Mozambique: Half of Mozambicans are Still Below the Poverty Line

Mozambique News Reports & Clippings Milton Keynes, UK Joseph Hanlon
Displayed with permission from allAfrica.com

Poverty is decreasing, but only very slowly, while inequality is increasing, according to a new analysis by the Ministry of Economy and Finance presented on 26 October. The analysis is based on four national family expenditure surveys, carried out every six years.

We have done a detailed analysis of the surveys, and a special supplement is attached, and available on bit.ly/MozPoverty

Although the percentage of people living in poverty has fallen in the past 18 years from 69% to below 50%, population has been growing faster, so the actual number living in poverty has risen from 11 million to 12 million. The report also notes that although there have been significant falls in urban poverty, rural poverty is declining only slowly – from 55% in 2002/03 to 50% in 2014/15.

Mozambicans are a bargain

The Brazilian airplane company Embraer had to pay smaller bribes to Mozambique than to other countries when selling aircraft, according to the US Securities and Exchange Commission (SEC). The action involved sales to four counties. Bribes in the Dominican Republic were $3.52 mn on a contract of $96.4 mn (3.6%), Saudi Arabia $1.65 mn bribe on a $93 mn order (1.8%), and India $5.76 mn bribe on a $208 mn order (2.8%). For Mozambique, the bribe was $800,000 on a $65 mn order which is just 1.2%. Clearly Mozambicans cost less and should be raising their prices.

According to the SEC, Embraer initially only offered $100,000-$160,000, but this was rejected. The Mozambican intermediary demanded $1 mn. Eventually $800,000 was offered and accepted. The money was paid by Embraer’s US subsidiary to a Portuguese bank account. The use of the US subsidiary meant that the SEC could bring the case under the US Foreign Corrupt Practices Act.

The SEC says that the $12 mn in bribes generated a profit to Embraer of $83 mn. On 24 October the SEC announced that Embraer had agreed to pay $205 mn in penalties to the US govenrment to settle the case. Mozambique’s Assistant Attorney-General Taibo Mocubora said on Friday that prosecutors will investigate the case of the bribe to an official of Mozambique Airlines (LAM). Mucobora noted that the Central Office for the Fight against Corruption (GCCC) announced in September that it was prosecuting the former LAM financial director, Jeremias Tchamo, for signing 25 contracts with a building company owned by his brother, who was also a LAM employee. LAM paid this company a total of 5.3 million meticais ($190,000 at the exchange rate of the time).

Other economic news

Bus stop : Maputo’s bus rapid transit project, due to start this year as a vital addition to public transport and reducing congestion, is not going ahead, confirmed Joao Matlombe, vereador (local minister) for transport. This is due both to the inability of Maputo to obtain the necessary $225 million in finance because Mozambique cannot guarantee debt, and because Brazil suspended this along with other projects in Mozambique due to suspicions of corruption. Odebrecht had won the tender. The two routes would have transported 7,500 passengers per hour into central Maputo. ( O Pais 28 Oct, @Verdade 24 Aug)

Ematum will lose MT 55,000 ($700) per boat per day , about $230,000 per year from its 27 boats, estimates Mario Dimene, the former director of the coastal shipping company Navique and the ship repair company Somonav. This is because Ematum planned to export whole fish, he told Domingo (30 Oct). But he does believe that by processing tuna and also fishing for shark and prawns Ematum could be made profitable. The detailed calculations are in Domingo.

Fuel subsidies were ended on 1 October, and the price of diesel fuel rose to MT 45.83 ($0.60) per litre, but there will still be a subsidy of MT 14.83 ($0.20) for licensed bus and minibus operators. This will cost the government MT 589 million ($7.6 mn) per year, transport minister Carlso Mesquita told parliament 26 Oct. ( O Pais 27 Oct)

Food is being imported that could be grown in Mozambique, according to Bank of Mozambique economist Filisberto Navalha Outro. In 2015 $30 mn of maize was imported compared to $9 mn in 2005.  Vegetable imports jumped from $1 mn in 2005 to $22 mn in 2015. ( O
Pais
27 Oct)

Cotton prices have been raised in Meticais but are cut in dollars . The minimum price for first grade cotton increases from MT 14.5/kg last year (then $0.35) to MT 20/kg (now $0.26). For second grade cotton the increase is from MT 10.5 to 14.5, $0.26 to $0.19 (AIM En 25 Oct; In October 2015 $1 = 41 and in October 2016 $1 = MT 78)

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