Mozambique has faced several challenges to its growth in the past three decades. As the country has shifted from communism to structuralism with a civil conflict in between, different institutions have left their mark on the country. Mozambique was ranked in a 1993 World Bank report as the poorest in the world.

But economic reforms, a privileged geographic position (an extensive coastline and borders with landlocked countries) and the expansion of Chinese investment in Africa (as a part of a foreign policy aiming to secure the supply of natural resources) have supplied Mozambique with the necessary ingredients to build a history of success and recovery after its civil war. Combined with the advantages of cheap electricity (due to the presence in its territory of the most powerful hydroelectric facility in Africa), abundant labour (a population of 22,894,000 according to a 2009 census), democratic political stability, and key natural resources including water and coal (the latter considered the largest unexploited reserve in the world), Mozambique has  the potential to significantly boost its trade. This is the basis of economic development in a globalized society

The 21st century arrived with new development perspectives: macroeconomic stability through orthodox consistent policies, primarily through the control of inflation. Today, Mozambique is a leading example of growth in the world, with aggregate economic performance improving by an average of 7% per year (World Bank Report, 2011) stimulated by massive foreign investment in coal (The Economist, 8th July 2010) – a highly valued commodity due to the demands of emerging countries such as China and India. In this economic context, the Mozambican government has opened the country to infrastructure investments, mainly in roads and energy, and implemented a privatisation program to increase public reserves and boost competitiveness. This formed the basis for new institutions in the country, allowing it to sustain economic growth in the long run.

Nevertheless, Mozambique still must overcome further challenges to sustain its growth. According to the 2012 “Doing Business” World Bank Report, Mozambique is ranked 126th out 183 economies in dealing with construction permits, 172th in getting electricity, 136th in trading across borders and 156th in registering properties – highlighting high transactional costs that can be a barrier to investments and entrepreneurship in the country. Only a deep institutional reform to reinforce the country’s institutions, even in the face of significant opposition from entrenched power groups, can further boost economic performance and turn the country into a real example to poor nations that sustainable growth is possible.

Ana Bossler