An agreement for the funding – part of a three-year $700-million project – was signed by the government and the United Nations Office for Project Services (UNOPS) which oversees the project.
Gas-rich Cabo Delgado province has been battered by a bloody jihadist insurgency since 2017 by a group known locally as al-Shabab.
In a major intensification of the violence, Islamic State-linked militants raided the coastal town of Palma on March 24, killing dozens and driving more than 25,000 out of the town.
Three years of violence has killed at least 2,800 people according to Acled, a non-governmental organisation (NGO).
President Filipe Nyusi, who attended the signing ceremony in Pemba, the provincial capital, said: “Despite the pain and sorrow that has characterised the lives of Mozambicans,” the agreement would help deal with a “humanitarian catastrophe”.
He vowed that “together we shall overcome and win” the battle with extremists, by focusing the national agenda on development.
“The heart of this plan is to remove families from situations of vulnerability through socio-economic inclusion,” the president said.
The government also sought “to restore normality to affected areas” where around 700,000 people have been displaced, he added.
The project aims to provide social services along with agricultural aid and infrastructure such as schools and mobile hospitals.
“The funds provide an opportunity to deliver services with intensity and avoid a humanitarian toll from lost income, shelter and a deteriorating capital,” said Idah Pswarayi-Riddihough, WB director for Mozambique.
“What is significant in this moment is the humanitarian need,” she told AFP.
“As a bank we don’t support humanitarian (needs)… but what is becoming so clear now … is there is no clear line between humanitarian and development”.
UNOPS director for East and Southern Africa, Rainer Frauenfeld, told AFP that the funding “enables persistency that goes beyond the pure humanitarian aid that has been provided and that will help with local development.
Agriculture and Rural Development minister Celso Correia who signed the deal on behalf of government said it represented “a positive dynamic”.