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How the DFC is Investing in a Sustainable Future for Mozambique

How the DFC is Investing in a Sustainable Future for MozambiqueThe USA’s Development Finance Corporation (DFC) just spent $3.6 billion in investments worldwide, with roughly half this amount going toward a sustainable future for Mozambique.

The project consists of an offshore liquefied natural gas (LNG) project created by the U.S. Anadarko Petroleum and owned by the French oil company Total SE, which will help grow the country’s economy by making it one of the biggest LNG exporters in the world. Its strategic location makes business with markets like Asia, Europe and South Africa very viable. The goal is to bolster Mozambique’s annual GDP to as high as $15 billion a year, stabilizing the country’s economy and encouraging everlasting growth.

Poverty in Mozambique

Mozambique is currently one of the poorest countries in the world, largely in part by corrupt government officials. It ranked 146 out of 180 in a 2019 transparency perception index, and in a study conducted by a Norwegian research institute, the country suffered a $4.9 billion annual increase in corruption from just 2004 to 2014 alone.

In recent times, it has been observed that poverty is decreasing in urban zones. The national poverty index as of today is around 41-46% of the population. This is good news compared to the country’s 80% poverty rate in 1990—making it at the time one of the countries most entrenched in poverty. However, the country still suffers from inequality between urban and rural zones. Poverty reduction in the south is 18%; contrastively, the north saw an 11% increase in poverty rates. However, there is hope that the United States’s renewable natural gas investments can offset this stark disparity, pushing for a prosperous and sustainable future for Mozambique.

Obstacles to a Sustainable Future in Mozambique

With new sustainable projects in action, comes the rise of Ahlu Sunnah Wa-Jamo (ASWJ), an Islamic insurgent militant group known for their terroristic attacks in small villages. Since the start of the LNG project, the group has been advancing by facilitating attacks in large city centers, even killing eight LNG project employees at a construction site near the Tanzania border.

Currently, the ASWJ does not have the arms capability of reaching the significant sites that are heavily guarded, but they still have the potential to pose a looming threat to other smaller project sites that do not have as much security. As the group advances, Total SE must take proactive measures to counteract attacks, given the unprecedented violence that has taken place as ASWJ asserts its presence amid the new oil plant.

The DFC is also giving Mozambique a $200 million loan to build power infrastructure. This will help the country become self-sufficient by using domestic gas to increase power generation, as well as providing affordable and sustainable electricity, furthering the country’s goal for a central electricity system. The country currently has one of the lowest electrification rates in the world, so this will be a massive step forward in bringing essential, environmentally-sound infrastructure, paving the way for a sustainable future for Mozambique.

The United States sees a potential future for Mozambique, and it is showing its optimism by allocating a hefty amount of its global investments into this single country alone. With this funding, the country can build up essential infrastructure like central electricity, as well as exponentially increase its national GDP with the help of the renewable LNG plant, all of which will reshape the lives of many citizens who have only known poverty for so long.

– Mina Kim
Photo: Flickr

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US Working to Reduce Poverty in Mozambique

U.S. working to reduce poverty in MozambiqueThe country of Mozambique, situated in southeast Africa, is ranked as of the world’s poorest nations. Since its independence from Portugal in 1975, this country has struggled to survive as a free nation. However, poverty rates are on the decline, with the U.S. working to reduce poverty in Mozambique.

One of the main causes of Mozambique’s extreme poverty rates is that following its independence in 1975, the country endured a civil war from 1977 to 1992. This war drained the country of its national resources. Shortly after the resolution of the civil war, the United States stepped in, providing much-needed aid to the hurting country. The United States is still Mozambique’s largest bilateral donor, giving an annual $400 million towards relief measures.

The United States and Mozambique both share a commitment to improving health, education and food security for the Mozambican people, which can be seen through the success of U.S.-funded programs.

For example, in 2000, after severe floods occurred in Mozambique, the United States provided assistance to 115,000 families to rebuild their homes. In addition, the PEPFAR program, supported by the United States, also works with the Mozambican government, saving hundreds of thousands of lives from the HIV/AIDS epidemic. The United States also provides for the future of the country through the Feed the Future program, educating farmers on how to develop their land to increase food production and therefore provide for their people, drastically reducing the hunger percentage.

