Mozambique

HL Deb 25 October 1999 vol 606 cc91-108

7.36p.m.

Lord Redesdale rose to ask her Majesty's Government what steps they are taking to help reconstruction and development in Mozambique.

The noble Lord said: My Lords, I always enjoy these debates. I feel that my standing up to speak has a certain effect on the House! I thank the many noble Lords who put their name to this Unstarred Question at such short notice.

This debate is timely. Although that is said about many Unstarred Questions, I believe it to be so because the second presidential and parliamentary elections in Mozambique will take place in December. This also gives me an opportunity to welcome the fact that Her Majesty the Queen is visiting Mozambique next month after her visit to CHOGM in South Africa, Mozambique being the newest member of the Commonwealth.

The importance of Mozambique becoming such a member is not because north-south relations would be improved but because the Commonwealth is far more important for south-south co-operation. Also, it has a particular role in Southern Africa in uniting many of the countries.

Mozambique is in a period of transition at present. The war which ended in 1990 ravaged the whole country. I first visited Mozambique in 1990 hitching a ride on the truck convoy that went between Zimbabwe and Malawi, through the Tete corridor. I have to admit that to see a country so devastated was a sight which gave me nightmares. At the side of the road I saw people who were living in grass houses. Such grass houses were not traditionally made and properly constructed but built very quickly so that if they had to be left almost immediately, there would be nothing for which to return.

Almost 10 years on, the country is now a different place. I have not been to Mozambique since 1994. Indeed, the High Commissioner told me that if I went back, I would not recognise it. I very much hope that that is the case. It is now a democratic country attracting foreign investment at a rate which would be fairly unusual in many of the African countries.

I started my speech by referring to the elections because the future of the country rests very much upon their outcome. By that I do not mean which party wins but that elections in themselves are incredibly important. The process of election is not only to elect a government but to elect an opposition. It is important to remember that democracy rests on a credible opposition.

A credible opposition is one that can take the government to task. It is not one that has to defeat the government at every opportunity, but one that can make sure that the government are accountable and are being watched at every opportunity. In that respect, I hope that the international community will support Renamo in the years ahead. It acted as a focus for the opposition groups; in fact, many of the smaller parties joined with Renamo in fighting this election against Frelimo. I say that not in a party political way, but because it is good for Mozambique. Many countries suffer when the "winner-take-all" attitude prevails.

An area in which Britain can help Mozambique, perhaps through the Westminster Foundation and maybe through other organisations, is in helping the parties to build up their party structures and produce credible policies that can be distributed to their electorate. One of the great issues that faces emerging democracies is economic pressure. Mozambique is a country with staggering economic difficulties. I want first to talk about health and education.

The international community has an important role to play in adjusting the economic ground rules under which Mozambique will go forward. The health and education systems were badly damaged, in many cases destroyed, by the war. Hospitals were burnt down. Schools were shattered. I remember monitoring the elections in Zambezia and we could not use some of the buildings because they were so badly damaged. Some of the poll stations meant to be in the schools had to be in the roads outside.

Another factor is not just the physical damage, but the damage to the people who make the infrastructures work. The trained staff left. One of the interesting factors in relation to economic growth in Mozambique is that there is a massive shortage of staff because those people who were trained are moving into the private sector where wages are far higher.

One reason why the international community has so much responsibility is because Mozambique is crippled by international debt. It is impossible to conceive that health and education will be able to develop while international debt stands at such a level. The international community is aware that Mozambique is one of the most unsustainably indebted countries in the world. That is why there was an agreement to reduce that debt by 1.4 billion dollars. That must be regarded as helpful. However there is a problem. The figures show that each year Mozambique is expected to service over 100 million dollars of debt—more than it spends on education and health put together.

When reading many of the articles on Mozambique, I picked out one which put forward its hopeless situation very well. Gary Younge from the Guardian said, The debt write-off will make somewhere between no difference at all and a negligible improvement, since the debt being relieved was money that the Mozambican government simply could not pay anyway. Between 1995 and 1998 the country paid roughly $113m a year in debt services. After HIPC that figure will drop to around $100 million—almost as much as the Mozambican government spends at health and education combined".

One of the problems I also see with that figure of 100 million dollars is that Mozambique is a developing economy and has a fairly rapid growth rate; however, the country's economic import and export ratio means that it is likely to be dependent on donor aid for some period to come. I realise that the Government have difficulty in writing off each country's total debt burden. But I ask the Minister to remind his right honourable friend the Chancellor of the Exchequer that he said he would look at each country on a case-by-case basis. I believe that Mozambique falls into a scenario where a 100 per cent write-off is the only step forward.

