Econolutionists History

Today In African History – Economic Changes in Mozambique

On this day in 1977, The Frente de Libertação de Moçambique, FRELIMO (Front for the Liberation of Mozambique), publicly announced its plans to shift Mozambique into running as a Marxist state after only two years into independence.

Generally, a Marxist state ,which derives from the theories of Karl Marx, is to create a classless society largely through the abolishment of capitalist economic behaviour. For over ten years, Mozambique was a single party state that enabled Marxism to ripple across the country. However, following the fall of the Eastern Bloc in 1989, and signing a covenant with The World Bank and IMF (due to further assistance in investment) resulted in the silent death of Marxism and integration of a pluralist, fresh constitution in 1990 – which accommodated a multi-party system.

It should be noted that Joaqim Chissano, Mozambique’s second President , was not as hard-line Marxist as his predecessor Samora Machel was. Due to its rapid economic growth following the adoption of a market economy in the later stage of the 1990’s, economists prove to be on two polarized sides.

On one side, economists believe that post civil war, the spread of Mozambique’s economic fruits were uneven, increasing poverty levels in the area. On the other side of the playing field it was noted that the discovery and extraction of Mozambique’s natural minerals resulted in an increase of tax revenues, reducing dependence on donors and foreign aid. By 2012, the finance ministry proved that 27% of public expenditure came from loans and grants from the IMF and World Bank.

Today, Mozambique economy boasts of capital-intensive nature. Although the Real GDP grew to 7% last year, mainly due to the increase of coal production, budgetary expansion and implantation of large infrastructure projects which are projected to grow to8.2% this year, it has its shortfalls. Economic growth still needs to produce its fruits towards the long term benefit of its people. Economic growth has yet to create a plethora of jobs for its people which does not translate into poverty reduction – an extreme drawback to the once idea of removing classes and ensuring Mozambique’s fruits could be distributed among its entire people.

SOURCE: African Economic Outlook, World Bank