Mozambique: Short Country Focus

Mozambique: Short Country Focus
By Scherzando Karasu

Since a peace deal was signed in 1992 ending 16 years of civil war, the República de Moçambique to give it its official title has made much progress in economic development and political stability.  And has consistently been one of the best performing countries in the UNDP’S “Human Development index”

The resettlement of civil war refugees and successful economic reform have led to a high growth rate and the country has enjoyed a remarkable recovery, with an estimated real GDP growth rate of more than 8% in 2010. Driven mainly by the minerals sector. With growth expected to remain brisk in 2011 with the government projecting the economy to continue to expand between 7-10% a year for the next five years.

Although rapid expansion in the future hinges on several major foreign investment projects, continued economic reform, and the revival of the agriculture, transportation, and tourism sectors.

However foreign investors are showing huge interest in Mozambique's untapped oil and gas reserves and titanium mining is now a growing source of revenue. Whilst the outlook for Mozambique's aluminium-dominated exports is expected to remain positive in line with growing global demand.

The country is also reportedly on the verge of developing newly discovered hydrocarbons reserves following a major natural gas find by a US company. Whilst the coal sector continues to attract big international interest with one of the World’s largest mining companies – the UK- Australian-owned Rio Tinto - agreeing to invest in Mozambique’s Tente province with production there expected to reach around 20m tonnes/year by 2013.

This would form the basis of Mozambique becoming a significant new international coal player. Rio Tinto's bid, and the interest of other international mining and steel companies, is an indication of the growing appeal of Mozambique's coal assets and their international demand.

The governments reforms haave also been swift and far reaching with more than 1,200 mostly small state-owned enterprises privatised. And there are preparations underway for privatisation and/or sector liberalisation for the remaining public sector enterprises, including; telecommunications, energy, ports, and railways.

During this process the government frequently selects s strategic foreign investor during the privatisation process. Additionally, customs duties have been reduced, and customs management has been streamlined and reformed.The Government has also placed great emphasis on educating their workforce thus to provide significantly improved human capital for their growing economy. Doubling the number of students in the country from 3 to 6 million in the past three years.

Moreover there has been a genuine willingness to form public-private partnerships to boost the country’s infrastructure development. Which is seen as a key element in Mozambique’s overall development as it seeks to create a more fertile environment for local and foreign companies alike.

So with an open-economy, abundant opportunities political and economic stability along with a proven ability to host both small and large-scale projects Mozambique is becoming a compelling destination for business. With the diverse pool of international companies now operating in the country testimony to this improved business climate.


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