Mozambique Economy

The legacy of war

In 1990, after centuries of exploitative colonial rule, decades of guerrilla civil warfare and years of centrally-planned economic policies, the economy of Mozambique was in an understandably lamentable state. The country was reckoned the very poorest in the world.

Reform and rebuild

By the time peace was declared in 1992 the Frelimo government had abandoned its Marxist policies and was implementing a series of reforms: market-based economic policies and a commitment to maintaining macroeconomic stability through fiscal and monetary discipline.

They paid off. Since 1990 the Mozambican economy has been among the fastest-growing in the world, with an average annual GDP growth of about 8%. The cyclone and devastating floods of early 2000 reduced growth for that year to 2.1%, but the country bounced back in some style - GDP growth approximated 14% in 2001.

Unfortunately the country's meteoric growth comes off an extremely small base. In 1997 Mozambique's per capita GNP was still the lowest in the world at US$90, and much of the country's health and education infrastructure had yet to be rebuilt from almost nothing. But sound economic management, massive international debt relief and great investment in human capital have been quite successful in alleviating poverty in the country.

Huge potential

Endowed with rich and extensive natural resources, Mozambique's present day economy is one of huge potential. The country's economy is based largely on agriculture, which employs roughly 80% of the country's population in mostly subsistence operations.

Agriculture makes up around 25% of GDP, with fast-growing industry (mainly food and beverages, chemical manufacturing, and aluminium and petroleum production) contributing 35% and services almost 40%. Imports still slightly overshadow exports, but the gap is closing. The country's tourism sector is growing, but still performing well below its potential.

The government has taken steps to make Mozambique as attractive as possible to foreign direct investment, upon which it is heavily dependent. South Africa is Mozambique's main trading partner and source of FDI, but Belgium, Spain and Portugal also figure among the country's most important partners.

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