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Creating magnets for growth in Mozambique

Mozambique has achieved impressive economic growth in recent years, primarily through its extraction industries, but this has not resulted in lower poverty rates.

As with many of Africa’s poorest countries, this new wealth is centred on urban areas and enjoyed by very few of its people. Around 70% of Mozambique’s population still live in rural areas, with more than half of all families beneath the poverty line.

Our role is to manage the programme, reporting in monthly to the World Bank and the Ministry, supervising how money is spent, identifying and evaluating suitable partners, and monitoring the environmental and social impact. We bring valuable experience of working with the Ministry and also the World Bank elsewhere in the world. We’re known to the right people and understood. That counts for a lot in projects like this.

Geert van Boekel

Account leader, Southern Africa

The World Bank’s US$106M Integrated Growth Poles Project aims to improve rural employment and economies around the Zambezi Valley and Nacala Corridor in central and northern Mozambique respectively – two areas identified as growth poles (high growth potential zones). By opening opportunity for smallholder farms and micro, small and medium enterprises (MSMEs), the project can provide magnets for economic expansion that will also help support and centralise the country’s efforts to improve healthcare, education, infrastructure and social services.

Challenge

Without investment in its farming communities, Mozambique will struggle to bring about the necessary socioeconomic change to improve living and working conditions among its scattered, rural population. While the country will benefit from attracting and fostering new high-tech agribusinesses, it’s vital that these international interventions reach out to smallholder farms and connect with MSMEs.

Ensuring that all funds are successfully distributed to the countryside - and then properly accounted for - also represents a challenge in a country where hard currency is in short supply.

Solution

To support viable business connections with smallholders and MSMEs, the US$34M Innovation and Demonstration Catalytic Fund (IDCF) project was launched as part of the Integrated Growth Poles Project. Beneficiaries of the fund – as its name implies – need to offer something new to the sector that can be replicated by others, in a way that will encourage opportunity in local communities.

As grant managers, our team worked closely with the Zambezi Valley Development Agency and the Special Economic Zones Office in the Nacala Corridor – as well as the ministry and World Bank – to ensure the project’s efficient, effective and transparent delivery.

Outcome

The fund is now attracting and developing significant capital investment and creating related jobs and income. The interventions aim to increase the number of smallholder producers who are able to enter the new and demanding markets in the Zambezi Valley and Nacala Corridor. The investments will also grow the number of skilled workers and the range of skills available in the local labour market – leading to more inclusive economic growth.

Ventures were chosen for their potential to contribute to a more competitive market place, allowing the ultimate beneficiaries – rural households – to have real choice and gain a realistic price. For example, the fund disbursed a grant to a large-scale organic sugar mill in central Mozambique to build a new heating facility that will be fuelled by goat dung. As part of the scheme, 6,000 local farmers will be supplied with goats, creating a new market around collection and transportation of dung to the plant. Popular in the UK, the organic sugar has secured forward orders that will guarantee a stable income for 50,000 people in the region for years to come.