Even without debt an interesting problem arises in one area that must be looked at in all debt relief; that is, that more care must be taken to look closely at the situation and not blindly follow principles of economic adjustment. I am thinking particularly of the case of the cashew nut industry in which the World Bank proposed liberalisation on taxation. That led to the collapse of the cashew nut industry. The World Bank has seen the error of its ways, but 8,000 people in one of the few industries lost their jobs.

The situation on the ground in Mozambique gives cause for hope. There is investment. Many countries are looking at large products, even though they are in the south rather than the north. The Commonwealth Development Corporation, in its new form, may play a significant role in that work. Mozambique is an agricultural economy with the potential, through the richness of its soil and its climate, to make significant gains in production. However, agricultural produce is very much subject to the vagaries of the market.

I wish to end on two specific points. The first concerns the landmines which still kill 1,000 people a year. I hope that the Government will not forget that the signing of the Ottawa Treaty did not remove any mines and that they will carry on the excellent work funded by people such as the Halo Trust. Also, I want particularly to thank the Government for pumping money into the AIDS vaccination project—an issue close to my heart and something which I called for on a number of occasions. The Secretary of State recently said that £14 million will be going into that project.

In fear of going over my time, I wish to say that DfID produced a wonderful report which looked at many of the import ant issues such as gender. There is a great deal of hope for Mozambique. but if DfID's target for 2015 is to be met, serious thought must be given to writing off its debt in total.

7.47p.m.

Baroness Warwick of Undercliffe

My Lords. I thank the noble Lord, Lord Redesdale, for introducing this debate.

Mozambique is one of the poorest countries in the world, yet it has made considerable strides in the past four years following democratic elections in 1994. It has a committed government, developing coordinated strategies; it has low inflation and many dynamic and engaged partners, including the UK But it faces enormous challenges in continuing to achieve economic growth which benefits the poor. My right honourable friend the Secretary of State is to be congratulated on the speed with which she decided to increase UK support through debt relief and a doubling of the aid programme following her visit last year.

Much has already been said about economic development. I want to say something about targeting rural areas, and particularly to concentrate my brief remarks on one specific aspect of rural development in Mozambique; namely, the role of women. If there is time, I should like also to say a few words about good governance.

Over 70 per cent of the rural population live in poverty. In the rural community women rarely own land, may have less education and their access to productive resources, as well as to decision-making, tends to occur through the mediation of men. Women typically have access to a narrower range of labour markets than men, while studies show women work up to three hours a day more than men. The lack of basic services in rural areas, reliable water supplies, health centres, woodlots and transport, all add considerably to women's workload.

The Government of Mozambique have clearly said that they are committed to the removal of gender discrimination and have signed up to international conventions. But although there is a supportive legislative framework, women's rights are not realised because of traditional beliefs and underdeveloped social and physical infrastructure. For example, girls are particularly disadvantaged in terms of access to education, especially in the northern and central areas where they account for only 39 per cent of students at primary level.

The Department for International Development is, very appropriately in my view, aiming to mainstream a focus on gender across the different sector activities, rather than initiating small-scale projects which target women directly. But the UK is also providing support in other ways. I want to highlight the work of two organisations which are playing a part in the reconstruction process. I must declare an interest in both.

Voluntary Service Overseas, of which I am chair, has 23 volunteers in Mozambique and these will double in the next three years. They focus on teacher training and improving rural livelihoods, particularly for children and women. It is worth noting that English language is a priority for the Government of Mozambique, who see the language as having a role to play in poverty alleviation measures through education and training, through increased employment opportunities and through commerce and trade, as well as increased links with their immediate English-speaking neighbours in the SADC region.

But also, as part of an imaginative development of VSO's work, we have two Portuguese volunteers. These, of course, have to be handled sensitively, as they are seen as "returnees" by some who resent the attempts by Portuguese "returnees" to claim nationalised real estate and industries. However, we hope to extend these possibilities by considering youth exchanges between Mozambican and Portuguese Muslims. Mozambique has many donors. It is important that partnership and collaboration maximise the impact of the resources which are being committed to this devastated country.

The noble Lord emphasised the importance of democracy. I was delighted that he referred to the Westminster Foundation for Democracy, of which I was previously a director. It is a UK organisation with a proven track record in delivering high-quality projects in support of democracy building. It has supported six projects in Mozambique specifically focused on human rights training and on voter education. Clearly, that will be enormously important in the forthcoming election. There is much scope for further projects. There is no doubt that democracy is still fragile and civil society relatively weak. There is a great deal that the Westminster Foundation can do, in conjunction not only with our political parties but also with other democracy building organisations working in Mozambique.

I would urge my noble friend the Minister to intensify the work being done in rural communities, particularly where women's chances of employment can be enhanced. At the same time, I urge her to encourage further the development in English language training and in democratic consolidation through the excellent work done on the ground by non-governmental organisations like VSO and the Westminster Foundation for Democracy.

