Mozambique Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Mozambique’s largest trading partners from EU countries are traditionally the Netherlands, Portugal, Poland, Italy, Belgium, Germany and Spain. The trade balance between the EU and Mozambique has been in deficit for a long time in favor of Mozambique. The EU imports large quantities of aluminum from Mozambique, and this puts it in the position of Mozambique’s largest export market. Other commodities imported into the EU are agricultural products and marine products (sugar, tobacco, nuts, vegetables and shrimp). EU exports to Mozambique include manufacturing products, machinery, transport equipment and chemicals.

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 505.2 669.8 697.7 696.5 814.7
Imports into the EU (million EUR) 1,567.90 1,748.10 1,662.80 1,249.60 1,569.10
Balance with the EU (million EUR) 1,062.7 1,078.3 965.1 553.1 754.3

Source: European Commission

Trade relations with the Czech Republic

Mutual trade between the Czech Republic and Mozambique showed a renewed increase in Czech exports to Mozambique in 2021 and a slight decrease in Mozambican imports to the Czech Republic. Imports for the year 2021 reached 46million CZK and the most imported were aluminum (up to 85% share), tobacco, graphite, zinc, sugar, precious stones, semi-precious stones and threads. Czech exports in 2021 reached CZK 16million, which represented the maximum for the last monitored period. The main export items were detonators for the mining industry, steel compressed gas containers, processing units and used clothing.

2017 2018 2019 2020 2021
Exports from the Czech Republic (million CZK) 33,34 45.7 55.08 136.09 161.2
Import to the Czech Republic (million CZK) 1,145.45 691.8 875.46 1,062.49 462.4
Balance with the Czech Republic (million CZK) -1 112.11 -646.07 -820.37 -926.39 -601.2

Source: businesscarriers.com

Trade relations with countries outside the EU

Mozambique’s largest trading partner outside the EU is South Africa, followed by India, China, Singapore, the United Arab Emirates and the USA. In 2021, both exports and imports increased due to greater demand for Mozambican minerals as well as a slight recovery in local demand in Mozambique.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 3,511.1 3,746.8 3,312.6 2,353.3 3,924.1
Imports to countries outside the EU (million EUR) 3,291.6 3,991.1 4,619.6 4,223.5 5,721.7
Balance with non-EU countries (million EUR) 219.5 -244.3 -1,307.0 -1,870.2 -1,797.6

Source: EIU, Eurostat

Foreign direct investment

Mozambique is a country that is dependent on the inflow of foreign direct investment (FDI). In 2021, their value reached USD billion, an increase of 68% compared to 2020. Investments in liquefied gas production projects in Cabo Delgado province played a significant role in this increase. From the point of view of sectoral distribution, the most FDI is concentrated in the mining industry (65%), transport and communications (33%), accommodation and hospitality (0.083%), production and distribution of electricity, water and gas (0.76%), wholesale and retail trade (0.64%). The largest investors in 2021 were: United Arab Emirates (34.9%), Mauritius (28.4%), South Africa (21.6%), Netherlands (9.3%) and Italy (3.9%).

Based on the information available to the Embassy of the Czech Republic in Pretoria, there are no significant Czech investments in Mozambique.

The APIEX agency serves to support the inflow of investments in Mozambique, and the rules for investments are set by Law 3/93 of June 24. The main areas where Mozambique wants to attract new investment are agriculture, food, mining, manufacturing and services.

FTAs and treaties

Treaties with the EU

Mozambique is part of the Economic Partnership Agreement (EPA) between the EU and some SADC countries, which has been provisionally implemented with Mozambique since 4 February 2018. The agreement has been implemented with the other countries since the end of 2016.

Contracts with the Czech Republic

  • Memorandum of Understanding between the Ministry of Foreign Affairs of the Czech Republic and the Ministry of Foreign Affairs and Cooperation of Mozambique /September, 2015/
  • Memorandum of Understanding between the Ministry of Defense of the Czech Republic and the Ministry of National Defense of Mozambique /May, 2015/
  • Agreement between the government of the Czechoslovak Socialist Republic and the government of the People’s Republic of Mozambique on cooperation in the field of healthcare and medical sciences (signed on 12/05/1982 in Maputo) amended on the basis of the unilateral confirmation of the succession of the Czech Republic on 17/09/2004; published in Sb. 1987-08-28 71/1987 and 2006-05-16 51/2006;
  • Statute of the Intergovernmental Mixed Commission for Economic and Scientific-Technical Cooperation /Czechoslovak Socialist Republic – Mozambique/ (signed on 28 November 1980 in Prague, unpublished);
  • Agreement on cultural and scientific cooperation between the government of the Czechoslovak Socialist Republic and the government of the People’s Republic of Mozambique (signed on 26 November 1980 in Prague, published in Sb. 1981-12-22 115/1981);
  • Agreement between the Government of the Czechoslovak Socialist Republic and the Government of the People’s Republic of Mozambique on scientific and technical cooperation (signed on 3 July 1978 in Maputo, publication No. 1980-02-04 10/1980);

