By Jinty Jackson
MAPUTO, Jun 28 2013 (IPS)

Mounds of sand and rubble are what are left of sections of Maputo’s beachfront road as bulldozers, manned by Chinese construction workers, tear up the road that is being rebuilt. Southern Africa is under construction and the reminders are everywhere.

Amid the dust and earth-moving equipment, delegates from across the southern African region are gathering in the Mozambican capital Jun. 27-28 at the Southern African Development Community (SADC) Infrastructure Investment meeting to try to galvanise the funding needed for an ambitious cross-border infrastructure network that will help make the region globally competitive.

Over the next 15 years SADC wants to set in motion an extensive revamping of existing infrastructure as well as building new logistics, including hydro-dams, power transmission lines, roads and railways, while boosting internet connectivity and broadband access across the region.

An estimated 64 billion dollars are urgently needed to fund the first phase of an “Infrastructure Master Plan” SADC adopted at a 2012 summit in Maputo and wants to start putting into motion. Over the next 15 years the total cost of infrastructure projects could run to 500 billion dollars.

“This number can be frightening, but if we do not invest now we will jeopardise our trade capacity,” SADC secretary-general Tomaz Salomao admitted. “We have decided to do it now.”

Poor infrastructure is seen as the biggest hurdle to economic growth across the region. Investors complain that weak infrastructure is one of the main pitfalls to operating in the region. In 2009, the World Bank estimated that the “infrastructure gap” cut two percent off national growth figures in the region per year.

How SADC will raise money to fund what is needed is the big question. Several countries have already set aside big amounts for infrastructure; South Africa committed 400 billion dollars in 2012. Regional integration is an obvious way to cut the cost of doing business for everyone.

For development financiers like the Development Bank of Southern Africa, the assurance that governments are prepared to work together on major cross-border projects is half the battle won.

“For us as bankers that is a critical part. When we look at projects the first thing we look at is, does it have sponsor support from various governments? If you have that, you have ticked a major box,” the general manager of the Development Bank of Southern Africa’s Project Fund, Mohale Rakgate, told IPS.

The needs are enormous, and nowhere more so than in the power grid. The region lags behind West and East Africa in terms of access to electricity. Only 24 percent of its residents have access to electricity, and in rural areas the proportion is closer to five percent.

Malawi, Angola and Tanzania have yet to be connected to a common power pool, the Southern African Power Pool, set up by national electricity companies in 1995 to create a common market for power in the region. Bringing them in forms part of SADC’s short-term infrastructure development goals.

Southern Africa is better placed than ever before to be able to finance its more ambitious dreams. Countries in the region have been remarkably resilient in the face of the global economic slow-down. According to the International Monetary Fund (IMF), the region registered robust growth of 5.1 percent in 2012, which could accelerate to 5.4 percent this year.

Demand for the region’s commodities is partially driving growth, according to the IMF.

But that is only part of the story. Southern Africa is more politically stable than it has been for decades, young people are increasingly taking advantage of new economic opportunities – particularly those presented by information technology – and prudent fiscal policies by governments have helped buffer countries from the crisis and helped build up foreign reserves

“These countries now have quite a lot of capacity to raise debt. The question is how much and how sustainable is it?” Graham Smith, programme manager for Trademark Southern Africa, a United Kingdom-funded programme to help boost regional integration, told IPS.

An obvious source of infrastructure funding is the African Development Bank. Infrastructure already makes up over 30 percent of its portfolio, but governments and the bank alone are not up to the task of raising the kind of finance that is now needed.

The bank is in the process of setting up the “Africa 50” fund that it hopes will be able to leverage some 100 billion dollars to finance infrastructure on the continent. The timing for the initiative is right, according to the bank. Quantitative easing in Europe and the United States will make infrastructure investments in the developing world more attractive.

“You are looking at mid-single to double-digit returns over a long period of time such as for roads or power projects,” the African Development Bank’s regional director Ebrima Faal told IPS.

Investment will not only come from outside, but from the continent itself, Faal believes.

“We see tremendous potential for pension funds. We also see tremendous potential for central bank reserves and other sovereign funds investment,” he said.

Beyond development financing, SADC is setting a great deal of store in building what it calls “public private partnerships”.