All those who work in Mozambique speak of the extremely positive feel about it, despite its real and widespread poverty. Its determination to achieve economic growth and its moves towards good governance are good reasons to increase support. But, as the noble Lord said, no one should underestimate the task.

7.53 p.m.

Viscount Brentford

My Lords, I, too, am most grateful to the noble Lord, Lord Redesdale, for introducing the debate at this excellent time. I do not have his experience because, regrettably, I have never been to Mozambique. Nevertheless, I have a great concern for the eastern seaboard of Africa.

Can the Minister tell us how Mozambique is gaining at present from its new membership of the Commonwealth? I can see enormous value in southern Africa working together. It must be of great advantage to have Mozambique, with its geographical location, working in that organisation. I know that South African interests are spreading northwards a great deal, and I hope that Mozambique is gaining economically, linguistically and in many other ways from its new membership of the Commonwealth.

As has been said, Mozambique has a very good economic growth rate—perhaps up to 10 per cent at times—and aluminium, iron and steelworks are progressing in the country. The government's priority is poverty reduction and, with 70 per cent of the population living in absolute poverty, no one can deny the importance of that aim. But as well as the improvement and investment in those major industrial works, the improving agricultural productivity in rural areas is also extremely important. I believe that about 80 per cent of the population live in rural areas, though I am sure that that will decrease as the years go by.

I was sad to hear about the problems with the cashew nut industry. I am aware that cashew nuts, along with sugar, rice and cotton, are important in the rural and agricultural areas. I hope that the situation will improve and that the industry will recover. As regards the Government's poverty action plan to bring prosperity to the poorest of the poor, I should be glad to know how the noble Baroness, Lady Amos, reckons that is actually working today.

Perhaps I may also refer to the question of debt, which was mentioned by the noble Lord, Lord Redesdale. I believe that 80 per cent of the debt being written off is quite insufficient, as this is one of the poorest of the poor countries. It will not take many billions of dollars to write it off, in comparison with what was found, for example, for the Asian economies when they were rescued a year ago. I look forward to hearing from the Minister the present position with regard to the write-off of debt, which is obviously crucially important for the future of the country. It cannot afford even that 100 million dollar debt repayment each year.

I turn now to health and education, to which reference has been made. Can the noble Baroness tell us how the campaign to eradicate polio by next year is progressing? It would be very good news to hear that that has been eradicated from the country. Have the UK Government contributed towards the cost of bringing about that eradication? I am not talking about a large sum of money, but it would relieve much suffering in that country. Further, can the Minister say whether the cost of doing this has been covered for Mozambique?

I am also concerned about the health needs of the under-fives. Can the Minister say whether the health of these children is improving? I recently read that 45 per cent were undernourished. Indeed, as has already been touched upon, there is a great need for rural basic health services, as the distance to the nearest doctor's practice may be much too far away.

There is also a need for primary and secondary schools. Can the noble Baroness say whether there has been any progress in that respect? I confirm what the noble Baroness, Lady Warwick, said; namely, that the rural literacy rate for women is half that of the general population as a whole.

Can the Minister say what is the progress on roads and railways generally, especially for rural road access to markets? It is often difficult for people who grow their own crops to get to where such crops can be sold. Further, can the Minister tell the House how landmine clearance is proceeding, particularly in the food production areas and those areas adjacent to school and health facilities?

Logging was another problem, which came to my attention. Much indiscriminate felling of trees took place, which gave rise to fears of possible desertification of some areas. Can the Minister say whether that has now been stopped or whether it is now being planned?

A year ago I met Bishop Denis Singulani of the Anglican Church in Mozambique. Al. that time he was conducting a marvellous programme for interpreting in today's language the biblical injunction to change swords into ploughshares. He told me that many weapons were being handed in and destroyed. In exchange, people were receiving a farm implement, a sewing-machine or something like that. That seemed to me that the Anglican Church was taking a very positive step in the country. I greatly look forward to hearing the Minister's response. If she wishes to write to me in relation to some of the points I raised, I shall be very happy to receive a letter.

7.59p.m.

Lord St John of Bletso

My Lords, I join in thanking the noble Lord, Lord Redesdale, for having introduced this debate. Indeed it is timely and opportune that this debate should be introduced not only because Her Majesty will be on one of her few visits to Mozambique next month but also because of the imminent second general election on 3rd and 4th December.

As for what steps Her Majesty's Government are taking to help reconstruction and development, credit ought to be given to Her Majesty's Government as well as to the international community for their tremendous support since the peace accord in 1992 in transforming what was ranked as the world's poorest country in the early 1990s to, in the words of the Financial Times' special edition on Mozambique last week, an unlikely member of the elite club of the Tiger economies at the end of the 1990s". That is a remarkable achievement.

