Ernst & Young Mozambique calls for transition towards a less aid-dependent economy

According to the auditor, while external assistance has enabled significant progress in healthcare, education and social protection, the volatility of donor priorities and successive global crises are exposing the country’s economy to growing risks of funding cuts, with potentially serious consequences for ongoing development projects. “In several African countries, including Mozambique, a significant share of health, humanitarian assistance, food security and social development programmes continues to depend on external financing. Sudden reductions in these funding flows can therefore directly affect vulnerable populations and undermine progress achieved over many years.

At the same time, this context reinforces an important message: the transition to more resilient development models that are less dependent on international aid must be accelerated,” Neves said. Her comments come as international reports, including International Monetary Fund (IMF) Article IV assessments, warn that reductions in foreign aid could leave millions of people across sub-Saharan Africa in situations of extreme social vulnerability. “The essential priority is to mobilise resources in a way that maximises the impact of every metical invested,” she said.

Neves also argued that the creation of a Development Bank could play an important role in transforming Mozambique’s economy. Alongside the establishment of a Development Bank, Neves warned that fragmented donor initiatives and duplication of efforts across some provinces and sectors, while other regions receive little or no support, reduce the effectiveness of development funding and undermine sustainable development. “It is essential to improve the coordination of funding, avoid duplication of effort among donors and strengthen national planning and monitoring mechanisms. It is equally important to establish institutions capable of mapping, coordinating and aligning external assistance with the country’s development priorities,” she said.