Positioning of Mozambique in the International Trade

REPUBLIC OF MOZAMBIQUE MINISTRY OF INDUSTRY AND COMMERCE

POSITIONING OF MOZAMBIQUE IN THE INTERNATIONAL TRADE

Trade Flows in Mozambique: Trends and Policy Measures

2016 Edition

REPUBLIC OF MOZAMBIQUE MINISTRY OF INDUSTRY AND COMMERCE

POSITIONING OF MOZAMBIQUE IN THE INTERNATIONAL TRADE

Trade Flows in Mozambique: Trends and Policy Measures

2016 Edition TECHNICAL NOTE Foreword TITLE: Positioning of Mozambique in the International Trade

REVIEW: Sabado Matsolo, Cláudia Langa, José Leonardo, Agonias Macia, Calado Silva, This report seeks to analyse the position of Mozambique in the international trade in the period of 2010-2015 vis- Samuel Zita, Masaki Mifune and John Barns. à-vis relations with principal trade partners. This analysis essentially systematizes the information signalling the status of various socio-economic factors which are infl uencing the performance of economy. PRODUCTION: Ministério da Indústria e Comércio (MIC) Mozambique’s trade fl ows, especially the value and volume of imports and exports, are important data to un- Direcção de Planifi cação e Estudos – Cláudia Correia Langa e José Leonardo derstand the situation of Mozambique in the international trade, and to take corrective measures to the coun- Direcção Nacional Comércio Interno – Isabel Simango try’s less favourable position, as well as to extract the maximum benefi ts granted by the facilities resulting from Enhanced Integrated Framework (EIF) – Herlander Namuiche, Samuel Zita the implementation of the various trade agreements of which the country is a signatory. United Nations Development Programme (UNDP) – Masaki Mifune With the modifi cation of the structure of traditional export products (as fi sheries and primary agriculture products LAYOUT: reduced its proportion in the exports structure), the country should explore new opportunities in the international Elografi co trade, increasing the value of primary products, and the opportunities which are emerging in competitive markets for minerals and hydrocarbons. EDITION: 1st Edition 2016 There is a need to explore all the avenues offered by the greater openness of international trade, the global population increase, as well as the dynamics in the indicators of the ease of doing business, par ticularly in PRINTING the regional markets, in the context of the profi le of the least developed countries that Mozambique is part of. 500 copies The challenge is to orient the government to defi ne trade policies, to benefi t more from trade opportunities in regional and international markets with the aim of improving the balance of payment, and creating new PUBLISHED BY: jobs and using trade as a tool for reducing poverty. We would like to express our appreciation to the United Nations Development Programme (UNDP), for its assistance to the Ministry of Industry and Commerce (MIC) in the elaboration of this report. This support was provided through capacity building for statistical data collection and analysis related to international trade. REPUBLIC OF MOZAMBIQUE We look forward to continuing to engage with UNDP in the future on trade related matters that will enable MINISTRY OF INDUSTRY AND COMMERCE us to make informed decisions that help the country to use trade as an additional tool in economic growth Praca 25 de Junho, n° 300 and development. Tel: +258 21 320401 www.mic.gov.mz

WITH SUPPORT FROM: Maputo, 12th December 2016 Minister of Industry and Commerce

Ernesto Max Tonela UNITED NATIONS DEVELOPMENT PROGRAMME (UNDP)

Av. Kenneth Kaunda 921/931, P.O Box 4595 www.undp.org

Positioning of Mozambique in the International Trade 2016 iii TECHNICAL NOTE Foreword TITLE: Positioning of Mozambique in the International Trade

WITH SUPPORT FROM: Maputo, 12th December 2016 Minister of Industry and Commerce

Ernesto Max Tonela UNITED NATIONS DEVELOPMENT PROGRAMME (UNDP)

Av. Kenneth Kaunda 921/931, P.O Box 4595 www.undp.org

Positioning of Mozambique in the International Trade 2016 iii Contents

Abbreviations ...... viii Executive Summary...... ix Chapter I. Overview of Trade Trends in Mozambique ...... 1 1.1 The Landscape of Trade in Mozambique ...... 1 1.2 Trade Partners in Mozambique ...... 4 Chapter II. Trend Analysis of Trade Products in Mozambique ...... 5 2.1 Trade Products Portfolio...... 5 2.2 Main Cash Crops and Foods Exports ...... 7 2.3 Main Food Imports ...... 21 Chapter III. Global & Regional Trends ...... 27 3.1 Demographic Trends and Food Security ...... 27 3.2 Demographic Trends and Socio-Economic Structure...... 29 3.3 Energy Demand and Industrialization...... 33 3.4 SDGs and Trade...... 38 Chapter IV. Policy and Institutional Framework for Trade in Mozambique ...... 40 4.1 Policy and Institutional Framework in the Trade Sector ...... 40 4.2 International Trade Agreements ...... 44 4.3 Business Environment in Mozambique ...... 47 Reference ...... 50

