Chiúre Secondary School

English work, Class B1 12a

Governance and public administration in Mozambique

Chiúre, june 2024

 Chiúre Secondary School

English work, Class B1 12a

Governance and public administration in Mozambique

Grupo elements: Evaluative work on the English subject
o
Gaspar Jacinto, N 22 with the topic Governance and public
Idalina Daniel Raúl, No 23 administration in Mozambique, tought
João Salvador, No 25 by:

Juma Anselmo Uahire, No 27 Dr.: Maulana Momade

Manhissa Francisco Rodrigues, No 29
Matilde José Selésio, No 30

Chiúre, june 2024

2
Indice
1. Introduction .................................................................................................................. 4

2. Governance and public administration in Mozambique ............................................... 5

2.1.1. Governance ......................................................................................................... 5

2.1.2. Types of Governance .............................................................................................. 5

2.2.1. Public administration in Mozambique.................................................................... 5

2.2.2. Concept and functions ........................................................................................ 5

2.2.3. Constitution of the Public Sector in Mozambique.................................................. 6

2.2.4.1. Central Public Administration ............................................................................. 6

2.2.5.1. Local Public Administration ............................................................................ 7

2.2.6.1. Social Security Funds ...................................................................................... 8

2.2.7.1. Public Societies ................................................................................................... 9

2.2.7.2. Public Non-Financial Companies .................................................................. 10

2.2.7.3. Public Financial Companies .......................................................................... 10

2.2.7.4. central bank .................................................................................................... 10

2.2.7.5. Public Deposit Companies except the Central Bank ..................................... 12

2.2.7.6. Public Insurance Companies .......................................................................... 12

2.2.7.7. Public Pension Fund ...................................................................................... 13

3.1. Public Sector Diagram in Mozambique................................................................... 13

4. Conclusion .................................................................................................................. 15

5. Bibliographic References ........................................................................................... 16

3
1. Introduction
Public administration in Mozambique has undergone several transformations throughout
of its history. From colonial times to the present day, the management and organization
of Mozambican public sector has been the target of significant changes, influenced by
different political, social and economic contexts.

The modernization of public administration is essential for the country's advancement. O

strengthening governance, transparency and the provision of quality services are essential
elements to ensure sustainable development and well-being of the population. Therefore,
this work will address the forms of governance in Mozambique and the forms of public
administration existing in Mozambique.

4
2. Governance and public administration in Mozambique
2.1.1. Governance
Governance refers to the process of making and applying decisions within a organization
or society. Covers decision-making mechanisms, establishment of rules and enforcement
that guide the functioning of an organization or society. A Effective governance is
essential to maintain order, achieve objectives and respond to needs of the community or
organization members.

Governance is the act or process of governing or overseeing the control and direction of
something, such as a country or an organization. - Involves all aspects of how government
fulfills its role in social and economic development. This process includes governmental
and non-governmental organizations, civil societies and private sectors who participate
in the development and implementation of policies.

2.1.2. Types of Governance

Government Governance: formal governance by a government body responsible for
making binding decisions within a geopolitical system.

Organizational Governance: refers to legal entities (such as companies) and their

internal rules and decision-making structures.

Socio-Political Governance: involves hierarchical political organizations, tribes,

families and other informal groups.

External Influences: actors such as lobbies, think tanks, NGOs and media
Communication can also influence governance processes.

2.2.1. Public administration in Mozambique

2.2.2. Concept and functions
Public administration is a concept in the area of law that describes the set of agents,
services and bodies established by the State, with the aim of managing certain areas of a
society, such as Education, Health, Culture, among others. Her too comprises the set of
actions that make up the administrative function.

Public administration units are unique types of legal entities established by political
processes that have legislative, judicial or executive authority over other institutional

5
units within a given area. Seen as institutional units, the main functions of public
administrations consist of:

 Take responsibility for the supply of goods and services (mainly non-market) to
the community or individual families and finance their supply through taxes or
other income;
 Redistribute income and wealth through transfers and;
 Engage in non-market production.

