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 results and impacts will be shared in forthcoming impact and performance evaluations.
- Original Amount at Compact Signing: $506,924,053
- Amount spent: $447,904,512
- Signed: July 13, 2007
- Entry Into Force: September 22, 2008
- Closed: September 22, 2013
Estimated benefits correspond to $310.8 million of compact funds, where cost-benefit analysis was conducted:
- 2,684,796Estimated beneficiaries over 20 years
Any household expected to receive an income gain from the MCC project, either through direct monetary increases, time savings, land value.
- $132,000,000Estimated net benefits over 20 years
Net Benefits are the compact benefits minus the costs for the project(s) over the 20 year compact life. This is calculated at a 10% discount rate.
Compact Changes
The MCC-Mozambique compact included large scale capital investments in infrastructure and major service delivery systems, like those that manage water and sanitation. MCC compacts are a fixed amount implemented over five years, and partner governments must focus on compact results while balancing changes in costs and implementation schedules.
As MCC and the Government of Mozambique encountered higher-than-anticipated construction costs—based on additional technical and regulatory information about the design of compact investments—they agreed to make four compact changes:
- Reducing the compact’s infrastructure projects from four road segments totaling 491 kilometers to two segments totaling 253 kilometers.
- Restructuring the Water Supply and Sanitation Project and the municipal drainage activities from six in each area to two.
- MCC and MCA-Mozambique terminated a Water Supply activity (Nacala), due to an underperforming contactor. The government began working with the World Bank in 2013 to complete this water supply activity.
The Government of Mozambique committed an additional $30 million in 2012 to help complete compact components that faced procurement and civil contractor staffing delays. This enabled them to complete all road works in January 2014.
Project Results
Farmer Income Support Project
- $17,432,211Original Compact Project Amount
- $18,857,349Total Disbursed
- 36%Estimated Economic Rate of Return over 20 years
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.
Estimated benefits correspond to $19.5 million of project funds, where cost‑benefit analysis was conducted:
- 534,044Estimated beneficiaries over 20 years
- $43,050,000Estimated net benefits over 20 years
Evaluation Findings
MCC is conducted a mixed-methods performance evaluation of the farmer income support project that measured CLYD prevalence and spread, household incomes, and the survival of coconut seedlings.
The evaluation found that in the epidemic zone (<10% disease prevalence), FISP was successful in reducing overall disease prevalence. Despite the success in efforts to reduce disease prevalence, coconut production did not increase enough to lead to increased household income from the sale of coconuts. Instead, FISP had an impact on non-farm income (fishing and non-skilled labor).
In the endemic zone (>75% disease prevalence), FISP had a measurable and significant impact on households’ adoption of alternative crops, which led to increased production of FISP-promoted crops; however, the magnitude of the increase was small and did not result in an impact on household income.
The Farmer Income Support Final Evaluation Report was released on the MCC Evaluation Catalog, available at https://data.mcc.gov/evaluations/index.php/catalog/131/related_materials.
Key performance indicators and outputs at Compact End Date
| Activity/Outcome | Key Performance Indicators | Baseline | End of Compact Target | Quarter 1 through Quarter 20 actuals (Dec. 2013) | Percent Compact Target Satisfied (Dec. 2013) |
|---|---|---|---|---|---|
| Business Development Support Outcome: SME business development in target value chains |
Businesses receiving BDF Grants | 0 | 150 | 119 | 79% |
| Control of Endemic Disease Outcome: To control and mitigate the spread of Coconut Lethal Yellowing Disease |
Farmers trained in planting and post planting management of coconuts
|
0 | 8,000 | 28,830 | 360% |
Farmers trained in surveillance and pest and disease control for coconuts
|
0 | 8,000 | 15,607 | 195% |
| Improvement of Productivity Outcome: Provision of technical assistance for income diversification |
Farmers using alternative crop production and productivity enhancing strategies(%) | 0 | 30 | 38 | 127% | Hectares of alternative crops under production | 0 | 8,000 | 7,686 | 96% |
Farmers trained in alternative crop production and productivity enhancing strategies
|
0 | 8,000 | 8,958 | 112% |
| Rehabilitation of Endemic Areas Outcome: Planting of coconut seedlings more tolerant of Coconut Lethal Yellowing Disease |
Coconut seedlings planted | 0 | 650,000 | 782,609 | 120% | Survival rate of coconut seedlings | 0 | 80 | 76 | 95% |
Land Tenure Services Project
- $39,068,307Original Compact Project Amount
- $39,466,421Total Disbursed
- 24.5%Estimated Economic Rate of Return over 20 years
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 public land administration agencies responsible for implementing policies and providing quality public land-related services; and,
- facilitating access to land use 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’ grants of land use, whether in the form of land titles to long-term or perpetual-use rights.
