The Marxist government of Mozambique is the latest communist-style regime to discover that a tight centrally controlled economy simply doesn't work well. Since turning to a free-market economy two years ago, the African nation is showing new signs of economic life.
Once-deserted streets in the capital of Maputo are now filled with cars, fuel is available, restaurants are busy, the black market in beer and cigarettes has virtually disappeared and business executives and investors are flocking into the country.However, the turnaround still has a long way to go. The ending of food subsidies has caused some hunger, inflation is 250 percent a year, and wages are very low.
Mozambique has vast natural resources, but much of it is unexploited because of the lack of trained workers, lack of skilled managers and a transportation network that is largely non-functional. Despite these problems, there is huge potential for economic growth.
The former Marxist government has adopted policies that allow foreign companies to be exempt from taxes on raw materials brought into the country for manufacturing. Managers' salaries and interest on loans used in development also are tax free. Some profits can be exported, and if a company closes, its financial investment can be taken out of Mozambique. Firms also maintain 100 percent control of their operrtions.
If transportation problems could be solved, the country might blossom. However, a 12-year guerrilla war keeps rural areas in turmoil. Rail lines are repeatedly blown up, convoys attacked, and sugar and tea processing plants burned.
Until 1984, South Africa openly supported the guerrillas. In a remarkable switch between the former foes, South Africa is pumping in billions in aid, and the two countries are discussing possible South African military security for roads and rail lines in Mozambique, as well as financial help.
It appears the biggest supporters of Marxism are developing nations that haven't actually tried to live under it. Those who have had the experience are eagerly looking elsewhere for answers.