2.2.3. Constitution of the Public Sector in Mozambique

The public sector is made up of the following subsectors:

2.2.3.1. Public administration

 Central public administration

 Local public administration
 Social security funds

2.2.3.2. Public Societies

 Public non-financial corporations

 Public financial companies
 Public deposit companies
 Central bank
 Other public depository companies except the central bank
 Other public financial companies

2.2.4.1. Central Public Administration

The central administration subsector consists of the institutional unit or units that
constitute the central administration plus the non-market ISFLs controlled by the central
administration.

The central administration enjoys authority throughout the country. Therefore, it has
power to levy taxes on all resident and non-resident units that carry out economic
activities in the country. Their political responsibilities include national defense, the
maintenance of law and order and relations with administrations foreigners.

6
Likewise, it aims to guarantee the efficient functioning of the social and economic system
by through appropriate legislation and regulation. Responsible for providing services
collectives for the benefit of the community in general and, to this end, incurs expenditure
on defense and public administration. In addition, you may incur expenses for the
provision of services, such as education or healthcare, primarily for the benefit of
individual families.

Finally, you can make transfers to other institutional units, namely for families, ISFL,
companies and other levels of administration.

Central Public Administration can be subsectored into:

State – Includes organizations whose revenues and expenses are registered solely in the
State Budget and the General State Account.

Autonomous Services and Funds – Includes bodies with autonomy financial and
administrative financing, mostly financed by transfers originating from other Public
Administration units and taxes imposed on them are registered. It operates in certain
areas, whether through regulation and supervision, or through the allocation of support
financial resources to economic agents within the framework of the economic and social
policy of the State.

Non-Profit Institutions of the Central Administration – Groups ISFL which

essentially carry out non-market activities and are controlled and financed, mostly, by the
Central Administration.

2.2.5.1. Local Public Administration

The local government subsector comprises separate institutional units, including non-
market NPITs that are controlled by local administrations. In In principle, local
administration units are institutional units whose authority fiscal, legislative and
executive extends to the smallest geographic areas established for administrative and
political purposes.

The scope of its authority is generally much smaller than that of the central administration,
and local government units may or may not have the right to levy taxes about institutional
units residing in their areas. Often these units depend on donations or transfers from
higher levels of administration and also may act as agents of central administrations to a
certain extent.

7
Units must also appoint their own employees, regardless of external administrative
control. The fact that they can also act as agents of central or local administration, to a
certain extent, does not prevent them from being treated as distinct institutional units, as
long as they can raise and spend funds on their own own initiative and responsibility.

In the democratic organization of the State, local power understands the existence of local
authorities, which are public legal entities with representative bodies that aim to pursue
the interests of their respective populations, without prejudice to national interests and
State participation.

In Mozambique, the autarchization process takes place gradually, having been the first
33 local authorities were created in 1997, 10 in 2007 and another 10 in 2013, totaling 53
local authorities currently existing in the country.

Through Law 6/2018 of August 3, the Assembly of the Republic approves the framework
legal framework for the implementation of local authorities and repeals law no. 2/97, of
18 February. That legal diploma profoundly changes the forms of organization,
composition and functioning of the State at the local level. Defines what local authorities
are locations, its composition, functioning, as well as the competencies of the various
organs.

Local authorities are municipalities and towns: Municipalities correspond to the territorial
circumscription of cities and towns and villages correspond to the circumscription
territorial headquarters of an administrative post.

Local authorities enjoy administrative, financial and patrimonial autonomy and are
subject to administrative and financial supervision by the State, according to the forms
and in the cases provided for by Law.

2.2.6.1. Social Security Funds

Social security funds constitute a social security scheme that covers significant part of the
community. The social benefits offered are normally covered by funds from contributions
from workers and employers.

This subsector includes all central and local institutional units; whose activity The main
objective is to provide social benefits that meet the following criteria:

8
Certain groups of the population are obliged, through law or regulation, to participate in
the scheme and pay contributions;

Regardless of the role they play as guardianship bodies or as employers, public

administrations are responsible for managing of these units in relation to the fixing or
approval of contributions or installments.

However, there is usually no direct link between the amount of the contribution paid and
the risk to which the individual is exposed.

