Globalaffairs

Issue 21/July-September 2010
By Frank Vollmer

Mozambique is a country that is riddled with poverty. It is placed on the UN’s list of the 50 Least Developed Countries, and accommodates 0.61% of the world’s population living below the global poverty line of US$1 a day. It continues to have one of the lowest GDP per capita in the world, and shows dramatic limitations in crafting human development (with 900 US$ in 2009, Mozambique is ranked 218/228 countries worldwide in GDP per capita terms, and 172/182 on the 2009 Human Development Index). On the other hand is it a country that has been hailed by the World Bank for its vehement reduction in poverty levels: “poverty declined rapidly in Mozambique over the 96/97-02/03 period” one report stated (Fox et.al, 2005).

How is this possible? This article sets out to meaningfully critique the way poverty is measured in Mozambique, by analysing the measurements usefulness against the capabilities framework of Amartya Sen, which is the philosophical base of the country’s poverty definition used in the government’s PRSP. Considering the influence measurement techniques have gained on directing policies, and to judge progress made on reducing levels of absolute poverty, it concludes with a call to replace the current unidimensional poverty measure with a multidimensional measurement application, one that shall allow the better crafting of policy responses to fight poverty defined as “capabilities deprivation”.

Introduction: Discrepancy unravelled

In Mozambique’s current Poverty Reduction Strategy Paper PARPA II 2006-2009 (Plano de Acção para a Redução da Probeza Absoluta), poverty is defined as the “the impossibility, owing to inability and/or lack of opportunity for individuals, families, and communities to have access to the minimum basic conditions, according to the society’s basic standards” (GdM, 2006: 8).

This definition follows implicitly the logic of Amartya Sen’s capabilities concept, one which perceives poverty as a multidimensional phenomenon: poverty understood as the absence of some basic capabilities; which is a minimum set of “real opportunities”, people need to live the life they value (Sen, 1987: 36).

Sen famously argued that seeking equality of income or consumption, the traditional proxies of development within welfare economics and utilitarianism, is a misleading informational base to judge development and poverty. Various “inter-individual” and “inter-societal” conversion factors, such as personal heterogeneities, social norms, customs and conventions, as well as environmental diversities, inter alia, can prevent the successful translation of commodities (or means, such as income and consumption), into functionings (or ends, such as being well-nourished). Functionings are defined as plural achievements (beings and doings) of value, e.g. being well-nourished, employed, clothed or literate. To ensure this, policy makers and their partners in development (public and private institutions) ought to focus on enhancing and equalising people’s real opportunities (or instrumental freedoms), by improving the provision of, among others, economic facilities, social opportunities, political rights, transparency guarantees and protective securities (Sen, 1999: 38-40). If this is ensured, a person can live out their full agency freedom. An agent is understood as “someone who acts and brings about change, and whose achievements can be judged in terms of her own values and objectives, whether or not we assess them in terms of some external criteria as well” (Sen, 1999: 19).

Post hoc, with poverty being acknowledged in PARPA II as “a multidimensional phenomenon, there is no single indicator that can capture all its manifestations” (GdM, 2006: 8).

Against this assertion it comes as a surprise that the same PRSP operates with very “traditional” ways to measure poverty. What is used is the unidimensional headcount ratio, the poverty gap and the squared poverty gap, measuring consumption levels within the family unit. Of particular relevance for policy guidance is the headcount ratio, which reports the percentage of the population that falls below a poverty line, one that is usually related to income and is conventionally measured by total household consumption (Fox et. al, 2005: 1).

The National Directorate of Planning and Budget (DNPO) of the Ministry of Planning and Development (MPD), the government’s key institution for poverty measurement, appraisal and monitoring, has chosen to base PARPA II on a consumption-based assessment of poverty, one in which

“the basic minimum conditions were identified on the basis of an absolute poverty line measured in monetary terms that permits the family unit to obtain a basket of goods corresponding to a basic standard of living (GdM, 2006: 10).”

