Why is Mozambique so poor?

Mozambique occupies a far from honorable 6th place in the table of the poorest countries in the world, only surpassed by Burundi, South Sudan, Malawi, Central African Republic and Niger.

May 29, 2023 - 18:20
Why is Mozambique so poor?
Image by Valéria Rodrigues / Pixabay

Mozambique is endowed with a variety of valuable natural resources (such in minerals, coal, natural gas, forestry, sea food) that contribute to a great  economic potential. How can it be one of the poorest countries in the world?

In fact, Mozambique has substantial coal reserves, particularly in the Tete Province. Coal mining is a significant industry in the country, and the coal is primarily used for energy production and export. And, besides coal, Mozambique has other mineral resources, including titanium, graphite, bauxite, tantalum, and gemstones.

In recent years, significant discoveries of natural gas have been made off the coast of Mozambique in the Rovuma Basin. These discoveries have the potential to make Mozambique a major player in the global liquefied natural gas (LNG) market.

Besides natural gas and hydropower, Mozambique has other energy resources, including solar and wind potential, which are being explored to diversify the energy mix and expand access to electricity.

Mozambique has fertile arable land, making agriculture a vital resource. The country produces crops such as cashew nuts, sugarcane, cotton, tea, and various fruits and vegetables. The countru has also significant hydropower potential, especially along the Zambezi River. Hydropower generation plays a critical role in the country's energy mix.

With a long coastline along the Indian Ocean, Mozambique has abundant marine resources, including fish and other seafood. The fishing industry is essential for both local consumption and export. 

On the other hand, Mozambique's diverse landscapes, pristine beaches, coral reefs, and national parks attract tourists. Tourism is a growing sector that contributes to the country's economy. Also, Mozambique has extensive forests, and the forestry sector provides timber and other forest products.

While Mozambique possesses substantial natural resources, challenges in terms of infrastructure, governance, and economic development have affected the full realization of their potential. Proper management and sustainable exploitation of these resources, along with investments in infrastructure and human capital, are critical to supporting the country's economic growth and development.

Mozambique faces a combination of historical, economic, and developmental challenges that have contributed to its status as a low-income country. While Mozambique does have valuable natural resources, including minerals, natural gas, and arable land, the country has struggled to fully harness and manage these resources to drive sustained economic growth and development. Several factors contribute to Mozambique's ongoing poverty:

  • Colonial Legacy: Mozambique was a Portuguese colony until gaining independence in 1975. During the colonial era, the country's resources were often exploited for the benefit of Portugal, and little investment was made in infrastructure and human development within Mozambique.

  • Armed Conflicts: Mozambique experienced a prolonged and devastating civil war that lasted from 1977 to 1992. The war, which involved the government and the rebel group RENAMO, led to widespread destruction of infrastructure, loss of life, and economic disruption, setting back development efforts.

  • Infrastructure Challenges: Mozambique faces significant infrastructural deficits, including inadequate transportation networks, limited access to electricity, and a lack of basic services in many rural areas. These shortcomings hinder economic development and impede the movement of goods and people.

  • Economic Dependence: The country's economy is heavily reliant on a few sectors, particularly agriculture, which employs the majority of the population. However, the agriculture sector faces challenges such as low productivity, climate vulnerabilities, and lack of modernization.

  • Debt and Financial Vulnerabilities: Mozambique has faced difficulties managing its public debt, leading to financial crises and affecting the country's ability to invest in social services and economic development projects.

  • Natural Disasters and Climate Change: Mozambique is vulnerable to natural disasters, including cyclones, floods, and droughts. Climate change exacerbates these challenges and can disrupt agriculture and livelihoods.

  • Corruption and Governance Issues: Corruption has been a longstanding issue in Mozambique and can divert public funds away from essential services and development projects. Weak governance structures and lack of transparency in some areas have also contributed to challenges in managing resources effectively.

  • Health and Education: Access to quality healthcare and education remains limited in many parts of the country, affecting human capital development and productivity.

The country's political evolution over the last 50 years can be divided into five different phases characterized by shifts in governance, economic policies, and the nature of the state:

  • FRELIMO Rule (1975-1990): Mozambique's first ruling party after independence was the Front for the Liberation of Mozambique (FRELIMO). Led by Samora Machel, FRELIMO established a one-party socialist state. During this period, Mozambique faced challenges such as civil war, economic instability, and political repression. The government pursued socialist policies, nationalized industries, and promoted collectivization in rural areas. Additionally, Mozambique faced an armed conflict with the Mozambican National Resistance (RENAMO), which was backed by the apartheid government in South Africa.

  • Multi-Party Democracy (1990-Present): In 1990, FRELIMO abandoned its one-party system and embraced a multi-party political system following the end of the Cold War and internal pressure for political reforms. This decision marked a significant turning point in Mozambique's political history. The country adopted a new constitution in 1990, paving the way for a more democratic political process. In fact, not always met in practice. 

  • Peace Process and Civil War Resolution (1992-1994): In 1992, a peace agreement was signed between FRELIMO and RENAMO, ending the civil war that had lasted for over a decade. This agreement led to the integration of RENAMO into the political system as a legitimate political party. Since then, Mozambique has experienced relative political stability and continued its path toward democratization.

  • FRELIMO Dominance and Governance Challenges (1994-Present): After the first multi-party elections in 1994, Joaquim Chissano, the FRELIMO candidate, became the country's president. FRELIMO has dominated Mozambique's political landscape ever since, winning subsequent elections, though not without criticism of electoral irregularities and concerns about the opposition's limited political space.

  • Economic Reforms and Development (1990-Present): In the 1990s, Mozambique embraced economic liberalization policies, attracting foreign investment and promoting economic growth. Over the years, the country has made progress in reducing poverty and achieving economic development. However, challenges such as corruption, unequal wealth distribution, and limited access to basic services persist

At the present, Mozambique is facing a new challenge in the northern part of the country, where an insurgency linked to ISIL (Islamic State of Iraq and the Levant) had escalated. This conflict has led to security and humanitarian crises in the region, impacting the country's stability and development efforts.

Despite these challenges, Mozambique has made some progress in recent years, experiencing periods of economic growth and attracting foreign investment, particularly in natural resource sectors. The country has also been working on implementing reforms and initiatives to address governance issues and attract private investment for sustainable development.

Efforts to address these challenges require a coordinated approach from both Mozambican authorities and the international community to foster inclusive economic growth, invest in human capital, and build resilient infrastructure. A sustainable and transparent management of natural resources can play a crucial role in supporting Mozambique's journey toward greater prosperity and reducing poverty levels.

Camila Cienfuegos Member of EA Coordination Team