Mozambique - Joint IDA-IMF Staff Advisory Note - Poverty Reduction Strategy Paper

Documentof The WorldBank FOROFFICIAL USEONLY ReportNo. 37975-MOZ Republicof Mozambique JOINT IDA-IMF STAFFADVISORY NOTE ONTHE POVERTY REDUCTIONSTRATEGY PAPER November 14,2006 Department: AFTP1 Country Management Unit:AFC02 Region: Africa This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  For OfficialUse Only Table of Contents Page I. Introduction..................................................................... 1 11. Poverty Situation.. ......................................................... 2 111. Macroeconomic andFiscal Framework................................. 3 IV. 6 BuildingHumanCapital., ................................................. Improving the InvestmentClimate.. ..................................... V. 7 VI. Delivering Public Services.. .............................................. 7 VII. VIII. Conclusions and Issues for Discussion.................................. ImplementationRisks, Monitoring and Evaluation o f PARPA 11... 8 9 This document has a restricted distribution andmaybe usedbyrecipients only inthe performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  THE INTERNATIONALMONETARYFUNDAND THEINTERNATIONAL DEVELOPMENTASSOCIATION REPUBLIC OF MOZAMBIQUE PovertyReductionStrategyPaper- Joint StaffAdvisoryNote Approved by DavidNellor and Anthony Boote (IMF) and Gobind Nankani (IDA) November 14,2006 I. INTRODUCTION 1. ,a September 006, the governmentformally approved.&s revisec Act.an Plan for ReducingAbsolute Poverty(PortugueseacronymPARPA;the Mozambican PovertyReductionStrategy Paper).'PARPA I1was preparedbythe government through broad-based consultations with major stakeholders and civil society ina more participatory approach than PARPA I,involving four national and ten provincial Poverty Observatories. It i s built on the experience o f PARPA Iincluding the PRSP Annual Progress Report (BdPES, or Balanqo do PES inPortuguese) presented to the Executive Boards o fDirectors o fthe International Development Association (IDA) and the International Monetary Fund(IMF) in June 2005, along with the Joint Staff Advisory Note (JSAN).2 PARPA I1i s the operational planfor the government's FiveYear Program (2005-09) and for the first time includes a strategic matrix o f key indicators, ajoint effort by the government, donors and civil society. These indicators will be fully integrated into and monitored through the annual instruments o fthe Economic and Social Plan(PES inPortuguese) and BdPES.This planning and monitoring process, a good practice innovation, will be a key issue for implementation. 2. While maintainingitscommitmentto improvequalityand access to social services, PARPAI1recognizes that the "rapid, sustainableandbroad-basedgrowth" warrants moreemphasis on the growthof the productivesectors with a moreactiverole of the privatesector. This strategy is reflected inapillar approach based on the FiveYear ''TheBdPES revised PARPA 2005-09 i s referred to as PARPA I1for the remainder of the JSAN. The is also submitted to Parliament. Other background documents include the following government documents submitted to the national assembly: the budget execution report for 2005, the medium-term fiscal scenario (CFMP), and the state budget (OE). The government and the direct budget support donors annually review the past year's implementation inApril, and agree on new commitments four weeks later. InSeptember, ajoint Mid-Year Review agrees on the performance indicators and targets for the following year. These reviews lead to an aide-mtmoire that complement the BdPES and the PES. The most recent aide-mtmoire (September 2006) was used as background for this JSAN.  Government Program incontrast to the sectoral approach used inPARPA I.Staffs welcome this shift, which ensures consistency with the principal policy framework o fthe government andprovides a more holistic view o f development, enabling the buildingof synergies within each pillar and cross-cutting themes. Inaddition, a special role i s provided to districts as the focus o f development while small and medium enterprises (SMEs) form the engine o f employment generation, facilitating a shift from the informal to the formal sector. There i s also a clear recognition o f the challenges related to HIV/AIDS with a credible strategy for accelerating the national response to the AIDS pandemic. Overall, the priority areas for public policy to sustain growth andpoverty reduction, and improve service delivery are arranged under three pillars: (i) economic development; (ii) capital; and human (iii)governance. 3. This Joint StaffAdvisory Note(JSAN) providesstaffs' adviceon key priorities for strengtheningfuture annualprogress reportsandfor ensuringeffective implementation.It also highlightsseveral critical areas for further analysis and elaboration o fpriority public actions. While Mozambique i s on track to meet the Millennium Development Goals (MDGs) on povertyincidence, infant andmaternal mortality, and access to safe drinking water, particularly inurbanareas, other areas such as enrollment o f upper primary school andbeyond, particularly inrural areas, gender equality, and HIVIAIDS call for a more efficient service delivery and effective use o f additional donor support. 11. POVERTY SITUATION 4. Mozambiqueachievedimpressiveresultsunder PARPAI,sustainingeconomic growthof 8 percentper year on average, andreducingthe povertyheadcountindex from 69 percentin 1997to 54 percentin 2003, supportedby prudent macroeconomic policies,far-reachingstructuralreformsandsubstantialdonor assistance. Growth has been"pro-poor" meaning that the rate o f consumption growth ofpeople below the poverty line was strongly positive due to agricultural expansion, greater nonfarm activities inrural areas, and a rise inemployment income. The decline inheadline inflation has also helped, as it tends to hit the most poor the hardest. 5. Staffswelcome that PARPAI1objectivesare consistent with the MDGtargets. PARPAI1aims at reducing the incidence o fpoverty further to 45 percent in2009. Mozambique appears well placed to achieve the keyMDGs o fhalving the poverty rate by2015 as long as growth remains roughly above 5 percent. Staffs share PARPA 11's view that sustained high, broad-based growth embedded inan environment o f good governance is needed to reduce poverty incidence and improve service deliveryin a sustained manner. 6. The quality of povertydiagnosis in PARPAI1hasimprovedconsiderablysince PARPAI.PARPA I1draws on the secondhouseholdsurveyresults and analysis (IAF2002-03), which allow comparisono ftrends over a five-year period. The definition of poverty has been broadened, and the measurements o fpoverty are now more multidimensional, including quantitative (covering incidence, depth and severity o fpoverty as well as nutrition-basedindicators) and qualitative information. These data used inthe poverty diagnosis are considered to be relatively reliable and o f good quality. Nevertheless, - 2 -  future poverty analyses could includeaspects such as disempowerment, causes o fpoverty and vulnerability. 7. Giventhe importanceof smallholder agriculturefor growthandpoverty reduction,staffswould welcome greater clarity as to how agriculturalgrowthcan be ensuredthrough increasedfarmlevel productivityandgreater access to markets. Smallholder agriculture i s predominantly subsistence based anduses few productivity enhancing inputs. Furthermore, agricultural production andthe livelihoods o f certain groups remain vulnerable to bad weather as witnessed by the flooding in2000 and drought in2005. The forthcoming rural development strategy should address the issues o fraising agricultural productivity, market access, and reducing vulnerability to weather shocks. 111. MACROECONOMIC AND FISCALFRAMEWORK 8. The primaryobjectiveof PARPAI1is to sustainbroad-basedgrowthandthus makefurther inroadsintopovertyreduction.PARPA I1emphasizes the importance o f consolidatingmacroeconomic stability through prudent monetary and fiscal policies inthe context o f a flexible exchange rate regime. Central to this strategy will be a gradual strengthening o fthe fiscal position underpinnedby an average increase inrevenue o f 0.5 percent o f GDP per annum. Economic growth is expected to remainpro-poor andat about 7 percent per annum, while inflation i s controlled to single digits through monetary control. The staffs welcome the well-presented macroeconomic framework inPARPA 11. Now that the post-conflict agricultural reboundhas largely runits course and first generation reforms are completed, there i s a need for a second wave o f reforms to sustain rapid growth. PARPA I1could have, thus, benefited from a more developed analysis o fthe sources o f growth and means to sustain productivity growth. 9. The baselinefiscal scenariois focused towardsachievingthe PARPAI1targets, butcouldbefurther elaboratedandcosted. The medium-term fiscal scenario (CFMP) clearly translates PARPA I1into an expenditure framework. Its approval by the Council o f Ministers for the first time in2006 lends the CFMP credibility as a tool to guide the preparation o f subsequent budgets and formed the basis for disseminatingthe 2007 budget ceilings. Inthis respect, staffs view that the CFMP could be included infuture PARPA I1 progress reports (i.e., BdPES), resultingingreater clarity over medium-term fiscal outlays. However, staffs are concerned that the expenditure framework seems to be based on trends in sector expenditures compatible with the objectives and goals o fPARPA 11, and not necessarily on a full costing o fpolicies and programs envisaged. There i s a needto strengthen the technical and negotiation capacity for budgetpreparation at the line ministry level inorder to improve the links between PARPA I1targets and the budget, an important challenge for the mediumterm. There is also a need to continue improving the planning and budgetingprocess by buttressingthe information on donor-financed expenditures inthe CFMP includingmultiyear commitments both for program and sector level supportwith the help o fthe donors. The alternative fiscal scenarios, including additionalMDRI-related spending, are illustrative and could be further developed infuture annual progress reports reflecting the actual debt reliefprovided andpriority expenditures budgeted. The staffs also - 3 -  see a need for a more detailed presentation o f alternative scenarios, particularly the challenges related to managing a scaling-up o f aid to meet the MDGs.Inthis regard, PAFWA I1could also be couched inamore long-termperspective, including a costingo fMDGsto guide policy directions and gamer additional donor assistance. 10. Thejoint Bank-FundDebt SustainabilityAnalysis of 2006 shows that debt dynamicsremainsustainableunderthe baselineandstress tests, albeit susceptible to a ratcheting up o fnonconcessional external borrowing. Although Mozambique's risk o f external debt distress i s low and the new external borrowing envisagedinPARPA I1is broadly consistent with staffs' medium-term macroeconomic framework andwith debt sustainability, it would be useful to analyze the viability o f alternative scenarios of external assistance through its impact on the debt sustainability outlook inhture annual progress reports. Inaddition, staffs encourage the authorities to continue to seek an increase inthe share o f grants, improvements inthe monitoring o f consolidated public debt, and develop a comprehensive debt management strategy including evaluating the impact o fpotential commercial borrowing for large infrastructureprojects. 11. Tax reformshaveproceededsmoothly andenter a consolidationstage. The law creating the Central Revenue Authority (ATM) was approved by the Assembly in December 2005, supported by the approval o f complementary legislation and regulationin June 2006, setting the stage for the appointment of the management body o f the ATM. The next phase o f the revenue administration reforms (2007-lo), to be supported by a multi- donor common fund, will focus on establishing the ATM as a sustainable, semi-autonomous institution, and improving operational performance to help achieve the medium-term revenue targets. The strong revenue performance recorded in2005 and 2006 attest to the gains from administrative improvements, although some fine tuning o ftax policy i s required to broaden the tax base by eliminating unwarrantedtax exemptions, implementinga simplified tax regime for SMEs, and adopting a comprehensive approach to the taxation o fnatural resource exploitation. 12. Large investments(so calledmegaprojects)in the miningand gas sectors have helpedMozambiquegain considerablecredibilitywith forei n investors,callingfor refinementsto the tax, transparencyandregulatoryregime. Total cumulative Q investment has been over US$4 billion for 1997-2005, puttingMozambique "on the global FDIMap." The sector's contributionto the fiscal accounts has, however, been lagging dueto generous tax exemptions. Now that investor confidence inMozambique i s stronger, staffs view that it is crucial that the government move forward very rapidly with the adoption o f a miningfiscal regimeinline with internationalbest practice. Inaddition, itwould be advisable to develop a more specific petroleum fiscal regime that would be embodied inthe 3The miningsector is broadly interpretedto include Mozal, a megaproject, which produces aluminum billets from imported alumina using electricity generated by the Cahora Bassa hydroelectric plant. - 4 -  general tax law so as to avoid case by case negotiationo fpetroleum project^.^ PARPA I1 commits to maintaining a transparent environment to attract investment inpetroleum exploration, and staffs encourage a timely implementation o fthe Extractive Industries Transparency Initiative (EITI) principles to improve transparency, revenue management and governance inthe oil, gas andminingsectors to continue to attract productive investments. 13. Publicfinancialmanagement(PFM)systems haveshown major improvements throughthe rolloutof the integratedfinancialmanagementsystem (e-SISTAFE) accordingto the latestPEFAassessment.The Homoine version o fe-SISTAFE was satisfactorily rolled out to six ministries (agriculture, education, finance, health, planning, andpublic works) inJuly 2006. The six ministries to which the systemwas rolled-out are now satisfactorily executing their budgets for goods and services and capital expenditure.' The authorities' medium-term e-SISTAFE Action Plan and Budget (APB) for 2006-0g6 includes the following main elements: the rollout o f the budgetexecution module to all central and provincial entities, and its customization to district and municipalities needs; the introduction o f Phase I1o f the budget formulation module; and the development o fnew modules and functionalities. Staffs view that the APB i s well-structured and the proposed phasingo f implementationis ambitious but feasible. The development of a payroll and pensions module shouldbe a highpriority for 2006-07, andwas identified by the PEFA assessmentto be a major fiduciary risk. The module is, however, dependent on the implementation o f a fully integrated civil service database, with which the e-SISTAFE payroll module shouldbe fully compatible.' 14. The governmentanditsinternationalpartnershaveincreasedeffortsto improve the monitoringandevaluationof expenditureprojectsandprograms.It shouldbe possible from next year to earmark programs through the budgetformulation module of e- SISTAFE, andto identify and track priority expenditures defined inPARPA I1on a real time basis. Staffs agree that the authorities and donors should identify a revisedset o fpriority programs to be monitored under PARPA I1including MDRI-related expenditures.' Good progress has beenmade inintegrating donor-financedprojects into the annual budget processes, although information on government accounting guidelines for externally- 4 T o date, the only major petroleumproject operating inMozambique is the Pande-Temane Gas Project, the contracts for which were signed in2000. More recently, four international companies have been granted the rightto start drilling for oil. Payments o f salaries continue to be executed centrally by the accounting department o f the Ministry o f Finance. By end-June 2006, the government and the donors reached an agreement on the APB for 2006-09 and a new Memorandum o f Understanding (MoU). 'Presentlythere are at least 12 different databases that maintain a register o f public servants throughout the government. The government is developing a centralized register ofpublic servants (CUF) with UTR4FE's collaboration. * Indoing so, it would be preferable to monitor both economic and fknctional classifications of spending, covering current and capital expenditures by geograplucal regions. - 5 -  financed projects that are brought "on budget" require clarification. Challenges also remain inexecuting donor-financedprojects throughthetreasury single account (CUT) ande- SISTAFE, and the use o f national procedures such as procurement, accounting, reporting and audit which needsto be further strengthenedwith close collaborationwith donors. Iv. IMPROVINGTHE INVESTMENTCLIMATE 15. A good investment climate is essentialfor the development of private sector, thereby fostering broad-based growth and employment creation. While PARPAI1 addresses the area of investment climate, staffs are concerned that it does not provide a clear vision and a strategy for doing so. Inlight o fthe cross-cutting and varied nature o fmost investment climate issues, staffs welcome the government's commitment to adopting a multi- ministerial sequenced long-term strategy to improve the investment climate, so as to create a consensus on the way forward and to increase the likelihood ofhaving successful reforms. 16. Finance and trade can accelerate the engines of growth and help cushion against exogenous shocks. The PARPA I1objectives regardingthe financial sector are consistent with the recommendations o fthe FSAPto ensure financial stability by strengthening supervision and modernizing accounting standards, andto enhance the scope o f financial intermediation by supporting the sound expansion o f the nonbank financial sector (insurance, microfinance, savings cooperatives for smallholders, and pensions). Inthis regard, staffs would welcome the specific measures to regulate private pensions and reform the National Social Security Fund(INSS) based on an actuarial study to ensure sustainability. The strategic matrix is, however, sparse on actions to reduce the cost and increase access to finance by improving the lendingenvironment, such as legal andjudicial reform, use o f land- use titles as collateral, and availability of credit information, as well as deepening o f domestic debt markets. Trade reform and regional integration should also be given greater priorityto promote export diversification as spelled out inthe Diagnostic Trade Integration Study (DTIS). 17. Accelerated justice sector reformwill remain a key to improving the investment climate. The weaknesses inthejustice sector anda lack o ftransparency will continue to impedethe development o f a viable private sector inparticular due to the slow contract enforcement process, which makes debt collection costly, slow and unlikely.There i s a clear needto develop a sector strategy and establish measurable performance indicatorsto monitor progress inthe sector indelivering its services. The performance against these indicators could be disseminated to the general public inorder to help foster a better image inthe judiciary system. 18. The ongoing revision of the Labor law is a step inthe right direction, and staffs urge the government's continued efforts to increase labor market flexibility. Whilst the new draft Labor law addresses some important labor market rigidities, weaknesses remain in the areas such as working hours (overtime, night andweekend work), paid leave, and retrenchment costs. As such, staffs view the needfor continued revision o f the law to address the remaining shortcomings as the implementationofthe new draft law takes place. - 6 -  v. BUILDINGHUMAN CAPITAL 19. Substantialprogress was made in the social sectors under PARPA I,partly due to the increased resources made available as a result of the Heavily Indebted Poor County (HIPC) initiative. Noteworthy achievements include the doubled primary enrollment rate, a significant fall inmaternal and infantmortalities, and a free provision o f ARV treatments for HIV infection. However, the lack ofprogress inruralwater supplyand sanitation remain a concern. 20. Overall, the approach laid out for the education, health and water sectors in PARPAI1is considered of good quality and consistent with the sectoral priorities and with achieving the MDG targets. Following the completion o fthe education sector strategic plan (Strategic Educationand Culture Plan, or PEEC), the health and water resources management strategies need to be finalized to realize the envisaged targets, including provision o f quality sustainable water and sanitation services insmaller cities and towns. 21. PARPAI1is found to be a credible strategy for acceleratingthe national response to the AIDS pandemic within the framework of the National Strategic Plan to Fight HIV/AIDS (PEN I12005-09). Inparticular, there i s a good analysis o f the impact of HIVIAIDSonwomen. However, the mainstreamingo fgender issues inthe health section is weak, as i s the question o f vulnerability o f younger women with regardto HIV and the practice o fparallel sexual relationships inthe spread o f HIV/AIDS. VI. DELIVERING PUBLIC SERVICES 22. A more efficient and effective delivery of publicservice will be essential to meeting most of the PARPA I1targets. The first phase o f the public sector reformprogram (2001-05) made some progress, but ingeneral has beenlagging behind reforms inthe PFM area. However, staffs are encouraged by the recent establishment o fthe National Civil Service Authority (ANFP), which reports directly to the President, to give the reform effort stronger leadership and focus, and the preparationo f the phase I1o fthe public sector reform (2006-1 1)with more restricted priorities and more directed to the impact on citizens' lives. Clear action plans aimed at approving andimplementingthe salary reform (installation of a civil service database based on a comprehensive census) are reflected inthe strategic matrix.' 23. Staffs welcome the government's incremental approach to extending administrative and fiscal powers to provinces and districts. This allows for the consolidation o f fiscal control, and improved accountability, duringthe critical period in which SISTAFE i s beingrolled out to the local level." Inaddition, staffs view the operation 'The ministryo f state administration deals essentially with local and municipal government, while the ANFP is expected to take strategic control o f the central and provincial state apparatus. loThe rollout of e-SISFTAFE to districts and municipalities includedinthe SISTAFE actionplan for 2006-09 should be gradual, based on their administrative capacity, and tailored to their needs. - 7 -  o fthe new procurement systemup to the district level as a priority inline with the PARPA I1 matrix. Staffs also welcome the government's proposedreview o f inter-governmentalfiscal relations as local government entities have limited autonomy indecision-making andare almost entirely dependent on government transfers for financing their expenditure," which should shape future reforms inthis area.12 Such a review might also cover the fiscal arrangements for transferring funds to municipalities, which need to bereassessed. 24. The objectiveof the reformprogramis also to intensifythe work on governance andcapacitybuildingwhile moving into new areas such as legal andjudicialreform, the restructuring o f government ministries, and the development o f a human resource management system. With regardto the restructuring o fministries, staffs would recommend a more focused approach. Governance measures are also beingtargeted through a range o f measures inaddition to those included inthe PFMwork ~r0gram.l~ However, staffs are concerned that there have been few concrete actions to actually implementthe recently approved Anti-Corruption Strategy. Continued emphasis on separation o fpowers and transparency i s needed to combat the widespread perception o f government interference. VII. IMPLEMENTATIONRISKS, MONITORING AND EVALUATION PARPA11 OF 25. To successfully implementPARPA11, the issue of developinginstitutionaland technicalcapacityneedsurgentattentionalongside good governance.The decentralization process, for example, poses considerable fiscal risks and challenges for capacity buildingat the local level, thus the authorities should take a more strategic approach to this issue with appropriate checks and balances. The weaknesses inthe justice sector are causing an increasing impediment not only indealing with criminal cases and corruption, but inrelationto labor issues andthe development o fthe private sector. This areathus constitutes a risk for PARPAI1implementation. 26. Staffs welcome the government's approachto monitorPARPAI1 implementationthroughthe annualinstrumentsof the PES andBdPES,inwhichthe key indicatorsof the PARPAI1strategicmatrix are integrated,anditsproposalto producean AnnualImpactReport(MI)at the end of the PARPAI1period.However, broad participation to strengthen domestic accountability inPARPA I1implementation and I'Recently, districts have eachbeen given additional budgets o f MTN7 million (plus ina selected number o f cases, 49 out o f 129districts, MTN3 millionfrom a World Bank project, thus more than doubling the budget o f these districts) over which they have authority to determine priorities, but this amount is small inrelationto overall public expenditure. l2Such a review might cover inter alia: the appropriate allocation o f responsibility for various categories or hnctions o f government between central, provincial and district government ("expenditure assignments"); the similar allocation o f responsibility for taxes and other government revenues ("revenue assignments"); and the arrangements for making transfers between central government, provinces and districts inorder to equalize for varying levels o fpopulation, poverty, revenue-raising capacity, etc. inthe provinces and districts. l3For example, steps are being taken to strengthenthe role o f the government's internal audit authority, the Inspection General o f Finance (IGF) and perform greater financial audits, which are important. - 8 -  monitoring needs consolidating through the provincial and district institutional mechanisms (Provincial Poverty Observatories and the Community Participation and Consultation Institutions), many o fwhich are still intheir infancy. The government will also have to ensure that the separation of the planningand finance functions into two separate ministries will not create problems for the implementation andmonitoring o fPARPA I1and the relationship betweenthe CFMP and the OE. 27. Effective monitoring of progress will depend on the alignment of the data collected for the PARPA I1strategic matrix and the degree of integration of these indictors into the PES and BdPES. To ensure the alignment o f the data collectedby the National Statistic Institute (INE)and data required for effective monitoring o fPARPA I1 implementation, there i s a clear need to develop a data collection plan, which i s harmonized with the statistic plano fthe INE.Furthermore, staffs view the need to develop systems for a timely delivery and improved dissemination o fkey results to the public, the ultimate beneficiaries, for effective feedback. VIII. CONCLUSIONSAND ISSUESFORDISCUSSION 28. The strategy to consolidate macroeconomic stability and accelerate the second wave of reforms in PARPA I1should facilitate sustained broad-based growth and poverty reduction. This will require a two-pronged strategy o f perseveringwith the stabilization effort, and buttressingthe investmentclimate by reducingthe cost o f doing business and strengthening good governance. To help achieve the MDGs, the government should ensure that additional external financing including MDRIresources are allocated to definedpriorities and guarantee that there is value for money inpublic spending. Medium- term PFMreforms and the public sector reformprogram more generally are key areas that require monitoring inthis regard. Priority areas for further strengthening PARPA I1include developing and implementing a strategy for improving the investment climate and modernizing thejudicial system as well as the steadfast execution o f the anti-corruption strategy. Staffs also welcome the willingness to strengthen the transparency o fnatural resources and megaprojects by adhering to the principles of the EITI. However, adoption o f the miningfiscal regime inline with internationalbest practice requires urgent action. Without these second-generation reforms, growth could suffer. 29. Do the Executive Directors concur with the areas identifiedby staffs: (i) key for as sustaining broad-based growth and achieving the MDGs; (ii) as priorities for strengthening the PARPA 11, particularly reducingthe cost o fdoing business and management of natural resources; (iii)as implementationrisks related to capacity constraints and governance; and (iv) as keyfor successful PARPA I1implementation,particularly PFMandpublic sector reforms. - 9 -   REPUBLIC OF MOZAMBIQUE ACTION PLANFOR THE REDUCTIONOF ABSOLUTE POVERTY 2006-2009 (PARPA 11) May 2,2006 Maputo May 2,2006   TABLE OF CONTENTS Contents Page I Introduction.andRelationshipBetweenPARPAandOtherPlanningDocuments . .......1 I1. PARPAReview Methodology....................................................................................... 6 I11. Absolute Poverty .Evolution ......................................................................................... 8 IV . Vision. Objectives. and Essential Actions ................................................................... 29 V . Basic Macroeconomic and Fiscal Scenario ................................................................ -34 VI. Scenarios for Absolute Poverty Reduction.................................................................. 57 VI1 . Cross-Cutting Topics ................................................................................................... 60 1. -60 2. Gender............................................................................................................. HIV/AIDS 62 3. ........................................................................................................ 63 4. The Environment ............................................................................................. Food and Nutritional Security.......................................................................... 65 Science and Technology .................................................................................. 66 6. 5. Rural Development .......................................................................................... 69 7. 70 8. NaturalDisasters.............................................................................................. De-mining ........................................................................................................ 71 VI11 Development Strategy. byPillar 73 1. .................................................................................. Governance ...................................................................................................... 73 2. Human Capital 3. ................................................................................................. 87 Economic Development ................................................................................. 120 IX FACTORS DETERMININGSUCCESS INIMPLEMENTATION ........................ 146 1. OwnershipParticipation by the Various Actors 146 2 3. . Political Leadership ....................................................................................... ............................................ 4. Coordination among Sectors, Including Cross-Cutting Issues ...................... 148 The Government's Position on Assistance from the CooperationPartners 149 ...149 X MONITORING AND EVALUATION..................................................................... 153 1. Introduction .................................................................................................... 153 2 154 3.. Challenges facing Monitoringand Evaluation .............................................. Fundamental Principles o f Monitoring and Evaluation ................................. 155 4. Mechanisms and InstrumentsofMonitoring and Evaluation ........................ 155 5. 6. Monitoring and Evaluation andParticipation ............................................... -157 The Position of Monitoring andEvaluationinthe InstitutionalFramework andits Responsibilities ............................................................................... 158  - 11- .. Annexes Annex 1: Summary of the Provincial Poverty Observatories, Annex 2: Linkages Between the PARPAI1Pillars and the MillenniumDevelopment Goals!  - ... 111 - Abbreviations andAcronyms ACPD HandicappedFormer Combatants ACTFs Transborder Conservation Areas AID1 Integrated Attention to Childhood Diseases ANE National Roads Administration ANFP Civil ServiceNational Authority A T M Mozambique Tax Authority ATS Health Counseling andTesting ARVT Anti-Retroviral Therapy BdPES Balance Sheet -Economic and Social Plan BM BankofMozambique C&T Science & Technology CCLJ Ruleof Law andJustice Coordinating Council CDMA Code DivisionMultipleAccess CENELEC National Electricity Council CFMP MediumTerm FiscalFramework CGE GeneralState Account ClRESP Inter-Ministerial Committee for Public Sector Reform CIT Information and Technology Sciences C M Council of Ministers CNCS National Council on Combating AIDS CNJ National Youth Council covs Orphans and Other Vulnerable Children CPI Center for Investment Promotion CSMJ Superior Councilofthe Administrative Magistracy CSTA Superior Technical Council for Customs  - iv - CTA Federation o f Economic Associations CUF Civil Servant Single Registry CUT Single Treasury Account DAF Department o f Administration and Finance DAM Medical Care Department DDT dichloro-diphenyl-trichloroethane DHAA Human Rightto Adequate Nourishment DINAGECA National Directorate of Geography and Land Registry DNA National Water Directorate DNAP National Directorate o f Fisheries Administration DNCP National Directorate ofPublic Accounting DNEAP National Directorate ofPolicy Research and Analysis DNEP National Directorate o fFisheries Economy DNHU National Directorate o fHousing and UrbanDevelopment D N O National Directorate of Budget DNP National Directorate o fPlanning DNPDR National Directorate for Rural Development DNPO National Directorate ofPlanningand Budget DNS National Directorate o f Health DNT National Directorate of the Treasury DOTS Directly-Observed Treatment Short-Course DPC Directorate ofPlanning and Cooperation  - v - DPEC Provincial Directorate o f Educationand Culture DPMAS ProvincialDirectorate o f Women and Social Action DPOPH ProvincialDirectorate o f Public Works andHousing DPPF Provincial Directorate o f Planningand Finance DPT3 Triple DPT Vaccine (diphtheria, pertussis (whooping cough) and tetanus - 3rd dose) EADS Environmental Strategy for Sustainable Development ECA I1 Agricultural Marketing Strategy I1 EDM Electricidade de Moqambique (Mozambique Electricity Company) EDR Rural Development Strategy EP1 First Level Primary Education (grades 1to 5) EP2 Second Level Primary Education (grades 6 and 7) ESG2 General Secondary Education- 2nd cycle e-SISTAFE State FinancialAdministration System - electronic system FARE Economic Recovery Support Fund FIPAG Water Investmentand Promotion Fund FUNAE National EnergyFund GACOPI Project and Investment Coordination Office GASP Private Sector Support Office GBS General Budget support GCCC Central Anti-Comption Office GDP Gross Domestic Product HB Hepatitis B  - vi - HDD DayHospital HN HumanImmunodeficiencyVirus IAF Surveyo fFamilyUnits IASIIFRS International Accounting Standardhternational Financial Reporting Standard ICs Social Communication Institute IDPPE Institute for the Development o f Small-scale Fishing IDS Demographic and Health Survey IGF General Inspectorate o f Finance IGS General Inspectorate o f Insurance IMF International Monetary Fund INAS National Institute for Social Action IND National DeminingInstitute INE National Statistics Institute INGC Calamity Management Institute N O Q National Institute o f Quality Standardization INSS National Social Security Institute IPAJ Legal Sponsoring and Assistance Institute IPCC'S Institute for Community Participation and Consultation IPEX Export Promotion Institute IRPC Corporate Income Tax IRPS Individual Income Tax ISCISA HigherInstitute ofHealth Sciences ITS Sexually-TransmittedInfections N A Value-Added Tax  - vii - M&A Monitoring andEvaluation MADER MinistryofAgriculture andRuralDevelopment (former) MAE Ministryof StateAdministration M C T Ministryof Science & Technology MDG MillenniumDevelopment Goals ME MinistryofEnergy M E C MinistryofEducationandCulture MF Ministryo fFinance M I C MinistryofIndustryandCommerce MICOA Ministryfor CoordinationofEnvironmentAffairs MINAG MinistryofAgriculture MINEC Ministryo fForeignAffairs andCooperation MINJ MinistryofJustice MINT Ministryofthe Lnterior MIREM MinistryofMineral Resources M I S A U MinistryofHealth MITRAB MinistryofLabor MITUR Ministry o f Tourism MMAS Ministry o f Women and Social Action MOPH Ministry o fPublic Works and Housing MP Ministry o fFisheries MP Mega-projects (synonymous with Large Projects) MPD MinistryofPlanning andDevelopment MPF MinistryofPlanning andFinance (former) MPME Micro, Small andMedium-sized Enterprises MT Metical (Mozambican abbreviationo f its currency) MZM Metical (international abbreviation) Nld Not available NEPAD NewPartnership for the Development o fAfrica  - V - ... l l l OE State Budget OMS World Health Organization ONG Non-Governmental Organization OP Poverty Observatory OPP Provincial Poverty Observatory osc Civil Society Organizations PAF PerformanceAssessment Framework PAMA AgriculturalMarkets Support Program PAP Program Aid Partnership PARPA Action Plan for the Reduction of Absolute Poverty PASAN Action Plan for Food andNutritional Security PAV ExpandedVaccination Program PDTI Information Technology Development Plan PEDD District Development StrategicPlan PEN National StrategicPlan PEN/SIDA AIDS National Strategic Plan PES Economic and Social Plan PESOD Economic and Social Plans andDistrict Budgets PETS Public Expenditure Tracing Study PF FamilyPlanning PGR Office of the ProsecutorGeneralofthe Republic PIA Population ofActive Age PlREP IntegratedProgram for Vocational Education Reform PPP Public-Private Partnerships PQG Government Five-Year Plan for 2005-2009  - ix - PRM Police o f the Republic o f Mozambique PROAGRI National Program for AgrarianDevelopment PSAA Small Water Supply Systems PTV Vertical TransmissionPrevention PVHS People Livingwith HIV/AIDS QAD Performance Assessment Framework QUIBB Questionnaire on Basic Indicators o fWell-Being RAI Annual Impact Report REL Report REMTI Insecticide-Treated Mosquito Nets REO BudgetExecutionReport RM Mozambique Radio RTA Automobile Transportation Regulations SAAJ Friendly Services o fAdolescent and Youth SACU Southern Africa Customs Union SADC Southern African Development Community S A N Food and Nutritional Security sc Civil Society SCI Internal Control Subsystem SEA School and Adolescent Health SETSAN Technical Secretariat for Food and Nutritional Security SIDA AIDS -Acquired ImmuneDeficiency Syndrome SIFAP Public Administration Training System SIS Health Information System SISTAFE State FinancialAdministration System S M I Maternal and ChildHealth SNS National Health Service T21 Threshold 21 TA Administrative Tribunal  - x - TARV Anti-Retroviral Therapy TB Tuberculosis TDM Mozambique Telecommunications TIA Agricultural Survey Project TICS Information and Communications Technology TIP Intermittent Preventive Treatment TS Supreme Court UEM EduardoMondlane University UGE Execution ManagementUnit UNAC National UnionofRural Workers UNAPROC Civil ProtectionNational Unit UNDP UnitedNations Development Program UNICEF UnitedNations International Children's Emergency Fund us HealthUnits USAP ProcurementSupervision Unit USD U S dollars UTRAFE Technical Unit for State Administrative andFinancialReform UTRESP Technical Unitfor the Reformo fthe Public Sector  I. INTRODUCTION,ANDRELATIONSHIPBETWEENPe.4ANDOTHERPLANNING DOCUMENTS 1. The Government o f Mozambique's Action Plan for the Reduction o f Absolute Poverty for 2006-09 (PARPA 11) i s intended to reduce the incidence o f poverty from 54 percent in2003 to 45 percent in2009. 2. This document is a successor to PARPA I(Government o f Mozambique, 2001). It shares the same priorities inthe areas o fhumancapital development through education and health, improved governance, development of basic infrastructures and agriculture, rural development, and better macroeconomic and financial management. 3. This PARPA differs from the previous one in that its priorities include greater integration o f the national economy and an increase inproductivity. Inparticular, it focuses attention on district-based development, creation o f an environment favorable to growth o f the nation's productive sector, improvement o f the financial system, measures to help small and medium-size companies to flourish inthe formal sector, andthe development o fboththe internal revenue collection system and the methods o f allocating budgeted funds. 4. Thisplan links its specific priorities with allocations o ffunds for the five-year period. 5. Although PARPA I1calls for an increase in internal revenues for 2006-09 in real terms, the Mozambican government expects to continue to rely on the contribution o f its cooperation partners to finance about 49 percent o f the State Budget every year during this period. 6. Owing to the extent of poverty inMozambique, reducing it challenges both the State and the elements o f civil society, and the cooperation partners, to dedicate their efforts. It i s vital that there be clear dividing lines between the fimctions o f each o f these parties so that coordination and alignment among all o f them can be more effective and efficient. It i s the responsibility o f the Government o fMozambique to coordinate these activities. 7. A summary o fthe principalvision for PARPAI1ispresented inChapter IV(Principal Vision, Objectives, and Essential Actions). 8. PARPA I1centers attention on ways to raise the low standard o f living of the least favored population groups whose current situation corresponds to "absolute poverty." 9. During the process of planning, executing, monitoring, evaluating and adjusting PARPA 11, strategies, programs, and sectoral and cross-sectional programs and plans were also used as basic documents. Regional, African and international agreements, including the Millennium Development Goals (MDG), New Partnership for the Development o f Africa (NEPAD) and the Southern African Development Community (SADC), were respected.  - 2 - 10. Because o f the importance that the Government o f Mozambique attaches to participation by civil society and appropriate use o f the contributions from the cooperation partners in the achievement o f the objectives defined here, the drafting o f PARPA I1took into account the opinions o fboth groups. 11. PARPA is flexible, and is adjusted and updated annually using the Medium-Term Fiscal Framework, the Economic and Social Plan, and the State Budget, which are tools used to implement the Government's Five-Year Plan. What remains constant throughout its life are the two general objectives (Chapter IVYsection 2). 12. During the subsequent five years, 2010-2014, specific key components o f PARPA will be incorporatedinto the Government's Five-Year Plan. 13. The combination o f the two processes and instruments has the advantage o f rationalizing the public planning exercise. This will enable efforts to be channeled toward implementationo f the government's plan from the very beginning o f its term o f office. 14. The new government will easily be able to align the priorities, debated throughout 2009, with the objectives stated inthe Electoral Manifesto. 15. Over the long term, the objective on which Mozambican society has reached a consensus is the improvement o f the standardo f living and welfare o f its citizens. Long-term objectives also include the following: (i) a balanced economic and social development; (ii) reduction o f absolute poverty; (iii) consolidation o f the peace, national unity, anddemocracy; (iv) widespread application o f the rules o fjustice; (v) improvements ineducation and health; (vi) encouragement o f work, honesty, zeal, and enthusiasm; (vii) the guarantee o f individual freedoms and social harmony; (viii) the imposition o f laws against criminal acts; the guarantee o f sovereignty, and (ix) the guarantee o f sovereignty and the strengthening o f international cooperation. 16. The government took these objectives into consideration, in both letter and spirit, when it defined its Five-Year Plan for 2005-09 and in the subsequent preparation o f this PARPA 11. 17. PARPA I1is presented with reference to three pillars:governance, humancapital, and economic development. The pillars approach enables us to focus attention on the functions o f social organization via the State, the development o f individual abilities, and the creation o f wealth to improve the well-being o f the citizens. It also makes it possible to examine the connections among the three functions that are necessary if the central objectives are to be achieved. 18. The governance pillar seeks to make the apparatus o f the State a means o f sparking the development o f human capital and the economy. The government will give special attention to improving the quality of policy analysis and design, in order to obtain fully the expected results of their implementation. Officials will be guided by the principles and laws o f a government ruled by law, thus ensuring transparency and accountability and combating  - 3 - the diversion and improper use o f public funds and resources. Also included i s active enforcement o fthe laws against criminal acts and corruption. 19. The human capital pillar provides continuity to the plans for developing work-related technical and scientific skills, good health and hygiene, and access to basic resources- especially food and water-and reducing the incidence o f diseases that affect the most vulnerable population groups, focusing particularly on the battle against HIV-Aids, malaria, and tuberculosis. A special part o f the resources in the state budget will be used to finance classic social services that cover a huge proportion o fthe population, including the poorest. 20. The economic development pillar concentrates on conditions basic to the pursuit o f productive activity, such as improvement in infrastructures that promote the creation of wealth and ensure the availability o f natural resources, a reduction inbureaucratic obstacles, and the enactment o f legislation that safeguards citizen rights and encourages gains in productivity, and innovation. It will also give priority to intersectoral connections in order to ensure higher productivity in agriculture and related sectors. Additional priorities are the development o f the banking and financial systems so that they may fulfill their duties in retention o f savings and active financingo f production, particularly productionby small and medium-sized companies. 21. The element common to the three pillars is the buildingof the Mozambicannation, consolidating national unity, developing each citizen's human potential, creating a functioning institutional system, and increasing the ability to create national wealth. 22. A fundamental condition for success in the formation o f this Nation is ensuring that investments are made in basic infrastructures and maintenance thereof. We need to foster efficient communications from north to south o f our territory and between rural and urban areas for people, goods, and information. Improving these communications will facilitate the integration o f farmers and the other rural and urban residents. 23. The multisectoral coordination among the different State institutions, organizations in civil society, the business community, and other development partners is the touchstone that will ensure the harmonious andmultifaceteddevelopment ofthis country. 24. The integrated and balanced development o f this nation i s an imperative that i s a determining factor and has multifaceted historical, political, social, anthropological-and even economic-implications. The priorities associated with each pillar will necessarily reflect this concept. 25. Since national development is a priority, PARPA I1i s also mindful o f the need for Mozambique to gradually and progressively integrate itself into the community of neighboring countries, the rest o f Africa, and the world. 26. After recovering production capacity in agriculture, construction, and services, the trend in economic growth may begin to depend increasingly on productivity gains and the  - 4 - ability to create, retain, and productively use domestic savings. These two factors present an enormous challenge for the coming years. 27. Growth in productivity i s another element that connects the three pillars, and it i s something that all three are focused on. The governance pillar will help achieve this objective if the quality of services, analyses, government policies, and monitoring improves, along with government's ability to make adjustments. This role o f the State needs to be buttressed by political quality and quality leadership, as well as the technical quality o f its staff. The benefits to the economy will be felt interms o f a reduction inbureaucracy and an increase in quality, strategic investment ininfrastructures, as well as incentives for growth o f the private sector. Investmentsineducation and health and sanitation services shouldbe oriented so as to mold citizens into a more effective production force that enjoys a higher standard o f living. 28. Chapter 11, which follows, explains the methodology used in preparing PARPA 11. Chapter I11reports on the trend inthe indicators o f absolute poverty. Chapter IV presents the strategic vision, the objectives and the priority actions. Chapter V discusses the basic macroeconomic and fiscal scenario. The absolute poverty reduction scenarios are presented inChapter VI. The principal objectives and actions on cross-sectional matters are discussed in Chapter VII, and the objectives and actions are addressed in detail, by pillar, in Chapter VIII. Chapter IX explains the factors that will determine the success o f the implementation o f PARPA 11. Chapter X reports on monitoring and evaluation procedures, and the Annex presents the summarized matrix o f the indicators to be used inmonitoring and evaluation.  Y v) I VI I 4 .. w  - 6 - 11. PARPAREVIEW METHODOLOGY 29. During the preparatory phase from January to March 2005, the Government of Mozambique arrived at a common approach to the process o f reviewing PARPA with the other government institutions, civil society, andinternational partners (MPD 2005a). 30. The notion o f a strategy o f consensusthat guided Agenda 2025 was revived, as were aspects o f the process used in the preparation o f that document. In this context, the following support structures were created: (i)thematic groups and working groups (Table 1) - observing the structure o f the Joint Review (PAP, 2005); (ii) the Technical Secretariat, and (iii) the national and provincial Poverty Observatories (MPD 2005b). 31. The working groups were composed o f technical personnel from the government, civil society, and international partners. The government and civil society met without the international partners for several sessions to acquaint themselves with the principal issues and to exchange opinions. Representatives o f civil society were in regular contact with the Technical Secretariat. The international partners entered the process later. The idea o f including the partners in a second phase helped to some degree to ensure the "appropriation" o f the process. 