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Mozambique borders Tanzania, Malawi, Zambia, Zimbabwe, South Africa, and Eswatini. Its long Indian Ocean coastline of 2,700 kilometers faces east to Madagascar. About two-thirds of its estimated 33 million people (2022) live and work in rural areas. The country has ample resources, including arable land, abundant water sources, energy, mineral resources, and newly discovered natural gas deposits off its coast. The country has three deep seaports and a relatively large potential pool of labor. It is also strategically located: four of the six countries it borders are landlocked, hence dependent on Mozambique as a gateway to global markets. Mozambique’s strong ties to the region’s economic engine, South Africa, underscore the importance of its economic, political, and social development to the stability and growth of Southern Africa as a whole.

Political Context

The Front for the Liberation of Mozambique (Frelimo) and the Mozambican National Resistance (Renamo) are Mozambique's main political parties, with the Mozambique Democratic Movement (MDM) trailing. Since gaining independence from Portugal in 1975 and adopting multiparty democracy in 1992, Frelimo has maintained control. In the 2019 elections, they achieved a landslide victory, obtaining a two-thirds assembly majority and winning the inaugural provincial elections, enabling them to appoint governors across all ten provinces.

In 2023, Mozambique held municipal elections across 65 municipalities on October 11. Frelimo won in 60 municipalities, Renamo won in four, and MDM in one. Due to irregularities, the votes were repeated or recounted in some areas. The final election results upheld Frelimo’s victory in Maputo, Mozambique's capital city, and Matola, Mozambique’s largest city. The next general elections are scheduled for October 9, 2024. 

Cabo Delgado conflict. Since 2017, Mozambique's gas-rich Cabo Delgado province has faced a violent insurgency, leading to loss of lives and livelihoods, widespread displacement, and a humanitarian crisis. The crisis has spilled over into the neighboring provinces of Nampula and Niassa, both through insurgent attacks and through the dispersion of displaced populations. Efforts by Mozambican and regional security forces to stabilize the province have seen some success, but a recent spike in violence in the southern parts of Cabo Delgado has displaced a further 100,000 people, many of whom had been previously displaced. It comes as the Southern African Development Community Mission in Mozambique (SAMIM) plans to fully withdraw by mid-2024. To address the crisis and its impacts, the Government has approved the Cabo Delgado Reconstruction Plan, as well as the Integrated Resilience and Development Program for the North of Mozambique, focusing on conflict prevention, recovery, peacebuilding, and resilience in the three affected northern provinces.

Challenges related to civic voice remain. The 2023 CIVICUS Monitor Report downgraded Mozambique's civic space from “obstructive” to "repressive", while the 2024 Freedom House report deems its expression "Partially Free". The Economist Intelligence Unit 2023 Democracy Index considers Mozambique’s governance “authoritarian” based on various democratic indicators.

Economic Outlook

Economic recovery gained momentum in 2023. The economy grew by 5% in 2023, primarily driven by the start of Liquified Natural Gas (LNG) production at the Coral South offshore facility. Strong growth in agriculture and services, particularly transport, also contributed to the economy's expansion, offsetting the impact of lower manufacturing and construction activity. Inflation reached a five-year high of 9.8% in 2022 and moderated to 7.1% in 2023 as global commodity prices subsided. Despite the 100-basis-point cut in the monetary policy rate to 16.3% in January 2024, the overall monetary policy stance remains tight, with high statutory reserves (39%). Total public debt has declined in recent years and is considered sustainable in a forward-looking sense. However, risks are tilted to the downside in the medium term. Delays in the larger LNG projects could undermine growth prospects. Other risks stem from the large wage bill, climate shocks, increasing domestic debt costs, waning commitment to reforms in the run-up to the elections, volatility in global markets, and uncertainty around the security situation in the North.

The national poverty rate surged from 48.4% to 62.8% between 2014/15 and 2019/20. The number of poor people increased from 13.1 to 18.9 million, reflecting inter alia the impact of COVID-19 on families. There has been a disproportionate increase in poverty in urban areas. This can be explained by the fact that, while there has been a generalized contraction in consumption, urban areas appear to have been disproportionately impacted by the global pandemic due to more significant impacts of reduced mobility and slower economic activity. With regards to inequality, the Gini Coefficient fell from 56.1 to 50.4 between 2014/15 and 2019/20. Multidimensional poverty has also worsened. The share of households experiencing deprivations rose from 71 to 78.3% between 2014/15 and 2019/20. In rural areas, conditions went back to the levels observed in 2002/03, with over 95% of households falling into multidimensional poverty. Urban households also saw a sharp increase in multidimensional poverty, from 32% to 46% during the same period.

Development Challenges

Despite having one of the fastest-growing economies in Sub-Saharan Africa from 2000-2015, job creation, poverty reduction, and human capital accumulation are still limited, with most of the substantial wealth generated benefiting limited sections of the economy. With a human capital index of 0.36, extremely low levels of human capital are a structural constraint to rapid, inclusive, and sustainable growth in Mozambique. Basic services in education and health are unevenly delivered across the country, driving spatial inequalities, with limited mechanisms to protect the most vulnerable from the impacts of shocks, thus driving fragility, instability, and violence.

The lack of good training and weak links between supply and demand compound a weak labor market and low productivity growth. Disempowerment among girls and women hinders growth through unfavorable fertility levels, high child and maternal mortality, low levels of skills among women, and poor productivity of women in the labor market.

Additional challenges include maintaining macroeconomic stability, considering the country’s exposure to commodity price fluctuations, and making further efforts to reestablish confidence through improved economic governance and increased transparency. Structural reforms are needed to support the struggling private sector. Diversifying the economy away from its focus on capital-intensive projects and low-productivity subsistence agriculture—while strengthening the key drivers of inclusion, such as improved quality of education and health service delivery—could, in turn, improve social indicators.

Last Updated: Apr 05, 2024

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Main Office Contact
Av. Kenneth Kaunda, 1224
Maputo, Mozambique
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Leonor Costa Neves
External Affairs Officer
For project-related issues and complaints