/ 1 August 2010

Building boom transforms Mozambique, but not for poor

Heavily pregnant Adelaide Mangwel balances 18kg of prawns on her head as she slowly descends the crowded ferry that carried her across Maputo Bay to sell her seafood in Mozambique’s capital.

It’s a daily journey that could be made easier as a bridge spanning the bay goes under construction later this year, part of the $1,5-billion that Mozambique is pouring into rebuilding its war-shattered infrastructure over the next five years.

“It will help. I won’t have to wait for a ferry,” the 29-year-old says.

“In November, when it’s raining, the small ferry doesn’t work. There are too many people. The bridge will be cheaper,” she says, an optimism not borne out in Mozambique’s recent experience.

Since its civil war ended in 1992, the Southern African country has spent billions of dollars to build and repair roads, enlarge harbours and rehabilitate railways.

Much of the construction has surrounded foreign investment in “mega-projects” like aluminum giant Mozal’s $1,3-billion smelter outside Maputo and vast new mines to exploit the world’s largest untapped coal reserves in central Mozambique.

The big investments are transforming the country’s economy, with aluminum now accounting for more than half of exports. As coal mines begin work over the next year, exports will shoot up again.

But grinding poverty remains the reality of life for most Mozambicans like Mangwel, raising questions about the building boom’s pay-off for a nation still among the world’s poorest.

“Mega-projects represent a large share of exports and GDP but have made a minimal fiscal contribution and resulted in relatively low job creation and spillover effects into the rest of the economy,” said Victor Lopes, an economist with Standard Chartered Bank.

Mozambique’s per-capita gross domestic product doubled over the last decade to $440. Despite the growth, poverty levels have hardly changed, mired at about 65% of the country’s 20-million people.

Without doubt, the construction has quite literally helped the country bridge its war-time divisions.

Last year a bridge over the mighty Zambezi River connected northern and southern Mozambique, linking the capital to northern areas that were once rebel strongholds.

Last month construction began on another Zambezi bridge, while over the last year new bridges have also linked Mozambique to neighbouring Tanzania and Malawi.

Those developments are just part of an ambitious construction spree.

A railway destroyed during the civil war has been restored, plans are under way for a new deep-water port south of Maputo, and a new railway to Botswana has been proposed.

But much of the latest building is aimed at facilitating new coal exports or serving landlocked nations in the region.

Improved roads and bridges do help the population by making transportation easier, said investor Adrian Frey.

“If you grow maize or potatoes, you get faster to the market. Transport costs are lower. It is quicker, cheaper,” he said.

And infrastructure construction has created jobs, said analyst Steve Ombati from Frontier Advisory consultancy.

“Local populations largely benefit through employment in infrastructure projects and the maintenance of the facilities,” he said.

But the number of jobs created remains minuscule relative to the size of the workforce, and the new investments focus on big commodity exports, rather than labour-intensive manufacturing.

Foreign investment “has been important for Mozambique’s economy and, to use the World Bank’s words, has helped to ‘put Mozambique on the investment map’,” said Lopes.

“So far, however, its contribution to the overall economy has not been that significant.” – AFP