Given Mozambique’s current level of development and its natural resources – including huge off‑shore natural gas fields – the country has become a focus for international investors.

The International Monetary Fund (IMF, Outlook April 2017) predicts 14.9% economic growth by 2022.
Its location, strategically placed to build relations with Southern Africa, the Middle East and Asia, is considered ideal for entry into the Southern African Development Community (SADC), which collectively has more than 305 million consumers1. Its resources however are not only limited to gas fields; Mozambique is a leading coal producer, aluminium transformer and ruby supplier (reaching substantial prices at international auctions). 

The country is equally recognised for its energy production capacity, various river basins, extensive coastline and the development of its ocean‑based economy. There is also growth potential via agriculture and tourism. While maintaining its traditional links with Portugal and South Africa, Mozambique has sought to develop strong relationships with multiple leading partners such as the World Bank, the African Development Bank, the European Union, the USA and Japan. To complement this, Mozambique’s foreign policy focuses its efforts on finding new business partners and investors in Brazil, China, India, South Korea, Thailand and Turkey.

Economically, Mozambique and its population of some 28 million people and an estimated nominal GDP of 11.5 billion USD2, is still a small‑sized market. Productivity is supported mainly by agriculture and service industries, but the exploitation of natural resources and its younger generations bring huge potential for future growth. Despite the Mozambican economy registering an average annual growth rate of 7% between 2010‑2015, it is currently experiencing a slowdown. In 2016, the growth rate was 3.8% – caused by a price drop in raw materials which impacted exports (primarily commodities).

A consequence was the postponement of investment decisions relating to large projects exploiting mineral resources, substantially reducing the inflow of Foreign Direct Investment (FDI). Adverse weather conditions and public financing limitations, such as the suspension of international donor support, have also contributed to an economic slowdown. 

But, there is the belief that Mozambique can return to its vibrant growth of recent years. 2017 expectations are moderately positive due to a first‑quarter GDP growth of 2.9%, more than double the previous quarter’s increase. 
The metical, which steadily lost value against the dollar during the first 10 months of 2016, is now more stable after strengthening 28% against the dollar in recent months. 

This monetary growth was fundamental to change, helping to slow inflation in mid‑2017 prompting predictions of an average inflation rate of 5.9% by 2021. International reserves are also recovering (as long as exports increase), supported by a price increase in commodities and a rallying coal industry. Imports however, remain more dependent and limited. 

Despite these improvements, the Mozambican economy is still exposed to some risks; 2017 first quarter growth remains below levels seen in recent years and a fluctuation in international commodity prices contributes to economic uncertainty.

Inflation at 18% remains high, impacting Mozambican families, and this restrictive monetary policy, while supporting foreign trading, endeavours to ensure a stable pricing environment. Mozambique’s credit reference rating is now among the highest in sub‑Saharan Africa yet the average rates of loans from regional commercial banks are unsuitable for the private sector. 

A stronger exchange rate, a rise in inflation and lower levels of credit could contribute to an economic downturn, so to prevent this, coordinated and decisive fiscal policy actions are necessary.

In terms of GDP per sector, 2016 estimates show the Service sector contributed 54.9%, despite employing only 13% of the workforce. It is followed by Agriculture at 25.3%, employing 81% and Industry at 19.8%, employing 6%.

In light of the country’s vast available mineral resources (particularly coal and natural gas which potentially ranks Mozambique as one of the largest suppliers in the world and the portfolio of investment projects already underway), the GDP from Industry is expected to continue to increase (in 2015, it recorded a 9.1% growth).

With energy, the gas industry will play a major role in its medium‑term growth;  here are plans for ExxonMobil (USA) and Anadarko (USA) to develop major operating export/facilities of liquefied natural gas (LNG) and for Eni (Italy) to construct offshore and in the future, onshore installations. Due to project complexities, LNG production will not start in the short to medium‑term, but development work will support growth from 2018 onwards. 

The Eni‑led consortium, which includes Galp Energia, the Chinese National Petroleum Corporation (CNPC), the South Korean Korea Gas (Kogas) and the Mozambican National Hydrocarbons Company (ENH), will invest 8 billion dollars in the Coral Sul project, installing a sea‑based floating platform to extract, liquefy, store, unload and export natural gas (by sea) to its final destination. 

The first shipment of liquefied natural gas is scheduled within five years and over 20 years BP will buy the entire production. In addition the Government and its partners, led by ENI and Anadarko oil companies, have formalized LNG licensing agreements for unloading plants for material and the sea terminal within areas one and four of the Rovuma Basin in Cabo Delgado, boosting the economy.

With the monetary policy, the central bank will follow its two main objectives: restoring price stability and supporting domestic demand. For export trade, coal has already increased growth in this area and it will overtake aluminium as Mozambique’s leading export product in 2017 (several coal mining companies are increasing production in response to international prices). 

Countries within the European Union (EU) and Africa, the Caribbean and Pacific (ACP) have signed new Economic Partnership Agreements – APE (in Portuguese) – removing immediate and/or progressive trade barriers and improving cooperation in related areas such as standardization, certification and quality control, competition and consumer protection. A consequence of this – it is hoped – will be greater trade relations between the two economic regions.


Aicep Global Portugal EPE, Agency for Investment and Foreign Trade of Portugal – its main functions are to support the globalization of Portuguese companies and their export activities, help with structural investments and build Portugal´s reputation with value‑creating initiatives for the country. AICEP is the result of the merger in 2007 between API (Portuguese Agency for Investments) and ICEP (Foreign Trade Institute of Portugal). It is a public business entity, dedicated to the development of a competitive business environment that contributes to an internationally‑focused economy. AICEP has a delegation in Mozambique, located in Maputo. The official business consultant, Ana Maria Rosas can be contacted: ana.rosas@portugalglobal.pt.

1 Source: SADC Statistical Yearbook, 2015.
2 Source: EIU Forcast for 2016.

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