December 11, 2006
Mozambique
1. External partner harmonization in Mozambique has been based around the PARPA 2001-2005, and now around PARPA II, which includes commitment to the development of an aid policy. Implementation of the PARPA had a tangible impact on poverty through implementation of an action program detailed in the Economic and Social Plan (PES) and the Annual Progress Report assessing performance on implementation of the PES in the previous year. Integration of the PARPA program in the budget cycle through the PES, discussed in the National Assembly, has improved over the past two years thanks to a better monitoring effort supported by dialogue with the group of external partners providing budget support, known as the Program Aid Partnership or the G18, around the Performance Assessment Framework (PAF), a matrix of actions related to budget support.
Ownership
1. Partners have operational national development strategies
a. Coherent long-term vision with medium-term strategy derived from vision
2. A long-term vision, Agenda 2025, was prepared in 2003 by a civil society group, known as the Committee of Advisors, through a participatory process supported by UNDP and other partners, including the World Bank. Agenda 2025 informed preparation of the PARPA by setting broad general goals, though without discussing a strategy and action plan to achieve them. The Maputo Municipal Council has also formulated a long-term vision highlighting local priorities of development for a ten-year period.
3. The Action Plan for the Reduction of Absolute Poverty or Plano de Acção para a Redução da Pobreza Absoluta (PARPA II) for 2006-09, Mozambique’s second PRS,[1] outlines a strategy to achieve the country’s own development goals in line with the MDGs and with the broad objectives of Agenda 2025. It updates the PARPA for 2001-05. While the PARPA II is widely considered as the country’s national development strategy, it is not the only planning instrument. PARPA II is acknowledged as the operational plan for the Government’s Five Year Programme, Mozambique’s National Development Plan.
4. Every year the Government prepares a constitutionally-required Economic and Social Plan, the Plano Económico e Social (PES), and its progress report, the Balanço do Plano Económico e Social (BdPES), to guide implementation of the Five-Year Program and the PARPA. Since 2004, the BdPES serves as the PARPA Progress Report. The PARPA II also includes a monitoring tool, the Strategic Matrix, which will be integrated in the annual PES and BdPES.
5. Updated medium-term strategies in some sectors, including the Education Sector Strategic Program for 2005-09, the National HIV/AIDS Strategy for 2005-09 and the Strategic Plan for the Health Sector for 2005-10, have fed into the PARPA II, the Five-Year Program for 2005-09 and the 2006 and 2007 PES. Line ministries are updating other sector strategies, including in the areas of transport and roads. The Government has prepared a draft National Water Resources Policy linked to a sector development strategy. It is also developing a gender equality strategy. Other strategies under implementation, such as the Agricultural and Natural Resource Integrated Sector Plan and the National Strategy for Sustainable Development, informed the first PARPA, continue to guide policy action in their respective sectors and fed into the PARPA II.
6. The Government is decentralizing strategic planning through a National Decentralized Planning Strategy and a National Strategy and Policy for Municipal Development. Districts are progressively introducing development and investment plans. In 2005, forty of the 128 districts in which Mozambique is divided had prepared development and investment plans. Twenty-seven additional districts are expected to have similar plans by 2007. The Maputo Municipal Council has developed a three-year strategy to guide implementation of its long-term vision. The Government has plans to incorporate district planning into the national planning process through an Integrated Participatory District Planning program. Also, provinces have prepared operational plans for 2006-07 around some of the strategic areas identified in the National HIV/AIDS Strategy for 2005-09.
b. Country specific development targets with holistic, balanced, and well sequenced strategy
7. Agenda 2025, the PARPA II, the Five-Year Program for 2005-09 and the 2006 PES are broadly in line with the MDGs. Mozambique has made good progress in moving toward the MDGs on child mortality, maternal mortality and immunization. Through implementation of the PARPA program Mozambique maintained a high level of economic growth and achieved a substantial reduction in poverty. The poverty headcount index was reduced by 15.3 percentage points from 69.4 percent in 1996-97 to 54.1 percent in 2002-03, bringing poverty well below the PARPA target. Poverty decreased more in rural than in urban areas. Substantial progress was made in particular in the social sectors with the concomitant impact on poverty reduction, partly due to the increased resources available as a result of the HIPC initiative. The number of children in primary school was almost doubled from approximately 2 to 4 million in the PARPA I period. Maternal mortality was reduced from an estimated 1,000 per 100,000 live births in the early 1990s to 408 per 100,000 live births in 2003. Under 5 mortality rates decreased from 219 to 178 per 1,000 live births. Infant mortality decreased from 147 to 124 per 1,000 live births. The capacity of the health system was expanded to start providing free antiretroviral treatment for HIV infection. In infrastructure, quality and reliability of urban water supply and the percentage of roads in good condition increased, and the number of landline telephones improved dramatically.
