The United Nations Development Programme (UNDP) has revealed that the war in Ukraine has had a negative impact on several countries, especially Mozambique, where more than a million people have fallen into extreme poverty.
‘The invasion of Ukraine by Russia in early 2022 directly impacted the increase in food, energy and transport prices, to 14.6 per cent, 6.3 per cent and 19.3 per cent respectively, leaving thousands of people in poverty,’ the organisation said in a study.
The UNDP economists said that ‘the conflict has affected the income and spending of Mozambican families until December 2022, and that, due to these effects, the number of families with less than 2.15 dollars a day has increased in the country’.
‘There has been an increase in the extreme poverty rate in Mozambique, standing at 71 per cent at the end of 2022, of which almost 60 per cent are in urban areas, where extreme poverty has risen by 12.2 per cent, putting the incidence at 52.2 per cent, up from 46.9 per cent in 2021.’
The UNDP stated that global commodity prices peaked in June 2022 and then fell, a phenomenon that did not happen with food, domestic energy and transport inflation, which continued to evolve, showing that inflationary pressures continued to impact on household finances throughout that year.
In the study, the organisation considered that the reduction in Value Added Tax (VAT), implemented in December 2022, had a limited impact, as it only mitigated 3.8 per cent of the increase in extreme poverty. ‘In addition to targeted cash transfers and public investment in increasing productive capacity in the areas of fuel, food and fertilisers, the sustainability of the cash transfer model could have been increased, reducing Mozambique’s dependence on imports.’
The experts emphasised that some ‘investments in domestic productive capacity would make Mozambique more resilient to future external shocks, reducing external inflationary pressures and accelerating the growth of the Gross Domestic Product, which would reduce poverty and prices in the short and long term’.