32. Inthe first phase,the rocess of drafting PARPA 11, for 2006-09, was begun. That process culminated with the 3' Poverty Observatory, held on August 4,2005. r 33. Note that the national Poverty Observatories are participative forums that include the government, civil society, andthe international partners. Their purpose is to follow the progress o fPARPA actions and the level o fPARPAperformance 34. Duringthe 3rd Poverty Observatory, the major lines o f the PARPA I1were defined and the initial decisions by the working groups were presented. These reports were compiled by subject matter. The medium term action plan, structured by pillars, was defined this way: (i) governance, (ii) capital, and (iii) human economic development. 35. Inaddition, the provinces heldtheir ownProvincial PovertyObservatories inorder to receive contributions to PARPA I1from local civil society and the cooperation partners. 36. Duringthe second phase,after the 3rdPoverty Observatory, the working groups and thematic groups were assigned to produce the documents and materials needed to facilitate the task o f drafting the preliminary version o f PARPA 11. These basic documents were finalized early in October 2005. The working groups continued their work on the matrices designed by area, following the orientation that came out o f the 3'd Poverty Observatory. Then one matrix was developed to be used to plan and calculate the costs of the different activities (Operational Matrix), and another matrix was designed with indicators and goals for the proposed activities, to be used to monitor PARPA I1(the Strategic Matrix).  - 7 - 37. The purpose of the 4th Poverty Observatory, held in November 23, 2005, was to study a preliminary version of PARPA 11, based on contributions fkom the various components o fthe process: (i) reports from the working groups; (ii) contributions fkom civil society and the international partners; and (iii) reports from the national and provincial Poverty Obsematories . 38. Following the 4th Poverty Observatory, the PARPA I1was completed and sent to the Council ofMinisters and the legislature. Table 1: PARPA I1Working Groups,by Subject ITopic Working Group I ~ ~~ Macroeconomics and Poverty Macroeconomic growth and stability Poverty analysis and monitoring systems Management o f public finances Governance Reformo f the Public Sector Decentralization Reformo f the legal andjustice systems Economic Development The financial sector The private sector Agriculture Infrastructure: highways, telecommunications, ports and railroads Iron Infrastructure: energy Human Capital Health Education Water and sanitation Cross-sectional topics Demining Environment Natural Disasters HIV-AIDS Gender Food and Nutritional security Science andTechnology Rural Development Note: This table includes the original working groups. The housing and social action groups were formed later. The private sector subgroup included in its discussion matters related to other areas that were not arranged in specific groups (including tourism, fisheries, mines, industry). Source: Government o f Mozambique 2005. 39. The next chapter examines the evolution o f poverty in Mozambique during the PARPAIperiod (2001-2005).  - 8 - 111. ABSOLUTEPOVERTYEVOLUTION - (a) The Definitionof Poverty 40. Reduction o f absolute poverty has been one o f the key objectives in the governance programs in various countries. However, the debate on the definition o f the concept "poverty" continues. For purposes o f policy decisions, poverty was initially considered as the lack o f income-money or negotiable goods-necessary to satisfy basic needs. Because this monetarist definition did not cover all the manifestations o fpoverty, the definition was broadened over time to cover such aspects as a lack o f access to education, health care, water, and sanitation, etc. At present, the definition o f poverty has also come to include aspects such as isolation, exclusion from society, powerlessness, vulnerability, and others. Box No. 1 presents alternative definitions o f poverty that attempt to cover the principal manifestations o fpoverty, including the definition used for PARPA 11. Box 1:Whatispoverty? PARPAIdefinition:"the inability o findividuals to ensure for themselves andtheir dependents a set o fminimumconditions necessary for survival andwell-being, according to the society's standards."" PARPAI1definition: "the impossibility, owingto inability and/or lack of opportunity for individuals,families, and communities to have access to the minimum basic conditions, according to the society's basic standards." 0therdefinitions: --"lack o fincome necessary to satisfy basic nutritional andnon tritional requirements" (Absolutepoverty, in terms of income.) -- "lack o fsufficient incometo satisfy the essential nutritional andnon-nutritionalneeds, according to the average income int country." (Relative poverty) --"lack o fbasic humancapabilities, has illiteracy, poornutrition, reduced life expectancy, poor maternal health, andincidence o fpreventable disease. This definition is relatedto indirect measurement factors, such as access to goods, services, and Note: *Definition adoptedon the basis oftheAvaliaq6es da Pobreza (Poverty Appraisal) studies of 1996-97 and2002-03. 41, Because poverty is a multidimensional phenomenon, there i s no single indicator that can capture all its manifestations. Therefore, to measure the evolution o f poverty, we must use several indicators that attempt to capture the principal forms o f poverty through multipleapproaches.  - 9 - (b) Methods of Measuring Poverty 42. There are two main methods o f monitoring and evaluating poverty: quantitative studies, and qualitative studies. Quantitative studies are based on the averages for a population selected by using large representative samples. For example, the Survey o f Family Units (Inque'rito aos Agregados Familiares - IAF) 2002-03 interviewed 8,700 family units andthe Demographic and Health Survey (Inque'rito Demogrcifico e de Sazide- IDS) 2003 interviewed 11,500 women between the ages o f 15 and 45. The quantitative studies are intendedto furnish objective data on the population's standard o f living. 43. However, there are problems in obtaining certain kinds o f data fiom these quantitative studies. For example, the qualitative perceptions that people have o f the nature and causes o f poverty are hard to capture. Qualitative and participative studies can yield information that i s difficult to capture using conventional surveys. The disadvantage i s that qualitative studies are often based on small, unrepresentative samples that hamper a generalization as to the results. 44. Under normal conditions, the two methods would complement each other pluralistically. Analyses o f poverty in Mozambique have not yet achieved this objective- see the section on Monitoring and Evaluation for future plans in this regard. However, a considerable number o f quantitative and qualitative studies have been made since 2000, and those studies supplied a wealth o f information. The following sections o f this chapter discuss quantitative indicators o f poverty, the general results o f qualitative studies, and selective cross-cutting issues. (c) Qualitative Indicators 45, There are manyquantitative indicators, such as illiteracy, mortality rates, percentage o f the population lacking access to potable water, and income. One important measure i s based on consumption per family unit. The goal of reducing poverty from 54 percent in 2003 to 45 percent in 2009, mentioned in the first paragraph o f this document, refers to a consumption-based indicator. Studies by the Ministryo f Planningand Finance (MPF) et al. (1998 and 2004) on the status of poverty in this country used consumption per capita-Le., total consumption by the family unit, dividedby the number o f its members-as the basic measure o f individual well-being. The consumptionmeasure encompassesthe total value o f itemsconsumed bythe family unit, whether they were purchased or producedbythe family unit itself, including transfers and the appreciation invalue of durable goods owned bythe family unit. 46. Giventhe importanceplaced on indicators of consumption, it is worth looking more closely at them. However, a principal point o f this section o f the document is that consumption-based indicators have not been and should not be the only standards to be usedto measure poverty. Other indicators will bepresentedinlater sections.  - 10- Consumption-basedindicators 47. The reason why consumption at the family unit level is used instead o f an income- based indicator, for example, i s that: Consumption is the most appropriate indicator or measure o f achieved well-being, while income i s a measuring tool for potential well-being, since the income may or may not be spent on consumption; and Consumption is the most accurate and most stable indicator o f well-being, since it fluctuates less over time. 48. Inconsumption-based assessments of poverty, the basic minimum conditions were identifiedon the basis o f an absolute poverty line measured inmonetary terms that permits the family unitto obtain a basket o f goods corresponding to a basic standard o f living. Each poverty line was constructed as the sum o f the nutritional poverty line established by nutritional standards o f approximately 2,150 calories per person per day, plus a modest portion for non-food expenditures, determined on the basis o f the portion of the budget spent on non-foods by families whose total consumption is approximately equal to the food-related poverty line. The poverty analysis in 2002-03 was done to facilitate a comparison o f the results from that period with the results from 1996-97. 49. The headcount index ofpoverty measures the portion o f a population that has been defined as "poor," Le., the people whose consumption falls below the poverty lined as defined. Two important additional measures o f poverty are calculated using the poverty lines: the poverty gap index and the squared poverty gap index. The poverty gap indices are more sensitive, particularly to changes in standards o f living among the poor. For example, ifa poor personincreases his consumptionbut still stands below the poverty line, we can say that poverty has beenreduced because the person has become less poor. The headcount index of poverty does not capture this reduction in poverty, but the other indices will capture it. 50. The evolution of the headcount and poverty gap indices is shown in Table 2. The results indicate that during the two periods examined here, a rapid reduction occurred in these indicators. The headcount index fell from 69.4 percent in 1996-97 to 54.1 percent in 2002-03, a decline o f approximately 15.3 percent. We should remember that the objective o f PARPA Iwas to reduce poverty to about 60 percent by 2005, which means that this goal was exceeded by 5 percent. The poverty gap index also declined sharply, from 29.3 percent in 1996-97 to 20.5 percent in 2002-03, a reduction of almost a third. These results mean that (i)the percentage o f the population below the poverty line has fallen, and (ii) average consumption by those who remainbelow the poverty line rose betweenthose two periods. 51. Although high levels o f poverty reduction have been achieved, the situation i s still critical in this country because 10 million Mozambicans still live in absolute poverty.  - 11- Chart 1 shows how those 10 million are distributed among provinces (MPF et al. 2004).. The chart indicates that every province has at least 500,000 poor people. It also shows clearly the influence o f Nampula and ZambCzia provinces inboth total population and the impoverished segment. 52. Interms of region, note that poverty declined more inthe rural areas than inurban zones-by 16percent and 10.5 percent, respectively). ZambCzia and Tete provinces experienced reductions inpoverty greater than 22 percent, while Sofala province reported a reduction o f more than 50 percent, taking it from the poorest of the provinces to the one with the lowest poverty. Poverty reductions were found in almost all the provinces of central and northern Mozambique, except for Cab0 Delgado, where poverty increased. In the south o f the country, the scenario nearly the inverse. Poverty increased intwo provinces there-Maputo province and Maputo city. In Inhambane, a marginal reduction-from 82.6 percent to 80.7 percent-was seen, making this the country's poorest province. Explanations of the trend inpoverty, by province, were presentedinthe Poverty Appraisal Study o f 2002-03 (MPF et al. 2004). [Graph on page 12 of the original] Chart 1: Populationand Poverty, by Province(2002-03) Vertical axis: Population (millions) Horizontal axis: List o fprovinces. Key: Blue: Not poor. Red: poor Source: Prepared on the basis o f IAF2002-03 (INE 2003). 53. Table 2 shows the evolution o f poverty andthe confidence intervals inthe estimates of poverty incidence for 2002-03, Those confidence intervals exist because estimates are made on a random sample o f the population, not total population. We should point out that the results inthe provinces have larger confidence intervals incomparison with the national results and the results per zone. Actually, the confidence intervals should be even bigger because of errors not associated with the sample. For example, if there were mistakes in communication between the survey worker and the respondent, these mistakes would enlarge the confidence intervals from the levels shown inTable 2. 54. Inasmuch as poverty is a multidimensional phenomenon, and because o f the uncertainty associated with any indicator--especially at the provincial level--it is important to introduce, at this point, other ways o f measuring poverty, and to make progress in the fbtureinusingmultidimensionalquantitative analyses.  - 12- Poverty HeadcountIndex Poverty GapIndex ConfidenceInterval ConfidenceInterval Estimate (95%) (2002-03) Estimate (95%) (2002-03) Region 1996-97 2002-03 Lower Upper 1996-97 2002-03 Lower Upper Limit Limit Limit Limit Nationwide 69.4 54.1 50.6 57.5 29.3 20.5 18.9 22.2 Urban 62.0 51.5 46.3 56.7 26.7 19.7 17.4 22.0 Rural 71.3 55.3 51.2 59.4 29.9 20.9 18.9 22.9 Niassa 70.6 52.1 41.1 63.2 30.1 15.8 12.5 19.1 Cab0 Delgado 57.4 63.2 55.8 70.5 19.8 21.6 18.0 25.3 Nampula 68.9 52.6 43.0 62.3 28.6 19.5 15.0 24.0 Zambkzia 68.1 44.6 34.6 54.6 26.0 14.0 9.7 18.3 Tete 82.3 59.8 51.5 68.1 39.0 26.3 21.1 31.5 Manica 62.6 43.6 35.4 51.7 24.2 16.8 11.7 21.8 Sofala 87.9 36.1 29.1 43.1 49.2 10.7 8.1 13.3 Inhambane 82.6 80.7 75.9 85.5 38.6 42.2 37.4 47.0 Gaza 64.6 60.1 53.2 67.1 23.0 20.6 17.4 23.8 Maputo 65.6 69.3 63.4 75.2 27.8 31.1 27.1 35.1 Province MaputoCity I 47.8 53.6 47.3 59.9 16.5 20.9 17.6 24.1 Source: MPF et al. 2004; and Simler and Arndt 2005. Health-based indicators 55. There has also been a favorable trend inindicators based on health, but they are still high.For example, the mortality rate among childrenunder the age offive fell from 207 per 1000 live births in 1997 to 153 in2003, driven by a decline ininfant mortality from 149 to 101. This indicator showed significant improvement between 1997 and 2003; however, the mortality rate among children under the age o f five in 2003 is still close to the average for less developed countries, which stood at 160 in2001. 56. Table 3 shows estimates o f the prevalence o f malnutrition in children, by survey, indicator, and age group. Some efforts were made to make the available data suitable for comparison. Following those adjustments, results indicate that the prevalence o f malnutrition among children, according to three frequently-used indicators, fell between 1996/97 and 2003. However, in comparison with the gains recorded in consumption, those improvements in the prevalence o f malnutrition among children seem minor and are sometimes not statistically significant. 57. The reasons behind the relatively weak performance o f the indicators o f the prevalence o f malnutrition in periods o f rapid economic growth are not well understood. Here are some o f the contributing factors: constraints associated with public health conditions such as the quality o f sanitation, access to potable water, and the prevalence o f  - 1 3 - diseases such as malaria. Furthermore, nutrition depends not only on the pattern o f consumptionby the family unit, but also on conditions inthe community as a whole. 58. The figures for the headcount index o f poverty were based on the potential capability o f a family unit to achieve average consumption and did not take into consideration the distribution o f food among members o f the same family unit. Children between the ages o f 6 and 24 months are the most vulnerable to malnutrition, because that i s when they start eating solid foods. Improvements in the knowledge and practice o f methods o f proper feeding for children in that age bracket are important, but do not automatically accompany gains in consumption by the family unit. This situation calls attention to the needto make mothers the central focus o f food policy andprograms. Table 3: Estimatesof prevalenceof malnutrition,by survey* IHeight/Age Indicator and Age Group 1996-97 IAF 1197 IDS 2000-01 QUIBB 2003 IDS I 0-0.9 years 23.69 20.67 18.73 19.23 1-1.9 years 52.21 45.57 46.58 46.29 2-2.9 years 47.10 51.89 48.06 39.79 3-3.9 years 47.66 50.07 46.33 4-4.9 years 50.41 42.70 41.97 Total 0-3 years 38.66 36.21 36.24 33.94 Total 0-5 years 42.17 40.42 38.03 Weightloge 0-0.9 years 16.43 16.00 16.44 15.23 1-1.9 years 36.27 34.69 31.79 31.42 2-2.9 years 25.78 35.54 31.44 26.86 3-3.9 years 21.48 23.OO 20.91 4-4.9 years 25.20 16.78 17.78 Total 0-3 years 25.36 26.75 26.08 24.01 Total 0-5 years 24.50 23.82 22.25 Weight/height 0-0.9 years 7.61 5.68 8.31 2.98 1-1.9 years 10.33 12.76 8.02 6.89 2-2.9 years 5.90 3.55 6.34 4.95 3-3.9 years 3.52 3.01 3.30 4-4.9 years 3.05 2.78 1.88 Total 0-3 years 8.14 7.51 7.74 4.88 Total 0-5 years 6.48 5.86 4.01 Note: *Percentage of the target population who fall below the line that marks the minimumstandard. Source: Simler and Ibraimo (2005)  - 14- 0ther Indicators 59. Tables 4a and4b summarize the trend in35 indicators at the provincial level. A plus sign (+) indicates an improvement, and a minus sign (-) indicates deterioration. According to Table 4b, the country experienced an 88.4 percent improvement inthe indicators ofwell- being that were considered. Greater weight was given to access to private goods and services, such as access to modern lighting, a source o f potable water and improved sanitation systems, better housing, and possession of durable goods. The provinces o f Tete and Maputo are the ones that exhibited the highest percentage of improvement, mainly because of the favorable developments in the areas of health and access to private and public goods andservices, such as improved roads, markets, and means of communication.  t t t t I I I t I L L i L E2 L  I ig I I t I + k t I t 9 t +I5 t + 95 t +In 'z 00 t c t +/9 I a : z z; I  - 17- 60. The City o f Maputo i s a special case because it improved in only 61.6 percent o f the indicators considered. Looking at the ranking o fprovinces with respect to the highest level o f access to services and infrastructure, we conclude that the city has always ranked first in comparison to the rest of the country-the information about "level" i s not explicit in Table 4b. This modest improvement may reflect the ever-increasing pressures on the city, mainly due to its territorial expansion, accompanied by an increase in demographic load. The increase in mortality among infants and children and chronic malnutrition merits special attention. 61. The results are heterogeneous. No province succeeded inimproving all 35 indicators, and no indicator worsened in all provinces. However, in general, the quantitative indicators o f consumption, health, and other aspects exhibited a tendency to improve between 1996-97 and2002-03. (d) The Causes of Poverty and of the Decline in the Quantitative Measures Shown Here 62. In 1992, Mozambique was known as "the world's poorest country." This undesirable situation was the result o f a complicated historical heritage that included a period o f colonization that put little emphasis on human capital, a failed (in economic terms) socialist experience, and a vicious civil war that lasted more than a decade. This toxic situation was aggravated by the drought o f 1991-92, one o f the 20thcentury's most severe. It would be hard to underestimate the severity o fthe poverty that existed at that time. 63. Both the economy and society have been profoundly transformed since 1992. The factors identified in PARPA Ias contributing to an improved economic and social situation were (among others), peace and the postwar economic recovery, macroeconomic stability, and the transition to a market economy. The poverty reduction strategy in PARPA I concentrated on the principal determinants o f economic growth. In making this strategy operational, PARPA Iestablished a vision o f the areas where basic actions could be taken to improve the people's welfare. These areas included peace and social stability, education, health, agriculture and rural development, basic infrastructures, good governance, and macroeconomic and financial management. 64. Between 2001 and 2005, remarkable achievements were realized in all the areas o f action listed above. It would be extremely difficult, if not impossible, to formally attribute the reductions inpoverty to the contents o f the various specific areas o f basic action. This is largely because o f the interdependencies among the action areas in fostering economic growth and reducing poverty. To cite just one example, it i s hard to build schools without building roads. However, the analyses o f poverty show, frequently and robustly, that education i s a fundamental determinant of well-being. Furthermore, in an economy where 80 percent o f the active population (the percentage is higher among the poor active population) works in farming, it i s hard to conceive of large-scale reductions in poverty unless there i s growth inthe agricultural sector.  - 18- 65. Despite the gains made, and the fact that more than a decade has passed, the historical heritage mentioned above remains the fundamental cause o f the high levels o f absolute poverty in this country. A shift from a situation where the great majority o f the population lives in absolute poverty, to a situation inwhich where the great majority is not poor requires decades, even when the rates o f reduction in poverty are rapid, by international standards. The analyses o fpoverty indicate that elements o fthe population who have a highprobability o f being poor include uneducated people, family units with high rates o f dependency, and family units headedbywomen. (Maximiano 2005; Fox, VanDenBroeck, andBardasi 2005). 66. The perceptions o f the causes o f poverty, based on the qualitative research, are discussed inthe following section. (e) Qualitative Studies 67. Because it was recognized that to evaluate poverty, we need to have information that was gathered by using qualitative methods, the first survey o f this kind was conducted in 1995 and 1996, covering 18 districts inten Mozambican provinces. This study was done by the Center for Population Studies at Eduardo Mondlane University (CEP-UEM), working with the former Ministry o f Planning and Finance (MPF) and other government and non- governmental organizations. In 2001, another series o f Participative Poverty Appraisals (Diagnbsticos Participativos da Pobreza) was organized by the MPF with assistance from the UEMand UNDP. This survey covered 21 districts in 7 provinces inthis country, namely Cab0 Delgado, Nampula, Zambkzia, Sofala, Tete, Inhambane, and Maputo Province. As a follow-up to these exercises and in order to consolidate their practice, a pilot study was conducted in 2003 in Sofala with assistance from UNICEF and in coordination with the Studies Center o f the Department o f Geography at the Pedagogical University o f Beira. The studycovered three districts, onthe basis ofthree communities per district. 68. Lastly, in 2005, the fourth qualitative study was conducted, in coordination with the School of Letters and Social Sciences o f Eduardo Mondlane University, in the provinces of Sofala and Inhambane, covering a total o f eight districts. The selection o f these two provinces had to do with the results obtained in the most recent National Poverty Appraisal, inwhich it was found that Sofala had cut poverty by more than 50 percent while there was very little change in Inhambane Province, which makes it now Mozambique's poorest province. Incomparing these qualitative studies o f poverty, we do not see big differences in terms o f the results obtained. The mainresults o fthese studies are presented below. 69. During the 1995-96 assessment, widespread reference was made to the war as a determining factor underlyingthe living conditions o f those who were the poorest people at that time. "Ignorance" and unfavorable weather were also mentioned. Lookingat the 1995-96 and the 2001 and 2003 appraisals, we see a slight change in the causes of poverty. In the latter two cases, the war was not often mentioned as a determining factor in poverty. Nine years had passed since the end o f the civil war in Mozambique. The absence o f social assistance by the government and other institutions; lack o f employment opportunities, i.e., working for other people; limited access to financing; marketing problems; and disability-  - 19- physical and mental-keeping people from working are mentioned as determinants o f poverty in the period 2001-03. Migration forced by the war-"displaced persons"--and the closing o f factories were also pointed out as causes o f poverty. Theological or fatalistic issues were mentioned too-it was said that some people are simply born to be rich and others to bepoor. 70. Another point that deserves attention i s that the most remote communities believe that those who live closer to the administrative offices get more government assistance and have better access to services (education, health, and markets) while those who live at a great distance have been completely abandoned. The results o f the most recent qualitative study on poverty resemble those of 2001 and 2003, where the following were specifically mentioned as causes o fpoverty: (a) Environmental issues, such as droughts and floods; (b) Human issues, such as a lack o fjobs, problems with access roads, exclusion based on partisan leanings, and laziness; and (c) Aspects related to government protection o f animals were also mentioned, such as the ban on killing animals that destroy crops because those fields are in a game preserve. 71. Definitions of priority problems to be solved to reduce poverty vary, depending on the respondent's age, gender, economic status and position in the power structure. In decreasing order o f importance, the poorest rank their priorities as: transportation, roads, prices, marketing, access to land and water, and installation o f motor-driven mills.These are activities that, after all, can make their farming efforts more profitable, improve their terms o f exchange or ability to participate in the market, and reduce the need for manual labor, always a limitingfactor. 72. Inthe 2001 diagnoses, the need for access to basic social services was emphasized, particularly the shortage o f health posts near where people live, lack o f transportation for the sick (ambulances), and insufficient personnel. Problems o f corruption, lack o f a potable water supply-especially the poor maintenance o f the existing infrastructures (such as pumps)-were also reported during this diagnosis. Inthe 2005 appraisal, in addition to the issues mentioned in both 2001 and 2003, priorities cited included assistance to widows and orphans, an increase in police presence, direct assistance to the poor, and agricultural processing plants. 73. Since most o f the Participative Poverty AppraisalsParticipative Rural Diagnoses were made before certain social programs were implemented, when we ask who in a community i s poor, most people claim to be poor so that they can be included in those socioeconomic programs. The difficulty o f identifying the different strata in a community made it hard to design a profile o f those who might be considered poor, or not poor. This distinction i s very useful indesigningan action plan.  - 20 - 74. With respect to perception o f poverty, responses varied with the survey site. Some factors that were mentioned as associated with being poor were: material goods, sources o f income, and civil relationships/status. 75. According to the communities covered by the 2005 appraisal, interms o f wealth, the population can be divided into three groups-the poor, the rich, and those in the middle. In terms o f frequency o f survey responses, the poor are those who cannot work owing to physical disability, age, illness, or marital status--widowhood. On other occasions, poverty i s linked to the fact that someone works hard, but ultimately earns little due to various factors such as unfavorable weather, or having small farms in areas where the soil i s not fertile. Poverty i s also related to superstition, and family poverty seen as a kind o f predestination. However, physicalpoverty was also mentioned as the lack o f essential goods, sufficient food, clothing, or lack o f any alternative source of income. 76. During these four studies mentioned above, the aspects most often mentioned as characterizing the social status o f poverty or wealth, in the order as presented, were such things as possession o f cattle; employment, a bicycle, or a car; possession o f clothing andits quality; having a house and the condition thereof; having money, access to credit, and saleable goods; ownership o f a shop or market stall; access to foods in quality and quantity. Looking at poverty within communities instead o f from the individual standpoint, we concluded that the symptoms and causes o f poverty are a lack o fbasic infrastructures such as roads, markets, and transportation, poor crop yields, and the absence o f assistance institutions. (f) The Volatility of Poverty 77. The dominant impression we get from the available quantitative data i s that living conditions for this country's population have been improving since the mid-1990s. This i s observable in several indicators, including poverty indices based on consumption, education, health, infant mortality, and access to services. However, progress has not been uniform; it varies markedly, depending on region and kind o f indicator. The question we might ask i s why this lack o f uniformity, both in regional terms and among indicator categories? For indicators related to government services, differences in the distribution o f funds and the efficiency with which they are put to use explains some o fthe variation inperformance. 78. The underlying regional variations in economic potential (which depend to a considerable extent on the availability o f infrastructures) may also pay a dominant role. Therefore, the evidence also points to a highdegree o fbetween-year variation inmany o f the indicators used. Inother words, if we were omniscient and could observe the exact value o f the series of the important living condition indicators over time, we would probably observe a substantial variation inthem duringthat lengthyperiod. 79. There are many forces behind these variations. Particularly in rural areas, the enormous variability inliving conditions reflects the significant year-to-year fluctuations that are typical o f farming on the dry, non-irrigated lands that are the primary source o f  -21 - employment for most Mozambicans (Table 5). The effects o f meteorological changes are exacerbated by both internal and external economic factors such as exchange rates and the prices o f oil, cotton, cashew nuts, and corn. For example, factors that probably contribute to the apparent poor performance in poverty reduction as measured by consumption indicators in southern Mozambique include: low rainfall inthe South duringthe crop year prior to the survey; the effects o f major floods in that same zone two years prior to the survey; and the substantial depreciation o f the metical against the South African rand during the survey period. 80. Inshort, the trend inpoverty (or in living conditions), whatever measuring stick is used, very probably would not be monotonous. Even when very strong positive trends are present, living conditions can easily deteriorate during a short time period, particularly when we are looking at limited geographic areas or a certain indicator. It is also important to remember that humans are not omniscient and that the availability o f quantitative data sometimes results ininaccurate indicators o f living conditions. Panel or longitudinal data are intended, essentially, to understand the interaction between chronic and transitory poverty. The 2005 Agricultural Survey Project (Trabalho de Inque'rito Agricola - TIA) was the first large-scale panel study to be conducted in Mozambique and will fbmish important information inthis area, as will the data from subsequent panels. 81. Certainly, large fluctuations in living standards pose much more than a measurement challenge. Such fluctuations increase family unit vulnerability, inasmuch as families that manage to generate [wealth] and escape poverty run the risk o f becoming poor again. Therefore, the important objective is not only to achieve a rising trend in the living conditions o f the poor, but also to boost the ability o f those families to withstand shocks and maintainan adequate andrelatively stable standard o f living. 82. We can supplement the dominant impression o f the improvement inliving conditions with the following observations: (a) Poverty persists throughout the country and i s severe. Regardless o f the measuring tool used, every region will be found to have a significant number o f poor people. (b) The influence o f the population o f ZambCzia and Nampula indicates that the performance of those two provinces i s crucial to any nationwide indicator. Poor performance in those two provinces will very probably result in poorly-performing national indicators. (Regional disparities are discussed ingreater detail below). (c) The underlying variation in the indicators, combined with limits on accuracy in the measurements of these indicators and the time lag in availability of information, indicate that care must be taken in distributingresources, particularly in doing so on the basis of a single indicator.  - 22 - (g) Some Concerns HIWAIDS 83. One o fthe issues o f greatest concern for the Mozambican economy is the highrate o f HIV/AIDS prevalence. The latest estimates indicate that 16 percent o f the population aged 15-49 are serum-positive, i.e., 1.5 million Mozambican s are living with HIV/AIDS. The estimates by sex for 2005 indicate that 21.9 percent o f women age 20-34 are infected, compared with 7.2 percent o fmen inthe same age group. Inaddition, 8.5 percent o f girls age 15-19 are infected, compared with 2.8 percent o f the boys. This situation shows that the current role o f HIV/AIDS and its consequences fall mainly on the women, owing not only to their level o f infection, but also because o f their social responsibilities toward other family members. Beyond the humanimplications o f this pandemic, this disease will have a negative impact on the economy through three different channels: (a) reduction inpopulation growth and accumulation o fhuman capital; (b) reduction inthe accumulation o fphysical capital, and (c) reduction inlabor force productivity. 84. Estimates indicate that HIV/AIDS could reduce per capita economic growth by 0.3 percent to 1.0 percent per annum. Poverty rates will fall more slowly because o f less vigorous economic growth, reduction inthe accumulation o f human capital, and an increase independency rateswithin families (Amdt2003). 85. We should note that the effects of AIDS are already beginning to be felt. Chart 2 shows that, at the national level, total deaths due to AIDS since the disease first appeared are the same as the projected number o f deaths for 2006-2010 (INE et al. 2004). [Graph, page 2 4 fthe original] Chart 2: Adult DeathsDueto AIDS Vertical axis: Number o fpersons Horizontal axis: Years Key: Deaths (black ink) Cumulative deaths (pink ink). Source: INEet al. 2004 HIV/AIDS and Orphans 86. The 800,000 deaths forecast to occur between 2004 and 2010 as a result o f Aids and related diseases will significantly increase the number o f orphans. These children encounter serious problems in access to education. Orphans living in foster families are especially  - 23 - discriminated against in terms o f access to family resources (Nhate et`al. 2005). Inadequate access to resources, especially education-related resources, limits their ability to emerge from poverty. GenderI nequality 87. Gender inequality represents an obstacle to this country's economic growth. In general, family units where the woman is discriminated against tend to be poorer. Improving the education o f women increases the efficiency o f family unit decisions regarding production, consumption, andsavings. 88. Analyses o f the incidence o f poverty according to sex o f head o f family were made, as were estimates o f the distribution o f the labor force by sex and income level. These estimates show that families headed by women have a higher incidence of poverty- 62.5 percent compared with 51.9 percent for families headed by men. The determinants o f poverty indicate that high rates o f poverty among families headed by women are related to low educational levels, widowhood and high rates o f dependency, and incomes too low to meet family needs. 89. With respect to labor force indicators, three indicators related to poverty merit separate mention: (a) The female population i s concentrated in rural areas and is employed in the subsistence sector; (b) Levels o f schooling among women are very low compared with those among men; and (c) Women are heavily represented in the labor force, despite the burden o f domestic tasks. 90. Tables 5 and 6 clearly illustrate these facts. Women account for about 55 percent o f the labor force, if we use headcount as the basis. That female labor force is heavily concentrated in agriculture: 90 percent o f economically active women work in farming, compared with two thirds o f the men. In other words, for every 100 men working in agriculture, there are 164 women inthat same field. And so participation by women in other sectors i s minor in comparison with the role o f men. For example, women represent 3, 4 and 25 percent o f the labor force in the fields o f construction, transportation, and government, respectively. 91. It is interesting to note at the bottom of Table 5 that the extent o f participation inthe labor force i s slightly higher for women than for men(82 percent compared with 79 percent). This is due to the fact that more men than women between the ages of 15 and 20 are attending school, despite the important gains made in the education o f women in recent years.  - 24 - Table 5: Participation in the OccupiedLabor Force, by Sector and Gender OccupiedLaborForce All Women Men Workers Agriculture 5,707,058 3,546,205 2,160,880 Mining 28,005 4,563 23,442 Manufacturing 56,563 5,468 51,095 Construction 156,333 4,8 13 151,721 Transportation 76,757 3,059 73,699 Commerce 538,599 219,109 319,490 Services 375,046 131,018 244,O 19 Government 233,962 57,737 176,225 Participation* 7,172,541 3,971,972 3,200,569 PIA** 8,902,220 4,842,658 4,059,562 (Population of Active-Age) PercentagebyRow (YO) All Women Men Workers Agriculture 100 62.1 37.9 Mining 100 16.3 83.7 Manufacturing 100 9.7 90.3 Construction 100 3.1 96.9 Transportation 100 4.0 96.0 Commerce 100 40.7 59.3 Services 100 34.9 65.1 Government 100 24.7 75.3 Participation* 100 55.4 44.6 PIA* * 100 54.4 45.6 Percentageby Column(YOof Part.) All Women Men  - 25 - Workers Agriculture 79.6 89.3 67.5 Mining 0.4 0.1 0.7 Manufacturing 0.8 0.1 1.6 Construction 2.2 0.1 4.7 Transportation 1.1 0.1 2.3 Commerce 7.5 5.5 10.0 Services 5.2 3.3 7.6 Government 3.3 1.5 5.5 Participation* 100.0 100.0 100.0 Rate of Participation* 80.6 82.0 78.8 Note: *Only those who are occupied. The rate of participation was calculatedsas a proportion of the occupied population with respect to the population o f active age. If the unemployed are included, total participation would be about 3 percentagepoints higher. **PIA is the population of active age, Le., those age 15 to 60. Source: Prepared on the basis o f IAF 2002-03 (INE 2003).  - 26 - Table 6: Occupied Labor Force by Highest Level of Education Completed, and by Gender OccupiedLabor Force All Workers Women Men EP1 [grades 1-51 or less 6,508,417 3,791,438 2,716,980 EP2 [grades 6&7] -ESG2 578,161 160,779 417,382 [2ndcycle secondary]* Higherthan ESG2 85,962 19,755 66,207 Total 7,172,541 3,97 1,972 3,200,569 Percentageby Row (YO) All Workers Women Men EP1or less 100 58.3 41.7 EP2-ESG2* 100 27.8 72.2 HigherthanESG2 100 23.0 77.0 Total 100 55.4 44.6 Percentageby Column(YOof Part.) All Workers Women Men EP1or less 90.7 95.5 84.9 EP2-ESG2* 8.1 4.0 13.0 Higherthan ESG2 I 1.2 0.5 2.1 Total 100.0 100.0 100.0 92. The cumulative effects o f a history o f relatively low levels o f schooling for girls are clearly shown in Table 6, where almost 96 percent o f the women who work did not attend school through, or advance past, EP1. This compared with 85 percent o f the men. Crossing Tables 5 and 6 with each other shows that 88 percent o f the female labor force i s unskilled, and i s concentrated inagriculture. 93. Inthis regard, the link between gender and poverty is one o f the leading concerns in the context o f the reduction o f absolute poverty. However, that very link raises questions about the best focus to adopt inorder to reduce poverty among women. Onthe one hand, it i s clear that achieving higher levels o f schooling i s fundamental and will also make it easier for women to enter non-farm sectors that, frequently, would earn her higherpay. However, inthe next several years, the majority o f them will continue to be unskilled and associated with the agricultural sector. Therefore, we must simultaneously identify mechanism by which they can boost their income to such an extent they [missing word] the poverty situation and improve their quality of life. Two initiatives are ftndamental here: (a) Development and dissemination o f improved farming technologies, particularly for food crops that involve an important contingent o f female labor; and (b) Provision o f goods and services that can alleviate the burdeno f domestic tasks on women (such as reducing the distance they must travel to get water and health  - 27 - services, and rural electrification) and that would increase the time they have available to spend inother productive activities. RegionalDisparities and Inequality 94. One o f the questions raised about PARPA I1 was the need to address regional disparities in poverty and well-being. Both the consumption-based poverty measuring stick and the methods o f measuring well-being that are not related to income vary considerably among the provinces, and between rural and urban areas. The 2002-03 IAF showed a significant reduction in poverty in northern and central Mozambique, but no change in the South, which makes this the poorest region in terms o f consumption-based indicators (MPF et al. 2004). This situation is partly attributable to bad weather inthe South duringthis period (first the floods, then the drought), together with volatility in the exchange rates that has an impact because o f the strong connections between Mozambique's economy and that o f its neighbors. 95. On the other hand, poverty measurement tools unrelatedto income exhibit a contrary panorama. In general, public services are much more available in the South than in other parts of this country, and this difference is shown by several indicators. Literacy and educational levels are higher in the South, especially when compared with the provinces o f the North. This i s the result o f discrepancies in educational opportunities among regions and the tendency for better-educated people to migrate to areas where employment opportunities are more attractive. People in the northern and central provinces also have poor access to health care services and higher rates o f infant and maternal mortality, high levels o f malnutrition, and low rates o f vaccination. Transportation and market services incentral and northern parts o f the country are unreliable, which restricts the benefits to be gained from a favorable agricultural environment. While difficulties in access to markets slow the flow o f production and contribute to keeping prices low for the buyer, those difficulties reduce farmers' earnings and discourage production. 96. There i s some evidence that these regional disparities are narrowing both in terms o f income-related poverty and on the basis o f other indicators. Ibraimo (2005) shows that in recent years there has been considerable convergence-Le., reduction in regional disparities-in many of the indicators o fwell-being that are not related to income. Similarly, James et al. (2005) shows that the inequalities in consumption that exist in Mozambique occur more often within each region than between regions, and that inequality between regions has declined somewhat since 1997. However, despite this convergence, regional disequilibria are still characteristic o f poverty in Mozambique and still deserve specific attentioninPAFWA 11. 97. As for the distribution o fconsumption among the wealthiest andpoorest social strata, the trend indicated by the Gini coefficient, which was 0.40 in 1997 and 0.42 in 2003, is statistically insignificant (Table 7). Most provinces experienced a small increase in the inequality estimate, although this was not significant except inMaputo City. Inthis province, the poor do not benefit from economic growth as much as the rich do. Because inequality in  - 28 - this country has not increased significantly inthe past five years, we can say that the base for economic growth has expanded. Although historically a trend toward an increase in inequality is not unusual to several countries that are experiencing a phase o f rapid growth, this indicator should continue to be monitored because a worsening of inequality may sow the seeds for destabilization. Table 7: Changez inInequalityOver Time AREA Average Gini" GE (I)" Consumption (proportion of the poverty line) 1996-97 2002-03 1996-97 2002-03 Nationwide 1.28 0.40 0.42 0.3 1 0.37 Rural 1.15 0.37 0.37 0.26 0.27 Rural 1.53 0.47 0.48 0.44 0.50 North 1.22 0.38 0.39 0.29 0.35 Central 1.40 0.37 0.39 0.27 0.3 1 South 1.15 0.43 0.47 0.37 0.50 Niassa 1.29 0.35 0.36 0.22 0.26 Cab0 Delgado 1.27 0.37 0.44 0.27 0.62 Nampula 1.18 0.39 0.36 0.30 0.24 ZambCzia 1.35 0.32 0.35 0.20 0.23 Tete 1.06 0.35 0.40 0.21 0.30 Manica 1.41 0.41 0.40 0.36 0.30 Sofala 1.81 0.40 0.43 0.32 0.41 Inhambane 0.77 0.38 0.44 0.3 1 0.40 Gaza 1.24 0.38 0.41 0.27 0.38 MaDuto' 1.01 0.42 0.43 0.35 0.36 Maputo City 1.69 0.44 0.52 0.41 0.60 Note: *The Gini and GE(1) ieneralized Entropy ratio) sumup the dispersion o f a distribution. "Zero" is interpreted as an absence o f equality. Source: James et al. 2005 Translator's Note: Footnote text missing.  - 29 - Iv. VISION, OBJECTIVES,AND ESSENTIAL ACTIONS (a) The Vision 98. The objective o f constructing a prosperous MozambicanNation is still valid. It guides and motivatesthe State to promote an increase inproductivity. 99. It is important to maintain high average annual rates o f economic growth similar to those o f previous years by adopting a comprehensive and inclusive model in order to improvelivingconditions, the well-being o f our citizens, and to reduce poverty. This section describes the basic conditions for achieving these objectives, and the general lines o f PARPA11. 100. Consolidation o f peace and democracy, social stability, public safety, and the guarantee of individual freedoms are basic conditions for the growth o f this economy and a reduction inabsolute poverty. 101. The State will continue to invest in providing public goods and services in order to reduce poverty via transfers o f resources (redistribution), similar to what happened during PARPA I,but giving relatively more attention (compared with PARPA I)to local, endogenous economic development, while keeping inmindthis country's integration into the African continent andthe rest of the world. 102. The level o f poverty prevailing in this country in the early 199Os, the success in achieving peace, and the transition to a democratic regime and market economy created an opportunity for Mozambique to receive financing inthe form o f donations and concessional credit from the international community. The government made an explicit commitment to adopt a strategy to reduce poverty during 2001-05. This strategy involved giving priority to the development o f human capital and good governance practices, ensuring macroeconomic stability, investing inbasic infrastructures, andcontributing to the development o f agriculture and the rural economy. 103. PARPA I1 2006-09 maintains the objective o f reducing poverty by redistributing resources, an approach that benefits the poorest and least favored population groups. However, PARPA I1must become more consistent and sustainable if it i s to raise the living standard and increase the well-being of Mozambicans in such a way that their own efforts, together with national savings, acquire a preponderant role. 104. Consequently, PARPA I1 lays out the additional objectives o f improving the monitoring o f economic development, playing a more active role inregulating private sector activity and the mechanisms o f competition, and continuing to allow room for public-private partnerships in the creation o f a favorable environment for business. Using macro- and microeconomic connections, the State will make it easier for the private sector to fulfill its hnction o f energizing the real and financial sectors o f the economy, not only for the big companies, but primarily for small and medium-size units inthe rural areas that are engaged inagricultural production, agroindustry, andother economic sectors.  - 3 0 - 105. The State will gradually increase its tax revenues as a proportion o f GDP until2009, reaching 15 percent inthat year. This objective should be achieved without increasing the tax burdenon the formal sector, by expanding the tax base, curbing tax evasion, and reducingtax incentives. 106. Institutions in civil society, having participated in the poverty reduction actions during PARPA I,continue to be stakeholders andimportant partners for PARPA 11.External aid and cooperation with the government's cooperation partners are still important in the battle against absolute poverty. 107. The strategy o f promoting economic growth and reducing poverty i s organized around three pillars: governance, human capital, and economic development, and integrating the cross-cutting topics. 108. Followingare the government's priorities and central objectives, by pillar. (b) Priorities 109. The government's Five-Year Plan for 2005-09 defined some key general objectives that are presented here in detail and arranged by pillar. The respective central priorities are also identified. i. General Objectives Reduction inthe levels of absolute poverty; and Promotion o f rapid, yet sustainable and comprehensive, economic growth. Priorities Carry out policies and use instruments to promote an average annual real growth in national per capita income; Maintain close coordination with the international community in order to permit continuation o f the flows of aid to this country, particularly to the State Budget; Ensure redistribution o f income to the population, particularly the poorest strata, by providing social services and performing other relevant and classical State functions; Continue to monitor the trend inpoverty levels; and Improve the monitoring o f trends inthe economy, includingproductivity, usingbetter and more appropriate statistical indicators, and employing them at the opportune time.  - 31 - ii. Governance Objectives 0 Consolidation o fnational unity,peace, justice, and democracy; 0 Confrontationo f corruption, excessive bureaucracy, and crime; 0 Strengthening sovereignty and international cooperation; and 0 The harmonious development o f this country. Priorities 0 Ensure the separation o f powers: executive, legislative, andjudicial; 0 Keep open the channels and the spirit o f communications among the different political forces; 0 Rationalize the functions o f the government bodies in order to meet planned objectives, improve intersectoral coordination, and avoid redundancy; 0 Decentralize government functions down to the district level, thus entailing budgetary repercussions, inorder to facilitate local development; 0 Review the salary and incentives structure and adopt the practice o f outsourcing- contract outside the staffing pattern-in order to ensure that positions that require advance technical skills are filled by Mozambicans, and that creation o f these positions reflects established priority policies. 0 Guarantee protection o f property rights; rationalize and regulate land use. Work with civil society and the private sector to find ways to expeditiously solve contract disputes inthe business world, while respecting the laws that are inforce; 0 Prepare a plan for dealing with vulnerability to natural disasters, or events o f human origin such as droughts, floods, plagues, epidemics (e.g. earthquakes [sic]), increases inpetroleum prices, drastic deterioration inthe terms o f trade, and sharp fluctuations inexchange rates; 0 Ensure the effectiveness o f government inspection authorities and the agencies that audit performance inthe financial andproperty areas; 0 Combat crime; 0 Integrate into activity programs and plans the key international commitments relating to integration into the continental sub-region and the international community,  - 32 - keeping in mind that the well-being o f Mozambican producers and consumers must not be allowed to deteriorate as a result o fthese agreements; and 0 Work to see that investments and State Budget resources are distributed nationwide in a balanced fashion. iii. HumanCapital Objectives Expand andimprove the levels o f education; 0 Improve and expand access to health care; 0 Improve and expand access to potable water and adequate sanitation; 0 Promote and consolidate self-esteem inthe minds o fthe citizens; and Increase awareness o f the importance o f a culture that values work, enthusiasm, honesty, and accountability; and 0 Help young Mozambicans to realize their potential and creative and entrepreneurial abilities, and express their voluntarist spirit. Priorities Expand access to education and improve its efficiency, paying particular attention to women and girls, children with special educational needs, orphans, and children from rural areas; Encourage the personnel who emerge from the various levels o f the educational system to respond to the needs of the business community and the market, making use o f science and appropriate modem technology; Carry out scientific activity and technological innovation and application, taking into consideration its practical application and usefblness inproduction; Expandthe coverage o fhealthcare services; Reduce mortality among mothers and infants; Curb the incidence o f HIV/AIDS; reduce deaths from malaria and tuberculosis; Improve the extent o f coverage o fwater supply and sanitation services;  - 33 - 0 Help create equality o f opportunity among women andmen, without discrimination- either positive or negative-giving preference to harmony between social progress and local tradition; 0 Include in the educational curriculum, beginning at the elementary school level, topics on morals, the culture o fwork, and individual responsibility; 0 Promote the strengthening o f the youth association movement as a strategy for organizing andincreasing participationby young people insociety; 0 Develop and consolidate social networks o f support for the least favored citizens, orphans, the elderly, the disabled, the mutilated, and the chronically ill; 0 Integrate the system that supports citizens who are malnourished and suffering from hungercrises, bydevelopingthe food production system; and 0 Ensure maintenance o f environmental equilibrium throughout Mozambique, including areas where new projects, regardless o f their nature, are beingcarried out. iv. Economic Development Objectives 0 Rural development; 0 Foster the development o f the national business community; and 0 Create an environment favorable to investment. Priorities Stimulate the structural transformation o f agriculture, which involves increasing that sector's productivity and integrating it into the rural sector, the rest o f the economy, and competition on world markets; Make the north-south corridor a focal point for national development, featuring multisectoral and territorial links, in order to meet overall objectives and the objectives o f the three pillars; 0 Draft a national policy for sustainable energy and continue to invest in electrification projects nationwide, especially inrural areas; 0 Help achieve and maintain macroeconomic stability through competent management o fpublic finance and o f the operations o f the Bank o f Mozambique;  - 34 - e Gradually increase tax revenues as a proportion o f GDP until2009, to attain a level of 15 percent inthat year. Revisit the current rates in the basic laws on the VAT, IRPC (Corporate Income Tax) and IRPS (Individual Income Tax), without exacerbating the tax burden; e Ensure that the State acts in a timely fashion to honor its commitment to pay for services and goods purchased on the market; e Define a strategy for guiding, systematizing, and orderly handling the flows o f foreign aid and external credit into the public sector, and find sustainable ways to manage the public debt; e Encourage an increase in national savings and a sustainable increase in credit and micro-credit to the economy, inreal terms; e Define an international trade policy and a strategy for regional economic integration inSouthern Africa and inthe principal world markets that is favorable, in aggregate terms, to Mozambican producers and consumers; e Promote expansion o f the agroindustrial system, labor-intensive manufacturing, and export-oriented local industries, particularly small and medium-scale units and those that make a highrelative contribution to national income andjob creation; e Guarantee the sustainable use o f natural resources and implement transparent mechanisms for the management andrational exploitation o f those resources; e Promote, regulate, and monitor the development o f tourism, ensuring that this sector makes a sustainable net contribution to the State Budget over the medium and long term; e Implement a program for construction o f excavated reservoirs; rainwater collection systems; and small, medium, and large dams inorder to satisfy the needs for water for human consumption, livestock, irrigation, fisheries, industry, tourism, electricity production-among other uses-to mitigate, in a planned manner, the negative effects of droughts and floods, with a view to ensuring sustainable management o fthe country's water resources. v. BASICMACROECONOMIC AND FISCAL SCENARIO (a) Medium-TermBudgetaryProgramming 110. The central purpose o f this chapter i s to present a scenario that could serve as basis for the macroeconomi; and fiscal framework o f PARPA I1by quantifying its strategy and identifying opportunity optionskosts. The scenario gives forecasts for 2005-09, and 2014.  - 35 - 111. The basic scenario presents an optimisticgoal. It is muchmore than a restrictive and conservative vision, and i s intended to spur reforms. The scenario presents a macroeconomic and fiscal picture that is consistent with the scope o f the PARPAI1goals. 112. The scenario covers the real, external, fiscal, and monetary sectors, since they are all interconnected. In the fiscal sector, the 2005 figures come from the report on Execution o f the State Budget, while the State Budget is the source o f the 2006 figures. It should be noted that the 2005 State Budget Execution Report represents a preliminary estimate, since information on the execution o f investment expenditure i s still incomplete. TheReal Sector 113. The basic scenario projects economic rates o f growth averaging 7 percent until 2009, and 6.5 percent in 2010-14 (Table 7 [sic - Table SI). Agriculture, commerce, and transportation play an important role ingrowth by helpingto integrate the nation's economy. Table 8. Projectionsof GDP, Inflation, and Population(2005-09,2014) - RealGDP * 68,581 73,999 79,179 84,721 90,652 124,130 YOannualchange 7.7 7.9 7.0 7.0 7.0 6.5 (per capitain MT million) 3.5 3.7 3.9 4.1 4.2 5.2 RealGDP wlo Large Projects* 62,646 67,941 72,537 78,055 83,299 116,504 YOannualchange 7.0 7.7 6.2 7.0 6.3 6.9 (per capitain MT million) 3.2 3.4 3.6 3.7 3.9 4.8 NominalGDP 153,041 180,831 208,970 236,408 266,372 469,904 YOannualchange 14.6 18.2 15.6 13.1 12.8 11.8 (per capitain M T million) 7.9 9.1 10.3 11.3 12.5 19.5 Rate of inflation(end of period) 11.2 7.0 6.0 5.5 5.4 5.0 Rate of inflation(annualaverage) 6.4 9.5 8.0 5.7 5.4 5.0 GDP Deflator(2006 = 100) 91.3 100.0 108.0 114.2 120.4 154.1 YOannualchange 6.4 9.5 8.0 5.7 5.4 5.0 - Population(million) 19.4 19.9 20.3 20.8 21.3 24.0 Populationgrowth (YO) 2.4 2.4 2.4 2.4 2.4 2.4 * Note that "real" means constant 1996prices (because this i s the base used by the INE-National Statistics Institute).  Note: Here and inthe tables that follow, the figures for 2005 were obtained from the December 2005 Report on Budgetary Execution. Inthis preliminary report, the degree to which disbursements for externally-financed projects are included is still very incomplete. And so the amount ofexternal financing is, infact, much greater than the figures shown. The big increase from 2005 to 2006 reflects this problem. The actual increase is much smaller. 114. Big projects play only a minimumrole-the only change is the startup o f the Moma Heavy Sands Project in 2006-07. Therefore, the growth rates are not based these kinds o f undertakings. 115. Note that the main impact o f these kinds o f undertakings on GDP i s limited to a broadening o f the basis o f production (Le., the size o f GDP) during the first years o f the project's production. After the optimum level o f production has been achieved, their contribution to the rate o f real growth remains relatively low. 116. We should emphasize that certain important assumptions underlie these forecasts o f growth, specifically: Stability and peace, both internally and internationally; Exploitation o f the economy's potential in agriculture, agro-industry, natural resources and tourism; Continuity o f public sector reforms, thus improving the business environment and access to credit, particularly rural credit; A better bankingsystem and greater sophistication inthe financial system; An additional effort to provide and maintaininfrastructures; Support for small andmedium-scale companies; Inflows o f foreign capital inthe form o f aid andinvestment; A deepening o f external economic relations, particularly with the Southern African Development Community (SADC). As an example o f an improvement inthe collection o fpublic revenues from the use o f natural resources, the document entitled Country Economic Memorandum: Mozambique estimates potential public revenues at US$67 and US$215 million in 2005 and 2015, respectively, compared with US$30 million in2003, at constant prices (World Bank 2005a). As a percentage o f tax revenues, these figures represent 5.3 percent and 11percent in 2003 and 2005, respectively. This favorable trend o frevenues in2003 and 2005 will be possible if the best mechanisms for charging fees for the use o f natural resources are implemented without any changes in the current legal situation. Government priorities for improving the revenue-collection mechanisms are discussed inChapter VIII. 118. Potential exogenous risks for the Mozambican economy are (i) reduction in demand for exports; (ii) increases in the prices o f specific imported commodities such as oil; (iii) a  - 37 - drastic drop in foreign aid; (vi [sic - iv]) weather-related shocks; and (vii [sic - VI) macroeconomic shocks. TheExternal Sector 119. The trends in the external sector are extremely important, inasmuch as the Mozambican economy [sentence incomplete - sic]. Mozambique i s heavily dependent on external flows o f funds, has a flexible exchange rate, and a relatively high level o f imports, equivalent to 28 percent of GDP (excluding imports for megaprojects), while exports stood at 7'3 percent o f GDP (excluding megaprojects) in2005. 120. Projections for the external sector (Table 8 [sic - Table 91) take an optimistic view o f exports, while excluding production by large projects. The fundamental assumption i s that the general growth o f the economy rests on the sustainable expansion and improved competitiveness o f export industries. This i s crucial to the maintenance o f desired levels of international reserves. 121. Therefore, we emphasize the importance o f properly appreciating the role o f the country's export sectors and avoiding actions that could harm them. Inthis case, monitoring focuses primarily on small and medium-size Mozambican exporters. This i s an additional argument in favor of the objective of maintaining macroeconomic stability and reducing volatility inthe exchange rate. 122. Parallel to these developments, we assume stability in the (global) balance of trade and a gradual and prudent strengthening ofthe net internationalreserves position. 123. Foreign aid will continue to be extremely important for financing the deficit in current account and ensuring stability o f the economy vis A vis the rest o fthe world.  Table 9. Projectionsof ForeignRelationsIndicators (2005-09,2014) (in US$ million) 2005 2006 2007 2008 2009 2014 Exports 1,745 1,803 2,016 2,156 2,269 3,236 annual YOchange 20.2 3.3 11.9 6.9 5.2 7.7 Yo of GDP 26.3 26.0 27.6 26.7 25.5 26.7 Mega-projects 1,263 1,215 1,332 1,365 1,393 1,809 Other 483 588 684 790 876 1,427 annual YOchange 19.7 21.8 16.4 15.5 10.8 10.0 Imports 2,242 2,643 2,595 2,723 2,899 3,802 annual YOchange 27.8 17.9 -1.8 4.9 6.5 5.1 Yo of GDP 33.8 38.1 35.5 33.8 32.6 31.3 MegaProjects 384 430 402 401 410 568 Other 1,858 2,213 2,193 2,322 2,489 3,234 annual YOchange 26.0 19.1 -0.9 5.9 7.2 5.0 Balanceof Trade -497 -840 -579 -567 -630 -566 Balanceof Trade (not incl. mega-projects) -1,375 -1,625 -1,509 -1,531 -1,613 -1,807 Yo of GDP -20.7 -23.4 -20.6 -19.0 -18.2 -14.9 Current Account palance) -761 -1,091 -910 -894 -985 -700 Net InternationalReserves(change) Index (2006 = 100) 141.4 100.0 102.9 104.6 90.3 119.1 as monthsof imports(of goods) 5.0 3.0 3.2 3.1 2.5- 2.5 TheMonetary Sector 124. Inorder to fulfill the goals ofthis sector, it is assumedthat the objectives inthe fiscal and external sectors will be achieved, since trends in monetary indicators are inherently linkedto developmentsinthese other sectors. 125. Expansion of the monetary base needs to be controlled inorder to keep inflation rates low. The goals proposed here were based on projections of the inflation rate and the real growth rate duringthe period.  - 39 - 126. Projections for the external sector suggest that international reserves held by the Bank of Mozambique [sic - will improve?] gradually until2014, from 2006 onward. Ifit proves to be impossible to achieve strong growth in exports while controlling imports, there may be mounting pressure on the exchange rate. 127. Interms ofcredit to the government, it is expected that deposits by the government will show a net increase until 2009. In other words, in net terms, the government will not receive credit from the banking system (Table 9). Instead, the increase in its deposits will contribute to an average 15 percent per annum increase in credit to the economy. This trend i s also consistent with the strengthening o f the primary deficit and support for monetary policy. Note that a failure o f the government to exercise fiscal control could undermine the desiredexpansion ofcredit to the private sector. Table 10. Projections of Monetary Indicators (2005-09,2014) (millions of contos) 2005 2006 2007 2008 2009 2014 - Net external assets 34,3 16 27,307 27,927 27,993 24,3 19 22,973 Net internal assets 9,125 22,839 28,949 36,212 48,oga 94,920 Internal credit 13,477 11,849 14,548 17,437 20,89a 46,288 Credit to the government -7,014 -11,921 -12,787 -13,998 -i5,26a -19,128 (net) Creditto the economy 20,491 23,770 27,335 31,435 36,150 65,4 16 Other assetsand liabilities -4,352 10,990 14,401 18,774 27,200 48,632 Money and quasi-money (M3) -43,44 1 -50,146 -56,876 -64,205 -72,409 -1 17,893 Currencyin circulation -6,110 -6,770 -7,509 -8,477 -9,560 -15,565 Deposits -37,331 -43,377 -49,367 -55,728 -62,849 - -102,328 Balance 0.0 0.0 0.0 0.0 0.0 0.0 (b) The Financial Envelope,2006-09,2014 128. The financial envelope defines the total volume of financing available to the government. It is consistent with other macroeconomic goals and the above forecasts o f the behavior o f the economy duringthe period.  - 40 - 129. The central objective i s to continue mobilizing domestic funds, thereby increasingthe sustainability o fpublic finance over the longterm. 130. In global terms, the basic scenario (Table 101 [sic - Table lo]) projects an annual average rate o f growth slightly above 10 percent in total real funds available between 2005 and 2009. This increase comes mainly from collections by the government-a significant increase in total State revenues i s forecast, from 14.0percent o f GDP in 2005 (in 2006 prices) to 16.2 percent in2009. Note that the forecast increase in external resources in2006 i s due to the inclusion o f off-budget items (resources that were previously not included inthe State Budget) in2006, and the low preliminary estimates for 2005. 131. This i s due not only to the pace o f the growth o f the economy but, and especially, to the tax reforms andother public sector efforts mentioned inChapters Iand IV.However, it i s recognized that these funds must be mobilized in a way that does not jeopardize growth o f the private sector or undermine the incentives to pursue economic activities in the formal sector. 132. During PARPA I1and until 2014, steps are expected to be taken to achieve greater integration with the economies o f Southern Africa. The fiscal implications o f these changes are being analyzed (a reduction in customs tariffs could lower Customs authority revenues, but it may also boost the total pre-tax value o f imports, and so it is difficult to estimate the net effect on State revenues). Therefore, the forecast for the financial envelope used a conservative position with respect to the growth inrevenues derived from foreign trade-it i s assumed that revenues from foreign trade rise intandemwith total value of imports.  -41 - Table 11.The FinancialEnvelope, at Constant2006 Prices(2005-09,2014) - 75,717 24,057 27,017 29,510 32,633 35,842 50,578 17,446 25,864 27,132 26,433 25,793 25,139 11,731 16,757 17,277 17,213 17,034 16,770 5,407 10,510 10,995 10,800 10,486 10,122 6,323 6,246 6,281 6,414 6,548 6,648 5,716 9,107 9,855 9,220 8,759 8,370 3,447 4,711 5,072 4,925 4,782 4,616 2,268 4,396 4,783 4,294 3,977 3,753 -524 -1,332 -802 -1,061 -1,049- 0 40,979 51,548 55,839 58,006 60,586 - 75,717 Total Resources 24.8 29.2 29.3 28.5 27.8 24.8 State revenues 14.4 14.9 15.3 15.8 16.2 16.6 External Resources 10.4 14.3 14.0 12.8 11.6 8.2 Donations 7.0 9.3 8.9 8.3 7.7 5.5 Credits 3.4 5.0 5.1 4.5 4.0 2.7 Net internal credit -0.3 -0.7 -0.4 -0.5 -0.5 0.0 - Total Resources 101.3 102.6 101.4 101.8 101.7 100.0 State revenues 58.7 52.4 52.8 56.3 59.2 66.8 External Resources 42.6 50.2 48.6 45.6 42.6 33.2 Donations 28.6 32.5 30.9 29.7 28.1 22.1 Credits 13.9 17.7 17.6 15.9 14.5 11.1 Net internal credit -1.3 -2.6 -1.4 -1.8 -1.7 0.0 133. The basic scenario depicted inTable 11reflects the heavy influence o f external aid in State financial resources. Under this scenario, it i s anticipated that the value of external finds available to finance State expenditure programs will remainapproximately constant, indollar terms, from 2006 onward (Table 11).Note that the forecast increase in external resources in 2006 (over 2005) i s due to the greater coverage o f the State budget, Le., the inclusion of several external resources that were previously off-budget. Although this forecast i s relatively conservative, it represents a prudent and moderate basis for guiding the  - 42 - expenditure programs; in other words, it i s believed that this level o f external assistance i s viable over the medium term. 134. Under this scenario, it i s anticipated that the value o f external fimds available to finance State expenditure programs will remain approximately constant, indollar terms, from 2006 onward. Table 12. PrincipalExternalResources, inUS$ Millions(2005-09,2014) (US$million ) 2005 2006 2007 2008 2009 2014 I Principal External Resources 639.5 899.2 928.4 944.6 956.7 967.2 Support of the Budget 294.0 309.7 320.7 332.1 344.2 356.4 Donations 231.5 219.7 230.7 242.1 254.2 266.3 Credits 62.4 90.0 90.0 90.0 90.0 ProjectFinancing" 345.5 589.5 607.7 612.5 612.5 611.2 Donations 207.8 406.8 415.9 420.6 420.6 419.7 Credits 137.7 182.7 191.8 191.8 191.8 191.4 135. The projection as to the volume o f external aid inthe State Budgetis neither a ceiling nor a fixed limit. The country remains open to additional flows o f foreign aid, provided such assistance i s aligned with the government's activities and plans. The next section of this document discusses the possibility o f a considerable increase in external funds and the fiscal implications o f such an increase. 136. One implication o f this scenario is that the size o f the financial envelope in terms o f GDP does not grow duringthe period (Table 121 [sic - Table 121). This trendwas based on the forecast about external resources and on the anticipated considerable decline in internal credit to the government. In fact, in line with the objective o f ensuring fiscal balance and prudence, it i s predicted that the State will begin to record a budget surplus between now and 2009 that i s associated with greater mobilization o f internal hnds, control o f the government's current expenses, and an anticipated reduction inits financial operations. 137. The scenario underlines the fact that a real increase in tax revenues i s key to achieving consistency between economic development and tax andbudgetpolicies. (c) Additional Funds in the State Budget 2006-2009,2014 138. The Basic Scenario represents a prudent and consistent framework for guiding the drafting o f the government's expenditure programs during the medium term. However, this framework i s not set in stone but i s open to changes that are consistent with the actual  - 43 - execution o f the economy, with new information, or with changes in relevant policies or goals. 139. In this section, we consider two important factors that may result in an upward revision o f the value of the financial envelope. These are: (i) supplementary forgiveness o f the State's external debt; and (ii) sustained rise in the volume o f external aid provided to a this country. 140. The budgetary implications o f these possibilities are estimated in Table 13, in the form o f different scenarios. To facilitate comparison among these scenarios, they are expressed in terms o f an index o f the principal components o f expenditure. Therefore, for each component o f expenditure in2006, the index found in the basic scenario in Table 13 i s equal to 100. 141. The Debt Forgiveness Scenario. Initiatives designed to forgive the external debt o f the underdeveloped nations have proliferated worldwide. It i s acknowledged that Mozambique should benefit from this sort o f bold action. However, as PARPA I1i s being drafted, the details o f such forgiveness as it may apply to this country are not yet clear, nor is the timing. Therefore, the basic scenario does not include any specific assumption as to a substantial increase insupport for external debt service. 142. Despite the lack o f concrete figures, it i s possible to make a rough estimate o f the budgetary impact o f additional levels of external debt service assistance. The pessimistic scenario (Table 13) assumes that an additional external debt forgiveness program means a fresh allocation (or redistribution) to investment expenses o f 15 percent o f the expenditures related to debt service (interest and amortization), beginningin2006. The optimistic scenario assumes a 30 percent redistribution in 2006, rising to 70 percent in 2008 and 2009. For the sake o f simplicity, all scenarios assume that total resources released will be allocated to investment expenses. Note also that debt forgiveness does not represent an inflow o f additional funds to the State Budget-total expenditure does not change. 143. These two scenarios show a significant fact-from the budgetary standpoint, debt forgiveness programs will not have a considerable impact ineither the short or mediumterm. However, this does not mean that such programs are not important. Rather, they have a gradual effect (over the long term) and a positive effect on the capital account o f the balance o fpayments that is not captured inthis exercise.  - 44 - Table 13: Scenarios Related to Additional Available Funds(2005-2009) Scenario: basic Current expenditure 86.1 100.0 108.2 113.0 117.7 Investment expenditure 66.1 100.0 108.3 114.4 121.8 Financial operations 117.5 100.0 110.2 94.7 85.6 Total expenditure 79.5 100.0 108.3 112.5 117.5 Scenario: debt t`orgiwncss (pessimistic) 0.0 144.4 137.4 136.8 139.1 Value of funds freed up (mde) 66.1 100.7 108.9 115.0 122.4 Investment expenditure 0.0 0.7 0.6 0.5 0.5 changevs. "base" (YO) Scenario: debt t`orgivencss 0.0 433.2 687.2 957.9 973.6 (0 timistic) p 66.1 102.0 111.4 118.8 126.2 Value of funds freed up (mde) 0.0 2.0 2.9 3.8 3.7 Investment expenditure changevs. "base" (YO) Scenario: increase in external aid Simulated increase inUS$ million 0 0 75 150 200 Investment expenditure 66.1 100.0 117.2 132.4 145.7 changevs. "base" (YO) 0.0 0.0 8.3 15.7 19.7 as YOof GDP 8.6 12.0 13.2 13.9 14.3 Total Expenditure 79.5 100.0 112.1 120.1 127.7 changevs. "base" (YO) 0.0 0.0 3.5 6.7 8.6 as YOof GDP 24.5 28.5 29.9 29.9 29.7 Note: The scenarios refer to a real index f each component o f expenditure, valued at constant 2006 prices. The actual figures for the basic scenario are presentedinTable 14. 144. Increase in external assistance scenario. Along with evaluation o f data on supplementary assistance with debt service, there i s discussion about increases inthe volume of external aid to this country. Aside from the issue o f the availability and quantity of additional aid, the government needs to reflect on the advantages and disadvantages of such an increase. Two interrelated questions arise inthis context, specifically: (i) the government's ability to absorb andmanage more aid; and (ii) danger that distortions may develop that the are related to an increase inthe aid.  - 45 - 145. And so the last scenario inTable 13 calculates (inreal terms) the impact o f a gradual entry o f additional external assistance on total investment and overall expenditure- assistance beyond the value in the basic scenario. For example, Table 13 simulates an increase o fUS$75 million in2007 that rises to US$l50 million in2009. This scenario shows that such additional funds would finance a higher rate o f investment (e.g. 14.3 percent compared with 12.0percent o f the GDP forecast for 2009 in the basic scenario) and, consequently, an increase inthe weight o ftotal expenditure as percentage o f GDP. 146. As for the problem o f absorption, the government recognizes that when foreign aid is used effectively, it has spurred the efforts to reduce absolute poverty and achieve economic growth. It i s also obvious that the country has not yet attained a level o f sustainable economic growth that would require a substantial cut in the volume o f assistance in the short or mediumterm. 147. Basic Principles for Application of Additional External Funds. In light o f the possibility o f a significant increase in external finding, the government has begun a process o f careful reflection in order to lay down some basic principles to guide the use of extraordinary external resources. The key reason why those principles need to be defined i s * that flows o f this type o f funding will not continue indefinitely and so it would not be prudent to include those funds in the medium-term planning process. Clearly, they require a specific approach. 148. Two principles for allocating those resources have emerged from preliminary discussions. Priority in the allocation o f high volumes o f special external funding will be given to: (a) Investments that need significant startup funding but can be sustained by lower funding duringthe implementation phase; and (b) Interventions that stimulate the productive sector o fthe country's economy. 149. Two concerns are associated with an inflow o f highvolumes o f external funds:Dutch disease and the ability of the nation's economy to absorb the fundsq2The focus on the production sector (b) will help address both concerns. 150. Lastly, note that these principles seek to prevent an incremental expansion in all headings o f the expenditures scenario that is presented in the next section. An incremental For example, aid flows coming from initiatives such as those adopted by G-8heads o f state at the Gleneagles summit in2005, or from the Millennium ChallengeAccount. Dutch disease, a term usedto describe the disappearance o f exporter industries owing to an appreciation inthe value o fnon-tradable goods and services relative to tradable goods (manufactured goods and agriculture).  - 4 6 - expansion in all categories o f expenditure would make implementation o f those programs unsustainable after the extraordinary fundingruns out. 151. Meanwhile, the government insists that despite the possibility o f additional flows of funding, it would prefer external aid that flows smoothly andwith appropriate predictability (see Chapter IX, section 4). (d) BudgetaryAccommodationof the PARPA 152. Budgetary accommodation of PARPA I1translates into the overall financial program that will support execution of the actions by the State called for inthat document. 153. This program is based on the Medium-Tern Fiscal Scenario, a tool that the government updates annually and uses to chart the course of its financial program, as well as to prepare the annual budget. 154. The portion of the resources that are available in the State Budget for 2006-2009 is shown inthe section on the financial envelope. Table 14 provides an overall summary of the fiscal program that illustrates boththe trend inexpenses andthe financial constraints. - 41,503 52,881 56,641 59,066 61,635 75,717 24,057 27,017 29,510 32,633 35,842 50,578 17,446 25,864 27,132 26,433 25,793 25,139 40,979 51,548 55,839 58,006 60,586 75,717 23,031 26,735 28,918 30,215 31,468 40,251 14,394 21,788 23,587 24,925 26,528 33,661 3,555 3,026 3,334 2,866 2,590 1,805 0 Current deficit [= 1.1 -2.11 1,027 282 592 2,418 4,374 10,326 Total deficit [= 1.1 -21 -16,922 -24,532 -26,330 -25,373 -24,744 -25,139 Total deficit (YOGDP) -10.1 -13.6 -13.6 -12.3 -11.2 -8.2 Internal Primary Balance *** -3,997 -4,681 -4,644 -4,555 -4,874 -7,055 Internal Primary Balance(YOGDP) -2.6 -2.6 -2.2 -1.9 -1.8 -1.5  - 47 - *** The internal primary balance measures the difference between total internal resources and internal spending, which includesexpendituresfinanced throughdirectbudget support. 155. Clearly, the mainobjective ofthis medium-termbudgetaryprogram is maintenance of fiscal responsibility in order to ensure macroeconomic stability and facilitate the success of this plan of action. Consolidation of the government's fiscal position during the period is evidenced by the negative figures on internal credit to the government (excluding transactions with the Bank of Mozambique) and in the decline o f the total deficit and the primarybalance interms of GDP duringthe years until2009. Table 15: Program of Expenditures (2005-09,2014), at Constant 2006 Prices. (millions of contos) 2005 2006 2007 2008 2009 2014 - Total Expenditure 40,979 51,548 55,839 58,006 60,586 75,71i Current expense 23,031 26,735 28,918 30,215 31,468 40,25 1 Personnelexpenses 11,707 13,345 14,580 15,601 16,693 22,870 Goodsand services 4,826 5,587 5,901 6,315 6,757 9,026 Chargeson the debt 1,367 1,568 2,237 2,174 1,955 915 Currenttransfers 4,174 4,726 4,155 4,584 4,420 5,336 Other 956 1,509 1,444 1,541 1,644 2,104 ~ Investmentexpense * 14,394 21,788 23,587 24,925 26,528 33,661 Internal component 5,349 6,566 7,520 9,199 11,260 18,296 Externalcomponent 9,044 15,221 16,068 15,725 15,268 15,364 Financialoperations ** 3,555 3,026 3,334 2,866 2,590 1,805 as YOof GDP - Total expenditure 24.5 28.5 28.9 28.0 27.3 24.8 Current expense 13.7 14.8 14.9 14.6 14.2 13.2 Personnelexpenses 7.0 7.4 7.5 7.5 7.5 7.5 Goodsand services 2.9 3.1 3.1 3.1 3.1 3.0 Currenttransfers 2.5 2.6 2.5 2.2 2.0 1.8 Investmentexpense 8.6 12.0 12.2 12.0 12.0 11.0 Internal component 3.2 3.6 3.9 4.4 5.1 6.0 Externalcomponent 5.4 8.4 8.3 7.6 6.9 5.0 Financialoperations 2.1 1.7 1.7 1.4 1.2 - 0.6 as YOof total expenditure Current expense 56.2 51.9 51.8 52.1 51.9 53.2 Personnelexpenses 28.6 25.9 26.1 26.9 27.6 30.2 Goods and services 11.8 10.8 10.6 10.9 11.2 11.9 Currenttransfers 3.3 3.0 4.0 3.7 3.2 1.2 Investmentexpense 35.1 42.3 42.2 43.0 43.8 44.5  - 48 - lmillionsof confos) as YOof totalexpenditure 2005 2006 2007 2008 2009 2014 I Internalcomponent 13.1 12.7 13.5 15.9 18.6 24.2 Externalcomponent 22.1 29.5 28.8 27.1 25.2 20.3 Financial operations 8.7 5.9 6.0 4.9 4.3 2.4 156. Given these constraints, it would not be realistic to make radical changes in the structure o f expenditure. Table 16 indicates minor changes that could be made between now and 2009 inthe major line items. 157. In terms o f investment, it is expected that the volume of external financing will decline in terms o f GDP, beginningin 2006. Even so, effective control o f current spending and an increase in State revenues would permit an increase in the internal component o f investment spending, thereby ensuring that total investment would stand at greater than 11percent ofGDP. 158. With respect to sectoral allocation o f expenditures, Table 16 estimates the total amount o f resources that could be assigned to the various sectors. This figure represents total hnds actually available to finance sector expenditure programs, particularly for the battle against absolute poverty. In each year, the figure is equal to total internal and external resources, minus financial expense and other commitments that cannot be included in expenditures by the sectors. Table 16: Resourcesthat can be Allocatedto the Sectors, at Constant2006 Prices. (millions of confos) 2005 2006 2007 2008 2009 2010 Total Resources 41,503 52,881 56,641 59,066 61,635 61,782 - FinancialOperations * -3,555 -3,026 -3,334 -2,866 -2,590 -2,445 - Active -2,751 -2,094 -2,441 -2,024 -1,777 -1,643 - Externaldebt amortization -804 -932 -893 -842 -814 -802 - Chargeson the debt -1,367 -1,568 -2,237 -2,174 -1,955 -1,842 - Miscellaneoustransfers -3,935 -4,117 -3,929 -3,810 -3,696 -3,588 +Net internalcredit -524 -1,332 -802 -1,061 -1,049 -897 =Resourcesthat could be 32,123 42,839 46,339 49,156 52,345 53,010 Allocated to the Sectors as percent of total 77.4 81.0 81.8 83.2 84.9 85.8 resources as percentof GDP 19.2 23.7 23.9 23.7 23.6 22.4  - 49 - (e) Approach,andProcedurefor EstimatingCosts 159. The intent o f PARPA I1 is to contribute to realization o f the objectives o f the government's Five-Year Plan. Along these lines, the section on costs presents a table showing how resources would be allocated by sector and sub-sector (called "programs"). It covers all the expenditures by the State, regardless o f the source o f the funds (internal or external) or the type o f expense (operating or investment). The allocation o f resources to the sectors i s compatible with the achievement o f the priorities and actions of PARPA 11. 160. During the preparation of this document, questions were raised as to the best approach to take in estimating cost: one option involved adding up the expenditures necessary to achieve the MDG [Millennium Development Goals] and the needs for additional financing ("aspirational costing"). The other approach was a presentation o f a plan for allocating funding that i s predictable within the current context, thereby assuring the maximumpossible impact with regard to the MDG. We opted for the second alternative: an expenditure structure compatible with the objectives and goals o f PARPA and within the predictable financial resource envelope. 161. The possibility for significant growth in the volume o f external funding, and the implications o f that increase, are explored at the end o fthis chapter. 162. Projections were made at constant 2006 prices, i.e., the same basis as the 2006 State Budget, and taking into account, albeit broadly, the projects and activities now under way. Also considered were some large projects, such as the bridge over the Zambezi river, or specific activities such as the Population Census planned for 2007, the installation o f provincial legislatures, and elections. 163. As presently designed, this projection does not draw a distinction between "internal sources" and "external sources" or between "operating expenses" and "investment expenses." External financing i s allocated according to Government priorities and then follows the strategy o f using general Treasury funds (internal revenues and support to the budget) to offset the distortions o f a not-fully-aligned allocation o f the external financing received. The expenditures structure described below i s a desirable one for total financing. And so the projection serves not only to guidethe appropriation o f general funds but also to direct the use o f external funds. 164. Investment expense i s not separated from operating expense because, in actual practice, what i s designated in the State Budget as "investment expense" are expenditures that are organized by project, while "operating expenses" refers to general expenses. The presence o f a Project in the State Budget makes it possible to follow the course of allocated funds on down through a specific use. Furthermore, it protects the funds assigned to that Project from being diverted to other uses. Hence it i s possible to find, under "investment expense," both current and capital expenditures. This i s why the distribution o f total expense into "general" (operating) and "specific" (investment) is an operational decision that will be made inthe annual budgetingprocess.  - 50 - 165. Another important aspect i s that the projection itself does not take geography into account. The distribution o f the funds by sector and program i s done purely by sector and subject area. The distribution of those sums by territorial levels i s done during the preparation o f the CFMP [Medium-Term Fiscal Framework], and takes into account the decentralization policy and the constraints present inthe capacity for implementation. 166. The projection shows the trend in sector expenses at constant 2006 prices, the same basis as used for preparation o f the 2006 State Budget. It includes the impact o f new hirings, but does not reflect changes inwages and salaries. There are two factors to remember here: (i) astheeconomygrows,therewillbesomeadjustmentsinrealwagesonthesalary first, chart; and (ii)second, as part o f the efforts to professionalize the civil service, the percentage o f personnel who have a stronger educational background and a higher salary will gradually increase. To take this effect into consideration, a cumulative figure o f 3 percent was deducted from the amount to be distributed to the sectors in order to take into account the fact that the average salary will rise due to promotions, progressions, and a slight increase in real wages from 2007 until2010. 167. The result o f this exercise i s presented below. It i s important to keep in mind the character and limitations o f this projection. It describes a desirable trend, but it was established without explicitly including all the projects now in progress or the posting o f external funds and project financing agreements under way. It indicates the trend inresource application over the medium term. Annual appropriations will fluctuate above or below the trends presented here, depending on existing commitments and the structure o f external financing. 168. A detailed layout o fthe allocation o f expenseswill be one o fthe results o fthe CFMP that defines the structure o f expenditures for 2007 and the next two years (2008 and 2009). At that point, works in progress and existing commitments to those who are financing the projects will be taken into consideration. The CFMP establishes a nearly-definite allocation o f expenses for the next three years, according to the orientations in PARPA 11, taking historical constraints into account. (f) FundsAllocation by Sectors 169. The appropriation o f the funds was guided by assumptions derived from the strategy described inthis document. Following i s an explanation o f the principal assumptions: 170. Public services and the infrastructure necessary to a comprehensive and well- balanced economic growth should receive more attention and more funding in the coming years. Heavy investment in social welfare in the past has contributed to relatively skimpy appropriations for infrastructures. The economic sectors need more attention: agriculture- especially irrigation, research, extension services, and small-scale fishing. The same i s true o f the tourism andtransportation fund, includingweather forecasting. The waters sector will see  - 5 1 - growth-first to compensate for the low rate o f execution o f its budget in the past, and second, because o f the need to rehabilitate certain dams that were left off previous lists.3 171. The roads and highways sector will continue to merit attention. Inthe coming years, construction o f certain strategic bridges and the rebuilding o f National Highway No. 1 to better integrate the North, Central, and South regions-already under way-will require significant amounts o f money to complete. At the same time, proper attention will be paid to achieving balance between primary and secondary highways and their access roads- neighborhood roads-that will help integrate the rural and regional economies and tie the sites o f farm production to the towns and cities that constitute the local market. 172. Other areas inwhich a substantial increase in funding is anticipated in order to meet goals related to economic growth are: (i)energy, which should contribute by supplying quality electric power to districts that have industrial potential; (ii) National Tourism the Funds; export promotion; and (iii) higher education (universities and polytechnic institutes) andvocationalhechnicaleducation. 173. Health and Social Action will continue to receive increased funding during the year, in real terms, to permit a rise in expenditures that slightly exceeds population growth. The focus in these sectors will be on efficiency and good management and on inter-sectoral allocation o f resources. And so it is anticipated that the Health sector will experience growth higher than the average for the basic services sector. Social Action will see an increase, particularly inactions intendedto mitigate the effects o f AIDS. 174. Particular attention i s reserved for Education, where significant growth in funds allocated to primary school (EP1 and EP2) and the first part o f secondary education up to lothgrade (ESGI) is predicted. This is to ensure that the increase in the number o f students does not cause a deterioration inquality. The goal i s to achieve a gradual improvement inthe teachedstudent ratio and a better balance among regions. There i s a potential for improving the quality o f instruction without incurring additional costs, through more efficient organization. It i s obvious that an expansion accompanied by improved quality i s not feasible without an increase infunding. 175. Furthermore, there are some sectors where allocations need to increase to keep pace with population growth. These include the Courts, Law Enforcement, Industry, Commerce, and Tourism (except for the institutions mentioned above), Fisheries and Mineral Resources, and Planningand Finance. 176. The allocation o f resources to sectors that perform general administrative functions will not change significantly. Prominent here are Foreign Affairs and embassies; Defense; the units associated with the offices o fthe President o f the Republic, the PrimeMinister, and Neither purchase o fthe Cahora-Bassa dam (HCB) from Portugal nor the constructiono f an additional dam along the Zambezi River (Mphanda Nkuwa) were included inthis projection.  - 52 - the Governors; the Assembly o f the Republic, and Statistical Services. The 2007 census was treated separately, as were the 2007-2009 elections, since these are special, non-recurring expenditures. Adjustments o f activities to the PARPA strategy will be made by redistributing funds within the respective institutions. 177. The current level of spending will be maintained (in real terms) for Housing, the Environment, and Women's Issues. There will be readjustments inthe internal distribution as needed. With regard to Women's Issues and the Environment, we should note that these sectors are important parts o f the PARPA strategy. However, in order to hlfill the goals Limitationsof these projections Inmanycases, unitcost ofthe products was not calculated. Projects now under way and works already assigned funding were not taken into account indetail. Funds projection assumes a regular flow, without large fluctuations between years. In reality, fluctuations result from the various phases o f projects implementation. Still to be solved i s the problem of an apparent scarcity o f internal resources to pay VAT tax and to cover joint participation in projects financed from abroad in which the external financing does not include the tax burden. Depending on the solution found, the figures may be changed significantly by the impact o f the taxes. The subdivision of expenditures by programs is not sufficiently developed, since such a subdivision does not exist in the current budget andbooks o f account. The projection does not discriminate between internal and external financing. Because of inertia in the current structure o f external financing, owing to projects under way and medium-term commitments, it will be quite a challenge to allocate the external funds in a way that corresponds to the desired structure. The figures attributed under the 2006 State Budget served as starting point. These were increased in some cases to take into account certain external financing that was known, but had not been recorded in the budget. This adjustment is, of course, a raw estimate. The affected sectors are HIV/AIDS, Education, Health, andHighways (bridge over the Zambezi River). In some cases, the figures from the 2006 State Budget may have been under-estimated because the proposals submitted by the sectors were reduced in order to ensure consistency between the State Budget and macro-financial programming. It was not possible to determine, in detail, the real value o f the investments financed under the existing projects, even when they were recorded inthe budget. defined for these sectors within PARPA 11, what i s most needed i s a redefinition o f internal priorities.  - 53 - 178. The evolution o f expenditures by large groups o f sectors that results from this effort i s presentedbelow, in Chart 3. All the projections that follow are expressed in constant 2006 prices and include both internal andexternal financing. Chart 3: Structure of SectoralExpenses by Area [translation of items in key, readingfrom top to bottom] The State (Office o fthe President, Legislature, Embassies, Defense, INE, CNE/STAE [Technical Secretariat for ElectoralAdministratiodNational Elections Commission]) General and technical education Higher education, technology 0 Healthand AIDS 0 Roads andHighways Waters 0 The legal structure 0 Agriculture, MIC, Natural Resources, Tourism Other Table 17: Structure of Sectoral Expenditures (excluding general expenses) 2006-2010 2006" 2007 2008 2009 2010 The State (Office of the President, Legislature, Embassies,Defense, INE, CNEISTAE) 9.9% 11.6% 9.8% 10.3% 8.6% Generalandtechnical education 18.9% 18.0% 19.0% 19.8% 21.2% Higher education, technology 3.1% 3.4% 3.8% 3.8% 3.9% HealthandAIDS 19.0% 18.1% 18.1% 18.0% 18.3% Roads andHighways 12.5% 13.4% 13.8% 13.6% 13.9% Waters 5.3% 5.3% 5.9% 5.8% 5.5% The Legal Structure 8.1% 7.6% 7.4% 7.3% 7.3% Agriculture, MIC [Ministry of Industry& Commerce], NaturalResources, Tourism 7.6% 7.6% 7.3% 7.2% Other 16.0% 15.0% 14.7% 14.2% 14.1% Total (in millionsof contos) 44,216 46,467 48,039 50,752 52,837 179. The "non-allocated" line [sic] requires some explanation. The starting point for the projections i s the 2006 State Budget, but some foreign aid projects were added that were known, but not captured in the budgeted expenditures. However, the macro projections call for only about US$35 million in which the posted external support will increase between 2006 and 2007 because o f improvements inbudget coverage. Hence the deficit. 180. In 2007, programmed expenditure exceeds the resources shown in the macro table because o f two specific activities: the population census, and provincial elections. In projecting revenue and other receipts, a regular flow in each year i s assumed, except for fluctuations occurring for specific reasons such as the end o f certain large projects, or special  - 54 - events such as elections and the census that are normally covered by special external financing. And so the 2007 deficit gap will probably be closed by special contributions from some cooperation partners. 