Investment Opportunities in Mozambique
Investment opportunities in Mozambique
After the end of the civil war in 1992, the Mozambican economy picked up in the late 1990’s. Though with the devastating floods, drought and trade-related disputes in the new millennium have undermined the progress, and required aid donors to step in. In 2006 the growth was healthy at 7.9%, but inflation was also high at 13.2%. Though in 2008 country’s Gross Domestic Product (GDP) is expected to have increased by more than 6.5 per cent.%.
Mozambique has an estimated 36 Million Hectares of arable land of which only around 10 - 12 percent is under cultivation. There is immense agricultural potential in Mozambique, diverse soil types and climatic conditions are suitable for a large variety of crops. There are around 60 rivers in Mozambique to which are useful in irrigating the fields. The post – independence policy on agriculture, lays stress on large scale farming and market incentives.
Some of the large export crops have been revived by foreign investments and joint ventures, but many crops domestically produced still face a lot of constraints in infrastructure, poor road network and marketing. The rehabilitation of such facilities is one of the priorities of the government. Development of commercial agriculture in suitable areas with existing water resources and irrigation facilities is another priority.
Mozambique has a significant amount of mineral deposits in coal, natural gas, gold, oil, diamonds and titanium. With an increase in the geological studies there has been a vast increase in the investment by the leading international and regional mining companies. Still in 2007, mining and quarrying contributed to only 1.6 % of the GDP. The constraints in this sector are poor infrastructure and the late civil war.
The mining sector has been growing due to the presence of international mining companies. The other known deposits are of graphite, marble, bentonite, coal, gold bauxite, granite, fluorite, diatomite, emeralds, tourmaline, apatite and limestone. The regulatory responsibility for mining rests with the Ministry of Mineral Resources and Energy.
In July 1997, the Mozambican government liberalized the electricity market, which allowed the private investors in the sector. The country has enormous resources for production of energy, large hydro resources, coal, natural gas, biomass and high levels of solar radiations.
The demand for electricity is expected to grow around 11% each year till 2015. With the new reforms both the national and international players have equal opportunities. The solar power and hydro electric power can create power for domestic use as the electrical power grid only reaches to 14% of the population.
At the time of independence, Mozambique’s industrial base was well developed by Sub-Saharan standards due to the boom in investments in this sector in the period of 1960 -70. The sector has benefited immensely by the macro economic situation and the increase in the demand resulting to massive foreign investment and high economic growth. The food processing sector is one of the largest segments of this industry. Light manufactures, such as beverages, textiles and wood processing are also important.
With breathtaking beaches, ideal tropical climate, world class scuba diving and diversified wildlife, Mozambique has a need for hotels, lodges, and resorts to attract a growing tourism industry. The average amount of investment approved for the tourism sector in Mozambique each year was USD 600 million between 2005 and 2008, reaching a peak of USD 977 million in 2007. Hotel attendance has risen by 15% annually since 2005. It is one of Mozambique’s major foreign exchange earner.