Economic Development in Mozambique Karam Wallia 12Jwi

Week 1: Mozambique is an African nation on the east coast of the country, bordering countries such as South Africa and Tanzania, and opposite the island of Madagascar. It was once a Portuguese colony but is now independent.

The discovery in April 2016 of previously undisclosed debt worth $1.4 billion, 10.7% of Mozambique’s gross domestic product (GDP), combined with the impact of the exchange rate depreciation, has led to a certain increase in debt ratios and the debt service burden. As a result, the fiscal position is likely to remain under stress until the end of the decade. The startup of gas mega projects will not yield significant fiscal revenues before the large external debt obligations fall due. Some respite to government finances might come in the form of mega-project linked capital gains taxes, but amounts and prospects are uncertain. Hence reforms aimed at deep fiscal consolidation will be required and remain a priority in the medium term.

The authorities face hard choices in pursuing a recovery and reestablishing confidence. A thorough review of the state enterprise sector, including liquidation and sale of un-strategic assets, should be considered as an option to increase government resources and reduce fiscal risks. Reengagement with the IMF and the donor community will also be crucial in reinforcing government finances which are crippled by the country’s debt burden. Concrete steps in transparency and accountability for the hidden loans would be an important milestone, including an independent international audit. In the short term, adverse climatic conditions, brought on by La Nina, are a risk. Should this materialize, the costs of flood damage and impact on food production would pose a major challenge to food security and livelihoods, especially in rural areas.

The Human Development Index (HDI) is a composite statistic of life expectancy, education, and per capita income indicators, which are used to rank countries into four tiers of human development.

Week 2: Mozambique is an LEDC, and it can be found that the strength of their educational and health statistics relative to more developed nations. The total primary school enrollment ratio is 89.8% and the infant-mortality rate (2012, under 1 year old) was 63. Now in France, a more economically developed nation, the total primary school enrollment ratio is 99.1% and the infant-mortality rate (2012, under 1 year old) was 3. What can be drawn from these statistics is that the more developed nation has a greater quality of health and education.

Week 3: Can be described as the process of which poor families become impoverished over many generations, meaning that their following generations don’t possess the ability to transmit intellectual, social and cultural knowledge.

Enormous efforts have been made in improving access to education with complete primary education now in sight. Infant mortality rates have declined dramatically from about 177 deaths per 1000 live births in 1975 to about 62 deaths per 1000 live births in 2013.

Land rights may be transferred by i) inheritance and the process of transfer is governed by the Civil Code or ii) by means of sale of the buildings, improvements and infrastructure erected on the land. In these cases, requirements differ according to whether the land concerned is regarded as an urban tenement (prédio urbano) or rural tenement (prédio rústico).

Post Mozambique’s independence from Portugal and its emergence from civil war, the government focussed on creating legal frameworks governing land while encouraging investment. The rationale behind the Mozambican Land Law and its Regulations was to protect land rights of communities, women and farmers. There is therefore no private ownership of land in Mozambique. In terms of the legal system, land and its associated resources are the property of the State and cannot be sold, mortgaged or alienated in any way.

Week 4: Mozambique is the 100th largest export economy in the world and the 123rd most complex economy according to the Economic Complexity Index (ECI). In 2014, Mozambique exported $7.27B and imported $10.3B, resulting in a negative trade balance of $3.04B.

The top exports of Mozambique are Raw Aluminium ($1.42B), Aluminium Bars ($1.05B), Petroleum Gas ($671M), Refined Petroleum ($603M) and Coke ($488M). Its top imports are Refined Petroleum ($1.34B), Raw Aluminium ($513M), Ferroalloys ($321M), Delivery Trucks ($316M) and Telephones ($266M).

The top export destinations of Mozambique are South Africa ($1.16B), the Netherlands ($1.14B), India ($638M), China ($541M) and Singapore ($474M). The top import origins are South Africa ($2.75B), China ($1.06B), Bahrain ($700M), the Netherlands ($595M) and Zimbabwe ($532M).

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