican elite and FRELIMO come from as regards their relations with donors, it is important to remember the nature of the relationship. There was no explicit conditionality. The former Eastern bloc donors introduced no policy-based development contracts, no performance indicators, or no structural or quantitative benchmarks. It was an alliance built on shared ideology and shared foreign policy concerns that defined a common enemy as well as mutual security concerns. The relationship was much more than one of aid. Economic and technical assistance agreements were technical, not policy conditioned, and embedded in agreement on policy at a much higher level.

To understand the Mozambican elite’s practices today, it is equally important to remember how this relationship changed and when. The spirit of the ‘Decade of the Victory over Underdevelopmenť was in trouble before Samora Machel died in 1986.

Although the peace agreement with RENAMO was still ten years away, and the structural adjustment programme only started in earnest in 1987, the FRELIMO government was already beginning to lose its grit in the early 1980s. The combined effects of war, the second world economic crisis (a sharp increase in interest rates and oil prices), and a persistent drought lasting more than three years caused sharp declines in the economy, and Mozambique’s sovereignty was increasingly being threatened.

Mozambique’s joining the International Monetary Fund (IMF) and signing the Nkomati Accord with South Africa show that the FRELIMO government was already on its knees in 1984, despite a very different public rhetoric from Samora Machel. The Nkomati Accord, in particular, was regarded as a defeat in many circles and by some regional leaders as an outright treason. Mozambique had to make enormous diplomatic efforts to try to explain to its peers why a no-aggression pact with the apartheid regime was necessary.

The disillusionment and loss of grit already in the early 1980s influenced the strength of many government institutions. Civil servants experienced great difficulty in implementing the plans and projects they were supposed to manage due to an increasingly obvious discrepancy between means and ends (human and capital resources and policy objectives). The difficulties were explained by the armed insurgency (por causa da guerra), but it became increasingly clear that the war was not the only problem.

We know from mainstream management literature that staff motivation is a main driver of institutional efficiency. Staff need motivation to believe in what they do, feel that they have the confidence of their managers, and relate to clear performance criteria, that is understand their institution’s mission and their own role in it. Remuneration is important insofar as it has to reach a certain level but, above that, salary can largely be taken off the table in terms of motivation.

When the World Bank and the IMF came to Mozambique in 1986 to formulate and help implement the structural adjustment programme (SAP), civil servants’ self-esteem and confidence in the GoM were already low. Mozambique had become a demoralised country in many ways.

The traditions and approach of the Bretton Woods institutions did not make things better. The imposition, especially by the World Bank, of new working methods and the support of hordes of foreign consultants often led to weakening national institutions, turning them into rubber-stamping entities. The SAP itself caused public sector salaries to shrink significantly, often below the subsistence budget level for a family.

B Structural Adjustment and Privatisations before Peace and Elections

The timing of the SAP from 1987 to 1995, the Rome Peace Agreement in 1992, and the multiparty elections in 1994 created an institutional framework where formal political power, but not economic power, was shared. Donor conditionality was introduced, and it changed the rules of the game, but the main players stayed the same.

By the mid-1980s, Mozambique was economically broke and faced increasing trouble with its creditors. The government, especially Joaquim Chissano, saw that Mozambique’s sovereignty was threatened by the combination of domestic economic factors and geopolitical developments in the world, not least reduced support from the socialist countries, in particular the GDR whose intelligence had concluded that the war could not be won by military means (Wolf and McElvoy Reference Wolf and McElvoy1997).

Referring to Table 10.1, the constitutional reviews in 1986 and 1989 bear witness to externally prompted policy changes of the most fundamental calibre (Table 10.1, column 3). The first review was necessary to accommodate structural adjustment and privatisations, and the second in 1989 paved the way for multiparty democracy.

The sequence of policy changes shows that the FRELIMO government took the difficult decision to lead the institutional changes, although some powerful leaders in the party were not convinced that the capitalist model was better. However, Chissano’s giving up control of policy formulation was necessary to defend sovereignty and FRELIMO’s leadership in the long term. ‘In the words of Luis Bernardo Honwana: “Chissano assured the preservation of the state and the continuation of the state without interruption”.’Footnote ⁹

The IMF and the World Bank introduced a much more direct contractual relationship with Mozambique as donors. The relationship with the IMF and the World Bank was the start of direct and explicit conditionality in development assistance. There was little ex ante belief that the former socialist GoM would wholeheartedly implement the SAP with fiscal austerity and privatisations as the main ingredients. It was evident from the start that the policy and institutional reforms embedded in the SAP would have negative effects on influential parts of Mozambican society and political costs for the government and ruling party. In exchange, Mozambique received loans, technical assistance, and, not least, rescheduling with the Paris Club of creditors.

Along with the introduction of capitalism, the most important institutional change in independent Mozambique was the adoption of multiparty democracy. This was not directly included in the agreements with the World Bank and IMF, but it was supported by a number of countries that were also Mozambique’s main bilateral donors and creditors in the Paris Club, as well as by influential board members in the IMF and World Bank. Some of these countries were even in ‘constructive engagemenť with the apartheid regime underpinning the RENAMO insurgency. (The Reagan administration introduced only very limited sanctions in 1985).

Although somewhat controversial, it can be debated how conducive multiparty democracy is to economic growth (e.g., in the case of the ‘Asian tigers’ in the 1980s), especially in Mozambique’s income level in the early 1990s. Particularly in a poor country like Mozambique, democracy itself constrains the ability of institutions to formulate and implement reforms. In a governmenťs lifetime of five years, there will be two years with elections (municipal and parliamentary/presidential), which will divert efforts and drain resources from managing the country. This is caused to some extent by the incumbent governmenťs abuse of public resources for campaign purposes, but it is by no means the only reason. Even in mature democracies where governments do not practise outright abuse of public resources, the waste of bureaucratic resources for short-lived campaign-motivated policy formulation and dissemination will drain resources (e.g., the preparation of two sets of policies and fiscal acts and Medium Term Expenditure Frameworks (MTEFs) in election years).

Short-lived governments, even from the same political party, will experience frequent changes of policy and of personnel in key positions. All politically headed institutions rely on personal networks, particularly when institutions are weak. Loyalty becomes more important than technical/professional ability, and high attrition, a sense of a lack of fairness, and insecurity of tenure undermine morale. The contribution of multiparty democracy has a negative effect on institutional efficiency.

In addition to the above, there is little doubt that the sequencing of the introduction of capitalism and multiparty elections in Mozambique has affected the country’s current economic performance. It allowed the GoM (FRELIMO and the Mozambican elite) to create new rules of the game and to continue to occupy the economic sphere before political power sharing took place. Economic adjustment was carried out and state assets were sold to leading Mozambicans (allies or members of the government) while RENAMO was still a guerrilla force, rather than a political party, fighting or waiting in the bush to be demobilised – far away from the decisions about economic reforms being taken in Maputo. When successful elections finally took place, and the new parliament began work in earnest in 1995, the SAP was all but over and most state assets had been sold, often to people with sector knowledge from the defunct state companies. This is not remarkable as there was no private sector to recruit from or sell to, but it supported an understanding or underlying notion of entitlement in the elite, who claimed and possibly believed that they could make the companies viable in a liberal economy.

Until the SAP, the political leaders and the emerging middle class in general had been complying with the code of values and practices of probity and respect for public property. The privatisations that occurred started to change this with the emergence of an incipient business class, more affluent and dominated by former political leaders and civil servants who had benefited from the privatisations. Those who did not benefit felt excluded. Furthermore, the first and subsequent multiparty elections created, for the first time, the awareness that FRELIMO might eventually lose the elections with subsequent widespread purges to follow, as RENAMO would need to accommodate its members and sympathisers in the state apparatus. All of this brought growing levels of insecurity and fear and a sense of urgency to ‘get something before it is too late’. It entailed corruption, compounded by a pervasive feeling and belief that FRELIMO members and sympathisers were more entitled to grab public assets than RENAMO members, who were portrayed as having colluded with external forces to destroy the country: ‘Mozambique privatized more than 4000 companies, about 80% benefitting Mozambicans and on highly advantageous conditions’ (Diogo Reference Diogo2013: 158).

