 I'm going to start with you, Finn. And why no change in the agricultural picture in poverty? Why has there not been? Because growth in Mozambique has been quite phenomenal. But it seems that poverty rates are pretty much staying the same, at least recently. OK, I'm going to go back. Let's start by saying thank you to Martin Rahmer, who got us involved with the World Development Report. So what we're going to talk about a little bit is one of the country case studies that went in to that process. So thanks, Martin. That was very helpful to us. What you can see here is a pretty phenomenal GDP growth performance. It's one of the best in the world. It's actually exactly similar to Vietnam. I could take a similar curve for Vietnam. So it's a very nice green curve, goes up. So what happened? So rather than going straight at your answer of poverty, I'd like to just spend one second on the growth first. OK, 1991, Mozambique was in war. 1992, the country was utterly destroyed. So what happens? Peace, 93, 94. What happens in such a country? After peace, what do farmers do? They return to till the land. So what drives the growth? Well, people return to the land, and they start producing so that they at least get some kind of food, and a minimum level of economic activity starts getting together. OK? I want you just to come back, because this is something that, my fault for leaving out. But the fact that they were literally rock bottom in 1994, and many of them living kind of a stone age hunter-gatherer. So they went from absolute bottom to as much as they could recover. One of the most horrifying experiences I've had in my life was visiting Gorongosa in the late 80s. This was exact to stone age. You had hundreds of thousands of people living with nothing. So in those circumstances, it's not difficult to get growth rate when you get peace, and people start returning. And you can see what happened. Up until around 2002, 2003, you can see that poverty did go down. So in that context, the two things went hand in hand. That's great. It sometimes does. Sometimes the conditions are such that growth and the kind of growth you have go hand in hand with poverty reduction. But then you can see that somehow it flattened from 2002 to 2008 pretty much no change. It doesn't mean that there are no in-country differences and so on and so forth, but this is the national picture. To make a very long story very short, the kind of growth that you have in the second half is very different. When people have gotten up to the point of approximate self-sufficiency, they didn't produce more. So when they arrived at the 800 kilos from their hectare of land that Johnny was referring to, they stopped. They didn't produce more. So what produced the second part of it are to a very large extent the so-called mega-projects. OK, Sam. Yeah, well, I, of course, completely agree with what Finn said. I think there's two, well, at least one important part of the story is the nature of the growth, as Finn said, has changed. So now we've got to a situation where there's a lot of people in agriculture. So as the audience is impressive in their knowledge of Mozambique. So you've got 70% of the population working in agriculture or in the rural areas. And actually, in the rural areas, there's very little non-farm activity. And they're basically remaining in low-productivity agriculture. So that's the fundamental challenge. Of course, there has been growth. So where's the growth come from? Well, in part from large-scale investment projects, but these are not creating jobs on the kind of scale that we want. Let's stick back to the agriculture for a moment. Why has the productivity stayed so low? That's a good question. I think if I knew all the answers to this, I probably wouldn't be in this room. But I think what the main reason is that the techniques and the nature of the agriculture has remained extremely basic. Is it because there's no demand for more? No, there is demand. But just to give you an example. So around, I think it was 2008 when one of these surveys was done, we asked the question, well, how many agricultural extension workers are there in Mozambique? So it's agricultural extension workers are typically public servants who provide advice to local small-scale farmers. How many are there? 600 in a country where there's 10 to 15 million people in rural areas. And of these 600, how many can actually travel into the rural areas and provide any form of useful advice, even fewer, because they don't have motorbikes. They don't have any functioning equipment. So that's part of the story. The other part of the story, which is related, no fertilizer. They're completely reliant on rain-fed agriculture, as opposed to irrigation, and a lack of seeds. So all these factors put together. You've taken Finn's seed story. Oh, I'm sorry. Yeah, well, I was thinking of the seed story. I'm sure, but there's obviously lots of factors. But it's not just a supply issue. Of course, there's the demand side as well. Yeah, and there I want to go back to Finn, because you have to take the geography somehow into consideration. Try and imagine that you're sort of a small farming household, 500 kilometers, somewhere inland. OK. To get your production, if you had one, out, what does it take? But it first takes infrastructure. Or maybe I should go one step back and say, it first assumes that you can produce it. In order for you to produce it, you need the inputs that Sam was referring to. So it's a very standard, established insight that agricultural technology and inputs are key in agricultural performance. That's just the one side of it. If you only do that, let's assume that you could with a switch, you could increase the yield, just like that. Is that going to solve your challenge? It's not. You know what's going to happen? If there are any prices around, they're going to go down. If you're in a very small market and you increase supply, then prices go down. So what does this agricultural technology focus need to go hand in hand with? It needs to go hand in hand with linking you up with markets. So it needs to go with infrastructure. It needs to go with marketing. It needs to go with marketing information. It needs to go with linking you up to global markets. If you can't commercialize domestically. If, for example, as in the case of Mozambique, that your ag production areas are up north and your demand centers are down south, where it's actually cheaper to import from South Africa or even import rice from Vietnam. So in those circumstances, there is no simple solution. It's not one measure, one thing you do. It