With this measurement approach applied, the headcount ratio fell from 69% to 54%, based on the comparison of the two family consumption surveys IAF (Inequérito aos Agrgados Familiares) from 1996-97 and 2002-03, in both rural and urban areas of Mozambique (the data was collected by the National Statistics Institute (INE)). These household surveys contain information on expenditure for a random sample of 8700 households (DNPO, 2004: 2). This figure is used to guide policy action, and as a headline to judge joint governmental and international community efforts regarding their poverty reduction strategies and policies. It resulted in the World Bank stating that “poverty declined rapidly in Mozambique over the 96/97-02/03 period” (Fox et.al, 2005); and it allowed the IMF to conclude in their PRSP Annual Progress Report and Review of the GdM’s Economic and Social Plan for 2003 that: “After all, it can be said that the PARPA central objective of reducing poverty incidence to less than 60% of the population by 2005 had already been met” (IMF, 2004: 22)

PARPA II sets itself the target to further reduce the poverty headcount from 54% in 2003 to 45% by 2009 (GdM, 2006: 1), a target still uncertain of being achieved as of July 2010.

In the analysis to follow I aim to highlight the discrepancy between the definition of poverty used in PARPA, against the chosen way to measure poverty. It will be argued that the discrepancy results in the drafting of policies that are not useful in alleviating poverty defined as the deprivation of some basic capabilities.

Poverty as a lack of consumption: Measuring around the problem

PARPA’s consumption-based assessment of poverty operates with poverty lines that were defined in a way that attempts to reflect the wide variations in prices and consumption patterns throughout the country (Hanlon, Smart, 2008: 61).

Yet, what counts as consumption and what is actually measured is determined by definition. Contained in the measurement is the “the total value of consumption of food and nonfood items (including purchases, home-produced items, and gifts received), as well as imputed use values for owner-occupied housing and household durable goods” (DNPO, 2004: 4).

The validation of the different components of consumption (and income respectively) is done at market prices. What’s problematic here is that monetary values should, in fact, be imputed into the measurement for those items that are not valued through the market (Glewwe, Grosh, 2000). This can be done through approximation of expenditure data, and adjustments for the use of services from durables (Ruggeri Laderchi et.al, 2003: 8). Due to claims by the DNPO of econometric-quantitative limitations however, two important components of consumption, at least from a capabilities perspective, were omitted from the measurement in Mozambique: the “consumption of commodities supplied by the public sector free of charge (or the subsidized element in such commodities) and consumption of home produced services” (DNPO, 2004: 4, fn. 4).

In other words, the provision of public goods, defined as goods that are non-excludable and non-rival (as in opposition to private goods whose ownership can be transferred and contested (that is, a good consumed by an individual cannot be consumed by somebody else)), are not included in the consumption measure, as the IAF data do not permit quantification of these benefits. Examples would include streets, schools, public markets or water taps, the environment (including clear water, clear air, inter alia), defence and law enforcement, among others.

Thus, even though these goods will most likely enhance the well-being of an individual who is using those facilities, it is not accounted for in the measurement. Additionally, home produced services, such as cooking and cleaning, also add to a person’s welfare; yet, the IAF data permits neither quantification of those benefits. They are excluded from the consumption measure as well (DNPO, 2004: 4).

From a capability perspective, this is problematic in several ways: firstly, policy-makers will lack incentive to invest in and protect public goods, which is crucial for the enhancement of several “instrumental freedoms” (such as the creation of economic and social opportunities, i.e. through investments in public infrastructure, schools and health systems, inter alia (Sen, 1999: 38-40). That is, because their impact will not be felt in numerical terms. Secondly, the identification of the poor for “evidence-based” targeting may favour those lacking private income. This will favour a market and private sector driven development model, against one that rather follows support-led processes and opportunities expansions, the latter the more appropriate choice within the capabilities framework for low human development countries (Sen, 1999: 35-36; 46). Hence, the measure tends, on the grand scale, to set incentives for policy actions that are based on a competitive market ideology, when, in fact, a solidarity model would be the more appropriate strategy for Mozambique (Vollmer, 2010a).

Applying the “Basic Needs Approach” to set poverty lines: Confusing caloric intake with nutrition

To determine region-specific poverty rates for each of the 13 areas of the country, Mozambique’s first and second national poverty assessment (MPF et.al, 1998; DNPO, 2004) chose the cost of basic needs approach (CBN). The CBN differs to other models used within the consumption-based approach for the determination of poverty lines, such as the food energy intake, in the sense that it “does not suffer from the problem of inconsistent poverty comparisons”, as claimed by the DNPO (2004: fn. 6). Poverty lines within the CBN approach were constructed

“as the sum of a food and non-food poverty line. Once the poverty line has been constructed, households that spend less on a per capita basis than the poverty line are deemed poor (…). They are set in terms of a level of per capita consumption expenditure that is deemed consistent with meeting these basic needs (DNPO, 2004: 4-5).”