There is speculation that the sequencing of the SAP was a deliberate tactic by FRELIMO to retain control of economic assets and that the Bretton Woods institutions accepted this – knowing that the economy would suffer in the medium term – to put the GoM in the driver’s seat of reforms. While the deep motivation of either party is difficult to ascertain, there was at least one additional element in FRELIMO’s motivation: The prospect for a lasting peace would be considerably better if demobilisation and reintegration happened before the elections. (See Appendix with separate note on peace process).

Contractual policy-based lending was not the only new feature in Mozambique’s relations with donors. The IMF required negotiations to take place directly with Mozambique’s Central Bank and Finance Ministry, whereas assistance from other donors was negotiated through the Ministry of Foreign Affairs and Cooperation. This separated the groups and privileged policy dialogue between the IMF and the Ministry of Finance as something all other donors depended on.

It had been intended that the SAP would address the structural imbalances in the de facto bankrupt Mozambican economy, introduce the fundamental institutional changes that capitalism entails, and succeed in implementing them. However, the whole operation was poorly timed and sequenced, and this had significant consequences for the way the Mozambican elite chose to mitigate and adapt to those changes. Even on its own isolated terms, sequencing of the SAP was unfortunate. While ‘re-installing’ market-based prices (which had never been relied on in colonial times) was meant to reinvigorate Mozambique’s comparative advantage, the economy was unable to produce a supply response to changes in relative prices.

There were a host of reasons for this, the most fundamental being that the programme went ahead in the middle of a devastating war, while Mozambique’s main comparative advantage from factor endowments lay with agriculture and natural resources. The war kept the farmers away from their land, as most were waiting in refugee camps or in the suburbs of garrison towns. The war also made it impossible to transport and market coal and other natural resources, to get inputs and spares, and to market the little output farmers managed to produce in less war-affected areas. Even the distribution and sale of cheap power from Mozambique’s dams crippled, as RENAMO sabotaged power lines. Few tourists dared visit the beautiful beach resorts and nature parks in the war-ravaged country.

Almost all the sectors where Mozambique could conceivably have a comparative advantage in a market-priced economy – except fisheries, which was already in Japanese and Spanish hands (through in-flagging and Mozambican silent partners) – were unable to respond to the changes in relative prices.

Therefore, while the expected positive effects of the SAP were late to arrive, the negative effects for previously established industries that had been protected by administered prices and exchange rates, on the other hand, took almost immediate effect. State enterprises across the manufacturing sector, which were overwhelmingly involved in import-substituting production, became unprofitable. The companies were subsidised by the government to avoid massive lay-offs and limit payroll cuts. However, once such subsidies became visible in the budget, they formed part of the fiscal equation in the IMF programme and were therefore short-lived. As the GoM still owned and controlled large sections of the banking sector, many subsidies were eventually moved to the banks, which were obliged to extend loans (e.g., under the heading of restructuring for viable commercial use) to unviable companies. This mining of the banking sector still affects the financial sector today.

At first, these companies could not make money, so they had to be subsidised in some way by the GoM until peace and foreign investors returned to favour their businesses. Eventually most companies’ assets were used for other purposes and/or partly sold to foreign investors:

The case of cashew showed that the World Bank/IMF imposed reforms with a view to securing the best possible farm gate prices to farmers (privatise and remove export bans and tax). When the government resisted in an attempt to save the cashew processing industry, the World Bank blocked a US$50 million loan tranche. When the GoM finally agreed, it became clear that the people who had bought the industries from the GoM – claiming they would try to safeguard ten thousand jobs – had colluded with the bank and Indian traders and used the installations for storage and trade only, exporting only raw nuts. The industry died and no new trees were planted (see, e.g., Diogo Reference Diogo2013).

When contract aid in the form of policy-based lending was introduced into macroeconomic management and reforms in key industries, the GoM managed the legitimacy aspects of the situation in two ways. To the Mozambican population, the negative effects of the economic policy of the period were successfully attributed to the conditionality of the IMF. The GoM played the ‘victim card’. It still controlled the press at home and took great care to protect other donors from bad press. In addition, in much of the international media, SAPs were reported to leave a trail of social havoc in Africa. This created the momentum for a group of countries and the UN to say that structural adjustment could be done with a human face. The same group of countries were the main bilateral donors to Mozambique. They found the IMF’s policy recommendations and conditionality to be misguided and were optimistic about prospects for Mozambique.

In the mid-1990s, state legitimacy was still relatively intact in Mozambique. FRELIMO’s election victory in 1994 was credible and accepted by RENAMO, although only after pressure from peers in the region (the ANC). Donors helped to convert Maputo’s finest cinema to serve as the parliament, and opposition politicians started to appear in local media on a daily basis and in the streets and cafés of Maputo. Things were also opening up in terms of accountability. The budget, which had previously been a state secret, appeared on the front page of a new and popular daily publication, Media Fax. Most people witnessed a remarkable improvement in living standards compared to the times of war. Double-digit growth rates, including in family agriculture, made the GoM popular at home and abroad.

At the Consultative Group meeting in Paris in 1994, donors pledged almost US$1.4 billion in new investment projects (including technical assistance), against a gross domestic product (GDP) of around US$2.5 billion and a government budget of around US$1 billion. Clearly, the GoM was not able to absorb this money in any sustainable way, as it was unable to finance the ensuing recurrent costs.

These conditions led to a handful of donors (Swiss Development Corporation, USAID, EU, and Denmark) working successfully with the Central Bank and Ministry of Finance and Planning to make the Bretton Woods institutions accept a more expansionary fiscal policy, enabling faster growth of social sectors after the war. This limited group of donors financed the servicing of some of Mozambique’s debt prior to the highly indebted poor countries’ debt cancellation initiative and import support schemes, which generated counterpart revenue in Metical for the government, which the IMF agreed not to sterilise.

This all took place in a ‘Marshall Plan’ atmosphere, and it was believed that subsequent economic growth and the cancellation of HIPCFootnote ¹⁰ debt would enable medium-term sustainability. Mozambique was internationally recognised as a post-war rehabilitation success (OECD 2002). The real test for this to become a more sustained operation was whether donors in general would be prepared to finance recurrent costs, including salaries.

C Scaling Up for a New Darling

This preparedness came from a strong international agenda at the time, which drove donors to provide higher volumes of aid and new instruments. It helped the GoM to expand services to the population but also maintained the country’s dependency on donors even as GDP and domestic revenue grew. It created an aid architecture in the name of host country ownership that allowed and increasingly encouraged isomorphic mimicry, bordering on ventriloquism.

The World Summit for Social Development in Copenhagen in 1995, the largest gathering of world leaders at the time, reached a new consensus to put people at the centre of development. Its declaration and agreed programme of action made donors in all countries increase their volumes of aid especially towards social sectors. The summit cemented the discourse by UNICEF and the Nordic countries of structural adjustment with a human face and obliged governments to formulate poverty eradication policies and plans (PRSPs), which became a condition for debt relief under HIPC.

Universal access to education and health was a tall order at the time, and pursuance of the ‘20/20 objective’ faced particular obstacles. This objective required governments to allocate 20 per cent of their budget and donors to allocate 20 per cent of their support to social sectors. However, the Mozambican government established a budgetary regime of 20 per cent for education and 14 per cent for health (Diogo Reference Diogo2013: 157).

If most donors had one strong notion at the time, it was a narrow concept of sustainability, requiring Mozambique to meet future recurrent costs on the investments made by donors. Bilateral agreements between donors and the GoM usually included clauses about counterpart funds and promises by the GoM to staff and maintain the infrastructure created by donor-funded projects. At that time, few donors would get board approval for projects if this were not addressed.

Especially in the social sectors, the cost structure was heavily tilted towards recurrent costs. Unlike roads or power lines, where recurrent costs are closer to physical maintenance, the social sectors needed staffing and consumables on a completely different scale. The costs of the salaries of teachers, nurses, and doctors, and of drugs, which the GoM and most donors agreed were necessary for rapid social expansion, were impossible to finance given traditional conventions in development aid. Thus, the need to find a way to help the GoM finance the recurrent costs of rapid social expansion was a main driver of the establishment by bilateral donors of a new institution known as general budget support (GBS).