Figures

Figure 1.1: Degree of trade openness 2000-2014 ...... 2 Figure 1.2: Current account, trade and FDI ﬂ ow in Mozambique 2010-2014 ...... 2 Figure 1.3: Principal trade products exported from Mozambique 2000 and 2015...... 3 Figure 1.4: Commodity price trend (Index, 2005=100)...... 3 Figure 2.1: Megaproject/extractive industry export value 2000-2015 (selected prducts) ...... 6 Figure 2.2: Cash crops and foods exports value 2000-2015 (selected products) ...... 6 Figure 2.3: Exports destinations by product (2011-2015 avg.)...... 7 Figure 2.4 Mozambique cashew nuts exports and global trends ...... 8 Figure 2.5: Mozambique cashew nuts export destinations...... 9 Figure 2.6: Mozambique sesame exports and global trends ...... 10 Figure 2.7: Mozambique sesame export destinations ...... 10 Figure 2.8: Mozambique almonds exports and global trends ...... 12 Figure 2.9: Mozambique almonds export destinations...... 12 Figure 2.10: Mozambique cotton exports and global trends ...... 14 Figure 2.11: Mozambique cotton export destinations ...... 14

Positioning of Mozambique in the International Trade 2016 v Contents

Figures

Positioning of Mozambique in the International Trade 2016 v Figure 2.12: Mozambique banana exports and global trends ...... 16 Tables Figure 2.13: Mozambique banana export destination ...... 16 Figure 2.14: Mozambique sugar export/import and global trends ...... 18 Table 1.1: Mozambique’s major trading partners (2011-2015 avg.) ...... 4 Figure 2.15: Mozambique sugar export destinations ...... 18 Table 2.1: Main export and import products in Mozambique ...... 5 Figure 2.16: Mozambique crustaceans exports and global trends ...... 20 Table 2.2: Cashew nuts export world ranking ...... 9 Figure 2.17: Mozambique crustaceans export destinations ...... 20 Table 2.3: Sesame exports word ranking...... 11 Figure 2.18: Food products imported by Mozambique 2001-2015 ...... 22 Table 2.4: Almonds export world ranking...... 13 Figure 2.19: Population trends and projections for Mozambique ...... 22 Table 2.5: Cotton exports world ranking ...... 15 Figure 2.20: Wheat import origins ...... 23 Table 2.6: Banana exports world ranking ...... 17 Figure 2.21: Maize import origins...... 23 Table 2.7: Sugar exports world ranking...... 19 Figure 2.22: Rice import origins ...... 24 Table 2.8: Crustaceans exports world ranking ...... 21 Figure 2.23: Frozen fi sh imported by Mozambique & import origins...... 25 Table 4.1: Preferential Trade Agreements - Mozambique ...... 45 Figure 2.24: Tomatoes imported by Mozambique & Fresh tomatoes import origin ...... 25 Table 4.2: Bilateral investment agreements – Mozambique ...... 46 Figure 2.25: Mozambique meats and live animals imports and import origins ...... 26 Table 4.3: Doing Business 2016 (comparison w/selected countries in Sub-Saharan Africa) ...... 47 Figure 3.1: World population trends 1980-2050 ...... 28 Table 4.4: GCI 2015-2016 global ranking (comparison w/selected countries in Sub-Saharan Africa). . 48 Figure 3.2: Cereals production, consumption and net import – Sub-Saharan Africa (excl. Table 4.5: LPI 2016 Sub-Saharan Africa ranking (comparison w/selected countries) ...... 49 South Africa) ...... 28 Figure 3.3: Calorie intake per capita in LDCs and Developed countries...... 29 Figure 3.4: World demographic trends by age group 1980-2050 ...... 30 Boxes Figure 3.5: World population median age trends 1990-2050...... 30 Box 1.1: Volatile commodity prices destabilize the economy ...... 3 Figure 3.6: Demographic age pyramid - Mozambique...... 31 Box 2.1: Food security and trade...... 24 Figure 3.7: World urban population growth rates & Rural/urban population trends for Mozam- bique1990-2050 ...... 31 Box 3.1: Changing dietary habits and diversifi cation of foods demand ...... 29 Figure 3.8: Trend of urbanization and services value added (% of GDP) 1980-2014 ...... 32 Box 3.2: Consumption in developing & emerging countries – Bottom of Pyramid ...... 33 Figure 3.9: Mobile and fi xed telephone subscription & International tourism arrivals and revenues . . 32 Box 3.3: COP 21 and energy demand forecast – IEA Bridge Scenario ...... 34 Figure 3.10: Consumption patterns by sector and income segment – 2010 (average of 92 countries) . . 33 Box 3.4: Global Value Chains (GVCs) – opportunities and risks ...... 36 Figure 3.11: Energy demand by sector & Total primary energy demand by resource ...... 33 Box 3.5: Trade and Development Agenda ...... 38 Figure 3.12: Electricity generation trend by resource – IEA bridge scenario ...... 34 Box 4.1: Functions attributed to the Ministry of Industry and Commerce ...... 41 Figure 3.13: Industry, value added (% of GDP) 2014 – Sub-Saharan Africa + Gulf States ...... 35 Box 4.2: Trade related issues coordination mechanism – Aid for Trade and EIF in Mozambique . . . . 43 Figure 3.14: Fuel price trends and world trade (exports) 2002-2014 ...... 36 Box 4.3: Logistics Performance Index (LPI) ...... 49 Figure 3.15: Fuel price trends and global GDP & Government revenue in oil producing countries . . . 37 Figure 3.16: Fuel price trend and global FDI trend & Mozambique and Nigeria FDI trend ...... 37 Figure 3.17: Global development initiatives related to trade agenda ...... 39 Figure 4.1: Organigram – Ministry of Industry and Commerce...... 41 Figure 4.2: Policy and strategic framework – Ministry of Industry and Commerce...... 43 Figure 4.3: Average MFN applied duties 2014 – Mozambique ...... 46 Figure 4.4: LPI – Mozambique 2010 vs 2016...... 49

