Global Geopolitics & Political Economy / IPS
By Nastasya Tay
MAPUTO, Dec 1, 2010 (IPS) – Baptista Macule is sitting on a sack of groundnuts in a dusty side-alley near the sprawling, makeshift Malanga market on the outskirts of Maputo. He squints into the sun as he tries to explain the extent of poverty in his country.
“People do not have enough food in their house,” he says. “There are not enough jobs, and even when people have jobs, the salaries are very low. Salaries have not increased, but prices have.”
Mozambique is one of the poorest countries in sub-Saharan Africa. Despite ample arable land and a coastline that offers opportunities for sea trade, more than half of its population goes hungry everyday.
In September, violent riots in townships and suburbs around the capital brought the Southern African country to the world’s attention, with at least 13 dead and hundreds injured. Three months on, scalds on the tarmac roads from burning tyres serve as a reminder of the discontent.
The demonstrations took place in some of the poorest peri-urban neighbourhoods. People went on strike because of the sky-rocketing price of bread, electricity and water – the basic goods they rely on.
But they were also chanting for justice and transparency and asking their government to fight corruption in its ranks.
The government responded with bullets and subsidies. After initial vehement refusals to institute price controls in the first days of the riots, it announced a subsidy for the price of wheat and that the price of water and electricity would not be increased.
In 2008, similar riots broke out around the capital about the rise in public transport costs.
To stop the public demonstrations, the government reversed the increase and capped the price of fuel. Fuel importers were forced to shoulder the burden of rising market prices – estimated now to be in the millions – which the government has yet to repay.
September’s wheat subsidy is due to expire in December 2010, but talks are underway in various forums to work out the next step. The subsidy is likely to be extended into 2011 but will it have the desired effect in the medium to long term?
About 70 percent of Mozambique’s 22 million people live outside urban areas. They live far from services and infrastructure and in extreme poverty.
The Third National Poverty Assessment, released in September 2010, showed that between 2003 and 2009, although substantial gains were made in health and education sectors, poverty levels remained unchanged despite impressive rates of economic growth – over six percent – during the last decade.
The improvements in access to education, health services and housing quality attest to positive long-run development trends but poverty, when measured in terms of food consumption, has remained at essentially the same level.
Nearly 55 percent of Mozambicans eat less than the amount of calories a day required to sustain an adult. When food prices go up further, even more people go hungry.
More than half of Mozambicans live on about 18 meticals (around 0.50 dollars) a day, says Lisa Kurbiel, senior social policy specialist at UNICEF’s Maputo office. And the new September subsidies will not necessarily help them.
Currently, 0.25 percent of the country’s budget is allocated for the wheat subsidy, and 1.5 percent for subsidising fuel. But most of those living in rural areas neither eat bread nor drive cars.
“You have to ask, are these measures pro-poor? Are they progessive?” asks Kurbiel. “And the risk is, how do you ever scale them down?”
Kurbiel feels the money could be reallocated to tackle the root problems of poverty, focussing on social protection, employment generation, and encouraging best practice in sectors such as agriculture.
Victor Lledo, country representative for the International Monetary Fund, says the fact that growth rates have not translated into poverty reduction must be approached in a nuanced way.
“Between 1996 and 2002 we saw a significant decline, from 69 percent to 54 percent in absolute poverty,” he says. But since then not much has changed.
In large part, this is because the increase in productivity in subsistence agriculture – how most of the poor survive – has levelled off, says Lledo.
The government is looking at the adoption of technological improvements, investing in infrastructure, and increasing access to finance to address the problem.
Prices have also risen dramatically because of the rapidly devaluing local currency, the Metical. “The riots came on the back of rising inflation and living costs,” says Lledo.
The surge in inflation is related to the depreciating exchange rate, Lledo explains. The significant volume of imports into the country means food prices increase, which in turn, feeds inflation, as food has a heavy weighting in Mozambique’s Consumer Price Index (CPI).
The IMF has advised the Mozambican government on several initiatives, says Lledo, including coordinating adjustments in fiscal and monetary policies and increasing commercial bank reserves to contract the monetary base and fight inflation.
According to Lledo, the finance ministry has adopted measures in the 2011 budget to increase fiscal savings, although these will not jeopardise spending in priority sectors, including health, education, agriculture and infrastructure development.
“The government sees the recent riots as a clear indication of the need to relaunch and rethink its strategy to combat poverty,” says Lledo.
The government will release a new Poverty Reduction Strategy Paper in early 2011, incorporating its five-year plan. But will a new plan translate from paper to reality?
Macule says he does not know whether there will be more riots. He sells shoes in the market and is far better off than those inciting strike action. But he still struggles to feed his family.
All rights reserved, IPS – Inter Press Service, 2010.
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