JUDY WOODRUFF: Next: Ray Suarez begins a series of three reports from the southern African nation of Mozambique. Amid much poverty, Ray and our Global Health Unit found some signs of economic growth.
RAY SUAREZ: A country with 1,400 miles of Indian Ocean coastline, neighboring six countries gifted with natural resources, Mozambique is wrestling to find its place in the world economy.
After a long struggle for independence and nearly two decades of civil war, in the 1990s, Mozambique finally began to enjoy peace and stability. The ruling party turned its back on Marxism, opened the country up to investment and imports, and, in the last several years, has posted rapid economic growth.
In the past 15 years, the economy here has grown 8 percent on average, and, despite a slip due to the global economic downturn, this year, Mozambique projects 7 percent growth. Signs of construction and bustling commerce can be seen throughout the country's capital city, Maputo.
A former Portuguese colony, Mozambique is often held up by the international community as a model for post-conflict African states. Sometimes called a donor darling, the country has gotten billions of dollars in foreign aid.
Carlos Castel-Branco is an economist with the Institute for Social and Economic Studies in Maputo.
CARLOS CASTEL-BRANCO, Institute for Social and Economic Studies: In Africa, it was very hard to find a success story. Congo has an ongoing war. Angola has tremendous levels of corruption, nothing compared to Mozambique. So, if you compare Mozambique with some of the other African countries, yes, Mozambique is a much better place.
RAY SUAREZ: Early in the transition, the Mozambique government was eager to earn trust with donor nations like the United States. Luisa Dias Diogo served as prime minister until January of this year.
LUISA DIAS DIOGO, former prime minister, Mozambique: So, when we had the debt relief, we promised, this money, we are going to put in education, in health, in order to supply. And we fulfilled. We did exactly what we promised to do. So, the international finance like to work with the countries and governments that are serious. When we focus on one objective, we deliver.
RAY SUAREZ: International aid now accounts for more than 50 percent of Mozambique's budget. This year alone, foreign aid will total $1.6 billion.
But, this past fall, the world watched as Mozambicans took to the streets to protest a sharp rise in the cost of fuel, food and energy, because the central government suddenly stopped heavy subsidies on consumer goods. Police opened fire on protesters, killing 12. Several days of rioting followed, bringing the capital to a standstill.
So, while Mozambique's roaring economy has put it on the map, the riots highlighted the ongoing problem of acute poverty.
CARLOS CASTEL-BRANCO: We have an economy that is growing fast, has been growing fast for the last two decades. And, yet, poverty hasn't reduced at all in the last seven years.
RAY SUAREZ: The national average income per person is less than $500 a year.
CARLOS CASTEL-BRANCO: There are people in this country that queue an entire day to be able to work, to get enough money to make a meal per day for their entire family. That's the level at which they live. So, if they fail, if they fail to get Wednesday work, they won't eat at all.
RAY SUAREZ: More than eight out of every 10 workers here scratch out a living in what's called the informal economy in physical labor, peddling on the streets to make ends meet.
Twenty-eight-year-old Sarangue Macassi sells shoes to support his wife and two children.
SARANGUE MACASSI, Mozambique (through translator): I arrive at 7:00 a.m., and I stay here about 10 hours trying to sell my shoes.
RAY SUAREZ: And if you have a day where you don't sell any shoes, do you eat that night?
SARANGUE MACASSI (through translator): If I don't sell any shoes, I will have to borrow money from my friends, then pay them back the following day, in the hopes that I will sell shoes.
RAY SUAREZ: In makeshift markets, like this one on the outskirts of Maputo, people resell used clothing, mend garments. And, even here, sales are down.
Thirty-year-old Agusto Vincente works a sewing machine.
AGUSTO VINCENTE, Mozambique (through translator): I make blouses for women. But it's becoming more difficult. I'm running out of clients. They are spending so much of their money on food, they don't have enough to pay me.
MAN: Mozal, the largest industrial project ever undertaken.
RAY SUAREZ: The big jumps in economic growth, the 8 percent averages, come mostly from mega-projects owned by foreign investors, like the aluminum mining company Mozal owned by an Australian-based multinational company.
Salomao Moyana, chief editor of the magazine "Independente," says profits from foreign investments move to Europe, Australia and Asia and do little to help Mozambique's poor.
SALOMAO MOYANA, chief editor, "Independente": The most capable projects of paying for the economy are exempt from paying any tax. So, there is need now to renegotiate those contacts, so that those big projects can contribute to the economy of the country.
RAY SUAREZ: But renegotiations are a tricky proposition.
LUISA DIAS DIOGO: No serious country, no serious state renegotiates contracts of investment, because it loses credibility.
RAY SUAREZ: One of the promising investments the country hopes to capitalize on is tourism.
LUISA DIAS DIOGO: Tourists will be the first industry in Mozambique. It has impact in roads, railways, ports. It has impact in water supply. It has impact in irrigation, in health. So, for me, it's the key industry in Mozambique.
RAY SUAREZ: The historic Hotel Polana in Maputo spent $25 million on a face-lift to appeal to international luxury travelers.
Emmanuel Petrakakis, owner of Costa Do Sol, a waterfront family restaurant since colonial days, says Mozambique offers a unique travel experience.
EMMANUEL PETRAKAKIS, owner, Costa Do Sol Restaurant: We can bring in people here to show them our multicultural, multiracial, integrated society that this is. It's a real rainbow, a social rainbow. It's a Mediterranean, African, cosmopolitan, even Latino kind of society which lives out there on the street. And there's a vibe to it.
RAY SUAREZ: But the real Holy Grail of tourism here is the beaches. Mozambique is home to over 1,000 miles of undiscovered beach. Here, in Inhambane, travelers find pristine beaches of white sand, crystal-clear Indian Ocean waters that stay warm year-round.
While Mozambique's protracted civil war devastated the country's infrastructure, the shoreline was ignored, protecting coral reefs from overuse, much to scuba divers' delight.
MAN: You have whale sharks and mantas that are very prolific now. So, that's one of our really big draw cards. We have some of the best sightings of big game fish and marine fish anywhere in the world.
RAY SUAREZ: Sixteen years ago, Dave Law created Barra Resorts, a group of tourist destinations in Inhambane, including the Flamingo Bay Water Lodge. Law says, in the last five years, tourism here has quadrupled. He and his partners are now looking to invest some $70 million more.
LUISA DIAS DIOGO: And you can do tourism at sea and wildlife. So, you -- in the morning, you go to the beach. And, in the afternoon, you see the lion, the rhinoceros, the elephants drinking water in the river. So, it's a combination places Mozambique on the map of tourism in Africa and in the world.
RAY SUAREZ: But while tourism may play an important role in Mozambique's future, the country is still finding its way up and out of decades of devastatingly dire economy.
JEFFREY BROWN: Ray's next report will look at the continuing AIDS crisis in Mozambique where one in eight adults is HIV-positive.