Fact Sheet

January 22, 2009 | www.mcc.gov

Mozambique and Millennium 

Challenge Corporation

Building a Dynamic Partnership for 

Poverty Reduction Through Economic Growth

The Millennium Challenge Corporation and the Republic of Mozambique have signed a five-year, $506.9 million 

Compact to reduce poverty and increase economic growth. The Compact’s goal is to increase the productive 

capacity of the population in selected districts, with the intended impact of reducing the poverty rate, increasing 

household income and reducing chronic malnutrition in the targeted districts. The various interventions are 

designed to foster investment and increase economic opportunities for Mozambicans living in the North. 

Background

Since emerging in 1992 from three decades of almost constant conflict, Mozambique has experienced one of the 

fastest growth rates in Africa, averaging eight percent per year over the last decade. To sustain this growth, it is 

necessary to unlock the potential of the economically lagging Northern provinces which are home to approximately 10 million people. Moreover, given Mozambique’s rapid urbanization, its next stage of economic recovery 

cannot succeed without well-functioning public services in its cities where coverage levels for water and sanitation 

are declining.

Water and Sanitation Project ($203.6 million)

The largest of the components in the Compact, the Water Supply and Sanitation Project, will increase access to 

a safe, reliable water supply and sanitation services thereby increasing productivity and reducing water-borne 

diseases - the leading cause of death in children under five. It involves water supply and sanitation services in six 

cities in the provinces of Zambézia, Nampula and Cabo Delgado; water supply in two mid-sized towns in Nampula 

and Cabo Delgado provinces; rural water supply services covering 600 water points in the Nampula and Cabo 

Delgado provinces; and capacity building of local institutions and policy development. 
Mozambique and Millennium Challenge Corporation, January 22, 2009 2

Transportation Project ($176.3 million)

The Compact includes a Transportation Project that will improve access to markets, resources, and services; 

reduce transport costs for the private sector to facilitate investment and commercial traffic; expand connectivity 

across the Northern region and the southern half of the country; and increase public transport access for individuals to take advantage of job and other economic opportunities. Specifically, MCC funding will rehabilitate 491 km 

of key segments of the National Route 1 which forms the backbone of country’s transportation network. 

Land Tenure Services Project ($39.1 million)

The objective of the Land Tenure Services Project is to establish more efficient and secure access to land by 

improving the policy framework; upgrading land information systems and services; helping beneficiaries meet 

immediate needs for registered land rights; and better access to land for investment. This project is comprised of 

three mutually reinforcing activity areas: 

 Policy Monitoring Pillar: to help improve the policy environment by addressing implementation problems 

with the existing land law, conducting regulatory reviews to improve upon it, and supporting training for 

predictable, speedy resolution of disputes; 

 Capacity Building Pillar: to build the institutional capacity to implement policies and to provide quality 

public land-related services by investing in human and information resources; and 

 Site-specific Pillar: to facilitate access to land use by helping individuals and businesses with clear information on land rights and access and with registering their grants-of-land use.

Farmer Income Support Project ($17.4 million)

Coconuts and coconut products form an important part of the economy in Northern Mozambique. Outbreaks of 

Coconut Lethal Yellowing Disease (CLYD) now threaten the industry and the livelihood of over 1.7 million people 

in Zambézia and Nampula Provinces. At the present rate of spread, more than 50 percent of the coconut area is 

likely to be lost over the next nine years. Affected trees cease producing and threaten healthy trees; therefore, they 

must be removed and replaced. 

The objective of the Farmer Income Support Project is to reduce the spread of CLYD, to improve productivity of 

coconut products, and to encourage diversification into other cash-crop production. This project will eliminate 

biological and technical barriers that hinder economic growth among farms and targeted enterprises while supporting diversification into other cash crops and improved farming practices to assist smallholders and producers 

recover lost income. In conjunction with tree removal and replacement, this activity will assist farmers in adopting 

new cropping systems and developing alternative sources of cash income during the time required for new coconut 
Mozambique and Millennium Challenge Corporation, January 22, 2009 3

trees to reach productive age. This component will also provide technical support to introduce better practices 

aimed at increasing crop yields. 

The Compact also includes $70.5 million for program management, oversight, fiscal accountability, monitoring and 

evaluation. In addition, the Compact budget contains $40 million of funding for capacity building and technical 

assistance to strengthen local institutions.

Expected Results1

 The Water Supply and Sanitation Project is expected to raise the incomes of approximately one million 

Mozambicans by 2015.

 The Transportation Project is expected to raise the incomes of approximately one million Mozambicans by 

2015.

 By 2015, the Farmer Income Support Project is expected to maintain the earnings of approximately 900,000 

individuals who would otherwise suffer losses due to the spread of Coconut Lethal Yellow Disease.

 The Land Tenure Services Project is expected to benefit 1.9 million Mozambicans by 2015.

Overall, the Compact is expected to raise the incomes of approximately 3 million Mozambicans by 2015.2 These 

individuals are expected to generate approximately $45 additional in income, on average, by 2015.3

1

The Millennium Challenge Corporation is currently developing updated guidance on beneficiary analysis to ensure that consistent practice has and will continue to 

be applied in describing the beneficiaries of its projects. The figures included represent a revision of original estimates based on this updated guidance and on more 

recent information. The figures offer preliminary estimates of project results and are subject to a variety of assumptions, risks, and adjustments. For more information on MCC’s approach to beneficiary analysis, please visit http://www.mcc.gov/programs/beneficiary/index.php.

2This figure does not include the anticipated 1.9 million beneficiaries from the land project, as MCC anticipates that many or most will already have been counted as 

beneficiaries of one of the other activities.

3This figure represents the total income earned by each beneficiary between 2006 and 2015, discounted at 10% annually. This income gain is in addition to the income 

levels that would have earned in the absence of the MCC compact.
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