MOZAMBIQUE

Key Messages1:

• The 2018 State Budget Law (LOE) combined Social Action and Labor &Employment into a single priority sector, for the fourth consecutive year.Nevertheless, other relevant budget and expenditure documents, such asState Budget Execution Reports (REOs) and General State Accounts (CGEs)classify Social Action and Labor & Employment as two different prioritysectors.Consideringthatthetwosectorshavedifferentobjectivesandtargetpopulations, it would be important that the LOE as well classified SocialActionandLabor&Employmentseparately.

• OftheMT6.7billion(b)allocatedin2018for“AcçãoSocialeTrabalho”,4.6billionMT correspondwith basic (non-contributory) Social Protection programmes.Given that no Price Subsidies (fuel, bread, transportation) are referred intoLOE2018,“SubsídiosasEmpresasPúblicas”ontheamountof735.5millionMTremainwronglyincludedaswithin“SocialActionandLabour”.

• Those Public Enterprises, as referred in LOE are“às empresas públicas quepelassuasatribuiçõesprocedemaosobjectivossociaissemcarácterlucrativo,estando contempladas a Rádio Moçambique, Televisão de Moçambique,Hidráulica do Chókwe, Imprensa Nacional deMoçambique (INM), RegadiodoBaixo Limpopo,Maputo Sul e EmpresaNacional de Parques de Ciênciase Tecnologia”. Allocations to cover exploration deficits of those publicenterprisesshouldnotbeconsideredinanywayassocialactionexpenditure,isneededandstronglyrecommendedtobereferredseparately.

• The Social Action Sector - intended in its narrow definition as the sectormanagedbyMGCASand INAS -wasallocatedMT6.1billion (b) in the2018Budget,representingthelargestevernominalallocationandthesecondlargestrealallocationtothesector.Theallocationtothesector isworth2percentoftheentire2018StateBudget; Less financialoperationsanddebt servicing, itrepresents2.6percent.AsashareofGDP,the2018allocationtoSocialAction

represents0.6percent,whichisstillfarfromthe2.4percenttargetlaidoutintheNationalBasicSocialSecurityStrategy(ENSSB)for2016-2024.

• TheSocialActionSectorhasreceivedanincreasingshareofinternalresourcesoverthepastdecade.The2018internalallocationisthelargestevernominalcontribution fromtheGovernment to thesector. Inproportional terms, theinternaltoexternalresourcesratioisbudgetedat71percentto29percent.Nevertheless,itisimportanttohighlightthatthelargestexternalinvestmentis theWorld Bank credit to the Productive Social Action Program (PASP);whilethisistrackedasexternalresources,theMozambicanGovernmentwillhave topayback the loanandthecorresponding interest.Hence, thePASPprogramisde factointernally-funded.

• Over 90 percent of the Social Action Sector budgetwas allocated to INAS,of which the largest share was directed to the non-central level. INASprogramsreceivedthefollowingallocationsin2018budget:(i)BasicSocialSubsidy Program (PSSB)was allocatedMT 3.1 b (or 68 percent of all INASprograms), (ii) Productive Social Action Program (PASP) MT 1.1 b (or 23percent),(iii)DirectSocialActionProgram(PASD)MT283m(or18percent),and(iv)SocialActionSocialServices(SSAS)MT94m(or3percent).Withthisbudgetatdisposition,INASprogramstargetedatotalof567,290beneficiaryhouseholds.

• While INAS recently introduced criteria to target beneficiaries in a moreequitable manner considering geographical disparities among provinces,targeting needs to be further improved. In fact, on the one hand nominalallocationsperprovinceshowbettertargetingofmostdisadvantagedareas;however,ontheotherhand,percapitaallocations-takingintoconsiderationthe distribution of poverty – reveal that there is still room to enhancegeographicalequityofSocialProtectionPrograms.

1. Please note: All analysis was carried out with publicly available information. Where limitations were encountered, notes are made in the text. There are some minor discrepancies between the totals presented in past Budget Briefs and those presented in the 2018 edition. As data sources were updated, UNICEF revised its calculations. The viewpoints expressed in this brief are those of the author and do not necessarily represent those of UNICEF Mozambique.

