mozesMozambique’s Gross Domestic Product (GDP) growth reached 5.9% in the first quarter of 2015, supported by trade, manufacturing, extractive industries, transport and communication, and electricity production. Mozambique’s annual growth has averaged 7% over the past two decades. Sound macroeconomic management, large-scale foreign-investment projects, and significant donor support have contributed significantly to such performance. However, the rapid growth of the past decades has not always translated into significant poverty reduction as poverty fell by only 4% between 2003 and 2009.

Mozambique’s public debt has rapidly risen to 55% of GDP in 2014 and is expected to stabilize around 60% of GDP in the medium term. Year on year inflation remains low (0.12% by the end of June 2015) although there are inflationary pressures in the north of the country due to the floods early in the year. The fall in the price of minerals and raw materials in general is also affecting the level of investments in Mozambique.

Political Overview

The 1992 peace agreement marked the transition from civil war to peace, culminating in the country’s first democratic elections of 1994 and the emergence of the Front for the Liberation of Mozambique (FRELIMO) as the dominant political force in the country, a fact that still holds true today.

Since January of 2015 Mozambique has a new president, Filipe Nyusi; the winning ruling party Frelimo candidate of October 2014 general elections. His party also secured a strong majority in the parliament (144 seats out of 250 in total), though in sharp decline compared to the previous election in 2009 when it garnered 75% of the vote. Renamo, the largest opposition and former rebel group, more than doubled its seats in the national parliament. Renamo has disputed the elections results and has proposed a decentralization of the current political system to allow it to rule those provinces where it came out ahead in the polls.

Development Challenges

Mozambique’s rapid economic expansion over the past 20 years has had only a moderate impact on poverty reduction, and the geographical distribution of poverty remains largely unchanged. Mozambique also needs to improve its social indicators. The country ranked 178th out of 187 countries in the most recent Human Development Index (HDI). The adult literacy rate is 56%, and average life expectancy at birth is just 50.3 years. Mozambique faces other challenges such as increasing malnutrition.. Malaria remains the most common cause of death, responsible for 35% of child mortality and 29% for the general population. HIV prevalence among adults shows a downward trend, stabilizing at a relatively high rate of 11.5%.

The social progress index for access to improved sources of water and sanitation ranks Mozambique 128th and 119th, respectively, out of 135 countries. Indeed, Mozambique has one of the lowest levels of water consumption in the world. As a response to such challenges, the Mozambican authorities have considered the social sectors as top priorities and funding has been increasing for those sectors in general.

Sources: World Bank