However, this is not a note of complacency but more an acknowledgement of the extraordinary success of the country's economic reform programme since it was launched in 1986, largely supported by international donors. While the Financial Times special report commended the country's economic achievements it cautioned, progress is likely to he hampered by a skills shortage, poor infrastructure and corruption within the bureaucracy". As we are all aware, despite the immensely impressive economic growth over the past decade, Mozambique is still one of the world's poorest countries with GDP per person less than 200 dollars per annum, compared with 3,000 dollars per annum in South Africa and almost 28,000 dollars in America.

I entirely agree with the noble Baroness, Lady Warwick, when she called for more recognition for the role of women in Mozambique. I am sure Mrs Machel would greatly applaud those comments as for a long time she has called for greater recognition of the role of women. Clearly the challenges, notably the low adult literacy ratio resulting in a natural skills shortage and the desperate need to increase the school enrolment ratios, as well as the need to reduce the high percentage of the population who live in poverty, remain major challenges to be addressed by the Government. However, there is clear evidence that the Mozambique Government are facing up to these problems but it will take well over a decade to catch up with some of the other African countries, notably Ghana and Uganda. As regards catching up with South Africa and Zimbabwe, that could arguably take several decades, if not 30 years.

I entirely agree with the noble Lord, Lord Redesdale, that in the run up to the election in the interests of long-term democracy, support should be given for a strong and credible opposition party. 'Even though Frelimo is expected to win the election, many observers believe that Renamo and its coalition with other smaller parties could make the election result far closer than many think will be the case. There is no doubt that for there to be sustainable economic growth there needs to be sustainable political democracy and stability.

Among several of his achievements Mr Chissano has implemented one of the most vigorous privatisation programmes in Africa and sought to reduce further foreign debt exposure combined with controlling public expenditure. Certainly a major boost for Mozambique was the 3.7 billion dollars—the noble Lord, Lord Redesdale, mentioned a figure of just under 2 billion, but my understanding is that the figure was 3.7 billion dollars—debt relief in July under the heavily indebted poor countries initiative.

The privatisation, particularly of the banks, has paved the way for the opening of the Mozambique stock exchange later this month. While donor assistance played a key role in reversing the downward spiral of the economy in the 1980s and the early 1990s, private investment, particularly by foreign companies from South Africa and Portugal, has ensured a relatively sustainable economic recovery. The two notable projects from South Africa are the opening of the Maputo corridor linking industrial companies in South Africa to the port of Mozambique and the Mozal aluminium smelter which is due to start production in the middle of next year. This increase in private sector inflow should, to a large degree, offset the reduction in future aid inflows into Mozambique.

In conclusion, in addition to the encouraging economic developments unfolding in the country, one of the main challenges for the next millennium in alleviating poverty will be the revival of agriculture so as to narrow the income gap between those who live in the rural areas and those who live in the urban areas. I certainly look forward to hearing what Her Majesty's Government and DFID will continue to do to complement this process. As someone who has lived most of his life in South Africa, my prayer and my hope for the next millennium is that Angola, a country which has been ravaged by civil war but with huge economic potential, will seize the initiative from Mozambique for a lasting peace and the rewards that come with that.

8.6p.m.

Lord Hughes of Woodside

My Lords, I join with those who have congratulated the noble Lord, Lord Redesdale, on raising this important topic. We do well to remember the horrific circumstances which Mozambique faced on achieving its independence. It suffered greatly from the activities of the apartheid government in South Africa and their surrogates, Renamo, which attacked and destroyed everything positive in the country: schools, hospitals, farms and local administration. This, coupled with a severe drought, resulted in mass starvation and economic collapse. It has been estimated that the destabilisation cost the country about 15 billion dollars.

Fortunately, over the past five years there has been an improvement and impressive growth. The country now manages to feed itself and exports both maize and sugar. There has been massive investment in an aluminium smelter which will have a huge impact on the gross domestic product. The GDP has been growing at a rate of 10 per cent. per annum while inflation has been kept low. The currency has stabilised, ending years of depreciation. That is good news, but we have to remember, as we have been reminded during the debate, that Mozambique is still one of the poorest countries in the world and the fruits of recovery are unevenly spread throughout the population. As we have been reminded, the GDP per capita is only 210 dollars per annum.

I wish to press the matter of debt because it is central to the future of Mozambique. Under the heavily indebted poor countries initiative debt will be reduced by 1.7 billion dollars, with repayments down from around 114 million dollars to 73 million dollars per annum. Further debt relief has been promised under the Cologne terms which could reduce payments to 55 million dollars a year. Nevertheless that is still a huge amount of money and the Mozambique Government and civil society have called for the debt to be completely written off. I am aware of and applaud the efforts being made on debt relief by my right honourable friends Clare Short and Gordon Brown, the Chancellor of the Exchequer, and I certainly wish to encourage them to continue to work for a complete debt write-off.

