Making Water Work in Mozambique for Economic Growth, People, Food and the Planet

Mozambique's economy is profoundly water dependent, and water is a primary driver of the economy. More than half of gross value added, over 90% of exports, and 84% of jobs depend on water-related sectors such as agriculture, hydropower, transport, and industry. Yet in one of Africa's most water-rich countries, water has become a binding constraint to growth, jobs, and human development. This paradox lies at the heart of Mozambique's development challenge and its opportunity.

Despite abundant rivers and rainfall, Mozambique faces economic water scarcity, driven by limited storage infrastructure and weak distribution networks. Floods and droughts already cost the country an estimated 6.7% of GDP every year, while 58% of the population is exposed to climate risks. Structural vulnerabilities compound the challenge: more than half of freshwater originates upstream, beyond Mozambique's borders, and over 86% of national storage is concentrated in a single dam-Cahora Bassa. Climate change amplifies each of these risks. The issue is not water availability, but the infrastructure, institutions, and financing needed to manage water reliably and equitably.

Water as an engine for jobs and inclusive growth

Water security is not just about pipes, dams, or treatment plants. It is about people, productivity, and jobs.

Around two-thirds of Mozambicans have access to basic water services, but less than 40% benefit from basic sanitation. These gaps undermine health and nutrition, disrupt school attendance, and reduce labor productivity, with disproportionate impacts on women, girls, and the poorest households.

New analysis from the Mozambique Water Security Diagnostic shows that change is within reach. With the right mix of investment and reform, water can become a platform for job creation, economic growth, and resilience. The Diagnostic estimates that every $1 million invested in urban water infrastructure can generate $1.2 million in discounted returns, and every dollar invested in water and sanitation adds $0.82 to GDP. Achieving this transformation, however, will require an estimated $14.3 billion by 2030 across water supply and sanitation, water resources management, irrigation, and hydropower.

To unlock this potential, the Diagnostic highlights four priorities:

• securing water resources,
• delivering equitable services
• strengthening climate resilience
• mobilizing diversified, sustainable financing.

As the World Bank Group launches Water Forward, a global push to turn water systems into drivers of jobs and prosperity, Mozambique stands at a decisive moment to translate analysis into results at scale.

Delivering results through water and sanitation reform

Mozambique is already demonstrating that water security reform can deliver tangible and lasting results. World Bank-supported projects, including the Rural and Small Towns Water Security Project, the Mozambique Urban Water Security Project, the Regional Climate Resilience Project (RCRP), and the Mozambique Urban Sanitation Project show how combining infrastructure with institutional reform can expand services, strengthen resilience, and support jobs and growth.

In underserved provinces such as Nampula and Zambézia, where water coverage in small towns once stood at just 25%, new and rehabilitated water systems are expanding affordable access, including through solar-powered mini-systems. Investments in these systems are generating local jobs during construction, and for operations and maintenance. The resilience dividend is already visible: when Cyclone Freddy struck in 2023, project-supported systems enabled the rapid restoration of water services to 115,000 people and improved sanitation for 88,000, helping communities recover faster.

Urban sanitation investments through the projects have also delivered results. Thousands of poor households in Quelimane and Tete gained access to improved sanitation facilities, while major sewerage works in Maputo, including rehabilitation of the Infulene Wastewater Treatment Plant, strengthened the capital's sanitation backbone. Across cities, nearly 163,700 students, including 87,600 girls, now benefit from safer school sanitation, which in turn is supporting education, dignity, and human capital development.

Beyond infrastructure, the most enduring impact comes from stronger systems and institutions. Provincial and district authorities now receive resources directly through a Block Grant mechanism, improving planning, accountability, and service delivery. The Urban Water Security Program is supporting the rollout of ten newly created provincial water and sanitation companies, alongside targeted investments to reduce water losses, boost energy efficiency, and expand digital systems. Together, these reforms strengthen utility performance, financial sustainability, and the ability to attract private capital.

Building resilience to climate extremes is equally critical. Through the RCRP, investments are improving the safety of existing dams, enabling increased water storage, and rehabilitating dikes systems to protect productive and inhabited areas. The project also helps prepare the country for developing much-needed new storage through technical design, alongside support for legal reforms and capacity building.

Mobilizing finance for water at scale

On May 19, 2026, Mozambique's President Daniel Chapo launched the ProAguas Water Security Compact 2026 - 2036, designed to address the country's water sector challenges. Findings from the Water Security Diagnostic helped inform the development of the compact.

The Diagnostic makes clear that closing the country's water security gap is less a question of ambition than of how finance is mobilized and sustained. Public resources will remain essential, but they will not be sufficient on their own. Unlocking larger and more stable flows of capital requires reforms to strengthen the sector's financial and institutional foundations, including updating raw water tariffs to better reflect costs, improving revenue collection, and building utilities' creditworthiness while protecting vulnerable users. Clearer asset ownership, predictable regulation, and a strong pipeline of bankable projects are also critical to attract private participation through well-structured public-private partnerships, particularly in bulk water supply, urban services, and sanitation.

Together, these measures can shift Mozambique's water sector away from fragmented, project-by-project financing toward a model that rewards performance, supports long-term maintenance, and enables investment at scale while preserving affordability and equity. Water already underpins Mozambique's economy, but the evidence now shows that with targeted investments and sustained reforms, it can do far more: create jobs, strengthen human capital, and build resilience.