China is second-largest investor in Mozambique

25 January 2010

Maputo, Mozambique, 25 Jan – China, which has benefitted from an “enthusiastic” reception, is now the second-largest investor in Mozambique and its businesspeople can benefit from a greater dynamism in the foreign investment sector, said the Centre for Chinese Studies of Stellenbosch University.

“The construction of prestigious government buildings (such as the Foreign Ministry) and other public facilities give the population pride, as well as respect from the staff of the State department and government,” said researchers Johanna Jansson and Carine Kiala in the study entitled, “Patterns of Chinese Investment, Aid and Trade in Mozambique,” published at the end of 2009.

The construction of infrastructures and foreign aid, despite some litigation involving Chinese businesspeople on a labour level and the extraction of mineral resources, are reasons given by the South African university team for civil society “being generally enthusiastic” about bilateral relations.

Although the project for construction of the new National Stadium has been criticised for allegedly not helping the country’s development, the Mozambicans themselves consider it to be a necessary facility to consolidate the country’s image as an international tourist destination, at a time when neighbouring South Africa is preparing to host the first soccer World Cup on the African continent.

A sign of improved relations is the growing interest in learning Mandarin, which may “establish a basis to reduce cultural differences,” according to the study cited by the Macauhub news agency.

Some difficulties and misunderstandings were felt in the first approaches, but the Chinese companies showed they were “quick to learn,” which was clear from work relations, particularly after in 2007 Mozambique published a Mandarin version of the Labour Code.

However there are still challenges for bilateral relations in fishing and, particularly, in the forestry sector, which had suffered from illegal practices by loggers in the provinces of Zambézia, Cabo Delgado, Nampula and Niassa, the researchers noted.

Trade between China and Mozambique has been increasing over the last decade, totalling US$442.7 million in 2008, or 48 percent more than the previous year.

The rise is attributed to the rise in Chinese imports of oil-producing seeds, wood and chromium ore.

Mozambican imports are made up essentially of manufactured products, vehicles and parts, electrical equipment and items made from iron and steel.

In terms of investment, the rise has been continuous, making China in 2009 the second-biggest investor in the country (US$76.8 million), behind South Africa (US$136 million).

The Mozambican Centre for Investment Promotion (CPI) at the end of 2009 had around 20 nMaputo, Mozambique, 2009 Aug – In the first half of this year Macau invested US$5.1 million in Mozambican according to information from the Centre for Investment Promotion (CPI), the government institution that analyses and approves investments in Mozambique.

“The efforts of the Joint Commission for Technical, Economic and Investment Activities and the work of the CPI with the Centre for Promotion of China Investment Development and Trade (CPIDCC) make trade easier and encourage investment between the two countries,” said the report.

Alongside this Mozambique is also creating an institute for Small and Medium-sized companies and setting up industrial parks (Dondo and Nacala) that will “create an incubator environment for investors, particularly in the textile and clothing sectors,” but also in the printing, metals and agri-industrial industries.

The researchers also noted that Mozambique had put itself up for establishing one of the areas of economic and technical cooperation with China, with a view to “driving Chinese investment to SMEs.”

“With a new focus on the promotion of partnerships, Mozambique hopes to attract Chinese human resources and capital to develop new areas of industrial development,” the report noted. (macauhub)