vi Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 vii Tables

Table 1.1: Mozambique’s major trading partners (2011-2015 avg.) ...... 4 Table 2.1: Main export and import products in Mozambique ...... 5 Table 2.2: Cashew nuts export world ranking ...... 9 Table 2.3: Sesame exports word ranking...... 11 Table 2.4: Almonds export world ranking...... 13 Table 2.5: Cotton exports world ranking ...... 15 Table 2.6: Banana exports world ranking ...... 17 Table 2.7: Sugar exports world ranking...... 19 Table 2.8: Crustaceans exports world ranking ...... 21 Table 4.1: Preferential Trade Agreements - Mozambique ...... 45 Table 4.2: Bilateral investment agreements – Mozambique ...... 46 Table 4.3: Doing Business 2016 (comparison w/selected countries in Sub-Saharan Africa) ...... 47 Table 4.4: GCI 2015-2016 global ranking (comparison w/selected countries in Sub-Saharan Africa). . 48 Table 4.5: LPI 2016 Sub-Saharan Africa ranking (comparison w/selected countries) ...... 49

Boxes

Box 1.1: Volatile commodity prices destabilize the economy ...... 3 Box 2.1: Food security and trade...... 24 Box 3.1: Changing dietary habits and diversiﬁ cation of foods demand ...... 29 Box 3.2: Consumption in developing & emerging countries – Bottom of Pyramid ...... 33 Box 3.3: COP 21 and energy demand forecast – IEA Bridge Scenario ...... 34 Box 3.4: Global Value Chains (GVCs) – opportunities and risks ...... 36 Box 3.5: Trade and Development Agenda ...... 38 Box 4.1: Functions attributed to the Ministry of Industry and Commerce ...... 41 Box 4.2: Trade related issues coordination mechanism – Aid for Trade and EIF in Mozambique . . . . 43 Box 4.3: Logistics Performance Index (LPI) ...... 49

Positioning of Mozambique in the International Trade 2016 vii Abbreviations Executive Summary

