Foreign Direct Investment in Mozambique increased by 2.1% to 2.5 MM$ in 2023

Investimento Directo Estrangeiro em Moçambique aumentou 2,1% para 2,5 MM$ em 2023

In 2023, Mozambique saw a 2.1% increase in the flow of Foreign Direct Investment (FDI), which totaled 2.5 billion dollars (equivalent to 12.1% of GDP) compared to the 2.4 billion dollars (13.4% of GDP) recorded the previous year.

According to the data contained in the annual balance of payments bulletin, recently released by the Bank of Mozambique (BdM), FDI from 2019 to 2021 showed an upward trend, influenced by the increase in capital inflows from major projects, with a focus on hydrocarbon prospecting and research activities in the Rovuma basin, as well as the revitalization of the coal and heavy sands industry.

However, this trajectory was interrupted in 2022 due to a divestment operation carried out by companies in the mineral coal industry, related to the net payment of loans and commercial credits totaling 736.5 million dollars.

In turn, "the increase in FDI in Major Projects (GP) in 2023 was driven by investments made using debt in the form of loans and commercial credits from oil and gas companies".

"The flow of companies that are not part of the GP category has shown a mixed behavior throughout the period under analysis, characterized by increases and decreases, having peaked in 2021 with the investments made by this category of companies, aimed at meeting the demands of GPs, in the transport, storage and communications component, with inflows of funds in the order of 1.6 billion dollars", highlights the document to which the MZNews had access to.

The report also indicates that in terms of the sectoral distribution of FDI, the extractive industry maintained its position as the largest recipient of investment flows, receiving a total of 2.2 billion dollars, corresponding to 90.11 BTP3T of total FDI (10.8 BTP3T more than in 2022), followed by the agriculture sector, animal production, hunting and forestry sector with 53.3 million, equivalent to 2.11 T3T of total FDI (down 0.11 T3T compared to 2022), and the electricity, gas and water production and distribution sector with 40.2 million dollars, corresponding to 1.61 T3T of total FDI (down 69.4 T3T compared to the same period in 2022).

However, disaggregating FDI by instrument, according to the BoM, as in the last four years, it can be seen that investment in "Other Capital" remained predominant in 2023, totaling 2.3 billion dollars, which represents 91.7% of total FDI. It should be noted that, in annual terms, FDI in the form of Other Capital grew by 7.7 %, driven by the increase in the mobilization of resources in the form of supplies and commercial credits by companies belonging to the GPs, with an increase of 8.7 %. This growth, according to the report, contrasts with the 35.4 % drop in FDI in the form of Shares and Participations, which stood at 207.7 million (8.3 % of total FDI), influenced by the 33.5 % drop recorded by other companies.

As for Mozambique's main FDI partners, Mauritius held the top spot, with 44.7 %, followed by South Africa, the Netherlands and Italy, with 25.4%, 14.6% and 7.2% of the country's total net FDI, respectively.

Overall, in terms of the distribution of investments by sector of activity, the bulletin points out that the extractive industry, the manufacturing industry, transport and storage and electricity generation and distribution were transversal for the majority of investors.

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