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Mozambique Compact

The Millennium Challenge Corporation (MCC) and the Government of Mozambique signed a five-year, $506.9 million compact in July 2007, designed to increase the country’s economic growth and reduce poverty by investing in four project areas: water and sanitation, roads, land tenure, and agriculture.

The government and MCC jointly identified and selected these project areas based on:

  • Efforts to fund activities that would help attract private investment and increase economic growth to reduce poverty;
  • Input from businesses and civil society; and
  • Lessons from previous government development strategies.
The compact focused on Mozambique’s northern provinces, home to half the country’s population but where the economy has lagged compared to the southern provinces.

At the end of the compact in September 2013, the Government of Mozambique and MCC had spent 90 percent of the anticipated compact funds to:

  • Help farmers improve coconut crop management and yields;
  • Formalize land titles;
  • Rehabilitate roads used for commercial traffic; and
  • Help upgrade water and sanitation systems.
The Government of Mozambique and MCC expect more than two and a half million people to benefit from the investments. Further details of the compact's results and impacts can be found in its impact and performance evaluations.
  • Original Amount at Compact Signing:
    $506924053
  • Amount spent:
    $447904512
  • Signed:
    July 13, 2007
  • Entry Into Force:
    September 22, 2008
  • Closed:
    September 22, 2013

Project Results

Farmer Income Support Project

  • $17,432,211
    Original Compact Project Amount
  • $18,857,348.79
    Total Disbursed

Estimated Benefits

Estimated Benefits for the Farmer Income Support Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At compact closure 534,044 $43,050,000

Project Description

Historically, Mozambique has been a significant exporter of coconuts and coconut products. However, outbreaks of coconut lethal yellowing disease (“CLYD”) had threatened the industry and the livelihoods of over 1.7 million people in Zambézia and Nampula Provinces.  Affected trees stop producing fruit and must be removed and replaced.

The objective of the project was to improve productivity of coconut products and encourage diversification into other cash-crop production. The project aimed to eliminate biological and technical barriers hindering economic growth among farms and targeted enterprises, while supporting diversification into other cash crops and improved farming practices to assist smallholders and producers to recover lost income. In conjunction with tree removal and replacement, the project assisted farmers in adopting new cropping systems and developing alternative sources of cash income during the seven or more years required for the coconut trees to reach productive age. Meanwhile, the project provided technical support to introduce better practices aimed at increasing crop yields.  At its conclusion, more than 8,000 hectares with diseased or dead palm trees were cleared in areas affected by the disease, more than 780,000 disease-resistant seedlings were planted and more than 15,000 farmers were trained in coconut pest and disease surveillance and control.

Land Tenure Services Project

  • $39,068,307
    Original Compact Project Amount
  • $39,466,421.35
    Total Disbursed

Estimated Benefits

Estimated Benefits for the Land Tenure Services Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At compact closure 1,333,445 $38,840,000

Project Description

Land is an important asset for income generation and wealth creation.  In Mozambique, land has been at the center of a long-standing debate about the different choices and visions for growth in rural and urban areas.  The Land Tenure Services Project was designed to address the issue of land insecurity and access, by improving policies and regulations and by helping specific beneficiaries better understand how to register their land rights. The project comprised three mutually reinforcing activity areas:

  • supporting an improved policy environment, including addressing implementation problems for the existing land law, and engaging in regulatory review to improve upon it;
  • improving capacity of public land administration agencies responsible for implementing policies and providing quality public land-related services; and,
  • facilitating access to land by helping people and business with:
    • clear information on land rights and access;
    • more predictable and speedy resolution of land and commercial disputes to create better conditions for investment and business development; and
    • registering individuals’ and businesses’ land rights in the form of land use certificates (DUATS) for long-term or 6 perpetual rights in land.
The project accomplished the following:
  • nearly 10,000 rural DUATs were delivered, following the mapping of over 8 million rural hectares. The Government of Mozambique has committed to formalize 5 million household DUAT rights with the World Bank funding 2 million DUATs starting in 2020;
  • nearly 150,000 urban DUATs were processed and distributed, including completion of a full cadaster in Monapo; and
  • a national land information management system was established in four northern provinces and eight targeted municipalities which the Government, with support from the Netherlands, expanded to all provinces in Mozambique after the end of the compact.

Rehabilitation/Construction of Roads Project

  • $176,307,480
    Original Compact Project Amount
  • $136,802,300.61
    Total Disbursed

Estimated Benefits

Estimated Benefits for the Rehabilitation/Construction of Roads Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
Not specified 1,237,734 $-13,280,000

Project Description

The objectives of the Roads Project were to:

  • improve access to markets, resources, and services;
  • reduce transport costs for the private sector to facilitate investment and commercial traffic;
  • expand connectivity across Mozambique’s northern region and towards the southern half of the country; and,
  • increase public transport access for individuals to take advantage of job and other economic opportunities.
In its design, the project was to rehabilitate 491 kilometers of high-priority interventions on key segments of National Route 1, which form the backbone of the country’s transportation network. Due to higher than expected costs identified during the preparation of full feasibility studies and detailed engineering designs, MCC and the Government of Mozambique agreed to re-scope the activity to two segments totaling 253 kilometers of improved road. At the conclusion of the compact, approximately 90 percent of the 150 kilometer road segment and 70 percent of the 103 kilometer segment had been completed. As a result, the Government of Mozambique committed a total of $30 million (an initial tranche of $10 million and a subsequent tranche of $20 million) to finish the works and cover the associated project management costs. These works were completed in December 2014.

Water and Sanitation Project

  • $203,585,393
    Original Compact Project Amount
  • $200,221,661.34
    Total Disbursed

Estimated Benefits

Estimated Benefits for the Water and Sanitation Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At compact closure 780,908 $52,360,000

Project Description

The Water Supply and Sanitation Project was designed to improve access to safe, reliable water supplies and sanitation services, recognizing that lack of access to these resources are a barrier to growth and health. This project aimed to increase productivity and reduce waterborne diseases—one of the leading causes of death in children under five. The project was also designed to address issues of inadequate access and unreliable service delivery in small- to mid-sized towns. Project teams constructed more than 614 rural water points (boreholes with hand pumps), upgraded and expanded two municipal drainage systems, and upgraded and expanded two urban water supply systems.  Additionally, MCC, the Government of Mozambique and other sector stakeholders worked to develop and apply new policies to promote sustainable management of Mozambique’s water resources infrastructure. This included the creation of a new, semi-autonomous government entity (AIAS) responsible for the management of water supply and sanitation assets in 134 of Mozambique’s medium-sized cities and towns.