Household Income and Assets in Rural Mozambique, 2002-2005: Can Pro-Poor Growth Be Sustained?

Mozambique made impressive reductions in poverty from 1996 to 2002. The national poverty rate, as documented by the National Household Consumption Survey Inquérito aos Agregados Familiares(IAF) expenditure surveys in those years, fell from 69.4% in 1996/97 to 54.1% in 2002/03. Consistent with the IAF expenditure survey results, Trabalho de Inquerito Agricola(TIA) rural household income surveys showed that mean and median rural household income per adult equivalent increased by 65% and 30% respectively from 1995/96 to 2001/02, and that all income quintiles shared in the income growth. Yet in spite of these impressive gains in household welfare, the majority of the country’s population remained below the poverty line in 2002/03 (51.5% in urban areas, 55.3% in rural). The first objective of this paper is to determine whether the upward trends in household welfare found from 1996 to 2002 have continued from 2002 to 2005, as measured in terms of TIA income and assets. The second objective of this paper is to use information about the structure of rural household income, asset levels, and access to technology and public goods in TIA 2002 and 2005, to investigate the prospects for continued rural economic growth, as well as the question of whether or not one could expect income growth to continue to be as broad-based as it was from 1996 to 2002. A key insight from the analysis of rural income growth in Mozambique from 1996 to 2002 is that the poorest 80% of rural households derived most of their gains from increases in crop income, which appear to have come primarily from expansion of cultivated area, not improved productivity. To address the first two objectives, we use data from the rural household income survey conducted by the Ministry of Agriculture in 2005, the TIA, which re-surveyed more than 80% of the households included in the previous TIA rural household income survey conducted in 2002, thus generating the first nationally representative panel household dataset for rural Mozambique. The third objective of this paper is to provide background information on the methods used to construct the income variables for the TIA 2002-2005 panel and the TIA 2002 and TIA 2005 full cross-sectional datasets. This panel household income dataset has already been used in two related papers, one which investigates household income poverty dynamics from 2002-2005 (Cunguara et al. 2008), and another which uses multivariate panel regression analysis to assess the relative impact on household crop income of changes in household asset levels, input choices, and access to crop production technology and public goods(Mather forthcoming.