As Coal Boosts Mozambique

When Augusto Conselho Chachoka and his neighbors heard that the world's biggest coal mine was to be built on their land, a tantalizing new future floated before them. Instead of scraping by as subsistence farmers, they would earn wages as miners, they thought. The mining company would build them sturdy new houses, it seemed. Finally, a slice of the wealth that has propelled Mozambique from its war-addled past to its newfound status as one of the world's fastest-growing economies would be theirs.

Instead, they ended up being moved 25 miles away from the mine, living in crumbling, leaky houses, farming barren plots of land, far from any kind of jobs that the mine might create and farther than ever from Mozambique's growth miracle.

"Development is coming, but the development is going to certain areas and certain people," Mr. Chachoka said, taking a break from trying to coax enough food from his scraggly field to feed his six children.

Mozambique is one of the poorest nations in the world, broken by a brutal colonial legacy, a 16-year civil war and failed experiments with Marxist economic policy. But it is also one of the so-called African Lions: countries that are growing at well above 6 percent annually, even amid the global downturn.

Mozambique is poised for a long economic boom, driven by its vast deposits of coal and natural gas. Vale, the Brazilian mining company, is planning to invest $6 billion in its coal operation near here, and other coal giants like Rio Tinto will soon begin producing coal in the Tete region of northern Mozambique.

Gas projects could bring in far more, as much as $70 billion, according to World Bank estimates. Mozambique's location on Africa's southeastern coast means it is perfectly positioned to feed hungry markets in southern and eastern Asia. These investments mean that income from natural resources could easily outstrip the outsized contribution foreign aid makes to its $5 billion annual budget.

The country has been growing at a rapid clip for the past two decades, in fact, since the end of its brutal civil war. Yet, after a substantial drop in the first postwar decade, gains against poverty have slowed substantially, analysts say, leaving millions stuck below the poverty line and raising tough questions about whether Africa's resource boom can effectively raise the standard of living of its people.

"You get these rich countries with poor people," said the economist Joseph Stiglitz, who recently visited Mozambique and has written on the struggle of resource-rich countries to develop. "You have all this money flowing in, but you don't have real job creation and you don't have sustained growth."

It is a problem in resource-rich countries across Africa. In a largely upbeat assessment of Africa's growth prospects, the World Bank said in October that rapidly growing economies powered by oil, gas and minerals have seen poverty levels fall more slowly than countries without those resources.

In some nations, like Gabon and Angola, the percentage of people living in extreme poverty has even increased as growth has spiked.

Most of Mozambique's people live in rural areas, and almost all of them depend on farming. Since commercial farming scarcely exists -- 99 percent of farmers are smallholders -- this means small-scale, family-based agriculture is the main, and in many cases the only, source of income for the vast majority of Mozambicans.

But the new gas and coal deals are wrapped up in multibillion-dollar megaprojects that rarely create large numbers of jobs or foster local entrepreneurship, according to an analysis by the United States Agency for International Development.

"The effects of megaprojects on living standards were found to be very modest," the report said. "These projects, over all, have created few jobs. And linkages to the public budget via tax revenues have also been small because of tax exemptions."

The plight of the people of this tiny, new village helps illustrate why Mozambique's rural poor have been left behind. Far from the centers of economic power, dependent on rain-fed agriculture and ignored by the government, the rural poor languish even as the country surges.

The coal deposits in Moatize represent one of the biggest untapped reserves in the world, and the Brazilian mining company Vale has placed a big bet on it. But to get to the coal, hundreds of villagers living atop it had to be moved. The company held a series of meetings with community members and government officials, laying out its plans to build tidy new bungalows for each family and upgrade public services. As the prospect of huge new investments in their rural corner of the world beckoned, villagers anticipated a whole new life: jobs, houses, education, and even free food.

Things didn't work out that way. The houses were poorly built and leaked when it rained. The promised water taps and electricity never arrived. Cateme is too far from the mine for anyone here to get a job there. The new fields are dusty and barren -- coaxing anything from them is hard.

Before he moved, Mr. Chachoka made a tidy living. He had a small vegetable patch, his wife made bricks from mud to sell in a nearby town, and he could pick up occasional work as a laborer.

Mr. Chachoka's move from peri-urban striver who salted away extra cash to struggling rural farmer who can barely feed his family is emblematic of a problem facing Mozambique and many other resource-rich but still deeply poor nations. Strong economic growth almost completely bypasses the rural poor, and in some ways can leave them even worse off. "The rich get richer and the poor get poorer," Mr. Chachoka said. "That is what is happening here."

Some resource-rich countries in Africa have managed to turn mineral wealth into broad-based development. Ghana, which recently discovered oil, has won praise for its careful planning for poverty alleviation. Botswana's diamonds have turned what was one of the world's most impoverished nations into a middle-income country. Mozambique says it hopes to do the same, striking a balance between exploiting its mineral wealth and improving rural farming so that all Mozambicans benefit.

"We are very optimistic," said Abdul Razak, deputy minister of mines and the man in charge of bringing Mozambique into compliance with international standards for transparency. "The level of poverty is going to be lower and the level of well-being is going to be higher."

The government has signed up to be part of the Extractive Industries Transparency Initiative, a program set up by Britain and supported by the World Bank to ensure that governments and companies are honest about revenues. The government also says it plans to invest the proceeds of mining into antipoverty programs and to help rural farmers.

But Mozambique's experience also shows how hard it will be to get there. Even after two decades of strong growth, the country remains near dead last on the Human Development Index, just above Burundi, Niger and the Democratic Republic of Congo. By some measures, median income has actually shrunk, not grown, since its boom began.

The events that unfolded in Cateme explain why this is the case. Earlier this year, the people of Cateme sent a letter to local government officials and Vale demanding that their complaints about the resettlement process be addressed, threatening to block the railway line that passes through their village carrying coal to the port. When they received no reply, they occupied the rail line. The police descended upon them, chasing them away and roughing up those who resisted removal.