Hence, each poverty line was set

“as the sum of the nutritional poverty line established by nutritional standards of approximately 2,150 calories per person per day, plus a modest portion for non-food expenditures, determined on the basis of the portion of the budget spent on non-foods by families whose total consumption is approximately equal to the food-related poverty line. The poverty analysis in 2002-03 was done to facilitate a comparison of the results from that period with the results from 1996-97 (GdM, 2006: 10).”

For each of the 13 areas a “food basket” was defined, that aimed to reflect actual consumption of people close to the poverty line. The bundle for the 1996/97 survey covered 151 food commodities, the bundle for the 2002/03 survey only 20 to 30 items, which, nevertheless, accounted for 95 percent of the value of food consumption in 1996-97 (DNPO, 2004: 8). The food poverty line was then expressed in region specific monetary costs per person per day for meeting the minimum caloric requirements when consuming this food bundle (DNPO, 2004: 6).

The non-food poverty line was derived by examining the non-food consumption among those households whose total expenditure is equal or close (80% to 120%) to the food poverty line (DNPO, 2004: 14-15). Spending on non-food items such as clothing ranged between 18% of the total budget in rural Mozambique to 32% in some urban areas in 1996/97 (Hanlon, Smart, 2008: 61). For the 2002/03 survey the non-food spending was not specified in the DNPO.

By combining both poverty lines into one for each area, 69% of the population (11.7 million people) were classified “poor” based on the first IAF for 1996/97, and 54% (10 million) for the 2002/03 survey (Hanlon, Smart, 2008: 61).

The results of the DNPO are contested in the sense that the high fall of 15% in the headcount ratio is based on the use of a “flexible food bundle”, one that takes the substantial relative price changes that occurred between 1996/97 and 2002/03 in all spatial domains into account. As of these price changes, low-income households have incentives to change their consumption choices to take advantage of goods with relatively low prices and avoid goods with relatively high prices (DNPO, 2004: 9). The stark increase of maize prices for instance forced the poorest sections of Mozambique to switch to the cheaper cassava, which is problematic because cassava is less nutritious than maize (Hanlon, Smart, 2008: 62).

As this consumption-based measurement does not take nutrients other than calories into account (such as iron, proteins, vitamin A, B, C, among others), the change in the type of food remains non-accounted for as long as the caloric intake remains the same. Critics have identified this measurement weakness (Hanlon, Smart, 2008), which is indeed acknowledged in the DNPO report as an econometric problematic limitation (2004: fn. 9).

It can be named as the main reason why officially the poverty headcount in Mozambique can decline (defined by caloric intake), while chronic (child) malnutrition is apparently on the rise (Hanlon, Smart, 2008: 60, 62). Indices of chronic malnutrition in children under the age of five are still extremely high in Mozambique, at approx. 41%. Between 2001 and 2003, child malnutrition declined by 3.6 % in rural areas, with a small increase in urban areas (0.4%). Overall though, the number of chronically malnourished children rose from 36% in 1997 to 41% in 2003, turning Mozambique into a country with the highest rates of child malnutrition in Africa. It is estimated that approx. 1.3 million children are chronically undernourished (DARA, 2009: 2). UNICEF argues that chronic child malnutrition can act as a well suited reference indicator for the general well-being of a population (Dupraz et.al, 2007: 94).

Based on the comparison of caloric vs. energy intake, Hanlon and Smart criticise the DNPO measurement procedure, stating that “though the flexible food bundle reflects what the poor are buying, it is not of the same nutritional quality; it is not the same poverty line but a lower one” (2008: 62).

Instead, a “fixed food bundle” should have been used in order to establish consistency in (absolute) poverty comparisons. If this is done, the reduction of the headcount ratio between the surveys is only at app. 6 % (69% to 63%), which would mean a net increase of people living in poverty from 11.2 million to 11.7 million (the increase in total figures is due to a population rise between the two surveys from 16,099,246 in 1997 to 19,607,519 in 2002) (http 1)).

The DNPO defends the switch by stating that “fixed food bundles tend to overstate the cost of attaining that standard of living, as alternative bundles that yield the same utility are available at a lower cost” (2004: 9). And further,

“if the relative prices of food vary regionally, the comparability of welfare levels across regions is only an illusion, and the use of a single consumption bundle for all regions can generate inconsistent poverty comparisons (2004: 7).”

