Market monitor: Mozambique

Natural resources spark growth, but poverty hampers progress.

Economic overview

When Mozambique gained independence from Portugal in 1975, it was one of the poorest countries in the world. Years of civil war worsened the poverty. But reforms, international financial assistance and, eventually, political stability enabled expansion. Mozambique’s annual gross domestic product growth averaged 7.4% over the past two decades, according to the World Bank. Recent discoveries of large deposits of coal and gas are changing the East African country’s role in the global economy. In late April, officials forecast the economy would grow by 7.5% in 2015, equal to last year’s growth rate. Agriculture, electricity, construction and gas sectors drive the economy; indeed, the country aims to become a leading liquefied natural gas exporter. According to reports from Reuters, Mozambique is offering 15 exploration blocks in its northern region, where U.S.-based Anadarko Petroleum and Italy’s Eni already are developing multibillion-dollar LNG projects.

Business travel industry insight

Mozambique’s industrial growth has boosted business travel into the country in recent years, but travelers’ health and safety are major concerns. Malaria and, more recently, tuberculosis are public health threats. Kidnappings are on the rise, and natural disruptors—such as recent floods—are fairly common. Just getting to Mozambique can be complex. Mozambican airlines are banned from flying into the European Union because Mozambican regulators were unable to verify airlines’ compliance with international safety standards. The main point of entry for most travelers is the capital, Maputo, and most routes from Europe and the U.S. include a stop in South Africa, which has strong economic ties to Mozambique.

Opportunities

  • Revenues from natural gas, coal, titanium and hydroelectric power generation are forecast to help Mozambique’s economy expand beyond Africa’s anticipated 4% average growth this year.
  • Mozambique’s foreign debt has been significantly reduced through forgiveness and rescheduling under the International Monetary Fund’s Heavily Indebted Poor Countries initiatives.
  • Reforms, including the introduction of a value-added tax and an overhaul of the customs service, have improved the government’s revenue collection abilities and fiscal stability.

Challenges

  • Mozambique’s expansion has come mainly from capital-intensive, import-dependent industrial sectors that do not create significant numbers of jobs.
  • The World Bank has warned that the country needs to improve its ability to manage gas and mining industries to ensure “sustainable and broad-based growth.“
  • Poverty takes its toll on Mozambique’s citizens. The adult literacy rate is 56%. Most of the country’s workforce support themselves through subsistence agriculture, and more than half the population is below the poverty line. Average life expectancy is just 50.3 years; malaria is the most common killer, responsible for 29% of deaths. 

When your business expands into new markets, we can get your travelers where they need to be. Contact BCD Travel about how we can support your company’s growth across the globe.

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