In Mozambique, the lack of rail infrastructure is hampering a coal rush in the northeastern Tete province. Brazilian coal company Vale had little choice but to finance the revamping of an old rail track through Malawi and down to a deep-water port on Mozambique’s coast, in order to get its coal out. The company said it would spend 6.5 billion dollars on railway and port construction.

“Sometimes people think it is easy. It is not easy. For each dollar we invest in our mine we have to invest another in infrastructure to enable the project to be feasible,” Vale’s chief executive officer in Mozambique, Ricardo Saad, said.

Thanks to Vale’s line, landlocked Malawi will be able to move its goods more easily to the coast as extra capacity is reserved for passengers and goods. And the line offers possibilities of linkages to Zimbabwe and Zambia.

The region’s rail network is a mishmash of poorly maintained, insular systems that need to be painstakingly revamped and connected to each other for development corridors to become realities.

And concessionaires are seldom prepared to take all the risks involved in building infrastructure unless they are involved in high-yield activities like coal mining.

“Ports and power projects are the most likely to attract public-private partnership because you can ring-fence a long-term revenue stream,” said Smith. Much of the rest, he added, “will be public-sector financed.”

China’s deepening role in the infrastructure sector was a matter not widely discussed in Maputo. The Asian giant already has a 20 percent market share of infrastructure contracting, according to a 2012 report by business consultants Ernst & Young. Chinese loans for infrastructure are growing and in 2011 close to 15 billion dollars in Chinese commitments were secured for infrastructure projects continent-wide.

“We are considering collaborating in transport and power projects. It is a big market from a business point of view,” Jon Lee from China’s Development Bank told IPS. The bank’s presence in Maputo was the only sign of a real and burgeoning Chinese engagement on the continent.

“We are going to engage China big time,” SADC’s director of infrastructure and services, Remmy Makumbe, told IPS. “Our only concern about China is that it is mostly involved in bilateral arrangements rather than regional arrangements. We don’t have a problem as long as they engage in bilateral projects that address a regional framework.”

By Jinty Jackson
Sep 20 2012 (IPS)

Carolina Poalo strikes the dry earth over and over with her hoe, her frail body bent almost double. She is determined to begin planting. During the long, dry season in Mozambique, she and her two young grandchildren have eaten little but cassava leaves.

In a country where the average life expectancy is 50, the 65-year-old is considered very old, but her golden years are far from restful.

Instead, life is a constant battle for the many elderly living in the semi-rural outskirts of the capital, Maputo.

Violence and abuse against the elderly – ranging from rape to psychological abuse and neglect – are on the rise, say authorities. Often this is linked to witchcraft accusations, although no official statistics exist about the phenomenon. Perpetrators are often family members.

Carolina Paolo’s sister, Amelia Paolo, fled her home when her sons accused her of witchcraft. “They threw me out, calling me a witch,” she tells IPS. “I only survived thanks to my plot of land.”

It was a bit unclear how she got access to land where she lives now, but she has a plot of land next door to her sister’s in Bilalwane, on the outskirts of Maputo.

“I don’t get any help from my children. Sometimes they dump their kids here when they get pregnant,” Carolina Paolo tells IPS of her two daughters.

The women survive by earning extra cash when they can, working in nearby fields. The five dollars a month state elderly grant, the lowest in Southern Africa, is enough to buy them a one-kilogramme bag of salt. With no access to running water, the money also comes in handy when filling up at a nearby tap – one barrel of water costs them three cents.

Mozambique’s social welfare office is notoriously corrupt and inefficient. Only one in three people interviewed by IPS said they received the grant despite all three having applied for it.

Her body shrunken and her eyes grown over with cataracts, Maria Chambale (70) admits she is frightened of what might happen when she can no longer work, “I must go on fighting,” she says and shrugs. “What else can I do?”

She, like the other elderly in Mozambique, works on her own small plot of land to grow vegetables to feed herself. She also accepts “piece jobs” or day jobs in nearby fields owned by richer neighbours who have land but do not have the time to farm it.

Despite the heady pace of Mozambique’s economic growth – the World Bank expects the economy to expand by 7.5 percent in 2012 – little benefit is trickling down to the poor, many of whom are elderly people.

