Responsible for breaking multiple glass ceilings for women in Mozambique, Prime Minister Diogo is also the lynchpin of relations with donors. With a background in finance, she worked for the World Bank and has been in and out of government service since the 1980s. Having had the backing of two successive presidents, Diogo says there is still much more to be done

The Africa Report: As the global slowdown unfolds, will you struggle with reduced aid, a drop in foreign direct investment and low commodity prices ?

LUISA DIOGO: We discussed with different donors and international partners, and we saw their high commitment to Mozambique’s development. They assured us that there is no cut in our budget for this year. So, we approved the budget normally, with indebtedness of 52%. Last year it was around 54%, now we are at 52%. We need to work hard in order to increase our domestic resources and in order to be able to reduce the external debt of the country.

For small and medium enterprises, we do not foresee any problems because the banks continue financing without big constraints. National and international investors are using the banking sector normally. But for the mega-projects, like the refinery in Nacala, like the Corridor Sands project in Chibuto (worth more than $1bn) and other big projects that are in the pipeline, we have foreseen some delays because they have to continue to do their financial engineering, recalculate the figures, renegotiate with the banks and try to find other sources of finance.

Mozambique has been one of the three major destinations of investment in Africa, even though it has no oil. Angola is one of the first, but it has got oil; Chad is another one, it has got oil also. Mozambique has no oil and yet it is one of the three, because of the mega-projects that attract investment.

We have a third phase of Mozal, they are continually interested in power, we have been discussing it with them. The only issue is energy. So, it is our responsibility, the ball is in our court. What we are doing is investing in energy, we have projects for the second phase of the Cahora Bassa, Cahora Bassa North, Mpanda Ncua (where we will have around 2,000 MW), Lorata Central in Moatize, from coal (over 800 MW), and we have other small ones. In total, for the next five or six years, Mozambique, if it manages to invest in these areas, can give back to the Southern African Power Pool around 6,000 MW of energy.

Will the financing be difficult ?

The bond market is drying up.I believe that for energy it will not. When we speak about the international financial crisis, we are speaking about selectivity on the kind of countries to invest in and the kind of projects to do, and I believe that the investors will understand that energy in this region is the best investment that they can make. It is the best. Why? We have got clean energy here, i.e. hydropower. Secondly, we have got the market in the region in terms of energy. The Southern Africa Power Pool has got a crisis; two years ahead we are foreseeing problems. So the curbs on energy, the cap on Mozal, that happened last year, should not happen in 2012, meaning that all this energy, if we fund the 6,000 MW, goes straight to the Southern Africa Power Pool. We have also got projects in the pipeline in the country with investors anxious to build them, like this third phase of Mozal, and they cannot build them because they do not have the energy. That is the only issue, if they get energy, they will do it.

There has been impressive progress, but are there still deficiencies in health, education and human infrastructure.

Mozambique is a country that has succeeded in jumping from a bad situation since 1975 to a better one. Mozambique had an illiteracy rate of around 98% in 1975, and when we had the peace agreement in 1992, the illiteracy rate was around 80-something. The education network was 50% destroyed, but we recovered all of the education network in less than ten years. We expanded, opened new facilities and now the illiteracy rate is around 52%. Unfortunately, women continue to be around 69%. The figure is not attractive and that is why we are doing adult education, and around 80% of the people who are in adult education are women.

About 20% of the global budget goes to education; the donors are financing education heavily. We have a budget to cover around 3,000 classrooms per year; we are doing only 1,000 because of the absorption capacity, but the money is there, the commitment of the donors is there, so what we did was to decentralise.

Secondly, we need to look more and more to the quality, but both are interrelated. When we have a small number of facilities and a small number of teachers, we have high demand and small supply. For one teacher in primary school and 102 students, it is humanly impossible. So we are doing our best to change this figure, so the teacher can do more and more in terms of the quality. And the teachers are being trained. The number of institutes for training is increasing; we are putting more and more institutes in the provinces instead of only having them at the central level.

In the health sector, 60% of our people have access to healthcare. Even for the women, in terms of maternity services, they have more and more access. In terms of the diseases we are used to facing like malaria, tuberculosis and diarrhoea, but also cholera and HIV/AIDS, we have more and more facilities servicing the people. For HIV/AIDS in 2005, we were covering about 19,000 people per year in terms of treatment, now we are covering 128,000 people this year.

Will the rail projects be on the colonial pattern? What about the Unity Bridge to Dar es Salaam?

It is a dream, a dream. When we try to identify the comparative advantages of Mozambique, we have to recognise that some of the issues are right from the colonial projects and others are wrong. One of the things that is right is that Mozambique has got high responsibility towards neighbouring countries like Zambia, Zimbabwe, Malawi and Swaziland. We need to be ready to open up fast routes, development corridors and so on, to take the goods to the hinterland. So, the ports have to be prepared for that, not only for us, but for the hinterland. Our geographical configuration makes us responsible for other countries. So when we discuss customs unions and so on, we are aware of this responsibility. It is right for the ports to be developed, to have concessions, to have business-driven management and business-oriented management from the people who are running those ports, with infrastructure and so on. We are not dreaming of building the railroads in one day. We are dreaming in terms of doing them phase by phase, by connecting the economic interests that we have through the country, as we are doing with the Sena line.