Agricultural Growth and Poverty in Mozambique: Technical Analysis in Support of the Comprehensive Africa Agriculture Development Program (CAADP)

Authors: 
Karl Pauw, James Thurlow, Rafael Uaiene, and John Mazunda 
Publisher: 
International Food Policy Research Institute/ Mozambique Strategy Support Program 

In any economy there are important economic linkages and trade-offs that need to be considered when designing policies or assessing their impacts. Various policy analysis tools can help policymakers understand these linkages and trade-offs. One such tool is an economywide computable general equilibrium (CGE) model. In this study we calibrate a CGE model to Mozambique’s newest social accounting matrix (SAM) to consider economywide growth, poverty, and nutrition impacts under alternative agricultural growth scenarios. Scenarios are compared over the period 2009–2019, which coincides with the implementation period of the Strategic Plan for Agricultural Development (PEDSA), Mozambique’s embodiment of the Comprehensive Africa Agriculture Development Program (CAADP). The “baseline scenario” assumes a continuation of Mozambique’s recent experience of low agricultural productivity and slow progress in the fight against poverty. Although national accounts estimates suggest that agricultural GDP expanded at around 7.4 percent per annum during 2003–2007, this figure has been widely questioned. In our baseline scenario, which carefully replicates historic crop production trends from official statistics, agricultural GDP only expands at 3.2 percent per annum during 2009–2019, while the economy as a whole expands at 5.7 percent per annum. The poverty headcount rate declines from 54.6 in 2008/09 (the official estimate) to 46.8 percent by 2019. The biggest decline in poverty occurs in the southern region where, following recent trends, agricultur-al productivity increases more rapidly off a very low base compared to other regions. The share of caloric deficient people declines from 57.1 percent in the base to 50.1 percent by 2019.

Under an accelerated agricultural growth scenario or “CAADP scenario”, agricultural growth is more broad-based and reaches the seven percent target set by PEDSA. Even though Mozambique’s GDP growth strategy largely focuses on the development of extractive industries, the agricultural sector’s importance is demonstrated in this scenario, with national GDP growth rising by 1.2 percentage points relative to the baseline growth rate (i.e., to 6.9 percent). The central and northern regions are prioritized under PEDSA due to a superior agricultural potential. After a decade of stagnation the north is regarded as a priority region with very high potential for rapid growth; hence, agricultural GDP expands by 9.3 in this region. The central region, which has already outperformed its neighboring regions during the past decade, continues to be considered a priority. We assume a continued strong performance, with the agricultural sector expanding at a rate of 5.8 percent per annum. Finally, agriculture in the southern region, although not a priority under PEDSA, grows at a respectable 4.9 percent off a low base. Under this accelerated growth scenario national poverty reaches 44.9 percent by 2014, which is higher than the Poverty Reduction Plan’s optimistic target of 42 percent by 2014, and 35.8 percent by 2019. The rapid increase in per capita (staple) food production in the CAADP scenario further causes the calorie deficiency rate to decline by 13.3 percentage points relative to the baseline scenario. As expected, poverty and calorie deficiency reduction is not as rapid in the southern region. However, even our reported rates of decline may be an overestimate given the assumption of common prices across a national commodity market. Further analysis is required to determine to what extent weak market linkages between the south and the rest of the country may actually prevent the southern region from benefiting from price declines and food supply associated with enhanced productivity in the central and northern regions.

Publication date: 
1 Nov, 2012 
Source / Citation: 

Pauw, K., Thurlow, J., Uaiene, R., and J. Mazunda. "Agricultural Growth and Poverty in Mozambique: Technical Analysis in Support of the Comprehensive Africa Agriculture Development Program (CAADP)," IFPRI/MozSSP Working Paper No. 2, November 2012.