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Sunday, November 25, 2012 - Page updated at 06:30 p.m.

In coal-rich Mozambique, rural poor get poorer though economy grows

The New York Times

CATEME, 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 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 newfound status as one of the world's fastest-growing economies would be theirs.

Instead, they were moved 25 miles from the mine, living in crumbling, leaky houses, farming barren plots of land, far from any jobs 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," 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 economics. 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, a 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 South and East Asia.

These investments mean that income from natural resources easily could outstrip the outsized contribution foreign aid makes to its $5 billion annual budget.

The country has been growing at a rapid clip for two decades, in fact, since the end of its brutal civil war. Yet, after a substantial drop in poverty after the first postwar decade, gains have slowed, analysts say, leaving millions stuck below the poverty line and raising 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.

Before he moved, 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.

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," Chachoka said. "That is what is happening here."

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 the bottom of the Human Development Index, just above Burundi, Niger and the Democratic Republic of Congo. By some measures, median income has shrunk, not grown, since the boom began.

"There were some problems after the relocation," said Vale's country manager, Ricardo Saad, adding that the company was trying to fix them. Local people, he said, should not think that mining would bring instant prosperity.

"One of the things that we have to manage very carefully are the expectations," Saad said.

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