Following this reasoning the poverty line would have been set too high with a “fixed food bundle”, overstating the amount of people living in poverty. As outlined above though, this reasoning excludes the type of diet poor people are dependent on, and thus overstates the importance of caloric intake. Hanlon and Smart’s criticism has thus a valid core; however, as shall be seen, the operation with “flexible food bundles” satisfies Amartya Sen’s demand to operate with “differences in relational perspectives” (to be outlined in the next sub point), which relativises this argument.

In sum nevertheless, whether the measurement operates with “flexible” or “fixed” food bundles, the core weakness of any consumption-based measure, defined either by caloric intake or based on food energy, is it’s inability to account for the physical condition of individuals to convert available food into a well-nourished diet (or to use the capabilities terminology, to convert commodities as means (caloric intake) into functionings as ends (being well nourished)).

Main limitations of PARPA’s unidimensional measure: Disclosure vis-à-vis concealment

Any quantitative measurement presents “an integrated view of situations” (OPHI, n.d.: 1) and is operating with value judgements and arbitrariness’ to define some fundamental issues in a comprehensive manner. By nature, they reduce the complexities of poverty in order to produce econometric sound results. Thus, each measurement needs to be critically examined in two ways: it requires analysing the information it actually provides, to be triangulated with the search of information it (deliberately or non-deliberately) obscures.

For instance, if poverty is defined in absolute terms in relation to consumption, as happened with the IAF surveys, it is likely to some extent that poverty is

“relative in income terms, since in richer societies people generally need more money to acquire the same nutrition - as cheaper foods are not available, transport is needed to shop, and so on (Ruggeri Laderchi et. al, 2003: 5).”

This has been identified by Amartya Sen as a conversion factor in the translation of commodities into achieved levels of functionings, and refers to the “differences in relational perspectives” (1999: 71). In other words, by using “flexible food bundles”, DNPO’s and PARPA’s measurement is indeed sensitive to “inter-societal” variations with regards to commodity translations; yet it is insensitive to “inter-individual” variations, as of the non-accounting for of other nutrients needed (other than caloric intake) to achieve a healthy diet.

Having said this, the “inter-societal variation” is only partly accounted for, as other important information in relation to relative resources in the socio-economic/ political environment are not incorporated. For instance, according to the reliable online source NationMaster, historical data from between 1996 and 2006 (which constitutes at the same time latest data available) shows that out of Mozambique’s total 30,400 km roads network, only 5,685 km are paved, which severely limits the capacity to transport road goods. A total of only 110 million tonnes/km were transported in 1996, thereby ranking Mozambique 49/52 in worldwide country comparison. This breaks down to 6.74 million tonnes/km per 1 million population, which is severely below the weighted average of 336.1 million tonnes/km per 1 million population of 72 countries ranked (http 2).

Additionally, Mozambique’s total railway network amounted to 3,123 km in 2006 (ranking it 53/220 worldwide), allowing goods to be transported in the realm of 768 million tonnes/km (ranking it 81/111 worldwide). This was equal to a capacity utilisation of only 38.803 million tonnes/km per 1 million population, which, furthermore, was severely below the weighted average of 3,901.0 million tonnes/km per 1 million of 111 countries ranked. Per capita, this places Mozambique 87/111 in worldwide comparison (http 2).

Thus, goods which cannot reach most of rural Mozambique, where 70% and hence the majority of the country’s poor live, are goods not available for consumption. Also problematic is the lack of suitable infrastructure in rural areas, which adds to the costs of farming. As outlined in a report by Mole, who conducted a Micro study on Smallholder Agricultural Intensification in Mozambique, transportation costs “increase transaction costs to market for both inputs and produce. High transaction costs result mainly due to poor links between production areas and consumption markets” (2006: 11).

Another important aspect to consider when consumption is used as an indicator for poverty is to assess technological achievements. These are suitable signifiers for judging governmental and private sector efforts in the R+D of (and actual distribution or real access to) new agriculture technologies, such as fertilisers and seeds, indispensable for the increase in food production. Here, UNDP’s 2001 “Technology Achievement Index” (TAI) is useful, which measured

“how well a country is creating and diffusing technology and building a human skill base, reflecting capacity to participate in the technological innovations of the network age. The TAI focuses on four dimensions of technological capacity: creation of technology, diffusion of recent innovations, diffusion of old innovations, human skills (http 3).”

