Mozambique

The Union policy in the sphere of development cooperation complements the policies followed by the Member States and fosters the sustainable economic and social development of the developing countries, their smooth and gradual integration into the world economy and the campaign against poverty. Furthermore, Community policy in this area contributes to the general objectives of development, consolidating democracy and the rule of law and respecting human rights and fundamental freedoms.

The strategy chosen for EDF cooperation in Mozambique is to help to achieve the twofold objectives of PARPA II, i.e. to decrease the incidence of poverty from 54% in 2003 to 45% in 2009 and to promote fast, sustainable and broad-based growth.

Substantial progress has been achieved in Mozambique, with real GDP growth averaging 8% per year over the period 1995-2005 and the proportion of the population living in absolute poverty falling from 69% in 1996/97 to 54% in 2002/03. However, in order to maintain the high growth rates needed to achieve the Millennium Development Goals and to expand and improve the quality of public services, continued reforms are needed to promote democratic governance, revitalise the public sector and improve the business environment.

Against this background, the response strategy has been designed in the light of the experience of the ongoing EC cooperation, the need for large-scale action in certain areas, the policy framework in place and the complementarity with other donors and other EC instruments. The proposed strategy recommends that 46% to 50% of the A envelope (€622 million of programmable resources) should be allocated to support the reform programme in order to maintain macroeconomic stability, while allowing the pattern of public expenditure needed to ensure progress towards the Millennium Development Goals. Apart from budget support measures, two focal sectors have been selected. About 21% of the A envelope is to be allocated to transport infrastructure and regional economic integration, including rehabilitation to facilitate social and economic activity, encompassing support for road maintenance and rehabilitation, rural roads, institutional support and capacity-building, along with capital investment supporting regional integration. About 12% to 15% is to be allocated to agriculture, rural development and regional economic integration to promote sustainable economic growth in rural areas, enhance food security and promote trade flows.

Action in non-focal sectors will continue to support the health sector budget. Apart from mainstreaming governance in the selected focal sectors and budget support,, governance measures in favour of human rights, justice, anti-corruption, Parliament and civil society will be envisaged plus the governance-based initiative in favour of the PALOP countries, as defined in the 10th EDF multi-country strategy. Finally, support for trade will be envisaged in this framework.

Complementarity will be sought between this strategy and other EC action, whether financed by the EDF (SADC Regional Indicative Programme, water, energy and infrastructure facilities if they are continued under the 10th EDF) or with other financial instruments (such as the EIB and budget lines).

As regards the form of implementation, the Community will give preference to budget support, whether general or sectoral, whenever the conditions are met. The Community will also continue to support the harmonisation efforts that are being made in Mozambique, in particular via the group of programme aid partners.