Concept note

Denmark’s partnership with Mozambique 2016-2020:
The Country Policy Paper: Synopsis – draft 10/2/15.
1. Overall vision and its rationale.
To support Mozambique in its efforts to build a nation based on stability and equality through
reconciliation and a continuous expansion and deepening of opportunities for the poor to
increase their incomes, access quality services and exercise their political and civil rights, whilst
safeguarding the carrying capacity of the country’s ecosystems.
Mozambique emerged from conflict in 1992 as the poorest country in the World in economic terms
and one of the poorest in Human Development Index (HDI) terms. 22 years of stability and a
continuous development effort funded to a significant extent by external donors such as Denmark has
enabled Mozambique to deal with some of its human and institutional development backlog. But
enormous challenges remain. After 20 years of rapid per capita growth an estimated 50 % of the
population are still absolute poor and inequality is escalating. And despite stability a conflict mind-set
continues to dominate political and public life, with a tendency to exclude “the other” – particularly
the opposition and its supporters – from power and economic opportunities. A resurgence of armed
clashes between the army and armed guards of Afonso Dhlakama, the leader of the former national
resistance movement and now opposition party Renamo, ending with an agreement before the general
elections in October 2014, is a stark reminder of the tenacity of peace.
The discovery of significant mineral resources in Mozambique has led to an understandable euphoria.
Yet experience shows that there is no guarantee that income from mineral wealth will benefit the
majority of a country’s population. Today, Mozambique funds the bulk of its public expenditure
through internal revenue. At the same time the country has gained access to the international capital
markets and the scramble for position in relation to the exploitation of the country’s mineral resources
is fierce. Commercial interests are also affecting the behaviour of traditional donors, dampening their
appetite for engaging Government in discussion of sensitive issues, such as good governance and the
fight against corruption.
Mozambique is at a cross-road. Difficult decisions need to be taken. The foundations of an inclusive
society must be strengthened and put in place where they do not already exist. Lifting the constraints
that prevent the poor from raising their incomes through entrepreneurship and employment is one
cornerstone. Changing the logic and attitude that tend to exclude the opposition and their supporters
from decision making, public positions and economic opportunities is another. To secure prosperity
and stability, these foundations have to be built now. Once revenue starts to arrive from the mineral
industry in volume, it may be too late.
Denmark can make a fundamental contribution to a prosperous Mozambique for all. Having
accompanied the country in its development since Independence, Denmark is considered a
dependable, predictable and committed partner and one that insists that a good partnership has a frank
dialogue as an essential ingredient. With a track-record of work in many sectors, at all administrative
levels, and including the public and the private sector as well as civil society, Denmark has
accumulated knowledge and contacts that will be an enormous strength going forward. We are also a
1
partner where private companies, civil society organizations and individuals have been intensively
engaged over the years. Because of these characteristics Denmark is also a unique partner.
Denmark believes that its contribution to development and stability in Mozambique in the coming 67 years should have the building of Mozambique as an inclusive society in economic, political and
social terms as its overall point of orientation.
The creation of job and business opportunities is essential to enabling the poor to move out of poverty
and emerge as a force capable of influencing decision-making in the country. Addressing social,
economic and territorial inequality are the main overall challenges. Lifting the physical, financial and
human constraints that bind growth, productivity and diversification in family farming and small and
medium-scale enterprises where the majority of the poor find their income requires a range of
interventions, a strong and comprehensive government programme and intensive collaboration and a
division of work among stakeholders. Denmark will support these processes and make its choice of
interventions accordingly. Denmark will also help strengthen the institutions that enable citizens to
enjoy their political and civil rights, including access to seek redress through the formal and
community justice system. And Denmark will continue to support reforms aimed at strengthening
accountability in government, such as in the area of public financial management and taxation,
including of the extractive industry.
In addition Denmark will support the greening of growth and national and local efforts to safeguard
the carrying capacity of Mozambique’s environment, including through sustainable production and
consumption, and in preparing for climate change.
