CO-Finnida SOMO Going Public Mozambique 1. Background
Context analysis: policy, priorities, and policy frameworks
Despite its economic growth over the last two decades, Mozambique remains one of the poorest countries in the world, with a 42% youth unemployment rate, under the heavy external debt burden(estimated 85% of GDP) and the economy highly depended on volatile export commodities markets. In the backdrop of a bleak economic situation, the discovery of vast natural gas fields in the north of the country at the beginning of the decade has positioned Mozambique as a major global energy source. Located in the Cabo Delgado region, the project known as Mozambique LNG is led by French extractive company Total – which committed to a $20 billion investment in 2019 –is expected to contain approximately 65 trillion cubic feet of recoverable natural gas.  Extraction activities are expected to start in 2024, allowing a short time for the development of essential infrastructure and a legal framework for the public governance of extractive activities.

An essential part of this legal structure is a proper taxation framework to be developed and implemented in time to manage significant revenues expected to be generated as early as 2024. Despite recent reforms in revenue administration, fiscal governance structures in Mozambique remain vulnerable to corruption and lack efficiency. Tax collection across the country remains low due to the size of the informal sector (calculated at over 90% of the economy in 2020),  insufficient digitization of transactions and rent-seeking practices by high-profit businesses. In this context, the revenue stream from extractive activities in Cabo Delgado presents itself as a once-in-a-generation opportunity for Mozambique to invest in sustainable development of the country and the Cabo Delgado region. As Cabo Delgado is among the poorest regions in the country - long struggling with high levels of illiteracy, poverty, child malnutrition, and alleged government neglect and marginalization – revenue sharing of the upcoming extractives revenues is vital for the region. Improving domestic revenue mobilisation also requires revision of the some of the country’s tax treaties, as some of the largest FDI flows into Mozambique comefrom the world’s worst tax havens, including Mauritius, the United Arab Emirates, and the Netherlands.  Mozambique has signed Double Taxation Agreements (DTA) with Mauritius and the United Arab Emirates,  which aggressively limit Mozambique’s rights to tax financial flows leaving its jurisdiction.

2. Objective
2.1 Overall objective
The overarching development goal of this project is to: Moreprogressive, transparent, and accountable revenue generation and public spending in Sub-Saharan Africa that contribute to the realization of human rights and inequality reducing public spending for marginalized groups.

Specific objective: to strengthen the ability of CSOs and marginalized communities, particularly women and youth, to influence and hold to account local and national decision-makers in Mozambique to change policies and practices on revenue generation from extractive industries to benefit of marginalized communities.

The main Outcomes expected from the Project are as follows:

(i) Empowered CSOs have oversight and voice over fiscal issues and governments have increased political will for inclusive, transformative development by quality research evidence and policy analysis.
(ii) Civil society, including women and youth, actively engage and hold local and national authorities to accountfor more progressive, equitable and accountable management of extractive sector revenues;
(iii) Strengthened Civil Society actors work in alliance / coalitions to demand transparent, accountable and progressive fiscal reforms (National and Regional);
(iv) Preparatory desk review studies. These studies focused on: (1) analysis of fiscal and tax reforms; (2) Non-compliance and tax evasion in extractive industry sector;

Outputs:

(i) Facilitate assorted trainings and learning initiatives on fiscal andtax trade in extractive industry sector;
(ii) National High Level Policy dialogue to promote fiscal and tax reforms in extractive industry sector;
(iii) Promote the development of a framework for prudent use of gas revenues to support essential services, with focus on agricultural value chains;

Promote work in alliance / coalitions across Southern Africa region also Kenya / Uganda under this project

Topline activities (Outcome 1):
> Capacity strengthening - Facilitate training on Tax and fiscalissues;
> Consolidated platform of multiple stakeholders to promote national dialogue on fiscal and tax reforms ( Government, private sector, academics and communities);
> Strengthen national tax network advocacy and coalition capacity to address harmfultax practices and advocate for revenue collection in extractive industries;
> Facilitate influencing, engagement and trust-building between citizens, civil society and governments on fiscal issues such as domestic tax in extractive industry and participatory budgeting for essential services;

Topline activities (Outcome 2):
> Designa community training tool on linkages, local content and economic diversification;
> Dialogue between government, private sector and communities on local development models;
> Desk review on existing legal frameworks for Non-compliance and tax evasion in extractive industry sector;
> Media engagements on minimum transparency standards for public and private sector in the extractive industry, and support investigativejournalists;
> Develop policy papers on Fiscal and Tax reform issues for redistributing value generated in the extractives value chains.

