For poor countries in Sub-Saharan Africa, poverty reduction usually requires a combination of well-distributed economic growth and increased investment in human capital, especially among the poor. Two key areas for such investment are education and health, both sectors in which the state is the major service provider. A third area that is often cited is physical capital, and public infra-structure in particular. Faced with tight fiscal constraints, governments must ensure that spending on public services and infrastructure is efficient and benefits the poor. Using data from Mozambique, this study asks the question, “Who benefits from public spending on education, health, and infrastructure?” In addition to the poverty reduction imperative that most poor countries face, Mozambique also faces the challenge of rebuilding after decades of war that devastated the country.

Heltberg, Rasmus

Simler, Kenneth

Tarp, Finn

English

Research Papers in Economics

 
Discussion Paper 154 
 
 
 
 
or poor countries in Sub-Saharan Africa, poverty 
reduction usually requires a combination of well-
distributed economic growth and increased investment 
in human capital, especially among the poor. Two key areas 
for such investment are education and health, both sectors in 
which the state is the major service provider. A third area 
that is often cited is physical capital, and public infra-
structure in particular. Faced with tight fiscal constraints, 
governments must ensure that spending on public services 
and infrastructure is efficient and benefits the poor. 
Using data from Mozambique, this study asks the 
question, “Who benefits from public spending on education, 
health, and infrastructure?” In addition to the poverty reduc-
tion imperative that most poor countries face, Mozambique 
also faces the challenge of rebuilding after decades of war 
that devastated the country. 
Introduction 
Mozambique gained independence in 1975, after more than a 
decade of armed struggle against Portuguese colonizers. The 
new government embarked upon an ambitious program of 
basic education and primary health care. Within two years, 
however, the country plunged into violence again, as the 
Resistência Nacional de Moçambique (RENAMO) guerillas 
tried to destabilize Mozambique, with military and monetary 
support from white-minority governments in Rhodesia and 
South Africa. RENAMO forces systematically targeted 
education and health infrastructure for destruction, and 
teachers and health workers were often killed. The war, plus 
failed economic policies, led to economic collapse in the 
mid-1980s. 
In 1987 the ruling Frelimo party adopted a set of new, 
market-oriented economic policies, which helped stabilize 
the economy. The peace accord in 1992 and first multiparty 
elections in 1994 made it possible to turn attention to 
economic recovery and reconstruction, 
including the restoration and renewed 
expansion of basic health, education, and 
economic infrastructure. 
Since the war, public spending on 
education and health has grown sharply, 
with these two sectors accounting for 
slightly more than one-quarter of central 
government spending in 1998–2000. 
Although it is clear that spending on 
social sectors has been growing, there is limited knowledge 
about the extent to which this spending is targeted towards 
poorer households. While the link from better education to 
poverty reduction is well established, it is not known to what 
extent Mozambique’s public spending on education reaches 
the poorest Mozambicans. This motivates the present paper. 
We focus on the incidence of public expenditures in 
education and health, which are arguably the main fiscal 
vehicles for improving the welfare of the poor. 
Methodology 
We estimate the distribution, or incidence, of public spend-
ing using the nonbehavioral benefit incidence approach. This 
combines information on the costs of providing public 
services with household income data to see which income 
groups benefit the most from these services. This approach 
values the benefits of the services at the average unit cost of 
providing the service, and does not incorporate behavioral 
information such as opportunity cost or willingness to pay. 
To assess the incidence of benefits, we first identify those 
households that receive a particular service (e.g., primary 
education). Recipient and nonrecipient households are then 
ranked by a standard welfare measure, total consumption per 
capita. We then plot concentration curves, showing the 
cumulative distribution of benefits received against the 
cumulative distribution of consumption. This is followed by 
a set of welfare dominance tests, which test for statistically 
significant differences among the concentration curves. This 
procedure is employed twice: once using simple participation 
rates to measure the benefit incidence, and once using the 
estimated monetary cost of providing the service. 
Two important points of reference are the Lorenz curve, 
which is the concentration curve for per capita consumption, 
and a 45-degree line from the graph’s origin. If a benefit’s 
concentration curve lies everywhere above the Lorenz curve, 
that benefit is said to be “progressive,” in that it is distributed 
more equally than current consumption. If a concentration 
curve lies everywhere above the 45-degree line, the benefit is 
“per capita progressive,” indicating that poorer households 
receive disproportionately large shares of the benefit. 
Concentration curves that lie below the Lorenz curve are 
classified as “regressive.” 
Data 
The 1996–97 National House-
hold Survey of Living Con-
ditions (IAF) is the source of 
information on welfare levels, 
use of educational and health 
services, and recent invest-
ment in public infrastructure. 
Unit cost data for public 
services come from budget data provided by the Ministry of 
Planning and Finance, the Ministry of Education, and the 
Ministry of Health. The unit cost data are disaggregated to 
the province level, which allows for some variability in the 
estimated cost of delivering services in different parts of 
Mozambique. 
F 
 