The importance of the rural economy to the people of Mozambique has been stressed. Mozambique's agriculture has had a reasonable spell but farmers' income is dependent on well functioning markets. It is important that those people who are to buy the produce obtain some form of credit at reasonable terms in order to fuel the whole system.

I wish to reinforce the issue concerning the cashew nuts industry. Under the guidance of the International Monetary Fund and the World Bank, the Government in Mozambique have privatised the processing industry. However, following the privatisation, the Bretton Woods institutions demanded that the surtax on the export of unprocessed cashews, which protected the national processing industry, be reduced and eventually removed altogether. As a result of this tariff, almost the whole of the processing industry has had to close down as unprocessed nuts were exported to India, forcing thousands of workers into unemployment.

The Mozambique Parliament, the Assembly of the Republic, voted last month to increase the surcharge. In theory, this jeopardises the debt reduction promised under HIPC and by the major creditors. I hope that Her Majesty's Government will support the decision of the Mozambique Government and that they will work within the IMF and the World Bank to keep debt relief on track.

It often seems that in helping developing countries the world's institutions give with one hand and take away with the other. We recognise the huge poverty of the majority of the population; we recognise that aid is targeted to help the poorest of the poor; but we again give with one hand and take away with the other. For example, the demand that the Mozambique Government introduce charges for water consumption can only do harm in a society where problems with sanitation can lead to increased disease, such as diarrhoea, which can be deadly to the young and vulnerable. Much greater attempts need to be made to understand the circumstances of the country with which we are dealing when trying to impose private sector solutions on developing countries.

I wish to make two other points. First, we need to deal with the major killer in Mozambique; that is malaria. A great deal of research and help is needed to reduce malaria. Secondly, how can we deal with the problem of AIDS, which is becoming increasingly serious? It is estimated that 10 per cent of the population currently have HIV, and it is increasing. How can the developing countries deal with that situation? What can we do to help them deal with this huge problem?

There is one other way in which the Government can help in relation to the economy of Mozambique: they could buy or encourage the international community to buy surplus maize from Mozambique and distribute it as food aid in Angola, where thousands of people face starvation in that war-torn country.

The noble Lord, Lord Redesdale, has done us all a service by introducing the debate. The future of Mozambique is strong, positive and optimistic. All of us who wish Mozambique well will hope that our Government will do all they can to help in the future.

8.13 p.m.

The Earl of Sandwich

My Lords, I agree fully with the noble Lord, Lord Hughes, and with other noble Lords who have spoken. Mozambique well deserves the favours it is receiving currently from the international community. I refer to its status as the latest HIPC to qualify; the encouragement it is receiving from the IMF; its membership of the Commonwealth. and its position as one of the European Union's major aid recipients. The UK alone committed £22 million in bilateral aid last year, placing it close to partners such as Kenya and Ghana.

All this has come from an unusual combination of circumstances. Mozambique has an appalling recent history of bloodshed and colonial neglect. I remember the terror of years of civil war from a short visit to the Church's relief programmes in the 1980s. But it is not sympathy from Europe today so much as the tough conditions that we are offering for our aid, debt relief and trade which now enable us to stand beside Mozambique as donors, potential trading partners and investors.

The cynics say that only the Lack of valuable minerals has saved Mozambique from Angola's fate, but it has other resources: the Maputo corridor; above all, the people of Mozambique, who are determined to return to a degree of prosperity; exports and tourism; economic growth, now close to 10 per cent; and, as we heard, inflation has all but disappeared. Mozambique is a success story; it is off the danger list.

Yet there are shadows, as I discovered during a meeting with Mozambique MPs earlier this year. Some concerned human rights, insecurity and lack of reconciliation; some concerned land ownership and the lack of capital in rural areas. To all of us, the most critical warning sign is the high proportion of people—90 per cent—in extreme poverty, higher than almost anywhere else in Africa; and women's literacy, lower than anywhere else. How will the Department for International Development achieve one of its stated policy aims, an improvement in the condition of the poor?

I asked the noble Baroness this question in a debate this summer: will cur aid programme have the capacity to realise this aim? Or will it, because of the need for skilled personnel and hi-tech programmes, be tempted to remain in the sectors of transport and public services and export-led private investment? The DfID is stretched. While supporting major programmes, such as the Customs service, through the Crown Agents, it is also looking for ways of developing health and social services on the ground and specialised work in sectors such as water resources and demining.

I understand the importance of infrastructure, but I know how easy it is for us outsiders to send more experts and even run the services in the cities, and how hard it is to identify projects in the poorer rural areas, where education and training can take place at an appropriate level, such as the VSO schemes the noble Baroness, Lady Warwick, described. The two have to hang together. In Mozambique—as often in post-conflict countries—it is difficult to spend money effectively precisely because of the lack of infrastructure and of trained people. I remember from my visit meeting young graduates who were in such demand from government that they hardly had time to think or sleep.