Photo: © UNICEF/MOZA2013-00319/Alexandre Marques

BUDGET BRIEF 2018 SOCIAL ACTION

1

SOCIAL ACTION, MOZAMBIQUE

MGCAS + INAS Delegations

MAPUTO CITY

GAZA

INHAMBANE

MANICA

SOFALA

TETE

ZAMBEZIA

NAMPULA

NIASSA

CABODELGADO

MAPUTOPROVINCE

Xai-Xai, Chokwe, Chibuto and Chicualacuala

Inhambane, Vilankulo and Maxixe

Bárue and Chimoio

Beira, Caia and Machanga

Marávia, Moatize and Tete

Gurúe, Mocuba and Quelimane

Angoche, Nacala, Nampula and Ribáue

Cuamba, Lichinga and Marrupa

Pemba, Mocímboa da Praiaand Montepuez

Matola

MAPUTO CITY

GAZA

INHAMBANE

MANICA

SOFALA

TETE

ZAMBEZIA

NAMPULA

NIASSA

CABODELGADO

MAPUTOPROVINCE

1. How is the Social Action Sector defined?

The Social Action Sector refers to the institutions in charge of Mozambique’s social protection systems that receive autonomous budget allocations through the State Budget. Although the 2018 StateBudgetLaw(LOE)combinedSocialActionandLabor&Employmentintoasingleprioritysector,otherrelevantbudgetandexpendituredocuments,suchasStateBudgetExecutionReports(REOs)andGeneralStateAccounts(CGEs),reportSocialAction spending separately from Labor & Employment spending, consideringthem as two different priority sectors2. It would be important that also theLOE classified Social Action and Labor & Employment as two distinct prioritysectors,astheyhavedifferentgoalsandtargetdifferentpopulations.Inaddition,althoughthe2018LOEdoesnotincludepricesubsidies(i.e.fuelsubsidies,wheatflour subsidy, and transporter subsidy), Public Enterprise Subsidies have beenagainincorrectlyincludedundertheSocialAction&LaborSector.Thesesubsidiesareallocationstocoverexplorationdeficitsofpublicenterprisesandshouldnotbeconsideredinanywayassocialactionexpenditure.

For these reasons, and with the purpose of further improving transparencyof the sector’s spending, this Budget Brief will focus exclusively on SocialAction and exclude both Labor & Employment, and Subsidies. The SocialAction Sector is managed at the central level by the Ministry of Gender,Children and Social Action (MGCAS) as well as the National Social Action

Institute (INAS). At the sub-national level, the sector ismanaged byMGCASProvincial Directorates and INAS Provincial and District Delegations. Whilein the past other institutions belonged to the sector’s organigram, DNPO’slatest“Methodology for the calculation of Priority Expenditure” has clarifiedthat the Ministry of Veterans’ Affairs (MAAC) ceased to be included in thesectorandthebudgetfortheDistrictServicesforHealth,Women’sAffairs,andSocialAction(SDSMAS)isaccountedforwithintheHealthSector.Intotal,theSocialActionSectoriscomposedof32autonomousbudgetholdinginstitutions(see Figure 1).

The Social Action Sector is guided by the National Basic Social Security Strategy (ENSSB) for 2016-2024. The Social Action Strategy, which wasapprovedbytheCouncilofMinistrieson23February2016,definestheguidingprinciples and targets for basic Social Protection in Mozambique. AccordingtotheENSSB, theStateBudgetshouldallocate2.24percentofGDPtoSocialProtection interventions by 2024. Additionally, two multisector strategicplans define Social Action Sector targets: (i) the PQG 2015-2019 states that25percentofvulnerablehouseholdsshouldbecoveredbybasicsocialsecurityprogramsby 2019 and (ii) theNationalDevelopment Strategy (ENDE) 2015-2035 states that 75 percent of vulnerable households should be covered bybasicsocialsecurityby2035.

2. 2017 CGE, Mapa III-3 Despesas nos sectores economicos e sociais. 2018 REO II, Tabela 30 – Despesas nos sectores economicos e sociais.

Figure 1: Organigram of the Social Action Sector

2

The Social Action Sector was allocated MT 6.1 billion (US$ 101 million) in the 2018 State Budget.Innominalterms, the 2018 allocation to the sector represents a 29percentincreasecomparedtolastyear’sbudget,a39percentincrease compared to revised allocation, and a 75 percentincrease relative to expenditure (see Glossary of budget terminology). In real terms, it represents a 20 percentincrease compared to last year’s budget allocation, a 30percent increase compared to the revised allocation, and a63 percent increase relative to expenditure (see Figure 2A & B). From a historical perspective, the 2018 social actionallocation is the largest of all time in nominal terms, butthe second largest (after 2016) in real terms. Budget andexpenditure in the Social Action Sector have been overallwell-aligned over the years; however, disparities betweenbudget and expenditure have progressively increased since2014andhavereachedover25percentdifference lastyear.Hencetheinitialbudgetallocationisnolongerindicativeofhowmuchwillbeactuallyspentinthesector.