181. The changes in the structure can be seen clearly in the comparison o f the 2006 and 2009 structures presented inthe following pie charts. Chart4: Structureof Expendituresin2006 and2009 [translation of items in key, readingfrom top to bottom - same keyfor both pie charts -2006 and 20091 e The State (Office o f the President, Legislature, Embassies, Defense, NE, CNE/STAE) e General and technical education e Higher education, technology e Health andAIDS e Roads and Highways e Waters e The Legal Structure e Agriculture, MIC, Natural Resources, Tourism e Other 182. Following are some charts that show how expenses have evolved by components or programs within the areas listed in the previous- charts; 100 percent represents total expenditure by the respective area. Chart5: RoadsandHighways:DistributionofExpendituresby Program [translation of items in key, readingfrom top to bottom] Primaryroads Secondary roads 0 Neighborhoodand regionalroads e Bridgeconstruction andrehabilitation General expenses Public works at the provincial level (includes access roads)  - 55 - Chart 6: Waters: Distributionof ExpendituresbyProgramandComponent [translation of items in key, readingfrom top to bottom] e General expenses e Rural water supply Rural sanitation e Urbanwater supply Urban sanitation e Water resources Chart 7: Agriculture:Distributionof Expendituresby Program [translation of items in key, readingfrom top to bottom] General costs Fishery Rural extension services Support for production Research Irrigation Forests and wildlife Farmlandmanagement Chart8: HealthandHIV/AIDS: Distributionof Expendituresby Program [translation of items in key, readingfrom top to bottom] Levels 1and2 (excluding wages and salaries) Level 3 (excluding wages and salaries) Level 1-3 Personnel and DPS [Provincial Health Directorates] Level 4 Medicines Equipment Training HIVIAIDS Overhead, general expenses  - 56 - Chart9: Education:Distributionof Expendituresby Program [translation of items in key, readingfrom top to bottom] 0 General education (primary-EP and the first part o f secondary education-ES2) Second part o f secondary andtechnical education Teacher training Adult education General expenses, HIV/AIDS Chart 10: "The State": Distributionof Expendituresby Component [translation of items in key, readingfrom top to bottom] Offices o f the President, Governors, andPrime Minister Legislatures, constitutional conventions Defense MAE[Ministryof StateAdministration], STAE, CNE INE MINEC [Ministry ofForeign Affairs & Cooperation], Embassies Note: The fluctuations inthe percentages mainly reflect sums allocated to the census and the elections. Chart 11:The LegalStructure:DistributionofExpendituresby Component [translation of items in key, readingfrom top to bottom] . Interior Ministry of Justice, prisons courts  - 57 - VI. SCENARIOSFORABSOLUTE POVERTYREDUCTION 183. The living conditions o f the poor are influencedby economic growth. Inrecent years, Mozambique's economy has grown at about 6 percent per annum, and between 1997 and 2003 a 15.3 percent reduction occurred inthe incidence o fpoverty (see Table 2). Evidence in other developing countries similar to Mozambique indicates that countries that experienced sustainable economic growth for at least a decade experienced reductions in poverty levels. (Table 18). Situations where economic growth was not accompanied by a reduction in poverty are very closely associated with the extent to which income i s unequally distributed inthat country. Table 18. Economic Growth and Poverty in Africa Country Period No. of Yrs. Growth * Poverty** Mauritania 1987-1996 9 0.4 -1.67 Senegal 1986-1997 11 0.0 -1.68 Mali 1986-1996 9 0.5 -0.76 Ghana 1988-1998 0 2.0 -1.86 Uganda 1993-2003 0 3.2 -3.90 Kenya 1989-1998 9 -0.2 -0.94 Tanzania 1992-1999 7 0.0 0.53 Botswana 1984-1994 0 4.8 -4.50 Zambia 1992-2001 9 -4.0 0.62 Zimbabwe 1988-1999 11 0.5 -0.59 Mozambique 1996-2003 7 6.3 -2.60 Note: *Annual average change inr( Iper capita GDP (national currency, constant prices). ** Averageannual change inincidence o f poverty (headcount index). Source; Growth figure: IMF, World Economic Outlook. Poverty figure: Booysen et al. (2005) 184. Table 19 illustrates the impact o f the incidence o f poverty under different scenarios using different projections of economic growth and the associated distributive effects. It updates and revises the analysis presented inChapter 3 and inTable 3.10 o fthe study entitled Pobreza e Bem Estar em Moqambique-Primeira Avaliaqio Nacional, MPF. The calculations were based on data from the 1997-98 Survey o f Family Units (Inque'rito aos Agregados Familiares-IAF), using consumption levels adjusted as of 2001 data, obtained from National Statistics Institute-INE estimates on the growth in spending on private consumption as o f 1999, and estimates by the MPF-DNPO for 2000 and 2001. The adjustment assumes a 2.3 percent increase in population during this period, and a neutral distribution o f that growth-keeping in mind that the agricultural sector grew at approximately the same pace as real GDP. 185. Considering a scenario based on an annual rise o f 5 percent in per capita consumption, with a neutral effect on income distribution, the incidence o f absolute poverty (headcount index) would decline from 54.1 percent o f the population in2003 to 36.4 percent in2009. For the average poor family unit, as defined by the 2002-03 IAF, real consumption  per capita would climb by 44 percent by 2009. On the contrary, a low rate o f real per capita consumption growth, say 2 percent per annum, would still leave about 47.2 percent o f the population below the poverty line in 2009. In this slow-growth scenario, the results would remain unacceptable even ifwe consider the possibility of apro-poor growth structure, i.e., a situation according to which per capita consumption by the poor would rise 1.25 times as fast as consumption by the non-poor. Therefore, slow growth means slow progress in reducing poverty for any o f the assumptions on distribution adopted inthe mentioned scenarios. 186. Assumingneutral distribution of income and a real per capita growth inconsumption between2 and 3 percent, the headcount index would be 45 percent in2009.  o\ 0 0 N 8 N 0 I- QI 9 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 S 0 N w a i i o o o b b b o\ I- 9 S 0 N ti I I 8 0 N t- o\ 9  - 60 - VII. CROSS-CUTTING TOPICS 187. These topics are considered as cross-cutting since they cannot be considered in isolation, because the action plan requires concerted and well-integrated action by a multitude o f actors. Addressing these factors i s crucial to the success o f the entire growth and poverty reduction strategy. Failure to consider these cross-cutting issues may limit the success o f the strategies and programs designed for other sectors. In order to implement an action plan to reduce poverty, it is important to discuss and deal with the basic factors that hinder the development o fthis country. 188. PARPA I1identifies eight cross-cutting topics: Gender; HIV/AIDS; Environment; Food and nutritional security; Science and technology; Rural development; Natural disasters; De-mining. 189. These issues cut across the different sectors and the country's social and economic reality. They are also interrelated, inasmuch as the issues o f one o f the topics are important and affect the way inwhich the other cross-cutting topics are addressed, and vice versa. Therefore, an integrated approach by PARPA I1to the cross-cutting topics will enable us to maximize the synergies resultingfrom the involvement and the commonality o f the vision and objectives o f the different sectors, which impacts program planning, policy formulation, and implementation. 190. All the cross-cutting topics have been addressed on each o f the pillars. However, the need to make them more visible in light o f their importance for the success o f PARPA I1 suggests that we shouldnow identify the key objectives o f each. 1. Gender 191, About 52 percent of Mozambicans are women, 72.2 percent o f whom live inrural areas; 23.2 percent are heads o f families. However, there are a number o f economic and social well- being issues that need to be considered in order to improve the living conditions o f this population group. Despite huge improvements in education, the proportion o f girls in primary education and subsequent levels needs to be improved, especially in the provinces where this proportion i s still lower than the national average. Within the adult population, the illiteracy rate i s higher for women (71.3 percent) than for men (43 percent). We also know about women's vulnerability to HIV/AIDSas a result o f incidents o f sexual violence.  - 61 - 192. Articles 35 and 36 o f the 2004 Constitution o f Mozambique establish the principle o f equal rights before the law for both men and women. The 2005-09 Five-Year Plan also makes achievement o f gender equality a major objective, and specifically recognizes that the empowerment o f women is a decisive factor in the eradication o f poverty. This creates an important framework within which, throughout the process o f economic and social development o f this country, we can focus on geater equity in access to resources, increased participation in the economy, access to the benefits o f development and participation in decision-making bodies. However, given the inequalities in education (levels EP2, ESG2, and above), three-fourths o f the investment by the State benefits boys, while only one-fourth benefits girls. 193. Empowerment o f women becomes a decisive factor in both the eradication o f poverty and the battle against the spread o f HIV/AIDS. It is especially necessary to protect young women, in order to reduce transmission to children. It must be emphasized that women are the most effective agents for improving the socioeconomic well-being o f communities. When their status is improved, women may become the most efficient and effective long-term investment. 194. The priority actions designed to promote equality o f opportunity between women and men and to empower women--actions addressed in a cross-cutting manner by the different pillars, areas, andcategories-include the following: (a) The approval andimplementation o f gender policy and its strategy, including the institutionalizationo f gender units inall sectors at the central andprovincial government levels, and training people in the effective integration, implementation, and monitoring o f gender issues insectoral plans and budgets; (b) Integration o f the gender perspective into national development policies, programs, and projects; (c) Revision o f all legislation that i s discriminatory toward women and adoption o f new legislation, particularly against domestic violence, and the creation o f conditions for their enforcement, including the training o f intervention personnel, and dissemination o f their availability; (d) Expansion o f agricultural extension services inorder to providebetter support to the transfer o ftechnologies, particularly inrural areas; (e) Integration o f women into strategies for the development o f small and medium- scale companies, including access to suitable credit and expansion o f the labor-intensive fields o f industry; by sex,(f) order to design and initiate the implementation o f a strategy aimed at filling those Identification of gaps in the gathering and analysis o f data that i s broken down in gaps insystematic fashion;  - 62 - ability o(g) Promotion o f gender balance inleadership positions, and fostering the increased fwomen to assume those positions; (h) Implementation o f actions intended to reduce the prevalence o f HIV/AIDS among women and girls, including promotion o fthe role o fmen inthis context; (i) Intensification o f efforts to reduce gender disparities inbasic, middle-level, and highertechnical education; zones so(i)that women and girls will not need to travel so far to get water, thereby giving girls a Improvement o f the coverage o f water supplies and sanitation services in rural better opportunity to attend school, and women more chances to become involved inproductive activities. 195. All sectors are responsible for integratingthe gender component into their planningand budgets. However, in an effort to strengthen this integration, the Women and Social Action sector serves as coordinator to support not only the integration o f gender into overall policies such as PAFWA and the PES/OE [Economic and Social PldState Budget], but also in the activities planned by the sectors. To this end, it i s vital to equip the institutions in this sector with the necessary technical and financial means. 2. HIVIAIDS 196. Because o f its devastating scale and its impact, HIV/AIDS represents a national emergency and one o f the most terrible challenges to human life, dignity, and the effective enjoyment o f humanrights. It blunts the impact o f efforts made to achieve economic and social development because o f its effect on population size and the well-being o f family units. It harms the economy because o f the loss o f economically active members, the increase in the number o f economically and socially vulnerable persons such as orphans and the elderly, and because o f the loss o fmanpower, which raises the costs o fproduction. 197. This pandemic affects all population groups-rich and poor, old and young-regardless o f sex or race. It i s estimated that more than 1.4 million Mozambicans are infected, corresponding to a prevalence rate o f 16 percent. Every day there are 500 new HIV/AIDS infections. Women, both adults and children but especially girls, have been the most vulnerable to HIV/AIDS. This i s reflected in the fact that the percentage o f women among infected individuals age 15-24 i s three times that o f men. Statistics for 2004 indicate that 800,000 o f the infected population are women. Furthermore, it i s estimated that 36.8 percent o f men, 57 percent o f women, and 6.2 percent o f children are living with HIV/AIDS, which has severe implications for their economic and social well-being. The burden falls more heavily on women because o fthe increased costs o f caring for the home. 198. Highpoverty rates contributeto the rapid spread o fHIV/AIDS, and vice versa. Indeed, poverty can be identified as one o f the most important factors contributing to the rapid spread  - 63 - o f this epidemic. The poor are more vulnerable to the impact o f HIV for several reasons: (i) they have little access to health care services; and (ii) they search for ways to make a living, as theytendto migratemore than other groups andthis increases the likelihoodthat they will have more sexual partners. Women may face extra risks when they get involved in sexual activities inorder to support themselves. Moreover, the poor have less access to information, which can limit their ability to make decisions and choices about sexual behavior. Therefore, the poor are more exposed to risky activities as part of their survival strategy. 199. The main objective with respect to HIV/AIDS i s to halt its spread. Based on the Second HIV/AIDS National Strategic Plan (PEN 11, 2005-09), the intention is to focus on certain selected results in the following five areas: prevention, stigma and discrimination, treatment, mitigation o f the impact, and coordination o f the national response. Actors in PEN are the Ministry of Health, the entire public and private sector, and the NGOs that work to curb the spread o f the pandemic and who work with the people who are directly or indirectly affected, with coordination by the National Council to Combat AIDS. 200. The fimdamental objectives inthis area are to: (i) the number o fnewinfections from cut the present 500 per day to fewer than 350 within five years, andto fewer than 150inten years; (ii) thebattleagainst HIV/AIDS anationalemergency; (iii) make diminish the stigma and discrimination associated with HIV/AIDS; (iv) prolong and improve the quality o f life o f persons infected with HIV and those illwith AIDS; (v) reduce the consequences o f HIV/AIDS for individuals, families, communities, and companies, as well as the global impact; (vi) increase scientific knowledge about HIV/AIDS, its consequences, and the best practices for combating it; (vii) improve planning and coordination capacity and decentralize the decision- making and resource management mechanisms; (viii) promote actions that lighten the burden o f household tasks on women; and (ix) undertake actions to combat the feminization o f HIV/AIDS. 201. It is anticipated that the proportion o fthe State Budget that is allocated to specific areas o f the HIV/AIDS program that will take actions in the topic areas mentioned above will be increased. The increased hnds will be used specifically to assist sectors in: (i) mitigation o f the impact o f HIVIAIDS interms o f human capacity; (ii) expansion o f the geographic coverage o f the response, particularly for the less privileged zones where prevention and treatment services are not available; and(iii) dealing with the risingcrisis posed by orphans. 3. The Environment 202. Most o f Mozambique's population depends on natural resources for subsistence and income. PARPA 11, in light o f that reality, recognizes that attaining its objectives depends heavily on how those natural resources are managed and preserved, and on the relationship between their use and exploitation and benefits for the poor. 203. The facts suggest a close relationship between poverty and the environment. Unplanned increases in population density contribute to more accelerated deterioration. Poor family units  - 64 - tend to depend for their daily livelihood on activities that directly impact the environment, such as: buildinghouses andplantingcrops in zones where erosion i s likely; continued use o f plants and woody materials for construction, food preparation, and producing o f household utensils; improper drainage and sanitation; recourse to burning to clear land for crops; improper handlinganddisposal o f solid and organic waste. 204. Inurbanzones where population is more dense, environmental deteriorationmay help exacerbate the health and well-being o f families. Endemic diseases such as malaria and cholera are a direct consequence o f faulty drainage, sanitation, solid waste management and water supply systems. Improving these conditions o f environmental deterioration requires proper planning or reclassification o f urban land areas, particularly land title registration and land use zoning, as well as proper access, drainage and water supply infrastructures. An integrated development o f Mozambican territory could curb the proliferation o f informal communities on the periphery o f urban centers, which pose a serious threat to public health, social well-being, and biodiversity. 205. The major environmental priorities in Mozambique focus mainly on the following: (i)cleaning up the environment; (ii) territorial zoning; (iii) prevention o f soil degradation; (iv) natural resource management, including control over burning; (v) legal and institutional aspects, Le., environmental education, compliance with law, and development o f institutional capabilities; and (vi) reduction o f air, water, and soil pollution; and (ii)prevention and reduction o fthe effects o fnatural disasters. 206. Also deserving o f attention are issues connected with environmental governance; the responsibilities o f the business community in terms o f environmental and social matters; the recognition o f the relationship between the environment and poverty, with a focus on environmental education, the role o f health care sectors, agricultural and rural development, energy, industry, tourism, mines, fisheries, management o f marine and coastal zones, technology, vulnerability, and natural disasters. 207. Education and the identification o f alternative sources o f income for the poorest families may help relieve the pressure that poverty puts on the environment. Gradual introduction and dissemination o f alternative technologies for construction, cultivation and fertilization o f soils, improved sanitation, and renewable sources o f energy may also make a significant contribution to the goal o f a sustainable environment. 208. Protection o f natural resources and their sustainable use to ensure more abundant production o fbetter foods requires that steps be taken to banpollution o f the waters and protect the fertility o fsoils, and that arrangements bemade for orderly fishingand forest conservation. 209. The purpose o f a cross-sectional approach to environmental issues is to ensure that all actors inthe development process, including the State, properly play their role inpreserving the environment, both urban and rural.  - 65 - 4. Foodand Nutritional Security 210. Everyone has the human right to a standard o f living that assures himher health and well-being. Regular, predictable access to food is a fimdamental right o f all people and a basic premise for their welfare. Food and nutritional security requires that all people have, at all times, physical andeconomic accessto a sufficient quantity o f safe, nutritive foodstuffs that are acceptable within a given cultural context in order to meet their nutritional needs and their food preferences, so that they can lead an active and healthy life. The four components o f food and nutritional security are availability, stability o f supply, access, anduse o fthe foods. 211. Food security should not be interpreted in a restrictive sense that measures it interms o f a minimumpackage o f calories, proteins, and other specific nutrients. The concept also refers to food safety (non-contamination), quality, variety, sustainability o f the production practices, andrespect for traditional cultures as they relate to food. 212. The objective o f this cross-cutting topic is to ensure that the conditions are present that are needed to produce nutritive and healthy foods, or for people to earn the means to acquire such foods (have access to appropriate food). To that end, activities must be promoted that are designed to improve the population's access to the resources and means necessary to ensure their survival. To protect those who cannot support themselves, safety nets or other assistance mechanisms should be established and maintained. Because o f the interdependence and interrelationshipbetween food and nutritional security and all the other areas o f development, a holistic approach i sjustified. 213. The National Strategy on Food and Nutritional Security (Estratbgia Nacional de SeguranCaAlimentar e Nutricional-ENSAN) has basically four dimensions: (a) sufficient availability o f food in a given region to supply the needs o f the people o f that region; (b) sufficient purchasing power or production by family units themselves to have physical and/or economic access to enough food, in quality and quantity, to satisfy their nutritional requirements at all times; (c) sufficient capability o f the human body to make biological use o f the foods, to absorb the foods ingested (good health); and (d) sufficient knowledge andproper eating habits onthe parto fthe family unit inits use o fthe available foods. 214. S A N [Food and Nutritional Security] is still a burning issue in Mozambique. Statistics show that indices o f chronic malnutrition are still extremely high, at 41 percent o f children under the age o f 5. This is an alarming percentage, because it means that approximately 1.3 million children are chronically undernourished.  - 66 - 215. Although the extent o f poverty fell from 69.4 percent to 54.1 percent between 1997 and 2003, the extent o f malnutrition, in terms o f percentage o f underweight children under the age of five, is still high. Rates did not improve significantly between 2001 and 2003 (down 2.3 percent). Rural areas saw a decline o f 3.6 percent, while in urban areas there was a 0.4 percent increase. 216. There is, therefore, a very close relationship between poverty reduction, food and nutritional security, rural development, and sustainable economic growth. Inthis regard, relief o f poverty i s essential if the country i s to achieve food security, because hunger i s both the cause and the result o f poverty. Poverty i s eradicated when hunger i s eliminated; thus sustainable economic growth i s assured. 217. The overall objective o f S A N for PARPA I1(until 2009) reads: "Between 1990 and 2009, the percentage o f the Mozambican population that suffers hunger and chronic malnutrition (transitory and structural food andnutritional insecurity) reduced by 30 percent. 218. There are three main challenges in the overall SAN context: (a) Reduce the high levels o f chronic and acute malnutrition inthis country, because they seriously impair the current and future human capital o f Mozambique; (b) Set up a comprehensive multisectoral and interinstitutional intervention in all three dimensions o f S A N and direct it toward vulnerable target groups inorder to achieve andmaintain food andnutritional security inthis country; and (c) Make SANa central element inthe battle against absolute poverty inMozambique. 219. Implementation o f SAN objectives i s included in actions that cover all sectors o f the State, but primarily agriculture, health, education, and the provision o f infrastructures (roads, energy, and water). 5. Science and Technology 220. The essential role o f Science and Technology (S&T) in the preparation and promotion o f economic growth through innovation i s well known. A specific example o f the role of technologies i s the use o f TICs [Information and Communications Technologies], These have been having an impact worldwide. Furthermore, significant results are being achieved in the use o f TICSto reduce poverty, although the full extent o f their potential i s not yet understood. What has been understood better i s that the broader area o f S&T has a crucial role to play in poverty reduction. Through S&T, new knowledge can be generated to provide solutions for many aspects o f poverty, and the (existing or new) knowledge can be applied to intractable problems that cause or perpetuate poverty. A failure to build S&T into a poverty reduction strategy will as a minimum impair its performance-if not utterlyruinits effectiveness. 221. There are two key features o f S&T that deserve strategic recognition, along with the operational effect they have within any poverty reduction strategy so that advantage i s taken of the potential o f S&T. First, the cross-cutting nature o f S&T (including TICs) must be recognized. S&T should not be seen as a sector in itself, but as a center for the exchange o f  - 67 - solutions for all sectors where the battle against poverty is being waged, from health to education, housing, andjob creation. 222. Second, and related to the first characteristic, S&T (including TICS) needs to be popularized within each sector or pillar. If the potential contribution o f S&T i s to be understood, it i s not enough that it be considered merely as a belated reflection within one sector, or one extension, as funds or other constraints permit. S&T must be considered as one o f the buildingblocks for any building, essential to the poverty reduction strategy within each sector. 223. Inorder that S&T canplay a strategic role, a fully developed nationalS&T systemmust be established. For example, such a system will include policy directives and strategies by public and private institutions that can generate knowledge (ie., scientific research) that will transform that knowledge into products, services, and solutions (i.e., the results o f innovations), that will develop human resources (for example, the education sector), that directs and coordinates the system (i.e., the M C T [Ministryo f Science and Technology]) and also the roles, relationships, and connections among the interveningparties within the S&T system that must be established andproperly maintainedto permitthe system to function inthe requiredways. 224. An essential ingredient in the performance o f the S&T system now in progress is development o f appropriate humanresources. It i s essential that there be an expanding flow o f qualified scientists, engineers, technical personnel and IT experts into the system. And so funds must be made available to enable people to acquire scientific andtechnological knowledge and expertise, on a sustainable basis. 225. Lastly, efficient and effective performance o f the S&T system will be facilitated and improved by appropriate levels o f funding, along with the necessary vehicles, coordination, and control mechanisms. For example, such vehicles will include flows o f funds that are earmarked for S&T in sectors that have already been identified. A National Research Fund (Fundo Nucionul de Pesquisa) will give funds for the following: 0 Research, on a competitive basis; 0 Promotion o f innovation that leads to new products, the provision o f services, and development o f solutions; 0 Support for the S&T infrastructure; 0 S&T research projects identifiedby the government as necessary to the achievement o f national objectives. 226. Coordination and control mechanisms will include, for example, a National Research Agenda, evaluation and coordination of sector research plans by the MCT, and coordination meetingswith financing agencies.  - 6 8 - 227. So that Mozambican strategy can use S&T and TICs to reduce poverty (and also for economic development), it is discussed hlly in a document entitledEstratbgia de Inovap7o da Cigncia e Tecnologia de Mozambique - MSTIS. [Strategy for Innovation in Science and Technology inMozambique). 228. The vision for science, technology, and innovation for 2015, as laid down in the MSTIS, is: "The omnipresent and equitable availability and the use of science, technoLou, innovation, and TICs as a right of all Mozambicans to accelerate the reduction in poverty, create wealth, and improve their social well-being. '' 229. The Mission is: "To promote the furnishing of scientijk and technological solutions to priority sectors as defined in national development programs such as PARPA and Agenda 2025, for the benefit of Mozambican society. '' 230. The basic objectives o fthe strategy are to: (a) Construct and improve the policy instruments, institutions, and infrastructures o f the national S&T system; (b) Establishpolicies on financing, andmechanisms for research and innovation; (c) Promote human resources development at all levels in the fields o f science, technology, and innovation; (d) Inculcate a culture o f innovation into Mozambican society; (e) Promote innovation in the existence and use o f S&T approaches by poor and less favored communities; (f) Promote innovation inthe industrial and public sectors; (g) Improve leadership and administration ofthe S&T system; (h) Review, evaluate, and improve the performance o fthe S&T system.  - 69 - 6. RuralDevelopment 231. Rural development inMozambique i s intended to ensure the active, direct involvement o f poor rural families in the rapid growth of the Mozambican economy and guarantee that the agrarian economy contributes directly to a reduction o f poverty in Mozambique. Most o f Mozambique's poor live inrural areas. 232. There are at least five [sic] determining factors underlying rural development: (a) A crucial axis of development i s extremely close interdependency among rural communities, urban centers, and the world market into which a national economy open to the outside world i s inserted. Inother words, the economic and social development o frural areas i s not synonymous with agricultural development; the standardo f living o f rural families depends on the complex relationship between family farm production and salaried work, both agricultural and non-agricultural; (b) The poor ruralpopulation will be able to break the vicious cycle o fpoverty only ifit can contribute to and benefit from that national economic growth; (c) the pace o f rural development depends directly on the size o f the investment that i s dedicated to developing rural capital-particularly: human, financial, commercial, intellectual, and social capital; (d) Government investment should give priority to developing rural production capacity, infrastructures, infrastructures, andbasic institutional services. 233. Rural development occupies a prominent position on the agendas for the economic and social development o f this country, because in 2003, 64.3 percent o f the Mozambican population was rural. In those regions, poverty i s in some way associated with insufficient development o f agriculture, rural infrastructures, and markets. Furthermore, the availability o f financial institutions is still inadequate, and great vulnerability persists. 234. Various activities have been carried out nationwide-whether by the State, the private sector, organizations of civil society, rural communities and other actors-all with an eye to development. However, greater harmonization among the actions aimed at rural development i s neededifit is to be integrated and sustainable. 235. Major challenges with respect to rural development are: (i)definition o f rural development policies and strategies; (ii) strengthening o f the role o f government agencies in coordinating intersectoral actions in the area o f rural development; (3)promotion o f financial services suited to local initiative; (iv) encouragement for people to join locally-based and/or community organizations, and to foster horizontal communication among them; (v) development of rural markets; and (vi) greater community participation.  - 70 - 236. The PQG emphasizes that rural development, translated into social and economic development and a resulting rise in well-being in rural areas, is the mainstay o f the overall social and economic development o f this country. But it states that "the social and economic transformation required for rural development is critically dependent on innovation, as well as on a significant increase inproductivity overall, but particularly inagriculture." 237. Taking into consideration the government's Five-Year Plan, Agenda 2025, the following objectives for rural development are to be incorporated into PARPA 11: (i) promote policies that would curb the exodus from rural areas caused by a shortage o f local opportunities for pursuing commercial activities that could enable rural families to improve the standard o f livingo f their members; (ii) maintain rapid and comprehensive economic growth, and see help that, during the midterm, growth receives a larger contribution from the rural economy; (iii) change the prevailing pattern o f capital accumulation in the nation's economy; (iv) break the vicious cycle o f rural human poverty by improving the productivity, competitiveness, efficiency and quality o f human capital in the rural areas by providing direct, explicit, and massive support to small and medium-sized companies that are able to transform the countryside. 238. Investment in infrastructures must include not only physical infrastructures, but also- and especially-the creation o f institutional infrastructures (legal, administrative, executive), without which this country's immense unproductive capital is unlikely to be converted into productive capital. 7. Natural Disasters 239. Natural hazards are considered to be disasters only when they impact human activities. Threats from nature do not affect everyone equally. Their disastrous consequences are proportional to the vulnerability o f communities and territories. That i s why 90 percent o f disaster victims live in developing countries, in poverty, under conditions that lead them to form communities inhazardous areas likely to be hit by floods, earthquakes, etc. The risks they assume are greater when environmental, technological, and urban planningpractices aggravate problem. 240. The worldwide increase in disaster occurrence, especially in countries like Mozambique, threatens to destroy humanwealth, and life itself. But disasters are not inevitable. That i s why disaster prevention i s such an important aspect o f development. By preventing disasters, we can make communities and territories less vulnerable to the various threats. However, it i s not easy to promote a culture o fprevention, because the costs o fpreventionmust bepaidnow inorder to produce effects inthe future. 241. Disasters occur when a force or energy i s unleashed that has destructive potential (threat) and encounters a weak response or an inability to deal with its effects (vulnerability). It i s vulnerability that determines the intensity o f the disaster, i.e., the extent to which lives are lost.  - 71 - 242. Natural disasters resultingfrom climate changes and seismic activities can aggravate a situation of absolute poverty because o f their destructive impact on the human dimension and socioeconomic infrastructures. Mozambique's geographic location makes it vulnerable to weather anomalies. 243. Inorder to respond appropriately to natural disasters, it is important to understand the threats and the vulnerabilities and capabilities o f the affected communities inorder to be able to mitigate andrespond to the negative impacts o f a disaster. 244. The primary objectives in managing threats o f natural disasters are: (i) to reduce the number o f human victims and the amount o f property loss; (ii)to consolidate a culture o f prevention; and (iii)to give the country the means o fprevention andmitigation. 245. The government's action plan for reducing the impact o f disasters includes giving this country the means for prevention, Le., advance warning systems for the kinds o f disasters that are most frequent in Mozambique-namely floods and cyclones-as well as identifying and mapping the zones that are at risk. Appropriate response mechanisms (information for the affected population groups, evacuation, search and rescue) are also included. 246. Other actions would require strengthening institutional, regional, and international coordination, installation o f hydro-meteorological networks in the most vulnerable basins for nearly real-time measurement and transmission o f information, the construction o f hydraulic infrastructures such as defense dikes and dams, as well as intensifying civilian training and education insubjects associated with weather-related events. 8. De-mining 247. In the context of the government's efforts to reduce poverty, de-mining becomes a strategically crucial activity, because it has a direct impact on the key priority areas-and in others, too. When mines are present, it i s impossible to implement development projects or programs such as the opening o f schools or local health clinics, building of roads and access routes, erecting o f power transmission lines and/or commercial, tourist, or industrial infrastructures. 248. Land mines still restrict poverty reduction efforts in Mozambique, especially implementation o f development programs in rural areas. It i s believed that 70 percent o f those mined areas are in Cab0 Delgado, Nampula, Zambbzia, Inhambane, and Maputo provinces. Tete and Gaza are also affected. 249. Even after intensive de-mining done shortly after the end of the war in 1992, there still remain areas o f the country where such devices have accumulated. They pose a hazard to human safety and hamperthe expansion ofbusiness activities. 250. Two fundamental objectives interms o f de-mining, according to the government's Five- Year Plan (PQG), includemaking sure that mines are cleared inthe affected regions inorder to  - 72 - (i)prevent andreduce the loss ofhumanlife and(ii)allow implementationofeconomic projects, resettlement, andgreater mobility ofpopulation groups. 251. Continuing the de-mining efforts will not only enable people to travel more freely; it will also make more landavailable for their use.  - 73 - VI11 DEVELOPMENT STRATEGY, BY PILLAR 1. Governance Introduction 252. Governance i s an extremely important element in the reduction of absolute poverty. Poverty i s not just a lack o f material resources, but a lack o f access to services. It also means exclusion from decision-making, lack o f participation, greater exposure to abuses by civil servants (including corruption), less protection from crime, and an absence o f appreciation in property values. 253. For all these reasons, proper functioning o f State institutions and the State's ability to bring services to the citizens, inclusion o f forms o f participative democracy in public administration, and a respect for the value o f traditional instrumentsfor conflict resolution are extremely important inreducing poverty. Assumingthat the State is not the only actor inpublic management, its management gains shape when authority i s shared inthis process. 254. The Governance Pillar is organized around these assumptions. It is inspired, in large measure, by the actions already underway andconsidered crucial inthe context o fPARPA I. Vision andChallenges 255. In the context of Agenda 2025 and the New Partnership for Africa's Development - NEPAD - two instruments that have established themselves as pillars in the definition o f the vision o f PARPA 11- the guidelines for the country have been established in the area of Governance. 256. However, as indicated in Agenda 2025, although the current political system-- characterized by a representative democracy that involves only the political parties-represents major national progress, it i s not completely satisfactory. It i s essential to guarantee that mechanisms o f democratization are present within the political parties and to develop participative democracy so as to ensure representation o f the various interest groups in civil society. This way, citizens can become the principal agents inthe buildingo f a democracy. 257. Under PARPA 11, this vision becomes a reality with the inclusion o f specific strategic interventions in the area o f the legislature, a strengthening o f local government bodies, and development o f municipal government. The multiplicity o f systems for administering justice makes it important to rethinkjuridical andjudiciary organization inMozambique. 258. The exercise o f a pluralistic democracy is still a new phenomenon in Mozambique. Consolidation o f this situation will require a tremendous ability to develop and manage public policies, to consolidate efficient governance that i s decentralized and transparent and respects institutional memory, ina context inwhich the buildingo f an institutional culture is a challenge yet to be faced.  - 74 - 259. Inthe area of government institutions, it has been found that far-reaching changes will be necessary to make the public institutions more operational and to improve the quality o f government personnel and the services they provide. And so a deeper public sector reform i s vital, one that supports the growth o f the business community and other institutions of civil society, and helps remove impedimentsto investment and citizen services. 260. The vision set forth here suggests that the following categories o f requisites regarding good governance are key: (i)good governance accompanied by a fight against corruption; (ii) decentralization and de-concentration; and (iii) rule o f law, fiscal probity, andprevention of the tax evasion and other forms o f fraud against the Treasury. In the chapter on decentralization and de-concentration, we will discuss the challenge that the State faces because districts are being defined as a budgetary planning unit, as well as the relationship between this vision and functional restructuring at the central andprovincial levels. 261. Another challenge refers to the relationship between the districts and the municipal authorities in a scenario under which it i s expected that the coming years will bring a gradual expansion o fmunicipalized spaces inthis country. 262. Also pertinent are the priorities for Democratic Governance inMozambique in the near fiture. These include the legislature, human rights, civil society, and the media-as well as other components that are already distributed between the areas o f Public Sector Reform and Reform o f the Justice System. This identification o f priorities is, therefore, consistent with the series o f strategic interventions-in the areas o f the legislature and media-proposed for PARPA11. 263. However, these aspects are part o f the objective o f improving governance and other important aspects o f the functioning o f State institutions and their relationship with the private sector and civil society, in general. Indeed, interventions related to the creation of district and community courts, the strengthening o f the legislative function o f the Assembly o f the Republic, as well as the means o f responding to and protecting citizens who report acts o f corruptionby civil servants are important measuresinterms o fhumanrightsprotection. 264. Furthermore, new developments on the world scenepose new challenges inthe areas o f the rule o f law, justice, and civil society--particularly terrorism, money-laundering and illegal immigration. They cannot be completely ignored, given their unfortunate effects on foreign investment. 265. Lastly, and inthe realm o f long-term challenges with respect to good governance faced by both the government and Mozambican society, it is essential to keep inmindcertain cross- cutting subjects that must always be considered in all the planning, implementation, and program evaluation exercises under PARPA 11. Prominent among these are (i)gender; (ii) HIV/AIDS; (iii) andnutritional security; (iv) environment; and (v) informationtechnology food and communications.  - 75 - 266. With respect to gender inthe context o f good governance, the government believes the gender issue i s crucial to the implementation o f PARPA I1 in order to improve access by women to services provided by government, as well as the participation, advancement, and status o fwomen inthe public administration, including state-owned companies. Furthermore, it i s vital that women take part in the decentralized planningprocess at the provincial and district levels. 267. Another priority under the heading o f the revision o f the Penal Code and the Code o f Criminal Procedure i s the inclusion o f domestic violence in an appropriate and effective manner, to guarantee full protection from this kind o f crime and ensure that women and men have access to the systemo f administration o fjustice. 268. At the same time, it would seem to be essential for the government to take an inclusive attitude on questions related to HIV/AIDS and governance at various levels, particularly the need to make sure that the rights o f individuals affected by HIV/AIDS are respected--especially government workers and those in the private sector--as well as the rights o f children, the disabled, and the elderly. 269. These prerogatives mentioned above also extend--and in the general context o f "The HumanRightto Adequate Food" ina systematic alignment with good governance--to the rights of citizens. The integration o f "The Human Right to Adequate Food" i s guaranteed to be integrated into the legislative process now under way, with a view to promoting Food and Nutritional Security. 270. In the field o f rural development, the social and economic transformation, and subsequent increase in well-being in rural areas, constitutes one o f the greatest challenges for the coming years. Actions oriented toward accelerated and sustainable development o f rural areas andthe proliferation o f initiatives intendedto create wealth inthe countryside are seen as o f priority importance, as a means o f reversing the trend in the incidence o f poverty in these zones. 271. The following challenges stand out: (i) reinforcing the role of government agencies in coordinating rural development actions by institutionalizing the mechanisms for continued dialogue and compromise among the development partners and promoting decision-making fora that involve the principal actors; and (ii) strengthening locally and/or community-based organizations and promoting horizontal communications through programs that seek to furnish access to socio-cultural and socioeconomic information and exchanges and carry out actions aimed at creating sustainable locally-based associations and organizations. 272. Inthe area o fthe environment, it is important to ensure efficiency andresponsibility on the part o f the agents o f the central and local governments in implementing the poverty reduction action plan. The empowennent o f local communities and their institutions through their involvement in managing human resources i s also crucial to the success o f poverty- reduction efforts.  - 76 - 273. The government believes that a partnership with civil society to encourage the adoption o f principles o f environmental management that promote the inclusion o f poor communities in the design, implementation, and monitoring o f environmental programs is important at both the central and regional level, as well as at the local level. 274. Information and communications technologies (TICs) are considered to be priority elements in support o f good governance. The government believes that TICs could make administrative actions more dynamic and afford efficient methods for facilitating and accelerating change and achieving the goals set for national programs, such as Public Sector Reform and Legal and Justice Reform. It i s important to make certain that women have access to information technology, to identify barriers to their access, and to implement strategies for surmounting those barriers. 275. Furthermore, it i s necessary to study the loopholes in the present body o f legislation (rights and penalties) as regards citizen safety, record-keeping (finances, health, safety), and management o f cyber-crime. 276. The efforts undertaken inlegal reform inthe direction o f including a gender perspective incertain laws are the result ofthe enactment ofthe new Constitution ofMozambique and the FamilyLaw. Coupled with the drafting o fthe Law Against Acts o f Domestic Violence, andthe revision o f the Penal Code, the Inheritance Law, and the Labor Law, all o f which are going on in this country, this development demonstrates the willingness that exists to ensure legal equality ingender relationships. 277. Continuation o f efforts to consolidate the rule o f law by implementing a system o f fair and expeditious justice i s crucial. Some key aspects to be considered include: (i)proceeding with the expansion o f citizen protection services; (ii) strengthen actions aimed at curbing the traffic in minor children; (iii)expanding and consolidating community courts as a supplement to conventional courts; (iv) strengthen actions to protect children, such as the registration o f births; and (v) integrating aspects related to HIV/AIDS, gender, and natural resources and environmentalmanagement into local planning as part o fthe decentralization process. 278. The battle against corruption is one ofthe major objectives inPARPA 11. It is a fact that corruption has a devastating impact on the well-being o f the population, inasmuch as it inhibits investment, which is so necessary to create suitable living conditions. At the same time it impairs the timely provision o f quality services. Corruption erodes the social fabric, destabilizes institutions, saps society's trust in State agencies, threatens national unity, and delays economic development, which i s the keyto our struggleagainst poverty. 279. For these and other reasons, the government believes that corruption must be fought as energetically as possible, with all available weapons. A battle against corruption must be launched inall sectors and at all levels o f government. Actions must seek to identifyboth those who are corrupted and those who corrupt, followed by prosecution of those involved.The battle  - 77 - against corruption must involve not only the offices that participate in criminal justice administration, but civil society which, quite commonly, sees and directly feels its toxic effects. 280. In this regard, the government believes that promotion o f general and professional ethics would improve the quality of public services and strengthen democratic participation by citizens at all levels o f government, a participation that i s crucial for effective exercise of good governance. ObjectivesandActions 281, As follow-up to the vision and challenges outlined here, and in order to make good governance, justice, and the rule o f law a reality inthis country, the government hereby makes the following priority objectives and actions part o fthe PARPAI1framework. i. PublicSectorReform 282. General objective: Improve the quality of the public services provided to the citizens. 283. Specific objective: Restructure and decentralize government agencies in order to promote efficiency and efficacy inthe provisionof public services. 0 Action: Finish the fknctional analysis and drafting of restructuring plans for all ministries and for provincial and district governments. 284. Specific objective: Strengthen the institutional capabilities o f local government. 0 Actions: (a) Approve and implement the decentralization strategy and plan; (b) Develop humanresource skills at the district level; (c) Establishthe capabilities o fthe infrastructure at the district level; (d) Develop planningand monitoring systems at the district level; (e) Strengthenthe financialmanagement skills of local government institutions; (0 Approve and implement the national decentralized planning and finance strategy, including its geographical andenvironmentaldimension; (g) Complete the diagnosis o f the creation o f new local government in light o f Art. 5 of Law 2/97;  - 78 - (h) Consolidate and expand the number o f local governments; (i) Approve and implement the local administration and urban development strategy andpolicy; and (j) Make administrative and financial inspection o f the Public Administration operational. 285. Specific objective: Reformulate the procedures by which services are provided, inorder to make them simpler, more accessible, and satisfactory interms o fthe client's needs. 