The State of Local Economic Development in Mozambique

Transcription

1 The State of Local Economic Development in Mozambique Development Policy & Practice Prepared by Petra Penninkhoff for United Nations Capital Development Fund September 21,

2 Development Policy & Practice, Amsterdam September 21, Mauritskade AD Amsterdam Telephone +31 (0) Fax +31 (0)

3 LED in Mozambique: Its successes and challenges i ABBREVIATIONS AAA AC ADPP AKF AMODER Acção Agrária Alemã (International NGO) Community Leader/Authority Humana Povo para Povo (International NGO) Aga Khan Foundation Mozambican Association for Rural Development (Associação Moçambicana de Desenvolvimento Rural) ANE National Roads Administration (Agência Nacional de Estradas ) AR ART ATLAS CARE CBO CEPKA CIDEL CIRESP CLUSA Concern CPI CTA DCI DDADR DNDR DNPO DNPOT DPADR DPCAA National Assembly (Assembleia da República) Linking territorial and thematic networks for human development (Articulação de Redes Territoriais e Temáticas para o Desenvolvimento Humano) UNCDF financial administration system (Sistema de Administração Financeira do UNCDF) International NGO Community based Organization Local NGO Inter-ministerial Commission for LED (Comissão interministerial de DEL) Inter-ministerial Council for Public Sector Reform (Conselho Interministerial da Reforma do Sector Público) Cooperative League of the United States of America International NGO Investment Promotion Centre (Centro de Promoção de Investimentos) Confederation of Business Associations Development Cooperation Ireland District Directorate of Agriculture and Rural Development (Direcção Distrital de Agricultura e Desenvolvimento Rural) National Directorate for Rural Development (Direcção Nacional de Desenvolvimento Rural) National Directorate for Planning and budgeting (Direcção Nacional do Plano) National Directorate of Territorial Planning (Direcção Nacional do Planeamento Territorial)) Provincial Directorate of Agriculture and Rural Development (Direcção Provincial de Agricultura e Desenvolvimento Rural) Provincial Directorate for the Co-ordination of Environmental Affairs (Direcção Provincial de Coordenação da Acção Ambiental)

4 LED in Mozambique: Its successes and challenges ii DPMCAS DPO DPPF DPS FARE FDC FDD FDL GoM GTZ IC-LED IDPPE IDWG IFAPA IPCC JICA LED LIG LOLE M&E MADER MAE MF MIC MIS MPD NGO NORAD Provincial Directorate of Education for Women and the coordination of Social Action (Direcção Provincial da Mulher e Coordenação da Acção Social) Department of Planning and Budgeting (Departamento do Plano e Orçamento) Provincial Directorate of Planning and Financing (Direcção Provincial do Plano e Finanças) Provincial Directorate of Health (Direcção Provincial de Saúde) Fundo de apoio a reabilitação da económica Fundação para o Desenvolvimento da Comunidade District Development Fund (Fundo Distrital de Desenvolvimento) Local Development Fund (Fundo de Desenvolvimento Local) Government of Mozambique German Development Cooperation Intersectoral Commission for LED Institute for the development of small scale fisheries (Instituto de Desenvolvimento Pesqueiro de Pequena Escala Informal Donor Working Group on Decentralisation Training Institute for Public and Municipal Administration (Instituto de Formação em Administração Pública e Municipal) Participative Institutions for Community Consultation (Instituições de Consulta Comunitária Participativa) Japan International Cooperation Agency Local Economic Development Local Investment Grant Law on Local State Agencies (Lei dos Órgãos Locais do Estado) Monitoring and Evaluation Ministry of Agriculture and Rural Development (Ministério da Agricultura e Desenvolvimento Rural) Ministry of State Administration (Ministério da Administração Estatal) Ministry of Finance (Ministério de Finanças) Ministry of Industry and Trade (Ministério da Indústria e Comércio) Monitoring and Information System Ministry of Planning and Development (Ministério de Plano e Desenvolvimento) Non-Governmental Organization Norwegian Agency for Development Co-operation