Here I have a more general question. Technical assistance is a sine qua non—we all see the necessity for it. But how much is the Government doing to train people inside the country. I know that there is a valuable British Council programme, but it is on a comparatively small scale. What is the record of Mozambique trainees after they return? I suspect that many who have been educated abroad go into the private sector. Are we training at too high a level? How much inter-regional training is taking place? Are we doing enough to help the very effective small NGOs, such as the Rural Mutual Aid Association, whose work is described in this month's DfID magazine? What is the outcome of the DfID workshop on land rights held in February?

There is an urgent need to support local institutions, especially in agriculture. I was delighted to read of our Government's support for a rural roads project in Zambezia province. That is just the kind of thing we should support. My visits to Africa always leave me with the impression that any money given to hi-tech large-scale projects—which, we should not forget, help our own economy at the same time—could have been invested in sustainable development.

I have another question for the Minister: how will the Paris Club or the IMF donors ensure that the considerable funds now arising in the form of debt relief will genuinely contribute to the eradication of poverty? Will there be some kind of local monitoring of debt relief such as takes place in Uganda.

I do not belittle progress so far, even though it has come from a low base. The Government have just published their Poverty Action Plan. The IMF reports on the improvement of social indicators. In 1996–1998. the primary school enrolment rate increased from 62 per cent to 71 per cent; coverage for key vaccinations increased from 58 per cent to 77 per cent; primary classrooms have increased by more than 60 per cent. These are encouraging statistics against Mozambique's recent political background.

But to sustain them, as is the case in many African countries, our Government will have to place even more emphasis on improving those skills which directly benefit the poor.

8.19 p.m.

The Earl of Northesk

My Lords, I, too, thank the noble Lord, Lord Redesdale, for introducing the debate. As noble Lords have observed, the first state visit of Her Majesty to Mozambique will take place on the 15th of next month. We on these Benches have no doubt that that occasion will buttress the good relations engendered as a result of previous ministerial visits, not least that of the Minister this year. Visits to our own shores by President Chissano, other members of his government and by members of Renamo have been just as frequent.

I make this point for a simple reason. Good and honest relations between nations are the seed-bed from which trust and healthy dialogue can flourish. Processes of reconstruction and development, upon which the noble Lord's Question concentrates, flow quite naturally from that. Within the general terms of the noble Lord's Question, and while acknowledging that everyone would always wish that more could be done, I believe that the Government's approach to Mozambique is to be commended. Suffice it to say that this is comprehensively and succinctly defined in DfID's Country Strategy Paper for Mozambique, with rural development in the Zambezia province and the customs reform project being of particular note.

As noble Lords have observed, presidential and parliamentary elections are due to take place early in December. The noble Lord, Lord Redesdale, made the point that since the end of the debilitating and destructive civil war in 1992 and the democratic elections of 1994, the country has made great strides in delivering to its people good governance. As the Secretary of State for International Development observed: Good governance is a crucial component of the economic policies that benefit the poor".—[Official Report, Commons, 29/4/98; col. 312.] But last year's municipal elections, with voter turnout of only 15 per cent nationwide, are a cloud on the horizon. Democracy is as much about participation as it is about representation. I ask the Minister to clarify what assistance the Government are giving to Mozambique in this context?

Other noble Lords have quite rightly mentioned debt relief. We on these Benches attach as much importance as the Government to the HIPC initiative. It would have been nonsense for Mozambique to have been excluded from the provisions by virtue of the Paris Club's 80 per cent threshold. The Government's action in offering their pledge of 10 million dollars of additional relief as a catalyst for others to follow is therefore to be applauded. But, despite this success, we hope that the Government acknowledge—perhaps the Minister can confirm this—that there are risks associated with pursuing unilateral action; that, in the words of the International Development Committee of another place, this should be, reserved for occasional cases where it will unlock relief from other creditors". Debt relief has many virtues, in so far as it is a mechanism that can inspire sustainable economic management within the nations concerned. But there are two sides to every coin. As other noble Lords have observed, the continuing presence and involvement of the Commonwealth Development Corporation will be critical, particularly as a conduit to attract foreign investment. As of 1998, the CDC had a portfolio invested in and committed to Mozambique of over £50 million and growing. I hope that the Minister can give the House some more up-to-date figures in this context, as well as confirming that the Government are committed to using their influence to facilitate the CDC's capacity to expand yet further in the area.