Denmark’s political and commercial collaboration with Mozambique will be complementary to and
supportive of this overall vision of our development role. A stable and inclusive Mozambique that
offers opportunities for everyone and with growth encompassing all relevant sectors and geographical
areas is also in line with our political goals. Likewise opportunities for commercial collaboration will
be multiplied with a broadly growing and diversified economy.
In the context and changing circumstances characterizing Denmark’s engagement in Mozambique we
propose the aforementioned overall programme thrust and combination of interventions as the most
effective articulation of Denmark’s priorities as described in The Right to a Better Life. With its
emphasis on human rights, including economic, civil and cultural rights as well as gender equality it is
also a credible proposition in pursuit of development through the human rights approach that informs
the overall strategy.
We expect to use foreign and security policy, development policy, commercial policy as well as
climate change policy instruments as the means of achieving the overall vision and strategic
objectives. These instruments will be employed complementarily to contribute to the emergence of
Mozambique as a stable, prosperous and just society with opportunities for everyone, increasingly
integrated in the world economy and participating as a force both regionally and globally in efforts to
resolve issues that hamper international collaboration, as well as a significant political, economic and
cultural partner for Denmark.
2. Analysis of the national context.
In 1992 Mozambique finally managed to extricate itself from a conflict that had shattered what little
economic and social infrastructure the country had when it broke out 16 years earlier and left it the
poorest country in the world, with at an annual per capita income of 90 US $. While Mozambique is
2
often hailed as an example of a country that has managed the transition from conflict to peace and
stability, the massive destruction of social capital and set- back for the human perspective provoked
by the conflict continues to frustrate nation building and development efforts. In the absence of
genuine and broad based reconciliation, old animosities continue to shape the political and social
landscape with exclusion of the opposition and its supporters from political power, public office and
economic opportunities. Moreover, the conflict left many people traumatized and in a confidence
deficit with little trust in institutions and appetite for risk taking, including in the economy.
40 years of cooperation between Mozambique and its development partners has been premised on the
twin goals of assisting the country to transit from conflict to peace and supporting the development of
Mozambique into a stable and prosperous nation with its people enjoying considerable improvement
in their living conditions. While Mozambique has achieved steady improvements in health, education,
water supply and sanitation since the Peace Agreement in 1992, the income of poor households
stagnated between 2003 and 2009, with subsequent trends not yet documented. Available data suggest
that growth has been much less pro poor than the average for Sub Saharan Africa, and that the
difference is primarily explained by the fact that some regions trail far behind others in terms of
growth in income in poor households.
The large revenues to be generated from the exploitation of Mozambique’s vast resources of coal, gas
and other mineral deposits could help catapult the country along the way towards an inclusive growth
model where the majority of people have opportunities for both contributing to and benefitting from
economic growth. But as experience from other countries wealthy in mineral resources shows, there is
also a real risk of setting in motion a negative spiral where the economic interests of the elite prevails
to the exclusion of the majority of the population, economically as well as socially and - by
implication - also politically.
Over the years Mozambique has managed to increase its internal resource mobilization considerably.
It now stands at around 26 % of Gross Domestic Product (GDP) on par with the Southern Africa
Development Community (SADC) average. Despite strong performance on revenue collection,
Mozambique also faces problems with tax evasion including through mispricing practised by
companies operating in the extractive sector. It is a particular challenge for the tax authorities in a low
income country to see through the sophisticated price and accounting structures of big internationally
integrated companies.
While development aid has grown in absolute terms, it dropped from around 70 % in the 1990’s to
just below 30% as a percentage of public spending today, with internal revenue accounting for most
of the balance. A consistently strong macro-economic performance, a high growth rate and the
prospects in the mineral sector have led to a surge in interest in investing in Mozambique. Incoming
FDI is high and particularly directed at extraction of mineral resources. The Mozambican elite is
jockeying for positions in relation to these investments and a considerable part of public or publicly
guaranteed investments are sucked into the creation of infrastructure around the extractive complexes.
Corruption and misuse of public office is a widespread and serious problem in Mozambique.
