Mozambique is an independent republic which lies on the south-east coast of Africa and forms part of the Southern African region. The capital city is Maputo. Other major towns are Beira and Nampula and the ports of Quelimane and Nacala.
The official language is Portuguese. Mozambique has a centrally planned economy although the government is instituting free-market reforms. The local currency is the Metical (plural meticais). (US$ / Metical – current exchange rate).
The international time zone for Mozambique is GMT +2. The international dialling code is +258. Maputo, Beira and Nampula have international airports that serve South African Airways and Air Portugal, the principal airlines flying to Mozambique. Linhas Aereas de Mocambique (LAM) and Empresa Nacional de Transporte e Trabalho Aereo (TTA) are to be privatised. There are three main railway systems running east to west in Mozambique. Development of the Maputo Corridor between Mozambique and South Africa will decrease travelling distance and facilitate exports and foreign investment projects. All visitors to Mozambique require visas.
Due to the state of health, the immunisation status, location and the local disease situation; bubonic plague, cholera, dengue fever, hepatitis A, malaria, meningitis, schistosomiasis, tuberculosis, and typhoid fever can occur in Mozambique. Only bottled water with unbroken seals should be consumed and tap water should be avoided. Medical services may be very expensive and advance payment may be required. Insurance needs to be arranged prior to arrival in Mozambique and individual risk assessment is recommended.
Mozambique is one of Africas success stories and is making economic progress, although the country is still dependant on foreign assistance. The economy was reformed by the elimination of subsidies and quantitative restrictions on imports, the reduction and simplification of import tariffs and the liberalisation of crop marketing. A major privatisation program involving the entire banking sector and state manufacturing companies is another active step in economic reform.
Mozambique has the natural resources to sustain the development of the agriculture, forestry, fishing, energy and tourism industries. Placed in an ideal trading location, increased exports in these areas will increase the amount of foreign exchange brought into the country. The countrys proximity to South Africa has resulted in a range of major projects that support continued high levels of growth. The country’s major exports are agricultural products, coal and energy, aluminium, textiles, cement, glass, asbestos and tobacco.
Mozambique has an agriculturally based economy. Industrial development has been slow as a result of the civil war that destroyed the transport system and other infrastructure. Mozambique has considerable mineral resources despite limited exploitation. The countrys oil and gas industry also has potential. Electricity is provided by the parastatal utility, Electricidade de Mozambique (EDM). The country exports electricity to South Africa from the Caborra Bassa hydro-electric facility.
Indicators such as inflation, which continues to decline, show that the countrys economy is likely to continue on its successful growth path. The government has adopted new tax codes and increased fuel taxes in order to rectify the effects of past inflation. The countrys GDP totaled US$3.9 billion in 2002, 23.3% of which was constituted by agriculture, 31% industry and services counted for 45.7%. In 2001 foreign direct investment amounted to US$479.9 million.
Mozambique’s economy continued to grow at a fast pace of 7.3% in the first half of 2005, on the back of a few giant and largely South African-financed ventures. Since 1994 major SA investment in the economy has included SA Breweries’ US$25m in 1995; Standard Bank’s US $6m in 1995; Anglo American’s US $13m in 1996; Shoprite Checkers’ US$3m in 1997; Industrial Development Corporation and others’ US $1.34bn in 1997; Illovo Sugar’s US US$52m in 1997; Basil Read, Stocks and Stocks and other construction companies in the Maputo Development Corridor $1bn in 1998; Eskom’s $120m in 1998; Southern Sun Hotels’ $13m in 2000; and the IDC and others’ US $860m in 2001.
Credit rating agency Standard and Poor’s (S&P;), gave Mozambique a B grade in its first assessment of the country under a UN-funded program. This is the same grade as Burkina Faso and Madagascar. S&P; says that Mozambique’s outlook is “positive” for the next few years and that Mozambique’s strengths include the rapid growth in its exports, increased foreign direct investment in the country, and the government’s “commitment to deepening reform”. In addition, Mozambique enjoyed a “consistently high level of donor financial support,”
In the first half of the 2005, commodity exports amounted to US$792 million, US$78 million more than in January-June 2004. Over the past few years Mozambican exports have grown at an average rate of 10% per year – a far higher rate than the international average of 6% – but these are largely as a result of aluminium exports from the SA-owned Mozal plant. The inflation rate has been cut to 4.1% – two percent lower than the same period last year.
The US Agency for International Development (USAID) has developed a programme that concentrates on improving the countrys trade policies, creating a more supportive enabling environment, and directly increasing exports in target sectors in Mozambique’s economy.
Despite the economic growth rate, 50% of the Mozambican population still lives in absolute poverty. The UN Human Development Report published in 2005 ranked Mozambique as 168th out of the 177 countries covered. The low rating has been ascribed to the impact of HIV/AIDS which has infected some 15% of the population and cut life expectancy rates, and frequent droughts and crop failure. The UN World Food Programme has warned that it needs US$19m for feeding 430,000 people in Mozambique. Across the region, the agency said it still needs about US$191m to feed 8.5 million people in Lesotho, Malawi, Mozambique, Swaziland, Zimbabwe and Zambia between December and April. The situation has been compounded in Mozambique by the bleak outlook for agricultural production in the next season. The government appealed for international assistance for nearly 550,000 people in May 2005 when it became clear that 43% of the maize crop in southern areas had been lost.
Mozambique is a member of COMESA, whose main export commodities include citrus fruits, coal, seafood, sugar tea and coffee and timber. The main import commodities include mining equipment, pharmaceuticals, raw materials, spare parts, chemical products, consumer goods and crude oil.
The importation and exportation of local currency is prohibited and foreign exchange transactions including the surrender of foreign exchange proceeds are effected through commercial banks.
All imports exceeding USD 500 are subject to licensing by the Ministry of Commerce and the customs tariff is based on the Customs Co-operation Council Nomenclature (CCCN).
Beira and Maputo Free Trade Zones were officially approved but are not yet operating.