Developmental cooperation

The Czech Republic provides Mozambique with development aid in the framework of so-called small local projects (MLP), which reach a maximum value of CZK 500,000. Mozambique is not one of the priority countries for Czech foreign development aid, which is why only these small projects are implemented. In previous years, this aid was directed, for example, to the construction of wells and the development of agricultural activities on the island of Inhaca near the capital Maputo, to equipping primary schools and other agricultural projects. In 2019, a project to support organic farming was successfully completed in Sofala province in the central part of Mozambique. Unfortunately, no project has been approved for 2020. The Czech Republic also provided humanitarian aid to Mozambique during the huge floods in 2017 and also in the spring of 2019 due to a devastating cyclone in the central part of the country around the city of Beira.

Czech companies can obtain financing to support business activities with a development element within the B2B cooperation of the Czech Republic.

FOREIGN DEVELOPMENT COOPERATION GUARANTEE programwill support private investments by Czech companies in risky markets through bank guarantees. For a loan of mainly investment nature up to 50% of the principal amount of the guaranteed loan, he will provide a guarantee amount of up to 25,000,000 CZK, the amount of the guaranteed loan is not limited, the validity of the bank guarantee is up to 8 years. The guarantee can be obtained when the project focuses on: sustainable management of natural resources, agriculture and rural development, economic transformation, growth and support of local employment, sustainable development of partner countries. The guaranteed loan can be used for the acquisition and technical evaluation (i.e. extensions, extensions, reconstruction, modernization) of long-term tangible assets, acquisition of long-term intangible assets, costs associated with the transfer, costs associated with project implementation in the target developing country.

Prospective fields of study (MOP)

Mining, mining and oil industry

Mozambique is rich in mineral resources and mainly mines coal, graphite, heavy sands, iron, bauxite, gold and precious stones (e.g. rubies). Mining takes place only on the surface, as it is in its infancy and does not have as long a history as, for example, JAR. Foreign investors are behind the extraction of mineral resources, who buy machines and equipment either locally or import them from third countries through their headquarters. There is interest in mining machines for surface mining, transport systems and explosives. In connection with the discovery of huge reserves of natural gas, projects for the extraction and production of liquefied gas are starting to develop in Mozambique, and the first of them will start production as early as 2022.

Agricultural and food industry

Agriculture and food production are among the most important sectors of the Mozambican economy (approx. 30% of GDP). The intensification of agriculture and the transition from self-sufficiency to more modern methods of growing crops is a fundamental priority of the government, which is why it is trying to attract foreign investors. The priority areas for Mozambique are poultry for meat and eggs, tropical crops, cattle and rice. It is precisely in these areas that Czech companies can offer so-called turnkey farms and supply the necessary machines and technologies.

Defense industry

Security and territorial integrity are one of the priorities of the Mozambican government, even with regard to terrorist attacks in the northern part of the country in the province of Cabo Delgado. However, as a result of the debt crisis, Mozambique is facing a lack of financial resources and requires the offer of so-called soft loans with long-term repayment, min. 15 to 20 years. For Czech companies, the greatest potential appears in the provision of pilot training, repairs of existing aircraft and also in the supply of military equipment and aircraft.

Energy industry

Given that the energy potential of Mozambique is not fully utilized, many opportunities are emerging for foreign investment, but also for involvement in projects as an EPC contractor or for subcontracting various equipment for combined cycle power plants or hydropower plants. Currently, 90% are hydroelectric power plants and the remaining 10% are thermal power plants burning diesel, 2 steam-gas and 1 combined cycle. Mozambique is also interested in strengthening electrification in hard-to-reach areas by building small and medium-sized hydroelectric or solar power plants. Negotiating the financial side of these projects can be a certain limitation due to the country’s indebtedness.

Water management and waste industry

Mozambique faces a shortage of drinking water due to climate change, which is manifested by alternating periods of drought, extensive flooding and cyclones. The drought is particularly evident in the south of the country, where the demand for innovative solutions for water desalination is growing. In the rest of the country, there is a problem with polluted water, and solutions are being sought for energy-independent and inexpensive technologies to clean it. The national plan for the development of drinking water supply envisages a total investment of CZK 30 billion over the next 10 years.

Mozambique Trade