4.1 Poverty and Inequality xcvi. Poverty is a fundamental issue for human development in Mozambique. There is no doubt that the country has experienced one of the most dramatic reductions in poverty in the world in recent decades. Based on a national poverty line, income poverty fell from 69.4 per cent of the population in 1997 to 54.1 per cent in 2003. There has been an even more significant decline in the depth and severity of poverty. Nevertheless, Mozambique remains among the poorest countries in the world. Moreover, the country’s efforts at poverty reduction have had uneven results across the regions. In particular, poverty rates increased in Maputo city and province. In addition, a 2007 report by the World Bank provides evidence of a “nutritional paradox”. While real consumption levels have risen across the country, chronic malnutrition has not declined apace, and has even worsened in some areas (Gaza, Inhambane, Maputo province, Sofala and Zambézia). xcvii. Mozambique has also not escaped the impact of soaring food prices that have engulfed several countries in recent years. In a country where 54 per cent of the population lives below the national poverty line, 34 per cent of households are food insecure and face perpetual hunger. This has a dramatic impact in urban areas, where city dwellers pay more for their food and the poor are no longer able to purchase adequate and nutritious food. It is a perennial struggle for Mozambique to produce enough food to meet the needs of its citizens. Reasons for this include persistent natural disasters in food-producing areas; poor farming and transport infrastructure; input scarcities (of e.g. fertiliser); and a general lack of investment in the agricultural sector. Consequently, Mozambique imports about 890 000 tons of cereals annually, making it susceptible to increases in global food prices. xcviii. A related issue to the challenge of poverty is inequality – the gap between the rich and the poor. While inequality is multifaceted, it is especially linked to the ethno-regional dominance of the south. This dominance is reflected in the tremendous economic gap in terms of investment concentration and developmental indicators, as well as political representation. It is also embodied in the domination of the technocratic elite within the state apparatus. Leading positions within the bureaucracy and FRELIMO are mainly filled by people from the South (Gaza province and Inhambane). xcix. The danger is that current economic divisions may harden into permanent social divisions, setting in motion a self-perpetuating cycle of social disadvantages. The other concern is that increasing inequality in the distribution of resources can lead to social conflicts. Moreover, inequalities in health, education and income are key components of human development that matter deeply to social wellbeing. 20 A P R M COU N T RY R EV IEW R EP ORT NO. 11