This drive by donors to increase absorption capacity by financing recurrent costs, including salaries, made Mozambique exceptionally dependent on donors. The GBS instrument also relocated the centre of dialogue between Mozambique and the donors from the Ministry of Foreign Affairs and Cooperation to the Ministry of Finance and Planning. In this way, one of the most important elements of Mozambique’s foreign policy – its relations with donors – separated from other foreign policy elements in a different institutional frame. This compartmentalisation of the formulation and management of foreign policy was appropriate and worked at the time.

The GoM never formulated a full and coherent aid strategy, although donors encouraged it to do so. It was not required to and probably did not want to. Indeed, in 1994, when the Ministry of Cooperation and the Ministry of Foreign Affairs merged into the current Ministry of Foreign Affairs and Cooperation (MINEC), there were discussions about the need to formulate an international cooperation strategy. However, this was abandoned to make room for the flexibility that is always needed when dealing with different donors. Experience had shown that donors had different policies and procedures, and, quite often, it was difficult to predict the amount of funding the donors would pledge and actually disburse. Against this backdrop of uncertainty and sizeable challenges, it was felt that the broad objectives stated in the governmenťs five-year plan were good enough to guide all stakeholders.

Given the overall context of the development challenges, the GoM had to be pragmatic and agree to meet the donors’ essential objectives. At the same time, a government that is under pressure from donors to accept reforms, and from local interest groups to resist reforms, can manage the situation by avoiding taking (explicit) strategic decisions (Castel-Branco Reference Castel-Branco2008).

The GoM embedded its priorities in the international aid effectiveness agenda, which was gaining strong momentum at the beginning of the century. The donor countries themselves were driving this agenda primarily through the UN, OECD, and the EU, which showed committed and competent leadership on the issue (e.g., by Poul Nielson, Richard Manning).

The Millennium Development Goals, New Economic Partnership for African Development, and the Paris Declaration, through which donor countries agreed to harmonise and increase aid/GDP ratios to get closer to the UN target of 0.7 per cent, were the main signposts for donors. Volume, ownership, and harmonisation through alignment and division of labour became the key elements in almost all donor countries’ aid policies and their country assistance strategies in Mozambique.

The GBS and sector-wide approach (SWAP) became significant instruments for aid delivery, and the dialogue structure was built around them. Consequently, it became increasingly difficult and awkward for Western donors to be outside the group. The group all but monopolised policy dialogue with the GoM, and produced and shared important information only internally. A number of donors joined the GBS instrument for the wrong reasons, some with very small budgets both in absolute terms and relative to their total country budget. Aid effectiveness at the aggregate level may not have been their main concern, but a seat at the table conducting policy dialogue was. Free riding became a problem (Bourguignon and Platteau Reference Bourguignon and Platteau2015). More importantly, though, there was – among most donors, including the pioneers of GBS – an underlying assumption that the instrument and broad co-ordination around it could be used for coercive purposes.

Since 2000, the government had been conducting half-yearly policy dialogue meetings with the EU, as agreed under Article 8 of the Cotonou Agreement. At these meetings, cooperation was evaluated and political issues were discussed. The GBS donors who were not members of the EU wanted to have a similar type of dialogue with the GoM. As the EU’s own code of conduct obliged its Commission and member states to subscribe to the broadest-possible host country-led dialogue mechanisms, the solution adopted was to establish a forum for all GBS donors.

Donors organised themselves into sector working groups with common funds, each with a lead donor. The working groups reported to the deputy heads of missions (heads of agencies where these were outside the diplomatic missions), who reported to ambassadors and high commissioners. By 2009, donors had a dozen common funds and working groups reporting to the top two levels, where the 19 donors selected a rotating chair in a troika format that was entrusted to undertake policy dialogue with the governmenťs key ministers. The donor troika was given a secretariat, paid for by donors with overseas development assistance (ODA). The GoM’s troika was headed by the Minister for Finance and Planning for fifteen years and by the Minister for Planning and Development during President Guebuza’s ten-year tenure, when the Ministry for Finance and Planning was split in two. The other members were the Governor of the Central Bank and the Minister of Foreign Affairs and Cooperation.

The whole machinery was based on a memorandum of understanding (MoU) between donors and the GoM, which set out the underlying principles, that is of democracy, good governance, and sound macroeconomic management (column 3 in Brown’s model – see Table 10.1) for budget support. The MoU also described the main tasks for implementing sector reforms, plans and targets (column 2 in Table 10.1), joint reviews and assessment of progress (PAP), and financial pledges each year. The matrix contained more than forty indicators, often tied to different tranches of donor disbursements, but they were mostly output and process indicators rather than real outcome assessments. The indicator framework measured how many children were enrolled in primary school and how many legal cases were awaiting settlement in the courts. It said little about learning outcomes and access to justice. It allowed for isomorphic mimicry, sometimes even encouraged it, because meeting output indicators became the objective. The system was successful in increasing aid, which became a reference point at many international gatherings on aid efficiency and harmonisation.

Although many reforms remained shallow because of the high ambitions of donors and frequent changes of direction, and because GoM would not allow reforms to deepen (i.e. in agriculture and the justice sector), much of the institutional capacity building undertaken with donor assistance in the 2000s was solid.Footnote ¹¹ This was the case with the strengthening of public financial management, including a strong tax authority and public budget and accounting system. According to the IMF (Dabàn and Pesoa Reference Dabàn and Pesoa2007), ‘Mozambique is a promising example of successful budget reform in Africa’.

Even where the reforms were shallow, there was little long-term systemic damage to the institutions due to isomorphic mimicry. Donor money and Mozambican human resources were wasted at times, but because the reforms remained shallow, they did little real damage. This occurs primarily when ill-conceived reforms and policies are implemented.

The GoM had few concerns about harmonisation, which was considered a win–win situation. The increased aid flow allowed the government to expand the social sectors and infrastructure, etc., which underpinned its legitimacy. The alignment with Mozambican procedures made the donors more anonymous and the GoM more visible. It also made the government a larger economic agent in the market (as a buyer of goods and services with donor money) helping to feed the bourgeoisie.

Aid dependency did not increase in nominal terms during the 2000s, as GDP and the governmenťs domestic revenue picked up. However, more donor funds enabled the expansion of government spending in the social sectors and infrastructure, etc., above what would have been possible without increasing and more aligned assistance. More importantly for ownership, donors expanded policy-based granting and lending (which had previously been restricted to macroeconomic and strategic sectors imposed by the World Bank/IMF) to almost all sectors and main donors. Common funds and donor-financed technical advisers and consultants, embedded in Mozambican institutions to assist primarily with policy formulation, became an implicit part of conditionality. Policy formulation and dialogue, along with target setting and measurement of results, took place at sector level. As the whole aid architecture was organised around the group of donors providing GBS (and the USA), donors were able to influence policy formulation at the sector level at very early stages and to follow through with implicit conditionality in policy dialogue with the government all the way to the macro level, that is in discussion related to fiscal policy such as MTEFs, yearly budget allocations etc.

This had two profound effects: (1) it weakened the GoM’s policy co-ordination efforts by strengthening the sectors vis-à-vis the Ministry of Planning and Development, enabling isomorphic mimicry and approaching ventriloquism and (2) it side-lined the Ministry of Foreign Affairs and Cooperation (to ceremonial duties) and compartmentalised foreign policy.

The governmenťs policy-coordinating ministries, which are vital for ensuring true government agency (the ability to formulate and manage a central policy and plan), were not strong and were further weakened in terms of resources vis-à-vis sector ministries. At the same time, they were subject to unclear mandates that the donors could influence.

The international winds were favourable to Mozambique through most of the 2000s. The Paris Declaration came shortly after FRELIMO’s and Guebuza’s disputed election victory in 2004, and the aid effectiveness agenda remained alive, albeit weaker, with the Accra Agenda for Action in 2008. Although donors expressed increasing concerns about issues of democracy, human rights, and corruption, the aid kept flowing and even increased. The GoM got used to the donors ‘barking but never really biting’.

