Mozambique needs bold reforms to avoid dependence on extractive industry, say economists

Economists say that only a deep diagnosis of the state of the economy, coupled with the political will to implement bold economic reforms, can make Mozambique cease to depend on revenues from the extractive industry to pay off its debt in 2024.

Moody's financial ratings agency considers that Mozambique is at risk of going into Financial Default again in 2024 if gas production lags and compromises the expected increase in revenues, given Total's decision to stop its activities in Palma.

The economist António Francisco says that this is a situation that puts strong pressure on Mozambique, which in his opinion, "has practically gone bankrupt, and this means that the country's commitments are being violated.

That economist argues that only effective and transparent reforms can get Mozambique out of this situation, stressing that it needs shock measures, starting with the attitude of the State itself.

Tax haven

Francisco emphasizes that "instead of saying that we are going to produce, because the State doesn't produce anything, the State should create conditions for producers to produce, and instead of turning the country into a fiscal hell, we should turn it into a fiscal paradise.

For economist Lourenço Sambo, the Mozambican economy has serious structural problems that need to be solved so that it can be sustainable and allow the payment of the country's debt.

Sambo argues that in the area of reforms, the role of small and medium enterprises in development needs to be capitalized, "because this economy needs to massify and increase income and you can only do that with small and medium enterprises."

For Sambo, the reforms should be mainly in the area of production, "because we don't produce enough, and what this country needs to do is to stop taking away natural resources and turn them into wealth."

Hostage of oil and gas

For his part, economist Hélder Muteia believes that wealth can also result from a strong focus on agriculture and agro-industry, not only on the extractive industry, because this holds the country hostage to oil and gas.

He noted that 70% of farmers in Mozambique work on a subsistence basis, "and we need to transform them into commercial farmers, and that means betting on the transformation of agriculture."

"We can't just think about big industry; what is the role of fishing, small industry, tourism?", wonders that economist.

For his part, economist João Mosca, believes it is essential that Mozambique works to diversify its economy, so that it does not depend heavily on revenues from oil and gas, products whose prices are subject to frequent fluctuations in the international market, while striving to take measures related to public debt.


Mosca says it is necessary to find ways to stop the growth of internal and external debt, "which puts Mozambique increasingly in an unsustainable situation; the Government has to take serious measures related to hidden debts and reforms linked to the state and public companies."

"In addition," emphasizes economist Ananias Matusse, "it is also fundamental that the government changes the way it views Mozambican business, in the different sectors of activity, because this is one of the ways to prevent the economy from becoming hostage to energy resources.

In his opinion, "Mozambique doesn't have real entrepreneurs; we have commission entrepreneurs, because you need to have political-party connections for your business to move, and that doesn't help; entrepreneurs need to have quick access to credit.

This at a time when some voices are questioning the privatization process of public companies, among them the Mozambique Post Office.

For some economists, this process, which is overdue, has to be done in a transparent way.

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