When social security schemes are organized separately from other activities of public
administration units and maintain their assets and liabilities separately from these and
carry out financial transactions on their own account, they are qualified as institutional
units described as social security funds.

At the However, institutional arrangements in relation to social security schemes differ

from country to country and, in certain cases, can become so closely integrated with other
administration finances and the question arises whether they should be treated as units
separate institutions.

The amounts paid in social security contributions and benefits can be, deliberately varied
in order to achieve government policy objectives that do not have a direct relationship
with the concept of social security as a scheme to provide social benefits to community
members. By way of example, values can

vary to influence the level of aggregate demand in the economy. However, while funds
remain separately constituted, they must be treated as units.

2.2.7.1. Public Societies

A society is considered public if a public administration unit, a public company or the
combination of these units, control the entity. The control of a company is defined as the
ability to determine the overall corporate policy of the same. The expression "general
corporate policy", as mentioned, is understood in a broad sense, as meaning the main
financial and operational policies related to the company's strategic objectives as a
commercial producer.

As mentioned previously, public companies in Mozambique are part of two categories,

namely public and financial non-financial corporation’s public.

9
Within these, there are public companies and companies that are mostly participated by
the State. Companies majority-owned by the State are those in which the State holds the
majority of the share capital. separate institutional SCN.

2.2.7.2. Public Non-Financial Companies

Non-financial corporations are entities whose main activity is the production of non-
financial goods or services. All non-financial companies residents and controlled by
public administration units or other entities Public companies are part of the public non-
financial corporations subsector.

Typical examples of public non-financial companies are airlines national entities, national
electricity companies and national railways, if these entities charge economically
significant prices. This category may also include public non-profit institutions engaged
in commodity production (such as hospital and educational establishments) if they are
separate institutional units and charge economically significant prices.

2.2.7.3. Public Financial Companies

The financial companies sector includes all resident companies that are dedicated mainly
to the provision of financial services to other institutional units. It is category includes
insurance companies and pension funds. All companies resident financial institutions,
controlled by public administration units or other public companies, are part of the public
financial companies subsector.

The public financial companies subsector is subdivided into:

(i) Central bank; (ii) Other public deposit companies, except central banks; (iii) Public
insurance companies and; (iv) Public pension funds.

2.2.7.4. central bank

The central bank is the national financial institution that exercises control over the main
aspects of the financial system. In general, the following are classified in this subsector
financial intermediaries:

 The national central bank, including when it is part of a banking system central;
 The monetary boards or independent monetary authorities that issue
 national currency fully supported by foreign exchange reserves;

10
  Central monetary agencies of essentially public origin (for example, agencies that
manage currency or issue notes and coins) that maintain a complete set of
accounts, but are not classified as part of the central public administration.

As long as the central bank is a distinct institutional unit, it will always be part of the
subsector of financial corporations, even though it could be argued that it is,

mainly a non-market producer. Although a central bank may have a high degree of
operational independence, it is a public financial company. The authorities’ supervisory
bodies that are mainly dedicated to the supervision of financial units and are

Institutional units other than the central bank are included in the financial auxiliaries.

The Bank of Mozambique (BM) was created in 1975 by Decree No. 2/75 of 17 May,
within the scope of the commitments assumed in the Lusaka Accords in 1974, having
inherited the assets and values of the Mozambique Department of the National Bank
Overseas, performing commercial and central bank functions.

The institutional separation of the BM's commercial function from its central bank
function came to fruition in 1992, with the approval of Law 1/92, of January 3, Organic
Law of Banco de Mozambique, which defines the nature, objectives and functions of the
BM as a bank central. In effect, this Law determines that the BM is the central bank of
the Republic of Mozambique, whose main objective is the preservation of the national
currency.

According to the same law, the Banco de Mozambique is a legal person governed by
public law, endowed with administrative and financial autonomy, with the nature of a
public company.

The responsibilities of the Bank of Mozambique are:

 State banker;
 Government advisor in the financial field;
 Guiding and controlling monetary and exchange rate policies;
 Manager of the country’s external resources;
 Intermediary in international monetary relations; It is
 Supervisor of financial institutions.