Comprehensive reforms of public financial management carried out over many years, with support
also from Denmark, has significantly reduced the space for misuse of funds on the state budget,
although petty corruption in contacts between civil servants and citizens is widespread. With the
investment boom, however, grey areas have spread around the state’s participation in economy
through State Owned Enterprises, Public Private Partnerships and guarantees.
3
The boom associated with the extractive industry, first and foremost coal and natural gas, has raised
the expectations of people in general and the business/political elite in particular. The tasks is now to
turn the dynamics around the mineral sector into a virtual spiral creating jobs and improvements in
living conditions for everyone and preventing the country from spinning into a negative spiral fuelled
by the exclusive interest of the few in maintaining privileged access to the returns from the extractive
industry. Because of its highly specialized nature this industry will constitute an enclave without
significant links to the wider Mozambican economy and employment potential for some time to come.
Indeed, the main task wills be to manage its Dutch disease effects and avoid negative impact on
directly affected populations and ecosystems.
Revenue from extraction is not expected to flow to the state in significant volumes until round 2022,
although significant windfalls have already been collected through taxation of capital gains. The
recent drop in world market prices on coal and hydrocarbons have tempered expectations and led to a
more realistic appreciation of the potential. In this situation, the need to invest in broadening the
economy through enhanced productivity and diversification is attracting attention as a means of
countering the price volatility of minerals and sustaining growth in the long run by turning the growth
pattern more inclusive.
As of January 2015 a new government has just been installed following the general elections held in
October 2014. The elections were marked by irregularities. Although it is difficult to say whether the
irregularities changed the outcome, this is certainly the interpretation of the opposition. The former
rebel movement Renamo made significant gains and Frelimo lost its qualified majority. Prior to the
elections, the country had been through a period of clashes between the army and the armed guards of
the Renamo leader Afonso Dhlakama. These low-intensity skirmishes led to losses of lives and
disrupted transport on the only highway connecting the North with the South of the country. The
spectre of resurgence of civil war created considerable fear in the population and provoked several
widely participated manifestations in favour of peace.
The new president Felipe Jacinto Nyusi from Frelimo (Front for Independence of Mozambique - the
governing party) made an unexpectedly conciliatory speech at the swearing in ceremony with a
general invitation to the opposition and others who might feel marginalised to work with the
government on the basis of his commitment to listen to, respect and integrate the views, ideas and
concrete proposals of others. The speech contained a range of pronouncements on key governance and
development issues which went a long way towards encouraging those – including the donors –
disenchanted with the performance of the outgoing government. However it remains to be seen to
what extent Nyusi has the power and independence from the former administration to put his laudable
ambitions into concrete action.
The new government appointed by the President did not constitute a break with the past in that all
ministerial and provincial governor nominations went to Frelimo members, including a not negligible
number of members of the former government. Yet, with 43 % of the seats in Parliament Renamo and
the other opposition party Movement for a Democratic Mozambique should be able to challenge the
initiatives of the executive and contribute to a real transition from a one-party to multi-party
democracy. Unlike some other countries Mozambique has the advantage of a vibrant civil society and
a relatively independent and critical press although particularly people in rural areas are insufficiently
organized and have little voice.
Mozambique’s winner-takes –all electoral system has contributed to consolidate Frelimo’s hold on
power since 1992. Retaining a parliamentary majority the party has pursued its own political
4
programs with little involvement of the opposition. With the President’s prerogative on nomination of
the heads of all key institutions in the public sector and the judiciary as well as provincial governors,
and an informal system that ensures that only people with party membership get appointed to
managerial posts in the public sector, including the army, there is no effective separation of party and
state. This bias is mirrored to a considerable extent in the economy where favours and contracts are
often granted on the basis of party affiliation or personal relations.
And the stakes in being able to manipulate the means of the state for private and clientelistic purposes
have only increased with the discovery of huge deposits of natural gas and the exploitation of coal.
