Poverty Reduction Setback in Times of Compounding Shocks

Mozambique has made significant progress in poverty reduction over the past two decades, with economic growth and improved household welfare lifting millions out of extreme poverty. However, from 2015 to 2020, this progress was severely reversed due to a series of economic and environmental shocks. The hidden debt crisis of 2016, combined with severe natural disasters (Cyclones Idai and Kenneth in 2019) and the COVID-19 pandemic in 2020, pushed the poverty rate from 48.4% in 2015 to 62.8% in 2020, affecting nearly 19 million people. This report highlights the compounding effects of these crises, the structural weaknesses of the Mozambican economy, and the urgent need for resilience-building policies to mitigate future setbacks.

Key Findings

Mozambique’s economic structure remains highly vulnerable, with 72% of the population relying on agriculture, yet low productivity, limited access to markets, and climate-related shocks continue to trap rural communities in poverty. Despite the country’s fast-growing extractive industries, they generate few employment opportunities for the poor, leading to a widening economic divide. Labor market weaknesses, high underemployment (affecting nearly 50% of the workforce), and limited investments in infrastructure, health, and education have further constrained poverty reduction efforts. Additionally, the lack of strong social protection mechanisms has left millions of Mozambicans without safety nets in times of crisis.

Mozambique’s exposure to environmental shocks has further destabilized poverty reduction efforts, as cyclones, droughts, and floods have significantly disrupted food production, household income, and overall well-being. Climate events have caused up to a 30% decline in food consumption in affected regions, exacerbating hunger and malnutrition. The COVID-19 pandemic intensified economic struggles, reducing mobility, disrupting businesses, and inflating prices of essential goods, especially in urban areas. With limited financial buffers, many households have not yet recovered from these consecutive crises, highlighting the urgent need for climate adaptation, economic diversification, and stronger social support systems to build long-term resilience.

Mozambique’s experience over the past decade demonstrates the fragility of its poverty reduction efforts in the face of multiple crises. The high exposure to shocks, lack of economic diversification, and inadequate social protection systems have left millions vulnerable. Moving forward, the country needs to invest in resilience strategies, including climate-adaptive agriculture, improved infrastructure, and stronger safety nets. Additionally, enhancing governance, economic diversification, and employment creation will be crucial to ensuring sustainable poverty reduction.

The report underscores that without proactive policy reforms, poverty in Mozambique may continue to rise, especially as climate change, economic instability, and social vulnerabilities persist. A multi-sectoral approach focusing on resilience, social protection, and inclusive growth is essential to securing a sustainable and equitable future for all Mozambicans.

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RESET Foundation is committed with the The Sustainable Development Goals (SDGs). The Poverty Reduction Setback in Times of Compounding Shocks is linked to several SDGs:

The SDG's, also known as the Global Goals, were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity.