Mozambique economy stimulated by infrastructure financed by China

4 January 2016

The economic forecasts for Mozambique have lost some lost some momentum in recent months, but a set of new projects funded by China in the county’s two major cities should stimulate growth.

After the inauguration of the Zimpeto Stadium, also funded by China and the first major sporting facility built in Mozambique after independence in 1975, attention was focused on the Catembe bridge in Maputo, and the new port of Beira, the second largest Mozambican city, according to a survey by news agency Xinhua.

The survey of new work carried out by the Chinese agency showed that the bridge, due to open in 2017, will open up new areas of Maputo to urban development, in addition to facilitating the connection between the two sides of the bay, driving a “substantial increase in economic development, business and tourism” of the Catembe region.

Under construction since 2014, the bridge, which is 3,000 metres long, is one of the largest of its kind in Africa, and is an investment estimated at US$300 million.

Construction of the new port of Beira began in September 2015, at the hands of the China Harbour Engineering Co. The port is seen as key to revitalise the country’s fishing industry and will serve the entire production chain, including refrigeration and export of processed products.

Another recent flagship infrastructure of Chinese cooperation in Mozambique is the Maputo Ring Road, which connects the Zimpeto stadium, built using funding from the Export-Import (ExIm) Bank of China by the China Road and Bridge Corporation, which is also responsible for the design of the Catembe bridge.

The ExIm Bank financing also allowed for completion in 2012 of the new Maputo International Airport terminal.

China has been gaining importance amongst Mozambique’s main foreign partners, with analysts projecting this trend to grow even stronger.

The Economist Intelligence Unit (EIU) said that Chinese investment will support the strengthening of relations and that China is expected to remain as the major creditor of the Mozambican state, a status it achieved recently.

The focus of Mozambique’s foreign policy, said the same source, is “to connect to new partners” such as China, India and Brazil, “with the long-term goal of reducing the weight of external aid with more investment revenues in the energy and mines sectors.”

The interest from major Chinese state-owned enterprises, such as China Three Gorges and China State Grid, in Mozambique’s big hydroelectric projects has been widely publicised.

In the last decade Mozambique has grown at an annual average of 7.4 percent, but according to the Eaglestone Securities consultancy, in the coming years the pace is expected to slow due to the fall in commodity prices on international markets as well as lower foreign investment.

The devaluation of the metical (58 percent against the dollar in 2015) is creating new pressures on the economy, particularly increasing the price of basic goods, while foreign reserves have been affected by the increase in debt service and lower foreign aid, among other factors. (macauhub/CN/MZ)