The Mozambique Experience Dr Pascoal Mocumbi CAR Leadership Seminar, Bangui, December 12-13 2005

Outline Context: from a war-torn country – the end of a dream – to a “success story” Post-war reconstruction and reforms Implementing change and reforms

Context: from a worn-torn country… 1975: Euphoria of independence International solidarity movement – racism & apartheid 1980-1987: destabilisation increases End 1980s: war spreads to entire country, Mozambique becomes one of the world’s poorest countries

Context: from a worn-torn contd... 1987: Economic and Social Rehabilitation Program (ESRP), to address the fundamental causes of economic crisis October 4, 1992: peace agreement signed – triggered by realization that without war, the financial situation of Mozambique would be considerably better (like CAR – a rich country)

…to a “success story” One of fastest growing economies of the world Peace and stability maintained since 1992 3 cycles of general elections (Presidential and parliamentary) Decentralization and community participation

Transition under UN supervision National reconstruction and resettlement program adopted Clearance of landmines Reintegration of demobilised soldiers Preparation of elections

Post-war reconstruction Following 1994 elections: 5-year program centred on poverty reduction adopted, focusing on reconciliation, national reconstruction and economic recovery Priorities: - Maintaining peace and political stability - Sound macroeconomic framework - Recovery of major roads

Post-war reconstruction (contd.) Adjustment of State institutions Public sector reform - professionalism of public administration - combat corruption - increase budget revenues (introduction of VAT, customs reform) Improvement of communication channels and accountability between gvt. and society

Implementing change and reforms Poverty reduction through focus on increasing agricultural production Promotion of reconciliation through effective management of potential conflicts Trade reforms opening up the economy internationally – substantial increase in foreign investment Mobilising assistance from international community and accountability

Lessons learned: Crucial factors Strong political commitment and leadership Clear vision and strategy responding to challenges identified – staying the course Prioritisation – addressing most urgent needs first Ability of leadership to build consensus in decision-making process – involvement of different groups of opinion Appropriate interface between policy makers and implementers Strengthening state capacity for revenue collection

Constraints and challenges Very weak human capital base Inadequate infrastructure Tightening macroeconomic constraints Structural reforms take time

Solutions Initiate change while managing emergency Consultation on “what to change and what for?” to build consensus on principles and “rules of the game” Lead by example – showing what is accepted behavior

Mozambique Customs Reform Why Reforms? - evidence of internal weakness capacity to collect revenues and control trade into and out of the country - civil society criticism on lack of gvt transparence in customs operations, poor management - domestic industry complained that could not compete with smuggles on domestic market

Customs reforms - Objectives Combat corruption and smuggling: smuggling rings were firmly entrenched and it would be difficult to break out from within Increase budget revenue: customs revenues were on a downward trend since 1992 and accelerated in 1994 Modernize customs services Facilitate legitimate trade

Strategy – create a technical unit Main components: - Human resources - Legislation and procedures - Organizational profile - Infrastructures and equipments

Outcomes to Date Efficiency of collection improved Expressive growth of fiscal revenues Trade facilitation: clearance times reduced Modern institutions managed by nationals A new customs Code issued in 1998 on the customs e-network and answers to frequently asked questions from importers and exporters.