Mozambique: The Gateway to Africa

Although being one of Africa’s poorest countries, Mozambique is a promising country. The country, with its enormous potential for agriculture, is also the gateway to access to sub-Saharan African countries. It is expected that Mozambique will be able to carry out major developmental reforms thanks to the resources of the newly discovered massive natural gas. 

mozambik

Mozambique with a population of 28 million, located in the southeast coast of Africa, is a country rich in water, arable land, natural gas, and coal. Mozambique borders Tanzania, Malawi, Zambia, Zimbabwe, South Africa, and Swaziland. Its long Indian Ocean coastline (of 2,500 kilometers) faces east to Madagascar. It is strategically located, with four of the six countries, it borders landlocked and hence dependent on it as a conduit to global markets. There are three major ports in the country: Maputo for the southern part of the country, Beira for the center, and Nacala for the north. These ports have great importance for Mozambique and the neighboring countries. Mozambique’s strong ties to the region’s economic engine, South Africa, also underscore the importance of its economic, political, and social development to the stability and growth of Southern Africa as a whole.

Mozambique’s political landscape bears the scars from the 15-year civil war that followed independence from Portugal in the 1970s, leaving the country and its economy in ruins. The former rebel movements, the Front for the Liberation of Mozambique (Frelimo) and the Mozambican National Resistance (Renamo), today remain the country’s main political forces, followed by the Mozambique Democratic Movement (MDM). The country entered a rapid development process after the civil war.

Despite being one of the poorest countries in Africa, Mozambique has achieved a 7 percent economic growth rate in the last 10 years. The discovery of gas fields off Mozambique’s coast in 2011 is set to transform the economy of Mozambique. Economic growth is projected to be below 5% in 2017 but gradually rise to 8% over the next decade. GDP growth has traditionally been driven by the agriculture, construction, and financial sectors while growth in the next decade is expected to be driven by the oil and gas industry due to the discovery of vast natural gas deposits. With the recent discovery of massive gas reserves (180 trillion cubic feet) in the Rovuma Basin, Mozambique is set to become the world’s third-largest producer of natural gas. Some analysts predict the investments that will be made in order to monetize the natural gas discovery will surpass $100 billion. Several mega projects will be the key drivers of the Mozambican economy in the next five years and will provide both direct and indirect opportunities.

South Africa and Portugal are Mozambique’s largest trading partners. Brazil, China, India, and Japan are also increasing their investments.

MOZAMBIQUE HAS A HUGE AGRICULTURAL POTENTIAL
About 70% of its population of 28 million (2016) live and work in rural areas. Agriculture constitutes 28 percent of the country’s GDP. 81 percent of the workforce is employed in the agricultural sector. Mozambique’s agricultural sector is characterized mainly by subsistence farming, with commercial lands focusing mainly on sugar, tobacco, cotton and cashew nuts. Agricultural exports reached $700 million in 2014, while agricultural imports were around one billion dollars.

According to US Department of Agriculture External Agriculture Service (USDA FAS) report, Mozambique’s total land area covers 79 million hectares (ha) with a potential agricultural area of 49 million ha or 62% of the total land area. The arable land area covers currently only 5.8 million ha or 7% of the total land area. Over 80% of the total cultivated area is used for the production of staple food crops for self-consumption. Each household cultivates an average of 1.2 ha with no formal land title deeds. Farming involves the whole family but with women as the head of agricultural production. The use of tractors, plows, fertilizers, and pesticides is limited. Hence, productivity per ha is low, but the potential for agricultural growth is significant. Commercial production includes sugar, tobacco, cotton, cashew nuts and sesame seed. Agricultural output increased by 50% in the past 10 years driven by private sector investment.

INVESTMENT OPPORTUNITIES
According to US Export.gov, investment and export opportunities exist in agricultural equipment, construction (roads, railway, and general infrastructure), energy (coal, hydropower, gas, solar, wind), oil and gas (exploration, distribution and infrastructure), tourism (hotels, resort, sports and leisure) and transportation (ports, airports, logistics and freight).

$400 MILLION FOR WHEAT IMPORTS
Mozambique is one of 29 African countries in need of food aid from outside, according to a recent report by the United Nations (UN) Food and Agriculture Organization. Despite the favorable soil, it can’t meet its grain need. Despite the government’s incentives to increase wheat production, it only meets one in four domestic consumption needs. So the country is spending around 400 million dollars each year for wheat imports. Most of the wheat is from neighboring South Africa.

Corn is at the forefront in grain production. Corn is grown in 29 percent of the total cultivated area. Corn is followed by cassava (13%) and sorghum (11%). The corn production has increased steadily in recent years. According to the report of USDA FAS, corn production, which was 1 million 357 thousand tons in the 2014/2015 season, reached 1 million 794 thousand tons in the past year. Production is expected to reach 2 million tons this year. Last year, 2 million tons of corn were consumed in the country, while 200 thousand tons were imported.

USDA figures show wheat production made no progress in the recent years. According to USDA FAS report, in the last 7 years, wheat production has stuck around to 200 thousand tons. Last year, wheat consumption was 735 thousand tons in the country and nearly 779 thousand tons of wheat imported. It is estimated that wheat imports will be around 750 thousand this year. Another important items that Mozambique is dependent on imports is rice. The consumption of rice in the country, which has produced around 200 thousand tons annually for the last four years, reached 928 thousand tons last year. To meet the consumption needs, 715 thousand tons of rice was imported in 2016/2017 season.

Mozambique President Filipe Nyusi wants the country to be self-sufficient in the agricultural sector. However, in order to achieve this goal, it is necessary to present new agricultural technologies, to use durable seeds, to expand irrigable agricultural land, and to achieve a better pest control.

MILLING INDUSTRY
Milling companies in Mozambique can be evaluated in 2 categories:

Large and medium-sized mills
There are around 15 mills in the country that can be classified as large scale. The facilities of companies such as Bakhresa Grain Milling, Companhia Industrial da Matola, Merec Industries, Moageiras do Norte, Deca and Moberia SARL are included in this class. The daily capacity of these mills, which mostly grind corn and wheat, varies between 50 tons and 380 tons. There are also 13 facilities in the medium-sized mill category. The daily production capacity of these mills is below 20 tons.

Small-scale mills
Small-scale mills process less than 5 tons of grain per day. A typical mill might have 1-3 hammer mills. These are small mills where local farmers take their cereals for their own use.

It is worth to note here that Mozambique has recently approved a regulation that obligates large, medium and small commercial scale mills to fortify.

REFERENCES:
– United Nations Food and Agriculture Organization
– World Bank
– US Department of Agriculture External Agriculture Service – www.export.gov

We also suggest you to read our previous article titled "Angola is Ambitious to Increase Wheat Production Capacity".

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