Discussion Paper BRIEFS 
Food Consumption and Nutrition Division of the International Food Policy Research Institute 
Discussion Paper 167 
Public Spending and Poverty in Mozambique 
Rasmus Heltberg, Kenneth Simler, and Finn Tarp 
“Public service provision in 
Mozambique is more equal than in 
many other African countries, with 
the major exceptions being upper 
secondary and university 
education.”  
Results 
Lower primary education (EP1) is distributed almost equally 
across the population, with the concentration curve closely 
tracking the 45-degree line. As one moves to higher levels of 
education the distribution of benefits becomes increasingly 
unequal. Upper primary education (EP2) is distributed more 
equally than consumption, so it is progressive. The concen-
tration curves for postprimary education both cross the 
Lorenz curve, so they are neither progressive nor regressive 
according to the Lorenz criterion, although upper secondary 
education is mostly below the Lorenz curve, meaning that it 
would be considered regressive by most alternative criteria. 
The education data were examined further to understand 
the reasons behind the increasing inequality of benefits 
received, revealing that inequality increases at each rung in 
the educational ladder. Children from poorer households are 
slightly less likely ever to attend school than nonpoor 
children. Among all students who attend primary school, 
poorer children are more likely to drop out during EP1, or 
not pass the test for admission to EP2. Of those who 
complete EP1 successfully, a smaller proportion of poor 
children go on to EP2, and among those that do, a smaller 
proportion complete EP2 successfully. This pattern continues 
in secondary education as well. 
In the area of preventive health services, both antenatal 
care and child vaccinations are progressive, with concentra-
tion curves that are close to the 45-degree line. Among 
curative services, hospital and health center services are 
progressive, but not per capita progressive. Benefits from 
hospital services are distributed remarkably equally, 
especially compared to other countries in Africa. 
The data on benefits from rural infrastructure are based 
on recent infrastructure investments, and thus reflect 
marginal benefits as opposed to the average benefits that 
were measured for education and health. Because of the way 
public spending programs expand and contract, it is often 
argued that marginal benefits are more pro-poor than average 
benefits. Recent infrastructure spending has been pro-
gressive, with concentration curves for school, health center, 
and road construction all close to the 45-degree line. The 
main explanation for this is that the investments apply to 
entire villages, and there is a high degree of economic 
heterogeneity in rural communities in Mozambique, with the 
poor and the nonpoor often living side by side. 
Mozambique has pronounced regional disparities in 
public service provision, with much better access to public 
services in the southern region than in the northern region. In 
addition, because of the relative weights of primary and 
secondary education in different regions, benefits tend to be 
distributed more equally within the northern region than 
within the southern region. 
Conclusions 
Public service provision in Mozambique is more equal than 
in many other African countries, with the major exceptions 
being upper secondary and university education. Health 
services and investments in public infrastructure also tend to 
be distributed progressively. Regional inequalities in access 
to public services are more pronounced than inequalities by 
income level. 
Although the distribution of benefits for higher education 
is regressive, spending in this area should not necessarily be 
reduced because it is not sufficiently pro-poor. Reducing 
educational inequalities requires expansion of schooling 
opportunities, especially at the secondary school level, and it 
is the secondary and postsecondary schools that train the 
teachers that will staff those schools. 
 
Keywords: public spending, education, health care, 
poverty, Mozambique 
 
Recent FCND Discussion Papers 
 
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from Migrants’ Assimilation in the Bangkok Labor 
Market, Futoshi Yamauchi, December 2003 DP166 
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Papers are available on our Website (www.ifpri.org/divs/fcnd/dp.htm) or via M.Aspillera@cgiar.org 
 
 
 
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“Public service provision in Mozambique is more equal 
than in many other African countries, with the major 
exceptions being upper secondary and university 
education.”—DP167 

Public spending and poverty in Mozambique

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Public spending and poverty in Mozambique

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