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Eliminando as Barreiras para o Desenvolvimento Inclusivo

Eliminando as Barreiras para o Desenvolvimento Inclusivo. Namaacha 22 Março 2010. Moçambique A country of great potential. A rich natural endowment Large regional market more than 100 million people with average income 5 times greater

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Eliminando as Barreiras para o Desenvolvimento Inclusivo

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  1. Eliminando as Barreiras para o DesenvolvimentoInclusivo Namaacha 22 Março 2010

  2. Moçambique A country of great potential • A rich natural endowment • Large regional market • more than 100 million people with average income 5 times greater • regional market & infrastructure integration underway • Electricity exports & expansion • Gas exports & offshore gas/oil • Large FDI – over$500m since 2008 • Large Official Development Aid • projected at $1.9 billion • roughly $86 per head • Easy access to global markets • And more ……

  3. Moçambique A country of great potential • 7th fastest growing economy during last 15 years • Committed to faster structural transformation • Embarked on business-friendly regulatory reforms, albeit at a slow pace • Investment in human capital • Strong desire to realize the potential for: • Natural resources development • Commercial agriculture • Regional transport logistics services • Electricity for exports • Special Economic/Industrial Zones • Eco and coastal tourism • Consistent focus on macro stability

  4. Unexplored potential • But Mozambique is growing from a low base • PIB per capita de Moçambique, cifrado em US$ 855 em 2008em termos de paridade de poder de compra • apenas 1,8 por cento do dos Estados Unidos e 8,2 por cento da média mundial • Poverty reduction at a slow pace • Narrow export basket; Focus on megaprojects • Growing labor force, but low job creation • Low utilization of production factors • Vast areas of fertile arable land have not been exploited with only 4.5 million out of 36 million hectares currently being cultivated • labor that is shed by agriculture is not being effectively absorbed by high value-added industries • even after privatization and deregulation, the rail and port infrastructures operate below capacity

  5. Challenges are significant High level of poverty by international measure Relatively unimpressive poverty reduction • Exports are highly concentrated • Aluminum exports > all other commodity exports combined • Only 14 products with exports of over US$1 million

  6. Economic geography of SADC • Where is the market for Mozambique? • Maputo is situated within 500 km of two major South African markets • Mozambique served its landlocked neighbors (Malawi, Swaziland, Zambia, Zimbabwe) • … which can be reconnected by upgrading existing transport infrastructure

  7. Physical access to markets • Maputo Development Corridor builds on existing logistics infrastructure • including roads, railroads, gas pipeline, transmission line, and a modern port • … and timebound regional integration program

  8. Moçambique Um pais de altapotencialidade • Mozambique:Regional Trade Flows 2007 • South Africa is the main user of Maputo Corridor • imports from South Africa were 2.4 times greater than exports to South Africa • over 50% of Mozambican exports to South Africa is electricity • chronic bilateral trade deficit with South Africa • Bilateral net importers are Malawi and Zimbabwe • Swaziland, Tanzania, and Zambia are net exporters to Mozambique

  9. The satellite imagery shows the land pressure being felt by farmers on the South African side of the border compared to a virtual non-existence of farms or industrial activity along the 90 Km highway from Ressano-Garcia to Matola.

  10. A comparable corridor from Uganda to Kenya shows a high concentration of Ugandan businesses forming clusters along the corridor….. …… and more recently, near the border to supply the Kenyan market. • Proliferation of businesses near border

  11. Registered Land Rights • Abundant land …. • ….. but sparse use • Roughly 5% of land use rights is registered • community land demarcation • land use rights (DUAT) • Less than ½ of land fully used, 30% not used • Land tax: 0.08, 0.6, 8 US$/yr.ha respectively for livestock, rainfed agriculture, and tourism.

