High economic growth in recent years is in fact not benefitting poor people in Moçambique. Neither is it stimulating the emergence of small businesses that can provide people with jobs. Donors and agencies alongside the government are increasingly emphasizing private sector development and entrepreneurship as the answer to this problem.
After having spent almost two weeks in the beautiful city of Maputo, Moçambique, I am starting to feel confident navigating around on the dusty, flawed sidewalks. The streets are perfectly straight and constitute a grid that sometimes reminds me of New York, but with a far more chaotic and disorganized atmosphere and funny names like Mao Tse Tung, Karl Marx, Vladimir Lenine, and even Olof Palme. In every other street I see women selling exotic fruits and vegetables such as papayas, passion fruits, bananas, avocados, mandiocas, and sweet potatoes. I see men pushing around carriages with pieces of plastic, metal and spare parts of electronics they are trying to sell, and in the corners there are shoes lined up and second hand clothes on display. I even see a group of men circulating a wrecked car pushed up against a tree, discussing if it is still usable.
I am here in Moçambique to study Scandinavian private sector development support, which is definitely on the agenda of both bilateral and multilateral donors. In a population of almost 26 million people, with a labor force of roughly 10 million, only 800 000 are employed in formal jobs. Out of these 800 000 formally employed, 500 000 are public servants. Given around 5 million are farmers, 3-4 million people earn a living through the informal private sector. This means they are basically self-employed, selling what ever they can produce or find, or performing any type of service. Engaging in the private sector development is an attempt by the donors to reduce poverty. If the jobs of the self-employed could be formalized, the workers would be put in a much more secure and stable position. It would also mean increased revenues to a heavily aid dependent state. Only a week ago, donors and funding agencies promised Moçambique about 305 million dollars in budget support for 2016, of which 34.8 million come from Sweden alone.
The other day I was invited to join an agribusiness working group meeting at the EU-delegation on farmer organization strengthening, joined by diverse representatives from embassies, NGO:s, investment banks etcetera. The discussion got quite interesting, and I would like to share some of the covered topics.
To give a brief background:
Although Moçambique has changed a lot in recent years and is in fact experiencing rather high economic growth, the agribusiness is stuck with chronic low productivity and farmers remain poor. Only 40 percent of all farmers sell any of their products. Most of them are subsistence farmers, meaning they produce what they consume. In fact, the fruits and vegetables I see on the streets of Maputo actually come from South Africa. A person in Moçambique can survive being a subsistence farmer, but can never get out of poverty. Farmers are trapped in a vulnerable position. Not only are they subjects to natural disasters such as floods and draughts, it is also expensive to access land. Land rights and licenses are complex and it is not possible to own land, only rent, and in order to prolong the licenses the farmers need to demonstrate improvement of the production. Without ownership their rights are limited, and land grabbing is an occurring practice.
In the meeting it was discussed that chronic low productivity is caused by lack of quality inputs and good practices. It was suggested there should be a shift from subsistence farming to “farming as business” in order to create local entrepreneurs and companies. Furthermore, it was suggested that donors and NGO:s need to change from a paternalistic approach to a business approach. Small hold farmers need to learn how to deal with the rules of the market instead of being forced to create associations and supported by government interventions. Donors should not stress numbers but quality, and NGO staff needs training on farming as business. They should be able to support the farmers in simple business practices, which was stated is not the case today. Obviously, not all farmers are able to or want to be entrepreneurs, but changing the mind-set into developing skills and practices in order to make a revenue was put forward in the meeting as the path out of poverty.
I am curious to know if anyone has any thoughts on this! Feel free to comment in the comment section!
However interesting it is to meet embassy staff and funding managers here in Maputo, I am eager to get out of the policy headquarters to see what the Moçambican countryside looks like and talk to the entrepreneurs myself.