Mozambique’s GDP has been dominated by the agriculture, construction, and financial sectors. Although the informal agriculture sector employs approximately 70% of the population, it only contributes around 25% of GDP, because it is mostly subsistence agriculture. Commercial farms that do exist often struggle with inefficiencies, lack of economies of scale, and low value-added processing, in addition to onerous government regulations and informal taxes. This, combined with an underdeveloped industrial sector, have limited Mozambique’s participation in the African Growth and Opportunity Act. However, the Government of Mozambique continues to identify agriculture as a priority sector and seeks to develop it through a $500 million loan from the World Bank called the SUSTENTA initiative. SUSTENTA is meant to transform small holder farmers into sustainable producers, and service providers for neighboring farms, although there are questions about its effectiveness and the transparency of its administration. Compounding these issues, Mozambique’s lack of industrialization makes the country dependent on import of finished and semi-finished goods. In response, the government embarked on its National Program to Industrialize Mozambique (Programa Nacional Industrializar Moçambique; PRONAI), initiative to move the country up the value chain through selective import substitution and parks for industry and agroprocessing.
The Government of Mozambique has programs designed to encourage foreign direct investment (FDI). Currently, FDI is largely concentrated in the infrastructure and extractive sectors. Mozambique possesses abundant mineral reserves of coal, copper, aluminum, gold, gemstones (notably rubies), iron, and critical minerals including graphite, vanadium, titanium, tantalum, lithium, and rare earth metals. FDI slowed dramatically beginning in 2015 largely due to a drop in commodity prices, especially for coal and aluminium. The government is interested in growing the mining sector by increasing extraction of critical minerals important to the global energy transformation, and is participating in dialogues with the U.S. Department of Energy to explore ways to strengthen its participation in global mineral supply chains. Eventually, the government would like to establish mineral processing hubs, starting with steel production, however it would likely need to strenghten its industrial base to make this a reality. The Government of Mozambique has also made tourism a key development sector and includes the country’s pristine beaches and vast parks with diverse wildlife among its natural resources. In 2023, the government enacted a visa waiver for tourist and business travelers from the United States and 28 other developed countries designed in part to boost its tourism industry.
Several megaprojects are projected to be the key drivers for the Mozambican economy in the next five years and to provide both direct and indirect business opportunities. The most significant opportunities are the construction of separate onshore liquified natural gas (LNG) plants by two consortia led by TotalEnergies and ExxonMobil/Eni, with estimated values of $20 billion and over $25 billion, respectively. Exploration activities by ExxonMobil, Eni, and others will provide further opportunities in the oil and gas sector. Terrorist activity in the Cabo Delgado region since 2017 has delayed the development of the country’s large-scale, onshore, export-focused LNG projects, although a smaller-scale floating LNG platform commenced production in late 2022.
Similar to other emerging markets, Mozambique has a very weak electrical infrastructure that is concentrated in urban locations but sparse throughout rural areas. Its limited transmission capacity separates the country’s northern and central grids from the southern grid. In some areas, it is common for industry and business to rely on backup generators for long periods of time due to intermittent power supply. The underdeveloped power grid and bureaucratic hurdles make the development of power projects difficult and time consuming. The Government of Mozambique has committed to full electrification of the country by 2030. This effort includes large generation, transmission, and distribution projects, as well as renewable microgrids featuring solutions such as rooftop solar in some areas.
However, Mozambique also has the largest power generation potential in the Southern African Development Community (SADC), largely in opportunities for future hydropower development. The government is working to develop the 1,500 MW Mphanda Nkuwa hydroelectric dam on the Zambezi River, 60 kilometers downstream of the existing Cahora Bassa Hydroelectric Dam. One of the most successful infrastructure projects in Mozambique, the Cahora Bassa Hydroelectric Dam, has a 2075MW capacity. It is in Tete Province on the Zambezi River and supplies power to Mozambique, Zimbabwe, and South Africa. Mozambique has strong potential for hydroelectric and thermal power generation, as well as solar and wind along its lengthy coastline.
Although less than a quarter of the population has access to internet, the COVID-19 pandemic played a crucial role in accelerating Mozambique’s digital transformation. As in much of the world, the information and communications technology (ICT) sector became an alternative means for ensuring continuity in economic development by supporting business, health, education, and social activities while urban Mozambicans observed social distancing requirements. These activities created demand for complimentary solutions including data storage, cloud computing, and cybersecurity.
The transportation sector is expanding, driven by major investments in ports and road infrastructure, including the new MCC Compact which will include investments in roads and transportation infrastructure in Zambezia Province. There are three major ports in the country: Maputo in the south, Beira in the center, and Nacala in the north. These ports define the three east-west transportation corridors in the country through which Mozambique connects the interior of the continent with the Indian Ocean. Geographically, Nacala Port is considered one of the best deep-water ports in East Africa. It is operated by the state-owned enterprise Portos e Caminhos de Ferro de Moçambique (CFM). The other two ports, Maputo and Beira, are operated by Dubai Port World and Cornelder, respectively. The far northern ports of Pemba and Palma will require substantial upgrades in order to provide logistical support for oil and gas projects. Infrastructure and construction project development remain bright spots of economic activity in Mozambique.
The largest investment and export opportunities in Mozambique exist in:
· Agriculture equipment (tractors, farm trucks, harvesting equipment)
· Construction (low-cost roads, railway, water management, and other infrastructure)
· Energy (coal, gas, hydropower, solar, wind, transmission lines)
· Fast Moving Consumer Goods
· Franchising
· Healthcare
· Information and Communications Technologies (wireless technologies, cybersecurity, automation, data centers, digital payments, digitization)
· Mining (coal, metals, gemstones, rare earths, precious metals, critical minerals)
· Oil & Gas (exploration, production, distribution, general supply chain)
· Safety and Security (safety equipment)
· Tourism (hotels, resort, sports, leisure)
· Transportation (ports, airports, logistics, freight)