Budgeting, planning, and economic strategy in Mozambique

Guest blog by Bruce Byiers

This is a blog series written by the alumni of the Leading Economic Growth Executive Education Program at the Harvard Kennedy School. 61 Participants successfully completed this 10-week online course in December 2021. These are their learning journey stories.

Several years ago, I was involved in what seemed like quite a practical, consultative – perhaps even problem-driven – project in Mozambique: to better connect their ‘plan’, their ‘budget’ and their medium-term expenditure framework. As one might expect, this entailed multiple internal meetings in the Ministry of Finance, meetings with line Ministry staff involved, meetings with provincial staff, and workshops to discuss ways to link these connected but separate budget and planning processes. We came up with an agreed approach. But it was agreed at the technical level. The Minister never bought it. And so it never got anywhere.

Since then I’ve been keenly aware of the fact that a ‘good’ development policy or strategy isn’t worth much if it is not somehow adapted to the political reality with some political ownership. That has led me to doing a lot of ‘political economy analysis’, to understand why things are as they are – and even to proposing a framework for thinking about how to work with a better understanding of interests and incentives: adapt, alter, avoid, await, abandon…

But what has perhaps been missing has been a more refined understanding of the process required to actually get things moving. Of how to get from ‘writing a study’ to ‘accompanying a process’.

Numerous things stand out as key takeaway from the LEG course.

  1. One is that there is never just one key problem that needs addressing. We sometimes have the impression that there is, ‘if you can just find a way to identify it’. The course helps think about how there will always be multiple, interconnecting problems, but these should be a starting point, not a barrier to progress.
  2. Another, is that there is always some progress to be made. Being confronted with a range of ‘problems’ often leads to requests to come up with ‘recommendations’ without any clear conception of how they would be put into practice – even if we can to say what would be ‘quick wins’, longer term goals, etc. Though that can also seem like a barrier to progress, the idea of creating ‘learning teams’ around each problem is helpful to get people thinking and connecting around some of the key issues being faced. The course teaches us that there is never nothing you can do, even if the first step is simply about trying to convince the right people that it might be a good idea to explore what is behind some of the identified problems (building acceptance), before actually getting their authorization and building ability to put in place a broader process.
  3. And that all helps in terms of working towards a process of action-oriented learning. Being asked to write a study, as if often the first step when a policy question arises, is often seen as a solution in itself. But what the course and the assignments underlined to me was the possibility of using such study requests as a basis for moving the conversation towards a more action-oriented, learning and problem-solving process. The need for political authorization has been quite clear to me since my early experience in Mozambique. What has not been clear is that very often what we are asked to do – studies – are also ways of building up acceptance of problems and authorization to work on them.

This may seem somewhat basic, but nonetheless is quite different from the kind of work that many of us in the development industry are involved in, where we write reports, hand them over, and hope that the information somehow helps make a decision.  

And for the report, well, the LEG course provides a whole range of tools for understanding what is going on in an economy through the Atlas of Economic Complexity. But perhaps more importantly, it offered 2 key concepts that can be applied at a range of levels:

  1. The need to think about how to build up and connect knowhow to do tasks, in the private and public sphere, across regions within countries, and indeed between countries.
  2. The need to think in terms of binding constraints. Like the problem definition exercise, there may be many constraints to economic growth, but to identify which is binding requires some work. Again, there are some useful ways of thinking about them on offer:
    • The price of the constraint should be high.
    • Changes in the binding constraint should be reflected in economic changes.
    • Firms that succeed will be those that have little need of the constraint – like camels in the desert.
    • …or they will be ones that have somehow found a way around it – more like hippos in the desert.

Now I find myself working on a project in Mozambique again – no longer in the realm of public financial management but rather looking at their economic strategy, and what position they could and should take vis-à-vis the African Continental Free Trade Area. They seek to learn from the experience of past trade agreements – where most trade has been with neighboring South Africa – while most of the recent economic growth has been from investment in minerals. Nonetheless, there are some success stories of new exports, and there could be ways to learn from them. Talking to different private sector actors already reveals many of the constraints they face to export goods, already offering some ideas that could form the basis for a more problem-driven approach.

There is also a new industrial policy in place – with many of the same policy proposals that have been made before. So there is perhaps also a political opening for thinking more concretely about how to really put the industrial policy into practice in order to be prepared for the continental free trade area. That would let us get down to better understanding what is stopping investment in new areas and exports that use similar capabilities to those already being used – what Ricardo Hausmann talks of as ‘monkeys jumping’ to new trees.

I am far from being able to begin putting teams into place, but we shall see how much acceptance we can build up for the work we’re doing now, and where there will be buy-in for thinking in terms of a problem-driven approach. This time we might just get the Minister to buy the approach, or at least ‘rent’ it as Matt Andrews likes to say.

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