Mozambique - Poverty and wealth

Though the vast majority of Mozambicans live in abject poverty, a small elite consisting of traders, politicians with business ties, foreign managers, and professionals working in the financial sector enjoy a life of luxury in the urban centers. This elite has benefited from the privatization and liberalization reforms associated with the SAPs, as they have largely displaced the state in the ruling positions of the economy. Unfortunately, policies such as the liberalization of the foreign exchange market, which enables business executives to easily acquire foreign currency, have increased the propensity of the elites to buy most of their commodities from sources abroad. Indeed, the Mozambican elite is particularly notorious for spending its money on the importation of luxury goods, rather than reinvesting in and supporting the local economy. As Joseph Hanlon notes, the elite travel extensively and identify more with the wealthy of western countries than they do with the Mozambican poor.

In contrast to the tremendous wealth of the small elite, the majority of Mozambicans find it difficult to provide for their basic needs. The United Nations Development

Program 's (UNDP) human development index (HDI) listings, which arranges countries according to their overall level of human development, ranks Mozambique 168th out of a total of 174 nations. The HDI, a composite index (one that assesses more than one variable) that measures life expectancy at birth, adult literacy rate, school enrollment ratio, and GDP per capita , is indicative of a country's general social and economic wellbeing. As such, Mozambique's HDI ranking demonstrates that the country is one of the least developed in the entire world.

Although there are no recent statistics for public expenditure on education, UNDP statistics on support for the health sector indicate that the Mozambican government has considerably reduced its already meager health expenditure. In 1990, for instance, the government spent 3.6 percent of GDP on the health sector, whereas this figure dropped to 2.1 percent in 1998. Such cuts reflect socalled austerity measures induced by the SAPs, designed to decrease government spending to "free" revenue for debt-servicing . Comparatively, the United States spent 6.5 percent of GDP on health in 1998. The vast majority of Mozambicans, for their part, spend their meager incomes on the basic necessities of life, such as food, rents, clothing, fuel, and transportation. As a result of a declining economy and a deepening of poverty, however, Mozambicans consume somewhat less food calories on a daily basis then they did thirty years ago. In 1970, the average Mozambican consumed 1,896 calories, with this figure declining to 1,832 calories in 1997. Americans, in contrast, consumed on average 2,965 calories in 1970 and 3,699 calories in 1997. This is not surprising, considering the increase in the gross national product (GNP) per capita has been grossly outweighed by mounting inflation in the past 10 years. The UNDP estimates that the annual growth rate in GNP per capita between 1990 to 1998 was 3.5 percent, while the average annual rate of inflation during the same period was 41.1 percent. Fortunately, inflation stabalized at 3.8 percent in 1998, though the GNP per capita in purchasing power parity (adjusted to compensate for the different pricing of goods and services in Mozambique in relation to the United States) the same year leveled at a paltry US$740.