5 LED in Mozambique: Its successes and challenges iii OIIL OLIPA OMM OPHAVELA ORAM PA PAFR PAMA PAPDEL PARPA PDD PEDD PESOD PDHL PPFD (1) PPFD (2) PROCADIS PROCIPP PRODER PRODEZA SALAMA SDAE SIFAP SIL SISRORE Budget for Local Investments and Initiatives (Orçamento de Investimento e Iniciativas Locais) Mozambican NGO Mozambican Women s Organisation (Organização da Mulher Moçambicana) Local NGO of savings and loans (ONG local de poupanças de grupo e empréstimos) Mozambican NGO Administrative Post (Posto Administrativo) Rural Finance Support Programme (Programa de apoio às finanças rurais) Support programme for agricultural markets (Programa de Apoio aos Mercados Agrícolas) Support programme for the LED process (Programa de Apoio ao Processo do Desenvolvimento Económico Local) Programme for the Reduction of Absolute Poverty (Plano de Acção para a Redução da Pobreza Absoluta) (In other countries known as PRSP Poverty Reduction Strategy Paper) District Development Plan (Plano Distrital de Desenvolvimento) District Strategic Development Plan (Plano Estratégicos Distritais de Desenvolvimento) District Social and Economic Plan and budget (Plano Social e Económico e Orçamento Distrital) Human Development Programme at the Local Level (Programa de Desenvolvimento Humano a Nível Local) Decentralised Planning and Financing Programme (Programa de Planificação e Finanças Descentralizadas District Planning and Financing Project (Projecto de Planificação e Finanças Distrital) Decentralisation and district capacity building programme )Programa de Descentralização e Capitação Distrital) Training programme for Public and Private sector organisations (Programa de Formação das Instituições Públicas e Privadas Rural Development Programme (Programa de Desenvolvimento Rural) Support project for Rural Development in Zambezia Province (Projecto de Apoio ao Desenvolvimento Rural na Província da Zambézia) Local NGO District Service for Economic Activities (Serviço Distrital de Actividades Económicas) Public Administration Training System (Sistema de Formação em Administração Pública) Local Investment Fund (Fundo de Investimento Local) District registry, control and earnings System (Sistema de registo controlo e receitas)

6 LED in Mozambique: Its successes and challenges iv SISTAFE SNV UNAC UTRAFE UTRESP State Administration Financial System (Financeiro de Administração Estatal) Dutch NGO União Nacional de Camponeses de Moçambique Technical Unit for the Reform of State Finances (Unidade Técnica de Reforma das Finanças dos Estado) Technical Unit for Public Sector Reform (Unidade Técnica de Reforma do Sector Público)

7 LED in Mozambique: Its successes and challenges v Table of Contents ABBREVIATIONS I 1. GENERAL INTRODUCTION Local Economic Development Research methods Report structure 2 2. BACKGROUND TO LED IN MOZAMBIQUE Historic overview The LED concept in Mozambique Enabling environments and legislation 6 Poverty reduction strategy 7 Decentralisation policies 7 Business Environment Strategy 9 3. LED IN PRACTICE Local Economic Development Agencies CSR/CSI LED elements in non-led focussed projects 15 PPFD District Planning and Financing Projects, 16 PAMA, the Agricultural Markets Support Programme 17 Rural Markets Promotion Programme 17 Competitiveness and Private Sector Development 17 PAFR Rural Finance Support Programme 17 BIFSMO Building an Inclusive Financial sector in Mozambique 18 PROCADIS Decentralisation and district capacity building 18 PRODEZA Support project for Rural Development in Zambezia Province Categorizing LED interventions Mozambique s medium and long term planning for LED 20 Stakeholder identified weaknesses 20 Meeting the challenges KEY LED STAKEHOLDERS Coordinating bodies 23 National Directorate for the Promotion of Rural Development (DNPDR) 23 Inter-ministerial Commission for LED 23

