MOZAMBIQUE’S INFRASTRUCTURE: A CONTINENTAL PERSPECTIVE

# Annual funding gap

Mozambique’s infrastructure funding gap amounts to $822 million per year, or about 12.5 percent of GDP. About 60 percent of the gap is found in the power sector, where the annual shortfall of 19 percent of the population without access is $486 million (table 23). Another significant part of the gap is found in the water and sanitation sector, where an additional $219 million is needed to meet the MDGs. Additional funds are also required in the irrigation, transport, and ICT sectors.

## **Table 23. Funding gaps by sector**

$ million per year

||**ICT**|**Irrigation**|**Power**|**Transport**|**WSS**|**Total**|
|---|---|---|---|---|---|---|
|Needs|(156)|(84)|(685)|(395)|(370)|(1,690)|
|Spending traced to needs|122|14|127|296|103|662|
|Within sector reallocation|2|0|0|0|0|2|
|Potential efficiency gains|26|1|72|56|48|204|
|**(GAP) or surplus**|**(6)**|**(69)**|**(486)**|**(42)**|**(219)**|**(822)**|

_Source:_ Derived from Foster and Briceño-Garmendia (2009).

_Note:_ Potential overspending across sectors is not included in the calculation of the funding gap, because it cannot be assumed that it would be applied toward other infrastructure sectors.

* traced to needs.

— = Not available.

# What else can be done?

The most obvious way to address the funding gap is by raising additional financing. In the case of Mozambique, there may be realistic prospects for increasing the flow of resources to infrastructure, both from the public and private sectors.

Private participation in infrastructure (PPI) commitments to Mozambique varied a lot over time; the country attracted more private financing into infrastructure then most other African countries on average, but there is significant room for improvement (figures 26a and 26b). On average over 2002–07, Mozambique has captured private investment commitments worth around 1.4 percent of GDP. Notably, transport absorbed more than half of this, unlike in most other Sub-Saharan African countries in the same period, where the bulk of PPI went to the telecommunications sector. Only a few other African countries have done better capturing PPI resources for infrastructure (if PPI flows to the natural gas sector are excluded). Countries such as the Democratic Republic of Congo, Liberia, Nigeria, Uganda, Kenya, and Senegal have all captured between 1.8 and 2.5 percent of GDP, while the most successful country in this regard—Guinea-Bissau—has captured in excess of 3.0 percent of GDP.

But even if additional finance is hard to secure, there is still much that Mozambique can do to reduce the infrastructure funding gap based on its own policy choices, and in particular the technology choices it makes to meet its infrastructure targets. The single-largest measure that Mozambique could take to reduce its infrastructure spending needs would be to improve its transport infrastructure. Adopting appropriate technologies for the surfacing of paved roads could produce savings of $124 million in annual investment requirements. Another $58 million a year could be saved by adopting lower-cost technologies to meet the MDGs, placing greater emphasis on stand posts, boreholes, and improved latrines. If all these policy 47