Although the Social Action Sector receives the smallest share of resources relative to the other social sectors, it has demonstrated the largest nominal and real increases in expenditure over time. In nominalterms, the initial allocation grew from MT 0.11 b in 2008to MT 6.1 b in 2018, and expenditure increased from MT0.6 b in 2008 to MT 3.5 b in 2017. Remarkably, spendingin the sector increased over 500 percent in nominal terms

and approximately 250 percent in real terms between 2008 and 2017. Theincrease in expenditure over time was largely captured by INAS: in fact,whereasINASwasresponsibleforjust23percentofSocialActionspendingin2008,in2018Budgetitisresponsiblefor91percentoftotalsectorspending.ThelargeincreaseinspendinghelpedINASmorethandoublecoverageof itsPrograms:BasicSocialSubsidyProgram(PSSB),DirectSocialActionProgram(PASD), Productive Social Action Program (PASP), and Social Action SocialServices (SSAS) (seeSection4.3 formoredetailsonSocialActionPrograms).

Initial AllocationRevised Allocation

Expenditure

0.10.80.7

0.50.80.8

0.71.00.7

1.21.31.1

1.41.51.5

2.12.22.1

3.33.1 2.7

3.63.62.7

2.52.62.4

2.92.62.1

3.4

Figure 2 A & B: Social Action Sector budgeting and expenditure Source: Author’s calculations from the CGE 2008-2016, REO IV 2017, LOE 2018. World Bank, World Development Indicators: Consumer Price Index (2010 = 100). Note: While years 2008-2017 display expenditure �gures, 2018 is the initial budget allocation.

FIGURAS 2A e 2B

NOMINAL TERMS REAL TERMS(INFLATION ADJUSTED)

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2.52.62.5

3.93.83.3

4.54.53.4

3.83.93.6

4.7 4.43.5

6.1

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Budget

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Budget

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Figure 2 A & B: Social Action Sector budgeting and expenditure Source: Author’s calculations from the CGE 2008-2017, LOE 2018. World Bank, World Development Indicators: Consumer Price Index (2010 = 100). Note: While years 2008-2017 display expenditure figures, 2018 is the initial budget allocation.

2. What trends emerge from the Social Action budget?

billion is the amount allocated to the Social

Action sector in the 2018 State Budget

MT6.1

3

The 2018 Social Action sector’s budget occupies a 2 percent share of the entire State Budget; this represents an increase from the 1.3 percent share last year (see Figure 3). Itmust benoted that the according to themethodologythattheGovernmentofMozambiqueappliestocalculatesectorshares–whichtakesoutfinancialoperations,debtservicingandsubsidiesfromthecommondenominatoroftheentireStateBudget–theSocialActionSectorshare increased from1.9percent in2017 to2.6 in2018Budget3. Regardlessofwhatmethodology isused tocalculatesectors’ shares,SocialAction is theonlyofthefoursocialsectorsthatsawitsshareoftotalexpenditureincreasebetween2008and2018.Infact,theweightofthesectormorethandoubledoverthepastdecade4.ThistrenddemonstratestheGovernment’scommitment

to increasingfundingtoSocialAction,despitethesector isstill receivingthesmallestshareofpublicspendingrelativetoothersocialsectors.

TheSocialActionSectorisworth0.6percentofexpectedGrossDomesticProductin2018Budget(seeFigure3).Thisisonparwith2017sector’sshareofGDPinthebudget(i.e.0.6percent),butitrepresentsanincreaserelativetotheshareofGDPconsidering2017expenditure(i.e.0.4percent).Still,thesectorisfarfrommeetingitsENSSBgoalofallocating2.24percentofGDPtosocialaction.LargerbudgetaryallocationstothesectorareneededtoreachthisENSSBgoalandisstillfarfrominternationalbenchmarksindevelopingcountries.

3. The Government of Mozambique, instead of using the total volume of the State Budget as a denominator, calculates the percentage share utilizing the total State Budget minus debt servicing, financial operations, and subsidies. This report calculates shares out of the total State Budget as is standard practice for international benchmarking.

4. This share is computed considering the narrow definition of Social Action (MGCAS/INAS activities only) and including financial operations and debt servicing in the denominator.

