54 AFRICAN COUNTRIES

In the past decade Mozambique has maintained an average growth rate of 8.6%, but due to disruptive floods and energy shortage in 2008 Mozambique’s growth rate fell to 6.2%. The country's economy is considered to be relatively shielded from the direct impact of the ongoing global financial crisis. Though, growth is expected to be slow in 2009 to around 4% as a consequence of falling world demand for commodities, foreign direct investment (FDI) flows and public investment financed with external assistance. In 2010 it is expected to return to 5.2 %, assuming a partial recovery of the international economy and further expansion of the agriculture sector. The inflation rate was at 10.4% in 2008 as a consequence of high food and fuel prices but it is expected to fall in 2009 following the decline in international prices.

Sector % age Contribution to GDP (2007) Agriculture AND fishing 27.40% Mining and quarrying 1.60% Manufacturing  14.5% Electricity and Water  6.2% Construction 2.90% Trade 13.20% Transport and communication 10.70% Hotels and restaurants 1.60% Government services  9.2% Financial and Business services 11.1% other Services 1.70%

Agriculture, Forestry and Fishing Sector

The agricultural sector had contracted in the first half of 2008 because of the natural calamities like floods and cyclones that hit the south and north of the country. Though the situation improved in the second half of 2008, but the year ended with growth in agriculture below 6 per cent. To prevent such a food crisis again, the government has developed a plan to increase crop production for both export and domestic consumption. This project is worth MZN 503 million (Mozambican meticais) or USD 14.46 million (US dollars) and is expected to start in 2009 and aims to raise production by 2014 of wheat, rice, cassava, corn and potatoes. The strategy of this programme includes distributing subsidized inputs to small landholders and establishing storage silos. However, the programme shows inadequate attention to transport infrastructure, which is essential for producers to reach both the silos and markets opaque land regulations, poor access to credit and poor administrative capacity are other obstacles to the effective implementation of the new strategy.

Mining Sector

The mining sector of Mozambique holds great potential. The country is a major electricity producer and an exporter of coal. Several foreign companies which hold exploration licenses for oil and gas and minerals, such as titanium, uranium and gold, are prospecting in the mineral-rich Tete and Sofala provinces. Petronas, the Malaysian oil company has been granted a license for oil exploration in the Rovuma basin in Cabo Delgado province. A number of other foreign companies including Anadarko (United States), Artumas (Canada), ENI (Italy) and NorskHydro (Norway) are already searching for oil there. Oilmoz has signed an agreement with Shell Global Solutions to carry out a feasibility study for the refinery it plans to build in Matutuine by 2014. Millions of tons of coal are expected to be mined in Tete province by 2010 by the Australian-South African mining company, BHPBilliton, and the Industrial Development Corporation of South Africa. Titanium will be mined in the Gaza province as soon as electricity supply problems are solved and the Delta Group will be extracting gold in the Manica province by 2009. The most viable mining projects are those that are already under construction or have a secured way to be financed. These include the development of a fuel pipeline from Maputo harbour to South Africa, which is to supply the South African market and the expansion of the natural gas pipeline mega-project owned by the South African petrochemical company Sasol, which plans to invest USD 225 million to increase output from the Pande and Temane gas fields for export to South Africa.

Manufacturing Sector

Around 1975, the industrial and manufacturing sector of Mozambique was mainly into processing of raw material such as shrimps, tea, sugar, cashews, citrus, copra coal and cotton and other light manufacturing commodities for domestic purpose. From the 1950s to the 70’s there was an immense growth in the local manufacturing capacity as a result of the increase in the demand.

A large amount of the skilled labors and managerial class left Mozambique when it got its independence, there was a rise in industrial production till the early 80s. Though by 1990s the industrial production had declined to almost its 1/3rd. The internal conflicts interrupted the growth in the industrial sector. The problem in supply of raw material to the industries, the soaring debt and the diminishing amount of exports strangled the industrial sector of Mozambique.

As the country’s overall social and economic climate improved in the early 1990s, industrial development resumed. Although production levels for the cement industry have not returned to those reached in the late 1970s, other industries are expanding. An ammonia plant opened in the centre of the country in the late 1990s and a car assembly plant began operation in 2000. A key factor in Mozambique’s economic growth was the opening of an aluminum smelter near Maputo in 2000. It is one of the world’s largest smelters of aluminum, which has become an important export for Mozambique.

Tourism Sector

Mozambique has immense amount of natural and man-made resources to boost the tourism sector. The wildlife, historical heritage and the beaches provide the opportunities for cultural and eco-tourism. In spite of the country’s tourism assets and its nearness to South Africa which is considered one of the world's top tourist destinations, Mozambique has the lowest tourist numbers of all its neighbors except Malawi. Tourism was a very profitable industry in the pre-independence days of Mozambique. Rhodesians and South Africans visited Beira and Mozambique's southern beaches. Gorongosa Park, halfway between Zimbabwe and Beira was a large tourist attraction.

During the 1990s the tourism sector was the fastest growing sector of Mozambique's economy. In 1999, a Minister for Tourism was appointed. Though in 2003, tourism accounted for about 1.2% of the country's GDP, far below the Sub-Saharan average of 6.9%. In 2005 the tourist industry grew by 37%, the fastest tourist industry growth rate in the world. The tourism industry attracts one of the largest foreign investment of the country as compared to the other sectors. The receipts from the tourism industry in 2001 were US$ 64 million and in 2005 were US$ 130 million. The sector provides employment to 32,000 people. About 1/3rd of the tourist population are from South Africa. In 2006 the tourism sector generated revenues totalling US$ 144 million. It seems quite evident that in the future also the tourism industry will be Mozambique's major foreign exchange earner, as the sector already has become the main focus of foreign investors in the country.

There are an estimate 7,700 hotel beds in the country, with an approximate occupancy rate of just below 40%. The capital Maputo has about half of the hotels. Many tourist operators supply their own power. Air access is limited and high priced. There is only one connection to Portugal other than regional services to Dar es Salaam, Harare, Johannesburg and Nairobi. The domestic air transport is very limited, although the price of fares is limited because of new small air carriers. The visa regulations of the country are also troublesome for the tourist industry because many other countries near to it, such as Mauritius, Seychelles and the Maldives, do not require European Union citizens to have visas. Whereas, a trip to Mozambique, requires a separate visa of the country.

For Further Reference

African Economic Outlook

Mozambique Country Profile - BBC News

The World Bank