World Bank suggests focus on agro-industry and light industry in Mozambique

27 August 2018

The World Bank suggests a stronger focus on agro-industry and light industry in Mozambique as a way to promote job creation and economic development in the coming years.


In a report released on 16 August, “Diagnosis of Employment in Mozambique,” the World Bank said that the agribusiness/forestry sector is “promising” through “value chain development in forests, sesame, banana, cashew and others,” along with the construction sector.


Other advantages to be explored by the Mozambican authorities include the country’s long shoreline, suitable for fishing, for the fish processing industry and for tourism, it said.


The natural deepwater port in the north of the country (Nacala), “if developed and managed, could be an important asset in attracting labour-intensive and export-oriented manufacturing.”


“The solution is to use the country’s natural wealth for investments in economic and social infrastructure that attract private sector investments. A dynamic, labour-intensive private business sector has the potential to have repercussions in other sectors by underpinning the diffusion of learning and technology, creating jobs and increasing domestic demand for agricultural production and informal services,” the World Bank reported.


The Government of Mozambique recently announced its five-year plan, focused on inclusive growth for 2015-2019, which includes among its five strategic priorities the promotion of employment, productivity and competitiveness, by increasing production and productivity in all sectors with a focus on agriculture, fostering industrialisation to modernise the economy and increase exports, create jobs and reform labour laws, along with promoting the value chain of domestic primary products, ensuring the integration of local content.


In the report, the World Bank said, “it is crucial that there be a strategy to increase smallholder productivity” and suggests “public support for the transition of small farmers to productive activities linked to the modern economy, where productivity and gains are much larger.”


The Asian countries, he said, have achieved enormous expansion by attracting foreign direct investment in the labour-intensive production of export-oriented goods, construction and export-oriented manufacturing, but even if the current context makes it more difficult for countries such as Mozambique to replicate this experience, the solution may be to process domestic agricultural production for the growing urban population.


This is the case of grain grinding units, pressing oilseeds, dairy products, slaughterhouses, among others, and investment in this type of units is a viable option for Mozambique, “where food imports and construction are very high.”


The natural resources sector, which includes coal (already in production) and natural gas (which is due to come on stream in about four years), “as long as strategically developed, can be a tremendous opportunity for Mozambique to increase sustainable economic growth,” it said.


However, the report points out, “the development of these sectors will create few direct jobs, and the link between job creation and the local economy remains weak”, just as so-called “megaprojects” did not create as many jobs as expected.


The report also points out that production remains focused in the largest and oldest companies, “which calls for measures to reduce barriers to start-up and stimulate competition.”(macauhub)