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November 15, 2012

Report No.: AB7154

(The report # is automatically generated by IDU and should not be changed)

Operation Name

MZ First Agriculture Development Policy Operation






General agriculture, fishing and forestry sector (100%)

Operation ID


Lending Instrument

Development Policy Lending



Implementing Agency

Ministry of Planning and Development

Date PID Prepared

October 26, 2012

Estimated Date of Appraisal

January 25, 2013

Estimated Date of Board Approval

March 28, 2013

Corporate Review Decision

Following the corporate review, the decision was taken to proceed with the preparation of the operation.

  1. Key development issues and rationale for Bank involvement

Mozambique’s economic growth continues to be strong. GDP growth averaged almost 7 percent in the past five years, during a period of relative turbulence across the world. Growth was not seriously affected by the global financial crisis, as the authorities’ adoption of accommodating fiscal and monetary policies in 2009 helped mitigate the impacts. Real GDP growth accelerated to an annual rate of 7.2 percent in 2011. Growth is likely to be maintained at similar or slightly higher levels in 2012, despite turbulence in international markets and sluggish growth in some of Mozambique’s main export markets.
The medium-term macroeconomic outlook is positive. The authorities expect real GDP to grow by 7.9 percent during 2013-15, driven by agriculture, the extractive industries, electricity and water, construction, and transportation and communications. As discussed in Mozambique’s Poverty Reduction Strategy Paper (Plano de Acção para a Redução da Pobreza - PARP), the GoM proposes reforms to support stronger growth in these labor intensive sectors, which will take time to implement.
The PEDSA is the government’s strategic plan for the development of the agricultural sector for the period 2011 to 2020. It is characterized by a multi-sector, inter-ministerial approach to improving agricultural performance; its strategic objective is to “contribute to food security and producer income in a competitive and sustainable manner that guarantees social and gender equity.” With implementation of the PEDSA, the government seeks to achieve an annual growth rate in agriculture of at least 7 percent, through a combination of increased farm productivity (i.e., higher yield per hectare (ha)) and an expansion of cultivated area (an increase of 25 percent by 2020 of the area cultivated for food crops). The PEDSA promotes the creation of an enabling environment conducive to stronger private sector participation (including smallholders and other economic actors) in the various commodity value chains. The PEDSA prioritizes public investments in areas of strong economic potential while supporting local initiatives and non-farm activities elsewhere. Six development corridors are identified where agriculture-related investment operations financed by the Bank are already under implementation, including the Zambezi Valley and the Beira corridors in central Mozambique.
The Agriculture Development Operation (AgDPO) series proposed is a logical extension of the lessons learned by the government and donors after a decade of operational and institutional engagement in agriculture. Amidst the various sector strategies, institutional development programs, and operational projects, the AgDPO series fills the growing policy gap that has been a determinant of the mixed results in agriculture performance in recent years. To achieve agricultural growth, the GoM needs to complement its new agricultural sector strategy (PEDSA), its recent national Comprehensive Africa Agriculture Development Programme (CAADP) Compact, and its subsequent medium-term sector investment plan (PNISA) with a medium-term program of policy and institutional sector reforms: the AgDPO series provides the GoM the opportunity to prioritize, select, implement, and report on the implementation of such rigorously selected sector policy instruments.

  1. Proposed Objective(s)

The Development Objective of the AgDPO series is to contribute to increasing production and enhancing productivity in the agriculture sector through the implementation of a medium-term sector policy and institutional reform agenda. To support the GoM’s strategic objective of achieving food security through sustainable and equitable growth in the agriculture and fisheries sectors, the AgDPO series is articulated around three strategic thematic areas (Technology Adoption, Access to Assets, and Sector Performance Monitoring) that are aligned with the pillars of the Bank’s Africa strategy for agriculture (land and water management, agricultural markets and infrastructure, food security and vulnerability, and agricultural technology). This strategy is itself aligned with the architecture of the African Union-endorsed CAADP, as reflected in the GoM’s national CAADP Compact, signed in December 2011.

The AgDPO series is designed as a programmatic series of three consecutive annual credits to support a sequence of medium-term policy and institutional reforms in agriculture. More specifically, the design of the DPO series and the choice of policy areas reflect the need for a broader approach to achieve the strategic objectives of the GoM as outlined in the PARP. In line with the PEDSA and the CAADP Compact, achieving significant results on the ground will require a multi-sector, inter-ministerial approach that addresses the policy and institutional bottlenecks hindering development and growth in the core areas of agriculture. It will further require the GoM to adopt measures that help improve the performance of sectors that influence the enabling environment, in turn generating positive outcomes for growth in the agriculture and fisheries sectors.

  1. Preliminary Description

Policy Area 1: Improving Technology Adoption for Enhanced Productivity and Nutrition

Mozambique’s agriculture remains characterized as largely rainfed, subsistence, low input use, and primarily smallholder operated. To bring about transformational changes that will help smallholder producers transition from being subsistence farmers to emerging market-led entrepreneurs, a significant increase in the adoption of new advanced technologies is required – and at a much larger scale than is currently happening. To achieve this, the AgDPO series addresses specific factors hampering: the broader adoption of agricultural inputs (seeds and fertilizers); significantly higher and more efficient use of water for agriculture; and the wider dissemination of nutrition-related technologies. The policy and institutional measures the GoM seeks to implement in Policy Area #1 focus on: (i) increasing the participation of the private sector in the commodity value chains for seeds and fertilizers; (ii) enhancing performance in public irrigation schemes through improved management arrangements; and (iii) [NUTRITION].