ACP African, Caribbean and Pacifi c Countries This report was prepared by the Ministry of Indus- Mozambique’s trade product portfolio and principle AfT Aid for Trade try and Trade with the support of UNDP to illustrate trade partners. The export of minerals has grown, Mozambique’s position in relation to business/trade particularly in the last 5 years, with much greater AGOA African Growth and Opportunity Act opportunities with its economic partners. Mozam- growth anticipated in the future. However, the ex- CAADP Comprehensive African Agriculture Development Program bique’s rich endowment in natural resources rep- port and import of agricultural and food products COMESA Common Market for Eastern and Southern Africa resent signifi cant trading opportunities that could is also signifi cant given its importance for sustain- COP Conference of the Parties transform the country from one which is dependent ing livelihoods and food security, and its impact on DTIS Diagnostic of Trade Integration Study on agricultural, marine, mineral and energy based the balance of trade. This chapter focusses on the EAC East African Community exports, to a major player in the global market of trade volume and value of a set of key agricultural EIF Enhanced Integrated Framework value added products, creating the fi scal space and marine exports and changes in global market ENDE Estratégia Nacional de Desenvolvimento (National Development Strategy) for sustainable investment in its increasingly young share. Mozambique is a net importer of food and FAO Food and Agriculture Organization population and socio-economic infrastructure. Yet, the growth of food imports has closely correlated FDI Foreign Direct Investment such opportunities often present a complex set of with population growth, which is expected to grow GSP Generalized System of Preferences macro-economic challenges, and in an increasingly exponentially suggesting that the import of basic globalized economy, Mozambique will need to care- foods will continue to increase. The implications and GVCs Global Value Chains fully consider ways to improve its productivity and impact of trade policy and food security policy are ICT Information and Communication Technology competitiveness and promote greater diversifi ca- intertwined, emphasizing the importance of a coor- IEA International Energy Agency tion through greater integration into the global value dinated effort among the key ministries and institu- INE Instituto Nacional de Estatistica (National Statistics Institutions) chains. To address such challenges, evidence- tions responsible for agriculture and trade policy. LDCs Least Developed Countries based policy coordination is a condition sine qua Growth in Mozambique’s trade has resulted in its LPI Logistics Performance Index non to ensure effective policy implementation and re-integration into the regional and global econ- MASA Ministro da Agricultura e Segurança Alimentar (Ministry of Agriculture and Food Security) meaningful economic transformation. omy. Chapter III looks at key global trends and MDG Millennium Development Goals The trade landscape in Mozambique has changed their impact on socio economic development MEF Ministro de Economia e Finanças (Ministry of Economy and Finance) signifi cantly in the last 15 years with substantial and on trade. The world’s population is growing MFN Most Favoured Nation increases in both imports and exports and there and becoming more urbanized and these trends MIC Ministro da Indústria e Comércio (Ministry of Industry and Commerce) is evidence that points to an intensifi cation of this are creating a new dynamism for Africa and for MMAIP Ministro do Mar, Águas Interiores e Pescas (Ministry for the Sea, Inland Water and Fishery) transformation over the next fi fteen years. Chap- Mozambique. Population growth can contribute MTOE Million Tonnes of Oil Equivalent ter I looks at the changing nature of trade in Mo- positively to domestic production and the bal- OECD Organisation for Economic Co-operation and Development zambique and the growing importance of trade for ance of trade. Mozambique’s young population the economy. Mozambique’s historical exports like and growth in the working age population could PES Plano Economico e Social (Social Economic Plan) cashew, cotton and shellfi sh, still signifi cant two bring a signifi cant demographic bonus for the PEDSA Plan for the Development of the Agricultural Sector decades ago, have been overtaken by the export in country. However, if domestic production of food PPP Purchasing Power Parity the minerals and energy sector. As a result of inte- is unable to keep pace with population growth, PQG Programa Quinquenal do Governo (Government’s fi ve-year programme) grating into the regional and global trade networks, dependence of food imports will increase. Global PTA Preferential Trade Agreement the importance of trade for the Mozambican econo- energy demand increased by over 50% in the pe- SADC Southern African Development Community my had grown to attain a value equivalent to 100% riod 1990-2013. Although this growth is expected SDGs Sustainable Development Goals of GDP by 2012. Substantial growth in imports over to continue, the world leaders are determined to SDT Special and Differential Treatment the period 2010-14 was driven by Foreign Direct In- curb growth in the demand for energy to meet TWh Terawatt Hour vestments in extractives sector. the COP 21 global target. Coal and oil has been the major energy sources for power generation UNDP United Nations Development Programme Mozambique’s abundant natural resources, not for many decades, but their relative importance UNCTAD United Nations Conference on Trade and Development only in terms of minerals but including agricultural is declining with natural gas becoming more im- WEF World Economic Forum land and fi sheries, potentially place the country in a portant, a trend which is potentially positive, to WTO World Trade Organization strong position as a major exporter of commodities. a great extent, for Mozambique. However, fl uc- Chapter II analyses the signifi cance of changes in

viii Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 ix Executive Summary

This report was prepared by the Ministry of Indus- Mozambique’s trade product portfolio and principle try and Trade with the support of UNDP to illustrate trade partners. The export of minerals has grown, Mozambique’s position in relation to business/trade particularly in the last 5 years, with much greater opportunities with its economic partners. Mozam- growth anticipated in the future. However, the ex- bique’s rich endowment in natural resources rep- port and import of agricultural and food products resent signifi cant trading opportunities that could is also signifi cant given its importance for sustain- transform the country from one which is dependent ing livelihoods and food security, and its impact on on agricultural, marine, mineral and energy based the balance of trade. This chapter focusses on the exports, to a major player in the global market of trade volume and value of a set of key agricultural value added products, creating the fi scal space and marine exports and changes in global market for sustainable investment in its increasingly young share. Mozambique is a net importer of food and population and socio-economic infrastructure. Yet, the growth of food imports has closely correlated such opportunities often present a complex set of with population growth, which is expected to grow macro-economic challenges, and in an increasingly exponentially suggesting that the import of basic globalized economy, Mozambique will need to care- foods will continue to increase. The implications and fully consider ways to improve its productivity and impact of trade policy and food security policy are competitiveness and promote greater diversifi ca- intertwined, emphasizing the importance of a coor- tion through greater integration into the global value dinated effort among the key ministries and institu- chains. To address such challenges, evidence- tions responsible for agriculture and trade policy. based policy coordination is a condition sine qua Growth in Mozambique’s trade has resulted in its non to ensure effective policy implementation and re-integration into the regional and global econ- meaningful economic transformation. omy. Chapter III looks at key global trends and The trade landscape in Mozambique has changed their impact on socio economic development signifi cantly in the last 15 years with substantial and on trade. The world’s population is growing increases in both imports and exports and there and becoming more urbanized and these trends is evidence that points to an intensifi cation of this are creating a new dynamism for Africa and for transformation over the next fi fteen years. Chap- Mozambique. Population growth can contribute ter I looks at the changing nature of trade in Mo- positively to domestic production and the bal- zambique and the growing importance of trade for ance of trade. Mozambique’s young population the economy. Mozambique’s historical exports like and growth in the working age population could cashew, cotton and shellfi sh, still signifi cant two bring a signifi cant demographic bonus for the decades ago, have been overtaken by the export in country. However, if domestic production of food the minerals and energy sector. As a result of inte- is unable to keep pace with population growth, grating into the regional and global trade networks, dependence of food imports will increase. Global the importance of trade for the Mozambican econo- energy demand increased by over 50% in the pe- my had grown to attain a value equivalent to 100% riod 1990-2013. Although this growth is expected of GDP by 2012. Substantial growth in imports over to continue, the world leaders are determined to the period 2010-14 was driven by Foreign Direct In- curb growth in the demand for energy to meet vestments in extractives sector. the COP 21 global target. Coal and oil has been the major energy sources for power generation Mozambique’s abundant natural resources, not for many decades, but their relative importance only in terms of minerals but including agricultural is declining with natural gas becoming more im- land and fi sheries, potentially place the country in a portant, a trend which is potentially positive, to strong position as a major exporter of commodities. a great extent, for Mozambique. However, fl uc- Chapter II analyses the signifi cance of changes in

