Country Information - Mozambique

ECONOMIC BACKGROUND At independence in 1975, Mozambique was one of the world's poorest countries. Socialist mismanagement and a brutal civil war from 1977-92 exacerbated the situation. In 1988, the government embarked on a series of dramatic macroeconomic reforms designed to stabilize the economy and reduce government participation. These steps combined with the political stability that has prevailed since the 1994 multi-party elections have led to dramatic improvements in the country's growth rate fueled by foreign and domestic investments and donor assistance. Inflation was brought to single digits during the same period, although it has returned to double digits in 2000 and 2001. Foreign exchange rates have remained relatively stable. Fiscal reforms, including the introduction of a value-added tax and reform of the customs service, have improved the government's revenue collection abilities. In spite of these gains, Mozambique remains dependent upon foreign assistance for much of its annual budget, and the majority of the population remains below the poverty line. Subsistence agriculture continues to employ the vast majority of the country's workforce. A substantial trade imbalance persists, although it has diminished with the opening of the MOZAL aluminium smelter, the country's largest foreign investment project. Additional investment projects in titanium extraction/processing and garment manufacturing should further close the import/export gap. Mozambique's once substantial foreign debt has been reduced through forgiveness and rescheduling under the IMF's Heavily Indebted Poor Countries (HIPC) and Enhanced HIPC initiatives, and is now at a manageable level. (Source: World Factbook, 2002) Click here for Country Map [23kB]

BI-LATERAL TRADE OVERVIEW The total value of bi-lateral trade has increased sharply in 2002, largely as a result of Mozambique's greater imports from the United States. As a result, Mozambique's overall bi-lateral trade deficit with the US has increased sharply in 2002, and stood at almost $ 90 million (2001: $21 million) fairly consistent, and was recorded at $ 21 million in 2001. A very large proportion of Mozambique's exports to the US in 2002 consisted of 'agricultural products', most of which were exported under the provisions of AGOA. Mozambique’s imports consist predominately of agricultural exports, which increased fourfold in the 2001-2002 period. Mozambique qualified for the 'Wearing Apparel' provisions on February 8, 2002, although the country has been slow in exporting qualifying garments. This is notwithstanding the fact that there is evidence of substantial new investment and in this sector. In fact, very little exports to the US take place in the 'textiles and apparel' category, and it is unclear when Mozambique will start taking advantage of this window of opportunity (bearing in mind that the “Lesser Developed Country” benefits are set to expire at the end of 2004). Click here for Detailed Trade Profile