0 Actions: (a) Establish one-stop service windows to serve the public in the major urban centers and review/consolidate those that already exist in order to improve their organization and hnctioning; (b) Implementimprovements in the efficiency o f administrative procedures for the services most important to the public (at the central and local levels); (c) Connect all public institutions (from the district up to the central levels) to the government's electronic network; (d) Make information about all public services available in electronic format on the Internet; (e) Review and implement the policy on public document management; ( f ) Improve the handling o f complaints/suggestions at all public institutions. 286. Specific objective: Strengthen policy management procedures at the sectoral and inter- sectoral levels to makethem consistent, effective, and efficient. 0 Actions: (a) Strengthen the systems and capabilities for policies management inall ministries andlocal governments; (b) Strengthenpolicy analysis capabilities inthemunicipal legislativebodies; (c) Strengthen the institutions and procedures for coordination o f inter-sectoral public policies; and (d) Ensure that public policies respond appropriately to cross-cutting issues.  - 79 - 287. Specific objective: Train government employees to manage the public administration efficiently and effectively. (a) Strengthen the organizational and managerialabilities o f government institutions personnel; (b) Continue the training o f government employees; and (c) Consolidate and develop the System for Training in Public Administration (Sistema deFormap70 em Administraqio Pziblica-SIFAP). 288. Specific objective: Improve humanresources management. Actions: (a) Review, approve, and implement wage and salary policy at all public institutions; (b) Review the pensions system for government employees; (c) Implementthe system andstructure o f career ladders at all public institutions; (d) Develop and implement a single personnel information and management system throughout government service; (e) Develop a system for managing the performance and rewarding merit in government employment; (0 Disseminate, apply, and monitor the revisedGeneral Statute on State Employees (Estatuto Geral dos Funciondrios do Estado) at all public institutions; (g) Adopt new human resources management policies in public institutions in response to problemsraisedby HIV/AIDS and gender issues. 289. Specific objective: improve public planning and budgeting procedures so that they are better integrated and more effective and efficient. Actions: (a) Approve and implement the National District Planning and Finance Strategy (Estratkgia Nacional de Planijkaqio e Finanqas Distritais). (Integrate geographical aspects, includingnaturalresources management, into district planning); (b) Develop a technical staff to handle fiscal transfers to local agencies o fthe State;  - 8 0 - to cover(c)all public institutions; Extend the SISTAFE [State Financial Administration System] and e-SISTAFE (d) Integrate "off-budget" hnds into the SISTAFE (Make the Central Tax Collection Authority operational); (e) Strengthen the planning, monitoring and evaluation skills in all public institutions; (CFMP),(f)the Economic and Social Plan (PES), andPARPA into the planningprocess; Complete the harmonizatiodintegration of the Medium Term Fiscal Framework (8) Define and approve a legal framework for the national planningsystem; (h) Strengthen a planning system that i s integrated from the district to the central level; (i) Improve efficiency inthe tax collection system; 6) Establish an Accountants' Association; and (k) Strengthen the systems usedto manage State property. 290. Specific objective: Make the public sector more transparent and less infested with corruption, by applying more effective and inclusive mechanisms o f accountability and oversight. Actions: a) Disseminate and implement the regulations o f the Anti-Corruption Law; (b) Reinforce institutional internal inspection skills as part o f the battle against corruption inpublic institutions; (c) Draft, adopt, and implement legislation on access to information; (d) Strengthen the Anti-Corruption Office inthe Office o f the Prosecutor General o f the Republic; (e) Strengthen the ability o f the Assembly o f the Republic and municipal legislatures to monitor the performance by the central government and city councils, respectively; (f) Conduct regular surveys on governance andcorruption;  - 81 - (g) Strengthen legislation pertaining to government employee integrity, and the corresponding implementingmechanisms; (g) Implement the anti-corruption strategy; (h) Strengthen the ability o f citizens, civil society and the private sector to monitor the performance o f the government and to denounce acts o f corruption; (i) Strengthen the ability o f citizens, civil society, and the private sector to monitor government performance andto denounce acts o f corruption; and (i) Strengthen the internal control systems (audits and inspections) in place at government institutions. ii. ReformoftheJusticeSystem,theRuleofLaw,andthePublicOrder The areas of Justice and the Rule of Law 291. General objective: to consolidate a justice system that i s accessible, transparent, and inclusive. 292. Specific objective: Improve access to thejustice system. Actions: (a) Reinforce and consolidate the independence o f the courts; (b) Increases court productivity; (c) Strengthen the capability o f the judicial inspection offices and o f the Office o f the Public Prosecutor interms o f inspectors, support personnel, and equipment; and (d) Improve access to thejustice system via hearings, the prosecutor line, the "green line" andthe implementation o finformation and communications technologies; 293. Specific objective: make legislation better suited to the proper functioning o f the administration o fjustice. Actions: (a) Approve and implement the Law on the System o f Administration o f Justice, which includes the Organic Law on Judicial Tribunals; (b) Review the statutes applicable to judicial magistrates and to court employees;  - 82 - (c) Review the Organic Law on the Office o f the Public Prosecutor and the respective statute on magistrates; (d) Revise the legislation that regulates the activities o f the Administrative Tribunal (TA) as well as its Organic Law (inlight o fthe 2004 Constitution); (e) Draft and approve the statutes on the magistrates who serve on the administrative, tax, and customs courts; (f) Draft the Law o f the Superior Council o fthe Administrative Magistracy; (g) Revise the legislationnow inforce; and; (h) Harmonize the Anti-Comption Law with regional and international laws, particularly the SADC [Southern African Development Community] protocol. 294. Specific objective: increase efficiency and expeditiousness in the provision o f services bythejustice system; 0 Actions: (a) Define the long-term vision and development strategy for the sector; (b) Update the strategic plans and the respective operational plans in view o f the vision for the sector; (c) Ensure the training and continuing education o f magistrates, offices o f the courts, the staff o fthe secretarial offices, and other justice administration personnel; (d) Buildandrehabilitateinfrastructures for use for court operations; (e) Set up district and community courts and see that they begin to function; (f) Buildandrehabilitateinfrastructures for use byprosecutors' offices; (g) Set up district prosecutors' offices and see that they begin to function; (h) Introduce modem methods o f management, monitoring, and evaluation at courts andprosecutors' offices; (i) Introducenew financial management tools (SISTAFE); (`j) Consolidate the commissions that monitor the rule o f law; and (k) Modernize the registration andnotary services;  - 83 - 295. Specific objective: guarantee legal assistance and protection for the most vulnerable citizens. Actions: (a) Reformthe court assistancesystem andthe Judiciary; (b) Increase the oversight by magistrates in the Office o f the Public Prosecutor as regards police stations andjails; (c) Improve the legal and institutional framework for protection o f children; (d) Develop minimum standards for the care o f children who are in the custody o f institutions such as orphanages and transit centers; and (e) Survey and provide legal assistance to persons who are living with HIV/AIDS, andto orphans andother vulnerable children. 296. Specific objective: reform the prison system and ensure that inmates are treated in a manner consistent with internationalprinciples o fhumanrights; Actions: (a) Reform and unifythe prison system; (b) Improve living conditions inthe prison system; (c) Ensure that prison personnel are trained and re-trained; (d) Buildandrehabilitateprisoninfrastructures; and (e) Increase educational and vocational training initiatives directed at inmates. 297. Specific objective: bolster the fight against corruption. Actions (a) Reinforce and expand the provincial anti-corruption offices; (b) Build the building intended to be used by the Central Anti-Corruption Office (Gabinete Central de Combate a CorrupqCo- GCCC); (c) Buildthebuildingsintendedfor the regionaloffices ofthe GCCC; (d) Buildresidences for magistrates;  - 84 - (e) Approve and implement the national anti-corruption strategy as it applies to the justice system; ( f ) Draft reports and opinions on the General State Account (Corzta Geral do Estado- CGE);and (g) Conduct audits. Law and Order, Public Safety 298. General objective: Ensure law and order inorder to provide the citizens with permanent tranquility andto protect theirproperty andassets. 0 Actions 0 Increase the police presence and reorient patrolling bypolicemen inthe streets; Prevent traffic accidents and their consequences by increasing police visibility and by educating drivers. 299. Specific objective: Reinforce crime prevention andmeasures to combat crime. (a) Formulate a national law and order policy; (b) Continue the reform o f the Criminal Investigation Police; (c) Improve the quality o f the service rendered by the Criminal Investigation Police; (d) Equipthe crime labs; and (e) Set up aNational Crime Observatory. 300. Specific objective: promote an improvement in relations between the police and the community. 0 Actions: (a) Develop a strategy for combating corruptionwithin the police force; (b) Consolidate mechanisms to protect and assist victims o f domestic violence; (c) Create counseling centers to protect victims o f domestic violence; and (d) Increase the number o f local precincts trained to assist women and children who are victims o f violence.  - 85 - 301. Specific objective: improve the standardo fperformance by the police forces. 0 Actions: (a) Implement the Strategic Plan for the Police; (b) Draft the organic statute for the Ministry o f Interior (MINT) and the respective regulations; (c) Organize technical and professional training courses for the agents o f law and order; (d) Ensure effective compliance with the health care system, medications plan, and guaranteed social assistance available to members o f the police force; existing(e) Build police stations and subordinate police units, as well as improving the physical, infrastructure, and equipment conditions; (0 Strengthen and equip the Special Forces andthe Reserve; (g) Expand and modernize the FireDepartments; and (h) Institutionalize and put into operation the HIV/AIDS Prevention and Combat Office (Nzicleode Prevenp7o e Combate ao HIVISIDA). 302. Specific objective: establish modem methodology to evaluate the material needs o f the various sectors, and create a Police database. Actions: (a) Improve the budget management performance o f the PRM [Police o f the Republic o fMozambique]; and (b) Establishmechanisms for gathering andprocessing data that i s broken down by sex. Other Arenas Peace,Politicaland SocialStability 303. The Government considers maintenance o f peace and political and social stability to be crucial to the pursuit o f the central objective o f reducing poverty. It has chosen dialogue, respect for differences o f opinion, compromise, and negotiation as practices always to be followed by all segments o f society--practices that can encourage people not to act in such as  - 86 - way as to disturb the stability o f the governing authorities and the institutions that support government actions. 304. The supremacy o f law, the guarantee o f permanent order and tranquility for citizens, and transparency in the management o f the public trust above and beyond partisan political interests, principles adopted during PARPA Iand reaffirmed in Agenda 2025, will become increasingly consolidated, inthe spirit o f good governance. 305. In this regard, priority will be given to consolidating the role of the State and civil society as guarantors o f national unity, peace, andpolitical and social stability. There will be an increase inconsensus inthe society, as well as fellowship, dialog and tolerance among citizens o f different ages, races, ethnolinguistic groups, sexes, political parties, and social, economic, andreligious organizations. 306. Furthermore, preventing conflicts o f various types by resorting to mechanisms based on local custom and rules will be broadly encouraged by the government inclose partnership with civil society. 307. Experience has shown that peace, democracy, and development are inseparable. The democratic process we are now experiencing will be sustainable only if it can assure citizens the stability needed for themto exercise their citizenship andpursuetheir plans for their lives. Social Justice 308. A just society entails, among other elements, equality of rights and opportunities for all citizens without distinction as to race, ethnolinguistic group, sex, or culture. The government considers the reduction o f social and regional inequalities and the establishment o f equity in gender relationships in all spheres o f society as vital to good governance. The evolution o f social relationships should be harmonious and respectful o f both the interests o f the modem world andinterests that are based on the equilibrium o f social-culturaltraditions. TheRule of Law, Safety 309. The State governed by Law that i s now under construction requires all segments o f society to respect the law. It needs an efficient administration o f justice, and competent authorities must see that people and property are be protected, as i s their right. These are prerequisites for the exercise o f good governance. 310. Therefore, respect for and familiarity with the legal order and an interactivity between the judicial and community tribunals and between police officials and community authorities can help resolve conflicts and allow the rule o f law to prevail. These will be encouraged by the government. 311. The government believes that the battle against crime must be a continuous and participative process in which positive, safe, and sustainable results will be possible only ifwe  - 87 - are capable o f sharing responsibilities on a coordinated front comprised o f law enforcement personnel and society at large. 312. Inthis context, the organs of sovereignty, the political parties, the public and private institutions, religious confessions, community leaders and society in general must devote themselves to this common effort that is aimed at eliminating insecurity and the absence o f tranquility. Entities that administer justice, in their role as interpreters and enforcers of the laws, as well as the police, as guarantors of public order and tranquility, are vital nerve centers andbear increased responsibilityinthis global undertaking. Information and Communications 313. The government is aware that the right to information is basic to the exercise o f citizenship and participation in the construction o f a democratic State. Because democratic governance involves public debate and decision-making that is open to interest groups, as well as the free circulation o f ideas and opinions, objective and impartial information is crucial. Therefore, the government believes that communications and access to information-for example, information about government accounts-as well as a regular dialogue with local governments and civil society about the contents o f the State budget will promote transparency and strengthen good governance. 314. This strategy for action will be consolidated in contexts where significant steps have already beenmade-for example, local participative institutions and the Poverty Observatories, andencouraged inareaswhere these are still absent. 2. HumanCapital 315. Human capability i s a fundamental asset for use in application to the initiative and actions o f citizens and all o f society's institutions. That capability must be steadily and constantly enhanced, thereby strengthening human rights, especially the rights o f children. The essential and inescapable areas that merit action to this end are education, health, water and sanitation, social action, HIV/AIDS, housing, and cross-cutting topics. Policies that redistribute income and wealth operate through those areas. They increase the immediate well-being o f the population. They help lay the foundation for an increase in the efficiency of working people. They enhance the ability to accomplish and to act, and they guarantee sustainability over the long run. 316. The relationship between education and poverty is significant. As was stated inChapter 111, poverty is multidimensional. And so education acts directly and indirectly to reduce poverty-directly, because education is a basic human right and part o f human development. The training o f citizens in a quality education system that i s available to all, oriented toward problem resolution, contributes directly to human development by increasing the ability o f our people, especially the less favored, to find solutions to their principal concerns. Access to a quality education gives everyone more opportunities for active participation inthe f i l l life o f a  - 88 - society. Indirectly, education contributes to poverty reduction because it is essential to accelerate economic growth. It expands the quality and quantity o f human capital in the productionprocess, as well as the nation's ability to make full use o f new technologies. 317. The cultural component is an indispensable part o fthe integral formation o f individuals, in the fostering development and reducing poverty. It is not only a tool for promoting a patriotic spirit, an exaltation o f Mozambican identity, o f reproduction o f the civil and moral values o f the society. Culture helps elevate the quality o f life for the population. Cultural diversity and creative activity in family and industrial contexts are important alternatives for earningthe income that people need inorder to support themselves. Similarly, cultural tourism represents a sustainable opportunity to improve living conditions in the communities. The emergence and advancement o f the "culture industry" (books, audiovisuals, live shows, etc.) create specialized kinds o f employment and also contribute to that end. 318. By the same token, health also contributes to human development, and directly and indirectly to a reduction in poverty. As a constitutional right, health i s a fundamental component in the reduction o f absolute poverty and is therefore considered to be a priority sector for PARPA focus. Furthennore, the sustainable development of this country demands a healthy population with a high capacity to produce. The vicious cycle in which poverty i s a direct cause of a number o f diseases that can, on different occasions, accentuate the status o f an individual as "pooryYy must graduallybe eliminated. 319. Water i s a key strategic resource, vital to sustain life. It promotes development and the maintenance o f our environment. Among its merits i s that it contributes to the availability and mobility o f factors. It makes work feasible. I t makes it possible to innovate and carry out the structural changes requiredover the medium and long terms. It guarantees the functioning and expansion o f markets. The lack o f clean drinking water and appropriate sanitary services are the leading causes o f water-borne diseases like cholera, malaria, and diarrhea. The presence o f a proper water supply and sanitation services at schools i s one o f the pre-requisites for the education o f girls, and consequently the improvement o f a family's health as girls assume the role o fexpectant mothers. It boosts school attendance and retention o f students. 320. HIV/AIDS could reverse the progress made so far inthe battle against absolute poverty. Poverty in its various forms and manifestations, by making persons and communities vulnerable, creates conditions that favor the spread o f the HIV/AIDS epidemic. Some o f the determinants o f poverty, such as gender inequality, the degree to which people suffer from hunger, malnutrition, low educational level, and inadequate access to health care services are associated with the conditions that facilitate the spread o f the epidemic (Second National Strategic Plan - PEN11). Furthermore, HIV/AIDS, by impacting persons o f productive age, not only reduces productivity-because it leads to morbidity and death-it also erodes the personal savings o f families and sends them into poverty and vulnerability. 321. The development process, considered as an indispensablecondition for the guarantee o f equal rights for everyone, can be global, complete, and effective only ifit includes all segments  - 89 - o fthe population. Therefore, the Women andSocial Action sector (MMAS) assumes responsibility for ensuring social assistanceand integration o fthe less favored population groups who are vulnerable because o f special conditions (physical, psychological, or social), andguaranteeing their participationinthe process o fdeveloping a country ina sustainable manner. 322. There is a visible relationship between the components o f the development o f human capital and the empowerment o f women. Education as a liberating factor gives women the basic technological skills needed to boost on-the-job productivity. It also gives women the information they need to maintain a safe lifestyle from both the health standpoint and in terms o f their interaction with society. For example, a study by Handa et al. (1998) indicates that for each additional adult woman who has an EP2 education, per capita consumption i s increasedby 21 percent in urban areas and 34 percent in rural areas. Furthermore, a child whose mother i s literate exhibits z-scores 0.304 standard deviations higher than a child whose mother i s illiterate. As regards access to health care services, it is estimated that when it takes more than two hours to travel to a health care unit, the likelihood that a women will use that facility for childbirth (which is safer) declines by 0.3 percent. There has been a greater incidence o f HIV/AIDS among women, which affects not only their survival and well-beingbut that o f their entire family, with a heavier impact on children. Interms o f access to water andbetter housing, not only do these reduce the probability o f the development o f respiratory and intestinal ailments, they free women to use their time in education or other productive activities. Inthis regard, the failure to invest inhumancapital and to include issues related to gender inequality i s unjust and inefficient. It leads to costs not only for women, but also for children and many men. It curbs the development o f human abilities, less relaxation, less well-being. The gender aspect i s crucial ineach o fthe areas o f the humancapital pillar. 323. Housing i s o f critical importance to an improvement in living conditions and the strengthening of the development o f human capital. Access to quality housing i s especially important for good public health, and it has a strong tie to the provision o f basic services such as water, sanitation, and electricity. Vision andChallenges i. Education and Culture 324. Education i s one o f the key sectors in the government's strategy to combat absolute poverty. Only a well-educated and competent population can effectively participate in the full life o f our society. The benefits o f education, especially the education o f girls, extend beyond the individual; they have an enormous multiplier effect on the entire society--in the social and economic realms, and on citizen participation inthe political life o fthe community. Everylevel of education has value for social and economic development. That is why the government should develop not only primary school education but post-primary and higher education in order to better the quality o fhuman resources and increase personal income.  - 90 - 325. Social issues occupy a central position in government actions aimed at reducing poverty. Public sector action in the social area has a direct effect in redistributing income and wealth. The development o f human capabilities i s promoted-these are a fundamental asset in all aspects o f the life o f a society, and something for which there is an "unlimited" demand from individuals and institutions (public, private, including families, companies, associations, religious institutions, NGOs, and clubs). Education occupies a position o f honor inthis context, because it acts directly on the creation and expansion o f human capabilities/skills, which also make a decisive contribution to an inclusive andcomprehensive economic growth. 326. Education o f women i s particularly important because it makes it possible, first, to create incentives for them to take a broader view o f changes in society, especially about their role in the development process. Then they are able to improve the standard o f living for the entire society by helping increase production in the countryside, reduce infant mortality, and improve nutrition for families-especially the children. Education for women also helps prevent a number o f diseases, especially HIV/AIDS, and contributes to the dissemination, in the community, o f desirable values. Gender equality, as an engine o f a more efficient development strategy, i s possible only when menacquire understanding and awareness through an education that levels out inequalities. 327. Education plays a vital role in sustaining the present indices o f economic growth. Note that in recent years, this country has grown at a remarkable pace (about 6 percent per annum). However, this growth has not yet been felt in terms o f an increase in our population's human development. Therefore, it i s urgent to ensure that the recruitment o f well-qualified teachers and literacy workers in sufficient numbers is funded, in order to ensure that the millennium goals are achieved with the desired level of quality. Investment in education should be directed toward the least favored regions, and oriented in the direction o f promoting education for all. Investment in education must also serve persons with disabilities so that people may take a more active part in reducing poverty. If social investment i s to have a greater impact, efforts must continue to bemade to ensure the internal efficiency o fthe sector and the effectiveness o f outside assistance. 328. Education i s referred to here in the sense o f a broad-based and complex system that involves both formal and informal elements. Managing the educational system means acting on vital subsystems, including: adult literacy and education; primary education, general secondary education; technical education (elementary vocational, basic technical; intermediate technical); teacher training, higher education, and vocational training. Despite their relative autonomy, these subsystems interact with each other and so require, over the medium and long term, treatment fiom a systemic standpoint (bird's eye view) and a balanced budget. 329. The cultural dimension is fundamental to the success and sustainability o f all development programs, since people are their departure and arrival point. This aspect i s complemented by the fact that culture itself increasingly assumes a privileged place as a factor in development, job creation, and formation o f citizens. Since culture is a supreme, common value, its transmission to new generations is a priority.  - 9 1 - 330. The affirmation o f Mozambican identity and national unity requires an awareness o f this country's greatness and cultural diversity. Therefore, the strategies seek to ensure better access to the values and products o f Mozambican culture, the promotion o f knowledge, and dissemination o f that culture on the national and international planes. This makes it essential to encourage research institutions and those that promote culture to create an economic and legal environment that favors the development o f cultural industries and the involvement o f civil society ina true appreciationfor Mozambican culture. 331. Partnership with civil society, religious organizations, NGOs, school boards, the private sector and the cooperation partners-as well as others-is essential to the implementation, financing, andjoint monitoring o f education programs within PARPA. 332. As a means o f ensuringthe pursuit ofthe objectives designed for education and culture, we must consider the objectives o fthe cross-cutting topics inthis area: 333. Gender: Assure gender equity at the EP1 level by improving the access, continued attendance, and safety o f boys and girls in school. Concerted action should be taken by different actors to reduce the indices of sexual abuse at school; curb school-leaving, particularly by girls, owing to improper water and sanitation; create conditions for recruiting female teachers and women into the system o f instruction and administration, especially in rural areas, thereby reducing the disparities that now exist; conduct campaigns to raise the awareness o f parents and members o f the community in general through the media and school boards to reduce truancy and convince girls, orphans, and vulnerable children to stay inschool. 334. HIV/'IDS: Implement the Strategy for Combating HIV/AIDS (Estratigia de Combate ao HIV/AIDS) by improving the planning process so that the potential impact o f HIV/AIDS i s taken into account duringthe planning processes, particularly as regards attention to be paid to mortality and absence o f teachers who are ill.Accelerate the implementation and improve the quality o f national programs directed toward sexual and reproductive health and the prevention o f STDs/HIV/AIDS, ensuring that they are oriented to local contexts by involving young people and the local communities. Combat stigmatization in order to protect the rights o f infected and affected individuals by eliminating discrimination inemployment and guaranteeing support for school attendance by orphans and vulnerable children. 335. Information and TechnologySciences (C1T):Promote a culture of science at all levels o f education by studying ways in which basic TIC skills could be addressed in the curriculum. Promote the use o f CIT in the central registry, and disseminate information and knowledge to schools (students andprofessors). Promote the use of CIT to facilitate teacher training. Promote experimentation with technologies appropriate for education. Connect education and technological development with the activities o f the private sector. Promote the creation o f funds to support technological development for different providers o f education. Promote the implementation o f educational-pedagogical and technological media in order to assist students who are engaged in distance learning. Promote the use o f CIT in the design, production, and  - 92 - implementation o f distance learning programs and develop systems to control the quality of instruction. 336. Improve Food and Nutritional Security (SAN): Inorder to help achieve the sectoral objectives adopted by the MEC (Ministry o f Education and Culture) itself, particularly improvement inthe rate o f school attendance, reduction o f gender disparities and improvement o f the quality o f instruction, the sector should prepare and include inits strategy certain aspects o f S A N so as to guide its partners rather than limiting itself to executive functions. Education has an enormous potential for contributing to a nationwide network o f social and S A N security (for example: school orchards, inclusion o f S A N in the curriculum, supplying food aid using local products to disadvantaged children and families, etc.) The MEC should have a school feeding policy: food aid that, preferably, would use local, non-imported foods, would include S A N content in training, and would encourage school orchards and micro-nutrient programs. As part o f the various incentives and mechanisms to improve access to school for all children, M E C ought to have the obligation to feed the more disadvantaged children and thereby ensure their attendance. The sector also plays a central role in the implementation o f the HumanRight to Adequate Food. 337. From the physiological standpoint, Food and Nutritional Security i s a key element inthe prevention o f HIV/AIDS. A well-nourished human body is less vulnerable to infection. Furthermore, families who are secure in terms o f food and nutrition are not as exposed to behaviors by which they risk contracting HIV/AIDS (prostitution, for example). The connection between food and nutritional security goes both ways: HIV and AIDS can increase vulnerability to food and nutritional insecurity, and the latter situation may help increase the susceptibility o f individuals to new HIV infections and/or their rapid progression to AIDS. The HIV/AIDSepidemic and food andnutritional insecurity have awidespread impact inasmuchas they threaten the level o f economic development that this country has achieved inrecent years. 338. De-Mining: The introduction o f de-mininginto plans for expanding the school system assures that surveys and de-miningwill be included inthe interventions when minedzones-or zones suspected o f being mined-are involved. It i s important that funds be appropriated to the de-miningcomponent for interventions in mined zones-or zones suspected o f being mined. The sector should consider the possibility o fincluding civic education as to the danger o fmines at schools located inaffected zones or zones suspected o fbeingmined. 339. The Environment: In order to ensure an expanded and effective contribution by all citizens to the sustainable socioeconomic development o f this country in both urban and rural areas, it is vital that citizens be educated and informed about our wealth o f natural resources, the importance o f supporting a conservation ethic for the sake o f a better quality o f life for all, and their constitutional rights and obligations with respect to the environment. For obvious reasons, environmental education is fundamentally important to the reduction o f poverty. It attempts to help citizens become aware and concerned about the environment in which they live and with the associated problems. An increase in public knowledge on a variety o f local  - 93 - environmental topics will result in better support and involvement in the search for solutions. Informed participationby all citizens i s vital to the success o f any development program. 340. Beyond basic issues related to people's hygiene and the preservation o f the environment, water i s vitally important to ecological balance, on the one hand, and to the pursuit o f various socioeconomic activities, on the other. Mozambique's territory is crisscrossed by a series o f rivers whose sources are in the neighboring countries. This makes our country extremely vulnerable with respect to this resource. We can see that it i s vitally important that steps be taken toward sustainable management o f hydric resources at the internal and regional levels, thus safeguarding the quality and quantityneeded to supply rural residents andtheir activities. 341. Environmental problems resulting from insufficient access to water and poor water quality that stem from an absence o f adequate sanitation and waste disposal services, among other factors, are the cause o f the most serious diseases, including malaria, cholera, and other diarrheal diseases that affect the poorer communities, especially their women and children, disproportionately. These diseases impair people's productive capacity, their ability to generate the wealth necessary to improve their quality o f life and well-being. Therefore, attention to issues o f environmentalhealth inorder to reduce the focal points o f disease associated with that health must continue to be one o f the top priorities o f the planto reduce poverty. 342. The challenge facing education i s to strengthenthe quality and efficiency o f the sector, thereby increasing the supply o f educational opportunities. In primary education, the implementation o f a new basic curriculum, teacher training, and the distribution o f educational materials will be key to reducing the rate o f school abandonment and grade repetitions, consequently lowering the unit cost per graduate. Low-cost construction that involves communities and their equipmentwill make it possible to afford the space necessary to educate all school-age children and to ensure that both girls and boys enter first grade at age six. Secondary and technical education facilities must get ready to serve an ever-increasing number o f primary school graduates. They must also benefit from a curriculum reform that makes the course o f studies more relevant to life, the labor market, and lifelong learning. Financing for education must increase proportionately inorder to meet the challenges o f Education for All, as well as the needs associated with the growth o f other levels o f education. Meanwhile, timely disbursementof funds andtheir balanced distribution through the subsystems o f education will be crucial to carrying out the programmed actions and ensuring the attainment o f the goals set for this sector. 343. In the realm of culture, the challenge is to consolidate a Mozambican identity, self- esteem, a love for this country and its culture, as well as to make culture a tool for raising the quality o f education and instruction and a source o f wealth. This will require promotion o f cultural diversity through research and publications, exchanges, education about preserving the cultural heritage, establishment and strengthening o f cultural institutions and infrastructures, and protection o f those who practice and express aspects of our culture and of the cultural industryitself.  - 94 - ii. Health 344. The direct relationship between people's poverty and their state o f health has been amply documented. Sustainable development requires a healthy and highly productive population. It is inthis context that the Ministryo f Health has an important role to play, bothin combating the causes o fpoverty andinrelieving its consequences. 345. The health o f the Mozambican population is still dominated by communicable diseases, namely malaria, tuberculosis, parasitosis, acute respiratory infections, diarrhea, etc. The HIV/AIDS pandemic (which posts a risk to economic growth and our long-term survival as a nation) i s spreading rapidly and already poses an enormous challenge to the health care system that, as we can already see, must bear an additional andheavy burdeno f diseases attributable to HN/AIDS.Furthermore, non-communicable diseases such as cardiovascular disease, diabetes, and even traffic accidents are gradually becoming more prevalent. This situation i s aggravated by the limited ability o f the health care system to respond. Coverage o f health care services is estimated to be less than40 percent (IAF 2003).4 346. Therefore, the central objective o f the health component o f PARPA I1i s improvement o f the state o f health o f the general public, particularly the poor. Inorder to guarantee that the most disadvantaged strata and vulnerable groups are reached by the planned interventions, sector strategy must be based on a specific approach to poverty reduction that seeks to increase access and respond directly to the growing needs o f the population. It i s in this context that the Ministry of Health will continue to expand the health care network, bringing it closer to the communities, thereby reducing the theoretical radius within which those units work and the average number o f residents per HealthUnit (UnidadeSanitciria). 347. That means, first, that siting o f facilities must be done on the basis o f equity, which makes it possible to channel hnds directly to the poorest and most vulnerable population groups. Second, this approach must translate into an expansion o f the health care network to underserved areas, so as to increase the physical access by the population to health care services. This indicator is based on the percent o fthe populationwho have easy access to one health facility, Le., resides no further away than 30 minutes' travel.  - 95 - 348. Interms ofthe provisionofservices, primary healthcare5is still thepriority. Its gradual integration is essential to ensure efficiency in the use o f resources and provision o f quality services. Inthis context, priority programs inthe health care sector play a key role because they give special attention to the most vulnerable groups, particularly, women, children, young students, adolescents and orphans, with special attention to the poorest o f these. The priority programs also care for those suffering from diseases to which the poor are most vulnerable, namely malaria, tuberculosis, leprosy, HIV/AIDS, parasitosis, and epidemic diseases that may strike during emergency situations: cholera, dysentery, and meningitis. 349. At the same time, and to permit providing services o f acceptable quality, all Health UnitsinMozambique mustgraduallybe adapted interms ofbasic infrastructure, starting with a reliable supply o f water and electricity. Giventhe scarcity o f funds, generating light using solar energy i s a sector priority. 350. The SNS [National Health Service] must be considered as a whole. Its role as a standard for basic specialized care needs to be strengthened, which will require assigning the proper kinds o f personnel and equipping the Health Units with the tools they need according to the typical patient load at each level o f care. Furthermore, strengthening the SNS will also involve improving management and organization at all levels o f service inorder to permit complete and efficient implementation o f sector programs, thus raising the quality o fthe services rendered. 351. With respect to humanresources, the training component will be strengthened and steps will be taken to assign and keep staff in the least favored areas by establishing a package of comprehensive and sustainable incentives. 352. Gender will also receive particular attention, not only as regards the promotion o f the rights o fwomen inthe healthcare sector, but also with respect to specific interventionsthat are needed inorder to eliminate existing barriers andpromote gender equity inaccess to services. 353. Lastly, success in the implementation o f sector strategy will depend largely on achieving consistency among different interventions at various levels. Here, active participation by the community inpromoting and safeguarding the health o f its members is essential. At the same time, the dynamic partnership with all the parties involved-including practitioners o f Maternal and child health, and family planning. Vaccination against the most important infectious diseases. Preventionandcontrol o fthe leading endemic diseases. Promotion o f sanitation and the supply o fpotable water o freliable quality inthe necessary quantities. Education about the most frequent health problems and ways to prevent and control them. Promotion o f good nutrition and a guarantee o f food quality. Clinical diagnosis and treatment o f the most common infections. Distribution o f essential medications. Collection and processing o fbasic statistical, epidemiological, and demographic data.  - 96 - traditional medicine, NGOs, and cooperation partners-will continue to be encouraged and strengthened inthe coming years. iii. Water and Sanitation 354. Access to potable water and suitable sanitary services are pre-requisites for an increase in people's productivity and an improvement in their quality of life. Water is vital to the achievement o f the other millennium development objectives, such as poverty reduction, education, health, and gender equality. Water plays an important and unique role in the well- being o fpeople everywhere. 355. Access to potable water has a multiplier effect on health. The lack o f clean drinking water and appropriate sanitary services are the leading causes o f water-borne diseases like cholera, malaria, and diarrhea. Establishing the practice o f washing hands after usingthe latrine and before meals can cut diarrheal ailments by about 40 percent. Recent studies indicate that access to potable water can delay the emergence o f opportunistic diseases (like diarrheas) among people who are living with HIV/AIDS and make treatment with anti-retrovirals more effective. As a result o f the inadequate coverage by basic services in Mozambique, infant mortality rates are highfor children under the age o f five (192 per thousand). Malaria, diarrhea, and cholera were the principal diseases contributing to these mortality rates (INE2004). 356. The presence o f an adequate water supply and sanitary services at schools is a pre- requisite for the education o f girls and, consequently, for the improvement of family health in their role as hture mothers. This factor also helps increase school attendance and student retention. 357. The following are the primary challenges and priorities: (i)strengthening the planning skills in the sector (provincial master plans) and the ability to provide suitable, sustainable services; (ii)training o f the principal persons involved in this sector; (iii)reinforcing decentralization and de-concentration, including the recruitment o f qualified professionals in the various areas and at all levels, but with greater focus on the districts; (iv) assuring the sustainability o f the water supply and sanitation infrastructures by focusing on districts/communities; (v) promoting integrated water supply and sanitation projects inorder to maximize impacts; (vi) reinforcing education in the areas o f water, health, and hygiene in communities to convince them to adopt safe hygiene practices; (vii) assuring implementation o f a utilityrates policy that makes it possible to recover costs; (viii) establish and improve reliable systems for monitoring and evaluating (national and provincial databases) water supply and sanitation services; and (ix) ensuring the availability o fwater for crops and rural development. 358. The vulnerability o f this country can be reduced by: (i) mitigating and managing the threat o f extreme events (floods and droughts); (ii) expanding and modernizing the country's network o f hydro-meteorological stations; (iii)mobilizing financing for construction o f hydraulic works.  - 97 - 359. The challenges facing the water supply sector are: (i) reinforcement o f the current capacity to provide adequate services; (ii) training the key people involved in this sector; (iii) ensuring the sustainability o f the water supply and sanitation infrastructures; (iv) promoting projects that integrate water supply with sanitation ;(v) strengthening education inthe areas o f water, health, and hygiene in communities and ensuring that water is available for farm production and rural development; (vi) reducing this country's vulnerability by mitigating and managing the threat o f extreme events (cyclones and floods); (vii) expanding and modernizing the country's network o f hydro-meteorological stations; (viii) mobilizing financing for construction o f hydraulic works; and (ix) ensuring the implementation o f a utility rates policy that makes it possible to recover costs. iv. HIV'AIDS 360. Inthe area ofHIV/AIDS, the bigchallenge is to make subject seen nationwide as an urgent problem by providing an effective and sustainable multisectoral response that not only helps stanch new infections but prolongs the life expectancy o f people who are living with HIV/AIDS, by providing appropriate care and treatment and improving their socio-sanitary conditions. This challenge requires a recognition that HIV/AIDS i s a bar to the development and adoption o f sectoral strategies on which there i s agreement, including the creation and viabilization o f a favorable juridical and legal environment a response to the pandemic that i s increasingly well coordinated and based on the socio-cultural realities o f this country. 361. In particular, it is anticipated that in Mozambique, the number of orphans and other children whose vulnerability i s caused directly by HIV/AIDS will increase considerably, since Mozambique i s moving closer to "dead man's curve." A comprehensive framework should be established to meet the specific needs o fthis most vulnerable group. 362. Ifwe simulate a decline inthe daily number ofnew HIVinfections from about 600-650 under the basic scenario to 350 or fewer in 2009 and 100 or fewer in 2014 (the scenario that postulates a reduction in daily infections with HIV), the average annual rate o f population growth would increase by 0.02 and 0.26 percentage points, respectively, in the five-year periods 2005-09 and 2010-14. This simulation was performed using the Threshold 21 (T21) model adopted by the MillenniumInstitute (2005). V, Youth and Sports 363. Recognition o f the aspirations o f young people, as well as the need to engage them actively in all areas o f this country's economic life, makes it necessary to arm them with the kindofknowledge that enables themto acquire life skills. They thenbecome active individuals, promoters o f initiatives designed to reduce the impact o fpoverty, and catalysts for participation inthe development o f the national economy and consolidation o f democracy inMozambique. Indeed, this country's harmonious and sustainable development comes from the coexistence o f many different values, such as the culture o f peace, mutual understanding, unity in diversity, peacefbl coexistence o f citizens, and a spirit o f sacrifice and tolerance. Hence the need for those  - 98 - values to be cultivated and safeguarded within the new generations who are the guarantee o f their continuity. 364. Sports contributes to social cohesiveness, reinforces national unity, and is a catalyst o f national development, helping to enhance the self-esteem of the Mozambican people. The government's objective with respect to physical education and sports consists in encouraging all citizens to participateinsports by expanding all kinds o f sports opportunities. 365. The primary challenge in the area o f Youth and Sports i s to energize and support initiatives directed toward promoting the development o f the personalities o f young people, as well as a creative spirit, and a desire to be o f service to the community. Conditions must be created under which youth can be integrated into an active life, through vocational training, promotion o f self-employment, expansion and improvement o f the implementation o f income- generating programs, prevention o f HIV/AIDS, and the formation o f young people's associations as an effective way to organize the youth o fthis country. 366. With regard to sports, the objective is to make sports an integrating factor-part o f the "glue" in the development o f a society-by encouraging mass participation in sports and strengthening sports-related associations. To that end, support i s needed for innovative approaches ineducation and training, carried out via local sports initiatives. vi. Women and SocialAction 367. The development process, considered as an indispensable condition for the guarantee o f equal rights for everyone, can be global, complete, and effective only ifit includes all segments o f the population. Therefore, the Women and Social Action sector (MMAS) assumes responsibility for ensuring social assistance and integration o f the less favored population groups who are vulnerable because o f special conditions (physical, psychological, or social), and guaranteeing their participation in the process o f developing a country in a sustainable manner. 