As observed by my noble friend Lord Brentford, this underscores an important aspect of Mozambique's development in recent years, its forging of meaningful links regionally and geopolitically. President Chissano's current chairmanship of the SADC enhances the reputation of his country regionally. Equally, Mozambique's admission to the Commonwealth in 1995 affords her a much wider profile globally, as exemplified by the international conference in May of this year when the signatories to the Ottawa Convention met in Maputo. Indeed, in this context, and like other noble Lords, we on these Benches would welcome the Government's assessment of progress on mine clearance. The benefits of the work of the NGOs and Churches in Mozambique—I take this opportunity to pay tribute to them—should not be underestimated. All of this is important, not only in terms of engendering greater credibility throughout the world, but also in terms of instilling self-belief and self-esteem among the Mozambican people.

I have one final point to make. Having reviewed various pronouncements from the Government as to their future plans for aid, I have emerged somewhat confused. In a verbal answer in July 1998 the Secretary of State stated, We are likely to treble our programme over the next few years". Conversely, the Country Strategy Paper, dated this month, states: We envisage doubling the bilateral programme by 2001". I simply ask the Minister which commitment we should view as the correct one.

I look forward to the response of the noble Baroness, not only to my questions, but to all the many issues that have been raised in this most intriguing debate.

8.25 p.m.

Baroness Amos

My Lords, I thank the noble Lord, Lord Redesdale, for initiating this important debate about Mozambique's development. I should also like to thank the noble Lord, Lord Redesdale, and other noble Lords for their positive comments about the work being undertaken by the British Government in Mozambique.

I agree with the noble Lord that the debate is timely. He referred to the state visit. Her Majesty the Queen, accompanied by His Royal Highness the Duke of Edinburgh, will pay her first state visit to Mozambique on 15th November, following the Commonwealth Heads of Government meeting in Durban. The visit programme will include meetings with the leaders of the two main parties and the formal opening of UK-Mozambique Co-operation Week and the British Council's new classrooms. There will also be a state banquet.

The noble Viscount, Lord Brentford, specifically raised the question of the benefit to Mozambique of membership of the Commonwealth. Mozambique is the 44th and most recent member of the Commonwealth. The wider benefits of being part of a Commonwealth community will flow to Mozambique, as will other regional implications. Several noble Lords have already referred to the fact that President Chissano has an important regional role as chairman of the Southern African Development Community. He took over the role at the SADC Summit in Maputo in August 1999.

The Government of Mozambique are committed to poverty elimination and are firmly in control of their own development process. Their development priorities include public investment in health, education, water and sanitation, as well as actively supporting strategies to increase agricultural productivity in rural areas. There is evidence from elsewhere in Africa and beyond that sound macroeconomic policies are essential in the fight against poverty. Countries with stable economies tend to grow faster. I am pleased to acknowledge that the Government of Mozambique have been following sound macro-economic policies for over a decade and that their macro-economic policies remain stable. None-the-less, the Mozambique Government remain concerned that high growth is not having an adequate impact on levels of poverty; hence their commitment to using resources released by HIPC to increase spending on activities that help to reduce poverty.

The British Government have been a regular provider of fast dispersing programme aid to Mozambique in recent years, in particular through the provision of direct budgetary support to help the Mozambique Government meet the costs of servicing their debts to international financial institutions. I shall return to debt, relief presently.

Political stability is also important, and I hope that the parliamentary and presidential elections due to be held in early December will further strengthen democracy. The noble Lord, Lord Redesdale, made reference to the importance of those elections, while other noble Lore s have referred to the need for promoting good governance. Our Government are funding the costs of international observers for the elections, which will include the training of local observers and the provision of post-election recommendations to the Government of Mozambique on improving systems for future elections. In addition, we are contributing to a joint EU election observation mission which will co-ordinate with others sent by our EU partners to observe the elections in all provinces of the country. I should like to say to the noble Earl, Lord Northesk, that more than 85 per cent of potential voters registered between July and September. I hope that that is a good sign in terms of the numbers who will actually participate in the elections.

The outcome of both the presidential and parliamentary votes could be close but a peaceful and generally fair election is expected. I can tell the noble Lord, Lord Redesdale, that a new election law was passed in December last year to address Renamo's concerns over the Jane 1998 municipal elections. The voter registration law was amended to call for new registration for the entire electorate, which took place from July to September this year. These laws will govern the holding of the 1999 general election in December.

The British Government's development assistance programme in Mozambique has as its main aim a poverty elimination focus, in particular by developing programmes in key sectoral areas such as health and education, where the benefits will be felt by the poorest. We envisage a growing programme with more national impact.

I can assure the noble Earl, Lord Sandwich, that our programme will support Mozambique's own poverty reduction strategy and will encourage progress towards the international development targets through four main impact areas: improved economic and financial management; a more effective and efficient public service; sustainable rural livelihoods; and improved quantity and quality of education and health for poor people. To achieve this ambitious programme, partnership with the Government of Mozambique, with civil society and the private sector is essential. I agree with the noble Earl, Lord Northesk, that that partnership is important and that we need to pay tribute to the work of civil society in this area.