Throughout the 10 year reign of the former government the exclusive nature of decision making and
benefit sharing has been reinforced by a centralization of power. The only de-central bodies with real
electoral and some decision making autonomy are the municipalities, now ruling 53 cities around the
country with some support from a small group of donors including Denmark.
In this situation of marginalisation, the grievances of the opposition and their supporters have reached
alarming levels and raised concern far into the ranks of the ruling party. Looking ahead development
may take the direction of any one of a range of potential scenarios.
At one extreme, the elite’s hold on political and economic power will be further consolidated based on
a reinforcement of state capture to the exclusion of the opposition and communities who support it. A
slightly different configuration of people in the elite may emerge to benefit and a certain level of
public expenditures upheld to try to avoid revolt and legitimize the party’s hold on power in a de facto
one-party-state. In this scenario the extractive industry is likely to remain as an enclave with few
positive linkages and considerable risks to the wider economy. This exclusive model can only be
upheld in the face of the growing opposition it is likely to create, by using the coercive means of the
state. This will require excessive defence and security spending and may not prevent low intensity
conflicts and bids for cessation coming from the Centre of the country.
At the other extreme, the moderate and development oriented forces within Frelimo will prevail and
succeed in attracting support for a more conciliatory approach to the opposition and its supporters and
for a government program with a much stronger focus on bringing poor people and marginalized
regions into the mainstream of growth and development. Here, the multi-party democracy stands a
much better chance of succeeding.
Between these two extremes – the exclusive economic and political model and its inclusive opposite –
stretches a continuum of more probable intermediary outcomes. Mozambique’s external partners and
perhaps most notably the G19 continues to wield sufficient power to be able to influence the direction
the country will take, both through the political dialogue and the investments it makes to improve
people’s lives. However, it will be hard work to overcome the resistance from some G19 members to
maintain a critical dialogue in support of an inclusive outcome because of conflicting donor interests
and ideas about the level of influence the donors should seek.
To pave the way for a more inclusive growth pattern in Mozambique it is necessary to strengthen the
institutions for accountability and to invest in a growth pattern, where the majority of the population
including today’s poor come within reach of real opportunities for increasing their income through
better jobs and business activities. This in turn will generate demand for effective development
spending also of the future income from the extractive industry, as well as capacity to absorb revenue
effectively to this end.
5
Today, a sizeable share of the population is engaged in low productivity and poorly remunerated
occupations in agriculture and micro enterprises. While this is certainly better than unemployment,
poor households will only be able to raise their income if they can respond effectively to market
opportunities and access better paid jobs. Investments in human development continue to be of key
importance also to this agenda, but other constraints – physical as well as human - seem to be binding
growth and productivity development in parts of the economy with potential for creating jobs. These
constraints need to be much better understood, and addressed.
While the financial importance of external aid is declining due to growing revenue collection, it is
expected that development partners can continue to make a strong contribution to progress in the
country for another 10 years or so, particularly if they focus on strategic areas where they can add
value. Over the years, the Government and donors have developed a robust framework for
development cooperation based on mutual accountability over development results and aid
effectiveness. This is the so-called G19 partnership which provides the only comprehensive
framework between donors and the Government for political dialogue, negotiation of performance
targets and monitoring of results. Built by donors providing general budget support starting in 2003
with Denmark as one of the founding members, the partnership also monitors the other aid modalities
and the total portfolio is around 2 billion US $ a year. Countries not providing budget support can be
associate members of the G19, provided that they agree to respect the principles of mutual
accountability and alignment of their portfolio to the Government’s plans and procedures as well as
financial and monitoring processes.
The G19 partnership is now being tested in several ways. Growing commercial interest on the part of
some traditionally like-minded donor countries have tended to cool their interest in pursuing the frank
dialogue with Government on sensitive issues which has been one of the hallmarks of the partnership.
The declining relative importance of aid as a source of financing the Government’s programme
combined with its access to new partners such as the BRICS (Brazil, Russia, India, China and South
Africa) and new sources of finance have encouraged the Government to take a more assertive stance
vis a vis the donors. And declining interest from donor headquarters in the aid effectiveness agenda
following the Busan Conference on International Development means that it is a much more uphill
battle for embassy staff and their government counterparts to secure a desirable degree of alignment
and harmonization of external aid.