“Sixty-eight percent of the elderly live below the poverty line in Mozambique,” says Janet Duffield, the director of the aid agency HelpAge International in this country.

For the elderly in the city who cannot grow food to feed themselves, conditions are even worse.

Sixty-year-old Armando Mattheus is amongst the many elderly people who now find themselves begging on the streets of the capital, unable to cope with the high cost of living. “Before I could buy something with the little I have but today I can’t buy anything,” says Mattheus, who spends his days outside a popular Maputo restaurant, begging tourists for handouts.

It is a situation experts say Mozambique’s government needs to address urgently. Eighty percent of people work well into old age in Mozambique – one of the highest rates in the world.

“The population in Mozambique works until they die because there aren’t alternatives,” says the director of Mozambique’s Institute of Social and Economic Studies, António Francisco.

With half its population of 23 million under 18 years old, Mozambique is often referred to as a country of young people. Those who can remember the devastating civil war that ended two decades ago are now in the minority.

Newly discovered natural gas and coal deposits promise untold riches for a lucky few and will soon fuel what is already one of the world’s fastest growing economies.

The aged make up a tiny fraction of the population – just five percent.  However, by the time a child born today reaches 60, that number will be nearly three times as high, according to Francisco’s research. This represents, he says, “an unprecedented demographic transformation in the history of Mozambique.”

Nearby countries – South Africa, Swaziland, Botswana, Namibia and Lesotho – all spend between 0.3 and two percent of GDP on grants for the elderly. Like Mozambique, they have a young population structure but such an approach can pay dividends.

Japan, which in 2010 registered 38 percent of its population over the age of 65 – the world’s largest proportion – spends over 10 percent of GDP on pensions, according to the International Monetary Fund. And the United Kingdom spends five percent of GDP on pensions, according to the Organisation for Economic Cooperation and Development.

Studies show that providing state pensions can reduce hunger and poverty because elderly people share resources with the family.

A 2003 study by HelpAge International found that “social pensions increase the income of the poorest five percent of the population by 100 percent in Brazil and 50 percent in South Africa.” And a 2005 study by the University of Manchester in the U.K. found that people living in households receiving a pension were 18 percent less likely to be poor in Brazil and 12.5 percent less likely in South Africa.

One fifth of all families in Mozambique include an elderly person. This is one reason why aid agencies are pushing the government to fall into step with other countries in the region. Another is that 43 percent of orphans are cared for by grandparents in Mozambique. The country has an HIV prevalence rate of 16.2 percent, one of the highest rates in the world.

“Of the 10 African countries with the highest HIV prevalence, eight have introduced some form of social pension or cash transfer directed at older people,” says Duffield.

The government would need to provide citizens over 60 with a minimum of 26 dollars a month to have an impact, estimates Francisco. The figure represents three percent of the country’s 12.8-billion-dollar GDP.

But universal social pensions would be too costly, argues Felix Matusse, who heads the government’s Department for the Elderly. “We still depend on external aid,” he explains, pointing out that foreign donors contribute over 30 percent of the entire state budget.

But the government cannot go on pleading poverty for long. By some estimates, Mozambique stands to collect over five billion dollars a year in the long term from its natural gas alone.

Bolivia, South America’s poorest country, financed its universal pension scheme or “Dignity Pension” in 2007 through a direct hydrocarbon tax. Could Mozambique do the same?

“Improved revenue collection from new-found mineral resources could free up fiscal space more than adequate to provide a cash transfer for all older people,” suggests Duffield.

Others argue that caring for the elderly should not have to depend on hydrocarbon windfalls. “What kind of state do we have that cannot look after five percent of its population?” asks Francisco, adding that nearby Lesotho finances a pension scheme but has no natural resources to speak of.

Few expect a major shift in government policy on pensions before the next national elections in 2014. But in the run-up, the government is showing greater willingness to tackle its elderly problem.

A draft bill, due to go to parliament before the end of the year, aims to protect the aged from abuse, meting out specific tough penalties for violence related to witchcraft accusations. However, there is no mention of universal old age pensions.

Matusse points out that Mozambique will not begin to reap the benefits of hydrocarbons for at least another five years. “Then we will see what is going to happen in terms of social security,” he says.