China Powering Economic Growth in Mozambique

Via Future Directions International, a report on China’s economic engagement with Mozambique:

China’s trade with the Portuguese-speaking countries (Angola, Brazil, Cape Verde, Guinea-Bissau, Mozambique, Portugal, São Tomé and Príncipe and Timor-Leste) grew by US$82 billion in the first half of 2018, an increase of 21.5 per cent on the previous year. While the overall leaders were Brazil and Angola (together accounting for almost 94 per cent of Chinese trade with the Lusophone countries), the biggest increase in percentage terms was recorded by Mozambique: up by 45.13 per cent, or US$1.4 billion.

After having lost much of its previously-acquired gloss as an emerging economy and a promising future exporter of oil and natural gas, the Mozambican economy is now benefiting from significant Chinese investment.


After the “hidden debt” crisis of 2016, when the Mozambican Government took out secret loans totalling up to US$2 billion to fund an over-priced (and still non-functioning) tuna fishing fleet, Western investors largely abandoned the country. The main foreign investors now are China, Japan, the World Bank and the African Development Bank. Although the Mozambican Government has to wrestle with that mountain of debt, the news is not all bad. The International Monetary Fund, for instance, has estimated that the Mozambican economy will be growing at a rate of 11.1 per cent by 2023, when revenues from the large offshore gas fields in the north should come online. In the meantime, the World Bank expects economic growth of 3.5% in 2018 and 4.0% in 2019.

China, however, is not waiting. Trade with Mozambique is very much in China’s favour, with imports from China worth a reported US$1.092 billion and exports valued at just US$400 million. Future oil and gas revenues aside, the fundamental nature of the trading relationship is unlikely to change.

Beijing is now the largest source of funding for much-needed infrastructure projects in Mozambique and Chinese construction companies are the main builders of that infrastructure. Although Mozambique owes just over US$2 billion to China alone, Beijing has forgiven US$34 million of that debt and has extended the repayment period. According to a report carried by the Xinhua news agency:

‘Data from the Chinese Embassy in Mozambique shows that nearly 100 Chinese companies have accumulatively invested nearly seven billion US dollars in Mozambique as of May 2017, in areas including energy and resources development, agriculture, fishery, construction, telecommunications, and process manufacturing.’

That fact was presumably not lost on Mozambican Industry and Commerce Minister Ragendra de Sousa. Speaking at the Macau International Fair, held in Macau on 18-20 October, Mr de Sousa called for more Chinese investment in his country, not just in infrastructure and transport projects, but also in sustainable agriculture and forestry to ‘jointly produce food for humanity.’ The level of interest in sustainable development projects remains to be seen, but, coupled  with the over US$5 billion invested by the China National Petroleum Corporation in a consortium in the Rovuma Basin natural gas field, it is clear that China is in Mozambique for the long haul.

This entry was posted on Thursday, October 25th, 2018 at 2:48 am and is filed under China.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.