Market Overview At the beginning of 2020, the African Development Bank published a positive outlook for the Mozambique economy. It projected growth of just under 6% for 2020 and 4% for 2021. Inflation had been brought under control to somewhere around 3%, poverty was falling (although still dismally high) and generally, the outlook was positive after a few years in which the country had endured devastating cyclones and the so-called ‘hidden debt crisis’.1
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BE SPECIAL REPORT [ MOZAMBIQUE ]
n March 22, the first case of Covid 19 was reported in Mozambique and the positive outlook was put on hold, which is where it remains six months later. It’s a harsh blow for the residents of a country which has been hit with its fair share of them, but it’s not alone: few countries have managed to avoid the scourge of the global pandemic. The good news for Mozambique is that it should be a short-term impact and the longterm outlook for the country remains positive. At the centre of the story is Mozambique’s new role as a major player in the world gas industry. Its offshore gas discovery just over a decade ago means that the country is saturated in gas, to the extent that it could soon be the world’s fourth largest exporter of liquified natural gas (LNG). As the experience of other African countries such as Angola has shown, this will bring challenges - but few would argue against it being a huge opportunity for the country. The government may already have earmarked some of the forthcoming LNG revenue to pay down its national debt, which skyrocketed to nearly $15 billion in 2019 - a 30% increase in the space of just two years, and the local currency deflating by around a third. The bad news for those in charge of the national coffers is that the first gas revenues are unlikely to arrive until the second half of 2023 at the earliest. Meanwhile, structural changes are required. As always where African countries are concerned, the structural changes in Mozambique revolve around the ease of doing
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