Positioning of Mozambique in the International Trade 2016 ix Chapter I tuations in fuel and energy prices have shown the role of the Ministry of Industry and Commerce, signiﬁ cant impacts on global export market and the key institution in Mozambique responsible for GDP growth, casting a shadow on extractive de- the trade agenda, and the composition of a num- pendent economies. Excessive dependence on ber of trade and commerce related policy instru- extractive industry can disproportionately expose ments and strategies. A number of international developing nations to volatile and unpredictable trade and investment agreements to which Mo- global markets. zambique is a signatory provide the framework for The complex nature of trade at the local, regional the promotion of bilateral and multi-lateral trade. and global level requires an organized and coor- Finally, an review of the business environment in dinated policy response to seize the potential op- Mozambique evaluates the country’s trade com- portunities and to mitigate the risks of volatility as- petiveness and weaknesses in relation to regional sociated with global markets. Chapter IV looks at counterparts. Overview of Trade Trends in Mozambique

1.1 The Landscape of Trade in Mozambique

Political reforms and sound macro-economic man- The Trade Openness Index measures the relation- agement have been important factors in stimulating ship between the combined value of imports and economic development in Mozambique over the exports in relation to the size of GDP. Figure 1.1 il- past 15 years, securing one of the highest growth lustrates the changing importance of trade for the rates for African non-oil economies with annual real Mozambican economy. There has been a notable GDP growth over the period 2002-2012 averaging change in Mozambique’s score on the index since 7.5%. 2000 in comparison to regional and global averages emphasizing the steady re-integration of Mozam- Economic reforms since 2000 have resulted in the bican trade into regional and global trade networks. gradual reintegration of the economy into both regional and global markets, directly impacting on the A closer examination of the value of imports and country’s trade structure and enabling trade to play exports as a percentage of GDP over the same pe- an important role in facilitating economic growth. riod shows that changes in trade openness appear to be largely export driven in the period 2000-2002 The trade landscape in Mozambique has changed and import driven in the period 2008-12. This almost signiﬁ cantly over the last 15 years, as both imports certainly reﬂ ects the beginning of the export of alu- and exports have grown dramatically as a result of minium in the early part of the decade and the im- Foreign Direct Investment (FDI) in mega-projects, port of equipment and machinery associated with and this dynamic is likely to continue for the fore- investments in the energy and mineral resources seeable future as the country’s trading potential be- sector, particularly coal and natural gas, at the end comes a reality, particularly in the extractive sector. of the decade.

x Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 1 Chapter I

Overview of Trade Trends in Mozambique

1.1 The Landscape of Trade in Mozambique

Positioning of Mozambique in the International Trade 2016 1 Figure 1.1: Degree of trade openness 2000-2014 Figure 1.3: Principal trade products exported from Mozambique 2000 and 2015 (% of GDP) (% of GDP) 2015 120 120 (3,196 million USD) 100 100 2000 80 80 Imports (364 million USD) driven 60 60

40 40

20 20 Export driven Aluminium Other 0 0 Crustaceances Other 2000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2000 2002 2004 2006 2008 2010 2012 2014

Imports of goods and services (% of GDP) Mozambique Sub Saharan Africa World Exports of goods and services (% of GDP) Cotton Haevy Source: World Bank Electricity Mineral Natural Gas Sands This trend is further substantiated in Figure 1.2 ports in the last 3 years. This has resulted in Cashew nuts that illustrates modest growth in the value of a widening current account deficit since 2010, exports over the period 2010-14 but substan- although as Figure 1.2 indicates, this has been Precious ElectricityAluminium Tabacco Sugar Coal Tabacco Sugar Stones tial growth in imports over the same period, offset by the steady growth in FDI over the Source: UN Comtrade with imports achieving double the value of ex- same period.