Economic growth and aid flows continued strongly correlated throughout the 2000s. However, the Mozambican economy did not achieve structural transformation and became a consumption-driven economy where agriculture fed the rural population while the formal sector – urban elite and middle class – depended on the export of a few commodities, a handful of large foreign direct investments, and development aid. As much of the development aid was delivered as programme aid, it financed public salaries and procurement. This meant it was strongly focused on public servants and – via public procurement – the private sector, which supplied goods and services to the public sector, often through shallow trading companies owned by the Mozambican elite and dependent on foreign supplies.

The notion of entitlement in elite quarters thrived in this environment, and Mozambique’s ranking in many international indexes of governance and corruption dropped. However, legal convictions in a few high-profile corruption cases (i.e. the Director of Airports) calmed things down. Donors agreed that Mozambique was heading in the right direction despite occasional setbacks.

D The Thrill Is Gone

All this changed slowly but surely as the decade of the 2000s approached its end and donor countries faced a series of new challenges in the world. Mozambique lost its status as a donor darling as aid money was needed elsewhere for less altruistic purposes, while the GoM did not respond to Western governments’ concerns about security and commerce. Donor assessments of Mozambique were carried out in a new light, and the attraction of isomorphic mimicry became more difficult. Contested elections, which were the norm, were no longer accepted. Donors evaluated reforms related to legitimacy and accountability as being too shallow, and the GBS ran into increasing trouble as an instrument of aid. At the same time, the aid architecture built around this institution remained intact.

The Western governments’ war on terror became wider and costlier. Afghanistan and Pakistan, in particular, consumed enormous resources, but events in West Africa and the Horn of Africa also caused Western countries to reconsider their priorities. A worldwide economic crisis also strengthened critical voices in Western parliaments on aid spending and conditionality, including on migration. Donor budgets reduced and moved increasingly north in Africa.

The developments at the Horn of Africa spilled over and had repercussions in Mozambique. Somali piracy and human traffickers reached the shores of Inhambane, and Mozambique was unable to patrol its territorial waters – 200 nautical miles along 2,000 kilometres of coastline. This was also one of the reasons, why the smuggling of drugs from south Asia through northern Mozambique intensified, and it was almost risk free. At sea, there was no law enforcement and on shore, there was ‘loosely governed territory’ as the CIA put it.

Western shipping was threatened in Mozambican waters and the drug trade that ran almost unhindered through Mozambique helped to finance the Taliban and Al Qaeda killing of Western soldiers in Afghanistan. This was bad enough on its own, but Western governments were also thinking ahead about the safety of future gas operations in the Mozambican seas. Some of the major donor countries at the heart of the G19 structure now also had security and commercial concerns about Mozambique. (As one senior diplomat in Maputo put it at the time: ‘There needs to be a roll-back of sovereignty’.)

President Guebuza and his government were insensitive to this. Guebuza forged ever-closer ties with China and Vietnam (awarded the third Global System for Mobile licence in Mozambique in 2010 along with enormous infrastructure contracts for a stadium, the Maputo circular road, and the bridge to Catembe). Furthermore, parts of the GoM, and Guebuza himself, openly supported a local business person, known to Western governments as a drug dealer.Footnote ¹²

The Western governments’ security and commercial concerns had little to do with the underlying principles of GBS. Nevertheless, they influenced the donor–GoM dialogue because this was where Western governments had leverage. Donors raised their commercial and security concerns in discussions under headings such as corruption, the Extractive Industries Transparency Initiative, state capacity, and independence from private interests. However, above all, the donors’ new priorities and concerns influenced their assessments, and they became more determined to act together.

The GoM had plenty of opportunity during the 2000s to observe the donors’ rising concerns about democracy, governance, and human rights elsewhere in Africa without cutting aid, but unlike Nigeria, Uganda, Ethiopia, and Tanzania, for example, the GoM did not address Western security concerns. Therefore, Mozambique was measured by another yardstick, and as the donors’ list of critical issues grew, an increasing number of the G19 donors wanted to test the underlying assumption that GBS could be used for coercive purposes.

The opportunity to do so came with the troubled elections in 2009. A new political party, Mozambique’s Democratic Movement, popular with intellectuals, NGOs, and donors, was prevented from running in seven of the country’s eleven provinces. Donors delivered a démarche to President Guebuza on the issue prior to elections but to no avail. FRELIMO declared an enormous victory (with a qualified majority in parliament) and inaugurated President Guebuza’s second term in office. All GBS was frozen shortly after. The decision followed many weeks of discussion between donors and was conveyed to the government in a short letter signed by all nineteen heads of missions, which claimed there had been a breach of the underlying principles in relation to democracy and governance. (See Table 10.1, column 3.)

This was a wake-up call for the GoM. A number of Mozambique’s ambassadors in donor countries were called home to explain how this had surprisingly happened. The GoM concluded that donor agencies were highly decentralised and that ambassadors of donor countries in Maputo had been calling the shots. While this was partly true, many heads of missions had just been delivering what their governments wanted. The institutional factors that contributed to the GoM’s poor assessment of the general donor drift was a more fundamental reason why the GoM was taken by surprise.

Donors discussed policy co-ordination and priorities primarily with the Ministry of Planning and Development (MPD), and the presidency took over an increasing number of the activities that the Ministry of Foreign Affairs and Cooperation (MINEC) had traditionally been tasked with. State protocol moved from MINEC to the presidenťs office, and ad hoc consultations with resident ambassadors by the president without the participation of the Foreign Ministry began to occur along with a very busy calendar of international visits by heads of state. MINEC was sidelined from the aid dialogue and Mozambique made little use of its embassies abroad to understand the policy shift under way in most Western donor countries. Foreign policy co-ordination had been weakened.

The freezing of GBS hardened the relationship between the GoM and donors from then on. However, at the time, the GoM decided to please the donors, at least superficially, and initiated a series of reforms on transparency, participation, and state legitimacy (election law, EITI, etc.).

GBS resumed later the same year, but the policy dialogue became increasingly rigid and unproductive. If the GoM told donors about its fundamental challenges and troubles, these issues would soon become the subject of donor-prompted reforms and be measured in the joint indicator frameworks that guided GBS disbursements. Neither donors nor the GoM tried (in earnest) to change the dialogue architecture and ways of discussion to open the debate, separate policy debate from conditionality, and analyse issues in fora where they naturally belonged by people who knew what they were doing. Everything entered the policy dialogue in the G19. Donor-prompted reforms were formulated with the assistance of donor-funded consultancies and advisers and were presented to the MPD together with an already agreed financial pledge from donors.

In identifying institutional drivers, it is important to remember that development cooperation is by nature a very long-term endeavour, whereas politicians in Western democracies are elected for and often optimise their political capital over the medium term. There are of course exceptions to this but, generally speaking, bilateral donors are impatient by nature because ministers want to attract domestic attention. Thus, personally ambitious ambassadors and heads of aid agencies frequently mirror this and lack the courage to propose and design aid finance that reflects the true cost, in terms of time and money, of reforms and capacity building.

Very often, development ministers get attention by announcing new initiatives and funding to assist poor countries that have specific issues. This is often through vertical programmes (like support to combat HIV) rather than horizontal ones, as are often more called for (e.g., integrated support to primary healthcare). Such support programmes are much more complicated and difficult to explain, and GBS is only a front-page story when a development minister decides to stop it (showing resolve to taxpayers). This means that results achieved are not at the centre of the political debate about aid in Western democracies. Many aid agencies struggle to document their results and disseminate them to the broader public, but there is little uptake of this by journalists and politicians.

Almost all the successful cooperation programmes that have delivered good results are likely to have been initiated by the predecessors of current development ministers who are often from a different political party, as alternation of political parties holding power is common in Western democracies. No development minister dreams of extending the timescale and providing new funds for a support programme that was optimistically designed and approved by a predecessor from a different political party. As a result, there was constant pressure on the GoM to adopt and implement new reforms designed by donor-financed consultants in the image of donor countries themselves. This drive often led to isomorphic mimicry, either by default or by design, to keep the funds flowing.

