According to the auditor, while external assistance has enabled significant progress in healthcare, education and social protection, the volatility of donor priorities and successive global crises are exposing the country's economy to growing risks of funding cuts, with potentially serious consequences for ongoing development projects.
"In several African countries, including Mozambique, a significant share of health, humanitarian assistance, food security and social development programmes continues to depend on external financing. Sudden reductions in these funding flows can therefore directly affect vulnerable populations and undermine progress achieved over many years. At the same time, this context reinforces an important message: the transition to more resilient development models that are less dependent on international aid must be accelerated," Neves said.
Any external support, she added, should be integrated into that ecosystem to maximise its developmental impact.
Her comments come as international reports, including International Monetary Fund (IMF) Article IV assessments, warn that reductions in foreign aid could leave millions of people across sub-Saharan Africa in situations of extreme social vulnerability.
Asked about the feasibility of financing development through domestic resources, Neves said Mozambique has considerable potential to increase domestic revenue by broadening the tax base through the gradual formalisation of the economy, strengthening efforts to combat tax evasion and fraud, modernising tax administration, making transparent and responsible use of revenues generated from natural resources such as natural gas, and expanding domestic financial markets and long-term savings.
"The essential priority is to mobilise resources in a way that maximises the impact of every metical invested," she said.
Neves also argued that the creation of a Development Bank could play an important role in transforming Mozambique's economy.
"International experience shows that development banks can be highly effective instruments, provided they operate with strong institutional discipline and a clear focus on results. They can finance long-term strategic projects, support small and medium-sized enterprises, promote industrialisation and economic diversification, finance strategic sectors that are often underserved by commercial banks, and mobilise concessional and blended finance," she said.
Alongside the establishment of a Development Bank, Neves warned that fragmented donor initiatives and duplication of efforts across some provinces and sectors, while other regions receive little or no support, reduce the effectiveness of development funding and undermine sustainable development.
"It is essential to improve the coordination of funding, avoid duplication of effort among donors and strengthen national planning and monitoring mechanisms. It is equally important to establish institutions capable of mapping, coordinating and aligning external assistance with the country's development priorities," she said.
Neves concluded that the government's long-term objective should be to create an economic ecosystem capable of financing its own essential public services, progressively reducing the need for foreign aid while promoting genuinely inclusive and sustainable long-term growth. Any external support, she added, should be integrated into that ecosystem to maximise its developmental impact.
Source: Karingana Agência de Comunicação / Press Release.