Oxfam Policy Brief on Mozambique: Getting it right now

The international community responded too slowly to the floods that struck Mozambique on 3 February. It must now move quickly to deliver reconstruction aid, organize relief and rehabilitation programs in close collaboration with the Mozambican authorities and civil society, cancel Mozambique's debt, and ensure that donors stay with the country for the long haul.
About a million people have lost their livelihoods, their houses, their tools and seeds and their livestock, leaving them vulnerable - not just now, but long into the future. But beyond this immediate human cost, the floods shattered much of what was a very fragile infrastructure. A poor country, but one successfully overcoming its legacy of war, has been dealt a crippling blow.

The cyclone destroyed a key rail link on which fuel and goods were brought in from Zimbabwe and South Africa. Hundreds of kilometers of roads - fundamental, among other things, to Mozambique's market reforms - have been washed away, and electricity and telephone lines downed. This damage will cost millions to repair; the government's early estimate is $250 million.

More than 140 schools were destroyed in three provinces by the end of February, and many more will have been destroyed since. Health centers have also been wrecked. The government's capacity to deliver important social services has been decimated.

Before the floods, Mozambique was one of the poorest countries in the world, but nonetheless one of Africa's success stories in the way it set about reducing poverty, promoting economic growth and building democracy. Mozambique should be recognized for its efforts to implement a major structural reform program. GDP increased by more than 10% in both 1997 and 1998, while an inflation rate of 70% in 1994 fell to only 6% by 1997.

But major challenges to poverty reduction and development remain following 16 years of devastating civil war. More than 11 million people lived below the poverty line even before the floods - and this in a total population of 16 million. Ten million people did not have adequate drinking water. Two out of every three adults can't read or write - and two thirds of these people are women. More than 1.5 million Mozambique children are not in school. One in five children die before their fifth birthday.

The country has a major debt problem. In June last year, its foreign creditors reduced Mozambique's debt repayments from just over $100m a year to around $71m. The country was due to pass through another debt reduction threshold earlier this year - called HIPC2 (the Heavily Indebted Poor Country initiative). However, the date was pushed back to April/June because the World Bank and the International Monetary Fund (IMF) were unsatisfied with the standard of Mozambique's national plan to reduce poverty.

The new reduction would have decreased Mozambique's annual debt service to around $45m. But even this reduced figure is far too tough. For example, the country can only afford to spend $20m on primary health care and just $32m on primary education - and this before the floods, and the massive clean-up and reconstruction costs it is now facing.

The Mozambique floods highlight a crucial weakness of current orthodoxy on debt relief, based as it is on debtor countries' ability to service debts in "normal" years. Countries can be vulnerable to routine or exceptional droughts or floods, armed conflict and other natural disasters, resulting in years of recovery that are not normal. Therefore, their ability to service debts can not be based on the assumption that such disasters will not occur, this has to be programmed into debtor countries calculations of ability to service debts and special treatment should be given when needed.

The response needed:

  • Mozambique now needs immediate 100% debt cancellation from both multilateral and bilateral creditors. Debt relief is not an option. Rapid progress through HIPC2 will still leave debt servicing at $45m a year. It is unacceptable that a country recovering from the devastation of these floods, coupled with long-term major challenges in poverty reduction, should continue to service foreign debt. Mozambique's major creditors - especially the World Bank, the IMF, the African regional development banks, France and Italy - should follow the example of countries that led the way on debt cancellation.
  • Debt cancellation must come from additional resources and not in lieu of reconstruction aid which donors should also give- both are needed. This will require creditor governments to cancel all debt owed to them, and for governments and the World Bank and IMF to provide the necessary finance to cover multilateral commitments.
  • The HIPC Trust Fund must be fully funded. The HIPC Trust Fund is presently underfunded with, for instance, the US resisting such financing. France and Italy are key creditors and must move quickly to full cancellation.
  • Donors must give reconstruction aid swiftly to help rebuild Mozambique's infrastructure, and to get education, health and other services running again. If it takes, for example, two years to rebuild destroyed schools, that is not just a delay in recovery - it also means thousands more illiterate Mozambique children. These children will have lost the chance to escape poverty and contribute to the return to the progress that their country had achieved over the past eight years.
  • Donors should pay for cost of rebuilding schools and health centers and, at least for a period, pay the day-by-day running costs of paying teachers, buying school books and so on.
  • Donor countries and relief organizations must coordinate and fully cooperate with relevant Mozambican authorities and civil society for delivering emergency relief and planning and realizing reconstruction and rehabilitation programs that will address long term poverty reduction objectives while strengthening local and national capacities.