World Bank (WB) President Robert Zoellick said on Monday that the bank is willing to assist the Mozambican government to avoid the problems of a dual economy.

Speaking to reporters immediately prior to leaving Mozambique at the end of a three day visit, Zoellick stressed the importance of the Extractive Industries Transparency Initiative (EITI), which demands that companies developing national resources, and the governments, publish details of all the money involved and where it goes, AIM reported.

Mozambique has not yet joined EITI, but Zoellick claimed the Mozambican government is moving towards it, and that the Mozambican government is fully aware of the dangers of a dual economy.

Mozambique's known mineral resources include natural gas, coal and titanium-bearing heavy sands, while there also strong hopes that oil may be discovered in the Rovuma Basin, and possibly in the Zambezi basin.

Zoellick said the polarization of a dual economy can be avoided by investing the income from resources into social development, and also by encouraging small and medium enterprises.

He said the WB's private sector funding arm, the International Finance Corporation (IFC) was already doing this through the linkages program whereby small companies are encouraged to provide goods and services for the country's largest factory, the MOZAL aluminium smelter on the outskirts of Maputo.

Dual economies are particularly vulnerable to corruption, warned Zoellick. This is a challenge for all countries that are developing natural resources and have major infrastructure projects, stressed Zoellick.

Commenting on the increased Chinese investment in Africa, Zoellick said he was sure that the Chinese could bring important experience, particularly in agriculture, to sub-Saharan Africa.

During his visit, Zoellick had flown over the Zambezi Valley to observe the flooding in central Mozambique. Zoellick said he had been shocked by the devastation he had witnessed, and believed that a long term solution would involve building further dams that could ensure flood control.

Summarising the World Bank's relationship with Mozambique over the past 20 years, Zoellick said the bank's soft loans affiliate, the International Development Association (IDA) had lent Mozambique 3.5 billion US dollars. The WB had handled a further 700 million dollars through trust funds for other donors.

The IFC had invested around 200 million dollars, and another part of the WB group, the Multilateral Investment Guarantee Agency (MIGA) had provided guarantees of 267 million dollars. This was MIGA's largest exposure in sub-Saharan Africa and its fourth highest in the world.

Currently the bank is funding 17 projects in Mozambique, over 50 percent of them on infrastructure, and is also among the 19 donors and funding agencies that provide direct support for the Mozambican state budget. Budget support from the bank for this year is 60 million dollars.
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(Xinhua News Agency February 5, 2008)