Paper short abstract:

Mozambique is an aid dependent country. Efficiency gains are possible through improved implementation of the aid harmonization agenda. Yet, development cooperation remains fragmented. This paper will analyze attempts to overcome aid fragmentation resulting in suggestions to pave the way ahead.

Paper long abstract:

Mozambique is an aid dependent country. The Government of Mozambique (GoM) is dependent on ODA to finance the balance of payments and to uphold public service delivery. Efficiency gains are possible through improved implementation of the aid harmonization agenda (division of labour, joint programming, UN Delivering as One). However, development cooperation remains fragmented in Mozambique. The OECD ranks it among a group of 44 countries with the "greatest opportunities for rationalization". Yet, initiatives to streamline the convoluted aid architecture - with at least 36 donors present in 2011 (against a global country average of 21) - have been thwarted by the "political economy" of aid. Bottlenecks include: a) the increasing importance of loans over grants to finance the state budget, which are less compatible to comply with the aid harmonization agenda; b) the demand for visibility of donors preventing the use of delegated cooperation or silent partnership; c) a government that does not show ownership in the process of streamlining the aid architecture based on the existing analysis (inter alia donor mappings, comparative advantage analysis); and d) weak incentives for donors to exit Mozambique that constitutes an emerging market in which development assistance is now perceived very openly as a strategic element in the donors' foreign relations with the GoM. This is resulting in weary attempts at reducing fragmentation. Based on a desk review and field research, this paper will analyze latest attempts to overcome aid fragmentation resulting in suggestions to pave the way forward.