Out of 72 countries ranked in the TAI (for which relevant data was available and of acceptable quality), Mozambique achieved a score of 0.066, and was placed last. The authors of the study state that scores below 0.20 indicate a marginalisation of the country, indicating that “technology diffusion and skill building have a long way to go in these countries. Large parts of the population have not benefited from the diffusion of old technology” (Desai et. al, 2002: 112).

This assessment has been somewhat verified by the aforementioned study conducted by Mole, whose survey of 398 households across Mozambique revealed that approx. 74% “had no cash outlay on seed in the year preceding the survey. The majority of the households in rural areas exchange seed from past harvest among themselves” (2006: 12). The survey revealed further that only 4% of smallholder farmers obtain seed via the market, that land preparation services by tractor or animal traction are in most parts of the study non-existent, and that only a few farmers have the ability to use fertilisers and pesticides (2006: 11-12).

Thus, one of the main problems of increasing agricultural production in Mozambique is the lack of inputs in the form of seeds and fertilizers, and poor market access. As a result, “the likelihood for increased incomes to improve access to food and reduce poverty is low” (Mole, 2006: 52).

These “inter-societal” conversion factors, or “real unfreedoms” in the terminology of Sen, are important types of information if poverty is understood as “capabilities deprivation”. That is, because they are barriers in people’s “agency freedom” which need to be removed, strictly speaking. Yet, PARPA’s measurement does not help in revealing these areas of necessary policy action; on the contrary, it conceals them with its narrow and unidimensional focus on caloric intake as a proxy for consumption. Hence, what is undoubtedly needed is a meaningful multidimensional measurement that better captures PARPA’s multidimensional poverty definition.

Conclusion: Matching measurement with definition - A call for revision

This paper has highlighted the problem that the applied measurement of poverty in Mozambique conceals, rather than discloses necessary areas of policy action. Researchers and analysts should aim to find and successfully apply a multidimensional measurement that actually helps to analyse real opportunity provisions for impoverished Mozambicans, in order to better guide policy makers and development actors with regard to Sen’s capability approach, which is engaged with the attempt to explicitly achieve individual well-being, context-specific defined, by switching the focus from means (such as consumption in form of caloric intake) to ends (such as being well-nourished, which remains one functioning among others nonetheless).

Measuring poverty is certainly meaningful; but only if it helps guiding policies to achieve self-set standards. The official unidimensional poverty measurement is of no help in alleviating the kind of poverty in Mozambique as correctly defined in PARPA II. And indeed, a close scrutiny of PARPA II reveals a policy orientation that is highly neo-liberal, monetarist and supply leaning, as it seeks macroeconomic stability through fiscal discipline, the creation of a free market and favourable market conditions for Foreign Direct Investments (FDIs) and the private sector (GdM, 2006: 118-119; Vollmer, 2010b: 350). Certainly, causation between poverty measurement and policy response can not be claimed; but neither can be a strong correlation denied.

Because of this rationale, a measure is needed that sets incentives to create the pro-poor possibilities people need to live out their full potential as active agents capable of improving living realities for themselves. Possible actions include, among others, prudent public expenditure policies that focuses on the development of “public infrastructure in the field of transport, communication and energy”, and a proactive tax and incentive policy, in order to mobilize investments for formal job and commercial agribusiness creation (Cornia, 2006: 20-21); far-reaching direct cash transfers to stimulate market demand, and a sharp expansion of labour-intensive public work projects, such as road and irrigation system building (Hanlon, Smart, 2008: 155-157); the “reintroduction of some type of marketing boards” to ensure fair prices of produced goods and guaranteed markets (Tvedten et.al, 2009: 4); and continuous investments in education and health systems, housing and sanitation.

It should be advocated that in the crafting of PARPA III, and even in the current debates on the governments programme for the five year period 2010-2014, submitted by the President Armando Guebuza and Prime Minister Aires Ali led government to Mozambique’s parliament Assembleia da República for approval on March 30th 2010 (http 4), and approved on April 5th 2010 (http 5), that this is a consideration which must be taken seriously into account. A promising new measurement applied in several cases, particularly across Latin America, is Sabina Alkire’s and James Foster’s Counting Approach (2008), one of a few new kinds of complex measures of multidimensional poverty which has been proven of being “user-friendly” (as in technically solid and replicable) whilst satisfying a number of desirable statistical and econometric properties. Yet, this is only food for thought. Finding the appropriate measure requires a very thorough debate.

Frank Vollmer
PhD Candidate
UNESCO Chair of Philosophy for Peace
University Jaume I, Spain

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