Not quite as stellar as it looks

Wednesday, December 5, 2007

AS a shining example of a happy transition from war to peace, Mozambique has won a lot of plaudits. In October Joaquim Chissano, the country’s former president credited with much of its recent success, won the first Mo Ibrahim prize for retired African rulers. In November the accolades came from the World Bank, which praised Mozambique for being among the region’s top business reformers. Enthusiastic donors poured $1.3 billion into the country in 2005?about a fifth of its GDP. Does Mozambique deserve the acclaim?

It has certainly come a long way from the early 1990s. Then, it was left exhausted and destroyed by years of war, first for independence against Portuguese colonial rule and afterwards between two domestic foes, the ruling Front for the Liberation of Mozambique (Frelimo) and the opposition Mozambican National Resistance (Renamo). But they have beaten their swords into ploughshares and now argue out their differences at the ballot box. The ruling party dropped its Marxist credo 20 years ago, though some of the rhetoric remains. The economy has grown by an average of 8% a year since 1996, and the IMF expects inflation this year to dip under 10%.

Mozambique has become a magnet for foreign investors because of its minerals. The Mozal aluminium smelter near Maputo started the rush in the 1990s; more recently several mining companies have done deals to dig for coal and ilmenite, which can be turned into titanium dioxide, a base for paint, paper and plastic. Foreigners are also interested in biofuels. The Chinese want to build several dams. With the main roads de-mined and patched up, you can drive fairly easily from Maputo, the capital down south, to Pemba, some 1,650 kilometres (1,025 miles) north.

The southern provinces had always done relatively well, mainly because they are close to the regional behemoth, South Africa. But now the north is picking up. Bright new banks, petrol stations and hotels have opened in the northern town of Nampula. In contrast to a few years ago, telephones are working, electricity is fairly reliable and water is running. The province’s dynamic new governor, Felismino Tocoli, is very friendly to business.

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Source: The Economist (link opens in a new window)