Mozambique’s economy set to grow 7.5 times over next 20 years

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Mozambique’s economy set to grow 7.5 times over next 20 years

11:17 CAT | 02 Jun 2016

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A study presented in Lisbon yesterday foresees the population of Mozambique doubling over the next 20 years, and its economy growing 7.5 times, but to seize the opportunity this represents, Portuguese entrepreneurs have to achieve a “change of paradigm”.

Companies will have to “evolve from a paradigm of container export to a paradigm of going local with the production which was previously exported,” said the vice president of CESO Development Consultants, the company that conducted the study.

In his presentation during the Mozambique New Paradigms seminar organized by AIP Foundation, Rui Miguel Santos explained that the prospects for Mozambique are “remarkable growth”.

Nominal GDP is expected to grow 7.5 times by 2035, the population is expected to double in the same period. The distribution of wealth will also increase, with a per capita GDP quadrupling from 600 to 2,400 US dollars over the 20 years.

To address these perspectives, Mozambique will have to invest in industrialization. “The key strategy is to diversify the economy and create jobs,”Santos says. This should radically alter the positioning of Portuguese companies currently focused on exports.

Although the growth in Portuguese exports to Mozambique – 12 percent between 2014 and 2015 – might be considered low in the short term, it may not even be matched long term because the goal in Maputo is for many of the products currently imported to be produced locally.

According to estimates from the CESO study, 16 percent of exports will be affected by local production in the short term, rising to 30 percent in the medium term and 47 percent long-term.

The solution for Portuguese companies, Santos suggests, is to partner Mozambique in its industrialization process.

The Mozambican government is already developing strategies to overcome the country’s difficulties in attracting investment, including increasing the volume of public resources for financing operations, mobilizing resources from external sources and domestic savings and increasing commercial banks’ resources for loans for productive activity.

The new paradigm, Santos says, is also framed by the UN’s Sustainable Development Goals, from both a development aid context and the promotion of investment.

International financial institutions like the World Bank, the African Development Bank and the European Union organizations should therefore progressively support productive investment in developing countries to eradicate poverty in a sustainable way.

Santos advised Portuguese entrepreneurs to think outside the traditional paradigms. “Look into the possibility of your investments being supported by international financial institutions,” he urges.

“It would be a missed opportunity if Portuguese companies do not take advantage of the growth of the Mozambican economy over the next 20 years,” he warns.

Asked by Lusa about the prospect of investing in Mozambique at a time when the country is experiencing various crises, from the military-political to economic, the businessman said that the current difficulties are just “growing pains”.

“All current difficulties – the debt crisis, the political crisis, the tension between the main political parties – reflect the growing pains that come from growth potential,” he said.

“This tension exists because there is a lot of opportunity and a lot of wealth to explore in Mozambique. If it is more evenly distributed because there are more jobs, particularly in industry, the future may be more interesting,” he added.

Source: Lusa