Arrogance and urgency on the donor side (we need to discipline the GoM before it is too late) and on the GoM side (revenues from natural gas will soon outstrip donor assistance by far, so we do not need donors any more) made the atmosphere worse. Donors began to pay more attention to the household surveys and poverty assessments showing a very slow decline in poverty rates and no decline in the numbers of poor people (headcount), as well as marked regional differences that favoured the ruling party and discriminated against the opposition’s heartlands.

Another contested election in 2014 proved to donors that the reforms initiated after the freezing of GBS in 2010 were shallow. Laws had been passed and procedures adopted. Nevertheless, they did not really change the state of democracy. The reforms were isomorphic mimicry – Mozambique was still not a multiparty democracy as defined and understood by Western governments. The main opposition party, RENAMO, gave up on democracy and went back to the bush to reinitiate insurgency to claim control over at least a part of the country. The GoM’s legitimacy was seriously questioned, although irregularities were no more serious than at earlier elections and no more problematic than in other countries receiving GBS at the time, that is Burkina Faso, Uganda, and Ethiopia.

The drivers that had made the institutions of SWAPs and GBS a success and had pushed aid volumes to unprecedented heights had all but vanished. The international winds that had carried the agenda forward weakened even more during the 2010s as the Arab Spring, the success of ISIS, and the war in Syria created enormous security problems on the EU’s doorstep and produced huge flows of refugees into Europe. This strengthened right-wing nationalist forces in the EU and the USA and put further pressure on aid budgets (cuts and re-direction to emergency aid in North Africa and the Levant).

Western donor countries were already starting to turn their backs on GBS at the beginning of the decade and would have abandoned the instrument no later than the early 2020s anyway (leaving such instruments to a few such as the EU and World Bank). The aid strategies, such as harmonisation, including GBS, that were formulated from around 2012/13 by countries, which had previously been stalwarts of aid effectiveness, clearly show that they were moving on and had new concerns and priorities. As international solidarity weakened, Western governments were clearly looking for more direct and endogenous reasons in recipient countries to justify reduced budgets and the move away from GBS and the Paris agenda at large towards results-based contracts and projects that could underpin their commercial and security interests.

The Guebuza government provided plenty of ammunition for this move – even a crash landing of donor relations – when it guaranteed three large commercial loans for partly fraudulent purposes to three state enterprises without informing parliament and donors. More than US$2 billion of new commercial debt was contracted in an attempt to create a maritime security infrastructure in Mozambican hands before the gas bonanza, when almost all security contracts would traditionally go to international companies with close links to foreign governments. A combination of incompetence and greed overwhelmed whatever good intentions there had been in the project, and Mozambique as a state was left with massive (defined as unsustainable by the IMF) levels of new debt that would inevitably be partly repaid by donor funds.

To Western donor countries, this was proof of further deception and mimicry. In partnership with the GoM and the IMF, they had promoted and financed what had been acknowledged as successful public financial management reform, and it was now clear that it had not solved the problem of accountability in any way. Donors acted swiftly and united around a single condition for resuming GBS: an international forensic audit showing what the money had been used for and by whom, along with appropriate legal follow-up of the findings. This condition was unmanageable for the GoM, as it would create decay in the ruling party. When the audit was finally carried out and revealed massive fraud and embezzlement, little or no action was taken by the Attorney General. After months of waiting and pressure from civil society and donors, lower-level officials were indicted and the legal processes crept forward very slowly.

Unlike the situation in the late 1980s, when Western donor countries had insisted on fundamental reforms (Brown’s column 3 – see Table 1), Mozambique’s sovereignty was not under threat in 2016. RENAMO’s new armed insurgency was containable and the GoM knew that oil and gas revenues could replace donor aid within a decade. As it was not threatened, sovereignty served as FRELIMO’s bulwark.

It was only when the British and South African courts complied with requests from the US courts and arrested former Finance Minister Manuel Chang and a number of foreign bankers involved in the scandal that the Mozambican Attorney General became busy. Although the Mozambican elite would not be threatened by withheld donor funds, high-ranking and centrally placed bankers and former members of the GoM who would cooperate with the US courts in a plea bargain could cause serious trouble.

While the freezing of funds by donors did not lead to change in the Mozambican leadership or its attitude, events in the justice sector in the region may well have influenced the mind-set in the ruling party, not least the indictment and order for preventive prisoning of former President Jacob Zuma. There is little doubt that these events inspired FRELIMO and the government to demonstrate stronger efforts to pursue corruption, although there still seemed to be some selectivity in deciding which cases to pursue.

Moreover, an often-ignored part of this phenomenon is the delays and the destruction of projects that infighting among the elite caused to programmes and projects financed by donors and foreign direct investment (FDI). When elements from different factions of the elite (FRELIMO) were destroying and stealing each other’s projects (rent seeking or not), this helped to create a corrupt or ‘do nothing’ approach in key institutions that prioritised, coordinated, and approved vital investments for economic growth. It seems that the GoM was trying to use the greater caution of economic actors and the damage caused to FRELIMO’s image by the debt scandal to reduce and control such infighting.

The political consequences of the debt scandal are far from over, but three things stand out:

1. 1. FRELIMO is still in government and has probably strengthened its position as compared to 2016. This has happened partly as a result of the manipulation of election results – intimidation, rigging voter lists, and direct ballot stuffing – but it is also the result of a completely disorganised political opposition and a new resolve within FRELIMO itself, to not lose power.

2. 2. Donors are coming back on stream, despite the lack of consequences for top party officials of the debt scandal and despite the election cheating that is incomparable to any previous elections.

3. 3. Donors have undermined their own previous institutional strengthening and capacity-building efforts by starving the government institutions of finance and choosing to finance NGOs, the UN, and standalone, vertical projects instead. The organisations pay good salaries (well above those paid by GoM) and have now hired a significant number of the best higher-level government officials and specialists in various sectors.

The donor’s financial body language did not lead to any change of attitude in the FRELIMO leadership. Rather, it may have helped to strengthen the resolve of the party leadership, as the Mozambican economy proved remarkably resilient to the financial crisis that followed the loans and was made worse by freezing of donor funds. Events have proved that FRELIMO’s sense of entitlement is still very strong, and it continues to be possible to equate Mozambique’s sovereignty with the party’s grip on power. Concessions were certainly given to some donor countries with large commercial investments, but not to the donor group at large.

Now, a few years later and after one much contested election since the non-declared state guarantees were revealed, many donors, including the largest and most intense defenders of the disbursement freeze, seem to have reviewed their standards for governance and democracy. The US Millennium Challenge Corporation has approved Mozambique for massive new financing and the IMF is finalising a new programme with the GoM, which will pave the way for the EU to re-engage. Most bilateral donors will follow, although their budgets have been reduced compared to the last decade (for other reasons) and their aid instruments have changed.

While the SWAPs in education and health may survive for some years in significantly reduced versions and with more strings attached, GBS is de facto dead for bilateral donors in Mozambique. No other known aid instrument can provide the volume of funds that GBS did, and Mozambique will have to raise revenue in other ways, including closing deals with foreign companies in the gas and natural resource sector. Most of these companies are from Mozambique’s donor countries.

There will be new instruments and new players in combinations that cannot be assessed and dealt with in a narrow donor-recipient perspective. Investments from private foreign companies, pension funds, government guarantees, loans, and grants will be bundled and advanced under strategic international agendas like climate change and job creation to suit donor countries’ interests.

When Mozambique begins to develop serious international commercial cooperation, it will with large and powerful foreign companies. They will use their governments to pave the way for general conditions for commercial exchange, sometimes even conditions for specific transactions. These foreign governments are Mozambique’s main donors and there is an increased risk that Mozambique will be totally dependent on foreign governments and companies in the coming decades. As revenue from gas and coal depends on the operations of a handful of foreign companies from almost the same countries as the main donors, the risk to Mozambique of external shocks – political or market based – may be harder to mitigate than ever before.

It is interesting that many of the large contracts for oil and gas exploration were signed at the time of the crisis between the GoM and its donors. The same is the case for some of the security contracts for exploration, and foreign security companies are now openly operating in northern Mozambique.