8 LED in Mozambique: Its successes and challenges vi Provincial and district level coordinating bodies 24 Municipalities Competency Centres 25 The Catholic University of Mozambique-UCM 25 The Higher Institute for Public Administration (ISAP) Local, National and International NGOs Financial institutes Funding agencies Networks and business associations CONCLUSIONS To LED or not to LED On LEDAs On impact Strengths, weaknesses, opportunities and threats ROMMENDATIONS LED implementation in Mozambique Recommendations of general (LEDNA) interest REFERENCES AND BIBLIOGRAPHY 37 5DEV/09.112/PP September

9 LED Country report Mozambique 1 1. GENERAL INTRODUCTION 1.1 Local Economic Development Often, technical cooperation and national government interventions and approaches are fragmented and therefore do not lead to the expected sustainable development. The Local Economic Development (LED) approach was developed in the mid 1990s to overcome this fragmentation; it is an integrated approach to combat poverty and achieve sustainable human development through socioeconomic development and employment creation. Core principles include: partnership arrangements between main stakeholders in a specific geographical area ( including all economic actors small and micro enterprises, corporate businesses, financing and credit organisations, civil society and the public sector at provincial and local as well as national levels active in the geographic area) Development of LED strategies and plans; Joint design and implementation of a common development strategy, based on investments towards improving local economic potentials and comparative advantages. In spite of the intentions and the theoretical soundness of the approach, the LED approach has faced various implementation constraints and like earlier approaches and most development interventions, has not always produced the anticipated results. By documenting LED initiatives in various African countries lessons may be drawn from which others can learn. One major issue to keep in mind is that many LED-like programmes have been and are being implemented that do not go through the established LED structures or use LED terminology but do bear the LED characteristics. The challenge is to identify and analyse such initiatives and determine: Whether these programmes and projects could be grouped under the basic LED classification (Box 1); To what extent these programmes have contributed to overall sustainable local economic development in the regions and localities where they are operational; Which lessons can be learned to further enhance future, more specific LED efforts. Box 1 LED Elements: Disaggregated national projects which are not entirely territorially focussed but aim at economic growth or employment creation LED projects: Projects which are not necessarily based on a strategy but are territorially based locally owned and implemented LED strategies: LED strategies with LED projects based on a territory, locally designed, owned managed and implemented Source LEDNA, 2008

10 LED Country report Mozambique 2 Over the past two years UNCDF sponsored a number of LED country studies in the context of its contributions to the LED Network for Africa. This Mozambique country study is one of them. The document describes how the LED approach was introduced and evolved in Mozambique, analyses the planning and implementation processes and puts forward recommendations for enhanced efficacy and efficiency. LEDNA aims to provide an African LED forum, exchange knowledge and as such assist in strengthening LED. 1.2 Research methods All information presented in this document is based on the study of documents available on the internet, received directly from one of the Local Economic Development Agencies and a few telephonic and electronic discussions with key informants in Mozambique. The Internet was searched on LED, rural development, sustainable development, poverty reduction, poverty alleviation, decentralisation, public-private partnerships, spatial planning, participatory methods, and on corporate social responsibility and investment in Mozambique (in English as well as in Portuguese). In addition, websites of the Government of Mozambique (GoM), of international and national NGOs and of multilateral and bilateral donors and financiers were searched on activities in and publications on Mozambique. The search on LED mainly yielded case studies and some PowerPoint presentation on LED Agencies and little more; hence the search on all the other key words. These results however, indicate the importance that the Mozambican assigns to LED agencies as the main instrument for bringing about LED. 1.3 Report structure This document consists of six chapters including this introductory one. Chapter 2 outlines how LED was introduced in Mozambique, how the concept evolved and what is in place in terms of the enabling environment and related legislation. Chapter 3 synthesises the LED and LED-like approaches adopted in Mozambique, the alignment with national, regional and sectoral policies and plans and the main delivery vehicles. Key stakeholders are listed and described in Chapter 4. Chapter 5 summarises the conclusions while Chapter 6 puts forward recommendations for further action and research.