The project accomplished the following:
- nearly 8.8 million rural hectares were mapped,
- nearly 150,000 urban titles were formalized and distributed, and
- an advisory forum was established to engage stakeholders in transparent and structured policy discussions relevant to the sector.
Estimated benefits correspond to $40.1 million of project funds, where cost‑benefit analysis was conducted:
- 1,333,445Estimated beneficiaries over 20 years
- $38,840,000Estimated net benefits over 20 years
Evaluation Findings
MCC is planning impact evaluations of both the urban and rural components of the site specific access to land activity, as well as a performance evaluation of the land administration capacity building activity. The impact evaluations will assess the effect of provision of a land use certificate (DUAT) on land tenure security, investments, land value and productivity. The performance evaluation will assess the effect of training of local land offices and incorporation of a land information management system on the time it takes to process a DUAT and the volume of DUATs. End line data collection is expected in 2017 with findings published in early 2018. In addition, a performance evaluation was already completed in coordination with DFID of the community access to land e component of the site-specific access to land activity, which assessed the effect of provision of community DUATs via the Community Land Fund on allocation of resources, perceptions of tenure and commercial investments. The community evaluation is available here.
Key performance indicators and outputs at Compact End Date
| Activity/Outcome | Key Performance Indicators | Baseline | End of Compact Target | Quarter 1 through Quarter 20 actuals (Dec. 2013) | Percent Compact Target Satisfied (Dec. 2013) |
|---|---|---|---|---|---|
| Land Administration Capacity Building Outcome: Land administration capacity building |
Land administration offices established or upgraded | 0 | 26 | 26 | 100% |
People trained (paralegal courses at CFJJ, general training at DNTF, etc.)
|
0 | 750 | 1,516 | 202% |
| Site Specific Secure Land Access Outcome: Facilitation of site-specific secure access to land |
ITC Communities land areas mapped | 0 | 222 | 259 | 117% | ITC Rural hectares formalized | 0 | 3,030,000 | 2,258,867 | 75% | LTR DUATs delivered to the rural beneficiaries | 0 | 6,237 | 9,456 | 152% | LTR Rural hectares mapped | 0 | 5,000,000 | 8,762,020 | 175% | LTR Urban parcels mapped | 0 | 140,000 | 188,423 | 135% |
LTR DUATs delivered to the urban beneficiaries
|
0 | 140,000 | 144,522 | 103% |
Rehabilitation/Construction of Roads Project
- $176,307,480Original Compact Project Amount
- $136,802,301Total Disbursed
- 7.3%Estimated Economic Rate of Return over 20 years
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 149 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.
Estimated benefits correspond to $127.7 million of project funds, where cost‑benefit analysis was conducted:
- 1,237,734Estimated beneficiaries over 20 years
- $-13,280,000Estimated net benefits over 20 years
Evaluation Findings
MCC is planning a performance evaluation of the Roads Project that will measure road roughness, road maintenance, annual traffic, and vehicle operating costs.
Key performance indicators and outputs at Compact End Date
| Activity/Outcome | Key Performance Indicators | Baseline | End of Compact Target | Quarter 1 through Quarter 20 actuals (Dec. 2013) | Percent Compact Target Satisfied (Dec. 2013) |
|---|---|---|---|---|---|
| Road Rehabilitation Outcome: Rehabilitate high priority segments of the N1 highway |
Kilometers of roads issued "Take-over Certificates" | 0 | 253 | 253 | 100% | Percent of roads works contracts disbursed | 0 | 100 | 88 | 88% |
Water and Sanitation Project
- $203,585,393Original Compact Project Amount
- $200,221,661Total Disbursed
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.
Estimated benefits correspond to $123.5 million of project funds, where cost‑benefit analysis was conducted:
- 780,908Estimated beneficiaries over 20 years
- $52,360,000Estimated net benefits over 20 years
Evaluation Findings
MCC planned an evaluation of the Urban Water Supply and Drainage and Sanitation Activities that would measure the reliability and quality of water supply, per capita water consumption, and health and other outcomes. The performance evaluation is expected to begin in early 2017.