A National Development Strategy

Mozambique has a set of long-term and mid-term instruments that are the framework of government policy and plans. The main long-term document is Agenda 2025 (Comité de Conselheiros 2013). The vision was originally defined in 2003 and revised in 2013 to align it with emerging challenges. According to Agenda 2025, development must be endogenous, prioritising the national market through the widening of the production base of small and medium enterprises (SMEs).

In 2014, the country adopted the NDS 2015–2035, based on the general lines of Agenda 2025. The main objective of the NDS is to improve the living conditions of the population ‘through structural transformation of the economy [and] expansion and diversification of the production base’ (República de Moçambique 2014b). Thus, industrialisation is at the core of the programme, and both agriculture and the extractive industries are aligned with the objective of structural transformation of the economy. The NDS acknowledges that the national economy generally and the rural economy particularly depend heavily on the exploitation and use of natural resources (land, agriculture, and forests). The strategy further includes the creation of an Investment and/or Stabilisation Fund from the surplus revenues and resource windfalls resulting from the extraction of natural resources (República de Moçambique 2014b: 20). The linkage of the mineral resources sector with industry will be through vertical integration of minerals production – coal, gas, ore, and mineral sands – assuring their transformation into industrial goods for national and international markets. In the area of the extractive industries, the strategy includes (i) the establishment of a partnership between national and foreign enterprises in the exploitation of resources; (ii) the involvement of national enterprises in the provision of services; and (iii) the creation by the state of public–private partnerships (PPPs) for the provision of goods and public services (República de Moçambique 2014b: 37).

In the extractive industry – especially coal, gas, and heavy sands extraction – the main challenge posed by the NDS is the need for domestic transformation – a process, which, according to the strategy, may address the problems, related to primary commodity export dependency.

Considering natural resources as fundamental for economic growth and structural transformation, the NDS points out that sustainable management is, among other factors, key to their success. This strategic vision supports, at least partially, the established argument that ‘resource-based accumulation is not an end in itself, but a means or stage(s) within a dynamic process of industrialization and economic transformation’ (Castel-Branco Reference Castel-Branco2011: 2). However, how resource-based accumulation should translate into industrialisation and economic transformation is not systematically explained in the strategy. Moreover, the NDS does not set out how the revenues generated from the country’s natural resources will finance the policies for transformation.

The NDS does not mention explicitly the role of FDI, but inferences can be drawn about the role of FDI in development from the assertion of the need for the state to avoid investing in areas where the private sector can perform better, and from its encouragement of national companies to establish partnerships with foreign enterprises and, through them, potentially mobilise funding. The resources for the project of economic transformation will hypothetically come from the country’s strategic and operational instruments of planning and budgeting, at the government and sectoral levels, and potentially from the above-mentioned Investment/Stabilisation Fund. Thus, for the NDS to attain its stated objectives, macroeconomic policies (fiscal and monetary), industrial policies, and relevant sector policies, especially related to the extractives, should define and determine the instruments for economic transformation. The following sections analyse the extent to which those instruments are consistent with the goals stated in the NDS with regard to the contribution of the extractives sector to structural transformation.

B Macroeconomic and Sector Policies

A set of policies creates an environment in which different economic and social actors can operate to generate structural transformation. These are the macroeconomic policies and key sector policies, but with a structural impact as the industrial policy. Macroeconomic policies (monetary and fiscal) play a central role in defining the conditions and directions of structural transformation. Their management is a major institutional factor determining the way the resources sector can effectively contribute to such a transformation. A major and widely discussed issue related to macroeconomic policy management in the context of extractives is how to avoid the adverse impacts of resource dependency, resulting, for instance, from a sudden increase in foreign exchange inflows – ‘Dutch disease’. Mozambique is no exception, and major challenges regarding macroeconomic policy management are still to be addressed. These concern not only the role monetary and fiscal policy play in preventing Dutch disease but also, and fundamentally, their role in creating the conditions for structural transformation.

As argued in the most recent Industrial Policy and Strategy (2016–2025), productive linkages between domestic SMEs and megaprojects, particularly in the natural resources sector, are seen as a way to strengthen the domestic private sector (República de Moçambique 2016). These processes require commitment to the creation and improvement of institutional capabilities, in both the state and the private sectors, and at various levels (political, economic, organisational, and financial). These include coordination and investment capabilities, strengthening government financial capabilities through improved taxation, and a financial sector capable of financing productive investment. However, these commitments are set up, and whatever particular institutional and organisational capabilities are needed, the role of the state and the private sector in providing, through investment, the incentives to make them effective is central.

Complementary to the debate about industrial policy has been the discussion about local content (the participation of the national companies in the natural resources investment projects). This was initiated in 2007, but only in 2019 did the government approve a legislative proposal to be submitted for enactment by parliament. Discussions between the government and national private companies about how and to what extent Mozambican enterprises would benefit from the new developments in the extractive sector are the most contentious. Emphasis and interest, especially from the domestic private sector, have been particularly on the upstream sector of the resources industry (i.e. the supply of goods and services relevant to the operations of the gas projects).Footnote ⁹ The debate over the development of linkages is related to the fact that the main multinational corporations (MNCs) operating in the O&G sector in Mozambique have already approved their production plans for the next few decades, some of them including FIDs. FIDs for the projects in the northern Cabo Delgado province have created a set of expectations regarding the benefits of the gas exploitation to the country’s development, including the business opportunities for domestic private enterprises (Muianga Reference Muianga and Chichava2019a, Reference Muiangab). However, most of these companies control global value chains (GVCs) within the industry and impose high international standards on their suppliers that local companies can hardly match. This poses the question as to how the natural resources projects can create opportunities for linkages that can contribute to the transfer of knowledge and technology for a sustainable diversification and structural transformation of the economy. The institutions and policies designed to respond to this question are described in the next section.

C Policy and Institutional Environment of the Extractive Industries Sector

As mentioned before, the extractives sector considered here comprises large-scale mining and the O&G sector. Reforms in this sector have included the separation of the policy, commercial, and regulatory functions previously lumped together in one entity, such as the national oil company (NOC), a ministry, or agency. In the case of the gas sector, this was part of the so-called new institutional arrangements (NIA), following the Norwegian model, which was considered an example of good governance (Thurber et al. Reference Thurber, Hults and Heller2011). In Mozambique these reforms were reflected in the redefinition of the functions of the Hydrocarbons National Company (ENH), the NOC, which maintained the commercial functions but saw its former regulatory functions being allocated to the INP, as a result of pressure from the World Bank – Norwegian cooperation, the long-time donors to the sector (Macuane et al. Reference Macuane, Buur and Monjaneforthcoming). The implementation of these reforms was more a strategic choice in a context of a country dependent on external resources than part of an internal agenda. In this regard, reforms were stimulated by increasing demands for the accountability of the sector in the international arena, embodied in the EITI, and by the need to attract FDI, which implied complying with international standards, to respond to pressures from donors and investors (Macuane et al. Reference Macuane, Buur and Monjaneforthcoming). The disproportionate influence of external factors and actors’ interests in the reforms to some extent explains the weak performance of above-mentioned commercial and regulatory institutions in this area, stemming from the limited commitment of the ruling elites to the process (Macuane et al. forthcoming). Specific reforms in the gas and mining sectors are presented below.

A Macroeconomic Policies

Macroeconomic policy is key to setting the conditions for and directing structural transformation. Mozambique’s high level of external dependence in a context of an emerging resources economy poses a challenge to macroeconomic management – namely, how to avoid Dutch disease. The challenge is due to the inconsistency between fiscal and monetary policies, which is manifested in the way they have been addressed over the past two decades.