  12. …andtheelusivespillovereffect Megaprojects

  13. Trade grew exponentially since 2000 • export growth fueled by mega-projects • import growth by both consumption goods and mega-projects • MOZAL exports exceeded all other exports combined since 2004 • MOZAL exports were nearly 3 times as big as its imports • net gain for on the BOP is much smaller after netting out debt service, support service fees, and yes, DIVIDENDS to foreign shareholders • from export earnings perspective, MOZAL is largely a phantom operation

  14. These are clearly high return investments • net gain to non-residents are high, so FDI will continue to increase • net gain to residents are modest, both in income and employment creation • Bias toward nontradables through exchange rate appreciation • depresses traditional exports • Exemptions and simplified procedures favor megaprojects • the rest of the businesses suffer from regulatory overload

  15. …andunleashingthepotential Broadeninggrowth

  16. Pre-IndependenceMapofMozambique Only 14 percentofthepopulationlivein central areas, the savana, forest, andgrasslandofthecountry. Pocketsofpopulationcenterscreatedbyhistory. Today, 35 percentofpeoplelivewithin 75 kmsofaninternaltionalborder. Theimmediateproximity to theborder (25km) islesspopulated (9% ofpeople). • OverhalfofMozambicans (52%) livewithin 75 kmsofthecoastline. And 33% livewithin 25 kmsofthecoastline.

  17. Mozambiquehas a verylowroaddensity. Compare: Vietnam’s 69 km andIndia’s 112 km • ButSouthAfricahas 29 km, Zambia 9 km, Zimbabwe 25 km (per 100 km2 oflandarea) accessible to Mozambicantraffic • Transportdevelopmentstrategyneeds to considerwhether to link populationcenters, natural resourcepockets, neighboringcountries, ortheagriculturalbelts. Thechoiceisnoteasyandtradeoffsmayhaveimplications for generations.

  18. In 2004, Mozambiquespent US$51 perchildinprimaryschool, or 10th lowestlevelamong 81 countriesinthesample. • butprimaryschoolcompletion rate was 29.5 %. • normalized to 100 % completion rate, Mozambiquewouldhavespent US$172 perchildgraduate. Notonlythemoneyusedislowinabsoluteterms, butalsoeducationsystemisnotefficient. Compared to othercountries, Mozambiquemakesrelatively more effort (beingrightsideofthetrendlines)

  19. TheScourgeof HIV/AIDS…. …. Nothing more needs to besaid

  20. NotsoeasydoingbusinessinMozambique Country ranking movedup 5 placescompared to 2009 report. • Bigjumpof 45 places for Starting a Business • Marginal improvementsinRegisteringpropertyandTradingacrossborders

  21. Removendo obstáculo para desenvolvimento inclusivo em Moçambique Termos de benefícios fiscais e impacto multiplicador podem ser analisado concretamente antes das negociações. Ligações com a industria nacional podem ser facilitadas. Necessidade de criar empregos em dimensão mais ampla. Megaprojetos Industria nacional Sector Agrícola Com aumento da produtividade e educação das crianças, pode proporcionar mão de obra ao sector industrial. Especialização e aglomeração Mais especializada Mais especializada Movimento intersectorial de mão de obra Mais especializada Especialização da Agricultura Especialização da Agricultura Especialização da Agricultura Urbanização da população Serviços

  22. Money is a partoftheproblem, butonly a part. Some Observations: • Idlefactorsofproductionneed to beput to use. Theyneed to beable to move to wherethey are needed. Orattractthosebusinesseswhichneedthem. • Broadeningofgrowthrequiresremovingbiasestowardmegaprojectsandlargebusinesses. • Infrastructureplanningneed to takeintoaccountwherepeopleandresources are located. Butthereis a series oftradeoffs. • Bureaucracyandregulationoverloadisincompatiblewithbroadbasedhighgrowth. Theyneed to besystematicallyremoved as soon as possible. • As businessenvironmentimproves, itbecomes more lucrative to borrow to invest. Returns to investmenthas to behigherthancompetingcountries. Money followssuccess.

  23. We do nothave a map for Mozambiquelikethisone for China. It shows theevolutionofspecializationandagglomerationinzonesspreadoutindifferentpartsof China. Whatwouldbethevision for Mozambique? What are thegeographic, demographic, commercialandlogisticfactorswhichwillinfluencethisvision? Observationsputforwardinthispresentation are simplifications. However, no onedoubtsthatMozambiquehas a greatpotential to growandprosper.

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