Sekondi Accra

Mozambique is a paradox in that it is a success financially however, it is also one of the poorest countries in the world too. In September 2010, the country suffered through three days of rioting over food and utility prices revealing the depth of anger over the unequal sharing of financial resources. After at least 13 people had died through a political crackdown, the government then announced a policy of fiscal austerity, which included cuts in expenses and a freeze in salaries.

The civil unrest caught the political elite off guard and the opposition made note that most affluent people in the country were connected to the ruling Frente de Libertacao de Mocambique (Frelimo). The unemployment rate is above 50% and more than 60% of the workforce live on less than $100 per month. The government is now under increasing pressure from donors who would like to cut the country off of aid and budget support. At the same time, donors are also pressing for electoral law changes, transparency in government spending and a stronger stance on corruption.

Industrial progress is ubiquitious. The country's potential, especially in mining and agriculture, is enormous. Vale and Riverside are developing large coal projects in the north around Tete. In September 2010, Vale bought a majority of the logistics company SDCN to get access to rail concessions while it also plans to build a new power station. The northern corridor project is an ambitious attempt to connect producers to international markets using the port as a final destination and to buid up infrastructure along with agribusiness projects which extend up to Zimbabwe. The number of hydrocarbon discoveries has increased: Anadarko and Cove Energy announced in October 2010 an additional 3 trillion cubic feet of gas at their Barquentine well. In September 2010, Oilmoz also said that it was close to reaching a financing deal to construct a 350,000 barrel-per-day refinery.

Yet the paradox surfaces once again. Bank lending to farming sectors continues to decrease and accounts for approxmiately 9% of total credit. Failure of banks to provide loans resulted in several Zimbabwean farmers quiting their projects after they had relocated to Manica Province. While commercial banks have the funds in their accounts, they favor people who have political connections to the ruling party, raising the risk of high rates of nonperforming loans. An additional barrier is caused by the marked increase of inflation along with interest rates. The Banco de Mocambique stated that inflation had risen to 17% in August 2010 from 11% two years earlier.

Frelimo will continue to dominate the political landscape. In 2011, the party will be focused on internal political battles for the succession of President Armando Guebuza and any possible attempts to remove constitutional term limits. The future of the opposition Resistencia Nacional Mocambicana (Renamo) is uncertain under Afonso Dhlakama. He has decided to move out of Maputo to the north and threatens to hold street marches protesting the 2009 elections.

Despite restrictions placed on it by the government, the nascent Movimento Democratico de Mocambique (MDM) performed well in the 2009 elections. Supported by reformists and young adults, the MDM has most of its backing in central Mozambique, where its leader, Daviz Simango, is mayor of Beira. Efforts by the party to organize its base could be consequential, especially given Renamo's decline.


Official Data


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Mozambique maintains an embassy in the United States at 1525 New Hampshire Avenue, NW, Washington, DC 20036; tel: 202-293-7146; fax: 202-835-0245.
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