The proposed Bank Group assistance strategy to Mozambique aims to:

• Scale up financial resources through budget support and project financing in support of good governance and increased economic infrastructure;
• Improve the performance of the current portfolio;
• Assist in capacity building;
• Increase policy dialogue, underpinned by economic and sector analytical work; and enhance coordination and harmonization with development partners.

The preparation of the Bank Group’s Country Strategy Paper (CSP) for Mozambique  followed discussions with government, development partners and civil society, and incorporated lessons learned from previous CSPs, portfolio reviews, and projects completion reports. The main selection criteria for the intervention
included:

• GoM agenda and PARPA pillars and priorities;
• ADB vision in promoting Good Governance, Regional Integration and Private Sector Development;
• African Development Fund (ADF-X) policy guidelines and the results based and increased selectivity approach;
• Synergies from previous interventions;
• ADB experience or specific specialization agreed among donors (e.g. African
• Water Facility, Rural Water Supply and Sanitation Initiative and NEPAD)
• Sectors’ implementation track record;
• Sectors’ ability to increase project’s average size; and
• Sectors’ ability to reinforce donor harmonization and to comply with Paris Declaration targets.

Based on the above criteria Governance and Infrastructure emerged as the most suitable pillars for Bank intervention. The CSP also aims to strengthen donor harmonization.

The Bank Group has, since operations began in Mozambique in 1977, approved fifty three projects, six policy-based programs and eleven studies. Total commitments stand at UA 914 million (April 2006). In terms of the size of the portfolio within the Bank, Mozambique is the fifth most supported country with 4.8 per cent of the Bank’s (ADF) total portfolio. According to the recently finalized Country Portfolio Review, in order to improve portfolio’s performance, the following key efforts need to be undertaken:

• Strengthen capacity building;
• Increase the average size of operations in order to reduce transaction costs;
• Rethink current project designs in terms of quantity of loan conditions, usage of Project Implementation Units (PiUs) and counterpart fund requirements
• Increase cooperation, harmonization and coordination with donors;
• Ensure a minimum task manager turnover rate;
• Increase the number of Bank staff fluent in Portuguese; and
• Review more systematically the portfolio.