On the one hand, monetary policy in Mozambique has been geared towards achieving a stable, low, and single digit inflation. Until 2017, the main instrument of monetary policy was based on a quantitative variable, the control of money supply, or the monetary base. This goal has been set in an economy that is highly dependent on imports for the majority of consumer goods (especially food) and suffers from a chronic current account deficit, and where the major sources of foreign exchange are concentrated and volatile – about 90 per cent of exports are concentrated in few primary products, including mining and other natural resources (Castel-Branco Reference Castel-Branco, de Brito, Castel-Branco, Chichava, Forquilha and Francisco2017; Chivulele Reference Chivulele, de Brito, Castel-Branco, Chichava, Forquilha and Francisco2017). Given this, the focus of monetary policy is on managing liquidity to guarantee the value of the national currency relative to the main global currencies and thus maintain the capacity to import basic goods and services. The Central Bank therefore also defines the direction of monetary policy in terms of the exchange rate and the level of foreign capital inflows and international reserves. From April 2017, a monetary policy interest rate, the Mozambique Interbanking Money Market (MIMO), was introduced as the main monetary policy instrument to achieve the ultimate goal of stable and low inflation. This has not prevented the Central Bank from using other instruments such as the exchange rate, through operations in the interbanking exchange rate market and other forms of controlling international reserves as the country continues to depend highly on imports of basics.

On the other hand, fiscal policy in the context of the natural resource boom has become geared towards expanding public expenditure, especially public investment in infrastructures to support the growing extractives sector of the economy.Footnote ¹⁰ These investments have been funded essentially by external and domestic debt, which puts more pressure on the state budget to service the debt (Massarongo Reference Massarongo, de Brito, Castel-Branco, Chichava, Forquilha and Francisco2016). For example, between 2014 and 2019, external debt financed more than 20 public investment projects accounting for almost US$6 billion (see Table 11.2). Of these public investments, 10 were major infrastructure projects in the energy, transport, and communications sectors (see highlighted projects in Table 11.2). Domestic public debt has also increased, having been intensively used to finance short-term public expenditure over the past decade. Domestic debt servicing has increased continuously between 2009 and 2019, from almost less MT1 billion (US$14 million) in 2009 to more than MT150 billion (US$2 billion) in 2019 (Ibraimo Reference Ibraimo and Forquilha2020).

Chivulele (Reference Chivulele, de Brito, Castel-Branco, Chichava, Forquilha and Francisco2017) noted that, given the current dynamic of the economy, which has shaped policy management, macroeconomic policies had become inconsistent, both among themselves and consequently with the objective of structural transformation. Such inconsistences are present within monetary policy, between monetary policy and the real economy, and between monetary policy and fiscal policy. The inconsistencies between monetary and fiscal policy and the real economy are principally due to the weak responsiveness by the financial sector to expansionary and restrictive policies such as the significant reductions in reference interest rates by the central bank. For example, between the period 2011 and 2015, the permanent lending facility (FPC) was reduced by 55 per cent and the permanent deposit facility (FPD) by 70 per cent.Footnote ¹¹ These reductions were followed by a timid reduction of interest rates charged by commercial banks – from 24 per cent to 21 per cent in the same period. However, when the Central Bank increases interest rates, commercial banks react more quickly. The increase by the Central Bank of the FPC rate between 2015 and 2016 from 7.5 per cent to 23.25 per cent was immediately responded to by an increase in the commercial interest rate of about 50 per cent. Although the percentage change of the reference rate is higher than that of the commercial interest rates charged by commercial banks, the important aspect to highlight is how quickly commercial banks react to an increase in reference rates as compared to a decrease.

The continual resort by the state to treasury bills, associated with a relatively small and highly speculative financial market, has created pressure to increase commercial interest rates, making it difficult for monetary policy to stimulate the economy (Ibraimo Reference Ibraimo and Forquilha2020). Expansionary monetary policies, which are supposed to expand credit for financing the productive sector towards a more diversified economy, are abruptly interrupted by these dynamics of reliance of the government on domestic public debt (Castel-Branco Reference Castel-Branco2014). The activity of the financial sector is then geared towards financing the infrastructure supporting the extractive core of the economy, and the issuance of public debt, consumption of durable goods, and the real estate sector with speculative prices. This tendency to speculation is partly explained by the higher demand and short-term profitability of these assets, as the increasing investment in extractives has prompted an emergence of a middle-income strata with access to higher salaries from the extractive sector. By concentrating its financing capacity in such activities, the financial sector diverts resources that should be used to finance productive investment in the country, a process that may allow the achievement of a more diversified productive domestic capacity and hence build the basis for the structural transformation of the economy.

B Dependence and Structural Economic Transformation

The past and recent history of Mozambique is that of a highly and structurally dependent economy, which has implications for its economic transformation. In the economic and social dimensions, dependence on foreign capital inflows – both public (foreign aid) and private (FDI, concessional, and commercial loans from the international financial system) – is, along with resource extraction, the main structural feature of the country’s dependence.

With respect to private capital inflows, the dependence on FDI, especially in the extractives sector and related activities, is the dominant feature of the pattern of economic growth and one of the fundamental elements of the ‘dominant political economy of Mozambique’ (Castel-Branco Reference Castel-Branco, de Brito, Castel-Branco, Chichava and Francisco2010, Reference Castel-Branco2014).Footnote ¹² Over the past two-and-a-half decades, Mozambique has presented a pattern of dependence on natural resources extraction similar to those of several resource-dependent developing countries. Between 2000 and2009 (the period before gas discoveries in the Rovuma Basin in Cabo Delgado), the resources sector, especially mining, represented 43 per cent of total FDI inflows, followed by the manufacturing sector with 28 per cent (of which 92 per cent corresponded only to the Mozambique Aluminium Smelter Company MOZAL). From a total FDI of US$1.4 billion that the sector received over this period, megaprojects in the extraction of heavy sands and coal contributed 53 per cent (US$580 million and US$171 million, respectively). In terms of exports, the resources/extractives sector in general or the mineral energy complex (aluminium, gas, coal, and energy) represented, on average, about 64 per cent of the total value of exports between 2000 and 2016 (Langa Reference Langa, de Brito, Chichava and Forquilha2017). By 2012, after the gas discoveries, the sector had increased its share to 72 per cent. It continued to do well until 2014, despite lower commodity prices after 2012 (Roe Reference Roe2018). The effect of the dependence on natural resources hit hard in 2015, when prices of Mozambique’s main export commodities (especially coal, gas, and aluminium) fell drastically, affecting the country’s economy, with GDP growth decelerating to 6.6 per cent and subsequently dropping as low as 2.2 per cent, after a mean value of over 7 per cent in most of the period since 2000. Figure 11.1 shows the growth of the extractives sector in relation to GDP growth between 2009 and 2018.

Figure 11.1 GDP and extractive industry growth (%), 2009–2019

Source: Data from National Statistics Institute (INE).

As Figure 11.2 shows, the contribution of the extractives sector to GDP increased from 1.2 per cent in 2009 to 13.6 per cent in 2018, and it is expected to contribute substantially more over the next few years, as the production of gas in northern Mozambique starts. Manufacturing declined over 2009–14 when it started a slight increase up to 2019, but it is still below its 2009 share of the GDP. Agriculture remains the main sector, contributing 24.7 per cent in 2019 to GDP, but the extractives sector has been the fastest growing sector over the past decade.

Figure 11.2 Contribution of agriculture, manufacturing, and extractive industry to GDP (%), 2009–2019

Source: Authors’ illustration; data from INE.

Current economic dynamics, supported by the discoveries and recent FIDs in the gas sector, and the set of expectations over future FDI, revenues, and linkages, point to an increasing dependence of the country’s economy on natural resource exploitation, consolidating the country’s structural dependence. As Langa (Reference Langa, de Brito, Chichava and Forquilha2017: 165) argues, under such conditions ‘Mozambique is following an opposite trajectory to economic [structural] transformation’, in the sense that the dependence on primary commodities has been expanding, at the same time that ‘a process of premature deindustrialization [defined as the increasing underdevelopment of the existing manufacturing sector] has been underway, constraining the possibilities of multiplication and intensification of productive linkages within the economy’.

Tendencies towards deindustrialisation are confirmed by research on the manufacturing sector, which shows that from 2011 to 2017 there was a reduction in the number of companies in the sector, of the labour force, and of turnover (CEEG, Ministério de Economia e Finanças, University of Copenhagen, and UNU-WIDER 2018). Whilst there has been some mobility of the labour force from agriculture to other sectors (services and manufacturing), the productivity of the labour force in these areas has been lower (Jones and Tarp Reference Jones and Tarp2015). These results cannot be directly linked to the emerging resources economy, but the consistency of the downward trend in manufacturing as well as in its employment suggests that economic growth is heading in the opposite direction to structural transformation.

