Attachments
Executive Summary
This Country Climate and Development Report (CCDR) captures the interplay between development challenges and climate change and climate policies in Mozambique, with the objective of identifying synergies and tradeoffs. The CCDR informs the World Bank Group’s engagement in Mozambique, alongside other key products, such as Systematic Country Diagnostics (SCDs) and the recently adopted Country Partnership Framework (CPF) for the period 2023 – 2027. The CCDR aims to support Mozambique’s strategic vision and identifies a set of priorities for the most impactful and cost‑effective actions to boost adaptation, build resilience, and foster low‑carbon growth, while delivering on broader development goals.
Mozambique’s development context
Mozambique is a country endowed with abundant natural resources, which provide a transformative opportunity to promote inclusive and resilient development. The country has one of the world’s largest natural‑gas reserves, vast amounts of arable land and miombo forests, considerable hydropower resources, wildlife, outstanding biodiversity, one of the region’s longest coastlines and is strategically located to serve as a gateway to global markets. Despite having experienced in 2020 the first economic contraction in 28 years, Mozambique’s prospects are promising, with growth expected to reach an average of eight percent during 2023–2027. In recent years, Mozambique has made significant progress in strengthening economic management, disaster risk management, sustainable land‑use, and access to electricity, among other areas (1) . Seventy percent of the population is employed in low‑productivity subsistence agriculture and live in rural areas. More broadly, Mozambique’s growth, driven primarily by mining and natural gas, has not created sufficient job opportunities at the pace needed for rapid poverty reduction. Inefficient factor and product markets, low human capital accumulation, low access to infrastructure services and weak institutions have hindered the process of a needed structural transformation of the economy.
Despite noticeable progress, government capacity to address Mozambique’s development challenges is highly constrained. Public spending is mostly committed to pay wages, pensions, and debt services. Tax revenues are already amongst the highest compared to peer countries. Debt levels are high and Mozambique, has been assessed to be at ’high risk’ of debt distress, with debt sustainable in a forward‑looking sense (2). This is particularly problematic given that the country does not have access to international financial markets at competitive rates. Further, high interest rates constrain access to finance and private sector development in the non‑natural gas sectors.
Mozambique’s development challenges are compounded by fragility, conflict, and violence. The intensification and escalation of an insurgency in gas‑rich Cabo Delgado (3) underscored the country’s fragility and the need to strengthen social cohesion. The resurgence of violence has had social and economic consequences, with almost one million people involuntarily displaced and the delay of investments in the two largest natural gas fields. Due to the worsening security outlook, in 2021 gas enterprises halted operations in the northernmost district of Palma, although there are recent signs that project activities are likely to resume. Mozambique’s institutions still need to improve effectiveness, inclusiveness, and public trust (4).
Climate change and the impact of extreme climate events, to which Mozambique has long been exposed, further exacerbates these challenges. Mozambique is amongst the ten countries that are most vulnerable globally to the impact of climate change and natural hazards. According to the 2021 Global Climate Risk Index, in 2019 Mozambique was the country most affected by climate change (5). Its location, extensive coastline, and large expanse of low‑lying hinterland contribute to its vulnerability. The impacts of climate change are expected to increase over the next decades. Projected rising temperatures, more irregular rainfalls and related sea level rise will increase the frequency and intensity of droughts, floods, and cyclones. In terms of temperature changes, under the SSP5 8.5 scenario, mean temperatures are predicted to rise significantly, with anomalies ranging from 0.8°C over the next 20 years to 4.19°C between 2080 and 2099 (6).
The Government of Mozambique has scaled up its commitment to tackling climate change, building resilience, and enhancing disaster preparedness. Mozambique is currently in stage 4 of the Nationally Determined Contribution (NDC) Partnership Plan Implementation, and the Government submitted its first updated NDC in December 2021. However, the connection between national plans, sectoral plans, and the NDC is still weak and could be further improved, while keeping expectations consistent with capability. Mozambique would benefit from balancing its foundational institutional and administrative capacity with its ambitious program conducted in an environment of extreme climate exposure.
(1) World Bank. 2022. (forthcoming). This percentage use the international poverty line of US$ 2.15 a day per person in 2017 PPP (purchasing power parity).
(2) International Development Association International Monetary Fund, Republic of Mozambique, “Joint World Bank‑IMF Debt Sustainability Analysis”, April 2020.
(3) Since 2017, Mozambique has been facing an insurgency in Cabo Delgado, which has spilled over into the neighboring Nampula and Niassa provinces. Insurgency has resulted in a humanitarian and displacement crisis and has led to delays in the implementation of large liquefied natural gas (LNG) investments. The conflict reflects some of the structural factors that drive fragility in Mozambique, including widespread poverty, north‑south disparities, political marginalization, lack of job opportunities and incomplete state building.
(4) For example, firms reported in the 2018 World Bank Enterprise Survey that they consider governance issues the biggest constraint to their business activity.
(5) The Global Climate Risk Index analyses quantified impacts of extreme events, both in terms of fatalities as well as economic losses that occurred. Source: David Eckstein, Vera Künzel, Laura Schäfer “Global Climate Risk Index 2021, Who suffers Most from Extreme Weather Events? Weather‑related Loss Events in 2019 and 2000 to 2019”, Germanwatch, 202.
(6)These figures refer to average median temperature anomalies. On the different scenarios, see Table 3