Where credit's due: livelihoods, market failure and financial sector development for poverty reduction in rural Mozambique

Mozambique is widely cited as one of the few recent examples of rapid and sustained economic growth in sub-Saharan Africa. Noting that this growth has contributed to appreciable poverty reduction, this paper argues that Mozambique’s economic miracle has yet to generate economic opportunities commensurate with the livelihood needs of the rural population in particular. The paper begins with an analysis of the development of livelihood strategies amongst rural Mozambican households throughout the country’s modern history. The analysis then shifts focus to the country’s post conflict economy expansion and the emergence of non-agricultural crop production economic opportunities for rural Mozambicans. The lack of such opportunities is seen, in larger part, to result from a poor environment for entrepreneurial activity, limited most notably by the failure of the commercial financial sector to serve adequately the needs of rural Mozambicans. Finally, a number of financial sector institutional alternatives are explored.