11 LED Country report Mozambique 3 2. BACKGROUND TO LED IN MOZAMBIQUE 2.1 Historic overview In Mozambique, local economic development made its first appearance in It was discussed as a means to stimulate domestic economic growth and supporting an economic development process leading to improved living and working conditions of the poorest rural population groups. Around the same time the operationalisation of policies and strategies to decentralise activities and responsibilities to district levels started to take shape. Earlier, in the mid 1990s, a household consumption survey (National Directorate of Studies and Policy Analysis, 2004) indicated that some 69% of the Mozambican population lived in poverty, in particular in rural areas. This led the Government of Mozambique to develop its Action Plan for the Reduction of Absolute Poverty (PARPA). PARPA s basic principles and those of the LED approach showed to be mutually reinforcing (van Boekel & van Logtestijn. 2002), thus providing a solid base for initiating the LED approach in Mozambique. The Human Development Programme at the Local Level (PDHL 1 ), that ran from , presented the ideal context to pilot the LED approach. This programme, financed by Italy and implemented by the United Nations Development Programme (UNDP) and the International Labour Organisation (ILO), was developed in the framework of the Mozambique s 5-year Socio- Economic Plan. The overall PDHL programme focussed on locally defined activities, intersectoral integration, sustainability of activities, community participation and gender equity while also providing assistance to the implementation of decentralisation. The LED component was piloted in Manica, Sofala and Maputo Provinces. Provincial and district LED fora, with representatives of the various public, private and civil society partners were established as the forerunners of the provincial Local Economic Development Agencies (LEDAs) The ILO technical assistance team promoted the set-up of LEDAs as the main mechanism for LED implementation. (More information on LEDAs is presented in Section 3.1). Initially, the Ministry of State Administration whose mandate includes territorial organization and decentralisation spearheaded the LED policy formulation process (Van Empel ea. 2006). In 2003, on the initiative of the Ministry of State Administration (MAE 2 ), an Intersectoral Commission (IC-LED) was formed to ensure collaboration between the sectors involved in LED/LEDAs. Subsequently, in 2006, the National Directorate for the Promotion of Rural development (DNPDR 3 ) was established within the Ministry of Development and 1 Programa de Desenvolvimento Humano a Nível Local 2 Ministério de Administração Estatal 3 Direcção Nacional de Promoção de Desenvolvimento local

12 LED Country report Mozambique 4 Planning (MPD 4 ) and the responsibilities to strengthen the promotion and coordination of LED were transferred to this department. About this process, Van Empel ea, (2006) listed the three main challenges encountered: Achieving a common understanding of the integrated, all encompassing comprehensive territorial based development approach; Aligning and coordinating sector based and area-based led approaches and addressing the potential overlap in responsibilities; Facilitating the effective contributions of all stakeholders given their diverse capacities and experiences. In addition to the formal LED activities planned and implemented under the umbrella of the LEDAs, many other programmes and projects that lead to local economic development have been implemented over the years. Participatory processes and local planning abounded since the late 1990s mainly in agricultural systems research and extension (author s experience in Mozambique, ). World Bank and IFAD were major sponsors; CARE International, World Vision, SNV (a Dutch development organisation) and CLUSA with their respective funding agencies major implementing agencies. Activities not labelled by their implementers are addressed in Section 3.3 and further While the Mozambican government has been supporting Local Economic Development (LED) through its LEDAs, LEDAs and through various development strategies, Cacéres ea. concluded in 2007 that a coherent national LED strategy for its promotion that includes both rural and urban areas does not yet exist.. However, Mozambique s Rural Development Strategy (approved by the Conselho de Ministros in 2007) incorporates various elements that are relevant for LED. The Strategy emphasises local financing, regionally and district specific participatory planning, public-private partnerships at various levels and the involvement of local farmers and business associations. Not only does the strategy specifically mention support to Local Economic Development Agencies, all of its five strategic objectives are likely to bring about LED in rural areas. ( Documentos/EDR.versãofinal final.pdf only in Portuguese). The Rural Development Strategy is now considered the main strategy for LED in Mozambique with the support programme for LED its main promotion vehicle. 4 Ministério de Planificação e Desenvolvimento

