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Life is increasingly more expensive for everybody. Prices of basic food items are high, and the price of oil keeps going up. In Mozambique, one of the measures proposed by the Government to mitigate the impact of the increases in the cost of living for Mozambicans has generated controversy with citizens. The Basic Needs Basket Subsidy had the aims of

a) Assegurar o acesso do agregado familiar a alimentos básicos;
b) Contribuir para manutenção de uma alimentação saudável e equilibrada;
c) Proteger a capacidade de compra do indivíduo e agregado familiar contra eventuais aumentos de preços dos alimentos;
d) Contribuir para estabilidade económica do agregado familiar de baixa renda;
e) Contribuir para estabilidade social do país.

"Family only eats sweet potato". Photo by Miguel Mangueze, used with permission

The proposal by the Government of President Armando Guebuza had a start date for June, but in spite of all expectations, its “abortion” was pronounced on June 16. Citing the Prime Minister, blogger Carlos Serra wrote “the country is stable and as such does not need the Basket. What remains to be known is why in March the government introduced it.”

In recent weeks, many disbelievers and some believers made public their opinions on the proposal in the blogosphere and social networks.

A Basket of basic needs and equality?

In a series of vox-pop videos on Youtube, the eligibility criteria were called into question, which brought some to believe in the subsidy’s discriminatory character, given that the Procedure Manual indicated it was targeted at:

Camadas Sociais de Baixa Renda (que vivem nos municípios de Pemba, Lichinga, Nampula, Quelimane, Tete, Chimoio, Beira, Inhambane, Xai-Xai, Matola e Maputo e tem rendimento individual igual ou inferior a 2.500,00Mts (cerca de 83 USD) por mês ou o rendimento per-capita do agregado familiar inferior ou igual a 840,00Mts(cerca de 28 USD))

Lack of clarity and information about the social reach of the initiative was strongly criticized. Cremild Maculuve, journalist, sceptical in relation to the “eligibility criteria of beneficiaries”, wrote on his wall on Facebook about who he presumed would benefit

a cesta básica só poderá ser dada (…) aos que têm um emprego formal. Cenário mais sombrio, mas não descartável é que esta cinja-se aos funcionários públicos, o que, à partida – se olharmos para o número de funcionários públicos e multiplicarmos pelo número dos que beneficiam directamente dos seus rendimentos – excluirá perto de 90 por cento da população moçambicana.

In another note on Facebook, the journalist Matias de Jesus Junior also wondered about the target group of the proposed measures to alleviate the high cost of living

acredito que aqui estão a abrir um fosso imaginável, isto porque a mesma é socialmente injusta ou descriminatória. Afinal quem é o povo moçambicano, é somente o funcionário público ou também aquele desempregado, privado e o informal

A number of citizens cited specific groups that did not have the right to the Basic Needs Basket in the vox-pop videos like Moises, a civil servant in Education, who maintains that the Basket does not benefit teachers, and Anacleto, a student, who in spite of believing the “Basic Needs Basket is a good idea” made a point of not ignoring the many “informal merchants” who would not be included.

In the Mozambican village of Madamba (Tete province) locals run a hunting business and the sale of rats on the side of the road. A rat kebab with between6-7 rats costs 10 meticais (20 Euro cents). Photo by Vlad Sokhin copyright Demotix (29/09/2010)

In a comment in the newspaper Jornal @ Verdade, Vasco Muarauane, a Mozambican citizen,  reminded that Article 35 of the Constitution, which refers to the principle of equality of rights for all citizens. Muarauane added that the “Basket” would be instituted with a “Decree with the force of Law”, for ignoring Article 35, given that it is estimated that more than 70% of the Mozambican population living in rural areas would not be reached by the Basic Needs Basket.

A recent increase in salaries, which would prevent many from accessing the Basket, was also mentioned. In a vox-pop video, Alzira Esperança, worker in a private enterprise, says that “the Basket is an excuse to calm people down” as a recent pay rise from 2.400 (within the Basket) to 2.600 meticais would prevent many from gaining access:

The same sums were also questioned in a vox-pop by Isilda,, who is convinced that the difference between those who earn 2.500 and those who earn 2.600 is small and they have the same difficulties.

Blogger Jonathan McCharty summarized the truth about the Basket in this way:

Hoje podemos julgar, com certeza absoluta que, em toda a cronologia dos eventos, os anúncios feitos à volta da “Cesta Básica” tiveram sempre “a carroça à frente dos bois”!! Em nenhum momento houve um “critério de elegibilidade” definido!! Em nenhum momento houve um “plano de atribuição da cesta básica” traçado!! Em nenhum momento se sabia o que, de facto, se iria fazer!!

A crisis in context

Bread sellers on the train from Nampula to Mutuáli, Mozambique, 2009. Photo by Rosino on Flickr (CC BY-SA 2.0)

In 2008, after the increase in the price of bread and fuel generated unrest, the Government of Guebuza decided to freeze prices of fuel and to subsidize the price of wheat so that gas stations reflected the real cost for Mozambicans and so that the price of bread would be maintained. In September 2010, the unrest worsened for the same reasons, in what become known as the “bread riots” [en].

What was clear to many economists was admitted by the Government in April 2011, by the Minister of Planning and Development Aiuba Cuereneia, who affirmed “the Government does not have the capacity to maintain these measures that were in place since 2008 over the long-term, to contain the cost of living, dictated by the food crisis and world financial crisis.” The Basic Needs Basket came following this conclusion by Government, given that it is inefficient to increase salaries of workers as this could create price increases and corrode purchasing power.

A briefing by the International Monetary Fund, via its representative in Mozambique Victor Lledó, read

A cesta básica tenta atender a linha do sistema de protecção social básica, mas ao nosso ver e de vários parceiros ainda carece de refinamento e quiçá repensar a sua estrutura básica, dado alguns factores que podem comprometer a sua implementação e seus objectivos

Professor Manuel de Araújo, not a believer in subsidies to alleviate increases in the cost of living, appeals to the need for a profound reflection on the impact of their adoption

Não quero aqui dizer que todo e qualquer subsidio e mau e que portanto não deve ser equacionado! Quero apenas chamar a atenção sobre as implicações e quiçá as distorções que os subsidios podem trazer a economia se não forem adequadamente equacionados!