Poverty in Mozambique: unraveling changes and determinants

The paper analyzes progress in poverty reduction in Mozambique between 1996/7 and 2002/3 using two cross-sectional national household surveys. The analysis shows that strong growth in household income has caused poverty to decline rapidly most broad groups the agricultural and non-agricultural sectors and in urban as well as in rural areas. Improvements were recorded in both monetary and non-monetary poverty measures. One key factor in ensuring broad-based growth was that inequality did not change significantly so poverty reduction could be broad-based. But despite good progress, more than 50 percent of the population still lives in poverty. Lifting this group out of poverty will require continued broad-based growth and further expansion of social services. The Africa Region Working Paper Series expedites dissemination of applied research and policy studies with potential for improving economic performance and social conditions in Sub-Saharan Africa. The series publishes papers at preliminary stages to stimulate timely discussions within the Region and among client countries, donors, and the policy research community. The editorial board for the series consists of representatives from professional families appointed by the Region’s Sector Directors. For additional information, please contact Momar Gueye, (82220), Email: mgueye@worldbank.org or visit the Web Site: http://www.worldbank.org/afr/wps/index.htm. Authors’Affiliation and Sponsorship Louise Fox (lfox@worldbank.org) Lead Economist, World Bank Elena Bardasi (ebardasi@worldbank.org) Lead Economist, World Bank Katleen Van den Broeck (kvandenbroeck@worldbank.org) Economist, World Bank Introduction and summary This background paper for the 2005 Country Economic Memorandum surveys Mozambique’s progress in poverty reduction over the last six years. Using two cross – sectional national household surveys (1996/7 and 2002/3), growth in household consumption, changes in the distribution of that growth and the role these two factors played in reducing poverty, are analyzed. Changes in nonincome poverty measures are also analyzed, including changes in assets and access to services. The correlates of poverty in 2002/3 are analyzed using bivariate and multivariate techniques. Finally, a profile of household livelihood strategies and labor market behavior of households is provided as a basis for linking macro and sectoral strategies to households. The main findings are that as a result of strong growth in incomes in the agricultural sector as well as the non-agricultural sector, poverty declined rapidly in Mozambique over the 96/97-02/03 period in rural areas and in most urban areas. The decline was broad based, and can be seen in improvements in both monetary and nonmonetary poverty measures. One key reason for the good poverty performance is that inequality did not change much, so aggregate growth in consumption reached poor households and raised their consumption levels. Despite this good progress, more than 50% of the population remains in poverty today. The poor in Mozambique are mostly living in rural areas and working in agriculture, although increasingly one earner in the household will get income from another sector as well. The adults have little education, and their children are less likely to be in school (although much more likely than in 1996/7). Many still do not have access to safe water, and live in fragile domiciles. Lifting the other 50% out of poverty will require continued broad-based growth in the economy, coupled with continued expansion of social services to the poorest.