368. M M A S plays a dominant role inpoverty reduction efforts because o f its responsibilities inthe integration of the least favored population groups and the reduction of inefficiencies in the allocation o fresources to those groups. 369. Hence the need to reinforce the ability o f MMAS to intervene ever more dynamically, so as to encourage participation by the public and private sectors and the organizations and/or associations o f civil society inthe reduction o fbothpoverty and the exclusion o f disadvantaged population groups in all their dimensions: economic, human, socio-cultural, political, and in terms o f social protection from a gender perspective. 370. Note that the gender perspective i s not concerned solely with the feminine condition, or with women's experiences and perceptions, but with the attribution o f roles, resources, responsibilities, and relative expectations to menandwomen.  - 99 - 371. MMAS has been adopting a transforming approach that energizes a focus on active participation and the empowerment o f the involved groups themselves, in the context o f their communities. 372. Assistance to and integration o f the vulnerable and less privileged social groups into PARPA I1is apriority. It is a means o f ensuring the achievement o fthe objectives laid down in the government's Five-Year Plan, the annual plans, andininstruments o f international scope in order to meet commitments assumed by Mozambique on the international plane in terms o f reducing the indices of absolute poverty in order to meet the goals defined in the Millennium Development Objectives. This integration will spur the process o f skills-building and empowerment o f the most vulnerable population groups, thereby guaranteeing their participation inthis country's development. 373. The starting point on the road to achieving these objectives should be a definition of regulatory and legislative tools for strategic planning, identification and location o f the most vulnerable groups and those living in absolute poverty, as well as improving the institutional capabilities o fMMAS. 374. The principal challenges faced by Women and Social Action are concentrated in an effort to ensure that resources allocated to the reduction o f absolute poverty are directed at the most vulnerable population groups, through implementation o fplans to serve unprotected target groups andthose excluded from society; vocational training o f target groups and the promotion o f self employment; expansion and improvement o f income-generating and community development programs; encouragement o f membership in associations in order to facilitate the granting o f support and assistance to vulnerable populations; empowerment o f the beneficiaries o f development projects through use o f simple technologies appropriate to the conditions in which the beneficiaries live and to the rural environment; and promotion o f campaigns to raise awareness and mobilize people to cease the discriminatory practices and acts o f violence by their members. 375. Women are the key to guaranteeing the sustainability o f a S A N strategy, because they play a vital role as producers o f foods, managers o f natural resources, generators o f family income, and caregivers o f families. At the same time, they continue to face restrictions in access to and management o f resources (land, education, training, credit, information, technology) and in the decision-making process. This discrimination reduces the productive potential o f families and increases their vulnerability. It limits the ability o f all individuals, including men, to escape poverty. 376. Of special significance inthe area o fchildrenwho are indifficult circumstances was the drafting o f a National Action Plan for Orphan and Vulnerable Children, in the context o f HIV/AIDS. The main objective o f the Plan i s to ensure access by the most vulnerable children to a package o f basic services, as well as to the social protection network. However, the scope o f support available to orphans and other vulnerable children i s still limited.  - 100- vii. Former Combatants 377. The results o f the Struggle for National Liberation and the Defense o f Sovereignty and Territorial Integrity in this country created a large number o f former combatants who are equipped and trained in the military arts. After they transition to civilian life, their areas o f expertise are no longer important. It has been a challenge for the government to ensure the socio-economic integration o fthis vulnerable social group into the life o ftoday's society. 378. Assistance to Handicapped Former Combatants (Antigos Combatentes Portadores de DeJici&cia- ACPD) i s a priority in government policy and required by the Constitution o f Mozambique. 379. The History and the Historical Heritage o f Mozambique as developed during the various phases o f this country's history constitute the center o f the civic and patriotic development of Mozambicans. Former Combatants 380. Main Objective: Ensure the insertion o f former combatants, particularly those who are in vulnerable circumstances, into programs designed to reduce absolute poverty and promote rural development. 381, Specific objectives: (a) Promote training and skills-building as a means o f guaranteeing the active participation o f the combatant inthe tasks o f social and economic development and the consolidation o fpeace. Following are specific actions: (b) Prepare and implement programs directed toward the social and economic integration o f former combatants, and vigorously encourage the entrepreneurs in this social segment to pursue economic activities that can make a substantial impact on the communities inwhich they live. (c) Guarantee the implementation o f instruments to be used in managing social assistanceto the former combatants. History and Heritage o f the Struggle for National Liberation 382. Main objective: Promote actions intended to enhance the appreciation o f the historic heritage and the history of the Mozambican revolution, in order to develop a patriotic spirit o f solidarity and national unitywithin the bosom o f society.  - 101- 383. Specific objectives: (a) Create ways and means for ensuring the involvement and participation by former combatants inthe civic education o f the citizens, particularly children and young people, as a way to raise ever higher the patriotic spirit o f solidarity and national unity within the bosom o fMozambican society. (b) Recognize the value o f the historical heritage as an integral part o f Mozambican culture andwork to preserve it. (c) Foster the habit o f visiting historical sites as an essential component in the civic education o fthe Mozambicanpeople. viii. Housing 384. Access to suitable housing, a universally-recognized right, poses a challenge to Mozambique's housing sector if the country i s to achieve millenniumdevelopment goals and the objectives o f the government's program. A continued improvement in basic living conditions, which include adequate housing, brings health benefits in a country where the poor quality o f housing i s exacerbating the vulnerability of population groups to infection by HIV/AIDS andother, associated, diseases (CNCS 2004). 385. InMozambique, where poverty dictates precariousness of housing inboth rural areas (93 percent) andurbanzones (60 percent) and the country i s vulnerable to natural disasters, it i s essential that actions be taken to improve the quality o f housing (NE 2005). The Agenda for Sustainable Development emphasizes housing as one of the determining factors that i s essential to a reduction in poverty. It i s expressed in the availability o f basic infrastructure services (water, sanitation, and electricity) in addition to the features o f the dwelling itself, and physical space sufficient for its inhabitants. 386. Mozambique has a variety o f housing types. Permanentdwelling units are found inthe urban centers. On the peripheries o f urban areas, permanent and precarious structures coexist, along with others dwellings made o fnon-durable materials. Some o fthese are inrural areas. 387. Although in urban areas we find a significant quality deficit, about 62 percent o f the population lives in rural zones, where the qualitative needs are concentrated. In terms o f predominant materials, 37.9 percent o f homes have walls made o f mcitico poles; 31.1 percent are built o f adobe blocks; 75.8 percent have a packed earth floor, and 74.3 percent have roofs o f native grasses, thatch, or palm. Better quality materials are more frequently used in the urban areas, since houses tend to be more "formal," but these still are not the predominant type o f housing. 388. Also directly related to qualitative aspects are the poor use made o f materials and the failure to comply with standards, and other cultural aspects. Furthermore, buildingmaterials are of poor quality and there is uncertainty as to land ownership. Moreover, infrastructure and  - 102- services such as potable water supplied in mains are unreliable, as are basic sanitation, electricity, andnetworks o fhealth care and educational facilities. 389. The vision for the sector calls for guaranteeing the basic conditions o f human survival by implementing housing policies and programs that translate into continued improvements in quality o f life. 390. Inthe realm of housing, the challenge will be to draft andimplement a housingpolicy that includes aspects associated with the relief o f poverty, and to raise funds to carry out housingprograms for low-income residents. ix. Food and Nutritional Security SAN- 391. With respect to food insecurity and poor nutrition, the major challenges are: to reduce the extremely high levels of chronic and acute malnutrition in this country, which seriously affect the present and future human capital o f Mozambique. Moreover, there i s a need to structure a comprehensive multisectoral intervention into the four dimensionso f SAN, one that i s directed to the groups that have been targeted for reduction in the indicators o f chronic and acute malnutrition, especially children. 392. The strategy for combating HIV/AIDS must be sufficiently holistic to include SAN as an effective key element in all components o f the strategy, so that HIV/AIDS and S A N are treated in an integrated fashion and as structural problems o f development. This structural problem threatens and compromises human capital and, consequently, the overall institutional capabilities o fMozambique (Triple Threat). 393. The presence o f one or more illpersons in a family requires not only a redirection o f financial resources toward the expenses o f treatment, but also a loss o f the income needed to purchase foods and agricultural production inputs. Therefore, a systematic monitoring o f the conditions o f S A N must be a priority, particularly inparts o f the country where there is a high percentage o f serum positivity. Monitoring is one o fthe strategies that can help most directly to permit the accomplishment o f objectives related to the increase in opportunities and the abilities o f individuals, families, and communities to generate income and ensure their own personal food security. x. Science and Technology 394. The major challenges in the field of science and technology are associated with the promotion o f a culture o f science-awareness at all levels o f education, and the improvement in the quality and importance ofhigher education interms o fscience and innovation.  - 103 - Objectives andActions i. Education and Culture 395. The main objective o f the education and culture sector, in the context o f the government's poverty reduction policy, will be to guarantee quality education for everyone, with special attention to primary education. Note that the program "Education for All" must also serve girls, and children with special needs, at all levels o f the instruction system. Likewise, the government will continue to give attention to the development o f a more vocationally-oriented primary education so as to ensure that the graduates o f these subsystems are capable o f adapting more sully to the life o f the community and thejob market. 396. The cultural dimension is crucial to the eradication of poverty. Inthe realm o f culture, the objective will be oriented toward the promotion o f culture as a component o f patriotic education and vital to a lasting elevation o f the quality o f education, a source o f income, and a factor insustainable development. The rich cultural diversity should be reflected inthe richness anddiversityo fthe creative and innovative activities. 397. Therefore, the fields o f action by the education and culture sector will be: literacy; non- formal and adult education; primary education; secondary education; technical, professional and vocational education; higher education; special education; teacher training, culture and cross-cutting issues like HIV/AIDS and gender; training inhuman rights and ways to battle all kinds o f discrimination; the fight against drug use in schools; the environment, and the strengthening o finstitutional capabilities. Literacy. Non-formal Education, and Adult Education 398. Main objective: reduce the high rates o f illiteracy among men and women, young people and people with disabilities, especially in rural areas by carrying out quality programs involving the use o f local languages, and incoordination with civil society. 399. Specific objectives: (a) Reduce the illiteracy rate by 10 percent by teaching 1,500,000 people to read and write. Of these, 70 percent will be women. The goal o f achieving Education for All will be kept in mind. Radio and TV programs will be used, as will non-formal educational programs. Literacy will also be taught face-to-face. (b) Reduce illiteracy among women by implementing the literacy strategy and non- formal and adult education, andteaching literacy by means o fthe radio. PrimaryEducation  - 104- 400. Mainobjective: universal school attendance6 401. Specific objectives: (a) Improve the quality o f instruction and academic achievement o f the students so as to attain a 59 percent completion rate in the 7-grade basic education system, with a 55 percent rate for girls; (b) Increase attendance in primary education by children o f school age, especially girls and children with disabilities, by building low-cost school buildings within the communities and guaranteeing a safe and healthful environment for the children; (c) Improve schools management by training directors o f schools and members o f the school boards, in order to ensure effective, participative, and transparent school administration; and (d) Consolidate the Direct Support to Schools (Apoio Directo Cis Escolas) program. Strengthen the financial system and increase funding to pay for both normal school functioning programs and special programs (support to orphans and other vulnerable children, integration of gender, etc.) that are already underway. Secondary Education: 402. Mainobjective: expansion o f secondary education o fhighquality that i s also relevant. 403. Specific objectives: (a) Complete and implement the curriculum reform for secondary education so as to ensure its efficiency and quality as well as the integration o f technicalhocational subject matter; (b) Expand secondary education by assuring integration o f the students who finish primaryeducation, with priority givento underprivileged children, childrenwith special educational needs, and girls; and (c) Develop partnerships with the private sector, with civil society, and with families inorder to ensure that costs will be shared at this level o f instruction. Preschool education i s the responsibility o f the Ministryo f Women and Social Action - MMAS.  -105 - Technical Education 404. Mainobjective: expand access to quality instruction. 405. Specific objectives: (i)Implement the Integrated Program for Vocational Education Reform (Programa Integrudo du Reforma da Educap7o Profissional - PIREP). Strengthen the kind o f institutional development that will result in a technical-vocational education system directed toward demand and that affords opportunities for quality training; (ii) expand technical and vocational education by improving the efficiency and quality o f training at the institutions in this subsystem; (iii)implement curriculum reform of the system by introducing modular courses oriented toward rural development as a means of strengthening the quality o f technical andpracticaltraining of students; (iv) proceed with the programto convert the network o ftrade schools (escolas de artes e ofcios) to vocational schools that are also able to serve young people with disabilities; (v) Introduce a qualifications system with a view to obtaining recognition o f vocational skills from the (basic) level to level IV (superior polytechnic). Higher Education 406. Main objective: expansion o f access to higher education that i s relevant and o f good quality, with regional and gender equity. 407. Specific objectives: (a) Train people for service inpublic administration and for the fields o f education, health, and agriculture; (b) Helpcreate a capacity for innovation andself-employment by encouraging small business; and (c) Ensure that research i s done to promote the creation o f internal management or development skills. Teacher Training 408. Main objective: ensure that teachers will be trained for all educational subsystems, with a view to promoting education for all children and young people, including girls and those with disabilities. 409. Specific objectives: Establish and implement a coherent and well-coordinated system to train teachers for all education subsystems, including technical education, through continued training and supervision o f all teachers in the system, especially those who did not receive initial training; continue to implement distance training courses to ensure continuing and in- service training o f teachers; train teachers inHIV/AIDS-related subject matter so as to involve them inprevention programs at school, with their students and inthe community, as well as in mitigation programs andprograms to assist orphans andvulnerable children.  - 106 - Institutional Development 410 Main objective: ensure effective decentralization o f the management o f the educational system down to the district level and to schools, an effort that pays attention to planning, implementation, and accountability at all levels. 411. Specific objectives: (a) Strengthen skills in the areas o f planning, coordination, monitoring, and management by providing training in planning, financial management o f human resources, and in schools management, particularly at the provincial, district, and individual school levels; (b) Ensuretimely transfers of funds, effectiveness in their use, and transparency in their management through training and creation o f conditions needed for the SISTAFE to function; and (c) Monitor hlfillment o f the outlined goals by holding annual meetings with all sector partners. Culture 412. Main objective: promote culture as a factor that strengthens the Mozambican identity, as well as peace, national unity, and development. 413. Specific objectives: (a) Promote a recognition o f the value o f Mozambican culture, anddisseminate it; (b) Encourage the habit of finding pleasure in reading as a means of acquiring life skills; (c) Strengthen culture as a source o f income; and (d) Expandand improve the nationalnetwork o f cultural infrastructures. ii. Health 414. The health care sector, in coordination with a number o f other sectors, has a responsibility to intervene inboth the identification and the progressive fight against the causes of poverty, as well as to relieve the consequences o f poverty. MISAU's mission, through the SNS and its service-providing partners, will be to place health care services of acceptable quality at the disposal o f a larger proportion o f the poor population, either free o f charge or at an affordable price.  - 107 - 415. The program has fours key components: improvement o f access to health care services, priority programs, improvement o f quality, an increase in efficiency and cross-cutting topics (gender and intersectoral cooperation). Increasing Access to Health Care Services 416. The first strategic objective refers to the improvement o f access to health care services, especially in the least favored parts o f the country, in order to increase the percentage o f the poor who have access to healthcare. 417. In this context, a number of specific objectives have been selected to reflect the comprehensiveness o f the word "access," which can be interpreted inmany ways. 418. First, a review i s needed o f the criteria for allocating resources. Moreover, the financing available to the sector should be increased from US$lO.OO to US$l5.00 per capita7, ensuring the additional funds are channeled into more disadvantaged regions. 419. Second, the health care network will be expanded so that it reaches the more disadvantaged areas, thus increasing the proportion o f the population that has easy access to a single health care unit' from 36 percent to 45 percent, by concentrating efforts on the least- served provinces. 420. Third, access to basic specialized care should be improved, and the referral system strengthened by a gradual increase inthe number o f health units able to offer basic specialized care as evidenced by the presence o f suitable means o f transportation and communication, in order to respond promptly andinan appropriate manner to the needs o f the population. 421. At the same time, the sector anticipates a gradual increase in access to prevention and control o f non-communicable diseases and trauma, through the preparation and initial implementation o fthe area planno later than2009. 422. Fourth, the sector i s committed to carrying out a series o f specific activities in order to increase access to health care services for women, through a better organization o f the services o f the health units and the promotion o f training activities within communities. The set o f actions in this area (definition o f indicators and goals) will be finalized in 2006 with the completion o f the Gender Action Plan (Plumde Ac@ do Gbuero), 423. Fifth, the elimination o f financial and non-financial barriers to the use o f services is a key component ofthe sector's strategy. It is split into four groups o fkey actions that have been identified, namely: Figures based on the State Budget, since this represents the component over which the sector has some control. Le., the person lives less than 30 minutes from such a unit (an IAF indicator).  - 108 - (a) Strengthening the district health system by developing and updating the planning and management tools at the district level; (b) Increasing community participation in promoting and protecting its members' healthby carrying out a whole set o f actions to mobilize community involvement; (c) Gradual elimination o f financial barriers, starting with a comprehensive study on funding for the sector, duringwhich the mechanisms for protecting the poor will be reviewed andupdated; and (d) Promotion o f cooperation with Traditional Medicine, in order to encourage research and participation inhealthprograms by those practitioners. Priority Programs for the Health Sector 424. The main strategic objective o f the priority programs in the health sector refers to the integrated expansion o f primary health care services, especially coverage o f the most disadvantaged population groups, so as to reduce morbidity and mortality among the poorest Mozambicans. 425. Inthe area ofreproductivehealth, the mainobjective is: (i) reduction o f the maternal mortality rate in hospitals from 182 per 100,000 to 168 per 100,000 live births by extension work and accreditation o f health care units that can provide basic or complete emergency obstetric care, especially in rural areas, these actions to be complemented by good communications and referral systems; (ii) training new professionals to handle the expansion o f health care units, keepinginmindthe impact o f HIV/AIDS on humanresources; (iii) arranging in-service training for technical staff associated with maternity clinics; (iv) increasing the number o f SMI [mothedchild health] personnel associated with maternity clinics; and (v) ensuring that essential medications are supplied to all health care units that perform maternity services. 426. The program also contributes to the reduction o f the maternal mortality rate, which should decline from 408 to 350 per 100,000, with the intention o f achieving the millennium goal o f 250 per 100,000 in 2015 by: (i) increasing coverage for follow-up office visits inhigh- risk obstetric cases; (ii) sensitizing the community andthe NGOs so as to promote construction o f homes for expectant mothers in all referential health care units in district seats; (iii) expanding and strengthening the roving teams strategy and the family planning component; (iv) producing educational materials for sensitivity training directed to opinion-makers who have decision-making authority (men, and older women); and (v) strengthening the training of traditional midwives as promoters o f good health. Note that, to a great extent, these actions will help increase the coverage o f institutional births from 49 percent to 56 percent, a hndamental intermediate objective inthe reduction o fmaternal mortality.  - 109- 427. PTV [Prevention o f Vertical Transmission], i s a key component o f the reproductive health program, and its importance has been growing in recent years. It i s intended to increase the number o f women and newborns who receive prophylaxis from 2percent in 2004 to 22 percent in 2009,' by: (i) expanding the number o f health care units able to handle PTV, an activity that should include a guarantee o f continued availability at the health units o f reagents for rapid HIV testing and prophylactic ARV; (ii) strengthening the strategy o f communicating with communities on the subject o f PTV; (iii)integration o f counseling and voluntary HIV testing and other specific PTV activities into the routines o f sexual and reproductive health services; (iv) increasing the availability o f counseling and voluntary HIV testing at all SMI clinics for all pregnant women; and (v) making sure that children born to an HIV-positive mother receive prophylactic ARV at birth. 428. Underthe pediatric healthprogram, the mainobjective is to reduce the mortality rate for infants and young children from 178 to 140 per thousand in 2009, thus moving toward the millennium goal of 108. This can be achieved by improving the care given to newborns, to healthy children, and to those afflicted with the most common ailments that affect children under five. To this end, neonatal health and Integrated Attention to Childhood Diseases (Aten@ Integrada i2s Doenqas da Infdncia - AIDI) strategies were developed. Inaddition, the activities o f the Expanded Vaccination Program (PAV) will continue to be strengthened by augmenting the roving teams and increasing the number o f stationary vaccination clinics. One o f the main objectives o f the PAV i s to ensure that 95 percent o f children under the age o f one year receive the DPT3 and HB [hepatitis B] vaccines. 429. With respect to health in schools, the objective is to gradually be able to provide all primary schools with a complete basic health package, beginning with the EP1 schools in the district seats. Since current coverage is nearly zero, it i s anticipated that by 2009, children will have access to this package at halfthe EP1schools. 430. Inthe context of health for school-age children and young people, the importance of cooperation with the education sector, to ensure that curricular include a suitable component o f health education, should also be emphasized. At the community level, liaison between health, education, and the Ministry o f Youth and the Ministry o f Social Action will need to be strengthened in order to promote the integration o f health care in the activities necessary to reduce risk factors andprotect orphans and other vulnerablechildren (COV). 431. Nutrition is one o f the key areas o f the sector. The objective is to contribute, in coordination with other sectors, to a reduction inthe prevalence o f malnutrition. The role of the The sector i s presently involved ina study o fthe implementation o fthe PEN SIDA [National Strategic Plan for HIV/AIDS],duringwhich certaingoals for key indicators, including the numbero fwomen andchildrenwho receive PTV, will bereviewedto better reflect the reality inthis country.  - 110- health authorities is to prevent and treat the consequences o f malnutrition, while the causes and their prevalence will require participation by various other sectors at the central and local levels, so that malnutrition can be seen as a problem for the State, one not limitedto health. It i s intended in this area to reduce the prevalence o f low-weight-for-age to from 24percent to 17 percent in 2009. The sector will play a vital role in the intensive promotion, by health care personnel and community agents, o f breast-feeding and appropriate weaning. The sector will continue the preventive administration o f Vitamin A to children aged 6 to 59 months and curative supplementing with Vitamin A in cases o f xerophtalmia, persistent diarrhea, serious pneumonia, and malaria in order to reduce the prevalence rate o f Vitamin A insufficiency in children aged 6 to 59 months. 432. As regards major endemic diseases, malaria is a key priority o f this sector. The main objective o f the program is to ensure that by 2009, at least half the population can benefit from the most appropriate combination o f individual and collective protection measures. This goal should be achieved primarily by rapid expansion o f the anti-vectoral battle by spraying homes with insecticides, preferably DDT. The expansion o f presumptive and intermittent treatment of pregnant women who are at risk o f contracting malaria, promotion o f community participation inissues o f environmental sanitation, andpromotion o fcommunity education will help achieve the established goal. 433. Now, when the PARPA I1document i s being finalized, the health sector i s conducting an evaluation of the PEN SIDA, because it has beenfound that the strategy adopted byboththe health sector and by all the other parties involved inthe fight against this pandemic, has not yet yielded the expected results. There is a consensus in the sector that not only must certain activities be revised, but the goals need to be redefined, particularly as they refer to the TARV [anti-retroviral therapy] and PTV goals for 2009, including pregnant women, young people, and children. It i s anticipated that this review will be completed in March 2006 with participation byprovincial-level managers and implementing agents. 434. Following are some o f the specific objectives and goals that have been identified: (a) Incooperation with the CNCS, reduce the number o f new HIV infections from 500 to 350 per day by: encouraging and coordinating information, education, and counseling at the community level; improving the tracking o f blood and blood products; andimprovingbiosafety measuresandprocedures at all levels; (b) In cooperation with the CNCS, reduce the prevalence of HIV among young people age 15-19 from 5.4percent to 4.2percent in 2009, by increasing access by adolescents and young people to services oriented toward them, in order to help change sexual behaviors. As part o f this objective, it is planned to increase the numbers o f  - 111- SAAJ [Youth and Adolescent Friends Services - Sewiqos de Sazide Amigos dos Jovens] from 104,000, to 380,000'0 in2009; (c) Increase the number o f users o f STI diagnosis and treatment consultations from 685,000 to 1,500,000 in 2009, and gradually improve their quality by reinforcing the syndromic approach o f STI, making it accessible at all health care units; (d) Gradually increase the percentage o f patients who receive prophylaxis and treatment o f opportunistic infections from 7, 924 in2004 to 165,000 in 2009 by: increasingthe ability o f health care units to diagnose AIDS and treat the associated opportunistic diseases; and increasing access to testing and counseling; infected(e)with HIV, and AIDS patients, by increasing the number o f beneficiaries of care given Incooperation with the CNCS, prolong andimprove the quality o flife o fpeople at home from 11,000 to 200,000, and improving coordination between the provision o f home care and the content o fmedical care given at the HealthUnits; ( f ) Increase" the number o f children aged 0 to 14 years who are receiving pediatric TARV (1,463 beneficiaries in 2005) by training the clinicians who now care for children and including inthe training courses other clinicians and the HDDpersonnel inall provinces; and women(g) Increase coverage in prevention o f HIV/AIDS and mitigation o f its effects on by: (i)increasing access to TARV by women, especially in rural areas; and (ii) expanding the means o f conveying information, and improving the quality o f information and messages addressed to boys and girls inrural areas.12 435. As regards leprosy, the sector's objective is to reduce the rate o f prevalence of leprosy from the current 2.7/10,000 residents to levels that do not constitute a public health problem, i.e., to <1/10,000 residents, and thus obtain WHO certification by 2009. To accomplish this, the geographic and functional coverage o f the program will have to be improved, and an active search conducted for all suspected cases in order that the individuals can be diagnosed and treated. 436. The main objective for tuberculosis i s to reduce the morbidity/mortality rates. One o f the major pillars o f the strategy i s an increase in the rate inthe success o f DOTS therapy from the current 76 percent to 83 percent in 2009. This means improving the geographic and lo This is a cumulative indicator; itrepresents all consultations, not only the initial ones. l1 Goals to be set after the study i s completed, because they do not appear inthe current PEN ITS/HIV/SIDA. l2 The principal indicators will be defined inthe context o fthe Gender Action Plan.  - 112- functional coverage o f the program, and gradually integrating health care for tuberculosis into primaryhealthcare services. 437. In addition to the priority types of intervention mentioned above to mitigate and gradually reduce the disastrous socioeconomic impact o f endemic, debilitating diseases, the strategy o f the health care sector is also oriented toward mitigating the effects o f epidemic diseases during emergency situations, and especially preventing the outbreak o f epidemics that afflict this country. In this context, activities will be directed principally to reinforcing integrated epidemiological surveillance inall the provinces, expanding laboratory capacity, and strengthening the ability o f all levels to respond promptly to emergencies. Furthermore, it will be essential to involve the community in risk management and promotion o f quality systems. Advocacy, by combining epidemiological information and geographic distribution o f water sources with the waters sector, i s vital if the investments inwater supply infrastructures are to be more effectively channeled. Improvement inthe Quality o f Services Provided 438. One o f the main strategic objectives o f the sector for the next few years i s to improve the quality o f services provided, in order to ensure that the SNS i s offering a variety o f good quality actions for the entire population, and helpingincrease user satisfaction. 439. In this context, the first specific objective identified is the improvement of the basic infrastructures at the existing Health Units, especially interms o f water and electric power. By 2009, it i s expected that all central and provincial hospitals, all rural hospitals, and 75 percent o f the Health Centers will have access to a water supply and electricity 24 hours a day. 440. The second specific objective refers to a reduction in in-hospital mortality from 7.5 percent to 6.5 percent, by taking a series o f steps, particularly increasing capacity for diagnosis and treatment, improving the organizational structure o f the Health Units by developing and implementing standards, strengthening biosafety measures, reinforcing the emergency room services, and increasing the capacity for scientific research. 441. Thirdly, the improvement inquality includes monitoring the quality o fwater suppliedto the public, especially in zones that are susceptible to major epidemics. The ability to analyze the water supplywill be enhanced. At this time, only the provincial capitals are able to do such testing, which will be expanded to about 60 districts by2009. 442. We should emphasize that improving the quality o f the services rendered requires adding personnel in order to strengthen and balance the health care teams throughout the country, at all levels. According to expectations about the expansion o f the health care network and the reinforcement o f technical skills at the Health Units, a total staff o f 27,189 i s forecast for 2010. This projection takes into consideration the losses due to HIV/AIDS in the coming years. Among other steps, it i s anticipated that 5,448 basic-level, intermediate, and specialized  - 113 - intermediate technical personnel will be appointed betweennow and 2009. Inthat same period, six courses will be held at ISCISA, and 124 specialized physicianswill be trained. 443. In order to ensure that teams are gender-balanced, activities will be conducted to encourage young people from rural areas to take courses inthe health field, andthe locations of test sites where entrance exams to these courses are given will be extendedto rural areas. These activities and the respective indicators will be described in the Gender Plan o f Action, to be completed in2006. ImprovingEfficiency inthe Use ofResources 444. The sector will continue its efforts to increase efficiency in the use o f the existing resources interms o f available funds, personnel, infrastructure, equipment, time, etc. The main objective i s to improve the use o f the funds within the sector so as to make additional resources available for the priority areas o fbattlingpoverty inthe health sector. 445. One o f the specific objectives identifiedi s the improvement in the degree o f execution of the funds made available to the sector13from the 62 percent recorded in2004, to 90 percent in2009. To that end, people at all levels must be trained, an integrated financial management system will needto be developed and updated, and the new instruments and procedures being developed as part o f the decentralization process led by the government will need to be implementedproperly and on a timely basis. 446. The second specific objective i s an increase in management skills at the Health Units and its support systems. This will be accomplished by offering courses for managers at various levels. 447. Lastly, and in order to improve the process o f decision-making based on evidence, the Information System for Health (Sistema de InformapTo pura a Satide - SIS) i s continually being improved as its plan is gradually implemented. Major areas on which this plan focuses are: a breakdown o f data by sex, along with the modernization and simplification o f the system inorder to permit more efficient, complete, and timely data collection. Once the planhas been fully implemented, levels 1to 4 o f the SIS should be operating and the quality o f the data will be assured. iii HIV/AIDS 448. Usingthe Second National Strategic Plan to Combat HIV/AIDS (PEN I1- 2005-09) as framework for operations, priority will be given to interventions in five specific areas where it l3 These represent funds from the State Budget, which includes internal finds, common finds, and some health sector assistanceprogramsthat are recorded inthat budget, including projects from banksand multi-andbilateral sources o f financing.  - 114- i s felt that results can be achieved to effectively halt the spread o f the epidemic. These areas are: Prevention, Stigma and Discrimination, Treatment, Mitigation o f Impact, and Coordination o fthe National Response. Prevention 449. Specific objectives: (a) 22percent o f HIV + women and newborns receive prophylaxis to prevent vertical transmission o f HIV; (b) 350,000 young people (age 10-24) are frequenting the SAAJ; (c) 60 percent o f young people (age 15-24) who are sexually active report they used a condom the last time they had sexual contact with a casual partner. Reduction in Stigma and Discrimination 450. Specific objective: 60 percent o f individuals age 15 to 49 express attitudes o f acceptance toward persons livingwith HIV/AIDS. Treatment 451. Specific objectives: (a) 165,000 o f HIV + adults who are eligible for anti-retroviral therapy are receiving it in2009, compared with 57,950 in2006; and (b) 50 percent o f HIV children who are eligible for anti-retroviral therapy are + receiving it. Mitigation of Impact 452. Specific objectives: same as(a) ratio for non-orphans; The ratio o f school attendance by children who have lost their mothers i s the the (b) The ratio o fprevalence o f low weight among orphan children is the same as the ratio for non-orphans; (c) 30 percent o f orphans and other vulnerable children live in families who are receiving outside assistance, free o f charge, incaring for these children.  - 115 - Coordination of the NationalResponse 453. Specific objectives: (a) 100 percent o f the State budget annually allocated to the CNCS will be disbursed to that council; and (b) All ministries and provincial bureaus will have received approval o f their sectoral plans o f action and budgets to combat HIV/AIDS in their sectors/provinces and will have implementedthose plans. Water and Sanitation 454. The water and sanitation program is intended to help reduce morbidity and mortality caused by waterborne diseases and poor sanitary conditions. It has two components: water supply and sanitation, and management of hydric resources. As cross-cutting actions; (i) institutional skills-building, including training the key people working in the sector; (ii) reinforcement of the process o f decentralization and de-concentration, including recruitment o f professionals who are qualified inthe various areas and at all levels, and: (iii) establishment o f reliable systems for monitoring and evaluating the supply o fwater and sanitation services. Water Supply and Sanitation 455. Specific objectives: a Increase coverage o f the water supplyto 53 percent, thereby serving about 4 million residents living inurban areas by 2009, and achieve 70 percent in2015, serving 5.4 millionpeople; 0 Increase coverage to 53 percent o f the population, thereby serving about 8 million residents who live inrural areasby 2009, and achieve 70 percent in2015, serving 11.8 millionpeople; Increase coverage o furbansanitation services to 40 percent, thereby serving about 3.8 millionpeople living inurbanand peri-urbanareas by 2009, and achieve 80 percent in 2015, serving6.1 million people; and Increase coverage o frural sanitation services to 37 percent, so as to serve about 6 millionpeople living inrural areas by 2009, and achieve 50 percent in2015, serving 8.4 millionpeople. Water Resources Management 456. Main objective: mitigate the effects o fdroughts.  - 116- 457. Specific objectives: relieve the shortage o f water used to supply the population, as well as for irrigation and small-scale livestock raising by building50 dams, or excavated reservoirs to capture rainwater. Flood Mitigation andPrevention 458. Mainobjective: mitigate the effects of floods. 459. Specific objectives: Reinforce water management programs interms o f a strategy for reducing vulnerability to flooding, by: (i)rehabilitating the network of hydro-meteorological stations; (iii)installing flood warning systems connected to a telemetric network and hydrological prediction models; (iii) mapping o f areas susceptible to flooding; and (iv) rehabilitationo f the Defense Dikes andRefuge Platforms; and Increase the capacity for storing the water, and regulate the Limpopo, Incomodai and Pungue rivers so that their hydric resources can be used, by conducting studies toward future constructionof large dams: BarragemMapai (on the Limpopo), Barragemde Bue Maria (on the Pungue), and prepare the detailed design for the Moamba Major dam (on the Incomodai). iv. Women and Social Action 460. The program includes five sub-areas: development o f the family, development o f women, persons with disabilities, children indifficult situations, and the elderly. Development ofthe Family 461. Main objectives: Promote family stability by encouraging and reinforcing the role o f the family inprotecting its members. 462. Specific objectives: 0 Sensitize the family to its role in protecting its members by training trainers and activists to engage in consciousness-raising activities; producing instruments that sensitize, and carrying out sensitization actions; 0 Strengthen and expand the number o f Family Counseling Centers and increase the availability o f shelters for protection o f victims of violence by publicizing the services available at those centers; by providing intake services, psychologicaVsocia1 care, and legal guidance; and by buildingcenters and houses; 0 Prepare and implement strategies andplans to prevent domestic violence andprotect the victims o f that violence by preparingand implementingstrategies and plans to prevent  - 117- domestic violence and protect victims o f that violence [repetition sic], and by training people inplanning and statistics; Strengthen the ability o f communities to protect families who are infected and affected by HIV/AIDS by producing instruments for use in sensitization, training activists, and conductingpublic information campaigns; and 0 Strengthen the actions taken to battle drug addiction by conducting sensitization activities, building centers for psychological and social assistance to drug addicts, and carrying out activities to re-integrate addicts into society. Development o fWomen 463. Main objective: Implement policies and an action plan conducive to reduction o f absolute poverty, particularly inrural areas, keepinginmindthe gender perspective. 464. Specific objective: Promotion o f associations and buildingtheir skills. Establishment o f strategic partnerships in the battle against poverty by energizing and facilitating the formation andjoining of associations by members o f the most vulnerable groups with a view to reducing poverty. Implementation o f income-generating projects and self-employment opportunities in order to assist female heads o f households whose economic capability i s fragile. Identification, selection, and establishment o f partnerships with organizations that are active in the fight against poverty. Persons with Disabilities 465. Main objective: ensure that persons with disabilities who are at risk o f being excluded from society will receive assistance. 466. Specific objectives: (i) provide services to impoverished persons with disabilities by implementing income-generating projects directed to those who are able to work; (i) set up [sic] community centers open to serve persons with disabilities in the community; (ii) out carry sensitization actions that target various sectors o f society in order to socially integrate persons with disabilities; (iii)provide vocational training in order to integrate persons with disabilities into the job market; (iv) provide a means o f compensation for persons with disabilities; (v) assist disabled persons who have no family support; (vi) build special schools for the visually impaired in all three regions o f the country; (vii) provide educational materials, including material in Braille, and train people in sign language; and (viii) propose legislation to require State agencies to have sign language interpreters available, andpromote inclusive education for the hearing-impaired. Children inDifficult Situations 467. Mainobjective: guarantee assistanceto children at risk o f social exclusion.  - 118 - 468. Specific objectives: (i) provide services to children who are in difficult situations by holding sessions for families and members o f society as a whole to sensitize them concerning the rights o f the child; (ii)locate the families o f separated children; (iii) reunite separated children with their families; (iv) assist children who have no family support; (v) provide technical, physical, and financial support for families who take in orphans and homeless children; and (vi) implement projects to provide preliminary vocational training andprojects to generate income for children, including minors involved inprostitution. The Elderlv 469. Main objective: guarantee social assistance to the elderly who are in situations o f absolute poverty. 470. Specific objectives: (i) provide services to the elderly o f both sexes who are living in absolute poverty by establishing open community centers; (ii) financially andphysically assist the elderlywho have no means o f support and are unable to work, who are living alone, or who are caring for others who are infected and affected by HIV/AIDS; and (iii). carry out activities to sensitize people to the rights o f elderly menand women, particularly regarding gender-based violence, and assist the elderlywho have no family support by receiving them at Social Units. V. Youth and Sports 471. This program includes two sub-areas: Strengthening o f associations o f young people, and encouraging massparticipation inphysical education and sports. Strengthening o f the Youth Associations Movement 472. Main objective: Make certain that membership in young people's associations i s the most effective way to organize the youth, anda means o f encouraging participative learning. 473. Specific objectives: 0 Strengthen the youth association movement by encouraging formation o f groups and associations based on common interests; 0 Promote development and training o f young leaders, directors, and event hosts with a view to strengthening the ability o fthe respective institutions to deal with youth-related issues; 0 Consolidate the CNJ [National Youth Council] as a forum for communication between young people and the State on the one hand, and as an instrument for coordinating the activities o f young people's associations, on the other;  - 119- Promote access by youth to training and the development o f entrepreneurial skills and business knowledge that can enable them to improve the administration o fjob-creating activities; and Develop Youth Resource Centers to assist with training and social integration o f youth through vocational training activities compatible with the acquisition o f the skills necessary to support young people as they enter the labor market or elect self- employment, andor inthe establishment o fmicroenterprises. Encouragingmass participationinphysical education and sports 474. Main objective: Make sports an integrating factor-part o f the "glue"in the development o f a society-by encouraging mass participation in sports and strengthening sports-related associations. 475. Specific objectives: 0 Support innovative approaches in education and training, carried out via local sports initiatives; Forge partnerships with institutions in civil society to promote and carry out physical and sports activities; 0 Improve access to the practice o f physical education and sports by creating and expanding opportunities for access to physical space, facilities, and sports infrastructures where the public can engage insports; 0 Develop initiatives intended to discover and enhance the value o f athletic talents that emerge duringschool andcommunity-based competitive sports; 0 Establish three Centers o f Excellence in Sports for the preparation o f new Young Talent; and 0 Create conditions for the free access and movement o f children, persons with disabilities, and the elderlyto andwithinbarrier-free sports facilities. vi. Housing 476. The program has two sub-areas: security in the right to use and exploit land; and housing durability. Securitv inthe Rightto Use and Exploit Land  - 120 - 477. Main objective: Implement urban development programs to ensure access to land that has an infrastructuresuitable for housing. 