The Mozambique Miracle

The Mozambique Miracle
By MATTHEW KAMINSKI
April 7, 2007; Page A8

MAPUTO, Mozambique -- In the Hulene quarter of this former Portuguese colonial capital, private minibuses swerve around holes carved in seas of mud. Metal sheets provide shelter for thousands packed in without electricity or sanitation. Illiteracy and HIV rates are shockingly high. The stench and deprivation take the breath away.

Mozambique is one of the world's poorest countries. It's also an African success story. Here, such things are relative. To the immediate west, Zimbabwe's Robert Mugabe misrules his country toward calamity. Nigeria, Ivory Coast and others are beset by civil conflict and corruption. But Mozambique, scarred by 16 years of civil war and Soviet-style economics, turned itself in the right direction on its own. Optimism, however guarded, and Africa do sometimes go together.

For all the debates over development strategies, the secret to Mozambique's recovery is simple. "We opened our markets and dropped the centralized economy," says Miquelina Menezes, who chairs the country's association of economists and runs a fund devoted to bringing electricity to rural areas. "If you want to join the world, you have to change. We needed to rebuild the country and to rebuild confidence."

The elite never experienced an ideological conversion. The main drags in Maputo, once dedicated to Portuguese worthies, are still named after Mao, Lenin and Kim Il Sung. ("It's our history, not our present," laughs Ms. Menezes. "They won't change them again.") But hyperinflation and a stagnant economy forced leaders of the neo-Marxist liberation movement, Frelimo, to shift their approach. Starting in the early 1990s, the ruling party cut subsidies, opened to outside investment, privatized firms nationalized after independence in 1975 and got a grip on borrowing and the budget. An independent central bank brought inflation into single digits. According to the World Economic Forum's competitiveness index, Mozambique has reformed more than any sub-Saharan African country.

The payoff is the highest average growth rate, at 8% over the last decade, among the continent's non-oil exporters. GDP per capita is a still tiny $320, but that's compared with $178 in 1992. Since 1997, poverty rates decreased more in rural areas (from 71% to 55%) than in urban (62% to 52%), according to the World Bank. Child mortality has declined to 152 per 1,000 live births from 235. And primary-school enrollment has risen to 71% from 43%. Once a leading recipient of food aid, Mozambique now exports maize, with 5.6% average yearly growth in farming in the last 15 years. Banks, telecom and tourist firms, many from neighboring South Africa, have come in.

"[Economic and political] stability has been the key factor" to reviving the country, says Thiago Fonseca, who runs the Golo advertising agency here. His challenges: A lack of skilled workers and HIV/AIDS, which has claimed the lives of a couple of his employees. The nation's HIV prevalence rate is 16%, which will reduce life expectancy to age 36 by 2010, from 40 today.

Appreciating the change for the better takes some imagination. Like many of its neighbors, Mozambique went from colonialism -- under Portugal, still a developing country itself -- to a Cold War-proxy conflict that claimed a million lives (out of 20 million) and left a generation uneducated. Few of the paved roads have been worked on since the Portuguese left 32 years ago. "A lot of [the growth] is catch-up after war," says the World Bank's man in Maputo, Michael Baxter.

But neighbors in similar straits haven't put in place Mozambique's fixes. Inflation in Zimbabwe is 1,700%; nearby Malawi and Zambia, their economies distorted by subsidies on commodities, are growing haphazardly. "You need political will" to get it right, says Mr. Baxter. "Starting from a low base" or "being a former colony" -- oft-heard excuses for Africa -- has little impact on economic performance. What matters, as regional dynamo Botswana also shows, is governance.

A "donor darling," Mozambique doesn't obviously squander the more than $1 billion a year in Western aid, which accounts for half the budget. Experience here suggests that a commitment to economic opening ought to be the litmus test for aid recipients.

No country in this part of the world is assured of staying on track. Erratic "Uncle Bob," as his deferential neighbors call Zimbabwe's 83-year-old Robert Mugabe, is a useful reminder that local politicians pose the gravest threat to Africa's future. In each of the three general elections since the 1990 constitution, Frelimo has won by wider margins amid accusations of fraud. Absent any peaceful turnover of power in Mozambique, Frelimo and the state are increasingly becoming one; nearly all jobs are reserved for party members.

What if it lost elections? "We'd have a serious revolution," says Fernando Lima, publisher of Mediacoop, the largest independent press group. While the government is publicly committed to free speech and democracy -- to keep donors happy, at least -- Mozambique's civil society is hampered by state domination of media, low penetration of radio and television, and weak institutions such as the courts. "Every country in Africa says it's a multi-party democracy," says Leon Louw, director of the Law Review Project in Johannesburg. "It doesn't mean it's so; it only means it's better than it could be."

In the meantime, having done the so-called first generation of market reforms, the government is dragging its feet on legalizing land ownership, fighting corruption and loosening a restrictive labor code to bring in more investment. "Now they're stuck," says Mr. Lima. "There is a strong socialist background here. If we want to perform, we need to be different."

The road ahead for a place like Mozambique is staggeringly long. About 93% of its people lack access to electricity. Half can't read; half are undernourished. But Africa needs to start somewhere, and Mozambique shows how