The Confederation of Business Associations of Mozambique (CTA) reports a marked drop in business turnover in the order of 26 percent during the first quarter of 2021, due to a series of restrictive measures as part of the fight against Covid-19, which have limited business activity.

The business situation was recently presented, by CTA, through a report called "Índice De Robustez Empresarial", which reports the deterioration of the performance ratios of Mozambican companies in the period in question.

"Q1 2021 is marked by the second wave of the spread of the covid-19 pandemic, which induced the adoption of new restrictive measures that limited business activity. Due to this scenario, the turnover of the Mozambican business sector reduced by about 26% in Q1 2021 compared to Q4 2020," the report reads.

The document shows that the business robustness index has reduced from 40 percent to 28%, corresponding to a drop of 12 percentage points, "a fact that is due, in addition to the new restrictive measures, to the negative effects of the terrorist attacks in the northern part of Cabo Delgado province, as well as the effects of cyclones Chalane and Eloise that ravaged the central part of the country."

As for the macroeconomic environment, the first quarter of 2021 also shows a systematic deterioration compared to the previous quarter, with the macroeconomic environment index dropping by one percentage point, from 47% to 46%, due to the depreciation of the Metical against the main currencies traded in the market (mainly the US dollar), although in the final part of the first quarter there was an appreciation in the national currency.

The document also points to the insecurity situation in Cabo Delgado province that has been felt since 2017, exacerbated by the March 24 attack in the district of Palma, where the Natural Gas project led by the French oil company Total is installed, as being one of the causes of the drop in the business robustness index.