Country Profile: MOZAMBIQUE

Southern Africa

Monday, 23 November 2009 00:00

This country profile was published in November 2009 in our annual 'Africa in 2010' issue. The next edition, 'Africa in 2011' will be on sale in November 2010.

The thumping 76% victory for President Armando Guebuza and the ruling Frente de Libertação de Moçambique (Frelimo) in the 28 October poll masks a turning point for post-liberation politics in Mozambique. Frelimo continues to claim progress in rural development, health, education and basic infrastructure, and no organisation is in a position to challenge it for at least another election. But the changing demography and urbanisation of Mozambique has created space for the emergence of a new party, the MDM, led by sophisticated young technocrats. Its leader, Daviz Simango, has experience as mayor of the important port town of Beira. Attention will turn to the manner in which Frelimo engages with a more credible opposition critique. Whether or not Frelimo gains a two thirds majority in parliament will affect their ability to change the constitution. 

Mozambique Simango broke away from the ailing Resistência Nacional Moçambicana (Renamo), which confirmed its downwards trajectory. Afonso Dhlakama, in charge since the days of apartheid financing, has yet to prove he can allow the thinning talents in his party take responsibility. Despite being prevented from running in 9 out of 13 electoral districts, he still recieved near 10% of votes. The MDM have said they have evidence of electoral fraud by Frelimo.  

After years of stellar growth (averaging 8% over a decade), the economy has not been immune to the problems besetting other developing countries. The IMF has revised the 2009 growth forecast down to 4.3%, projecting a climb to 5.2% in 2010. Exports have suffered and the trade and current account balances have turned negative. The collapse in global demand for automobiles hit aluminium exports hard, leading the flagship Mozal smelter to lay off 100 people and reduce exports by over one-third.  There are widening gaps between richer and poorer parts of the country, but there are some positive trends. Infrastructure improvements have tracked the flow of investment interest. The latest, a pre-election showstopper, was the bridge over the Zambezi which opens up the rural hinterland. Agribusiness companies from South Africa and beyond are increasingly active, especially in biodiesel and horticulture projects.  

Tourism is another fast-growing sector, dominated by South Africans, but increasingly opening up to a more international clientèle. The football World Cup finals in South Africa should bring a consequent spill-over in visitors, helping to illuminate the charms of the Indian Ocean coastline. The banking sector is still undeveloped, with few corporate customers to vie for. Currently, Portuguese investment bank BES is applying to enter the country, with an eye on infrastructure projects. At the other end of the scale, the central bank has ordered the retail banking sector to get rid of the disproportionate fees charged to customers.  International commodity prices are recovering, which has helped renew impetus in the country’s mining sector. Indian miners are keen to access large coal reserves in the north of the country. Vale and Riversdale are sitting on deposits of coal totalling around 1.7bn tonnes, with the latter hoping to use barges to float the coal down the Zambezi to the coast. Vale is meanwhile encouraged that the government has found $500m to begin a railway from the coal-rich Moatize region to the port at Nacala. The port at Beira is now too shallow to handle larger tankers, and some of the money will go towards dredging. The three ports, Maputo, Nacala and Beira, are vital for the region’s economic integration and expansion, particularly in the case of Malawi and Zimbabwe.