13 LED Country report Mozambique The LED concept in Mozambique Initially, in the late 1990s, the term local economic development was loosely used in the context of poverty reduction programmes; the LED (DEL in Portuguese) was not used as yet and no definitions given either. Against this background, the Government, through the Intersectoral Commission for the promotion of LED considered LED as an end result of a variety of decentralisation, small enterprise development and financial mechanisms to support such development, the creation of appropriate employment, the generation of income to support the population s well being and a sustainable environment for the reduction of poverty (Comissão Intersectoral, 2005, See Box 2). Box 2: In 2005, the technical support unit of the Intersectoral Commission for the Promotion of formulated LED s mission and principles as follows: LED Mission Strengthen national and local capacities (provincial and district) and promote opportunities for economic development, the creation of appropriate employment and the generation of income through a process of organisation, capacity building and technical assistance directed at producers, women and youth groups, local institutes etc. strengthening their capacities in decision making processes and in the implementation of strategic initiatives for local economic development LED principles Participation: Integration of local actors in the decision making progress, promoting LED fora at local, provincial and national levels (LEDAs) Sustainability: Autonomy and replication of experiences; national policy support through an LED policy Territorial approach: interventions at local levels, linkages between local and national levels Inclusion: The integration of vulnerable groups, appropriate jobs, gender equity To implement the strategic outlines, LED was developed according to two complementary perspectives 1. Strengthening the productive base in target districts through the organisation of activities, technical assistance and capacity building as well as supporting the expansion of economic infrastructure. This was implemented through complementary activities such as construction and rehabilitations of basic economic infrastructure installation of equipment and institutional strengthening 2. Creation of participatory mechanisms and the establishments of economic development agreements such as Local Economic Development Agencies, which are provincial mechanisms to assist in forging linkages between district, province and national levels, integrating the most vulnerable groups who have been until now excluded from the local economic dynamics, by means of strategic projects that include production and marketing. In practical terms this implies The creation construction of a system of competitiveness, starting with the productive cycle and inclusion of various modalities for sectoral integration and territorially determined networks The diversification of sources of employment and income generation, a string vertical integration of economic activities in the rural areas and enhanced linkages with urban centres A productive and social change to complement the productive capacity and strengthen the negotiation power of the organisation Capacity development of producers in order for them to participate in the local economic development strategy (organisation and training) Participation in social polices in particular education and health and the provision of basic services Investments in infrastructure as well as in human, natural and social resources Reach consensus on all intervention levels (national, provincial, district) among the main actors (government, communities, public and private sectors, civil society and development partners) around the promotion of a local economic development strategy (Source: Comissão Intersectoral, 2005, Translated from Portuguese)

14 LED Country report Mozambique 6 Van Boekel and Logtestijn (2002), who worked in Mozambique in the context of the PDHL programme, wrote that LED is a participatory development process that encourages partnership arrangements between the main private and public stakeholders of a defined territory with the final objective of creating decent jobs and stimulating economic activity. The process enables the joint design and implementation of a common development strategy, by making use of the local resources and competitive advantage in a global context. Cacerés ea. (2007) who developed an LED planning and implementation guideline for Mozambique indicated that The main idea of LED is to create a support mechanism for local business that integrates the identification of economic potentials. Support measures primarily aim at generating income and employment opportunities. The objectives of LED are closely connected with the overall goals of poverty reduction and the improvement of living conditions of the rural population in particular. In 2008, the Intersectoral Commission described LED as the process in which local stakeholders develop and share strategic decisions on the economic, productive and labour future of a given territory, with as pillars: legal embedding, banking and micro-finance activities, technical assistance and capacity building, internal and export markets, information and education for development. Appendix 1 shows the visualisation of the LED strategy as developed by DNPRF the National Directorate for the promotion of Rural Development. In short, LED processes have been put in place explicitly through the LEDAs, and the Intersectoral Commission and implicitly through various donor and NGO supported programmes and projects. However, the diversity and ambiguity of LED concepts and of the practical implications have rendered it difficult to demonstrate LED impact on pro-poor growth. 2.3 Enabling environments and legislation While programmes to effectively implement LED are still in their initial stages, an enabling environment to make it happen is in place This section presents the main mechanisms determining that environment. It does not deal with the many additional laws, decrees and regulations that define the functioning of councils and systems such as the Consultative Councils and Development Committees at District, Administrative Posts, Locality and community levels or the Systems for State Administration and Finances (SISTAFE) and District registry, control and earnings (SISRORE). They are important, for the implementation of the strategies discussed below. However, it is the author s opinion that more needs to be done to operationalise them.