FIGURA 3

2.0%

2.63%

0.6%

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1.5%

2.5%

3.0%

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Figure 3: Trends in the weight of the Social Action Sector relative to total government spending and GDP Source: Author's calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

Social Action Sector share of State Budget Social Action Sector share of State Budget less financial operations, debt servicing, and subsidies Social Action Sector share of GDP

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Budget

Figure 3: Trends in the weight of the Social Action Sector relative to total government spending and GDP Source: Author’s calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

Photo: © UNICEF Mozambique/2012/Ian Berry/Magnum Photos

4

The Social Action Sector in Mozambique is financed with internal (i.e.domestic)andexternal (i.e. foreign) resources. Internal resourcesarederivedfromtaxes,tariffs,duties,andinternalcredits.Upuntil2015,internalresourcesweresupplementedbyGeneralBudgetSupport(GBS)fromagroupofdonors.External resources allocated to the Social Action Sector are“Bilateral ProjectFunds”, which are grants or credits. Bilateral project funds are –in theory–

coordinatedbetweenthedonorandMGCASandappliedthroughavarietyofmodalitiesincluding:(i)directgovernmentsupportwithgovernment-onlyorjoint partner-government implementation, often “On-Budget, On-CUT”; (ii)partner or third-party implementation, often “On-Budget, Off-CUT”; or (iii)partnerorthird-partyimplementation,but“Off-Budget”.

The Government of Mozambique has steadily increased its funding to the Social Action sector, and it has reached its largest nominal contribution to the sector in 2018 budget (see Figure 4A). In nominalterms, internalresourcesallocatedtoSocialActionin2018BudgetareworthMT4.3b.This representsovera40percentnominal increaserelativeto2017internal resources dedicated to the sector. From a historical perspective,considering that ten years ago the government dedicated justMT 370m totheSocialActionsector,2018internalsectorallocationisabout1000percentlarger. In real terms, the internal contribution to the sector increased by 34percentrelativeto2017,andbyover400percentthanin2008.

In proportional terms, internal resources allocated to Social Action in 2018 make up 71 percent of the sector budget, while external resources make up 29 percent. This represents a decline of the internal resources share relative to last year (see Figure 4B).Between 2008 and 2017, the sector’s internal to external resources ratio

averaged 79 percent internal to 21 percent external. In 2008, 62 percent ofresources came from theGovernmentwhile 38were fromdonors. Later, theinternaltoexternalresourcesratiocontinuedtoincrease,andreacheditspeakin2014(i.e.94percentinternalto6percentexternal).Sincethen,theportionof internal resources has progressively decreased until this year’s allocationNevertheless,itisimportanttohighlightthattheonlyexternalinvestmentistheWorldBank credit to thePASPprogram;while this is trackedasexternalresources,theMozambicanGovernmentwillhavetopaybacktheloanandthecorrespondinginterest.Hence,thePASPprogramisdefactointernally-funded.Finally,onexternalsupport,itisworthmentioningthattheSocialActionsectorbenefits from technical and financial support from international partners(i.e. ILO,UNICEF,WFP, etc.) indevelopingand strengthening theBasic SocialProtectionsysteminMozambique,butthissupportisnotrecordedintheLOEasthefundsarenottransferredtoINAS/MGCAS.

3. What is the source of Social Action Sector resources?

3.1 Internally- versus Externally-sourced Resources

FIGURAS 4A e 4B

Figure 4 A & B: Provision of internal versus external resourcesSource: Author's calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

NOMINAL TERMS 7

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FIGURAS 4A e 4B

Figure 4 A & B: Provision of internal versus external resourcesSource: Author's calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

NOMINAL TERMS 7

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Figure 4 A & B: Provision of internal versus external resourcesSource: Author’s calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

5

The Ministry of Economy and Finance releases initial funds (dotação inicial)viatheCUTtoeachautonomousbudget-holdingsocialactioninstitution(i.e,INASdelegations)and subsequentlyupdates theallocationbasedonbudgetexecutionratesandavailableresources(dotação actualizada).Theinstitutionstrack spending (execução) through the e-SISTAFE (Government integrated

financialmanagement information system),which sources quarterly budgetexecutionreports(REOs)andtheannualGeneralStateAccount(CGE).Thewaythe2018socialactionbudgetwillbespentcanbeanalyzedfromthefollowingfourperspectives:

In 2018, recurrent spending for the Social Action Sector is budgeted at MT 6.03 b, the largest ever allocation to recurrent, and investment is budgeted at MT 0.08 b in nominal terms(see Figure 5A).Historically,spending in the Social Actor Sector has been predominantly recurrent (see

Figure 5B).In2008,recurrentexpenditurewasworth81percentoftotalsectorexpenditure,while investmentwasworth19percent.Recurrent expenditureprogressivelyincreasedrelativetoinvestmentandreacheditspeakwitha99percentsharebothin2016andin2018Budget.