is a package of things that need to go together. Coming back to the infrastructure, and Sam, you were mentioning the other night, the fact that, yes, there are ports being built in the north. And yes, there is some infrastructure development. But what's the big but? Well, I think there's two reservations. The first is that the north-south linkages are simply not there. So for a country, as Finn was saying, where the agricultural production is, to actually get that produce down to the south, and where the main richer demand is, is well over 1,000 kilometers. And there's no functioning railway road that goes there. So you can only take it by truck. And that's extremely expensive, particularly with fuel prices as they are these days. The other problem, the other challenge that's occurring, is related to the natural resource investments. So the natural resource investments are the great opportunity is that they are creating new infrastructures. But the big challenge is to allow space for the smaller scale producers to actually get access to those as well. So for example, they are building new railroads at the moment, linking the interior because of coal to the coast. So that's a great opportunity. But getting the smaller scale producers onto those railways at a reasonable price is a huge problem. And that means it really needs government capacity and a strategy to deal with that. And that's in some places missing. I see you looking antsy. So before I know, because I am not sure if it's time yet to move to the structural change and the skills in the city, or if you have another comment about agriculture first. No, I think we should move on to the structural transformation story because that's where we are exactly on the same page. Or as I would rather prefer to say, we provide the wider perspective. As opposed to the broader perspective, sorry. Look at this. You can only draw a picture like this one when you actually have data over time. When there are data available, and data, as we have been referring to several times, they are incredibly useful in trying to come to grips with what's going on. But this is a terrifying picture. Why is it terrifying? Sam, what would you say? Why is this terrifying? Well, I think Mozambique is a microcosm of a lot of the issues that we've spoken about today. And particularly, John's talk about the lack of structural transformation. So what you see in an economy that has been growing at stellar rates for the last 20 years, you've got no structural change in where people are working or how they're getting their livelihoods. And as you can see, so the green bars there are those who are working in wage labor. And this includes actually some, what you might call, informal sector, but they receive some kind of a wage. And to all intents and purposes, the structure has not changed. So what we mean by that is that the same share of people are working in the wage sector or the more modern jobs as they were before. Even more concerning is that the productivity differences between sectors are growing. What you would expect in structural transformation is that there would be actually a kind of convergence between sectors. And what we see actually is that it's actually, particularly the manufacturing sectors, which have, has increased productivity, but they're not adding jobs. Their productivity increases come through capital. So there's more capital per worker. There's more money per worker being generated. But in the agricultural sector, the productivity is really low. Let's just come back a little bit there to the structural change, because there seemed to be, I mean, and I don't want to answer your questions for you. I will try desperately not to. But there are serious problems due to various things in Mozambique about actually creating a manufacturing base. I mean, Finn, can you elaborate on that? Sure. I mean, the first point is that the number of skilled workers, the management capacities, et cetera, that you need for establishing a manufacturing sector is not there. Part of this story is that even if you were to move people from the rural area into the more modern urban area, actually, that wouldn't make them very much better off. So in a sense, you are a bit stuck. What is the solution? The solution is to try to get agriculture going, because you do want to create good jobs. And as you get the agriculture process going, that is then automatically going to let people move on. And what you can then try to aim at is to develop in a stepwise fashion the more urban-based, enterprise-based, firm-based manufacturing activities. But you can't. It's just not possible that you sort of switch and then you say you move up from one level to the immediate. That I got. So basically saying, if you're in agriculture, move up, which is echoing a little bit about what we heard before, and then as opposed to just moving sideways and possibly down. But why is it that a manufacturing industry in Mozambique faces such challenges? Because you've said that basically they cannot compete vis-a-vis cost. So I've said that you need capacity. You need skills. And you also do need investment in order to get this going. You can say that to some extent you could now hope that Mozambique is starting to get this investment capital. But there is a challenge looming, which Sam was referring to and which John is also referred to, is that Mozambique is approaching a situation where they will have relatively large amount of natural resource rents coming in. As they've had foreign aid, what that does is that it is very difficult to stay competitive in these circumstances. If you do not use the foreign aid and the natural resource rents to try to help increase your competitiveness rather than undermine it. What that means is that you need to be very careful with the kinds of investments that you do. You need to be very targeted that they are targeted towards improving your competitiveness rather than undermining it. And also we didn't mention, we were talking about the war, the fact that so many people were fighting or killed created a real lack of skills, didn't it? Sure, yeah, Finn touched on it. So if you look at the average worker, even in the most productive sectors of the economy, the average worker does not have a completed primary education. And if you go to the lowest productivity sectors, which is agriculture, the average worker there has two years or two and a half years of education. This is a big increase from one 10 years ago, but there's still a huge way to go to be able to enter into firms that are gonna be competitive at a global or regional