Through its foreign policy Mozambique contributes constructively to the resolution of international
tensions and some of the other collective action problems that beset the region and the World
community. Notwithstanding the political tensions, Mozambique cherishes its own rich and diverse
culture and history as an important factor of national strength and unity. In many areas Denmark and
Mozambique share important values, and there will be opportunities for working together, including
on human rights issues such as Sexual and Reproductive Health and Rights (SRHR), gender equality
and the elimination of torture in the United Nations and elsewhere. As Mozambique develops further
we expect it to play and increasingly strong international role, both commercially and as a positive
force for stability and other global goods benefitting the world community. As long-standing partners,
Denmark expects to see its relationship with Mozambique grow still stronger with time, in political,
cultural and commercial terms.
Denmark has been engaged in Mozambique since independence and many Danes have spent
considerable time in the country as volunteers, development workers or in business positions. A
considerable number of these “friends of Mozambique” have chosen to settle in the country and now
run a variety of businesses. They – in their turn – have contributed to attracting others. These are all
6
important ambassadors for the close relationship between Denmark and Mozambique as are the many
Mozambicans who have come into contact with Denmark and the Danes over the years.
Several Danish Non-Governmental Organizations (NGO) are operating in Mozambique and some
have been active for very many years. They continue to make a fundamentally important and
complementary contribution to development in the country, through mobilization of local
communities around key development challenges and advocacy. This also applies to the Mozambican
private organizations which Denmark supports in all areas of the programme. Some of these have
turned into prominent watchdogs and as such play an indispensable role in calling for and at times
succeeding in securing a higher degree of transparency and accountability in government action, also
in relation to the development of the mineral industry.
Because of the recent political transition, the new government’s short and medium-term plans are not
yet in place. But the budget, the Five Year Plan covering 2015-2019 and the Poverty Reduction
Strategy (PRS) or its successor are anticipated in March and April whence they can be used to
influence the formulation of the country policy paper and the country program. As described above
Denmark will encourage Government to develop these plans and strategies on the basis of the
priorities indicated in this paper and in collaboration with the other donors in the G19. More elaborate
analysis of the economic, political and social development in Mozambique, assessment of major risks
and review of Denmark’s work in Mozambique will also be prepared in support of the formulation of
the full country policy paper and the country program.
3. Strategic choices
As described above, Mozambique is at a cross- road where hard decisions need to be taken to provide
the foundations of an inclusive society. There is a window of opportunity right now for influencing
decision making, but it is closing fast. Once revenue starts to arrive from the mineral industry in
volume, it may be too late.
Denmark has accompanied Mozambique as a development partner and through interaction between
companies, organizations and people since Independence. It is considered by many as a dependable
and predictable partner and one that at times has gone to great lengths to meet the country’s needs in
desperate situations. We have also taken on the task of providing support in some of the least popular
and most difficult areas such as justice and we have worked both centrally and de-centrally to enhance
the capability to deliver services to the poor in education, health, water supply and sanitation, energy,
agriculture, fisheries and road construction in a public sector that was rudimentary at the outset. We
have accumulated experience and contacts over the years from working with the private sector and
civil society in numerous configurations and always with a keen eye on what works for the poor.
Denmark is also known for keeping up a frank dialogue including on sensitive issues that beset the
political environment and development work in the country - to the grief of some and recognition of
others. This track record and our top ranking in international integrity indices provides us with
sufficient legitimacy to continue the open and direct dialogue on sensitive issues like corruption and
misuse of power without which external aid would be little more than free money.
Despite this vantage point, the ambition to continue Denmark’s engagement in Mozambique with the
overriding goal of helping the country maintain peace and emerge as an inclusive society in political,
social and economic terms has considerable implications. It will require ability to stay focused on
important things, remain involved despite set-backs and to respond to new challenges with flexibility.