Figure 1.2: Current account, trade and FDI fl ow in Mozambique 2010-2014 Box 1.1: Volatile commodity prices destabilize the economy (million USD) World commodity prices are known to be volatile, driven by changes in global demand and supply, and emerging 8,000 economies, that are highly dependent on revenue derived from agricultural and mineral and energy resources, 6,000 and that also rely on the import of basic foods, are particularly vulnerable to these price fl uctuations. The graphics 4,000 below show a high price volatility both in Mozambique’s principle export commodities, particularly coal, cotton and 2,000 sugar, and in the prices of staple and imported foods like wheat, maize and rice. Commodity price volatility can - have various negative impacts on economic growth, instability in the balance of trade and Government revenue, and unpredictable infl ation in domestic markets for end-users and consumers. (2,000) (4,000) (6,000) Figure 1.4: Commodity price trend (Index, 2005=100) (8,000) Commodities exported from Mozambique Commodities imported to Mozambique (10,000) (USD, Index 2005=100) (USD, Index 2005=100) 2010 2011 2012 20132014 350 350 Goods - exports 2,333 3,118 3,856 4,123 3,916 300 Goods - imports (3,512) (5,368) (7,903) (8,480) (7,952) 300 Current account (1,525) (2,997) (6,371) (6,254) (5,797) 250 250 FDI 1,018 3,559 5,629 6,1754,349 200 200 Source: INE 150 150 100 100 The portfolio of the products exported by Mozam- total exports in 2000. However, although the export 50 50 bique has seen a signifi cant change over the last of these products has continued, the impact of FDI 0 15 years as illustrated in Figure 1.3. Mozambique on the composition of Mozambique’s top export 0 is traditionally known for the export of crustaceans products became noticeable by 2015 with the ex- 2001 2003 2005 2007 2009 2011 2013 2015 2001 2003 2005 2007 2009 2011 2013 2015 (mainly prawns, crabs and lobster) and cash crops port of aluminium, coal, natural gas, heavy mineral Crude Oil Wheat Maize Rice such as cashew nuts, cotton, tobacco and sugar, sands, and precious stones accounting for the top Coal Aluminium Cotton Sugar and indeed these products accounted for 80% of 70% of export products. Source: IMF, World Economic Outlook

2 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 3 Figure 1.3: Principal trade products exported from Mozambique 2000 and 2015 2015 (3,196 million USD)

2000 (364 million USD)

Aluminium Other

Crustaceances Other

Cotton Haevy Electricity Mineral Natural Gas Sands

Cashew nuts Precious ElectricityAluminium Tabacco Sugar Coal Tabacco Sugar Stones Source: UN Comtrade

Box 1.1: Volatile commodity prices destabilize the economy World commodity prices are known to be volatile, driven by changes in global demand and supply, and emerging economies, that are highly dependent on revenue derived from agricultural and mineral and energy resources, and that also rely on the import of basic foods, are particularly vulnerable to these price ﬂ uctuations. The graphics below show a high price volatility both in Mozambique’s principle export commodities, particularly coal, cotton and sugar, and in the prices of staple and imported foods like wheat, maize and rice. Commodity price volatility can have various negative impacts on economic growth, instability in the balance of trade and Government revenue, and unpredictable inﬂ ation in domestic markets for end-users and consumers.

Figure 1.4: Commodity price trend (Index, 2005=100) Commodities exported from Mozambique Commodities imported to Mozambique

(USD, Index 2005=100) (USD, Index 2005=100) 350 350

300 300

250 250

200 200 150 150 100 100

50 50 0 0

2001 2003 2005 2007 2009 2011 2013 2015 2001 2003 2005 2007 2009 2011 2013 2015

Coal Aluminium Cotton Sugar Crude Oil Wheat Maize Rice

Source: IMF, World Economic Outlook

Positioning of Mozambique in the International Trade 2016 3 1.2 Trade Partners in Mozambique

Table 1.1 shows Mozambique’s top ten trading bique runs a trade defi cit with most of its top ten partners according to the value of exports and im- trade partners with the exception of the Netherlands ports. Proximity to South Africa, the second-larg- and India. The Netherlands is a special case due to Chapter II est economy in Africa, accounting for 24% of the the trading of aluminum and India is Mozambique’s continent’s gross domestic product in 2015, make largest coal export destination. it Mozambique’s biggest trading partner. Mozam- China and India, ranked in 3rd and 4th position, are bique’s principle exports to South Africa are gas gaining increasing importance as trade partners and from Inhambane, and electricity from the Cahorra are the principle destinations for primary commodities Bassa hydro dam in Tete. However, the importance such as coal and heavy mineral sands. The impor- of South Africa as a trading partner lies principally tance of Bahrain and the UEA is related to the import in its role as a source of imports particularly in re- of petroleum. Traditional trading partners amongst de- lation to machinery, vehicles, and foods, and as a veloped countries, notably Portugal, the UK, the USA result Mozambique runs a signifi cant trade defi cit and Japan, are international suppliers of machinery, with its neighbour that has averaged close to $2bn vehicles, and electrical and electronic products. per annum over the last fi ve years. In fact, Mozam-