INAS was allocated over 90 percent of the Social Action budget in 2018, of which the largest share was directed to its district delegations(see Figure 6). In 2018, INAS and its delegations were allocateda total of MT 5.5 b, equal to 91 percent of the SocialActionSector’sbudget.Ontheotherhand,MGCASwasallocateda total of aboutMT0.5bor9percentof thesector’sbudget.Ofthis,about5percentwasdedicatedto MGCAS at the central level, and 4 percent to itsProvincial-levelDirectorates.

4.1 Recurrent versus investment spending

4.2 Resource use by Social Action Institution

4. How are Social Action resources spent?

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FIGURAS 5A e 5B

Figure 5 A & B: Recurrent versus investment resourcesSource: Author's calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Budget

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Figure 5 A & B: Recurrent versus Investment ResourcesSource: Author’s calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

FIGURA 6

Figure 6: Resource shares by institutionSource: Author's calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

PROPORTIONAL TERMS

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Budget

DPIMAS & DDINASDPMAS

INASMGCAS Central

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Figure 6: Resource shares by InstitutionSource: Author’s calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

6

FIGURA 7

Figure 7: Resource shares by administrative levelSource: Author's calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

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60|40 53|47 38|62

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4.3 Resource use by administrative level

Figure 7: Resource shares by administrative levelSource: Author’s calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

Spending for the Social Action Sector is highly decentralized, particularly to the district level(see Figure 7). Whiletheratioofcentraltonon-centrallevelresourceswas60to40percentin2008,itbecame15to85percentbothin2017andin2018.

FIGURAS 8Ae 8B

Figure 8 A & B: Allocations to INAS Social Protection ProgramsSource: Author's calculations from LOE 2015-2018.

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4.4 Resource use by Social Protection Programs (INAS Programs)

Figure 8 A & B: Allocations to INAS Social Protection ProgramsSource: Author’s calculations from LOE 2015-2018.

INAS Programs were allocated a total MT 4.7 b in 2018 budget (see Figure 8 A & B). This corresponds to 77 percent of the Social Action Sector’s budget, 1.5 percent of total State Budget, and 0.4 percent of GDP.Inrecentyears,INASProgramshavereceivedanincreasinglylargershareof sector’s resources that culminated in this year’s budget. Among the fourprograms,thePSSB5hasconsistentlybeenallocatedmostoftheresourcesover

thepastfouryears(anaverage56percentbetween2015and2018),followedby PASP6 (23 percent), PASD7 (18 percent) and SSAS8 (%). Similarly, in 2017budgetPSSBwasallocatedMT3.1b(or68percentofallINASprograms),PASPMT1.1b(or23percent),PASDMT283m(or18percent),andSSASMT94m(or3percent).

5. Programa Subsidio Social Básico (PSSB) targets vulnerable households with no labour capacity, mainly people in old age and people with disability.

6. Programa Acção Social Productiva (PASP) – Public Works Programme, targets poor households with at least one member with labour capacity.

7. Programa Acção Social Directa (PASD) targets household affected by shocks.

8. Social Services. 7

In 2018, INAS Programs targeted 567,290 beneficiary households (see Figure 9).This represents an 11.6 percent increase relative to the 507,840households targeted by Social Protection programs (PSSB, PASP, PASD andSSAS)9.ThevaluesofthetransferstobeneficiaryhouseholdsofINASprogramsremainedthesamesince2015,notbeingadjustedwithinflation.Nevertheless,throughtheDecreen.59/2018fortheRevisionoftheValueofSocialAssistance

ProgramsSubsidies,approvedon6August2018,theGovernmenthasupdatedthesubsidiesvalues.UnderthePSSB,thenewvaluesforsubsidiesareasfollow:(a)MT540forone-personhouseholds;(b)MT640fortwo-personhouseholds;(c)MT740forthree-personhouseholds;(d)MT840forfour-personhouseholds;MT1,000forfive-personhouseholds.UnderthePASP,thevalueofsubsidywasupdatedtoMT1,050.

FIGURA 9

Figure 9: Bene�ciary Households of INAS Social Protection ProgramsSource: Author's calculations from the CGE 2008-2017, LOE 2018, and Balanco do PES 2017.

2011 2012 2013 2014 2015 2016 2017 2018

600,000

500,000

400,000

300,000

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287,000

339,736355,500

427,000466,063

498,866507,840

567,290

Figure 9: Beneficiary Households of INAS Social Protection ProgramsSource: Author’s calculations from the CGE 2008-2017, LOE 2018, and Balanco do PES 2017.