7
It will take investing in research to generate knowledge on the constraints that hold back the creation
of jobs and business opportunities for the poor and engaging with the government, the private sector
and other partners in systematic efforts to deal with them. A strong program aimed at improving the
business environment for small scale farmers and entrepreneurs through a selective set of
interventions should be a main pillar of Denmark’s engagement in the future.
We will need to work hard and determined in the G19 to be able to collectively encourage the
Government to design and implement a pro-poor medium term program. This program must reverse
the biases in territorial spending, put the development of small scale agriculture and enterprises at the
center of attention and deal effectively with the quality aspects that hold back improvements in health,
education and other services. With continuous government support for system-wide reforms of the
civil service and public financial management Denmark could provide support in these areas and also
look for ways of strengthening fiscal management of the extractive industry.
The provision of direct budget support is the most effective modality supporting dialogue with
Government on overall policies and reforms as well as debate and follow-up on issues such as human
rights, gender and environment that cut across all spheres and pillars of government. However, this
requires a government program clearly directed at these challenges and a demonstrated will to deal
with issues of integrity and accountability. In the absence of that, Denmark may opt for more peacemeal support for reforms in areas with a good track record and put more emphasis on alternatives
means of ensuring that resources get to the people who need them most.
Access to justice is essential for reconciliation and building people’s trusts in the ability of society to
resolve conflict and rigorously enforce the law. As the only long-standing partner in this area,
Denmark is in a privileged position to continue her work. In a reinvigorated reform environment there
is an option for supporting both the formal justice system in combination with assistance to traditional
justice. In the absence of that, it might be more effective to focus on informal justice and advocacy.
Providing access to quality services in health is essential to raising the living conditions of the poor
including their ability to earn a living. Denmark has been engaged booth at the central level and with a
particular emphasis on Tete - the province now home to big investments in coal and agro-processing –
and has a keen sense of how centrally planned reforms and interventions actually play out on the
ground. We have also been in the forefront calling attention to the huge challenges associated with
securing appropriate nutrition for people in many parts of the country and we have taken the lead as
donors in supporting government in its efforts to deal with this cross-sectorial question.
Denmark is committed to working for gender equality in all its dimensions and finds in Mozambique
a strong partner in this respect. Mozambique has a well-articulated policy on gender equality and has
made notable progress in a number of areas. Yet the backlog is considerable and efforts to address the
many and serious outstanding forms of gender inequality are central to putting the country on a
sustainable development path and Denmark will help Mozambique respond to this.
Denmark is also in the forefront in efforts to tackle environmental disruption resulting from
unsustainable production, consumption and human settlement patterns. Ironically the Mozambican
economy is relatively green, because of the still underdeveloped state of its industry and agriculture.
As the country addresses the overriding priority of reducing poverty through the creation of jobs and
productivity development its ecosystem and natural resources will come under increasing pressure.
Denmark stands ready to assist Mozambique prevent and mitigate environmental degradation
resulting from industrialization, mechanization and urbanization as well as in the endeavour to adapt
8
to the impact of climate change. Denmark will actively pursue the possibilities for greening the
Mozambican economy, including by tapping its own domestic knowledge and entrepreneurial
capacity and with a keen eye on export opportunities for Mozambican companies.
Conflicts over land are also becoming more frequent and acrimonious, including in the extractive
industry. Helping farmers and local communities defend their rights to land and other natural
resources goes hand in hand with the inclusive growth agenda and is also indispensable to finding
lasting solutions to environmentally disruptive land use practices.
There is a growing interest in investing in or doing business in Mozambique from Danish companies.
These interests cover a variety of business areas and several ventures have been established with
Mozambican partners. As Mozambique develops, it is natural that commercial and business ties
between our two countries will become more prominent and relevant to the country’s emerging
requirements, and Denmark will work to help ensure that these develop in a direction that are
beneficial to both. Danish companies are already engaged in a range of sectors such as infrastructure,
transport, energy, including the hydrocarbon sector, agriculture and services. Depending on the
direction of growth of the Mozambican economy, this range may expand or stay largely the same.
