Mozambique focuses on industry to create 216,000 jobs

28 January 2013

Industry and the agro-industrial sector are the Mozambican government’s focus to create almost 216,000 jobs in 2013, whilst the economy is expected to post one of the world’s highest rates of growth.

The Mozambican Economic and Social Programme for 2013, which was approved at the end of 2012, sets out the country’s macroeconomic and social targets, and for this year outlines solid economic growth driven above all by the emerging extractive industry, which is expected to grow by 18.6 percent.

The financial sector is projected to grow 17.7 percent and transport by 14.1 percent, reflecting coal exports (7.5 million tons), but the government is also expecting robust performance in sectors such as real estate, tourism and industry.

Agriculture is expected to post growth of 4.6 percent, particularly due to large-scale explorations, with cashew, tea, sugar and tobacco harvests seeing improvements, as in previous years.

The Economic and Social Plan outlines creation of 216,000, of which 162,000 are in the private sector, partly due to large projects worth US$6 billion, particularly in agro-industry (sugar and biofuels) but also three new thermal and hydroelectric plants, a petrochemical plant and a cement factory.

The Mozambican government also has ambitious plans to make significant progress in its Millennium Development Goals, to be concluded in 2015, in the areas of Health and Education.

According to the Economist Intelligence Unit, its is “unlikely” that the target for job creation will be achieved, given the current weakness of the labour market and traditionally, “slow execution of investment projects”, but that overall the Programme seems “relatively realistic in its broad macroeconomic projections” which are slightly more “upbeat” than those of the EIU.

The biggest risk, it said, is that greater expectations for exploration of natural resources to improve living conditions of the average citizen will not become a reality, thus leading to social dissatisfaction.

The government’s projections point to growth of 8.4 percent this year, with inflation of 7.5 percent.

The targets are in line with those of the International Monetary fund (IMF), but are some way from those of the EIU (8 percent for growth and 5.5 percent for inflation).

“Lower expectations for global economic growth and trade as well as an uncertain outlook for global demand in commodities have led to more caution,” said the EIU in its latest report on Mozambique.

Last year, the performance of the Mozambican economy was “notable” the EIU said, having posted growth of 7.4 percent despite the fragile state of the global economy.

The State Budget for this year projects a continued drop in dependence on foreign aid, from 40 percent to 32 percent, but high nonetheless.

Whilst countries such as the Netherlands and Spain have reduced their aid, “new partners” such as China and India have offset this drop by providing loans.

Tax revenues from extracting natural resources have also increased sharply, particularly those related to coal, whilst the country is also preparing to start extracting natural gas in the Rovuma basin in 2018. (macauhub)