Macau, China, 7 Feb – The dynamism of economic activities in Mozambique is “transversal” across all sectors, with the agriculture sector standing out due to its contribution to above average economic growth for the region, according to Portuguese bank BPI.
“Favourable weather conditions, as well as a focus on investment and reorganisation of the sector, justified this performance,” noted the BPI analysts in their most recent report on the country, published last week.
In 2010, the rate of economic growth was around 8 percent, “once again exceeding expectations,” which were for 6.2 percent, officially, they said.
“The recovery of the global economy was also reflected in the upturn of exports and a greater contribution to production by so-called large projects, notably aluminium, electricity and also natural gas,” according to the report.
“The development of the agricultural sector should be a priority for government policy, as growth of the sector appears to be an important tool in combating poverty levels,” BPI said.
Development of the sector, it noted, also makes it possible to reduce outside food dependence, which is a weight upon Mozambique’s accounts.
Agricultural contributed 3 percentage points, or 27.5 percent, to gross domestic product (GDP) growth in the first nine months of 2010.
Amongst the other sectors, the most notable were Transport and Communications (1.1 percentage points of GDP growth), Repair Services and Sales (1 percentage points) and Financial Services (0.9 percentage points).
These sectors, “reflect the dynamism of domestic demand, particularly the main city centres, and slowdown is not expected over the next few months.”
The mining industry currently accounts for 1.2 percent of GDP, but over the next few years it is expected to “significantly increase its weighting, given production prospects.”
Amongst the large projects linked to this sector is coal mining, which over the next two years expects five new mines to go into operation.
In May last year a new license was granted to Australia’s Bracon Hill Resources, in the Moatize area, and the company has already said it has found additional reserves, but at an advanced stage on the ground are also Nippon Steel, Riversdale Mining and Tata Steel.
“The projects underway related to coal mining will make Mozambique one of the world’s largest producers of this product, which is likely to lead to a rise in exports,” BPI noted.
In the near future, it is also expected that agriculture and construction will increase their contribution, “given that development of basic infrastructures is expected to continue to be a priority for the government,” and Energy, due to an increase in the production capacity of the Cahora Bassa hydroelectric dam and construction of the new Mphanda Nkuwa facility.
According to BPI, the development of the Mozambican economy will continue to “favourably surprise, outperforming its peers in the region,” a scenario which “involves the progressive start of operation of several large projects, mainly in the energy and mining sectors.”
Mozambique rose four places to 126th out of 183 countries in the latest edition of the World Bank’s “Doing Business” survey. (macauhub)