Table 1.1: Mozambique’s major trading partners (2011-2015 avg.) Trend Analysis of Trade Trade value (million USD) Trade balance (exports + imports) Products in Mozambique South Africa 3,264 -1,789 Netherlands 1,678 537 China 851 -371 India 625 34 2.1 Trade Products Portfolio United Arab Emirates 550 -465 Bahrain 465 -447 Table 2.1 summarizes Mozambique’s principle ex- minerals, and cash crops whereas imports include Portugal 434 -336 port and import products across three broad cat- petrol, industrial and manufactured products, par- United Kingdom 354 -68 egories: mega-projects, extractive industries (min- ticularly vehicles, machinery and construction ma- USA 289 -152 erals) and industrial products, cash crops and food terials, and basic foodstuffs, including cereals, fro- Japan 238 -198 products. Principal exports comprise aluminum, zen ﬁ sh and meat. Source: UN Comtrade

Figure 1.5: Mozambique’s principle export destination and import origins (2011-2015 avg.) Table 2.1: Main export and import products in Mozambique Megaproject, Extractive industry, Exports destinations Imports origins Cash Crops Foods Industrial products USA 2% United Aluminium Cashew nuts Kingdom Coal Sesame 3% Italy Natural gas Almonds 2% Other 21% Netherlands Other Exports Electricity Sugar Crustaceans South Africa Switzerland 29% 23% Heavy mineral sands Cotton 2% 32% Japan Precious stones Banana 3% Woods Tobacco Petroleum Zimbabwe South Africa Unwrought aluminum 2% 19% Wheat USA Electricity China Maize Singapore 3% 8% Machinery 4% Imports Sugar Rice India Construction materials United 4% Fish frozen Kingdom Netherlands Vehicle 7% Live animals and meats 4% India Portugal China 5% United Arab Pharmaceutical products 6% 9% Bahrain Emirates Furniture 6% 6% Source: UN Comtrade

4 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 5 Chapter II

Trend Analysis of Trade Products in Mozambique

2.1 Trade Products Portfolio

Table 2.1 summarizes Mozambique’s principle ex- minerals, and cash crops whereas imports include port and import products across three broad cat- petrol, industrial and manufactured products, par- egories: mega-projects, extractive industries (min- ticularly vehicles, machinery and construction ma- erals) and industrial products, cash crops and food terials, and basic foodstuffs, including cereals, fro- products. Principal exports comprise aluminum, zen ﬁ sh and meat.

Table 2.1: Main export and import products in Mozambique Megaproject, Extractive industry, Cash Crops Foods Industrial products Aluminium Cashew nuts Coal Sesame Natural gas Almonds Exports Electricity Sugar Crustaceans Heavy mineral sands Cotton Precious stones Banana Woods Tobacco Petroleum Unwrought aluminum Wheat Electricity Maize Machinery Imports Sugar Rice Construction materials Fish frozen Vehicle Live animals and meats Pharmaceutical products Furniture

Positioning of Mozambique in the International Trade 2016 5 Figure 2.1 indicates that in terms of export volume, has grown particularly in the last 5 years although Regarding cash crops, the markets for sugar and Bangladesh, China, Singapore and Vietnam as im- industrial products and minerals have accounted much greater growth is anticipated in the future. cotton are relatively diverse. Sugar is exported al- portant destinations. Over 60 % of the exports of for the greater percentage of total exports over the By contrast, cash crops as a percentage of total most entirely to Europe, although split relatively sesame go to China, with the balance exported to period 2005 to 2015, albeit witnessing a small drop exports halved between 2000 and 2005 and have equally between Portugal, Spain and Italy and with various countries mainly in Asia. Finally, India is the to below 60% between 2012 and 2014. Aluminium ﬂ uctuated between 10 to 20% over the last 10 years smaller volumes going to France and the Nether- principal market for Mozambican cashew nuts ac- export has accounted for over 30% of total exports (Fig.2.2). Tobacco, sugar and cotton are the biggest lands. Cotton exports go almost entirely to Asia with counting for over 40% of export volume, but the USA in this category since early 2000. Export of minerals export crops by value. the biggest volumes going to Indonesia but with and Canada are also important export destinations.

Figure 2.1: Megaproject/extractive industry export value 2000-2015 (selected prducts) Figure 2.3: Exports destinations by product (2011-2015 avg.) Destinations of export products - megaproject/extractive resources (2011-2015 avg.) (million USD) 3,000 100% Aluminium Coal Natural gas Heavy mineral sands 90% Precious stones 2,500 Singapore Other Other Other 80% 3% 5% 7% 5% Heavy mineral sands 70% Singapore 2,000 16% 60% Natural gas United Japan Other India 4% 1,500 50% Kingdom 20% 22% Coal 9% 40% Italy 1,000 30% China India Electricity Netherlands South Africa 17% 25% 52% USA 20% 83% 95% Spain 500 Aluminium 15% China 10% 6% 16% - 0% % of total exports – right axis 2000 2005 2012 2012 2014 2015