478. Specific objectives: reduce the number o f family units who lack access to a plot o f land for housing (from about 20 percent in 2004 to 15 percent in 2009) by supporting the implementation o f partial land use zoning plans; working out differences regarding the draft decree regulating urbanlanduse, submitting that draft for approval by the Council o fMinisters, andconductingcampaigns to studyandpublicize the legislation on landandhousing. Housing; Durability 479. Main objective: ensure the durability of housing by implementinghousing improvement programs. 480. Specific objective: promote access to appropriate housing by monitoring the training o f those who produce building materials in the communities. Also, provide technical support to the establishment o f resource centers for home-building, including training rural extension workers, and drafting andpublicizing the Housing Policy. 3. EconomicDevelopment Introduction 481. Sustainable economic development i s one o f the necessary conditions leading to a reduction in absolute poverty. The contribution o f this pillar i s intended to stimulate and promote the following: (d) [sic] An increase in per capita income from economic activity, with special emphasis on rural areas, thereby improving well-being, especially the well-being o f poor people; intermsAnfthe nation's economy, betweenrural and urbanareas from north to south of (e) increase inproductivity and intersectoral connections by a better integration, o this country; (f) Creation and improvement inthe quality o f employment and self-employment; (g) Development o f scientific and technological infrastructures and skills applied to national and rural productive activity; (h) Expansionof a strong, dynamic, competitive, and innovative private sector; (i) Developmentofamonetaryandfinancialsystemthat fulfills itsfunctionof energetically encouraging savings and channeling them into productive domestic investment;  - 121 - 0') Pursuit o f a more comprehensive tax reform in order to increase State assumption o f responsibility for the nation's institutions and citizens, thereby contributing to the expansion of the formal sector o fthe economy; and (k) Pursuit o f a gradual and mutually advantageous integration o f the nation's economy into regional and international markets so as to ensure the movement o f goods and services, and increase national production and supply o f quality products and services. 482. Economic development i s achieved by growth in a country's productive sectors- through the structural transformation o f agriculture, conversion o f the informal sector to a formal one, and vitality and entrepreneurial competitiveness on both the national and international market-especially those activities that make a significant contribution to job creation, exports, foreign exchange, and intersectoral coordination o f the Mozambican economy (example: agro-industry). 483. Prominent among the conditions necessary to achieve a degree o f sustainable economic development that contributes to a rapid reduction o fpoverty inMozambique are the following: (a) A stable macro-economic situation; (b) An institutional framework andbusiness environment favorable to investment; (c) A well-developed and comprehensive financial sector; (d) Good infrastructures interms o f energy, roads, andtransportation; (e) Modernized companies with technical and technological capabilities, staffed by Mozambican workers who have beentaught those skills; and (0 Conditions suited to effective marketing o f goods and services on domestic and internationalmarkets. 484. However, in the long run, economic development can be sustained only if it takes into consideration the impact of cross-cutting issues such as HIV/AIDS, gender, food and nutritional security, and the environment. Then it will be able to ensure a comprehensive and sustainable economic growth. 485. The State has a role in this context: to promote investment in economic and social infrastructures, and to provide basic services and an institutional system that creates an atmosphere favorable to and encouraging o f the expansion o f private Mozambican enterprise and private sector action and investment, particularly investment in small and medium-scale companies. This expands the possibilities for the necessary comprehensive economic growth, the development o f priority productive sectors and increased productivity--one that puts more emphasis on rural areas where most o f the poor population lives.  - 122 - 486. Actions to fwrther these system-related objectives can be taken through rigorous macroeconomic management, coupled with an effort to maintain appropriate levels o f "openness" for the country and its economy that would ensure the required flows o f technology, skills, information, financial resources, investments, and trade so that there i s effective integration with the world market. Actions mustbe taken to ensure that such resources are efficiently and effectively channeled into the productive sectors o f the economy. Vision and Challenges 487. The principal challenges for the economic development pillar inPARPA I1are: (a) Continue to guarantee macroeconomic stability in Mozambique by solid and stable macroeconomic management o fmonetary and fiscal variables; (b) Continue to monitor the State's financial management practices, including management o fpublic spending, revenue collection, and financial relationships with the cooperation partners; (c) Promote the consolidation and integration o f the domestic market by improving the basic infrastructures andtransportation systems, as well as improving the regulation o f commercial exchanges on the internal market; (d) Improve the business and labor climate in Mozambique in order to: (i) encourage domestic and foreign investment; (ii) facilitate formalization o f the economy; and (iii)contribute to creation o fhigh-qualityjobs; (e) Strengthen the regulation and supervision o f the financial system in order to minimize the risk o f financial crises; (f) Modernize and expand the financial system, by creating new instruments and expanding regional coverage, especially in the rural areas, in order to increase savings and the availability o fcredit; (g) Contribute to the creation o f a strong, dynamic, competitive, and innovative private sector through more complete integration o f the Mozambican economy (intersectoral links), modernization o f the productive base o f Mozambique, improving the technical and technological capabilities o f Mozambican companies and workers, and ensuring a continued supply o f energy and a better transportation infrastructure; (h) Promote the broadening o f the business base and development o f the priority sectors and activities; (i) Strengthen the family sector o f the economy, with emphasis on activities such as fanning and small-scale fishing, with heavy emphasis onrural parts ofthis country;  - 123 - 0') Continue to improve the degree to which Mozambique i s part o f the regional and international economies through continued development o f trade and investment relationships with other countries, a gradual and progressive liberalization o f international commercial exchanges, and heavier flows o f trade and investment with other countries; (k) Contribute to a comprehensive and sustainable economic and social development (environment, HIV/AIDS, food and nutritional security, rural development, etc.) that contributes to the general well-beingo f this country's citizens. ObjectivesandActions i. Macroeconomic management 488. The government will guarantee rigorous macroeconomic management by maintaining appropriate levels o f openness in the economy, thereby permitting the flows o f funds, technology, trade and investment necessary for maintenance o f stability in the financial sector. To that end, actions relating to the consolidation and reform o f public finance, monetary management, and an improved supervision o f banks, insurers, and the social security system become important. Tax Policy 489. Inthis area, the government will work to reform andincrease the efficiency of the tax administration with a view to gradually increasing the mobilization o f domestic funds as a percentage of GDP, with the idea of reducing external dependency. To that end, the following steps will be taken: (a) Domestic revenues will gradually be increased; (b) The tax system will be simplifiedand refined, and the tax basebroadened; (c) Reforms made indirect and indirect taxes will be consolidated; (d) Simplified taxation regimes will be reviewed, the effectiveness o f tax and investment incentives will be evaluated, and the process o f establishing tax courts will be continued; (e) Work on modernizing the tax administration will be continued, to make it an efficient tax-collection system and to curb fraud and tax evasion; (0 Legislation will be approved that simplifies the relationship between the tax administration and the taxpayers, making it easier for them to exercise their rights and receive the protection assuredthem;  - 124 - (g) Tax and customs courts will be effectively implemented; and (h) Legislation on local government finances will be refined and the conditions o f the agencies responsible for collection and control o f local government taxes will be improved. Monetary and Exchange Policy 490. Management o f monetary policy will be coordinated with fiscal andbudgetarypolicy so as to avoid excessive rises in the rate o f exchange, thereby assuring that real interest rates remain within levels that are consistent with proper functioning o f the economy, and to permit competitiveness. Inother words, the following are anticipated: (a) Maintenance o f inflation at low, stable levels; (b) Maintenanceo f a stable and competitive exchange rate that encourages exports; (c) Maintenance o f international reserves at levels appropriate to the fulfillment o f the country's international commitments. BudgetPolicy andPublic Finance Management Policy 491. This policy i s intended to reduce dependence on outside sources o f funds, and shrink fiscal deficits and the internal and external debt. The budgetary programming cycle will harmonize PARPA I1 with public spending. Therefore, the midterm action plan should influence the annual budget and translate it into financial plans. 492. Given the scarcity o f funds, a strategy aimed at their rational use by allocating public spendingto certainpriority areas willbe adopted. 493. Mozambique also relies on a flow o f concessional external funding over the medium and long term, and [envisions] gradually overcoming its dependence on foreign aid. 494. The efficient and effective use o f funds entails increased strengthening o f inspections and audits, systematic reviews ofpublic spending, and a thorough reform o fthe SISTAFE. The following steps must be taken inthis connection: (a) (i)Increase transparency inthe management and use of public funds; (ii) improve the system by which State works projects are paid for; and (3)adopt a transparent and efficient public procurement system; (b) (i) withdecentralizationofplanningandfinancebyestablishingcriteria Proceed for allocating financial resources to the districts; (ii) establish and harmonize rules and procedures for programming, executing, and evaluating public resources, and (iii)  - 125 - develop midterm and long-term budget programming tools and consolidate the short- term tools; (c) (i)Consolidate and expand the implementation o f the SISTAFE and (ii) the put e-SISTAFE into operation, and; (d) (i)Develop subsystems that furnish timely, reliable information on the budget and property status o f State agencies and institutions; (ii) implement an accounting system to control budgetary and property execution by the State; and (iii) increase the efficiency o f the internal control system so that it i s consistent with international practices. ii. Improving the BusinessEnvironment 495. A good business environment is essential for the development of the private sector, to promote and attract domestic and foreign investment-including small-scale investment-and to create incentives for formalizing the activities o f the informal sector. Administrative Barriers 496. The administrative barriers to the pursuit o f economic activities have been identifiedas the most serious constraint on private sector development. The Government of Mozambique will proceed with a review ofthe legal and institutional framework that will make it possible to simplifyand accelerate the licensing o fcommercial and industrialactivities and tourism, with a view to issuingthese licenses within the deadlines stipulated inthe law for each o fthese cases. It will also simplify and unify the inspections o f business activities and make them more effective. The following steps inthis connection are anticipated: (a) Simplify procedures for licensing commercial, industrial, and tourism-related activities, and other activities, inlight o fpublic sector reform; (b) Establish and consolidate one-stop service windows in all provinces, and give them hlllicensingpowers; (c) Computerize notarialrecords; (d) Review the regulation o f the inspection o f economic activities, with special emphasis onjoint inspections; (e) Create an attractive business environment inthe field o f tourism by adhering to systematized and sustainable tourist zoning rules, by updating and simplifylngtourism- related legislation; and  - 126 - (f) Expedite the processing o f tourism investment proposals in coordination with the Center for Investment Promotion (Centro de PromoGco de Investimentos - CPI), DINAGECA [National Directorate o f Geography and Land Registry] and the provincial tourist bureaus. The Job Market 497. Another aspect that i s important for the improvement o f the business environment and the resulting creation of new jobs i s the prevailing situation with respect to hiring, employing, and protecting workers in Mozambique. The government, labor unions, and employer associations play a vital role in the evaluation o f the approach to this problem if possible changes are to be made. This evaluation i s important as we attempt to make the labor market more flexible and competitive in order to help create jobs in the formal sector. Still, it i s important to consider social norms, cultural habit, and the historical past as we conduct that evaluation and propose such changes. 498. Following are components o f a review o f the conditions o f hiring, employment, and worker protection on the labor market inMozambique: (a) Review o f labor legislation and inspection practices, as well as [other] applicable legislation(Decree 32/98 andMinisterial Document 17/90); (b) Implementation o f a strategy to prevent labor conflicts, and establishment o f a commission and centers for labor mediation and arbitration as tools for alternative methods o fresolving labor disputes; and (c) Review o f social security legislation and reform and modernization of the legal and institutional framework o f social security, specifically the INSS [National Social Security Institute]. iii. Development of the Financial System 499. The main objective in this area is to develop a modem financial system that is comprehensive in social and geographical terms, that helps increase the monetization o f the nation's economy, and that meets the needs o f its growth by financing the activities of the productive sectors. Efforts on this subject will be concentrated primarilyinfour areas o f action: Regulation and Supervision ofthe Financial System 500. Objective: strengthenthe regulation and supervision o f the financial system in order to minimize the risk o f the occurrence o f financial crises by adoptingmeasures that are:  - 127 - Directed toward seeing that reports on the financial system adhere to international standards (International Accounting Standardshternational Financial Reporting Standards); Aimedat full compliance with the Base1Basic Principles; Intended to achieve effective control o f electronic transactions, particularly the regulationo f electronic financial products (credit and debit cards); and Oriented toward achieving better financial intermediation, including that which is directed toward small businesses and microenterprises. Modernization and Expansion 501. Objective: modernize and expandthe financial system by creating new instruments that are accessible to small and medium-size companies and family units and are more widely available interms o f geography, including rural areas. The main actions developed to guarantee fulfillment o fthis objective are: 0 Introduce new alternative credit instruments; 0 Increase access to micro-credit by publicizing it, or by training inspectors specialized in the supervision and monitoring o fthe activities o f micro-finance institutions; and 0 Increasingaccess to credit. National Savings 502. Objective: encourage national savings, including savings by low-income families, by takingthe following initiatives: 0 Study the feasibility o f offering deposit insurance; 0 Approve regulations for the Deposits Guarantee Fundfor micro-finance institutions that are subject to Bank o fMozambique supervision; and 0 Introduce new financial instruments and measures to increase access to credit and micro-credit. Insurance and Social Protection 503. Objective: improve the insurance and social protection sector by adopting programs intendedto perfect their regulatory framework, bytakingthe following actions:  - 128 - Reviewing the legal system applicable to the insurance business, including drafting regulations on private pension funds and a law on insurance contracts; review o f the financial guarantees legally required o f the insurance business, and review o f current legislation applicable to the insurance business; 0 Modernization o f the institutional framework o f the sector by preparing a plan for transition o f the insurance accounting and reporting system to conformity with International Financial Reporting Standards, as well as providing institutional training for the Office o f the Inspector General o f Insurance (Inspecpk Geral de Seguros - IGS); 0 Review o f social security legislation, and reform and modernization o f the legal and institutional framework o f social security, specifically the INSS. iv. Promoting the Creation of a Strong, Dynamic, Competitive, and Innovative Private Sector 504. The creation o f a strong, dynamic, competitive and innovative private sector is a necessary condition for achieving continued economic development that i s sustainable over the long-term, within a market economy. This condition must allow the Mozambican economy to gain a greater presence on international markets. Inthis context, the productive sectors require dynamic energy to become stronger and this depends on the availability and quality o f factors o fproduction, such as humancapital, technology, electricity and telecommunications, that have a direct impact on the international competitiveness of Mozambican enterprises. The following need to be done intwo areas: Technical and Vocational Training 505. Invest intechnical training o fworkers so as to improve this country's human capital and boost employment, through interventionsbythe Ministryo f Labor directed towards: Implement the Employment and Vocational Training strategy; Train microentrepreneurs and small businessmen in management o f businesses in various fields that would generate income in rural and urban areas; train unemployed persons invarious special skills; Promotevocational internships, traditional apprenticeship, andtraining o f artisans; Build new vocational training centers throughout the country, giving priority to provinces that have industrial and tourism potential; and  - 129 - 0 Strengthen the existing partnership between public and private training centers by improving the mechanisms o f technical assistance, monitoring, and follow-up o f the public andprivate training centers. Buildingthe Technical and Technological Skills o fCompanies 506. Improve the technical training at Mozambican companies as a way to improve production processes and Mozambican products, through initiatives to be carried out by the Ministry o f Industry and Commerce (MIC) along the lines o f 0 Formulation o f industrial property policy and implementation of policies as regards quality; 0 Promotion o fthe certification o fproductionprocesses and products; and 0 Restructuring and strengthening o f institutions responsible for certification o f quality standards and accreditation, includingmetrology. Production, Importation, and Distribution o f Electricity 507. The energy sector has a program to continue to guarantee increased access to electricity for both domestic use and business activities. To that end, actions will be taken to: expand and improve electricity production capacity and the national electric power grid; the distribution and marketing o f liquid fuels; the startup o f operations by the National Electricity Council (Conselho Nacional da Electricidade - CENELEC); the supply o f unleaded gasoline on a national scale; bringing to final fi-uition the energy projects identified in the electricity master plan; continued work to identify projects for electric power generation and new and renewable energy sources; and reforms inthe electric power industry. The program has four components: electrification, fuels, renewable energy, and intersectoral collaboration. Electrification 508. This country has a huge potential for production o f hydroelectric power. Nevertheless, the index o f access to electricity i s the lowest inthe region. 509. Main objectives: expand access to electricity for consumers, and especially for production, while curbing the environmental impact o f its use; improve the commercial and financial performance o f Electricidade de Moqambique so that revenues increase, as well as exports of electricity. 510. Principal actions: 0 Complete the electrification o f district seats and administrative posts with a view to replacing diesel generation with the national electric grid;  - 130- Promote electricity generation projects, specifically: the Mphanda Nkuwa hydroelectric project, the Moatize thermal power plant, and a thermal power plant fueled by natural gas; and 0 Promotion o f alternative sources o f electricity generation to use in electrification o f areas that are isolatedfrom the national grid. 511. Mozambique is dependent on imports o f liquid fuels, and the continued rise in their prices on the world market has had a negative impact on the lives o f people and on the economy as a whole. 512. Main objectives: reduce costs and dependency on imported fuels by-products; promote investment inexploration and productiono fpetroleum. 513. Principal actions: 0 Continue efforts to promote the expansion o f the liquid fuels distribution network, particularly for kerosene, unleaded gasoline, and liquefiedpetroleum gas; 0 Introduce natural gas as a fuel for transportation vehicles; 0 Reviewthe regulations for sales o ffuels indrums; and 0 License the "artisanal" vendors o fpetroleum products, and create means for storage and marketing. Renewable Energy. New Sources 514. The energy deficit creates an ever-increasing demand for alternative sources of renewable energy, such as solar, wind, and biomass. 515. Principal objectives: (i) the destruction o f the forest for the use of its biomass; (ii) curb increase access to the sustainable and improved use o f biomass fuels for cooking; and (iii) encourage the use o f environmentally friendly energy sources. 516. Principal actions: 0 Continue to extend the rural electrification program to new areas, giving priority to connecting additional districts to the national electric grid, with special attention to new and renewable sources o f energy; 0 Increase electricity supply to hospitals, community health clinics, and schools, based on alternative sources o f energy;  - 131 - 0 Take actions leadingto implementation o f electricity generating projects by diversifying alternative sources o f energy with a view to preserving the resources o f the biomass and encouraging recourse to alternative energy sources; and 0 Promote the use o f ovens and stoves that have been improvedwith a view to sustainable use o fbiomass energy. Intersectoral Cooperation: Industrv 517. As a major energy consumer, industry's viability and competitiveness depends on a stable supply o f energy sources. As in other countries, the government should give special attention to the needs o f this key sector by establishing new electricity tariffs, as well as tariffs for water and transportation for the productive sector so as to reduce the cost o f these factors o f production, thereby promoting the competitiveness o f domestic production. However, this kind o f service to companies must be managed efficiently in order to avoid granting unnecessary subsidies. Cross-cutting Topics 518. Interms ofcross-cutting topics, theMinistryofEnergywillintegratewomenintosector policies and programs, integrate environmental management components into all activities, and raise awareness o fthe HIV/AIDS pandemic among sector personnel. Telecommunications 519. Inanincreasinglyglobalizedandinterconnected informationeconomy andsociety, the availability and quality o f modem and geographically well-distributed telecommunications i s another key to guaranteeing the development o f a strong, dynamic, and competitive private sector. In this area, the government's overall objective under PARPA I1 i s to improve the country's telecommunications andpostal systems inorder to enhance business competitiveness, energize the economies o f the rural areas, and improve the living conditions o f its population. Inthe area of telecommunications, the government's main objective is universal access to telecommunications throughout the country, while with respect to postal services, the objective is a general improvementinservice. 520. Objective: to guarantee access to telecommunications services throughout the country by coordinating measures intended to: (i)restructure Telecomunicaq6es de Mocambique (TDM); (ii) introduce new services and technologies/ (CDMA); (iii) complete the backbone o f the telecommunications network; and (iv) set up the UniversalAccess Fund. 521. Objective: improve the quality of postal services by taking the following actions: (i) reform of the postal sector (ii) definition o f a policy for the postal sector; and (iii) restructuring andmodernizingEmpresa Correios deMoqambique.  - 132 - v. Promoting the Priority Sectors, Broadening the BusinessBase, and Creating Jobs 522. Achieving sustainable and comprehensive economic growth oriented toward job creation will depend on the development o f the country's productive base - both company and family businesses - especially in those activities that are considered as priorities in the agricultural, industrial, tourism, fisheries, and mining sectors. These are activities that contribute to the general objectives o f economic and social development and poverty reduction through generation o f income in family production units, creation o fjobs and opportunitiesfor self-employment, generation o f foreign exchange and revenues for the State, and the coordination and integration within the Mozambican economy. To support this process, the government intends to articulate, throughout the implementation o f PARPA 11, specific development policies for each o fthese sectors and productive activities. Agriculture Promam for the Sector 523. Actions planned for agriculture are targeted mainly at the government's objective o f reducing absolute poverty inthis country, since farming i s the predominant activity inthe rural areas where the highest indices o f absolute poverty are found. 524. The small family farm sector represents 99.65 percent o f the total number o f farm families, and 95.19 percent o f the total area under cultivation nationwide (MADER 2004a). This makes the sector the subject o f special attention in the agriculture development program for 2005-2009 (PROAGRI 11). One o f the eight principles guiding this sector's program refers to "greater attention to the rights and needs o f the families o f small agricultural producers in matters related to access to land, intermediate goods, and markets." (MADER 2004b). The objectives and actions listed below will take into particular consideration this broad sector o f agriculture in all phases o f the planning, implementation, monitoring and evaluation, and adjustment o fPARPA 11. 525. After more than a decade o f postwar economic recovery, the benefits of the rehabilitation of the productive fabric and the simple mobilization o f factors o f production are becoming exhausted. If the PARPA 11vision i s to become reality, the actions by the agrarian sector must be directed toward achieving higher productivity and intensifylng the vertical and horizontal links within the rural and national agricultural economy. 526. In the long run, the agricultural development program must be oriented toward: (i)assistance to small family farms duringtheir gradual transition to commercial operation; and (ii)assistance to commercial farmers, encouraging them to boost their production, productivity, and competitiveness, thus ensuring satisfaction o f basic needs and higher incomes in rural areas, coupled with the establishment o f agroindustries that will add value to farm products for both the domestic and export markets. Therefore, implementation o f the sectoral program (PROAGRI 11)will be essential to fulfillment ofPARPA I1objectives for agriculture.  - 133 - 527. Encouragement o f stronger links between the family farm sector and commercial farming will result not only inthe transfer o f technology, but in economic growth o f rural areas and, therefore, higher incomes for rural families. No less important is the process o f public sector reform now under way, particularly decentralization, which will require more interventions by public services inthe rural areas, thereby permitting more interaction between the State and the citizens, especially the fanners. 528. Development o f Public-Private Partnerships (PPP) should be adopted as strategy to ensure structural transformation in agriculture. The State can intervene in the PPP in several ways, specifically: (i) making investments that encourage agribusiness (help the family farm sector supply agroindustry with quality raw materials in the required quantities and at the proper times); (ii) transferringthe provision o f public services to the private sector; and (iii) taking part inprivate investment. These interventions will contribute to improved productivity, competitiveness, links among different activities, andproducer incomes. 529. Structural transformation o f agriculture also requires rural producers to be better organized. This will involve public investment to reinforce the fabric o f rural institutions and organizations. 530. Following are the areas that were considered to be o f hndamental importance to the achievement o f these objectives and the [success] o f agriculture under PARPA 11: (i) agrarian services: increase production and productivity, guarantee food security, raise income and improve competitiveness o f farmers; (ii)natural resource management: assure sustainable environmental management o f natural resources (land, forests, wildlife); and (iii) institutional development: reform the institutions, manage human resources, manage the financial and property aspects, conduct monitoring and evaluation, and implement a strategy to prevent and mitigate HIV/AIDS. Agrarian Services 531. Main objectives: the main objectives o f the sector as regards agrarian services are: (i) increase access to technology and to information on extension services; (ii)increase the availability and access to intermediate goods (seeds and agricultural chemicals); (iii)encourage construction and rehabilitation o f agrarian infrastructures; (iv) promote food security networks for the most vulnerable groups; (v) improve access to market information and to the markets themselves; (vi) promote development o f the private sector and o f production systems from the standpoint o f the value chain; and (vii) encourage producers to organize. 532. Principal actions: 0 Generate agrarian technologies that are adapted to the various zones and ecologies; 0 Publish and disseminate agrarian technologies;  - 134- e Conduct animal andplant health campaigns; e Improve the provision o fveterinary care; a Distribute plant materials and hold fairs at which intermediate goods are available; e Implementprograms for propagation o f improved seeds; a Buildandrehabilitatefisheries infrastructures andwater capture systems; e Implement programs to prevent and manage threats related to food and nutritional insecurity; e Promote a service that provides information on market opportunities; e Increase warehouse capacity andreduce post-harvest losses; e Establish a framework o f quality standards and sanitary and phytosanitary certification rules for a competitive market; e Promote expansion o fthe agricultural products processing industry (agribusiness); e Create alternative means o f agricultural financing (risk capital, crop insurance, guarantee hnd, lines o f credit for agribusiness); and e Assist and train organizations o fproducers. Natural Resource Management 533. Main objectives: (i) improve equitable access by communities and individuals to natural resources for sustainable use and management; (ii) promote a service that provides information on existing natural resources (land, forests, and wildlife); and (iii)improve oversight o f the exploitationof these resources. 534. Principal actions: e Consolidate andpublicize legislationon access to naturalresources; e Assist with establishment o f local andprivate Mozambicaninitiatives inthe rational and sustainable use ofnatural resources (concessions, communities); 0 Certify andor deed the rights to land to small and medium-scale farmers for income crops;  - 135 - Take inventory and map the occupation, use, and exploitation o f lands, and routinely update the national cartography; Oversee compliance with naturalresources legislation; Implementa strategy to manage the conflict betweenpeople andanimals; Prevent andcontrol uncontrolled burningo f lands; Develop appropriate technologies for the sustainable management of natural resources; and Develop forestry care systems to establish andenrich forest species and formations. Industry 535. The government's program for this area calls for creating conditions that promote the growth o f the industrial sector in order to increase its contribution to GDP, modernization o f the economy, job creation, and the interconnection with other productive sectors, especially with the primary sectors, thereby promoting the environmental sustainability of industrial activities. Inthis context, the activities considered to be priority are those that contribute to an expansion o f employment and the exploitation o f comparative advantages in production from Mozambique, such microenterprises, small and medium-scale businesses, and agroindustrial companies. 536. Objective: contribute to the enhancement of natural resources and an increase in national value-added as a means of increasing industry's contribution to GDP. Actions: Reformulate industrial policy and strategy, and formulate and implement sub-sector strategies (the foods industry, metals and machines, chemicals, graphics and packaging, textiles and apparel, lumber, fishery products processing); Formulate an industrial propertypolicy and implement a quality policy; Establishtariffs for electricity, water, and transportation for the productive sector. 537. Objective: take better advantage o fthis country's favorable location. Actions: Promote and develop industries along the north-south axis in zones that have growth potential, comparative advantages, and economies o f scale; and  -136 - 0 Establishtax-free zones, on the condition that an evaluation be made, inadvance, o f the net contribution to the national economy andto tax revenues. 538. Objective: contribute to the development o f M P M E (microenterprises, small and medium-scale businesses). Actions: 0 Preparation o f a diagnosis o f the status ofthe MPME; 0 Approval o f a strategy for MPME and creation and consolidation o f the functioning o f MPMEas aninstitution; and Establishment o f a liaison program within the MPME in order to improve integration with suppliers and customers. 539. Objective: promote maintenance o f a sustainable industry, using technology that promotes ecological balance. Actions: 0 Creation o f an institutional framework for promotion of environmentally healthy technologies; 0 Joint participation by the M I C and MICOA [Ministry for Coordination o f Environmental Affairs] in environmental audits of industrial establishments, provided this does not hamper the expansion o findustry. Fisheries 540. The fisheries sector makes an important contribution to equilibrium in Mozambique's balance o f payments, because it accounts for about 8 percent, in terms of volume, o f the country's exports. Inorder to capitalize on this role, the sector will continue to follow strategies aimed at ensuring permanent access to the international market for Mozambican fishery products, which requires taking action inthe realm of quality control by consolidating fisheries inspection services, improving competitiveness and diversifying the list o f domestic products available for export. Note that this country i s already pursuing commercial aquaculture for export. 541. Overfishing, pollution, habitat degradation, and natural disasters have impaired the ability o f coastal populations to meet their basic economic and social needs. This results in a reduction intheir food security and puts them at greater risk for disease. Therefore, the priority of PARPA I1inthe fisheries sector and the coastal and marine zone management program i s to ensure that appropriate measures are taken to promote environmental sustainability in these sectors through integrated management o f the marine and coastal environment, and o f fishery  - 137 - resources that protects important ecosystems (mangroves, coral reefs, and coastal and interior wetlands). Non-Industrial Fishing 542. Objective: the major objective o f the sector in this area i s to improve the standard o f living o f communities o f fishermen and to ensure that fisheries resources and aquaculture are exploited in a sustainable manner. The government's actions in this area are directed at: (i) creating andor rehabilitating infrastructures that support non-industrial fishing inthe principal fishing centers; (ii)increasing the supply of domestic fish to the internal market; (iii) encouraging the distribution and marketing o f fish and fishery inputs; and (iv) raising productionbythose who practice non-industrial aquaculture. 543. The following actions will achieve these objectives: 0 Strengthen the control and oversight o f fishery and aquaculture activities; 0 Support participationby non-industrial fishermen infisheries management; 0 Trainthe management committees and community fishery councils; 0 Move forward with regulations for non-industrial fishing and aquaculture; 0 Proceed to implement the master statistical plan for fisheries; 0 Strengthen institutional coordination inmanaging aquatic conservation areas; 0 Introduce, perfect, and publicize improved techniques for fishing, conservation, and processing the products o fnon-industrial fishing. Commercial Fishing 544. Objectives: the main objective for the commercial fishing sector i s improvement o f its competitiveness and sustainability, so as to increase its contribution to exports. 545. To achieve this objective, the following actions havebeen programmed: Improve the facilities that support commercial fishing; 0 Promote training o f technical and (land-based) managerial personnel for the fishing companies; 0 Complete the reform o fthe public administrationo f fisheries; 0 Strengthen the training inbasic specialty fields that are inshort supply inthe sector;  - 138 - Support the creation and certification o fMozambican brands for shrimp; 0 Establish a national market information system; 0 Expandthe areas dedicated to aquaculture (shrimp and algae); and 0 Encourage the addition o fvalue to fishery products. Tourism 546. The travel and tourism industry now ranks first, worldwide, in terms o f revenue generation. It i s the industry that employs the most people and an industry that has demonstrated an ability to adapt quickly to crises that have battered the world economy. Inthe past five years, investments in tourism in Mozambique have increased, as has the number o f people it employs. Conservation areas that represent a valuable heritage o f Mozambican society are being revitalized. Inthis context, we must emphasize that natural resources are the primary base o f support, and a main attraction, o ftourism inMozambique. 547. Main objective: Mozambique has a rich and diversified tourism potential that the government plans to take advantage o f during the next several years in order to develop and position this country as a world-class tourist destination, while at the same time ensuring an environmentally healthy exploitation o f the natural resources that form the basis of that potential. Implementation o f this main objective responds to two specific objectives, each o f which includes a set of actions to be taken. 548. Specific objective: improve marketing and partnerships by segmenting the issuing markets through: Implementation o f specific marketing campaigns; formation of a partnership to benefit from the 2010 FIFA World Cup to be hosted by the Republic o f South Africa; Creation o f effective partnerships with neighboring countries, moving towards regional integration; Rehabilitation andreorganizationo fthe country's conservation sites; Providing incentives for creation o f an attractive environment that offers true relaxation for tourists by transmitting an environment o f safety and hospitality along the tourist corridors. This role will be played by tourist information posts, as well as by a suitable tourist gateway to be set up shortly; Institutionalizationo f festivals designed to appeal to tourists, as a means o f diversifying our tourist attractions and lengthening the average stay by visitors inthis country;  - 139 - Promoting the active involvement o f local communities in the development o f tourism and inits benefits. 549. Specific objective: improve the provision o f products and services with a view to increasing the number o fjobs, hotel beds, raising earnings, and increasing the number o f small andmedium-scale businessesby incentives directedtoward: Promoting local tourist support businesses and local small and medium-scale companies in the tourism sector, including public co-financing of private business initiatives in tourism; Promoting the participative development o f conservation sites by establishing management councils and a growth in the volume o f revenues channeled to local communities inthe vicinity of those sites; Facilitating the entry o f tourists and those who would invest in this country (simplification o f procedures, better coordination among the various government agencies); Establishing an appropriate institutional framework by designing strategies for various kindso ftourism (hunting, cruises, rural, adventure, etc.); Assembling a tourism work force, giving priority to local workers; and Creating a national association o f the hotel and tourism industry, and adopting a code o f conduct. Mining 550. Objective: increase participationby the Mozambican business community inthe mining industryinorder to raise thenumber ofprivate operators inminingto 750 from the present 683, and boosting private investment in the sector by 40 percent, by taking actions to: (i)promote the conduct o f geological studies to evaluate the carboniferous potential in areas adjacent to the Moatize deposit and others situated in the provinces o f Tete, Niassa, Cab0 Delgado, and Manica; (ii) proceed with prospecting and research programs; and (iii) processing and install primarytransformationindustriesinthis country. 551. Objective: strengthen the legal and fiscal framework in order to attract private investment as a way o f increasing investment, tax revenues, and exports by the mining sector, by: (i)reinforcing the ability to oversee mining activities; (ii)publicizing basic geological information in this country; and (iii) consolidating the regulatory framework, and proceeding with the institutionalreform o fthis sector.  - 140 - 552. Objective: research and take inventory o f mineral resources by: (i) promoting research and prospecting (basic metals, precious metals, gold and diamonds, ornamental rocks, deposits o f industrial minerals, etc.); and (ii) promoting geological mapping (coal, the coastal zone). 553. Objective: increase the contribution by the small-scale and non-industrial mining sector to improving the life o fpopulation groups as a means o f increasing productivity andproduction efficiency by: (i)providing technical support to prospectors in improving their mining tools; and (ii) proceeding to support the promotion o f associations, cooperatives or companies, and other forms o f organization inthe extraction andprocessing o fminerals. 554. Objective: Guarantee environmentally sustainable exploitation o f the country's mineral resources by regulating and monitoring the environmental performance o f the mining industry. Promote a reduction inthe risk posed by heavy metals and those toxic to human health and the environment by training non-industrial miners inthe use of cleaner production methods. Inthis area, the government will: Continue to publicize and monitor the environmentalregulations applicable to mining; Proceed with inspection and oversight o f companies that operate in the geological/mining field; Proceed with actions to prevent water pollution in order to reduce the danger to health and protect the ecosystem, by mitigating the effects o f groundwater pollution and by establishing monitoring systems and effective legal frameworks; and Arranging for the geological and environmentalmapping o fthe coast o fMozambique. OilResearch 555. Objective: Maximize the value o f oil resources to benefit the whole society, by: Maintaining a transparent legal, regulatory, and contractual system to attract investments and foster judicious resource management, with emphasis on health, safety, and environmentalaspects; Establishing national sovereignty over part o f the continental shelf pursuant to the UNConventiononMaritime Law; 0 Systematically mapping and surveying resources based on Concession Agreements signed with qualified companies ina competitive andtransparent process; Ensuringrational and efficient use o fproductionand transportation infrastructures;  - 141- Ensuring the development of the domestic market for natural gas, condensed natural gas, and other oil products; 0 Ensuringthe education and training o f Mozambicans to participate in all stages o f oil operations, including the provisiono f goods and services to the oil sector; 0 Fostering regional cooperation with neighboring countries and ensuring the unitization and exploitation o f common resources in a coordinated manner; the development o f an efficient regional natural gas market, the use o f common technical standards, and the implementation of capacity and contingency measures throughout the region. Fostering Job Creation 556. Inadditiontotheprograms describedindetailintheprevioussections,theGovernment o f Mozambique will coordinate specific initiatives aimed atjob creation, as a means o fhelping generate income and reduce absolute poverty. 557. Intheareaofroadsandhighways, thegovernment willcontributeto anincreasein familyincome and employment bycreating thousands o f seasonalandpermanentjobs through incentives directed toward: 0 Giving priority to labor-intensive technology in maintenance of tertiary and neighborhoodroads; 0 Makingit mandatory that all unskilled labor be recruitedlocally; 0 Promoting the participation o fwomen inroads projects; 0 Designingspecific programs to use labor-intensivetechnology; and 0 Contributing to a reduction in the rates o f HIV/AIDS infection and discrimination against infected persons in the highway industry by inserting into all project contracts clauses relating to programs that combat HIV/AIDS. 558. Furthermore, the Ministry o f Labor will promote job creation in all sectors o f the economy by: 0 Promoting the employment dimension in all sectoral policies, programs, and projects, thereby assuring widespread adoption of a pro-employment economy in the battle against absolute poverty. 0 Makingits contributiontojob creation, especially through associations ofproducers;  - 142 - Follow-up and monitoring o f production activities undertaken by associations and cooperatives; 0 Identification o f employment opportunities for newly-graduated young people, and promotion o fthe hiring o f such candidates for employment; and e Gathering statistics on employment/unemployment that are bothreliable and current. vi. Improving the Integration of Mozambique into the Regional and International Economy 559. The integration o f the Mozambican economy into the international economy from standpoints o f trade and investment can contribute to the economic growth o f Mozambique by: (i)increasing availability o f less expensive goods and services, o f better quality, to the general public and the productive sectors; (ii)affording new business opportunities for domestic companies and in the context o f direct foreign investment; (iii) creating jobs; (iv) reinforcing the productive fabric; (v) facilitating technology transfers; and (vi) permitting better integration into regional and international chains o f value. 560. Despite these advantages, if the nation's institutions are not ready for integration into the world economy, Mozambique could suffer significant losses, as has been happeningwith local industry, especially the cashew industry. 561. In terms of globalization, the government's strategy, expressed through initiatives by the Ministry o f Industry and Commerce and the Bureau o f Customs for the PARPA I1 implementationperiod, will consist of: BuildingInstitutional Skills 562. Improving the government's institutional capability to respond to the challenge o f assuminga greater role inthe flows o fregional andinternationaltrade by: Developing strategies for exporting oilseeds andtropical fruits; Creating an inter-ministerial working group to ensure simplification o f the procedures adopted for export promotion and the attraction of strategic investments that make intensive use o f labor; Establishingan inter-institutional committee on foreign trade; Improving statistical information; and Developing the capabilities o f the institutions involved in international trade negotiations, and reinforcing the country's diplomatic missions in Brussels, Geneva, Washington, Beijing, and Brasilia.  - 143 - Trade Agreements 563, Maximize the benefits o f participation in bilateral and multilateral preferential trade agreements by: (i) concluding bilateral agreements for the free trade zone; (ii) identifying and facing up to the existing constraints in order to exploit the preferential access opportunities granted to Less Advanced Countries; (iii) evaluating the impact o f the 2010 SADC customs union; and (iv) evaluatingthe implications o fMozambique's accession to the SACU. Promotion o f Mozambiaue's Image inthe World 564. Objective: develop a strategy for attracting investment (foreign and domestic) that involves various sectors. Facilitating Trade 565. Objective: reduce the time required for customs clearance so that it conforms to international standards, by taking initiatives directed toward: 0 Implementation o f a Transit Module and adoption o f a Single Document (DU) that i s common within the Region; Use o f new information technologies to accelerate clearance o f goods by electronic transmission o f the Single Document and implementation o f an electronic container verification usingscanners; 0 Improving customs infrastructures by developing communications and information facilities and installing and operating a "Dry Port" at Ressano Garcia (Railway Terminal); and 0 Improvingthe technical andprofessional skills o f customs personnel. vii. Promoting the Integration and Consolidation of the Domestic Market 566. The consolidation andbetter internal coordination of the domestic market i s a key to the economic development of this country and its battle against poverty because it will permit: (i) better distribution o f the nation's products-agriculture, industrial, etc. and their integration into regional and international markets; (ii)effective circulation o f people, goods, and information; and (iii) by the public to a larger number o f goods and services o f better access quality. Inthis field, the government's action during the PARPA I1implementation period will be directed to four priority areas, namely: (i)transportation systems; (ii) highways; (iii) distribution andthe national commercial network; and (iv) regulation o f internal trade. Inthese areas, the government, acting through various responsible sectoral institutions, namely the ministrieso ftransportation and communications, public works andhousing, and commerce and industrywill (promote): [sic]  - 144- Transportation Systems Highway Transportation 567. Objectives: improve the efficiency and access to highway transportation; organize the highway transportation system; facilitate connections among cities andprovinces; guarantee the operational sustainability and safety o f highways; and ensure that Mozambican operators are able to compete on an equal footing with operators from the neighboring countries, by taking initiatives in the following areas: (i)creation o f the Highway Fund; (ii) renovation and expansion o f the fleet; (iii) revision of the Automotive Transportation Regulations (RTA), including a strategy for organizing semi-collective transportation; (iv) approval o f the Regulations for Passenger Transportation Terminals; (v) revision o f the policy regarding technical assistance to the country's automobiles; and (vi) monitoring the implementation o f bilateral agreements. Water Transportation 568. Objective: revitalize and improve maritime, river, and lake transportation by taking actions to: (i)liberalize the entry and operation o f private parties in cabotage and crossings; (ii) dredge the ports o f Beira and Quelimane; (iii)purchase vessels for the crossings at Maputo/Catembe, InhambaneMaxixe, Beira/Buzi/Machanga and Quelimane/Ricamba; (iv) rehabilitate the bridges at Catembe, Maputo, and Inhambane; (v) build a shipyard at Inhambane; and (vi) make certain that the management o f all principal and secondary ports in this country is efficient and effective. Ports and Railways 569. Contribute to the development o f economic and social activities along the Beira Corridor and foster market competition by: (i) rehabilitating the Sena line; (ii) maximizing the use of the port o f Beira; and (iii) establishing the regulatory authority for ports and railroads. Highways and Bridges 570. Construction and Rehabilitation: Continue the rehabilitation and maintenance o f highways and bridges inorder to improve trafficability and reduce vehicle operating costs. The north-south axis i s the national priority. 571. Expressed in detail, these actions include: (i)continuing the rehabilitation o f the principal routes, specifically, the N1 Maputo-Pemba, N14 Lichinga-Pemba, N13 Lichinga- Cuamba; the N103 Cuamba-Nampevo, and others; (ii) continue the programs for rehabilitating tertiary roads; (iii) build bridges over the Zambeze, Rovuma, Meluli, Lugela, Guija, and Moamba rivers; (iv) finish the rehabilitation of the Ilha de Moqambique bridge; and (v) keep the entire highway network inreasonably good condition.  - 145 - 572. Building Institutional Skills: Ensure an efficient and sustainable response by the government to the development problems o f the sector by: (i)continuing the institutional reforms program; and (ii) continuingthe program of improving institutional skills. MarketingSystem 573. Promote the development o f the commercial network, the agricultural marketing network, and the stabilization o f the consumer goods market by initiatives directed toward: (i) financial assistance to development o f the commercial network; (ii)implementing the Agricultural Marketing Strategy (Estratkgia de Comercializaqio Agricola - ECA 11); (iii) disseminating information about markets and prices, and implementing actions aimed at gradual accommodation o fthe informal sector within the formal economy. Regulationo f Internal Trade 574. Improve the conditions o f competition on the domestic market in order to curb unfair competition and reduce losses stemming from the presence o f monopolistic markets by: (i) formulating and implementing policies and legislation relating to competition; and (ii)training the staff o fthe Ministryo fIndustryand Commerceinthis subject.  - 146- I X FACTORSDETERMININGSUCCESSINIMPLEMENTATION 1. Ownership/Participationby the Various Actors 575. The function o f the State, as the principal apparatus o f the social organization o f Mozambique, i s to direct the drafting and implementation o f the PARPA I1 strategy in cooperation with civil society and representatives o f the interested international community. The PARPA exercise must observe the linkage between the development vision, government priorities, the structure o f the state budget, and actions to be taken to reduce absolute poverty during the present government's term of office. At the same time, an exercise in listening to opinions and discussing problems and ways to solve them takes place, expanded to include the different organizations inMozambican society. 576. The success o f the active participation by the key actors mentioned in the preceding paragraph in the preparation, execution, monitoring, evaluation, and adjustment o f its action plan depends on: (a) Close coordination among the parties involved in all phases o f the action plan, leading to reaching consensuses or including different points o fview; (b) Clear definition o f the functions and assigned duties o f each party involved so that the process is effective and efficient, avoiding the costs associated with redundancy andthe sacrifice o f actions not carried out; (c) Clear commitment by the parties involved incarrying out the actionplan; and (d) Actual allocation o f the resources planned for the defined activities. 577. Inorder to achieve satisfactory coordination, participation, and ownership by all actors and the general public, the government i s developing a PARPA I1Communications Strategy in order to expand a culture o f participation by citizens, institutions in organized civil society, children and youth, and others who are involved, but with emphasis on key actors and key levels o f authority: the national and provincial Poverty Observatories, and the Institutions for Community Participation and Consultation (Instituiqces de Participaqio e Consultas Comunitdrias - PCC). And so, in 2006 the Communications Strategy will be completed and implemented,alongwith its actionplan for the PARPAI1period, 2006-2009. These documents will be a vital complement to the implementation, monitoring, andevaluationo fPARPA 11. 578. The following paragraphs describe the roles o fthe key actors inthe PARPAI1process. 579. The Provinces assist with the preparation o f PARPA I1by reporting on the Provincial Poverty Observatories (see Annex 1). 580. The role o f the International Community will be mentioned later, inthe subsection on cooperation partners.  - 147 - 581. The function o f the Private Sector is to make the economy grow. This is accomplished by creating jobs, increasing productivity, adopting innovative technology, raising the both the incomes o f workers and the returns for owners o f the capital, and by integrating the different sectors o f the domestic and international economy. 582. The success o fthe private sector dependson the functioning o f a market economy. This depends to a large extent on the efforts and merits o fthe private sector itself. 583. However, there are some universally-recognized flaws in the market economy system. For those cases, the State has a duty to assist with the allocation o f resources. Whenthe State i s able to do so, it performs this function. But in the presence o f a State whose resources are scanty, there is an extremely high risk that it will not fulfill its function o f compensating for marketflaws. InMozambique, we are faced with a State whose capabilities are very limited. 584. PARPA I1 offers a solution for these inadequacies o f the State, through a careful selection o fpriorities. 585. The market economy system is still in the developmental stages in Mozambique. However, there are serious weaknesses at the institutional level, as i s true o f the judicial system. The private and public sectors need to find pragmatic and imaginative intermediate solutions while classic judicial institutions are beingdeveloped. 586. Most o f the private sector in Mozambique is engaged in agriculture and other rural activities. Much o f this sector operates at the subsistence level. In other words, it i s integrated into the market, but only rudimentarily, and i s vulnerable. To make things worse, Mozambican private enterprise faces international competition from farmers inthe more developed countries who practice mechanized farming, have modem technology, and benefit from high subsidies from their governments. 587. PARPA I1also addresses agricultural policy, and in this regard a close coordination among organizations o f farmers (such as UNAC), the State, and the cooperation partners i s important. Obviously the cooperation feel pressure from competing interests, because although they contribute to international development, they grant heavy subsidiesto the farmers in their own countries, It i s up to Mozambicans to do a better job o f coordinating their policies and actions so as to take advantage o f the opportunities offeredby the cooperation partners. 588. The urban private sector heads the organization task through the Confederation o f Economic Associations (ConfederapYo das Associap5es Econdmicas- CTA). The principal vehicle for coordination between the CTA and the State i s the Annual Private Sector Conference at which the matrices o fproblems andthe proposed solutions are discussed 589. The function o f Workers' Organizations is to ensure that some o f the gains in productivity benefit this social group. They also work to see that jobs are protected when  - 148 - companies file for bankruptcy or undergo a change in ownership. This function is important to our society. 590. Non-Governmental Organizations are proliferating in Mozambique as the presence o f the community o f cooperation partners has expanded. In Mozambique, NGOs should complement the role o f the State. These organizations are important to the action plan for reducing absolute poverty. 591. The Religious Confessions (churches) have an extremely important role in alleviating poverty. InMozambique, they also have the job of re-establishing the social fabric interms of its moral dimension and to assist with pacification after the various social upheavals and the war that ended in 1992. They have traditionally played an important role in education and health in this country. For PARPA I,the churches proposed that the government create a permanent, stable, and regular channel as a sounding board, one that would have the authority to solve problems. 592. YoungPeople and Students can work through their organizations to help prepare and comment on PARPA 11. 593. The media have publicized the meetings held to discuss PARPA, and have also publishededitorials on the subject. The function of these information dissemination agents is important. Fuller advantage needs to be taken of them while PARPA I1i s being drafted, and later during the monitoring and evaluation process. And so the PARPA I1 (2006-2009) Communications Strategy emphasizes the crucial role o f this group in getting out the message and mobilizing the general public so that it will realize the extent o fPARPA 11's impact on the country's development. 594. The Mozambican People contribute to the success o f PARPA I1through the various mechanisms for participation, including the Provincial Poverty Observatories and the various organizations o f civil society. 2. Political Leadership 595. The leaders o f the Mozambican government have led the process o f drafting PARPA I1 and explicitly stated the objective of reducing absolute poverty. This commitment i s important to ensure the quality o f the actionplanandthe success of its implementation. 596. In addition to a direct commitment to prepare and execute PARPA 11, it is important that there be exemplary behavior and attitudes toward laws, social norms, and public property--from the very top o f the hierarchy o f government agencies, down to the lowest echelons. 597. Since absolute poverty affects more than half the Mozambican population nationwide, political leaders -from the various opposition parties can play a constructive role by: (i) supporting PARPA I1on those points with which they agree; and (ii) offering constructive by  - 149 - criticism and suggesting viable alternatives on those points on which they disagree with PARPA 11. 3. CoordinationamongSectors, IncludingCross-CuttingIssues 598. Coordination among ministries and other units o f the government occurs at several political and technical levels: (i)in working meetings called for by law, in programs o f activities, and in resolution o f unanticipated and urgent issues; (ii)in the drafting and execution, in the broad sense, o f the government's five-year program, o f PARPA, of the sectoral and provincial strategic plans, on the medium-term fiscal scenario, in the Economic andSocial Plan, inthe State budget, and other tools o fthe government function. 599. The intersectoral coordination that occurs through working meetings starts with the Council o f Ministers and goes down through the different specialized councils, such as the Economic Council, topic-specific meetings in which members o f the Council o f Ministers participate-such as the ones on HIV/AIDS or the SADC--to multiple meetings at the technical level. 600. The intersectoral coordination that occurs with respect to programs, plans, strategies, budgets and other instruments adheres to the priorities defined by the government, and the availability o f funds. Cross-cutting issues are addressed in the various global, sectoral, and specific plans and strategies. 601. The PARPA I1Working Groups are ideal forums for working out agreements among the government, civil society, and the cooperation partners. Thesegroups must stay active and involved in the battle against absolute poverty. 4. The Government'sPositionon Assistance from the CooperationPartners 602. Given the major importance o f external funding in bringing the PARPA actions to fruition, it i s essential that there be a clear, comprehensive strategy in the minds o f both the government and the cooperation partners that will make it possible to direct, systematically organize, and re-stabilize the flows o f foreign aid into Mozambique. This i s because coordination among government agencies with respect to the management and subsequent channelingo f these funds to priority areas is so important. It is inthis spirit that the government i s committed to drafting the National CooperationPolicy. 603. The government intendsto develop an external assistancesystem that is ledbythe State and reflects its priorities, in a coherent and comprehensive partnership with the cooperation partners. This will minimize the macroeconomic distortions associated with sizeable inflows o f outside financing. And so in this section o f this document, we will establish the general principles that will form the basis o f the government's strategy toward foreign aid. (However, this section does not address the public debt; that topic will be included in "Mozambique's Debt Strategy.")  - 150 - Analysis of theSituation 604. Inthe context of its efforts to reduce absolute poverty inMozambique, the government receives financial and technical assistance from various cooperation partners. In recent years, external assistance has financed about half o f the State Budget and, on average, about 15 percent o f GDP (average for the five-year period 2000-2004, General Account o f the State. Figures may have been underestimated due to exclusion o f off-budget funds). This confirms World Bank figures (2005b) that show that, worldwide, Mozambique i s one o f the countries that i s most dependent on foreign aid. (See Table 6.10 - Aid Dependency, in World Development Indicators 2005, publishedbythe World Bank.) 605. Substantial assistance from cooperation partners is significant in the war against poverty. However, such a highpercentage of external financing has two important (and closely linked) implications. First, there are macroeconomic implications. For example because of the high level o f dependency, any shock inthe volume or form o f external financing could create substantial macroeconomic volatility (see Chapter V, part "c"). 606. Second, there are some significant challenges with respect to the quaZity/effectiveness of foreign aid (i)a risk that government institutions may become more accountable to the cooperation partners than to the Mozambican people; (ii)an absence o f transparency due to sources o f financing outside the State Budget (see "Estudo sobre os `Off-Budgets' no Sector Sazide, Cabral et al. 2005); (iii) coordination and systematization o f flows o f information among the cooperation partners, the MINEC [Ministry o f Foreign Affairs and Cooperation], the recipient sectors, and other State agencies (in the areas o f planning and finance); (iv) the administrative burden represented by the variety o f information requested, the differing methods o f evaluation, and other demands made by the cooperation partners; (v) the emergence o f distortions within the public sector owing to a proliferation o f projects; and (vi) coordination and appropriationo ftechnical assistance/training. 607. Examples o f best practices exist and can be studied in order to improve the effectiveness o f aid to Mozambique. For example, the system o f direct support to the State Budget with Program Aid Partnerships (Parceiros de Apoio Programdtico - PAP) has improved the quality and ownership o f foreign aid, based on a Memorandum o f Understanding used as guidance, according to the declaration by the 2005 Paris High-Level Forum for Developing Countries and Donors (www.aidharmonization.orq). This declaration laid down specific goals for improving the quality o f external aid in terms o f predictability, ownership, alignment, harmonization, and preferred modes. Initiatives now under way by the cooperation partners and aligned with these principles are welcome, and the government expects further progress in this regard. In order to more actively lead the coordination o f external assistance, the government will approve anewNational CooperationPolicy, andhas implemented reforms inthe management ofpublic finances.  - 151- General Principles 608. In light o f global initiatives to increase the flows o f foreign funds to developing countries, it will be especially important to ensure that flows to Mozambique are channeled into priority areas that have sufficient institutional capacity, or, alternatively, to bolster that capacity. Therefore, the focus o f foreign aid needs to take into consideration the ability to manage macroeconomic impacts and the need to improve the quality/effectiveness o f external assistance. 609. In order to consolidate the macroeconomic management of the impacts of outside financing, the government proposes adoption o f the following general principles: (i) increase the predictability o f aid flows; (ii) gradually reduce dependence on external financing by achieving economic growth and improving internal revenues; (iii) increase both the quality and distribution o f information on foreign aid; and (iv) improve the understanding o f the interactions between foreign aid and the macro-economyinthe Mozambican context. 610. As regards improvement o f the quality/effectiveness o f external assistance, a structure oriented around the following general principles i s proposed: (i)increase governmental "ownership"; (ii) ensure the sustainability o f the activities financed through external aid; (iii) strengthen the alignment and harmonization o f foreign aid with government priorities and procedures; (iv) improve accountability, both o f the government and o f the cooperation partners; and (v) proceed with reforms ina comprehensive andparticipatory manner. Strategic Objectives 611. Based on the general principles outlined above and with the support o f the cooperation partners, the following objectives are proposed as a means o f enhancing the positive impact o f the foreign aid: 0 Formulation and approval o f the National Cooperation Policy that will govern cooperation activities. 0 Inorder to facilitate achievement ofthe goals o fthe Five-Year Plan and PARPA 11, the government appeals to the cooperation partners to implement their respective commitments, as included in the Paris Declaration. For example, they would decentralize both the authority and the responsibility for fidfilling established concrete goals to the local offices o f the cooperation partners. These commitments include a pledgethat 85 percent o f foreign aid would be included inthe State Budget(ie., that no more than 15 percent would be off-budget), and that at least 75 percent would be disbursed on a timely basis. For its part, the government will continue its efforts to strengthen its management o f public finances, inparticular as regards integration o f off- budget funds into the State Budget, in the reports on execution, and in the General Account o f the State (Le., inboth budgetary programming andinfinancial execution).  - 152- 0 Improve the quality and frequency o f data available on external financing, and improve its circulationbetween government agencies and the relevant cooperation partners. 0 Improve the understandingof the impacts on the Mozambican economy by taking into account aid flows as they are expected to occur inthe mediumand longterm. 0 The government will establish a strategy for handlingthe allocation o f funds to sectors inways consistent with its priorities. Inparticular, the government will examine: (i) the ideal balance between the weight o f domestic funds (tax revenues) and external aid as regards State expenditures; (ii) volume o f financing that is desirable and can be the absorbed-total and by sector-keeping in mind the capacity for absorption and the influence o f the State on the economy; and (iii) ideal balance among types of the financing; 0 Although the idealbalance among types o f assistancewill probably contain a mixture o f these, the government would like the proportion o f the funds that is channeled through the Public Treasury Accounts, mainly through direct support o f the State Budget (known internationally as General Budget Support, or "GBS"), to be increased, because o f its consistency with the general principles defined above. At present, within the context o f direct support to the State Budget, it would be preferable if all PAPSwould adopt multi-year commitments (i.e., commitments for at least three years, on a rolling basis) inorder to facilitate the programming o f government activities (within the CFMP [Medium-Term Fiscal Framework], for example). 0 Develop ajoint strategy that is well integrated with the government's priorities in order to coordinate external assistance that is channeled through programs in support o f the development o f technical assistance and the institutional capacity o f the government in a coherent manner (based on an initiative already in progress and supported and coordinated by the cooperation partners). 612. To facilitate the implementation o f these objectives, an Action Plan will be established in 2006 (led by the government, in cooperation with the cooperation partners) that takes into account the initiatives already under way and the principles, priorities, and objectives laid down inthis document (particularly, the importance o f implementingthe Paris Declaration) inorder to improve the quality of assistance being given by all cooperation partners. For example, consideration could be givento introducing a Comprehensive Memorandum o f Understanding, to be signed by all the cooperation partners andby the government.  - 153 - X MONITORINGANDEVALUATION 1. Introduction 613. The objective o f Monitoring and Evaluation i s to create conditions under which the government can maintain consistency in the implementation o f the objectives and actions planned for PARPA. The flow o f information generated by the Monitoring and Evaluation system makes it possible to make informed and timely decisions about potential changes in poverty reduction programs, and to identify and capitalize on initiatives that, according to the data generated bythe system, appear to be encouraging performances that mightbe multiplied. 614. Monitoring and Evaluation is also a means o f keeping not only the government, but others involved in the war against poverty-particularly organizations in civil society, the Mozambican legislature, and the cooperation partners-informed o f the progress made in implementing PARPA, as well as the difficulties encountered. 615. Inshort, it is ameans o fmonitoring effectiveness andefficiency, evaluating impact, and determining how public policies influence the reduction o f poverty among the different social categories. It also captures and analyzes changes in the forms and types o f poverty, including the development o f inequalities. 616. As an integral part o f the planningcycle, Monitoring and Evaluation creates a capacity for accountability in order to rationalize strategies and actions aimed at reducing poverty. Therefore, it i s an indispensable instrument on which to base policy decisions that lead to the effective and efficient implementation o f PARPA and its results through a system o f pertinent controls and with very close ties to the planning process. The PARPA I1 (2006-2009) Communications Strategy will determine in what way the information obtained through the mechanism of Monitoring and Evaluation will be disseminated among the various parties involved inthe battle to reduce poverty and to the general public. 617. In this context, and following a situational analysis of the current Monitoring and Evaluation system, it has become necessary to adjust certain elements o f the PARPA Monitoring and Evaluation strategy and system, to identify weaknesses in the intersectoral approach, and to respond to new realities such as decentralization and participatory Monitoring andEvaluationso as to respond hllyto its prerogatives. 618. It is important to note that, as regards participatory Monitoring and Evaluation during the PARPA Iperiod, a huge leap forward was made because o f the dynamic launched by the Poverty Observatories at both the central and provincial levels. It institutionalized the active participation of organizations in civil society in the Monitoring and Evaluation of PARPA. In the past two years, significant progress has also beenmade in the Poverty Analyses. Reports have been produced about the various dimensions o f poverty, such as the determinants and profiles o f poverty, the emergence o f inequalities, and comparisons between the two most recent Surveys ofFamilyUnits (IAF 1996-97, and IAF2002-03).  -154- 619. At the same time, improvements were made in integrating the indicators from the Performance Assessment Framework (PAF) into the Economic and Social Plan(PES), the State Budget (OE), and the Medium-TermFiscal Scenario (CFMP), using the Consolidated Process Methodology (Metodologia do Process0 Unico) and strengthening the PES Balance Sheet (BdPES). The 2004 PES and OE are fine representatives o f the improvement that has taken place in linkages among central government actions, the final product, and the results to be achieved with a view to implementation o fPARPA. 620. Indeed, the BdPES, the government's chief tool for Monitoringand Evaluation, is now a better reflection o f the implementation o f the PES, although it still needs to hmish more analytical information with respect to public policy implementation. As regards the qualitative monitoring portion, an approach directed toward complementarity with other kinds o f monitoring has been defined, specifically, triangulation o f quantitative and qualitative data. 2. Challenges facing Monitoring and Evaluation 621. The following challenges have been identified for the strategy, organization, and management o fPARPAI1Monitoring and Evaluation: (a) Improving the existing Monitoring and Evaluation tools (PESBdPES) and implementing tools that are still missing (example: the Annual Impact Report - (Relatdrio deAvaliaqZo deImpacto MI);- (b) Strengthening and clarifying efficient and effective linkages among levels and types o f Monitoring and Evaluation, and between Monitoring and Evaluation and planning; strengtheningthe analyticalability to relate public policycauses and effects. (c) Aligning the decentralization process with participatory requirements surrounding the national and provincial Poverty Observatories and the new local participatory institutions created under the Local Agencies Law (Lei das OrgZos Locais); (d) Establishing an organizational structure for Monitoring and Evaluation that can ensure cooperation and an effective flow o f information. And, in this context, it i s crucial to improve intersectoral coordination so that high-quality disaggregated data can be generated the proper time frame for planning purposes; (e) Creating and developing skills centered on training programs that address all sectors and levels o fplanning and Monitoring and Evaluation; and (0 Making certain that the indicators selected for the Monitoring and Evaluation reflect the priorities of the government, expressed innational policies (the Government Program, PARPA,PES, and sectoral plans). Such policies must determine the indicators within the operational and strategic matrices, which must be used for the various Monitoring and Evaluation exercises (BdPES, PAF, MDGs).  - 155 - 3. FundamentalPrinciplesof MonitoringandEvaluation 622. Five fundamental principles form the foundation for the Monitoring and Evaluation strategy for PARPA I1: (a) Consistent and appropriate integration o f the monitoring o f PARPA into the existing mechanisms for monitoring government programs; (b) Differentiation between results indicators that evaluate the achievement o f the specific definedobjectives, on the one hand, and theproduct indicators that measure the degree o f fulfillment o fthe activities conducted, on the other; (c) The combination o f the quantitative and qualitative monitoring and their implications as to methods o f collecting information and the institutional partnerships formed for the purpose; (d) Use o f PARPA monitoring as a mechanism for continued review o f the goals and programs, thereby maintaining the central strategic objectives; and (e) Theparticipatory approach inthe Monitoring and Evaluationprocess, especially as regards collection o f data down to the base, the consensus as to the object to be monitored, and the analysis and dissemination o f the results to the public. 4. MechanismsandInstrumentsof MonitoringandEvaluation 623. This document presents two levels o f matrices: (i) "Strategic Matrix," featuring a the concise selection of key indicators for Monitoring and Evaluation o f the government's priorities and strategic objectives (presented in its entirety at the end o f the document) and (ii) the Operational Matrices, which include the objectives, the results indicators, the product/execution indicators, actions, and goals. The Strategic Matrix is derived from the OperationalMatrices and shouldbe usedinconjunctionwith them. 624. As a means o f rationalizing the Monitoring and Evaluation system, the government is integrating the monitoring o f PARPA into mechanisms already in effect, thereby avoiding duplication, or multiplication, o f reports and preventing placing an excessive burden on the institutions involved. It i s pursuingthe objective o f fully integrating PARPA I1into the overall program o f activities o fthe Executive Branch andthe various sectors involved. 625. Just as in PARPA I,the monitoring strategy maintains the situation in which the activities and programs o f the sectors within PARPA I1are be reflected in the Economic and Social Plan, whose annual balance sheet (BdPES) constitutes the principal monitoring tool for all government activities. However, structural changes are beingmade inthe preparation o f the PESBdPES in order to make the PES a more results-oriented planning instrument and, at the same time, to make the BdPES a more effective monitoring tool. Inthis regard, a "Perfomance Chart" has been created, structured as follows:  - 156 - Table 20: PerformanceChart Pillar Area Sub-area Strategic Objective ImpactIndicator Specific Results Base Goal Accomplishments Responsible Product/Execution Base Goal Goal Goal Goal Objective Indicator 2005 2009 (Actions) Entity Indicator [source 2005 2006 2007 2008 2009 [source of of verification] verification] 626. This "Performance Chart" will be the basis for central and provincial planning, thus facilitating procedures inthe prioritizing o f activities and follow-up on the principal indicators. The indicators selected inthe Strategic Matrix will become the basis for the new Performance Evaluation Framework (PAF) so as to focus attention on the strategic objectives and priorities o f the government inthe annual Monitoring and Evaluation. 627. The relationship between the Strategic Matrix and the PAF used by the Program Aid Partnerships (PAP) has not yet been finalized. However, it i s anticipated that the PAF will be made up o f a subgroup o f the indicators in the Strategic Matrix. The PAF will continue to include no more than 50 key government indicators, arranged by pillar, and determined in discussions with the PAPS. 628. Inthis same context, the Monitoring and Evaluationstrategy introduces anew typology o f indicators-namely, results indicators andproduct (or execution) indicators. It i s mandatory that all sectors systematically distinguish between results (outcome) indicators and product (output) indicators. These are the two principal Monitoring and Evaluation indicators o f PARPA (Table 20). 629. Results indicators serve to assess the extent to which the objectives defined by the sectors were attained. Therefore, these indicators must be designed as a function o f the objectives. 630. Product (or execution) indicators measure the degree o f execution o f the actions that were defined by the sectors as the means o f achieving their respective sectoral objectives that were included inthe Strategic Matrices. 631. Inthe context o fthe State Budget, the Monitoring and Evaluation of PARPA I1retains the Report on Execution o f the State Budget (Relatdrio de Execuqio do OrCamentodo Estado) with the same fbnctions it assumed under PARPA I,i.e., the monitoring of the allocation o f  - 157 - resources at boththe budgetaryprogramming andbudgetaryexecution levels, with emphasis on the priorities established inPARPA and summedup inits OperationalMatrix. 632. In the context of evaluation, PARPA I1 introduces a new approach, centered on triangulation of quantitative information (IAF, QUIBB [Questionnaire on Basic Indicators o f Well-Being], and I D S [Demographic and Health Survey]) and information generated from qualitative studies (sociological and anthropological), analyses of poverty, and a new instrument: the Annual Impact Report -RAI. 633. It is proposed that one RAIbeproducedduringthe PARPA I1cycle, preferably one year prior to the next revision o f the PARPA, for submission to the national and provincial Poverty Observatories. The RAI should not only be the instrument for cross-checking all the sources and types o f relevant information, but an analytical and explanatory document in terms o f addressing the issue o f attribution (relationships between causes andeffects). 634. The MIwill be one o f the key documents for orientation o f fbture revisions o f the PARPA and will make use o f all available documents, such as information on the evolution o f the indicators laid out in the MPD objectives, relevant evaluations and studies of poverty, including those prepared by institutions outside the MPD, provided they meet scientific standards o f quality and/or were presented at a Poverty Observatory. Note: Production o f the RAImustbe adjusted to the existing capacities under the MPD. 5. Monitoringand Evaluation and Participation 635. Participation i s essential for increasing the efficiency and effectiveness o f public policies oriented toward poverty reduction and for fostering national "ownership" o f the poverty reduction strategy by democratizing the decision-making process. The need for participation in planning and in Monitoring and Evaluation increases proportionately as one moves down the administrative-political hierarchy, since the problems arise at the local level where, therefore, the effectiveness of political intervention needs to be recognized and monitoredjointly with the beneficiary population. 636. The participatory Monitoring and Evaluation in PARPA I1 is organized around the following principles: (i) transparency; (ii) mutual reciprocal accountability; and(iii) democratic dialog. The PARPA I1 (2006-2009) Communications Strategy must, therefore, ensure accessibility o f the information in formats suited to the different target groups, so that these principles can be established. 637. All actors and authorities that make up the Monitoring and Evaluation system must respect and institutionalize these principles. The system i s organized around the central and provincial Poverty Observatories and the Community Participation and Consultation Institutions that operate at the level o f the districts, administrative posts, and localities.  - 158 - 638. The Poverty Observatory is a participatory forum that includes the government, civil society, and the cooperation partners.It i s designed to monitor and evaluate the performance o f the actions carried out by public and private entities inthe war against poverty. Its prerogatives and responsibilities in terms o f active participation by civil society and other partners in PARPA I1Monitoring andEvaluationare defined inthe respective terms o freference. 639. As for the districtAoca1 Participatory Institutions, their functions in the context o f the PARPA I1Monitoring and Evaluation and public policies are definedby the local government agencies law. 6. The Positionof MonitoringandEvaluationinthe InstitutionalFrameworkandits Responsibilities 640. At the central level, the Monitoring and Evaluation activities will be taken over by different directorates in the MPD, namely the National Directorate o f Planning (DirecCio Nacional de PlaniJicaCio) and the Directorate o f Policy Studies and Analysis (DirecGio de Estudos e Analises de Politicas), in coordination with the National Statistics Institute (INE), particularly inthe conduct o f quantitative surveys such as the IAF and QUIBB (Table 21). 641. The Technical Secretariat o f the Poverty Observatory will be positioned around these two M P D directorates. We emphasize here the need to set up an effective internal communications and cooperation network among all authorities and actors that have different responsibilities for the Monitoring and Evaluation o fPARPA. 642. Satisfactory operational performance o f the PARPA I1 Monitoring and Evaluation system also depends on the existence o f a network for communications and cooperation with the different actors, namely the national directorates and sectoral provincial directorates-- including, first o f all, the Provincial Directorates o f Planning and Finance--as well as with other partners. Civil society in general can play an important role by encouraging debate on public policies, based on the Monitoring and Evaluation results presented at the central and provincial Poverty Observatories. 643. At the provincial level, the Provincial Directorates of Planning and Finance continue to play their key roles in terms o f relations with the sectors and civil society. In each DPPF a Technical Secretariat o f the Poverty Observatory (STOP) will be created to handleliaison with the partners. They will work with the Poverty Observatories, as well as local participatory institutions. In coordination with the sectors and partners, the STOPSwill be responsible for determiningthe needfor impact studies, which it must appropriately accommodate. 644. At the district level, management o f the Monitoring and Evaluation system is the responsibility o f the local government, working with the Community Participation and Consultation Institutions, in which the quality, utility, sustainability, and accessibility o f the goods and services produced under the programs enrolled in PARPA I1will be monitored and evaluated.  - 159- 645. Communications networks are vital to the success of Monitoring and Evaluation. These will also be addressed by the PARPA I1 (2006-2009) Communications Strategy, so as to maximize the flows of information among the different parties involved and within the government itself. Table 21: Products of Monitoring and Evaluation; Distribution of Responsibilities; Frequency Monitoring Products Responsible Institutions Submission of Products Frequency NationalPESbalancesheet MPD MPDMF SectorsMinistriesand Economic Council DirectoratesProvincial CouncilofMinisters Annual Governmentsfor supply of Assemblyofthe Republic inputs NationalPoverty Observatory ProvincialPES balance DirectoratesProvincial MPDMF sheet Governments, coordinated ProvincialNationalPoverty Annual by the DPPF Observatory Reportson Executionofthe MFMPD MPDMF State Budget DAFofthe Economic Council Annual SectorsMinistries CouncilofMinisters DPPF Assembly of the Republic CentralPovertyObservatory EvaluationProducts ResponsibleInstitutions SubmissionofProducts Frequency Annual Impact Report (RAI) MPD Nationaland Provincial 1 year prior to PARPA Poverty Observatories revision Survey of Family Frequencyand subject Units(IAF) matterwill vary inthe case Questionnaireon of the QUIBB (every 2 BasicIndicatorsof INENPDMISAU INEMPD Years) Well-Being(QUIBB) NationalPoverty Demographic& Observatory IAF/IDS (every 5 years) HealthSurvey  - 160- Bibliography [two pages, not translated]  - 161- Annex 1: Summary of the Provincial Poverty Observatories As part o f the preparation o f PARPA 11, provincial Poverty Observatories were held. These are consultation fora in which representatives o f provincial government, organizations from civil society, and the cooperation partners participate. Following is a summary o f the principal intentions submitted by the provinces and are considered as crucial to poverty reduction. They are arranged according to the three strategic pillars: Governance, Human Capital, and Economic Development, as well as inline with the cross-cutting topics. I n theArea of Governance a Improve the quality o fpublic services; a Reduce bureaucracy and increase transparency inpublic management; a Invest inthe priority infrastructures for the administrativeposts; a Provide incentives to persuade qualified staff to migrate to the districts; a Consolidate planningat the district level, and make the district consultative councils operational; a Ensurethat the different sensitivities o ftheprovinces are includedinthe monitoring of PARPA11; a Facilitate procedures that enable local communities to acquire their own legal status (personalidadejuridica) so that they can enjoy the benefits o f exploitation o fnatural resources; a Ensurethat the CivilRegistry services will function correctly so that all citizens may benefit from the facilities that registration and an IdentityDocument afford the bearer; a Define the indicators pertainingto returno fresponsibilitiesand transfer o f assigned duties and specific areas o f authority to the local agencies of the State; a Publicize legislation (laws andregulations) so that rural communities become aware o f them and are forewarned about conflicts and violations, particularly the Forestry and Wildlife Law, and the Lands Law; and Establishmechanisms for consultation so that actions and decisions by the local agencies o f the State and by other institutions do not conflict with the established legal framework.  - 162 - I n theArea of Human Capital Expandthe healthcare services network, accompanied byinvestments in infrastructures, especially for rural areas; Promote the training and recycling o fhealth care technical personnel Organize roving medical teams to provide periodic assistance to rural communities that are far from healthcenters that are staffed with physicians; Achieve better coordination o f actions between the various thematic interventions, such as HIV/AIDS, malaria, and others o f interest to the general public; Expandthe school system to areas inthe interior o fthe districts; Improve access, and quality, o fbasic education and technical vocational education, while observing gender equilibrium; Expand vocational training to all district seats, orientedtoward specific employment andself-employment opportunities; Provide incentives so that outstanding female teachers are assigned to rural areas, in order to encourage girls to stay inschool; Expand the water supply infrastructure inthe districts, using sustainable and durable, yet low-cost, water supply systems, with emphasis on dams; Improve management o f the sources o fthe water supply (training and oversight) and create additional management committees, where none exist; and Set up factories at the district level to produce improved latrines, thus improving sanitation. I n theArea of EconomicDevelopment Increase the availability o f agricultural credit, and help small andmedium-scale farmers andinvestors inagroindustry; Create rural credit institutions inorder to develop the concept o fmicro-finance and encourage savings, as a means o f energizing the rural economy; Reactivate paralyzed agroindustry facilities (processing plants) as a means of creating jobs and wealth; supply them from local production o fraw materials;  - 163 - Reactivate the network o frural commerce so that rural residents can access goods and services, and to facilitate the distribution o fproduction; Promote tourism inrural areas, based on natural resources and local cultures. Take advantage o fthe potential offeredbythe parks (synergetic tourism) and beaches, because o ftourism's impact onjob creation; Disseminate information on agricultural markets at the provincial level; Buildsmall irrigation systems anddams inorder to boost farmproductionandhelp conserve water for periods o f drought; Expandthe role o fagricultural marketing, focusing specifically on the establishment of agricultural fairs, thereby eliminating transportation costs that cut into the income of rural workers; fairs will also help market farm surpluses; Foster strategic crops that are drought-resistant, as a means o f ensuringfood security; Expandthe geographical coverage ofthe transportation and communications network, focusing particularly on productive areas; Build andrehabilitateroads inorder to ensure that people and goods can travel, with particular emphasis on roads leading to areas o fpotential agricultural development; and Electrify rural areas, givingpriority to the administrativeposts and the expansion o f the fuels supply network to rural communities. I n theArea of Cross-Cutting Topics Carry out disaster-mitigation activities (re floods and droughts); Broadcast advance warnings anddisaster prevention notices; Prioritize not only the prevention o f HIV/AIDS,but also the treatment o f infected persons, thus ensuringtreatment with anti-retrovirals; Prioritize the dissemination o f methods to prevent HIV/AIDS, usingthe local languages o fthe communities; Assist the elderly, intheir roles as caretaker o f children orphaned byH N / A I D S for whom they are often responsible after the deaths o f the parents; Encourage the vocational training o f childrenwho are indifficult situations, instructing them incarpentry, metal work, and construction;  - 164- 0 Award micro-credit to widows for income-generating projects inthe districts; 0 Carry out actions to buildthe skills o f institutions and communities with respect to the design and implementation o fprograms to support vulnerable groups; 0 Publicize technologies for low-cost productiono f energy as a means o freducing the intensive use o f forests, and curbing deforestation; and 0 Promoteprotectiono f the environment by the same people who exploit it and by local communities; inother words, prioritize sustainable environmental management by creatingmechanisms for environmentalinspection.  - 165 - Annex 2: LinkagesBetweenthe PARPAI1Pillarsandthe MillenniumDevelopmentGoals (MDG) Pillars/Topics o f MILLENNIUMDEVELOPMENT PARPA I1 GOALS Macroeconomics Goal 1:Eradicate extreme poverty and Poverty and hunger Macro-economic growth Goal 1: cut in halfthe percentage of and stability people living in absolutepoverty, by 2015 Analysis o f poverty, and Goal 2: cut in halfthe percentage of monitoring systems people who suferfiom hunger, by 2015 Management o f public finance Governance Goal 8: Develop a global partnership Public sector reform for development Decentralization Goal 12: continue to develop an open, Reform o fthe legal and multilateral commercial andPnancia1 justice systems system based on rules, that is predictable and non-discriminatoiy, including a commitment to good governance, to development, and to the reduction ofpoverty at both national and international levels. Economic Goal 1: Eradicate extreme poverty Development and hunger The financial sector Goal 1: cut in halfthe percentage of 0 Theprivate sector people living in absolutepoverty, by 2015  - 166- 0 Agriculture and rural Goal 2: cut in halfthe percentage of development people who suferfiom hunger, by 2015 Infrastructures: roads, telecommunications, Goal 8: Developa global partnership ports, and railways for development 0 Infrastructures: energy Goal 16: in cooperation with the developing countries,formulate and implement strategies thatprovide young people with dign$ed andproductive employment. Goal 18: in cooperation with theprivate sector, make the benefits of new technologies accessible, particularly information and communications technology HumanCapital Goal2: Achieve universalprimary Health education Education Goal 3: by 2015, ensure that all boys and Water and sanitation girls complete thefull cycle ofprimary education Goal4: Reducechildmortality Goal 5: reduce by two-thirds the mortality rate among children under agefive, by 2015 Goal5: Improvematernalhealth Goal 6: reduce the ratio of maternal mortality by three-fourths, by 2015 Goal6: Combat HIV/AIDS, malaria,and otherdiseases Goal 8: By 2015, have halted and begun the reversal of the incidence of malaria and other serious diseases.  - 167 - Cross-Cutting Goal3: Promotegender equality and Topics empower women HIV/AIDS Goal 4: eliminate the gender disparity Gender in primaly and secondary education, The environment preferably by 2005 [sic], and at all Science and technology levels of instruction no later than 2015 Food and nutritional security Goal6: CombatHIV/AIDS,malaria, 0 Reductioninthe impact and other diseases ofnatural disasters Goal 7: By 2015, have halted and begun 0 De-mining the reversal of the spread of HIV/AIDS 0 Rural development Goal7: Ensureenvironmental sustainability Goal 9: integrate theprinciples of sustainable development into the nation's policies andprograms, and reverse the loss of environmental resources Goal 10: cut in halJ; by 2015, the percentage ofpeople who lack access to potable water and to sanitation Goal 1I:by 2020, have achieved a significant improvement in the standard of living of the residents of deteriorated neighborhoods. 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