15 LED Country report Mozambique 7 Poverty reduction strategy The first Action Plan for the reduction of Absolute Poverty (PARPA I) that ran from (Government of Mozambique, 2001) had as main objectives propoor growth. It stated that overall rapid growth is essential for poverty reduction on medium and long term and that a strategy was needed to create an enabling environment to stimulate investment, enhance capacities and exploit opportunities for the poor. PARPA II, formulated for the period 2006-, (República de Moçambique, 2006; shows continued commitment to investing in the provision of public goods and services and a redistribution of resources in order to reduce poverty. The document promises to give more attention to local and indigenous economic development, while taking into consideration Mozambique s regional and global integration. More specifically, PARPA II prioritises the development of and support to small, medium and micro enterprises (SMME), the monitoring of economic development and a more active role for government in regulating private action and competition mechanisms in particular to give more space to partners from the private sector to create an environment that stimulates trade. Currently, about 70% of Mozambique s population lives in the rural areas; agriculture is their main source of income and employment (Mungoí, 2008). Many development strategies and plans, including PARPA, emphasize that agricultural development provides the basis for wider economic development. They take as point of departure that agriculture and agribusiness promote rural development, job creation and social infrastructure and provide the opportunity to link the informal rural sector with the more formal (registered) economic sector in neighbouring more urbanised zones. While rural urban migration trends indicate that in a decade or so the percentage of the population living in urban areas will have increased considerably, so far less attention has been given to urban economic development needs. Decentralisation policies The process of decentralising government functions started in the late 1990s as well, amongst others with the aim of increasing management and financial efficiency and creating a better environment of Public Private Partnerships (Cuereneia 2001). In 1996/97 SNV and DANIDA, with Dutch and UNDP/UNCDF funding respectively, ran integrated district planning pilots in seven districts in Nampula

16 LED Country report Mozambique 8 Province 5. Around the same time, DNPO, the National Directorate for Planning and budgeting stated the preparation of medium and long term plans would be the preferred starting point for the district planning processes (Paulo, 2008). In 2001, the government of Mozambique, GTZ and the Worldbank decided to expand the Nampula experience to other districts and provinces and formally introduced its decentralized planning and finance program (PPFD). Consequently, between 2002 and 2004 (Cacéres ea, 2007) three major decentralisation support programmes started (funded by UNCDF, GTZ and the World Bank). Early 2006, these programmes 6 covered eight of Mozambique s 11 provinces (Banco de Moçambique, 2008). Later in 2006, after a joint evaluation of these projects, donors and government decided to harmonise support to the government s decentralisation through a revised District Planning and Finance Project. This programme mainly addressed the political and administrative aspect of decentralisation. PPFD s second phase included a strong support to Local Economic Development. In general, PPFD s underlying principles provided the enabling environment for LED implementation. These principles included: The Districts having ownership of and being the starting point for district planning and development; The Central Government providing guidance and ensures sustainability of the process; Good governance and transparency concerning the provision of services to the citizens; Participation and inclusion (of the population); Coordination and partnerships (in the planning and execution of programmes). The establishment of multi-sectoral development teams in the districts as part of the programme played an essential role. They were made responsible for stimulating and organising community participation. The teams also were given the necessary decision making powers to integrate information derived from community participation in District Strategic Development Plans (PEDD) and Socio-economic strategic plans and budgets (PESOD). National guidelines for the elaboration of district development plans, formally adopted in 2003, reinforced the role of the districts and of District Consultative Councils as crucial actors in the development and planning cycle (Massuangange 2005) The Budget for Local Investments and Initiatives (OILL, launched in 2006) added the fiscal dimension to the decentralisation efforts. In addition to mandating districts to raise and manage their own revenues, from 2006 onwards each 5 Angoche, Mecubúri, Mogincual, Mogovolas, Moma, Monapo and Muecate 6 Supported by UNDP, UNCDF, The Netherlands, Switzerland, Norway and Ireland

