Search results

As a sovereign country, Mozambique initially relied on international solidarity and managed its donor relations well. Donor dependency entailed some loss of agency for the government as it allowed donors to challenge its capacity but never its authority. However, in the last decade, donor countries have expressed disappointment with reforms and challenged the government's legitimacy. This is not only because of developments in Mozambique. Donor countries have become less enthusiastic about long-term, harmonized development cooperation and less concerned with aid effectiveness for poverty alleviation and inclusive growth. Aid budgets are under pressure and development finance is linked more to other donor countries' foreign policy concerns, especially security and commerce. Mozambique should expect increasing instrumentalization of aid budgets by donors. It must be able to address its partners' concerns other than those of poverty alleviation, human rights, and democracy and carefully weigh conflicting interests of its partners against its own long-term interests. The institutions Mozambique developed to deal with donors are not well suited to today's challenges. They focus on less relevant areas of the relationship with foreign countries, which often serve other agendas. Reforms could start with strengthening Mozambique's foreign service as a genuine coordinator of foreign relations and the establishment of greater discipline around national plans and strategies. Institutionalizing strong links between the foreign ministry and key economic ministries under the leadership of the prime minister could help.

"Building on a core set of thematic chapters, this compelling diagnostic tool provides a thorough and structured approach to understanding institutional dimensions of development. It targets a broad audience of scholars, policy makers, international development agencies, and people interested in the role of institutions in economic development"--

At independence in 1975, the Frelimo government took over public administration from the colonial system and started to transform it. The public financial management (PFM) system was adapted to the central planning and management of the economy in line with nationalist and Marxist-Leninist thinking. Collapse followed in the mid-1980s, amidst the Cold War and the liberalization of the economy. The PFM system was gradually and systematically reformed towards more transparent and efficient mechanisms, and successful reforms did coincide with high rates of economic growth for more than 20 years, after 1993. The reform process was supported by sizeable foreign aid to the extent that Mozambique became highly aid dependent. As the nationalist agenda became more forceful from around 2005-10, when the existence of large natural gas reserves in the Rovuma Basin was confirmed, the extraction of natural resources became the main government focus as a source of public revenue, and severe cracks in the PFM system started to emerge. The 'hidden debt' scandal in 2013-14, the renewed conflict between Frelimo and Renamo from 2013, and the insurgency war in Cabo Delgado from 2017 put the PFM system under pressure and performance suffered accordingly with significant economic and social costs. The paper brings out how difficult it is to make institutional reforms work, within a structure of political and economic power that may not benefit from them, even in the context of a high degree of aid dependence.