8. Growth is expected to continue to have an impact on poverty reduction, and Mozambique could achieve the poverty MDG by 2015, assuming a 5 percent growth rate and unchanged inequality levels, aid flows and HIV/AIDS incidence. The infant mortality MDG is also likely to be met. There have been also some improvements in the health sector structure that supports the fight against HIV/AIDS. This, however, has not prevented an increase in the infection rate; HIV/AIDS has already reached 16 percent of the population.
9. The development objectives and targets of the PARPA II reflect continuity with the objectives and targets of the first PARPA. Compared to the strategy for 2001-05, however, the PARPA II is better balanced between the social and the productive sectors, with a plan to enhance poverty reduction through greater development of the productive sectors. Specifically, the PARPA II stresses the need to improve the business environment and the financial sector in order to promote private sector growth. It identifies actions to strengthen the judicial system, reform the labor code, promote rural development and increase investment in infrastructure. It focuses on three pillars: i) governance, ii) human capital, and iii) economic development. It addresses macroeconomic and poverty issues, including poverty analysis, monitoring systems and public financial management. It also tackles HIV/AIDS, gender, natural disasters, science and technology, rural development, food security and nutrition, and demining as key cross-cutting issues.
c. Capacity and resources for implementation
10. The strategy is increasingly being linked to the budget, the Orçamento do Estado, through a Medium-Term Expenditure Framework (MTEF). While the MTEF, which is prepared on an annual basis with three-year projections for sectoral allocations, initially remained a process internal to the Ministry of Finance, coordination between the Ministry of Finance and the line ministries for the preparation of the MTEF has improved. The MTEF for 2007-09 was approved by the Cabinet and published. It is expected to shape public expenditure around the projected macroeconomic framework and the overall objectives of the PARPA II, furthering the practice established during implementation of the first PARPA. The MTEF offers an overview of the main macroeconomic variables, investment plans, sector and social programs, and annual budgetary forecasts. PARPA implementation is aligned with the Government’s fiscal year (January to December). The measurement of outcome and output targets is aligned with the measurement of fiscal outturns and reported in an annual report on PES implementation to the parliament in late February or early March. The Government is also taking some action to develop Medium-Term Expenditure Frameworks (MTEFs) at the sectoral level. For example, plans are underway to develop a MTEF for 2007-09 for the agricultural sector.
11. A key priority of the PARPA II is to strengthen revenue collection to allow for a steady rise in total expenditure on priority sectors. Preliminary data shows that 55 percent of total Government expenditure for 2005, excluding interest and financial operations, was allocated to the education and health sectors. The budget for primary and postsecondary education increased from 5 percent of GDP in 2003 to 5.2 percent of GDP in 2005. However, it declined as a percentage of total expenditure from 20 percent in 2003 to 19 percent in 2005. Expenditure in PARPA priority sectors such as education, health and infrastructure is expected to increase by 2.6 percent in 2006, accounting for 69.5 percent of total expenditure.
12. Implementation of the decentralized framework for service delivery began in 2004, providing for increased budgetary and administrative responsibility at the local level. For the first time, the 2006 budget assigned investment funds to the districts. The Maputo Municipal Government is planning to improve the use of resources by progressively moving from an input-based to a results-oriented budget. Local government capacity is being strengthened through learning-by-doing approaches implemented in 8 municipalities and 49 districts.
d. Participation of national stakeholders in strategy formulation and implementation
13. In March 2005, two separate ministries, the Ministry of Finance and the Ministry of Planning and Development, replaced the Ministry of Planning and Finance, which had been responsible for coordinating the formulation and the implementation of the PARPA, the Five-Year Program, the PES and the budget. The Ministry of Planning and Development currently coordinates planning, including the preparation and implementation of the PARPA II, while the Ministry of Finance takes the lead in the preparation of the budget. There is also an Economic Council which includes key ministers.