We will step up our work on commercial opportunities and keeping a watchful eye on aspects of our
development work that may benefit from involvement of Danish companies. Involvement of Danish
public institutions might also be relevant in areas such as taxation, green growth and geoscience
related to the extractive industry.
Building interventions on a thorough understanding of the political economy of growth and the
constraints and opportunities facing particularly small-scale economic agents in the different parts of
the economy is the key to achieving results both in development spending and private enterprise, and
to avoiding costly mistakes. Strengthening the knowledge base for development is also indispensable
to taking decisions that maximize the public and private returns to public spending and investment,
and Denmark will continue to support Mozambican research institutions to this end.
Support to civil society organisations working on advocacy and mobilization of people around
common interests, including in farmer’s and business associations as well as trade unions, is a key
element of the current program and one that is expected to play an even more prominent role in the
future. The role of civil society is indispensable to keeping government accountable, providing voice
and means of organization for the poor and others who are marginalized and to building bridges
between communities and groups, the governed and the governing, in the spirit of reconciliation and
dialogue.
The staggering number of new jobs and business opportunities that are needed in Mozambique can
only be created with a much stronger involvement of the private sector, both generally in the country
and more specifically also in the Danish programme.
Hitherto, development cooperation has been the main platform of collaboration between Denmark and
Mozambique. With around 50 % of Mozambique´s populations still struggling to get by in absolute
poverty, this is likely to continue to be so also in the next program cycle. However, as Mozambique
develops, other aspects of this relationship will become more prominent – such as the commercial and
political collaboration between our two countries – and eventually take over the role of prominence.
On current trends, and assuming continued peace and reconciliation, Mozambique is expected to
transit to middle income status within the next 10 to 15 years. While unforeseen changes influencing
growth in the mineral and hydrocarbon sector could impact on the pace of transition, the important
9
thing to remember here is that Mozambique could reach the middle income average per capita income
based on very different patterns of real distribution of wealth, including extreme scenarios of
inequality with little change for the majority of the poor. The country policy paper should provide an
analytically solid, politically robust and strategically consistent framework for our work in
Mozambique in the next programme cycle leading towards that transition.
Denmark believes that working together with Mozambican and development partners to define and
achieve common goals and aligning external aid to government and partner systems are the keys to
achieving results. A strong commitment to harmonization and alignment will therefore also guide
Denmark’s approach in the partnership in the coming program period but we should expect to have to
work harder to achieve this in the somewhat less amenable environment.
We will continue to work closely with partners and particularly likeminded donors from within and
outside the Nordic+ (the Nordic countries, UK and Ireland), configuration in the G19 to ensure that
current efforts to reform the partnership results in its maintenance as an effective platform of dialogue
and results monitoring. And we will work with the EU and relevant MS, particularly on political
governance but also around joint programming if this emerges as a viable option.
Inequality and exclusion has attracted attention worldwide at the highest level because of the
disquieting growth in inequality in many countries – both and rich and poor – and the extreme
accumulation of wealth in the richest centile of the world population over the last 15 years. In
Mozambique this debate has helped underscore concerns over the weak impact of growth on the
income of the poor and a consensus appears to be emerging amongst the country’s external donors
that inclusive growth with its emphasis on job creation and growth in the labour intensive parts of the
economy is the appropriate response to the problem. While this is shared by some in Government including the new President -there are opposing forces and it will take a concerted effort to firmly
embed this approach in the new administration. The International Monetary Fund has come out
vocally in favour of this approach and Denmark will work closely with the IMF, the multilateral
development banks, the EU and others who share this view and have the advisory and financial
wherewithal to act on the agenda.
The following strategic objectives are suggested for Denmark’s engagement with Mozambique in the
period 2016-2021:
1. To secure peace, reconciliation and continuously improving livelihoods for the majority of the
population by strengthening the ability of people to engage in productive and profitable
economic activity in small-scale agriculture and in small and medium scale enterprises and by
addressing market and policy failures that may prevent them from doing so.
