New Alliance – Much left to do to realize its full potential

Within the framework the G8 countries committed to helping the government to accelerate the implementation of the PNISA and PEDSA, the government committed to undertaking a series of reforms and certain private businesses committed to significant investment in the agriculture sector in Mozambique.

The Government of Mozambique committed through the New Alliance to focus its efforts, in particular, on increasing stability and transparency in trade policy; improving incentives for the private sector especially in developing and implementing domestic input and seed policies that encourage increased private sector involvement; developing and improving the transparency and efficiency of land policy and land administration; and developing innovative methods for increasing the availability and access to credit by smallholders. It reaffirmed its intention to provide the human and financial resources and the mechanisms for dialogue with the private sector, farmers and other stakeholders, and across government ministries that are required for the achievement of tangible and sustainable outcomes, the acceleration of Mozambique’s development, and the delivery of tangible benefits to smallholder farmers, including women and youth and to mainstreaming nutrition in all food security and agriculture-related programs.

The New Alliance agreement document outlines 15 actions which are to be undertaken in order to achieve these aims. These are:

1. Revise and Implement National Seed Policy, including:

a) Systematically cease distribution of free and unimproved seeds except for pre-identified staple crops in emergency situations.

b) Allow for private sector accreditation for inspection.

2. Implement approved regulations governing seed proprietary laws which promote private sector investment in seed production (basic and certified seed).

3. Revise and approve legislation regulating the production, trade, quality control and seed certification compliant with the Southern African Development Community (SADC) seed protocol requirements.

4. Develop and implement a national fertilizer regulatory and enforcement framework.

5. Assess and validate the National Fertilizer Strategy.

6. Adopt procedures for obtaining rural land use rights (DUATs) that decrease processing time and cost.

7. Develop and approve regulations and procedures that authorize communities to engage in partnerships through leases or sub-leases (cessao de exploração).

8. Eliminate permit (guia) requirements for inter-district trade in agricultural commodities.

9. Develop and approve invoices that can be issued by purchasing firms on behalf of suppliers (i.e. smallholder producers) that are not registered taxpayers; develop and approve respective monitoring and control procedures. Implement fiscal education program for small holders, including tax registration.

10. Eliminate the Simplified VAT scheme and replace with the existing ISPC (Simplified Tax for Small Contributors).

11. Approve a decree allowing the setup of private credit information bureaus.

12. Enact mobile finance regulations that are risk-based and allow for experimentation and innovation.

13. Enact approved Food Fortification regulations (including bio-fortification).

14. Determine optimal structure for institutional coherence within nutrition, as per Scaling Up Nutrition country-level strategic priorities.

15. Ensure that Multi-Sectoral Nutrition Action Plan for the Reduction of Chronic Undernutrition 2011-2015 and PEDSA implementation plans are aligned with one another.

However two years into the implementation of the New Alliance framework much remains to be done. While some legislation has been drafted or promulgated (in the seed and fertilizer sectors for example), some has not. Where legislation has reportedly been drafted (removal of simplified VAT scheme, credit bureaus, mobile finance for example) the draft legislation is not publicly available for comment. SPEED has undertaken a high-level analysis of the legislation that is available and we note that there are a number of significant concerns about its impact on business and we believe it will be important to discuss whether the legislation that has been drafted or is to be drafted in fact fits within the true aims and intents of the New Alliance framework.

While SPEED is endeavoring to work with our partners on items 1-13 above progress has been slow or negligible in many areas. This is of particular concern given the importance of the framework and its potential impacts on the lives of all Mozambicans.

At the same time a critical factor in the success of the New Alliance is the involvement of business. Based on the reforms which should happen under the framework it should become easier and more attractive for business to invest in the agriculture sector. However slow reforms and lack of concrete dialogue mean that in many cases businesses which are keen to invest remain on the sidelines of this process. A brief overview of the experiences of those companies which signed up to the New Alliance compact shows that far from being treated as key partners in the process they are experiencing as many difficulties as any other investor with access to land, licensing, access to markets and so on.

Through the New Alliance the Mozambican government has made a commitment to reform and to improving the lives of millions of small-holder farmers and their families. The G8 and business stand ready to fulfill their sides of the agreement. However firm commitment and clear forward movement is required in each of the areas listed above if the New Alliance is to deliver on its promise.