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 (2022) people live and work in rural areas. The country is endowed with ample resources, including arable land, abundant water sources, energy, and mineral resources, as well as newly-discovered deposits of natural gas 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 and 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) remain the country’s main political forces, followed by the Mozambique Democratic Movement (MDM). Frelimo - which has been in power since the country’s independence from Portugal in 1975, and kept the lead after the introduction of a multiparty system following the general peace accord of 1992 - won both the presidential and legislative elections in a landslide in 2019. Frelimo also won the provincial elections, which were held for the first time that same year, thus appointing governors in all of the country’s ten provinces.
Mozambique will hold its sixth municipal elections in October 2023, marking the beginning of a new election cycle which will conclude with general elections in October 2024 to elect the President of the Republic as well as the delegates to the national parliament and the provincial assemblies. During the last municipal elections, which took place in 2018, Frelimo came up largely victorious, winning 44 out of 53 cities and towns across the country. Renamo won eight municipalities in the central and northernmost populous provinces, while MDM retained its stronghold in the strategic central port city of Beira.
Mozambique will not hold its first district elections, even though they were initially planned for 2024. This decision, announced in June 2023, follows months of debate. An initial decision to hold district elections was agreed upon in 2018 as part of a package of constitutional amendments on decentralization. The amendments included a commitment to hold district elections in 2024. However, the constitution did not elaborate on potential overlapping power between district delegates and other locally-elected bodies, such as municipal assembly delegates. In light of these apparent incompatibilities, the President of the Republic ordered a reflection on the matter, naming a commission to discuss its feasibility. The commission concluded that the conditions for holding district elections in 154 districts in 2024 do not yet exist in the country, thus effectively postponing the municipal elections.
Demobilization, Disarmament, and Reintegration (DDR) of Renamo’s residual forces. The Government has completed its DDR efforts of Renamo’s residual forces. This is expected to bring a definitive end to the military confrontation opposing the government and Renamo ’s residual forces who had not disarmed following the peace accord of 1992. The conflict led to flare-ups of hostilities and attacks, mostly targeting civilians, perpetrated by Renamo over the years in the central region of Mozambique.
Cabo Delgado conflict. Mozambique has been grappling with an insurgency in parts of the gas-rich province of Cabo-Delgado since 2017. The government troops, aided by regional and Rwandan military contingents, have been successful in substantially reducing the incidence of the conflict, allowing thousands to return to their villages and towns. The conflict has however killed thousands and displaced over a million people, causing an unprecedented humanitarian crisis. The conflict has also derailed the economic potential of lucrative Liquified Natural Gas (LNG) investments in the area. Meanwhile, the government approved a reconstruction plan for the province, as well as the Programa de Resiliência e Desenvolvimento Integrado do Norte de Moçambique (PREDIN) in 2022. The latter is a short- to medium-term approach designed to promote conflict prevention, conflict mitigation, social cohesion, and resilience, and is intended for the provinces of Cabo Delgado, Niassa, and Nampula.
Challenges related to civic voice remain. The civic space in Mozambique has gone from “obstructed” to “repressive”, according to the 2023 CIVICUS Monitor Report. The country’s freedom of expression is rated “Partially Free” according to the 2023 Freedom House Report. These bring to the fore increasing challenges to civil liberties.
Economic Outlook
Economic growth picked up momentum on the back of strong services production and the start of LNG production. After a modest recovery in 2021, growth gathered pace in 2022, reaching 4.2 %, and is expected to accelerate to 6.0 % in 2023 as LNG production at the Coral South offshore facility picks up. Growth was mainly driven by the recovery of services and the start of liquified natural gas (LNG) production at the Coral South offshore facility. Total public debt declined in recent years, and it is assessed to be 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, and uncertainty around the security situation in the North despite recent improvements. Headline inflation hiked to 10.3% in 2022, from 6.4% in 2021, as global prices surged due to the war in Ukraine. A tighter monetary policy has supported the local currency (Metical) and helped moderate inflation, which stayed at 4.9 % in August of 2023.
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 mostly 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 larger 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 availability 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 levels of fertility, high child and maternal mortality, low levels of skills among women, and the 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. That, and 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: Sep 25, 2023