2. To enhance the individual’s access and ability to exercise her rights and strengthen the
contract between the governed and the governing for political, social and economic outcomes
that benefit the many, through: a. Improved transparency, accountability and efficiency in the
public sector; b. a justice system responsive to the needs of ordinary citizens; and, c. a civil
society effectively influencing policy and outcomes for the poor.
3. To enable Mozambique to safeguard it-self against climate change and protect the carrying
capacity of its ecosystems including through adoption of environmentally sustainable forms of
production and consumption.
4. To help build stronger commercial, political and cultural ties between Denmark and
Mozambique in support of the achievement of objectives 1-3.
10
4. Suggested thematic areas for the country programme.
There are many dimensions to an inclusive and sustainable economic, social and political outcome of
development. Denmark cannot address them all but we will make our choices based on the
considerations explained in the preceding chapter and in the spirit of ensuring a reasonable
distribution of donor funding across the many areas in need of this.
Looking ahead, we need to adjust the country programme so that it contributes effectively to the
global and strategic objectives, reflects changing circumstances and so that it fits the requirement that
Denmark should be working within a maximum of three thematic areas plus general budget support in
any partner country. The following thematic areas appear as an effective choice for structuring the
programme along the strategic objectives while securing a degree of internal coherence with the
overall objective of the country programme:




Governance, peace and reconciliation: Support to public financial management, taxation,
decentralisation, justice, civil society organisations and reconciliation.
Human Development: Continued support to the expansion and quality improvement of health
services and a stronger support to efforts in the area of nutrition.
Inclusive and green growth: Through a value chain approach and based on strong growth
diagnostics, the programme will help: 1.Strengthen the business environment and lifting
constraints to growth in family farming and amongst Small and Medium-scale Enterprises
(SME); 2. Strengthen the ability of economic agents to engage in domestic and international
trade; 3. Supporting the capacity for environmental regulation and sound natural resource
management as well as climate change adaptation.
Budget support.
Human rights, gender equality and environmental sustainability will be tackled as transversal
concerns as relevant in all these categories.
The suggested developmental, political and commercial interventions have been identified to provide
maximum synergy with ongoing efforts in the country. However there is also a clear element of
internal synergy amongst the various components of the programme. Thus investments in human
development and in physical and institutional infrastructure are supplemented by political dialogue
and attention to governance. The approach is furthermore premised on a balance between support for
central government and decentralization, with support to municipalities and districts seen as tools for
furthering inclusion and strengthening local autonomy in a society still plagued by unequal
distribution of power and resources. Support to the public sector will be balanced with strong support
to both civil society organisations working with advocacy and mobilization of local communities and
to the private sector, including to improvement of both the soft and hardware elements of the business
environment as well as to mobilization and organization of small-scale farmers and entrepreneurs in
associations. And support to the executive arm of government will be complementary with support to
the rule of law through a continuation of the long-standing collaboration in the area of justice. Last,
but by no means least, a continuation of general budget support allows us to participate in the political
dialogue and discussion and monitoring of government-wide performance, that help secure finance of
underfunded sectors and maintain a bird’s eye perspective on trends and challenges.
11
With limited staff and budget, we need to make intelligent choices within these broad areas that will
enable us to maximise the contribution, facilitate learning and avoid an unmanageable programme
where the administrative burden prevents us from paying attention to strategic questions and dialogue.
We will screen the elements that will eventually be suggested for inclusion in the programme very
carefully, both for their overall relevance, effectiveness, efficiency and sustainability and from the
perspective of our ability to manage the programme.
5. Results
We expect both higher order objectives related to poverty reduction and nation building as well as
objectives related to more intermediate development outcomes and indicators of individual activities
included in and monitored as a basis of the programme.
6. Monitoring and evaluation.
The country programme will be based on a strong and coherent results framework to be drawn from
Government’s and partner’s own performance matrices and monitored, as far as possible, through
partner accountability processes and jointly agreed donor mechanisms.
7. Process Action Plan.
The process action plan for the preparation of the country policy paper is attached.
12