All of these programs demonstrate the positive effects of the U.S. working to reduce poverty in Mozambique; however, there is still much that needs to be done, as the majority of the population still lives in extreme poverty. For every percentage point of economic growth between 1996 and 2009, Mozambique’s poverty rate only decreased by 0.26 percentage points. This is half of what other African countries have achieved in terms of poverty reduction rates.

The reason for this difference in numbers is because there is not an even distribution of funds among the Mozambican people. If Mozambique’s growth had been more equally shared between groups of people living throughout the country, an estimated two million additional people could have been lifted out of poverty.

Rural areas contain a much larger percentage of people living in poverty because of the difficulty in accessing relief methods provided to those in more urban settings. However, even with the uneven distribution of funds and other methods of aid, with the U.S. working to reduce poverty in Mozambique, things are looking up for the country.

Despite all of the struggles Mozambique has had to endure, its future is looking bright. Although it is ranked as having one of the world’s worst healthcare systems, the country has made significant progress in reducing mortality rates. Its economic success has also started to pick up the pace as seen in 2017, when the GDP growth rate increased 2.9 percent from the preceding quarter.

With numbers like these, it can be seen that Mozambique is slowly reducing the number of people living in poverty. However, it still relies on foreign assistance such as that from the United States, and it is vitally important to continue these relief methods.

– Adrienne Tauscheck

Photo: Pixabay

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Building a Diverse Economy With Infrastructure in Mozambique

Building a Diverse Economy With Infrastructure in MozambiqueInfrastructure in Mozambique is significantly underdeveloped compared to all other countries of the world. Of its approximate 30,400 kilometers of highway roads, only 18 percent are paved, the rest remaining dangerous and even impassable in certain weather conditions. The entire length of Mozambique spans 2,000 kilometers and varies between 50 and 600 kilometers in width.

The Estrada Nacional One, or National Highway One (EN1) remains the only road connected to the country’s capital, Maputo, to the north and south. The rest of the country remains largely disconnected, with little to no mode of transport available to the outer regions. There are no rail lines going beyond Maputo to the north, with many of the existing ones in the south being unserviceable and in complete disrepair. Domestic and freight transport mainly serves the center and south of the country through the largest transport company, Transportes Lalgy, which also connects to South Africa and Zimbabwe.

The rising demand for the country’s vast natural resources is its best chance for boosting the economy and spurring the development of infrastructure in Mozambique forward. The main challenge to this development is diversifying the economy, expanding and tapping into the resources centered in Mozambique’s food products, ports, airlines and railways.

The United Nations Industrial Development Organization (UNIDO) created the Competir com Qualidade, or private sector quality promotion program, in 2012, aiming toward enhancing the country’s development through increasing product competition. According to UNIDO project manager Dominika Dor, this is the first step toward creating a productive and stable economy, saying, “A well-functioning quality infrastructure can have a positive impact on multiple aspects of life, reaching from industrial development to environmental sustainability.” She goes on to explain that this impact is especially essential when it comes to water and other food products, as they are meant to be consumed by humans.

Development of infrastructure in Mozambique is particularly crucial when it comes to the railroads and ports. Malawi and Zimbabwe are entirely dependent on the rail lines that connect them to Mozambique, as they are completely landlocked and cannot reach the ports for their imports and exports any other way.

The Maputo Port Development Company (MPDC) plans to invest $750 million in the development of the Port of Maputo, Mozambique’s largest port, so it can transport 48 million tons of goods each year by 2033. This includes the transport of iron-chromium, coal, vehicles and fruit, among other goods. The second and third largest ports, Beira and Nacala respectively, are currently undergoing enhancements to expand their accommodations for larger cargos and ensure Zimbabwe’s entry into the world market.

The rail network, on the other hand, requires private investments to improve railroad safety and ensure the safe passage of cargo and goods. The Portos e Caminhos de Ferro de Moçambique (CFM) is currently working on obtaining these investments and bring Mozambique’s railways up to the national standard.

Further development on Mozambique’s roads and transportation services will only serve to increase movement through the nation’s economy. With continued work on the infrastructure in Mozambique, the quality of life will inevitably improve for the African nation’s citizens.

– Kayla Rafkin

Photo: Flickr