17 LED Country report Mozambique 9 district received MZN 7 7,000,000 (USD 280,000 at the then exchange rate), representing 3% of the general state budget. This amount has increased to MZN 10,000,000 in (about USD 368,000,000 at the current exchange rate). Strict guidelines passed in the middle of 2006 and tightened in 2007 stipulate that all state budget funding should be used for locally developed income and employment generation programme. releases/government_claims_advances_in_fight_against_poverty ). Legislation to anchor the decentralisation process was passed in 2003 through the Law on Local Government Bodies (LOLE) (Paulo, 2008). In 2005, the related regulatory framework kicked off the factual devolution of responsibilities and autonomy to the districts. In spite of Government s efforts to decentralise, participants in an UN internal workshop concluded in December 2008 that much still needed to be done. They felt that districts and municipalities were still too dependent on the central government as municipalities and districts still have insufficient institutional, financial and human resources capacity to deal with all their planning implementation and monitoring functions. The (draft) national decentralisation policy that could tie all defragmented initiatives together, expected since 2007, was still being awaited. That participatory planning, favoured by a decentralisation process, can have a positive impact on poverty reduction was demonstrated by a study done in Nampula Province, although these results could not be explicitly attributed to the decentralised participatory planning processes (as mentioned during UN Internal workshop) 8. In spite of these efforts, there is neither a clear decentralisation policy and strategy as yet, nor a clear vision. (E. Hobson, pers. comm, ). Unfortunately, Mozambique s current dual decentralisation system that differentiates between Districts that refer to rural areas and Municipalities that cover urban areas (even when situated within the rural districts) is not conducive to deal with the different constraints each of these entities face. Business Environment Strategy Since the late 1990s, early years of 2000, the Government of Mozambique (GoM) embarked on creating an enabling environment for national and sub national economic development by removing trade barriers and other obstacles and introducing new policies including: 7 Mozambican Meticais 8 A specific reference to the mentioned study is not available

18 LED Country report Mozambique 10 the passing of a decree providing a legal basis for micro-finance operations and the granting of micro-finance lending licenses to NGOs and individuals the introduction of VAT, the cutting of taxes on business profits, tax reductions for investments in the country s poorest regions. (van Boekel & van Logtestijn, 2002). In the 2007 and 2008 the Government introduced legislative changes to facilitate business start-ups, protect investors and add flexibility to labour regulations (World Bank, ). esitepk=382131&menupk=382165&projectid=p More recently, (GoM) formulated a five year strategy to improve the business environment which relies on concerted efforts of various if not most government departments (World Bank, ). The strategy is based on four main pillars: Legal Reform: covering business registration, licensing, inspection, labour law; competition law; import-export facilitation; property registration; simplification of tax administration; Fiscal and Financial Sector Reform to improve the fiscal environment and promote access to finance for SMMEs; Infrastructure: aiming to reduce costs and increase access for private sector to basic infrastructure services, such as electricity, water, sanitation and telecommunications ; Governance and Implementation Mechanisms to build the capacity needed to implement the reforms and to establish a mechanism for overseeing and monitoring the implementation of the business environment improvement strategy. Government s macro and micro economic mechanisms are crucial to enhance the private sector s role (large corporate enterprises but also in agricultural enterprises and rural SMMEs) and may be expected to be conducive to local economic development.