9. MEF, 2018 Documento da Fundamentação, page 28.

10. The Education Sector has shown the highest execution rate of 92 percent over the past decade.

The Social Action Sector executed 80 percent of the sector budget in 2017 (see Figure 10). Over the past ten years, the Social Action Sector hasexecutedonaverage86percentofitsbudget.Thisisonparwiththeaverage

executionrateoftheentireStateBudget,anditisthesecondhighestaverageamongsocialsectors10.

5. How well has the Social Action Sector executed its past budgets?

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FIGURA 10

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Figure 10: Social Action Budget executionSource: Author's calculations from the CGE 2008-2017.

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EXECUTION RATE OF SOCIAL ACTION BUDGET

Figure 10: Social Action Budget ExecutionSource: Author’s calculations from the CGE 2008-2017.

8

The Mozambican Government has set two ambitious goals for the Social Protection Sector under its 2015-2019 Five Year Program (PQG) and its 2015-2035 National Development Strategy (ENDE). Asmentionedearlierinthereport,intheitsmedium-termstrategy,thePQG,theGovernmenthassetthetargettocover25percentofhouseholdsinasituationof vulnerability, starting from a 15 percent estimated baseline in 2015.Thelong-term target set in the ENDE is a 75 percent coverage rate of poor andvulnerablehouseholdsunderSocialProtectionprograms.

According to the mid-term review of the 2015-2019 Five Year Program (PQG), Mozambique provides 17 percent of vulnerable households with social assistance. This is nearly 8 percent away from its 2019 strategic target(see Figure 11).Asofthelastavailabledata,Mozambiquehasstilltocoveranadditional8percentofbeneficiaryhouseholdsinorderto

meet its strategic objective of a 25 percent household coverage.Within thismeasure of support, the government currently provides 309,806 vulnerablechildrenwithsocialassistance11.Thisisstillaround40,000childrenshortofthegovernmentmeetingits2019target.

In order to reach the ambitious goals defined in the medium- and long-term Government strategic documents, the allocations to the Social Protection Programs should keep growing at a constant pace over the next few years. Inaddition,thechallengesof(i)modernizingthesystems tomanagebeneficiaries, (ii) outsourcing paymentmechanisms, (iii)re-registeringcurrentbeneficiaries,etc.–whichareongoingprocesses-requireheavierinvestmentsinthecomingyears,aswellasasubstantialstrengtheningofthesector’shumanresources.

11. Author’s compilation from Balanço Intermédio do Programa Quinquenal do Governo 2015-2019, Page 73.

6. How has the Social Action Sector performed relatively to strategic objectives?

0.5% 1/0% 1.5% 2.0% 2.5% 3.0%0%

FIGURA 11

Figure 11: Social Action Performance relative to PQG targetsSource: Balanco Intermedio do Programa Quinquenal do Governo 2015-2019, Page 73.

SOCIAL ACTION PERFORMANCE

% of vulnerable households benefiting from Basic Social Security programsNumber of vulnerable children benefiting from social support

Goal set for 2024 at 2.24%Current level in 2018 is just 0.6%

15.76%

255,101

2014

15.96%

204,492

2015

17.39%

309,806

2016

20.50%

309,806

2018

25%

2019PQG Target

350,000

ENSSB 2016-2024 - % OF GDP DEDICATED TO BASIC SOCIAL PROTECTION

2024

2018 0.6%

2.24%

40%

35%

30%

25%

20%

15%

10%

5%

0%

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0

0.5% 1/0% 1.5% 2.0% 2.5% 3.0%0%

FIGURA 11

Figure 11: Social Action Performance relative to PQG targetsSource: Balanco Intermedio do Programa Quinquenal do Governo 2015-2019, Page 73.

SOCIAL ACTION PERFORMANCE

% of vulnerable households benefiting from Basic Social Security programsNumber of vulnerable children benefiting from social support

Goal set for 2024 at 2.24%Current level in 2018 is just 0.6%

15.76%

255,101

2014

15.96%

204,492

2015

17.39%

309,806

2016

20.50%

309,806

2018

25%

2019PQG Target

350,000

ENSSB 2016-2024 - % OF GDP DEDICATED TO BASIC SOCIAL PROTECTION

2024

2018 0.6%

2.24%

40%

35%

30%

25%

20%

15%

10%

5%

0%

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0

Figure 11: Social Action Performance Relative to PQG TargetsSource: Balanço Intermédio do Programa Quinquenal do Governo 2015-2019, Page 73.

