Mozambique is still such a young country, but it already has quite a long history. Only gaining independence in 1975, it then quickly plunged into 17 years of cold and hot wars, only emerging in 1990 to pass a modern constitution. In the capital city of Maputo the history still hangs heavily in the air, pierced by the spire of the Portuguese Catholic Church, divided by Avenidas called Karl Marx, and Ho Chi Minh.
Soot stains a concrete circus of art deco creations from fifty years ago, and towering ridged blocks of Soviet era high density housing crumble, exposing the abject poverty which still defines much of the country. Mozambique is one of the poorest places in the world. The United Nation’s Human Development Index places it 178 out of 187 countries, lower than countries like Afghanistan. In 2014, the mean years of schooling a male has achieved is 1.7 and for a female it is a mere 0.8, with 60% of the population living on US$ 1.25 or less.
However, despite all this, Maputo is safe, flavorful and optimistic. The crumbling concrete shivers in the shadows of giant cranes, which are carving new corporate character into the city. Old colonial stained glass windows diffuse light into boutique cafes, mouthwatering piri piri prawns dominant menus and places like Zambi, Dhow Cafe and Bella Madallena ooze style and smiles.
Even the Red Light District now hosts live music, and it is safe to walk home at night after beers and clams on the beach. Maputo has been cool for years now, but for most, it will be too expensive for them before they even hear about it. Basic hotels in the capital already charge about US$ 200 a night. The prices in Maputo are now just as likely to bring tears as the poverty.
The understated dynamism is being fueled by huge inflows of foreign direct investment from abroad. Now deemed one of the African Lions, Mozambique’s economy has been driven by enormous natural gas discoveries, which promise to place it as one of the largest gas exporters in the world. They have huge coal deposits as well, and if global coal prices rise again, they could catalyze even higher levels of investment. Analysts predict the GDP will increase by five to eight fold by 2035, representing one of the most prolific growth rates in modern history.
However, ironically the money will not alleviate the poverty, this type of wealth is more likely to exacerbate it. These extractive industries are capital intensive; they do not supply the jobs needed to distribute it into the economy. They will not lift the dilapidated fishing boats on the coast in a sea of change. The foreign money will drive prices higher, not wages for the masses.
Domestic industries will become less competitive abroad until they are not even competitive at home, undermining the local production of everything — even food. The poverty brought by proxy wars and socialist policies will only be aggravated by the great wealth that these capitalist industries bring. It is a poisoned apple for a starving state that is becoming even sicker with every bite it takes.
This resource curse is not a unique problem, its syndrome is called Dutch Disease and created states like Papua New Guinea, Angola and Nigeria. Modern states with sophisticated governments and educated populations can absorb the wealth. Countries like Norway shielded the economy from its oil wealth by creating a sovereign wealth fund, but that creates a moral quandary in a place like Mozambique. Should money be shielded from poor people that need it now, and what government institution can be trusted to properly manage such a fund?
Maputo is the tale of two cities woven together in the same location yet tugging the seams in different directions with a potentially devastating result for the fabric of society. It is a marriage of socialist ghosts and a capitalist nightmare. For now there is somehow a hip coexistence in this flicker of history, but times are changing quickly.
This article was subsequently published on the USAID SPEED Programme’s website on 27 January 2015: Maputo: Poverty and Prosperity in a Glass House.