19 LED Country report Mozambique LED IN PRACTICE This chapter describes the main delivery vehicles for local economic development in Mozambique. The most prominent one is that of the Local Economic Development Agencies (Section 3.1). In fact it is the only instrument that explicitly uses the term and has tried to adopt the basic principles of LED. There are some activities that can be characterised as Corporate Social Responsibility or Corporate Social Investment (Section 3.2). Most of these however are poverty alleviation or social in nature rather than LED type of interventions. More specifically these activities include the construction of schools, health clinics and some basic infrastructure. Although they may be locally planned, they are not necessarily locally owned or aimed at economic development. The exception are the activities initiated by MOZAL, a South African owned aluminium smelter, established almost ten years ago in Matola, close to Maputo. Lastly there are many activities contributing to LED and undertaken by international, national or local NGOs, other civil society organisations, organized produces groups of farmers associations, some private sector associations and bilateral or multi-lateral organisations. National, provincial or District governments mainly play a facilitating role in these activities (Section 3.3). 3.1 Local Economic Development Agencies Historically, the Mozambican Government stimulated LED through the local economic development agencies (LEDAs) due to the over-emphasis that the ILO / UNDP PDHL Project ( ) put on such agencies According to van Boekel & van Logtestijn (2002), LEDAs provided an effective response to the need to decentralize the Mozambican economy and to introduce democratic methods of territorial management (Box 3). UNCDF 2007 noted that LEDAs provided a link between national and local levels in terms of formulation and implementation of policies and resource management. However, more recently, a variety of stakeholders has voiced their concerns about the LEDA approach, for creating parallel institutions outside of the government structure, which is legally mandated to promote LED in Mozambique. Current developments strengthen the role of local governments in the leadership and coordination of LED promotion (see under 4.1 Coordinating bodies) The LEDAs were piloted in Manica, Sofala and Maputo Provinces. Because of the results achieved in these provinces, LEDAs have gradually been introduced in Mozambique s other six provinces (Van Empel et al, 2006; ILO, 2006). Currently, LEDAs are operational in Maputo, Sofala, Manica, and Nampula Provinces. The LEDA in Zambezia province is facing some implementation constraints, the ones in Inhambane and Tete were established mid 2008 and those in Cabo Delgado, Niassa and Gaza are being initiated.

20 LED Country report Mozambique 12 Box 3: Van Boekel & van Logtestijn indicated in 2002 that the LEDAs in Mozambique were expected to be involved in: Promoting the diversification of the economic activities in the province; The delivery of locally-based comprehensive support to potential or existing micro and small enterprises; The introduction of new management techniques and new technologies; The provision of export promotion services; The improvement of quality and productivity of the local agricultural production; The introduction of new forms of organization of the production (cooperatives; clusters, franchise, etc.); Channelling external resources into productive investments; The delivery of a wide range of information services (i.e. the creation of databases regarding markets, machinery, tools, training possibilities, etc.); The provision of consultancy services to facilitate guidance and assistance in formulating and selecting bankable projects; The stimulation and support of a social dialogue at the local level, in particular the between the public and private sector; The promotion of dialogue between local, national and international level in matters Generally, LEDAs are set up as not-for-profit membership organisations and have the legal status of an Association. Their members include the public sector (provincial, district and municipal administration, decentralized national government and universities) the private sector (study centres, private universities, private sector organisations and individual entrepreneurs) and the non-government sector (such as NGOs, CBOs, NGO federations and farmer associations) (Appendix 3). This wide representation facilitates a buy-in of the LED approach by the main economic agents in the province and provides the LEDA with the legitimacy to coordinate LED activities in the local economy. While LEDAs operate at provincial level, through their members who are based in the districts they are represented at district levels. Members play a role in LED activities according to their own organisational mandates and expertise (Box 4). Box 4: In a honey production project for instance The Union of Cooperatives was assisting with the organizational aspects, while Frutisul, an association of fruit and honey producers provided technical training to the beekeepers, in this way partners direct involved in the preparation The draft flyer aimed to synthesise and impart information on LEDAs (IC-LED, 2008) defines LEDAs as local mechanisms in which the public and private sector together with CBOs and local governments define strategies for local economic development.