4. Implementations arrangement
Within the scope of this project, the implementing partners will aim to cooperateandseek synergies with other actors working within the field of tax justice. We will implement activities at local and central level through The Centre for Democracy and Development (CDD) to strengthen our discourse and voice on Fiscal and Tax reform issuesforredistributing value generated in the extractives value chains.

The Project will be implemented under the leadership and overall responsibility of Oxfam in Mozambique, through CDD. The project will be implemented over a period of 15 months (October 2021 – December 2022). Oxfam will designate a Project Lead to oversee the overall project execution. Memorandum of Understanding (MoU) willbe signed between Oxfam and CDD and will establish the roles and responsibilities of each entity for the implementation of relevantactivities. A Project Steering Committee will be established that will be responsible for (i) providing overall policy guidance anddecision-making on all issues relating to the Project; (ii) facilitating coordination among the relevantagencies and stakeholders; (iii) reviewing and approving annual work and expenditure plans, and (iv) assessing risks of strategic impact and identifying solutions. The Steering Committee will meet four time a year (quarterly) and hold extraordinary meetings when necessary. The inception plan will be developed and discussed amongst stakeholders before project effectiveness and integrated into the project implementation manual. The inception plan will be designed to engage all project stakeholders in adialogue and provide them with a platform for interaction, planning, and decision-making.



The Centre for Democracy and Development (CDD) is a Democracy, Governance and Human Rights Mozambican civil society organization. As a chapter of the Southern Africa Human Rights Defenders Network (SAHRDN), CDD has led the efforts for the establishment and strengthening of Mozambique Network of Human Rights Defenders since November 2019. Since 2020, the organization has jointly coordinated the APIE – the National Platform Extractive Industries and Natural Resources. CDD also holdsthe chairmanship of the Mozambique Budget Group (FMO), the national platform on budget monitoring, public finance transparency and accountability. CDD is also catalyzing the Platform forDialogue on Business, Security and Human Rights for Cabo Delgado, the naturalgas rich province facing violent extremism. CDD was selected for its convening power and CSO’s empowerment, particularly youth centring organizations, CBOs and social movementsto utilize the thinking and working politically (TWP) model, social relations, strategic links to leverage access to duty bearers without comprising democratic and accountability principles. Expecting Add values engaging with civil society using a networking-led approach to catalyse citizen demands for greater tax justice and increased domestic resource mobilization from extractive industries as a key contributor for reducing poverty and inequality.

A Project Team (PT) will be established in Oxfam in Mozambique Office and comprise: (i) a Full-time Project Lead (ii) Project Officers experts in Tax and Fiscalissues; financial management, accounting, and IT / procurement on a part-time basis. The implementation of the project will also benefit fromthe presenceand local connections of partners Unit based in Provinces. The Unit will provide complementary local information and facilitate the field missions and associated meetings with provincial and local authorities and stakeholders.

The experienceaccumulated by Oxfam in Mozambique through its previous interventions in the governance on extractive industries argues in favour of such intervention. Highlight for interventions through “Accountability through Active Citizenship: Improving PetroleumGovernance inMozambique program (from early 2014 through early 2018) and AGIR (2010-2020).

Project Beneficiaries. The Project’s direct institutional beneficiaries are implementing partners (CDD and CIP). In addition, Civil Society Organizations members of “National CSO platform for Natural Resources and Extractive industry”, technical staff, service providers and communities (at the local and central level) will directly benefit from technical assistance and training support.

5. Results Monitoringand EvaluationArrangements
Oxfam in Mozambique, through its MEAL Unit and the Central MEAL Unit based in Oxfam Novib will be responsible for Monitoring and Evaluation (M<(>&<)>E) of the Project, based on its experience of implementing other projects and tools. The MEAL Unit staff responsible for theentire M<(>&<)>E system in Oxfam Mozambique will supervise a full‐time MEAL Officer. The MEAL Unit will: (i) collect, consolidate and report on Project performance data; and (ii) provide periodic information on the Project indicatorsincluded in the Project Results Framework, and progress toward outcomes.