Mozambique: The nation that proves aid works

After years of civil war, floods and Marxist misrule, Mozambique now has soaring growth, falling poverty and rising literacy. Its story should inspire the G8 leaders

It is rare to hear any success stories from Africa. Mozambique, with its history of war, famine, misguided Marxist experiments, natural disasters and the creeping horror of Aids, should be a typical African basket-case. But in a continent with so many countries on their knees, this one offers hope - and perhaps inspiration to the G8 leaders meeting today in Gleneagles.

Economic growth has averaged 8 per cent a year for the past 11 years, one of the fastest rates in the world. Fuelled by two rounds of debt relief - the latest, just last month, was reckoned to be worth $57m - growth is set to accelerate further.

The streets of Maputo, the capital, once a byword for decay, are beginning to fill again with tourists. One side of a high-rise building carries a giant portrait of Kelly Holmes's great rival, Maria Mutola; Mozambique's only Olympic gold medallist is advertising mobile phones.

Relics of the country's lurch into socialism after independence from Portugal in 1975 are still around Maputo. The capital's streets, once named after forgotten Portuguese administrators, now commemorate Communist icons such as Marx, Lenin, Mao and Allende.

But the government has embraced free market reforms with such fervour that the Chancellor, Gordon Brown, likes to hold up Moz-ambique as an example to other African countries. While more than 1,000 state enterprises have been privatised, the currency, the metica, has been allowed to float, prices and interest rates are determined by the market, and private investors are showing increasing interest, helping to stimulate the country's nascent stock exchange.

All this still requires considerable outside support. Foreign aid accounts for 15 per cent of GDP and half of all government spending. But income per head is still less than $1 a day, and more than half of Mozambique's 19 million population live in poverty.

But five years ago, both figures were much worse, and the gains made so far have bred a new confidence, reflected among young Mozambicans such as 12-year-old Madina, president of a "youth parliament" organised by Save the Children in the central town of Morrumbala, and Luis, 17, the parliamentary secretary.

"I want to be a doctor and help my country," Madina said. "In this town we value education, because we know that it is the only way to escape poverty." Luis plans to study economics. "We want the same things as people our age in other countries, and we believe if we work hard we can get them," he said.

They are too young to remember the desperate years that followed the abrupt Portuguese pullout in 1975. No sooner had Bob Dylan made a tribute in which he sang I like to spend some time in Mozambique than the Frelimo independence movement, which had taken over a country almost devoid of infrastructure or administrative capacity, found itself in the midst of a civil war.

The struggle against the Renamo resistance - financed, armed and trained by the apartheid regime in South Africa - destroyed what was left of the economy after the disastrous ministrations of Soviet and East German advisers, and caused famine in much of the country.

Maputo, its population doubled to two million by peasants fleeing the fighting in the countryside, became a giant slum. The coast road north, lined with restaurants which used to serve Mozambique's celebrated giant prawns with vinho verde and Laurentina beer, was cut off by a roadblock a few hundred yards from town. Landmines were scattered indiscriminately, still posing a danger, and Mozambique sank into poverty.

In 1988, Richard Lander stayed in the Polana Hotel, the capital's most famous landmark, built in the same era as the Mount Nelson in Cape Town and Raffles in Singapore. Mr Lander, now general manager of the Polana under its new owner, the Aga Khan, said: "Sewage was dripping through the ceiling. All you could get for breakfast was fruit. If you wanted an egg, you had to give someone the money the previous night, so that he could go and buy you one in the market." Now, in a project which could stand as a symbol of Mozambique's fresh start, Mr Lander is about to supervise a $25m refit of the hotel aimed at reviving the grandeur of 1922, the year it opened.

But it will take the rest of Maputo, and Mozambique, some time to catch up.

The Frelimo government finally renounced socialism in 1990, and the civil war staggered to a halt two years later, followed by multi-party elections in 1994 in which Renamo was defeated. Its leader, Afonso Dhlakama, lost again last December to the new Frelimo President, Armando Guebuza, who succeeded Joaquim Chissano after 18 years in office.

Mr Guebuza, a successful businessman, has a reputation for decisiveness: he was known as "24-20" at independence for giving Portuguese settlers 24 hours to get out, with 20kg of baggage each.

He also "cleaned up" Maputo by rounding up street dwellers, petty criminals and prostitutes and dumping them in the countryside to learn agriculture. But the capital remains dingy, and dotted with embarrassments including the concrete shells of a hotel and coastal development abandoned by the Portuguese in 1975 and never completed.

Mozambique can plead that its efforts to pick itself up have been set back by natural disasters such as the devastating floods in 2000 and 2001, then a drought which has only recently abated. The country should be earning substantial amounts from transit trade with its landlocked neighbours, but economic collapses in Zimbabwe and Malawi have been setbacks.

Mozambique's recovery remains fragile. It still faces problems, not least Aids, which might induce despair in a less optimistic people. But political change in its powerful neighbour, South Africa, allied to a decade of peace and sensible policies at home, have brought the country back from the brink, demonstrating that the cause of Africa is not hopeless.

You turn around to take a final peek, Bob Dylan sang 30 years ago.

And you see why it's so unique to be

Among the lovely people living free

Upon the beach of sunny Mozambique.

Signs of improvement

ETHIOPIA

The original beneficiaries of Live Aid live in a country that has progressed politically in the past 20 years.

The first democratic multiparty elections were held in 1995 and Prime Minister Meles Zenawi was recently elected in a relatively democratic vote.

Aid removed the devastation of the crippling famine of 1984, though fears of a return to the horrific scenes of the past arise during sporadic droughts.

UGANDA

The Ugandan response to HIV/Aids has been one of the most effective of all African nations.

For the past 20 years, Uganda has been struggling to recover from the effects of Idi Amin's murderous dictatorship.

The current President, Yoweri Museveni, has been in power since 1986 and has helped to pave the way to relative stability and to improve the economic climate.

RWANDA

President Paul Kagame is making efforts to boost the country's economy through coffee and tea production.

These first signs of recovery are crucial in a country that suffered the bloodiest conflict in modern African history.

With up to one million people dying in clashes between the Hutus and Tutsis, the road to recovery will be long. Two thirds of the country still live in abject poverty.