Despite the governmenťs approval of the local content bill in 2019 (for submission to parliament for its enactment as an Act), prospects of local companies making linkages with the gas projects of the Rovuma basin are still uncertain. National companies lack the capacity to match the quality standards of the O&G industry and the national business class poses a high reputational risk to international companies due to its excessive reliance on political lobbying.Footnote ¹³ These factors are contributing to the resistance to local content policies from the international companies leading the investments in the gas sector.Footnote ¹⁴ Total’s signing of all financing contracts in July 2020, following EXIM Bank’s decision to back American suppliers to LNG development in Mozambique, together with the imminent approval of US$1 billion from UK Export Finance (see Introduction) may mark a turning point towards the start of the LNG production, but at the same time they signal the difficulties national companies will have in establishing linkages with the gas projects. Despite the provisions in the local content policy to promote linkages with national companies, this will be a more complex issue than expected. Power dynamics have played a central role in providing the conditions and the direction of public policy for local content. More specifically, the power that MNCs have in controlling the GVCs of their production, including the suppliers of goods and services to their industry, may define the possibilities and outcomes of local content initiatives. In fact, the dynamics and structure of natural resources extraction reflect the dependence of the natural resources sector upon FDI for financing development projects, thus justifying the relative power that MNCs have in influencing local content policies and resource extraction in a capital and (industrial) capability scarce economy. This puts MNCs in a position to determine the direction of policy.

Internal actors will more likely support policies that promote structural transformation through diversification of the economy and the establishment of linkages between local companies and the natural resources projects than by FDI. This makes domestic resource mobilisation an alternative to external resources – which is in fact the idea of using natural resources revenues to promote the diversification and economic transformation presented in the NDS.

C The Contribution of the Extractives Sector to Revenue Mobilisation

As mentioned, the natural resources area has experienced a set of reforms in the last two decades, which were accelerated by the increasing importance of natural resources in the Mozambican economy. Most of these institutional reforms have been either directly or indirectly linked to the generation of natural resources revenues, and they have led to the creation of regulatory agencies in the petroleum sector (INP), in 2004, and mining (INAMI), in 2014. Besides, in response to the growing importance of the extractive industries in the economy, the AT created in 2017 a specific unit to deal with the sector. The results of these reforms are mixed, with implications for revenue generation.

There has not been a systematic assessment of the performance of key institutions related to natural resources. The most relevant is the Resource Governance Index (Natural Resource Governance Institute 2017), which covers three indicators: value realisation, revenue management, and enabling environment. Scores range from zero to 100, higher values referring to higher performance. In the last assessment, carried out in 2017, Mozambique’s overall score on resources governance was 50 (average) and on value realisation 66 – which is satisfactory due to good performance in taxation – but its scores on revenue management and enabling environment were poor: 42 and 43, respectively. The enabling environment is related to governance indicators, voice and accountability, government effectiveness, regulatory quality, rule of law, control of corruption, political stability, and absence of violence.

Revenues from natural resources derive from a series of standard taxes and fees, including value-added tax (VAT), income tax (corporate (IRPC) and individual (IRPS)), royalties, and production taxes (República de Moçambique 2018). Specific revenues are collected by the regulatory agencies, INP and INAMI, including for their capacity development. Public-owned companies (ENH, CMH, EMEM) in the sector must provide dividends to their shareholders when they are profitable.

Figure 11.3 shows the share of fiscal revenues from megaprojects in the mining and oil sectors in total state revenues. The fiscal contribution of extractives increased over the first half of the last decade, from 2 per cent of total revenues in 2011 to more than 5 per cent in 2015. This increase reflects the boom in production – especially of mineral coal, as prices were high. However, the commodity prices drop since the end of 2014 has prompted a decline in regular extractives revenues.

Figure 11.3 Fiscal contribution of megaprojects in the mining and oil sector to total state revenues, 2011–2019

Note: *includes capital gains taxes.

Source: Authors’ illustration based on State General Accounts 2014–19.

The higher contribution of the sector in 2017 and 2019 is explained by the extraordinary revenues – capital gains taxes (CGT) of about US$350 million and US$880 million, from oil asset transactions between ENI and Exxon Mobil, and between Occidental (which took over the concession and assets of Anadarko) and Total, respectively. Without CGT, the contribution of the extractives would fall to 5 per cent and 3.7 per cent of the total revenues in 2017 and 2019, respectively. This would confirm the downward trend that began in 2015. Despite the fact that the legislation is clear about the rate of 32 per cent and the mandate of the AT to collect CGT, this revenue has been embroiled in intense debate and ‘interpretations’ of its calculation, with suspicions that MNCs have negotiated politically to pay less than what is due. Presidents Guebuza and Nyusi were directly involved in the ENI and Total deals, respectively, to some extent bypassing the existing institutions, especially the AT (Macuane et al. forthcoming). In the case of the negotiations with ENI, part of the payment agreed was in kind – the construction of a coal power plant, which was never delivered, fuelling suspicions of corruption (Macuane et al. Reference Macuane, Buur and Monjane2018).

Despite progress in creating capacity to implement the tax regime, there are still institutional weaknesses in revenue collection, among them the capacity to audit companies to define the taxable amount and, in the case of oil and gas projects, the recoverable costs. Moreover, discrepant information on natural resources for revenue collection purposes is an institutional inefficiency that has been persistent over time and systematically reported by the Administrative Court analysis of public accounts. The successive country EITI reports show discrepancies in the revenues declared by the companies and by the Revenue Authority, although the differences are reducing and in 2018 were of 1% (Tribunal Administrativo 2017, 2018; EITI Mozambique/I2A Consultoria e Serviços 2020). Part of this improvement is due to the increasing scrutiny that the sector has been subject to from civil society organisations, which also participate in the secretariat of the EITI. To some extent, demand for transparency in the sector is contributing to the increasing collection of revenues.

Despite the growing importance of the extractives in total state revenues and the institutional reforms made to strengthen institutions of revenue collection, the contribution of the sector (when CGT is not included) is low. It is therefore not an alternative to foreign aid for public investment in areas to stimulate structural transformation. The regular bypassing of the institutions where CGT is concerned also suggests that natural resources revenues are vulnerable to appropriation by political leaders and use for clientelist purposes.

The gas sector has been the principal source of another revenue stream, dividends paid to the government by the natural resources public enterprises (ENH and its subsidiary CMH), INP, and companies with state shares (Mozambique Gas Pipeline Company (CMG)), but this has accounted for less than 1.5 per cent of state revenues in most of the 2014–19 period (Figure 11.4).

Figure 11.4 Extractives dividends as % of total revenues

Source: Authors’ illustration based on State General Accounts 2014–19.

The contribution of the extractives sector’s public enterprises to public revenues is still modest. However, in the case of the gas sector, specifically in the SASOL projects of Pande and Temane, these companies have been a source of rents for national business elites linked to the ruling party, in down- and mid-stream projects such as gas distribution and electricity generation (Salimo et al. Reference Salimo, Buur and Macuane2020). The participation of the public companies in these gas projects did not make a visible contribution to the promotion of linkages with local companies, and the lead company SASOL has been criticised for its limited contracting of local companies in its supply chain. In sum, the model so far adopted, of participation by public companies in the extractives, has neither been a good source of revenues to public coffers nor visibly contributed to the structural transformation of the economy.

Extractives revenues, apart from the extraordinary CGT payments, have not played any significant or transformational role in public expenditures. This is partially attributable to the size of the revenues so far, but it is also due to the lack of a specific regime to earmark its contribution for broader or defined economic goals. The discussion over creating a SWF, which would go some way in that direction, has so far been restricted to a limited group. To some extent, this is a continuation of the uncertainty and lack of transparency that have characterised the use of CGT revenue so far. The use of CGT to cover budget deficits has been recurrent (e.g., in the last transaction of assets between Occidental and Total in 2019, the President announced that part of the revenues would be used to finance the deficit resulting from the elections), but there is no specific mechanism of accountability for this.