Mozambique

CAFIS – Consultoria Fiscal e Contabilidade Lda, Mozambique

Economic Overview & Business Opportunities – Mozambique

The Future Looks Bright for One of South Africa’s Top Trading Partners

Bordering several cities around the southeast coast of Africa, the economic overview and business opportunities in Mozambique hold untapped opportunities.

Economic Overview

Mozambique is a city that borders Malawi, Zimbabwe, Zambia, Tanzania and South Africa and eSwatini. Located along the Indian Ocean coastline, the city is 2,500 kilometres east of Madagascar. Approximately 66% of the city’s population work and live in rural areas.

With its strong ties to South Africa, the region’s economic engine, its strategic location makes it a conduit to the global market. The economic overview and business opportunities in Mozambique remain subdued in terms of growth trajectory. This follows the commodity price shock that happened in 2015, and the hidden loans crisis of 2016. Muted growth prospects for 2019 were largely because of the devastating aftermath of tropical cyclones Kenneth and Idai left on the agricultural production.

However, the economic overview and business opportunities in Mozambique are expected to recover by 2021. Rehabilitation efforts are in the works to help spur economic growth. Easing interest rates provide an extra incentive for investors to consider venturing toward this region.

Moreover, the large natural gas reserves which have been discovered in Rovuma Basin put the city in an exciting position. The discovery means exciting business opportunities, potentially attracting major investments. This in turn, calls for a qualified work to meet growth demand. The projected economic boom that is expected to follow with the developments happening in the gas sector promises a very optimistic outlook moving forward.

 

Why Invest in Mozambique?

Any country’s economic overview and business opportunities must present a strong case. There must be strong enough reasons why investors should consider this location over others. As one of the five trading partners with South Africa, Mozambique’s economy continues to stride forward despite the setbacks it faced. Over the past two decades, the it is one of the fastest growing economies in the continent.

Other reasons to consider investing in Mozambique include:

• The growing economy in anticipation of the incoming investments in the energy sector over the next few years.
• The thriving tourism sector. The World Economic Forum reports that Mozambique is one of the top 10 tourism destinations and the growth is expected to accelerate in the next decade.
• The unilateral methods mean there is no double taxation that resident companies need to deal with.
• Thanks to its abundant natural resources and easy access via sea, the country continues to hold strong as an important destination for foreign direct investment (FDI) within the South African region.
• The monetary policy that it has in place resulted in a deceleration of inflation, beginning mid-2017 onwards.
• The Bank of Mozambique has been hard at work since 2007 working on minimising interest rates. Measures include a marginal lending rate of 23.25%.
• Infrastructure that continues to improve thanks to the large-scale investments in strategic sectors. These sectors include precious metals and energy and mining.