level. Okay, gentlemen, we're gonna do a little more Q and A, but I wanna ask Martin here, because Martin, you mentioned Vietnam earlier and I cut you off, but Vietnam is a country which actually did manage to stay on the agricultural base. It also got into manufacturing and grow up, and it is one of your models. So what are the lessons or are they transferable? Is what happened in Vietnam replicable in Mozambique? Well, first of all, I want to reciprocate those thanks to Fin, because for each of the cases in our typology of jobs challenges, we picked up a country and a team, a non-world bank team. We were very deliberate in trying to get second opinions on everything, and Fin and Sam and their colleagues in Mozambique did a great job, and we had several of those. Bangladesh was one of our case studies, Mexico and Papua New Guinea. So first thing is to reciprocate those thanks. Second is that for each of these case studies, for these cases in the typology of job challenges, we tried to see not just a country that is facing the challenge today, but a country that did well at addressing it. And we found that a good example was Vietnam. Vietnam in the mid 1980s was as devastated or more, actually, than Mozambique. By the statistics we had, it was one of the five poorest countries on Earth. And some 10, 15 years later, it was the second world exporter of rice after Thailand, the second world exporter of coffee, the first exporter of cashew nuts and black pepper and shrimp. And so the question is, how did they manage to do that? All the numbers were very similar, 75% of the population in rural areas, 60% poverty rate. And I think there was a lot of clarity on what the jobs challenge was, not just the growth challenge, but the fact that most people were in agriculture and nothing will happen before these people could really pull up. And they did just three things. Now, whether this is replicable or not, depends very much on the politics and the governance and institutions, why they could do it is quite special, but that the risk of caricaturing that these three things, one is making sure that farmers had land. They did one of the most radical land reforms. One would say one of the biggest privatization programs on Earth. Land was collective, it was given to households on an equal basis in the North, a bit less equal in the South, so that everybody had a plot of land. Second thing is they got the incentives to get to markets. Of course, infrastructure was as devastated, if not more, in the North, there had not been any investments since the French left, but they basically took the monopolies out of trading in agriculture. These monopolies were with state-owned enterprises. From some point onwards, anyone could be in sectors like agriculture, drugs, importing or exporting, and that created the incentives that lifted the prices for the farmers much closer to world markets than at the time when there were these state-owned enterprises. But the third one is related to the management story, is that even for farms, you need knowledge. And they used a structure where they had these agricultural extension workers in every village. Of course, it was not 600 for the whole population. It was not, there was a basis, an institutional basis that had every village with some presence of the state, which you don't find in all developing countries. So that may not be a replica. And it was done in a very directive manner. If you were in a rice growing area, you will not be taught how to do anything else than to grow rice, but basically the skills were transferred. So this combination of land, knowledge and markets is what did the trick. Okay, now this was obviously, as you said, directive, which is a very polite way of describing the government. But Finn, are there any lessons that can be taken from Vietnam for Mozambique? Is anything replicable? I'm not sure if the transport issues are the same, or maybe I should just cut to the chase and say what do you recommend from Mozambique? I know you've made some recommendations already. May I start by just sort of saying that I personally have obviously found comparing Vietnam and Mozambique very, very interesting because the two countries are in many ways, they have similar histories. And we actually do have with support from Danila, we actually do have another project on this. But let me, however, if I may, and I'll be very quick, try to create a picture of Mozambique. Do what we call the social accounting matrix. Try to understand what the structure of Mozambique is. You do it here. Try to do the same thing for Vietnam. Okay, so you have a picture of Mozambique with all the economic linkages and so on and so forth with the infrastructure in there. The same for Vietnam. Do a set of policy experiments on Mozambique to exactly the same sets of policy experiments on Vietnam, in which country do you think you get the largest poverty reduction? You have Mozambique and its structure here. You have Vietnam and its structure here. You do a series of policy experiments on Mozambique. You do the same experiments on Vietnam. In which country do you get the largest poverty reduction? Okay, so imagine, yes says Mozambique and no says Vietnam, all right? And three, get rid of it, or you can leave, don't know. So do you get the largest poverty reduction in number one, which is going to be Mozambique or number two, which is Vietnam? So yes or no? Mozambique or Vietnam, one or two or three, please push one of those numbers and then your green button. So Vietnam. You are spot on. Mozambique is at a very serious structural, how can you say, deficiency or challenge that is bigger than that of Vietnam. Now that has implications for aid allocation as far as I'm concerned. All right, I'm gonna ask you to, we have to do this very quickly. We're gonna take our questions to Finn and to Sam later on because we have the minister showing up in 20 minutes or so and I would like everybody back in their chairs after their caffeine fix this afternoon. But quick, policy punchline. Well, the obvious policy punchline is, do something serious in agriculture. So get agricultural productivity going, but that's not gonna be the solution for everything. You do need to start thinking about labor intensive manufacturing and enterprises in the cities as well. It's a dual track or three-way track. And Mozambique will have desperately to get the resource rent management right. If Mozambique does not get that right, we will have a catastrophe and foreign aid should get in there and actually try to help make sure that that doesn't happen. Thank you both very much.