Mozambique

Mozambique's major ethnic groups encompass numerous sub-groups with diverse languages, dialects, cultures, and histories. Many are linked to similar ethnic groups living in inland countries.

The north-central provinces of Zambezia and Nampula are the most populous, with about 45% of the population. The estimated 4 million Makua are the dominant group in the northern part of the country--the Sena and Ndau are prominent in the Zambezi valley, and the Tsonga and Shangaan dominate in southern Mozambique.

Despite the influence of Islamic coastal traders and European colonizers, the people of Mozambique have largely retained an indigenous culture based on smallscale agriculture. Mozambique's most highly developed art forms have been wood sculpture, for which the Makonde in northern Mozambique are particularly renowned, and dance. The middle and upper classes continue to be heavily influenced by the Portuguese colonial and linguistic heritage.

During the colonial era, Christian missionaries were active in Mozambique, and many foreign clergy remain in the country. According to the national census, about 20%-30% of the population is Christian, 15%-20% is Muslim, and the remainder adheres to traditional beliefs.

Under the colonial regime, educational opportunities for black Mozambicans were limited, and 93% of that population was illiterate. In fact, most of today's political leaders were educated in missionary schools. After independence, the government placed a high priority on expanding education, which reduced the illiteracy rate to about two-thirds as primary school enrollment increased. Unfortunately, in recent years school construction and teacher training enrollments have not kept up with population increases. With post-war enrollments reaching all-time highs, the quality of education has suffered.

Mozambique's first inhabitants were San hunter and gatherers, ancestors of the Khoisani peoples. Between the first and fourth centuries AD, waves of Bantu-speaking peoples migrated from the north through the Zambezi River valley and then gradually into the plateau and coastal areas. The Bantu were farmers and ironworkers.

When Portuguese explorers reached Mozambique in 1498, Arab trading settlements had existed along the coast and outlying islands for several centuries. From about 1500, Portuguese trading posts and forts became regular ports of call on the new route to the east. Later, traders and prospectors penetrated the interior regions seeking gold and slaves. Although Portuguese influence gradually expanded, its power was limited and exercised through individual settlers who were granted extensive autonomy. As a result, investment lagged while Lisbon devoted itself to the more lucrative trade with India and the Far East and to the colonization of Brazil.

By the early 20th century the Portuguese had shifted the administration of much of the country to large private companies, controlled and financed mostly by the British, which established railroad lines to neighboring countries and supplied cheap--often forced-- African labor to the mines and plantations of the nearby British colonies and South Africa. Because policies were designed to benefit white settlers and the Portuguese homeland, little attention was paid to Mozambique's national integration, its economic infrastructure, or the skills of its population.

After World War II, while many European nations were granting independence to their colonies, Portugal clung to the concept that Mozambique and other Portuguese possessions were overseas provinces of the mother country, and emigration to the colonies soared. Mozambique's Portuguese population at the time of independence was about 250,000. The drive for Mozambican independence developed apace, and in 1962 several anti-colonial political groups formed the Front for the Liberation of Mozambique (FRELIMO), which initiated an armed campaign against Portuguese colonial rule in September 1964. After 10 years of sporadic warfare and major political changes in Portugal, Mozambique became independent on June 25, 1975. FRELIMO quickly established a one-party Marxist state and outlawed rival political activity.

Macroeconomic Review
Aleviating poverty. At the end of the civil war in 1992, Mozambique ranked among the poorest countries in the world. It still ranks among the least developed nations with very low socioeconomic indicators. In the last decade, however, it has experienced a notable economic recovery. Per capita GDP in 2000 was estimated at $222; in the mid-1980s, it was $120. With a high foreign debt (originally $5.7 billion at 1998 net present value) and a good track record on economic reform, Mozambique was the first African country to receive debt relief under the initial HIPC (Heavily Indebted Poor Country) Initiative. In April 2000, Mozambique qualified for the Enhanced HIPC program as well and attained its completion point in September 2001. This led to the Paris Club members agreeing in November 2001 to substantially reduce the remaining bilateral debt. This will lead to the complete forgiveness of a considerable volume of bilateral debt, including that owed to the United States.

Rebounding growth. The resettlement of war refugees and successful economic reform have led to a high growth rate: the average growth rate from 1993 to 1999 was 6.7%; from 1997 to 1999, it averaged more than 10% per year. The devastating floods of early 2000 slowed GDP growth to a 2.1%; estimates point to a full recovery in 2001. The government projects the economy to continue to expand between 7%-10% a year for the next 5 years, although rapid expansion in the future hinges on several major foreign investment projects, continued economic reform, and the revival of the agriculture, transportation, and tourism sectors. More than 75% of the population engages in smallscale agriculture, which still suffers from inadequate infrastructure, commercial networks, and investment. Yet 88% of Mozambique's arable land is still uncultivated; focusing economic growth in this sector is a major challenge for the government.

Low inflation. The government's tight control of spending and the money supply, combined with financial sector reform, successfully reduced inflation from 70% in 1994 to less than 5% from 1998-99. Rates spiked in 2000, however, to a rate of 12.7% due to economic disruptions stemming from the devastating floods. Inflation began to increase in the second half of 2001. The value of Mozambique's currency, the Metical, lost nearly 50% of its value against the dollar since December 2000, although in late 2001 it began to stabilize.

Extensive economic reform. Economic reform has been extensive. Over 1,200 state-owned enterprises (mostly small) have been privatized. Preparations for privatization and/or sector liberalization are underway for the remaining parastatals, including telecommunications, electricity, water service, airports, ports, and the railroads. The government frequently selects a strategic foreign investor when privatizing a parastatal. Additionally, customs duties have been reduced, and customs management has been streamlined and reformed. The government introduced a highly successful value-added tax in 1999 as part of its efforts to increase domestic revenues. Plans for 2001-02 include Commercial Code reform; comprehensive judicial reform; financial sector strengthening; continued civil service reform; improved government budget, audit, and inspection capability; and introduction of the private management of water systems in major cities.

Improving trade imbalance. In recent years, the value of imports has surpassed that of exports by almost 2:1, an improvement over the 4:1 ratio of the immediate post-war years. In 2000 imports were $1,217 million, and exports were $723 million. Support programs provided by development partners have largely compensated for balance of payments shortfalls. The medium-term outlook for exports is encouraging, since a number of foreign investment projects should lead to substantial export growth and a better trade balance. MOZAL, a large aluminum smelter that commenced production in mid-2000, has greatly expanded the nation's trade volume. Traditional Mozambican exports include cashews, shrimp, fish, copra, sugar, cotton, tea, and citrus fruits. Most of these industries are being rehabilitated. As well, Mozambique is less dependent on imports for basic food and manufactured goods because of steady increases in local production.

SADC trade protocol. In December 1999, the Council of Ministers approved the Southern African Development Community (SADC) Trade Protocol. The Protocol will create a free trade zone among more than 200 million consumers in the SADC region. Beginning the 10-year implementation process of the SADC Trade Protocol is a major goal for the region in 2002.