Prior Action 1: Publication of a ministerial decree on the adoption by the GoM of the regulations governing seed production, trade, quality control, and certification, compliant with SADC harmonization requirements.

Prior Action 2: Adoption by the Council of Ministers of the medium-term investment plan for agriculture (PNISA) under the country’s CAADP agenda, which includes the policy agenda, the institutional coordination arrangements, a detailed costing, and an M&E framework for the irrigation sub sector.

Prior Action 3: [NUTRITION]
Policy Area 2: Enhancing Access to Assets for Increased Production

Mozambique’s smallholder farmers are often rightly characterized as “asset poor households.” Moreover, studies indicate that in the current context, a large share of farming households likely require a considerable span of time before they can develop a bankable asset base. Further, the scale of benefits to the agriculture sector from new mega-projects remains uncertain. There is a need for the GoM to speed up the community land demarcation initiative and issue land user rights (DUATs) to producer associations currently farming on that land. Finally, since in Mozambique land cannot be used as collateral and farming households are generally asset poor, access to financial services should be enhanced to promote private sector-led agriculture growth.

To that effect, the AgDPO proposes to support the asset-building policy and institutional changes committed to by the GoM, with the goals of: (i) increasing smallholder land tenure security in the face of sustained interest in land from larger-scale investors; and (ii) developing a policy and institutional environment conducive to a significant increase in access to financial services in rural areas.

Prior Action 4: Publication of an official regulation by MINAG that simplifies the process for transferring rural DUATs under 10 ha and establishes reduced timelines for that process.

Prior Action 5: Publication of a ministerial decree on the adoption by the GoM of the country’s strategy for agribusiness (PNDA) that includes a comprehensive implementation plan with a policy agenda to promote the development of rural financial services and the private sector in agriculture.
Policy Area 3: Monitoring Sector Performance

The growing popularity in recent years of performance-based management systems has greatly increased the demand for statistical data and information on agriculture. The GoM has committed to addressing the policy and institutional bottlenecks affecting the monitoring and reporting of the performance of the agriculture sector. The multi-year program of reforms proposed under the AgDPO series seeks to build a sustainable agricultural statistics system, integrated with the national statistical system, that will enable evidence-based decision-making and facilitate the design of policies and programs, as well as allow informed assessment and reporting on the performance of the agriculture sector and progress on implementation of PEDSA, the country’s CAADP agenda, and the AgDPO series.

Prior Action 6: Official ratification by MINAG, as part of the adoption of the Master Plan for Agricultural Statistics (2012-22), of: (i) the list of core sector indicators to be monitored and reported upon annually; and (ii) the consolidation of the mandate for agricultural statistics and data management under a single MINAG Directorate.

  1. Poverty and Social Impacts and Environment Aspects

Poverty and Social Impacts

The main objective of this AgDPO is to contribute to increasing production and productivity in agriculture through reforms designed to alleviate existing policy and institutional constraints to agriculture growth. Since some 70 percent of the country’s population is based in rural areas, with the vast majority of households dependent on agriculture for their livelihoods, agriculture growth-inducing reforms can be expected to have a direct and positive impact on overall rural poverty reduction. As such, the primary challenge for the GoM is to achieve agriculture-led, broad-based rural poverty reduction across the country (taking into account that 27 percent of rural farming households are women-led). Recent analytical work from the International Food Policy Research Institute1 concludes that with the right investments and policies geared towards reasonable improvements in crop and livestock yields, Mozambique can achieve the 7 percent agricultural growth target agreed on under CAADP and the PEDSA. This growth rate would lift almost 1 million people above the poverty line, thus greatly reducing the national poverty rate.

Environment Aspects

The specific country policies supported by the proposed AgDPO-1 operation are not likely to cause significant negative effects on the country’s environment, forests, or other natural resources. The proposed operation recognizes the GoM’s sector strategy and participatory processes, which are geared towards promoting the agricultural sector while ensuring protection and sustainable use of natural resources. The multi-sectoral nature of the AgDPO series also implies that linkages exist with many other operations in the Bank’s portfolio. Such linkages will result in a synergy that enhances better management of natural resources and minimization of adverse impacts. The irrigation sub-sector provides a good example : implementation of a mid-term irrigation investment plan (an AgDPO Prior Action) will likely lead to an increase in land irrigated. However, the GoM’s national irrigation policy clearly prioritizes the rehabilitation of existing irrigation perimeters (i.e., no clearing required). Further, given the nature of the investments, most of the works in rehabilitating irrigation schemes are likely to be occurring in the context of donor-funded operations for which rigorous environmental and social safeguards apply (e.g., the IDA funded PROIRRI project). Relatively adequate institutional capacity exists in Mozambique within the Ministry for Coordination of Environmental Affairs (MICOA) and its decentralized National Directorates for the Coordination of Environmental Affairs (DPCA) to develop and implement impact mitigation measures that could be necessitated with the implementation of the AgDPO-1 measures.

  1. Tentative financing





International Development Association (IDA)




Others (specify)



  1. Contact point

World Bank

Contact: Patrick Verissimo

Title: Sr Sector Economist

Tel: 5333+2347 / 258-21-482-347


Location: Maputo, Mozambique (IBRD)


Contact: Ministry of Finance, Agency for the Development of the Valley of Zambezi

Title: Director Roberto Albino Mito


  1. For more information contact:

The InfoShop

The World Bank

1818 H Street, NW

Washington, D.C. 20433

Telephone: (202) 458-4500

Fax: (202) 522-1500


1 IFPRI (2012): Strategies and Priorities for African Agriculture – Economy-wide Perspectives from Country Studies. Washington, D.C.

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