“Mozambique needs to accelerate the transition to more resilient development models that are less dependent on international aid.” EY Mozambique

Francisca Neves, a partner at Ernst & Young (EY) Mozambique, recently highlighted that the country needs to accelerate the transition to a more resilient and autonomous development model, progressively reducing its dependence on international aid.

According to the auditor's analysis, although external support has enabled crucial advances in health, education, and social protection, the strong volatility of donor priorities and successive global crises expose the national economy to increasingly high risks of funding cuts and consequent impacts on ongoing projects.

“In several African countries, including Mozambique, a significant portion of health, humanitarian assistance, food security, and social development programs continues to depend on external funding. Therefore, sudden reductions in these flows can directly affect populations.”

vulnerable and jeopardizing gains accumulated over several years. However, this context also reinforces an important message: it is necessary to accelerate the transition to more resilient development models that are less dependent on international aid."As Francisca Neves mentioned."

The warning comes at a time when international reports, including assessments by the International Monetary Fund (IMF) under Article IV, emphasize that potential cuts in foreign aid could place millions of citizens in Sub-Saharan Africa in a situation of extreme social vulnerability.

When questioned about the real feasibility of financing local development, Francisca Neves argues that, “Mozambique has significant potential to expand its domestic tax revenue by broadening the tax base through the progressive formalization of the economy, rigorous combat against tax evasion and fraud, greater modernization of the national tax administration, responsible and transparent use of revenues generated by natural resources (such as natural gas, among others), development of national financial channels and long-term domestic savings, therefore, the essential focus is on mobilizing resources from a perspective of maximizing the impact of each metical invested.”

According to her, the establishment of a Development Bank could play a significant role in the country's economic transformation.

“International experience demonstrates that development banks can be very effective instruments, but only when they operate with strong institutional discipline and a focus on results, potentially bringing advantages such as financing long-term structuring projects, supporting small and medium-sized enterprises, promoting industrialization and economic diversification, financing strategic sectors often under-prioritized by the commercial banking system, attracting concessional resources and mixed financing,” stated Francisca Neves.

Alongside the structuring of a Development Bank, the auditor also warns against the dispersion of initiatives and the duplication of efforts in certain provinces and sectors by donors, to the detriment of regions lacking any support, as obstacles to capitalizing on the benefits of the funds received and the consequent impact on the country's sustainable development.

"It is essential to improve the coordination of funding, avoid duplication of efforts among donors, and strengthen national planning and monitoring mechanisms. The creation of structures is equally important."

with the capacity to map, coordinate, and align external support with the country's development priorities."He clarified."

Faced with these challenges, the auditor reiterates that the ultimate goal of government planning should be the creation of an economic ecosystem capable of financing its own basic public services, progressively minimizing the need for external aid and promoting truly inclusive growth in which any external support or assistance is integrated and framed within that same ecosystem, generating sustainable, long-term growth.