Determinants of Rural Poverty in Post-War Mozambique: Evidence from a Household Survey and Implications for Government and Donor Policy

This paper analyses the welfare effects of rural household coping strategies in post-war Mozambique. In addition, it considers appropriate government and donor policies to assist poor, war-affected farm households. The paper discusses the expected theoretical effects of war on smallholder labour, asset, and social capital endowments and thus on household welfare. In addition, it considers the effects of war on land use and market-participation decisions by households and the impact of these choices on post-war household welfare. Household welfare is measured by income, consumption, and food consumption thus assessing several dimensions of welfare. The empirical analysis is carried out using econometric techniques on an agricultural household survey from post-war northern Mozambique. The war in Mozambique, which ended in 1992, is found to be a strong cause of these poverty traps, ie of economic mechanisms which prevent poor rural farmers from increasing income and food security. The main effects of the war are indirect rather than direct. For example, refugee households do not appear to poorer than non-refugee households. The negative war effects are very difficult to reverse thus making post-war reconstruction and poverty alleviation much slower than expected. Almost nine years after the end of the war in Mozambique, post-war reconstruction and poverty alleviation in northern Mozambique is thus on-going process. Quite surprisingly, increasing the area farmed by smallholders has very strong the positive welfare effects. Previous empirical studies for Mozambique under-estimated the sign of this effect. In addition, post-war farm households do not benefit from adopting cotton. Past studies of the welfare effects of cash crop adoption in Mozambique may have found conflicting evidence due to the particular specification of their econometric models. Households do clearly benefit from specialising in agricultural production and from participating in crop markets. This evidence suggests that farm households should be encouraged to continue their war-time coping strategies, which rely heavily on extreme form of subsistence agriculture, in the immediate post-war period. With a favourable security situation, post-war rural households have a labour supply surplus which can be used to extend the area cultivated. Household asset endowments were badly hit by the war and re-endowing households with tools and assets can help increase this agricultural supply response and can help insure households against short-term income shortfalls. In the immediate post-war period, rural households are likely to have a low demand for education. Instead, government and donor policies should aim to create markets destroyed by the war and lower transaction costs in the rural economy. Broadly based rural development policies should commence soon after the end of the fighting to increase both household income and food security and to avoid imbalanced rural growth. Preparing government capacity to implement such post-war rural development programme should start before the end of a conflict, thus accelerating genuine post-war poverty alleviation.