11
2.2.7.5. Public Deposit Companies except the Central Bank
Public deposit companies, except the central bank, consist of all resident depository
companies, other than the central bank, which are controlled by public administration
units or other public companies.

In the case of Mozambique, this subsector is made up of the National Bank of Investment.
Banco Nacional de Investimento, S.A., was created on June 14, 2010 and is the bank of
development and investment in Mozambique, aimed at financing projects focused on
innovation and that contribute to the development process sustainable development of
Mozambique and boosting business sectors.

This bank is 100% owned by the Mozambican State through the Instituto de Gestão of
State Participations (IGEPE).

The National Investment Bank is a privileged interlocutor not only with Mozambican
companies and international investors, but also institutions national and international
institutions responsible for providing instruments and products financial support for
development.

Objectives

Boost the country’s development, through infrastructure financing

 structures and manufacturing industry;

 Strengthen the capacity of national, public and private companies, with a focus
on for Small and Medium Enterprises (SMEs);
 Advise companies and projects that have an impact on economic development and
Social;
 Boost the capital market as a financing alternative for companies national; It is
 Advise the Government on specialized finance matters, namely financial
structuring to mobilize financing for projects structures of the country.

2.2.7.6. Public Insurance Companies

Insurance companies are entities whose main function is to provide of life, accident,
illness, fire or other types of insurance, to unit’s individual institutions or groups of units.

12
 The criteria for determining the Public Insurance Companies subsector are the same as
those referred to for public financial companies. Currently there is only one public
company in this subsector, Emprise

Mozambican Insurance Agency (EMOSE).

2.2.7.7. Public Pension Fund

The pension fund subsector consists solely of security pension funds social, which are
institutional units separate from those that create them.

Pension liabilities arise when an employer or government requires or encourages

members of a family to participate in a social security scheme that will provide income
in retirement.

In Mozambique, an example of this subsector is KUHANHA, the fund management

company of pensions for Banco de Mozambique employees.

3.1. Public Sector Diagram in Mozambique

Composition of the Public Sector in Mozambique

Public Sector in
Mozambique

Administration Societies Public

Public

Administration Administration Funds of Society no Society

Central Local security financial financial public
13
Social public
Bank Other companies Society Funds in
Central deposit except central insurance Pensions
bank

14
4. Conclusion

Public administration in Mozambique has undergone several transformations throughout

of its history. From colonial times to the present day, the management and organization
of Mozambican public sector has been the target of significant changes, influenced by
different political, social and economic contexts. The modernization of administration
Public policy is fundamental to the country's advancement. Governance refers to the
process of making and application of decisions within an organization or society. The
subsector of central administration consists of the institutional unit or units that constitute
the central administration plus non-market ISFLs controlled by the central administration.

15
5. Bibliographic References

1. European Central Bank (2007): Monetary Financial Institutions and Markets Statistics
Sector Manual. Frankfurt am Main. Available from:
http://www.ecb.int/pub/pdf/other/mfimarketstatisticsectormanual200703en.pdf.

2. International Monetary Fund (2009). Pay and Position Balancing Manual of

International Investment, 6th Edition. Washington.

3. International Monetary Fund (2000). Monetary Statistics Manual Financiers

Washington, United States.

4. National Institute of Statistics (2005). Public Sector Handbook Mozambique. Maputo.

5. International Monetary Fund (2014). Government Finance Statistics Manual/Statistics

Department. Washington DC.

6. INM (2019). Legislation on the State’s Public Business Sector. Law no. 3/2018, of
June 19; Decree No. 10/2019, of February 26th. Maputo United Nations, European
Commission, International Monetary Fund, Organization for Economic Cooperation and
Development and World Bank (2009). System of National Accounts. New York.

7. United Nations, European Commission, International Monetary Fund, Organization for

Economic Cooperation and Development and World Bank (2003): Integrated
Environmental and Economic Accounting 2003, Studies in Methods, Series F, No16 Rev.

8. United Nations Publication, Sales No. E.06.XVII.8. Also available from:

http://unstats.un.org/unsd/envaccounting/seea2003.pdf

16