9

INAS recently introducedobjective criteria to targetbeneficiaries indifferentdelegations by relying on demographic and poverty indicator. These criteriaaimatreducinginequityinthegeographicaldistributionofresourcesallocatedtothefourSocialProtectionPrograms(PSSB,PASP,PASDandSSAS).However,while nominal allocations per province showan improved targeting ofmostdisadvantaged areas (e.g. Zambézia), ‘per-poor’ allocations reveal that thetargetingofSocialProtectionProgramsisstillinequitable.

Nampula and Zambézia provinces receive the largest nominal allocations from INAS programs relative to other provinces(see Figure 12). In 2018 Budget, Nampula and Zambézia were allocatedMT 940m and

MT 810 m respectively, followed by Tete, Manica and Gaza that receivedapproximatelyMT400meach.Amongtheotherprovinces,MaputoProvincereceivedthelowestallocationtoINASprograms.Asmentionedabove,themostfundedprogramacrossthecountryisPSSP,followedbyPASP,PASDandSSASinorderofaverageallocation.However, inZambéziathePASPprogramreceivesabout half of the total resources dedicated to INAS programs. Similarly, theNampulaprovinceisallocatedahigherthanaverageshareofthePASP.

7. How equitable is the Social Action budget?

Billio

ns

of

Me

ticais

(10

9),

CU

RR

EN

T

2011 2012 2013 2014 2015 2016 2017 2018

Alocação aos Programas em Relação ao OEAlocação aos Programas em Relação ao PIB

FIGURAS 12A, 12B e 12C

Figure 12A, B & C: 2018 Allocations to INAS Programs by Province Source: Author's compilation from the 2018 LOE.

MAPUTOCITY

GAZAINHAMBANEMANICA

SOFALATETEZAMBEZIA

NAMPULANIASSA CABODELGADO

MAPUTOPROVINCE

NOMINAL TERMS 1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

SSASPASPPASDPSSB

Billio

ns

of

Me

ticais

(10

9),

CU

RR

EN

T

MAPUTOCITY

GAZAINHAMBANEMANICA

SOFALATETEZAMBEZIA

NAMPULANIASSA CABODELGADO

MAPUTOPROVINCE

PROPORTIONAL TERMS100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

SSASPASPPASDPSSB

Sh

are

of

INA

S P

rog

ram

s B

ud

ge

t, %

Figure 12A & B: 2018 Allocations to INAS Programs by Province Source: Author’s compilation from the 2018 LOE.

Photo: © UNICEF Mozambique/2012/Ian Berry/Magnum Photos

10

MAPUTO CITY

GAZA

INHAMBANE

MANICA

SOFALA

ZAMBEZIA

TETE

NAMPULA

NIASSA

CABODELGADO

MAPUTOPROVINCE

Figure 13: Geographical equity of Social Action spending Source: Author's compilation from the 2018 LOE, considering the MEF 2017 Poverty Incidence Index from the Fourth National Poverty Assessment.

FIGURA 13

2018 BUDGET

INAS Programs – Per Capita Spending

1035280

Figure 13: Geographical equity of Social Action Spending Source: Author’s compilation from the 2018 LOE, considering the MEF 2017 Poverty Incidence

Index from the Fourth National Poverty Assessment.

2018 BUDGET

MAPUTO CITY

GAZA

INHAMBANE

MANICA

SOFALA

ZAMBEZIA

TETE

NAMPULA

NIASSA

CABODELGADO

MAPUTOPROVINCE

Figure 13: Geographical equity of Social Action spending Source: Author's compilation from the 2018 LOE, considering the MEF 2017 Poverty Incidence Index from the Fourth National Poverty Assessment.

FIGURA 13

2018 BUDGET

INAS Programs – Per Capita Spending

1035280

was the Per Capita allocation to the poor

in Mozambique

MT376

Nevertheless, 2018 per-capita Social Action Sector spending on the poor is lowest in Zambézia, Niassa, Nampula and Sofala(see Figure 13).WhileconsideringnominalallocationsofINASSocialActionProgramsbyProvince,Zambéziaprovincereceivesthesecondhighestgrossallocation,but on a per person basis (i.e. per capita allocation among the poorpopulation), receives the lowestallocation. In fact, Zambézia’sperperson

allocation – taking into account the estimated poor population- in 2018isMT280while it isapproximatelyMT1000 inMaputoCity.Thisexamplereveals that the relationship between the geographical distribution ofpoverty and thedistributionof the sector’s resources through INASSocialActionprogramsisstillveryweak.

