Brazil, China, India, and Japan have established projects in Mozambique and are increasing their investments. The largest bilateral donor of development assistance is the United States, which until recently was not a major trade partner. However, U. Several megaprojects will be the key drivers for the Mozambican economy in the next five years and will provide both direct and indirect business opportunities.
The development of the Nacala Logistics Corridor, comprising multiple industrial projects and a transportation corridor valued in the billions of dollars, offers additional opportunities. Similar to other emerging markets, Mozambique has a very weak power infrastructure that is concentrated in urban locations but is sparse throughout rural areas.
Its limited transmission capacity runs the length of the country, connecting the northern and southern parts of Mozambique into a single grid. It is common for industry and business to rely on backup generators for long periods of time due to intermittent power supply.
One of the most successful infrastructure projects in Mozambique, the Cahora Bassa hydroelectric dam, with a MW capacity, is located in the Tete Province on the Zambezi River.
This dam supplies power to Mozambique, Zimbabwe, and South Africa. Mozambique has strong potential for hydroelectric and thermal power generation, as well as for solar and wind farms along its lengthy coastline. However, the underdeveloped power grid and bureaucratic hurdles make the development of power projects difficult and time consuming. The transportation sector is expanding, driven by major investments in ports and road infrastructure.
This time it explores the profile of the formal private sector and the impact of economic downturn on its performance. It notes that smaller firms experienced growth and dynamism when Mozambique saw resource-driven growth acceleration. And the share of the economy that small and medium enterprises have is still growing, a phenomenon that bodes well for productivity growth overall. Our report notes that, while extractives and other large industries are showing some resilience, the rest of the private sector—the green shoots of the economy—faces reduced growth in demand, higher costs, and more difficulties finding access to credit.
Hence, re-establishing macroeconomic stability through a balanced mix of fiscal and monetary policy is a priority for private sector growth. Where We Work Mozambique publication. This page in: EN dropdown. Latest Issue:. An estimated three million people are projected to face high levels of food insecurity across the country due to the combined effects of the conflict in the North, weather shocks, and COVID mitigation measures, which have restricted economic activity.
As the recent Mozambique Economic Update March notes, the country needs to press ahead with its structural reform agenda as the pandemic subsides. In the near-term, measures to support viable firms and households would be crucial for a resilient and inclusive recovery. In the recovery phase, policies focusing on supporting economic transformation and job creation, especially for the youth, would be critical. Targeted interventions to support women and alleviate gender inequalities as well as to harness the power of mobile technology would support sustainable and inclusive growth in the medium term.
Moreover, structural reforms are needed in support of the currently struggling private sector. Another major challenge is diversifying the economy away from the current 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, which could in turn improve social indicators.
The focus areas of the current World Bank Group strategy, which targets underserved regions of the country, are: a promoting diversified growth and enhanced productivity, b Investing in Human Capital, and c Enhancing sustainability and resilience.
The portfolio is complemented by International Finance Corporation investments and Multilateral Investment Guarantee Agency operations focused on private sector development. In March , the government concluded and inaugurated road networks rebuilt in the province of Gaza, southern Mozambique, following the destruction caused by the and floods.
The first phase of the Roads and Bridges Management and Maintenance Program restored road connectivity between the various affected areas covering The second phase aimed for a more in-depth reconstruction of roads and bridges. For example, to increase rainwater flow and reduce overtopping in the rainy season, aqueducts were built, and 15 others repaired along the project's various roads and bridges. For years, the coastal city of Beira has been hit by violent storms and recurrent flooding.
The project upgraded and built 11 km of drainage canals, installation of six flood control stations and the construction of a , cubic meter large water retention basin, among other benefits. Through several initiatives, the Bank-supported SWIOFish Project is helping Tanzania and Mozambique fishing communities increase their fish stocks and restore livelihoods and fisheries. The project also helped significantly reduce the illegal fishing practices such as blast fishing in Tanzania.
In Mozambique, the project is providing financing to fishing associations, and helping fishers, particularly women, save their earnings, borrow money and grow their businesses. At completion, the project is expected to ensure irrigation more than 3, hectares, of which 1, ha are dedicated to rice production, ha for horticulture, and ha for contract production.
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