The Rural Water Supply Activity Final Evaluation Report was released in August 2014 on the MCC Evaluation Catalog (available at http://data.mcc.gov/evaluations/index.php/catalog/76/related_materials). A summary of key results includes:
- Consumption of improved water increased by 15.1 liters per capita per day.
- Median household year-round trip time to the primary water source fell by 62 minutes and dry-season roundtrip time fell by 129 minutes.
- Time savings were primarily used for domestic activities, resting, family activities/child care, and farming.
- No statistically significant impacts detected on health-related outcomes.
- No statistically significant impacts have been detected on household income.
- No statistically significant impacts detected on poverty rate.
Key performance indicators and outputs at Compact End Date
| Activity/Outcome | Key Performance Indicators | Baseline | End of Compact Target | Quarter 1 through Quarter 20 actuals (Dec. 2013) | Percent Compact Target Satisfied (Dec. 2013) |
|---|---|---|---|---|---|
| Construction of Rural Water Points Outcome: Install and rehabilitate rural water supply points |
Persons trained in hygiene and sanitary best practices | 0 | 7,200 | 8,400 | 117% | Amount disbursed for rural water points construction contracts | 0 | 8,597,705 | 8,223,869 | 96% | Percent of rural population of the six intervention districts with access to improved water sources | 0 | 22 | 23 | 106% |
Rural water points constructed
|
0 | 600 | 614 | 102% |
| Municipal Sanitation and Drainage Systems Outcome: Rehabilitation/ expansion of sanitation and drainage systems in urban areas |
Amount disbursed for municipal sanitation and drainage construction contracts | 0 | 51,354,969 | 51,222,254 | 100% | Value of Municipal Sanitation and Drainage Systems construction contracts signed | 0 | 40,437,763 | 51,354,969 | 127% |
| Urban Water Supply Systems Outcome: Rehabilitation / expansion of water supply systems in urban areas |
Percent of revised construction contract disbursed for water systems | 0 | 100 | 81 | 81% | Value of contracts signed for construction of Water Systems | 0 | 91,518,535 | 109,547,822 | 120% |
Coordination and Partnerships
With a recognition that construction on the 253 kilometers of road would not be completed by the September 2013 compact end, the Government of Mozambique provided additional funding of $10 million in July 2013 to cover expected post-compact construction and project management costs. Following the compact’s closure, the Government of Mozambique allocated another $20 million, for a total government contribution of $30 million. These additional funds were provided to cover expected final costs associated with the Road Project, which included outstanding construction and project management costs, as well as funding to cover construction-related claims. Following the compact’s closure the government worked with the World Bank to identify financing and construction opportunities for the Nacala Water Supply activity, which was terminated as a result of a poorly performing contractor..
Key Conditions Precedent
To encourage desired investment outcomes under the compact, MCC and the Government of Mozambique agreed that the following conditions precedent (CP) would be met before disbursing project funds.
| Key Compact Component(s) | Major Condition Precedent or Policy Reform Required | Rating |
|---|---|---|
| Water and Sanitation Project |
Increased Authority of Central Regulatory Agency To better ensure sustainability and consistency within the WSS sector, the regulatory agency will have broader oversight to include smaller cities and towns. As a CP, the Minster of Public Works and Housing signed a letter of sector policy which officially expanded the mandate of the regulatory agency. |
Met on time |
| Land Tenure Services Project |
Land Use Legislation Land use rights are currently not easily transferrable, hindering considerable small and medium-scale development, business creation, etc. The Government will adopt revised legislation and administrative procedures that allow land use rights to be transferred without undue delay or risk. |
Not met |
| Water and Sanitation Project |
Legal establishment of Provincial Water Boards for AIAS Administração de Infraestruturas de Água e Saneamento (AIAS), a new institution established to manage water supply and sanitation assets in Mozambican cities with populations between 50,000 and 150,000. |
Met on time |
| Rehabilitation/Construction of Roads Project |
Road Maintenance The Government of Mozambique has prepared a paved road maintenance program that includes a periodic maintenance for the entire paved roads network. The program includes but is not limited to the following items: a rolling planning period of eight years; provisions for annual updating of the program based upon additions to the paved road network; a detailed listing of all paved roads subject to periodic maintenance by year; a funding plan that includes 100% of routine and periodic maintenance works such that those works will be funded in increasing amounts to 100% by user fees as of ten years after the initial paved roads maintenance program. |
Met on time |