I shall now try to address the specific issues raised by noble Lords but in the time available I may not be able to cover all areas. I undertake to write to noble Lords if I do not manage to cover a specific question or issue. My noble friend Lord Hughes of Woodside, the noble Lord, Lord Redesdale, the noble Viscount, Lord Brentford, the noble Lord, Lord St. John of Bletso, and the noble Earl, Lord Northesk, raised the question of debt relief. Mozambique received HIPC debt relief in June 1999. Before receiving HIPC relief, it would have cost Mozambique 2.7 billion dollars to pay off all its official debts in one go. HIPC reduces this sum by 1.7 billion dollars. Mozambique's debts will he cut further by approximately 250 million dollars when the revised HIPC package agreed at the annual meetings of the IMF and World Bank is applied retrospectively to Mozambique. This will halve the amount that the Mozambique Government spend on servicing their external debt in comparison to what they were paying in the five years before HIPC. I can assure the noble Earl, Lord Sandwich, that the Government of Mozambique are committed to spending the domestic resources released by external debt relief on activities which will help reduce poverty in Mozambique. We have developed a country strategy paper following consultation and we are committed to monitoring the effectiveness of our programmes.

Our Government have been a leading supporter of the Government of Mozambique's eligibility for HIPC debt relief. We have contributed approximately £1 5 million to help the African Development Bank meet its costs of writing down its Mozambican debts. We have also used programme aid to help ensure that the Government of Mozambique could meet the costs of servicing international financial institution debts in the run up to HIPC. However, we do not support the call for total debt forgiveness. Concessional resources that are required for HIPC and other forms of development assistance are finite. Cancelling all Mozambique's debts would be at the expense of other poor countries, not all of which are benefiting from the HIPC initiative. While we need to cancel the unpayable debt, we need to recognise that debt of itself is not bad. All countries have debt, and invested wisely loans will enable a country to develop more quickly. Our Government cancelled all Mozambique's aid debts to them in the 1980s.

My noble friend Lady Warwick mentioned the importance of sustainable rural livelihoods. The noble Viscount, Lord Brentford, is correct. Almost 80 per cent of Mozambicans live in rural areas and most are smallholder farmers. About 71 per cent of the rural population lives in absolute poverty. Improving the returns to smallholders is critical if poverty is to be cut. Mozambique has enormous agricultural potential and there has been a large increase in agricultural output since the end of the civil war in 1992, as returning refugees brought their land back into cultivation. Until recently, most of DfID's assistance has been provided through international NGOs. The largest of those is the World Vision Rural Livelihood Programme in Zambezia which aims to deliver research, extension credit and restocking of livestock to the poorest farmers.

With respect to gender discrimination, as raised by my noble friend Lady Warwick, a key strand of DfID policy is the removal of gender discrimination in all our programmes. Rather than initiating small-scale projects which target women directly, DfID is aiming to mainstream a focus on gender across the different sector activities. I do not have time to go into examples of that.

The noble Viscount, Lord Brentford, mentioned transport. A great deal of Mozambique's infrastructure was either deliberately destroyed during the war or deteriorated owing to a lack of maintenance. The Government of Mozambique have sought donor funding for the rehabilitation of key public infrastructure and there have been impressive gains. The school network has been returned to its prewar coverage, the coverage of primary health facilities has expanded and more than half the road network has been rehabilitated, some of that with funds from the British Government.

A number of noble Lords mentioned health. Since the end of the civil war the government's health sector recovery programme has made significant progress in replacing health infrastructure destroyed in the conflict. On the specific question of polio eradication, the Secretary of State for International Development announced an additional £20 million for a programme of polio eradication.

A number of noble Lords mentioned the importance of private sector development and foreign investment. Mozambique has only a small but rapidly developing private sector, based largely in Maputo. The Government of Mozambique have been successful in attracting inward investment. That includes a 1.3 billion dollar MOZAL aluminium smelter which is part funded by the CDC. DfID is considering supporting a multi-donor funded, but Government of Mozambique/private sector-led, programme to help formal sector businesses devise strategies to improve their competitiveness.

My noble friend Lord Hughes raised the specific issue of cashew nuts. There have been criticisms that the conditionality included in these programmes infringes on Mozambique's sovereignty. A Bill has recently been pushed through the Mozambique national assembly awarding a slightly greater degree of protection for the cashew processing industry. I cannot go into the question of land mines now but I will write to noble Lords.

In closing, I want to leave the House with the impression that I gained when I was in Mozambique earlier this year. It is one of the poorest countries in the world but immense hope is felt there—not only among politicians, civil servants and businessmen but ordinary people. Mozambique is an emerging success story. The Government are committed to continuing to support Mozambique's efforts to lift millions of ordinary Mozambicans out of poverty.