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The PARPA: Towards achieving results - May 2002
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| 6. Great strategic options |
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In the elaboration of a strategy, there are some elements which could already be taken into consideration on the basis of experiences which were acquired and systematised by research [carried out] in Mozambique. These elements include the great options of a strategic character which a country should embrace.
It could be asserted that the market by itself would take care of these options. But unfortunately in Mozambique, the market or markets are not perfect. In the majority of the cases they are incipient; in other cases they don’t even exist. Therefore an equilibrium has to be estasblished between what can be viably expected from the market and what can possibly be done from the normative point of view.
6.1 First strategic option
Should the country’s poverty reduction strategy be different or equal to the economic growth strategy? At first sight it may seem obvious that poverty reduction emanates from economic growth. But economic history has shown several times that, although there is a positive correlation between them, the time period which separates them is far longer than has been supposed.
In the face of the unforeseen, nothing else can be done but to adopt mechanisms which would enable the results to interact with the postulates. So, nothing prevents a multifaceted strategy being adopted whereby, on the one hand, the economic growth question would be targeted and, on the other, poverty reduction would be addressed. For example, the country may determine that accelerated economic growth may depend on the exploration of energy resources by means of foreign investment; while poverty reduction would be addressed by attracting national investment to the agrarian sector.
6.2 Second strategic option
If an option is made to reduce poverty by means of national investment, should the State then create financial mechanisms aimed at reducing the risk for the invested capital, or should one wait for the market to do it by itself?
Even where it is said that the markets tend towards perfection, as may be the case in the European Union and the United States, the question of agricultural subsidies continues to occupy the agendas of international forums.31 How can one expect markets which are incipient and structuraly distorted by the international situation to regulate themselves regarding investment in the agrarian sector?
However, the question arises on the nature of subsidies to agriculture. Experience has already shown that subsidised products or privileged agents do not always contribute towards the decrease of social asymetries; and they do increase the tendency towards capital flight. What type of subsidy then could minimise risk? In this sense, studies have still to be carried out; but one can already say with certainty that the costs of research, market research and information can very well be covered by the State without running the risk of distortion. In addition, compensation funds may be created, and return periods of interest rates may be revised in function of the productive cycle and the behaviour of international markets with less risks. This is beyond the already accepted co-participation of the State in the initial investment costs, by means of the building of infrastructure and service provision such as energy and technical assistance networks, added to the costs of exploration and maintenance.
6.3 Third strategic option
In the case of poverty reduction via the agrarian sector, should the country opt for an agriculture of scale, with an intensive use of the labour force, or for a highly productive family agriculture?
For a long time studies have been carried out and debates taken place in the realm of agrarian economics, concerning the relationship between the dimension of the area of agricultural exploration and economic efficiency. Today it is known that the multiplicity of factors which influence economic efficiency is such that one cannot have a single dimension as being the ideal area. The following factors, among many others, are responsible for the unforeseen in this field: the productivity of the soils, the storage systems, the routes of access to the market, the costs of inputs, the appearance of niches as well as the disappearence of others in the market, the unpredictable atmospheric changes, etc. However, not being able to know the ideal dimension does not imply that the measure of the non-desirable is not known; this is that which is utilisable, it is that of the non-utilised land for speculatory ends. In Zimbabwe, one of the reasons for the land crisis arises from the fact that a large percentage of productive and good quality land lies abandoned; this is side by side with the enormous search for land by the poor. There is no doubt that the State has a role to play [in this regard], and in Mozambique the land legislation has mechanisms to prevent the same from happening.
Another approach to the problem of the dimension of agricultural exploration and its efficiency is related to labour. When priority is given to an agriculture of scale, this means that one has opted for the transformation of the peasantry into rural labourers; as Samir Amin would say, [this is an option for] the proletarianisation of the peasantry. This would imply a profound revision of the rural worker’s salary level, accompanied by the guarantee that the supply of employment in the great farms would correspond to the number of self-employment jobs which are guaranteed by a family agriculture. There is little chance that this will happen.
The third factor pertaining to this option is related to the physical planning of the rural population centres. If one opts for an agriculture of scale, then one would unquestionably have to revise the settlement pattern which is predominant in Mozambique. It is not by chance that, in the region, Mozambique is the only country which has a dispersed settlement pattern in the greater part of its rural areas. This is a result of the predominance of family agriculture, in relation to commercial scale agriculture. If the latter becomes predominant, it will become necessary to concentrate the citizens in function of the economic rationality of the businesses where they will be employed; the option between the so-called development hubs and the services networks where the citizen resides is dependent on the option which has been chosen by the country in relation to the type of agricultural exploitation to be adopted.
6.4 Fourth strategic option
Once more, in the case of poverty reduction through the agrarian sector, is the country going to export primary materials, or is it going to add value through industrial transformation?
In the knowledge that approximately one third of the external debt which is now being incurred is earmarked for the area of infrastructure, it becomes relevant to have a clear option on a market access strategy for agrarian products. If an option to export is made, then the roads linking the interior to the coast should be the ones to be constructed; the electrical energy capacity to be distributed among the districts will be less; and the water supply will be exclusively for human consumption. On the contrary, if an option towards the products’ transformation is made, then one should have to think in terms of road networks; energy has to be measured according to potential industrial utilisation; and the quantity and quality of water will depend on the type of venture which one can foresee happening.
To the question surrounding the type and dimension of the infrastructures one should add that of the long term sustainability of the natural resources utilisation, as well as the dependence of export monocultures on the whims of international markets.
6.5 Fifth strategic option
The last strategic option which should be emphasised is related to the disbursement of the funds which were made available by the ‘PARPA’. Should this disbursement be carried out exclusively by the State, or can the co-participation of the private sector and civil society be accepted?
Up to the present, the State has been solely responsible for this financial disbursement, although it is a known fact that, in certain areas, the private sector has greater capacity, while in other sectors civil society has a greater agility. Since the debt will have to be paid by all the partners, there is nothing to prevent the question being asked, “Why is only one of the development partners responsible for its disbursement?”
The concentration in the State, more actually in the executive, not only exacerbates the administration costs, but also exonerates the other [partners], which are seen as integral and indispensable elements in the process, from any responsibility. The Central Bank could very well become the meeting place of the various partners in the execution of the ‘PARPA’s financings, in place of the Ministry of Finance.32 It goes without saying that, from the moment the agreements have been signed, there will be no way to go back on them, even in the name of efficiency.
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Footnotes:
- In 1999 the countries of the OECD spent US $ 360 billion in subsidies to agriculture which means US $ 1 billion per day in subsidies. In OECD, 2001. Agricultural Policies in OECD Countries: Monitoring and Evaluation.
- “In whatever form, the administration should be professional, transparent and oriented towards results”, commentary by Prakash Ratilal.
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