Who Owns Whom

There are causes for optimism about Mozambique’s political and economic future due partly to a recent peace accord with opposition Renamo ahead of the country’s October election and partly to the announcement of several major projects following the discovery of huge deposits of natural gas.

African Development Bank figures show Mozambique’s GDP growth was 3.5% in 2018, down sharply from the average of 7% from 2004 to 2015, mainly because of the steep decline in public and foreign investment.

Mozambique has a debt crisis and it remains in debt default after the 2016 discovery of US$2bn (13% of GDP) of questionable government-guaranteed debt. The minister of Economy and Finance, Adriano Maleiane said recently that the budget deficit will be 8.9% in 2019.

The growth outlook varies widely. Some commentators expect GDP growth of less than 1% in 2019 due to the devastating impact of cyclones Idai and Kenneth and widening fiscal and current account deficits due to reconstruction costs from the storms.

The AfDB expects growth of 4.5% in 2019 and 5.0% in 2020 driven by a recovering agriculture sector, extractive industries and coal exports.

Mozambique’s economic prospects hinge largely on major projects in the Rovuma Basin, where huge natural gas reserves were discovered.

A Whom Owns Whom report on The Mozambican Petroleum Industry indicated that the 35 trillion cubic metres of natural gas deposits in the Rovuma area could put the country among the 10 largest liquefied natural gas producers over the next few years.

The report, quoting an International Monetary Fund June 2019 update, said Mozambique’s economic situation had been improving following a drop in inflation (from 26% in November 2016, to 3% in April 2019) and the further development of gas projects, until cyclones Idai and Kenneth hit.

The Mozambican economy is characterised by a lack of diversity, with the agriculture sector, which was devastated by the cyclones and their aftermath, accounting for about 30% of GDP and around 80% of the country’s labour force, according to the Who Owns Whom report. Mozambique is also affected by corruption, poor governance, bureaucracy, the weak rule of law and an underdeveloped financial sector that makes it difficult to access finance. Companies contend with a shortage of skilled labour and state-sanctioned monopolies.

However, gas investment will bring opportunities. Major investments include Anadarko and partners’ US$25bn in the Rovuma liquefied natural gas project and ExxonMobil, Eni, China National Petroleum and partners’ development of a US$27bn to US$32bn project. Eni and ExxonMobil have a second US19bn project under development, while Eni operates another US$8bn project and Shell has completed a feasibility study for a US$5bn gas to liquids plant.

The economy, meanwhile remains susceptible to downside risks. The African Development Bank said these include debt distress, rising prices for key imports such as fuel and food, economic difficulties in South Africa, Mozambique’s second largest export destination, and natural disasters.

Contact us to access WOW's quality research on African industries and business

Contact Us

Most Popular Articles

Energy & WaterGreen EnergySouth Africa

Innovation in Energy. From an Obscure Commodity to an Attractive Star Performer?

Read more

AquafarmingSouth Africa

Ocean & Coastal fishing and Aquaculture in South Africa

Read more

MiningSouth Africa

Manufacture of Basic Precious & Non-Ferrous Metals in South Africa

Read more

Related Articles

Country Snapshots Mauritius

Mauritius Snaphot

Mauritius is an island nation of 1.3 million people with a GDP of US$13.5bn. It has previously been a colony of France and the UK, and to quote a resident,...

BlogCountry Snapshots Egypt

Egypt-Snapshot

Egypt is situated in North Africa with 2,900km of coastline on the Mediterranean Sea, which links to the Red Sea through the Suez Canal. With GDP of US$363bn in 2020,...

BlogCountry Snapshots Algeria

Algeria – Snapshot

Algeria is a North African country with a 1,600km coastline on the Mediterranean. It has a GDP of US$145bn and a population of 44 million of which just over 500,000...