MOZAMBIQUE’S INFRASTRUCTURE: A CONTINENTAL PERSPECTIVE While Mozambique has made progress in its reform of the ICT sector, there is still unfinished business. Although the incumbent’s exclusivity has ended, so far no additional fixed-line operators have been licensed. Furthermore, both the incumbent fixed and mobile operator remain fully state-owned, inhibiting private sector investment in the sector. Administration of the universal service fund could be enhanced, particularly to target the remaining areas of the country without mobile coverage.

# Financing Mozambique’s infrastructure

To meet its most pressing infrastructure needs and catch up with developing countries in other parts of the world, Mozambique needs to expand its infrastructure assets in key areas (table 19). The targets outlined below are purely illustrative, but they represent a level of aspiration that is not unreasonable. Developed in a standardized way across African countries, they allow for cross-country comparisons of the affordability of meeting the targets, which can be modified or delayed as needed to achieve financial balance.

**Table 19. Illustrative investment targets for infrastructure in Mozambique**

||**Economic target**|**Social target**|
|---|---|---|
|ICT|Fiber-optic links to neighboring capitals.|Universal access to GSM signal and public broadband<br>facilities.|
|Irrigation|Increase irrigated area by 96,399 hectares [1].||
|Power|1,400 MW interconnectors.<br>3,248 MW in hydrogeneration capacity [2].|Electricity coverage of 19.3% (41% urban and 5.2% rural).|
|Transport|Regional connectivity by good-quality 2-lane paved road.<br>National connectivity by good-quality 1-lane paved road.|Provide rural road access to 26.5 percent of the highest-<br>value agricultural land, and urban road access within 500<br>meters.|
|WSS||Achieve Millennium Development Goals and clear the<br>sectors’ rehabilitation backlog|

_Source:_ Mayer and others 2009 ; Rosnes and Vennemo 2009; Carruthers, Krishnamani, and Murray 2009; You and others 2009. _Note:_ WSS = water supply and sanitation; ICT = information and communication technology; GSM = global system for mobile communications. [1] Assuming trade stagnation scenario. Therefore, the power needs considered in this chapter are expected to be higher under a power trade scenario.

[2] Assuming an internal rate of return of 12 percent. n.a. = Not applicable.

Meeting these illustrative infrastructure targets for Mozambique would cost $1.7 billion per year through 2015. Capital expenditure would account for around 69 percent of this requirement. The highest annual price tag is associated with the power sectors, requiring on the order of $685 million. Transport and water supply and sanitation sectors are also in need of significant funding of around $395 and $370 million per year, respectively. Around $156 million is needed for the ICT sector. The irrigation sector would require about $84 million annually over the next decade. Water sector spending is associated with sustaining MDG targets for water and sanitation, while power sector spending is associated with

> broadband network. See: www.mcel.co.mz/content/view/13/633/lang,pt_PT/. The monthly price of an unlimited 3G broadband subscription is MT 2,400 compared to MT 3,650 for a 2 Mbps (capped at 21 GB of use) ADSL subscription. See: www.mcel.co.mz/content/view/13/633/lang,pt_PT/ and <u>www.tdm.mz/portdm/tarifas/b_larga/b_larga.htm [Accessed 20 August 2010]</u>

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