14. When formulating the PARPA II, the Government mostly relied on the structures responsible for monitoring and coordinating PARPA implementation. Between July and December 2005, Working and Thematic Groups, which include line ministries, external partners and national stakeholders, met regularly to identify strategic objectives for the PARPA II. Following its finalization, the PARPA II was approved by the Council of Ministers in May 2006. Between June and July 2006, a Quality Control Group led by the Ministry of Planning and Development and external partners worked to reach agreement across government and external partners on the Strategic Matrix, which was finalized in September 2006. Civil society representatives participated for the first time in a workshop to validate the Matrix, held in July 2006.
15. There is an Observatório de Pobreza (OP) which was established by the Government in April 2003 as a consultative forum for discussion of poverty reduction issues. The OP is facilitating regular dialogue between Government and stakeholders on development objectives and poverty issues. For example, the OP met regularly to provide inputs for the preparation of the PARPA II. OP meetings build on discussions and inputs gathered at the local level through provincial poverty observatories, the Observatórios de Pobreza Provinciais (OPPs). OPPs are being established in all provinces, and their inputs were conveyed during preparation of PARPA II. However, OP meetings usually last one day and have been perceived by some participants as insufficient to foster participation. The Government is taking some action to broaden stakeholder participation in policy formulation outside the OP and OPPs. At the end of 2005, it organized a National Seminar on a draft Anti-Corruption Strategy. The recommendations and inputs provided by stakeholders contributed to the final Strategy. Also, some of the local development plans such as the Maputo medium-term strategy and long-term vision have been developed through a consultative process which included a number of Stakeholder and Technical Workshops held in November 2005.
16. Civil society is actively engaged in policy dialogue with the Government. CSO representatives, such as the umbrella NGO G-20, participate in the Working and Thematic Groups, the OP and OPPs. While civil society was not consulted for the preparation of the 2003 and 2004 PARPA Progress Reports, since 2004 the BdPES and the PES are discussed with civil society. Party representatives, churches and various associations were among those represented in the Committee of Advisors which coordinated the preparation of Agenda 2025. The Committee of Advisors, formally disbanded, has remained active as an informal advocacy group after the completion of Agenda 2025 and is advocating stronger links between Agenda 2025, the PARPA II, the PES and the budget.
17. The Government has taken action to involve the private sector in policy formulation. Some umbrella organizations, including the CTA-Confederação das Associações Económicas which assembles most business associations, are represented in the OP. The Government is also consulting the private sector on key policy issues such as procurement reform. Also, the Ministry of Labor has worked with the private sector and trade unions to prepare a new Labor Law which was submitted to Parliament in 2006 and is expected to be discussed in 2007. Private sector representatives participate in the PARPA Working and Thematic Groups. The private sector has been consulted on PES and BdPES formulation.
18. Parliamentary involvement is strengthening. The National Assembly endorsed Agenda 2025 and approves the annual PES, the budget, the Five-Year Program and the BdPES, as mandated by the Constitution. The PARPA II Strategic Matrix will be presented to the National Assembly through the PES and BdPES. The Government submits to the National Assembly quarterly budget reports and semi-annual BdPES reports which contain information on PARPA implementation. The Budget and Planning Committee, the Commissão do Plano e Orçamento, examines the budget and the quarterly budget execution reports and reports to the National Assembly’s plenary.
Alignment
2. Reliable country systems
19. The Government is taking measures to strengthen fiduciary systems building on a concerted move by external partners toward budget support. For example, Public Financial Management Assessments are jointly prepared by the Government and the group of external partners providing budget support, known as the Program Aid Partnership (PAP) or the G18, which was established in 2004. The last assessment, which was carried out according to the Public Expenditure and Financial Accountability (PEFA) methodology, was completed in March 2006 and led to an update of the Public Financial Management action plan. Public Financial Management Assessments are expected to be undertaken every two or three years. Also, the rollout of the Integrated Financial Management System, SISTAFE, which was introduced in the Ministries of Finance and Planning in 2004, is contributing to improving reliability of budget transactions. However, not all transactions are being processed through SISTAFE, and there are still some shortfalls and overruns in the execution of the budget. SISTAFE has been used by the main spending ministries since July 2006 and should be rolled out to all Ministries by the end of 2006. The 2005 World Bank Country Policy and Institutional Assessment (CPIA) performance criterion that assesses the quality of budgetary and financial management places Mozambique at 3.5 on a scale of 1 (very weak) to 6 (very strong).