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Press Release

3 May 2006

The UK announces £215 million to support Mozambique to reduce poverty and deliver services to the poorest

Maputo – The UK Department for International Development (DFID) today announced that it has approved a new £215 million programme of budget support for Mozambique, which will be provided directly to the budget of the Government of Mozambique (GoM) over the next five years. The money will be used to support the GoM to achieve the goals for poverty reduction and economic growth that it will set out in its new poverty reduction strategy (PARPA II).

This level of funding from the UK demonstrates the confidence that the UK has in the Government of Mozambique’s ability to sustain, over the next five years, the impressive progress already made in improving the lives of the Mozambican people.

The programme is rolling. This means that each year we will add another year to the programme – so that the Government always has a five year commitment. We are making such a long-term commitment so that the Government can in-turn have the confidence to plan long-term and to enter into long-term commitments for service delivery.

But our funding is not un-conditional, we will expect a strong and real impact on the lives of poor people every year. So each year we will, working with the Group of 18 budget support donors, with civil society and with the government, monitor the impact of this financing very carefully. We will also continue to work closely with the Government to help ensure that systems for the control of public finances continue to be strengthened.

Background

DFID Mozambique Programme and budget support:

• The UK is one of the largest donors in Mozambique. DFID’s aid framework for 2005/06 is £55 million. Of the £55 million, £35 million (64%) is provided as budget support. In addition to budget support, DFID has large sectoral programmes in health, education, infrastructure and HIV and AIDS. DFID also funds key central reform processes, including public financial management and public sector reform. In addition DFID has a number of programmes with civil society which aim to strengthen voice and accountability.

• This is a doubling of our budget support compared to our support over the last five years. It will take our annual budget support to nearly £50 million by 2011, accounting for 75% of our annual programme, the highest percentage of any donor to Mozambique.

• Budget support is un-earmarked funding that goes directly through the budget of the Ministry of Finance. It is therefore allocated according to GoM priorities. As an indication of where the money is spent: in 2004, the biggest sectors for GoM spend were education at 22%, health at 12% and infrastructure also at 12%. This funding is not un-conditional; we expect to see a strong and real impact on the lives of poor people every year. A Performance Assessment Framework (PAF) is used to track progress and make decisions on budget support allocations.

• In addition to providing financial resources, the budget support programme also entails policy dialogue around the GoM’s poverty reduction programme. DFID’s and other donors’ expertise, in-house or contracted, is available to advise the Government on policies, provide challenge and invest in continued assessment of policy impact. Policy dialogue is structured through sector working groups, chaired by a GoM representative from the relevant Ministry and with donor and civil society representation.

• More information about DFID Mozambique and the budget support programme, including performance reviews, is available on DFID's Mozambique country profile.

Development outcomes:

Although Mozambique remains one of the poorest countries in the world, development aid, and specifically budget support, has already enabled the GoM to rapidly expand pro-poor service delivery, including in education and health. The GoM has made some impressive advances in the last few years, including:

• Poverty: Reduced poverty from 69 per cent in 1997 to 54 percent in 2003, meaning that there are nearly 3 million fewer Mozambicans living in absolute poverty than would have been the case had poverty remained at 1997 levels.

• Education: Increased the number of children enrolling in primary school by over 1 million between 1999 and 2004 – from 44% to 76%. Gains have been strongest for girls, narrowing the gender gap.

• Health: Increased the number of health units by almost 25% in the last 5 years. The number of mothers dying in childbirth is estimated to have halved since 1995 and child (under-5) mortality reduced by 19 percent between 1997 and 2003, from 219 deaths per 1000 live births in 1997 to 178 in 2003.

Assuming the targets the Government of Mozambique has set itself in the final draft of PARPA II are met it will be on-track for many of the Millennium Development Goals (MDGs) and will:

• Reduce poverty to 43% of the population, meaning 2 million fewer Mozambicans will be living in poverty in 2009 than would be the case if poverty levels remained at 2003 levels.
• Increase primary school enrolment from 83% to 93%, meaning an additional 400,000 children will enroll in school in 2009 than in 2005.
• Increase water coverage from 40% to over 50% of the population, meaning 9000 water fountains will be built or rehabilitated and 2 million more Mozambicans will have access to safe drinking water in 2009 than in 2005.