Mozambique’s diverse opportunities for investment

Mozambique’s diverse opportunities for investment

Gas production Pemba Basin, Mozambique.

An evaluation of the social and economic development

This year marks the 40th Anniversary of Mozambique’s Independence. Since then, we have enjoyed peace, stability and positive developments. Democratic institutions are well established in the country and legislative, presidential and municipal elections have been held every five years since 1994. As a result of macro and micro-economic policies in recent years, the country has experienced strong economic growth in sectors such as agriculture, industry, transport and communications, tourism, fisheries and aquaculture, as well as energy and services—including financial and insurance services. The next Five-Year Plan of the government (2015-2019), which was approved early this year, will focus on five pillars that should bring forth socio-economic development plan includes:

  1. The consolidation of national unity, peace and sovereignty;
  2. The development of human and social capital;
  3. The promotion of employment, productivity and competitiveness;
  4. The development of economic and social infrastructure;
  5. The sustainable and transparent management of natural resources and the environment.

This program will ensure that the government continues its efforts to eradicate poverty and to improve the standard of living of the Mozambican citizens.

Bilateral cooperation with Japan

After the formal establishment of the cooperative relationship between Mozambique and Japan in 1979, it gradually expanded from a one-sided development assistance to a diversified partnership, which includes political dialogue, investment and trade, as well as people to people interaction. Bilateral cooperation, including the TICAD, focuses on:

  • Providing social and economic infrastructure;
  • Supporting education and health;
  • Developing human resources, capacity building, agriculture, community development, mitigation of the effects of climate change, improvement of food security, water and sanitation, science and technology and the promotion of business.

Most recently, the “AMIZADE” (friendship in Portuguese) agreement was signed in January 2014 during the visit of Prime Minister Abe to Mozambique. This new instrument established a framework to deepen and enhance the bilateral cooperation and public and private partnerships. Three pillars were identified as the main priorities—namely the reinforcement of political dialogue, vitalization of economic exchanges and acceleration of economic cooperation. An assistance package of approximately JPY 70 billion (USD 670 million) was pledged by Japan to promote “Japan-Mozambique Mutual Growth”. Regular political dialogues promote a better understanding of the development needs between the political leadership of the two countries and create an appropriate environment for their cooperation. On the other hand, it will also ensure that business initiatives have the political understanding and necessary support from both governments.

In order to vitalize the economy an important program is currently under implementation along the Nacala Corridor, which links the port of Nacala, in Nampula, Mozambique, to the province of Niassa, North West of Mozambique and to the Republic of Malawi. This corridor has been identified as one of the priorities by the TICAD V, designed to support regional integration in Africa. The port of Nacala is currently undergoing renovation, expansion and modernization realized by a combination of official development assistance (ODA) and soft loans provided by the government of Japan and Mozambique. The program also includes the improvement of the street network and the supply of power to Nacala port. The Nacala will be an important harbor linking the Asian markets to the South African markets.

Another important TICAD initiative worth mentioning is the ProSavana, a program designed to transform the subsistence farms into commercial products businesses through the transfer of agro-technologies in a trilateral cooperation between Mozambique, Japan and Brazil. The ProSavana is inspired by the Strategic Plan for Agricultural Sector Development (PEDSA), an initiative launched by the government of Mozambique aiming to:

  1. Accelerate the production of staple foods;
  2. Increase income;
  3. Ensure access and secure land tenure and natural resources;
  4. Provide services considering the value chain;
  5. Promote development of zones with high agricultural potential;
  6. Contribute to the balance of payments.

The zero draft of the ProSavana strategic plan has been concluded and consultations with the targeted communities are already taking place in order to come to an agreement.

In June 2013, to accelerate economic cooperation, Japan and Mozambique signed an agreement for Reciprocal Liberalization, Promotion and Protection of Investment. In 2014, President Armando Guebuza and Prime Minister Shinzo Abe launched the “Japan-Mozambique Development Initiative based on natural gas and coal” and the ABE Initiative (African Business Education Initiative for Youth). The first instrument will support the development of natural resources particularly natural gas and coal. Mozambique has in recent years discovered world reserves of natural gas and metallurgical coal. These instruments will forge a mutually beneficial and strategic partnership for both parts. The natural resources that Mozambique has are of strategic importance to Japan since it does not possess natural resources.

Companies such as Mitsubishi Corporation, Mitsui & Co Ltd., Nippon Steel and Sumitomo Metal, Impex, Hitachi Construction Machinery and many more are already active in Mozambique and their interests range from coal mining, development of natural gas, provision of technical services, logistics, development railway infrastructure, agriculture to wood chips, fisheries, recycling, consulting, engineering and real estate agency, to name but a few. Thanks to this process, trade between the two countries is beginning to show positive effects and is expected to grow as exports of coal and liquefied natural gas (LNG) begin to reach the Japanese market.

Through the ABE Initiative, three hundred youths from Mozambique will benefit from scholarships for post-graduate training in the area of natural resources in Japan. This program is designed to support the initiative taken by the government of Mozambique to develop new skills, which will allow the country to provide adequate labor force to the coal, gas and petroleum industries projects under development. The Japanese International Cooperation Agency (JICA) and the Japan Oil, Gas and Metals National Corporation (JOGMEC) have also been very instrumental in providing short-term training to the government and the private sectors involved in the development of natural resources.

Mozambique a destination for investment

Mozambique will continue to experience positive growth; being amongst the ten fastest growing economies in the world, with an area of 799,380 square kilometers and an estimated population of 25,727 million people, mostly under twenty years old. In addition, with a 2,525 kilometer coastline, Mozambique offers ample and diverse opportunities for investment. The abundance of mineral resources, particularly natural gas recently discovered in the Rovuma Basin, in the northern part of Mozambique, the vast arable land and water, as well as the tourism potential are factors to put into account when considering investing in Mozambique.

Thanks to the improvement of environment for doing business, more than 23 billion US dollars have been invested in Mozambique in the last five years alone. From 2013 to 2014, the country approved investments proposal projects worth about 18.8 billion dollars.

The protection against property expropriation—non-discriminatory treatment between foreign and domestic investors and unrestricted loans and payment of interests abroad—make Mozambique a secure destination for foreign direct investments.

Mozambique is considered a fascinating tourist destination with beautiful islands, beaches, resorts and parks. This sector also offers opportunities for investment since the infrastructure to support the industry is still underdeveloped. Nacala’s port is considered a Special Economic Zone (EEZ) designed as an integrated project to transform Nacala in an important industrial park and gateway to Asian markets. The Nacala EEZ, inaugurated the Nacala International Airport in December 2014, which will cut three hours of flight time to international destinations such as Asia, Europe and America.

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