Credit rating agency Standard & Poor’s said yesterday that extreme climatic events in Mozambique will delay economic recovery and increase risks on the long-term outlook.
“Extreme and recurring weather events are likely to postpone economic recovery in Mozambique and exacerbate the risks of long-term growth prospects”, reads a comment sent to news agency Lusa and to which we had access, in which it is written that S&P forecasts growth of 1% in 2020 and 5.5% this year in the country.
“Climatic risks and the effects of the covid-19 pandemic have weakened economic performance in the past two years; the effects of the pandemic and cyclone Eloise, as well as the intensification of the insurgency in Cabo Delgado province, will potentially weaken the economic recovery this year and delay the development of natural gas projects”, the report reads.
“Our view of Mozambique’s financial, institutional and economic profile reflects the adverse influence of environmental, social and governance factors,” their analysts point out, specifying the risk factors as “natural disasters to security threats in the north, which pose risks to social cohesion and macroeconomic stability, high indebtedness, and low level of development, these are all long-term constraints on credit quality”.
Mozambique was struck by two cyclones in 2019, Idai and Kenneth, with Idai being singled out as “the largest cyclone ever recorded in Africa”, according to S&P, which cited World Bank figures putting the financial impact at US$3.2B (€2.6B), affecting 2.5 million people.
“This is significant in a country with low levels of wealth and very low penetration of the insurance industry, just 1.5% of GDP”, the report points out.
S&P’s observations come days after the Global Climate Risk Index (consult PDF at the end of this article), prepared by the NGO GermanWatch, placed Mozambique first on the list of countries most vulnerable to climate change, after being affected in 2019 (the last year measured) by Idai and Kenneth, which claimed about 700 lives.
Since then, other storms have struck the country, including Cyclone Eloise this past January, causing at least nine deaths and affecting 290,000 people, including 18,000 displaced.