11

AGO ApoioGeralaoOrçamentoAF HouseholdCGE GeneralStateAccountCUT SingleTreasuryAccountDFID DepartmentforInternational

DevelopmentUKDNO NationalBudgetDirectorateEKN EmbassyoftheKingdomofthe

NetherlandsENDE NationalDevelopmentStrategyENSSB NationalBasicSocialSecurity

StrategyFMI InternationalMonetaryFundGDP GrossDomesticProductILO InternationalLabourOrganisationINAS NationalSocialActionInstituteINE NationalStatisticsInstituteLOE StateBudgetLaw

budgetary terms

Initial Allocation:ThefirstallocationoffundsapprovedbyParliament

Corrected Allocation: AcorrectedallocationoffundsapprovedbyParliament

Updated Allocation:Thetotalamountoffundsmadeavailabletoaparticularinstitution

Expenditure Undertaken: Allocatedfundsspentoninvestment,servicesandhealthproducts

Execution of the Budget: Percentageofallocatedfundsspentoutofthetotalallocation.

Nominal, or current values:Numbersnotcorrectedtotakeaccountoftheeffectofinflation.

Real values:Numberscorrectedtotakeaccountoftheeffectofinflation

glossary

MGCAS MinistryofGender,ChildrenandSocialAction

MPD MinistryofPlanningandDevelopmentMT MeticalOE StateBudgetPASD DirectSocialActionProgrammePASP ProductiveSocialActionProgrammePES EconomicandSocialPlanPQG GovernmentFiveYearProgrammePSSB BasicSocialAllowanceProgrammeSS SocialSubsidiesSSAS SocialActionSocialServicesUNICEF UnitedNationsChildren’sFundWB WorldBank

Per capita allocation in poor population per INAS Delegation (Consumption Poverty Incidence – 4th National Assessment, 2014/2015, Ministry of Economy and Finance);

Thus for the entire year of 2017, the Chicualacuala delegation, for example, will have funds to cover the costs of the various social protection programmes equivalent to almost MT 1,554 for each of the inhabitants regarded as poor who live in the districts covered by that INAS delegation, while, at the other extreme, the Gurúe delegation, in Zambézia, received an allocation equivalent to MT 134 per capita, although it covers more than a million people estimated as poor. This disparity has been noted in previous years.

It is hoped that the new INAS Information Management System (e-INAS), which should be operational in 2017, might help INAS better distribute and plan resources, making management more efficient and making possible a greater impact of the monetary transfers on the vulnerable population, significantly improving the monitoring systems.

Fó

Photo: ©UNICEF/Mozambique

InternationalLabourOrganization

16

• Initial Allocation (Dotação Inicial):Thefirstallocationoffunds,approvedbyParliament

• Revised Initial Allocation (Dotação Rectificativa):Arevisedallocationoffunds,approvedbyParliament

•Updated Allocation (Dotação Actualizada):Thetotalfundsthatarriveatthedisposalofagivensocialactioninstitution

• Expenditure (Despesa Realizada):Allocatedfundsspentonsocialactioninvestmentandrecurrentcosts

•Budget Execution (Execução do Orçamento): Percentage of allocatedfundsspentoutofthetotalallocation

•Nominal Values; Current:Numbersnotcorrectedfortheeffectofinflation

• Real Values; Constant:Numberscorrectedforinflation

GLOSSARY OF BUDGET TERMS

LIST OF ACRONYMS

• b:Billion

• CGE: GeneralStateAccount(FinalBudgetReport)

• CFMP:Medium-termFiscalPlan

• CUT:SingleTreasuryAccount

• ENDE:NationalDevelopmentStrategy

• ENSSB: NationalBasicSocialSecurityStrategy

• e-SISTAFE:FinancialManagementInformationSystem

• GDP:GrossDomesticProduct

• ILO:InternationalLaborOrganization

• INAS:NationalSocialActionInstitute

• LOE:StateBudgetLaw

•MAAC: MinistryofVeterans’Affairs

•MEF:MinistryofEconomyandFinance

•MGCAS:MinistryofGender,ChildrenandSocialAction

•m:Million

•MT:MozambicanMetical(LocalCurrency)

• PASD:DirectSocialActionProgram

• PASP: ProductiveSocialActionProgram

• PES:EconomicandSocialPlan

• PQG:GovernmentFiveYearPlan

• PSSB:BasicSocialAllowanceProgram

• REO:StateBudgetExecutionReport(BudgetUpdateReport)

• SDSMAS:DistrictServiceforHealth,Women,andSocialAction

• SSAS:SocialActionSocialServices

•UGB:AutonomousBudgetHolderCode

•UNICEF:UnitedNationsChildren’sFund

•US$: UnitedStatesDollar(Currency)

•WB:WorldBank