Supporting the Policy Enabling Environment for Development

Economic Governance

Recent discoveries and imminent exploitation of significant natural resources (i.e., gas, coal, and minerals) have triggered what is expected to be a massive amount of foreign direct investment in Mozambique. The country is slated to receive the largest single FDI project in Sub-Saharan Africa, effectively doubling government revenues over the next five to seven years. 

These revenue forecasts are sending waves through the Mozambican economy, with the country’s development pathway tied to critical governance and investment decisions that must be taken in the very near term. Natural Gas is capital-intensive industry which employ a relatively small number of highly skilled people; government leaders will be challenged with both developing strategies to prepare Mozambican companies to benefit from local content contracts as well as ensuring that natural gas revenues are reinvested to diversify the economy, improve social services, and stimulate broad-based economic growth. 

The USAID CDCS hypothesizes that “if Mozambique is to manage its economic, health, and education responsibilities successfully, particularly with the upcoming resource boom from the extractive industry, then both the government and civil society will have to be at their peak performance.” 

In general, effective management of Mozambique’s public resources seems to be declining. Mozambique ́s score on the Worldwide Governance Indicators (WGI) for Control of Corruption, measuring the extent to which public power is used for private gain and ”capture” of the state by elites and private interests, has been in decline since 2010. The Mo Ibrahim Index of African Governance identified a trend of “increasing deterioration” in overall governance, rule of law, and transparency and accountability. This is consistent with perceptions of the Mozambican population, with 48 percent saying that corruption is increasing according to Afro Barometer. A 2010 assessment carried out by the Ministry of Public Administration showed that the public perceived procurement of goods and services and health and education services, among others, as areas most vulnerable to corruption. 

Besides corruption, another key factor in poor management of public resources is low compliance with procedures, norms, and standards, coupled with a weak control environment. Management control involves state actors that employ regulatory, oversight, and management systems to prevent, detect, and implement administrative and judicial sanctions to control service providers and managers of public resources. 

The Contractor shall support civil society, the private sector, and other non-government actors with appropriate studies and analyses for evidence-based advocacy campaigns regarding transparency and accountability in the following set of policy and regulatory matters: access to information, decentralization, public revenue generation, public financial management, creation of a sovereign wealth fund, local content, and protecting the environment. The Contractor shall address both the demand and supply sides of accountability and oversight.. 

The Contractor shall support relevant public and private institutions at national and local levels to improve participation, inclusion, transparency and accountability, to strengthen public financial management systems, as well ensuring adequate use of resources allocated for improving social service delivery, particularly health, power, and water. For this component, the Contractor shall coordinate and work together with other USAID- funded activities supporting civil society organizations at local and national levels.