Source: UN Comtrade Destinations of export products - cash crops (2011-2015 avg.) Sugar Cotton Sesame Cashew nuts India Figure 2.2: Cash crops and foods exports value 2000-2015 (selected products) Singapore 2% Malaysia 2% Other Lebanon 4% 8% 2% (million USD) France Viet Nam UAE 6% Other Other 2% UAE Other 7% 16% Indonesia 3% 700 100% 17% Portugal 16% Cashew nuts 24% 90% 25% South 600 India Africa 43% 80% Almonds Bangladesh China 3% Japan Canada 500 16% 16% 61% 70% Sesame Italy Spain Singapore 14% 22% 24% South USA 60% 9% China Turkey Africa 17% 400 Crustaceances Netherlands 14% 6% 50% 6% Mauritius 5% Banana 10% 300 40% Cotton Source: UN Comtrade 200 30% 20% Sugar 100 10% Tabocco - 0% % of total exports – right axis 2000 2005 2012 2012 2014 2015 Source: UN Comtrade 2.2 Main Cash Crops and Foods Exports

Turning from general trends to look in more detail export. Production peaked in the 70’s when Mozam- at specifi c export products, this section will analyse bique was the world’s leading exporter of shelled seven key export products for Mozambique: cash- cashew. However, in recent years the volume and Figure 2.3 summarises the principle export destina- gas exploration and processing starts in northern ew, sesame, almonds, cotton, banana, sugar and quality of cashew nuts produced and exported has tions in relation to industrial projects and mineral re- Mozambique. The market for heavy mineral sands crustaceans. declined. sources and cash crops over the period 2011 to 2015 shows greater diversity with exports going to Asia, Cashew Nuts The volume of cashew nuts exported over the pe- Over 90% of Mozambican coal is exported to Asia, Europe and the USA, although India and China rep- riod 2005-2015 has been fl uctuating as export value with over 50% going to India and a further 25% to resent the biggest markets. Aluminium export is a Since production began in the early 20th century, has sharply declined in 2015 (Fig. 2.4). This shows China. Almost all of the natural gas currently pro- special case with of 80% of the aluminium produced cashew nuts have been an important cash crop a marked contrast to global trends where export vol- duced in Mozambique is exported to South Africa. going to the Netherlands as the Port of Rotterdam is for Mozambique. In the post war period numerous umes have more than doubled over the same period However, this is likely to change signifi cantly once a logistic hub for trade in Europe. factories were built for processing cashew nuts for and export value has increased by almost tenfold.

6 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 7 Regarding cash crops, the markets for sugar and Bangladesh, China, Singapore and Vietnam as im- cotton are relatively diverse. Sugar is exported al- portant destinations. Over 60 % of the exports of most entirely to Europe, although split relatively sesame go to China, with the balance exported to equally between Portugal, Spain and Italy and with various countries mainly in Asia. Finally, India is the smaller volumes going to France and the Nether- principal market for Mozambican cashew nuts ac- lands. Cotton exports go almost entirely to Asia with counting for over 40% of export volume, but the USA the biggest volumes going to Indonesia but with and Canada are also important export destinations.

Figure 2.3: Exports destinations by product (2011-2015 avg.) Destinations of export products - megaproject/extractive resources (2011-2015 avg.)

Aluminium Coal Natural gas Heavy mineral sands

Singapore Other Other Other 3% 5% 7% 5% Singapore 16% United Japan Other India Kingdom 4% 20% 22% 9%

India Italy Netherlands China 17% 25% 52% South Africa 83% 95% USA Spain 15% China 6% 16%

Destinations of export products - cash crops (2011-2015 avg.)

Sugar Cotton Sesame Cashew nuts India Singapore 2% Malaysia 2% Other Lebanon 4% 8% 2% France Viet Nam UAE 6% Other Other 2% UAE Other 17% 7% 16% Indonesia 3% 16% Portugal 24% 25% South India Africa Bangladesh China 43% 3% Japan Canada 16% 16% 61% Italy Spain Singapore 14% 22% 24% South USA 9% China Turkey Africa 17% Netherlands 14% 6% 6% Mauritius 5% 10%

Source: UN Comtrade

2.2 Main Cash Crops and Foods Exports

Cashew Nuts The volume of cashew nuts exported over the period 2005-2015 has been ﬂ uctuating as export value Since production began in the early 20th century, has sharply declined in 2015 (Fig. 2.4). This shows cashew nuts have been an important cash crop a marked contrast to global trends where export vol- for Mozambique. In the post war period numerous umes have more than doubled over the same period factories were built for processing cashew nuts for and export value has increased by almost tenfold.

Positioning of Mozambique in the International Trade 2016 7 Figure 2.4 Mozambique cashew nuts exports and global trends Figure 2.5: Mozambique cashew nuts export destinations

Mozambique Global trend 2006-2010 Average 2011-2015 Average

(thousand tonne) (million USD) (thousand tonne) (million USD) 15 25 2,000 6,000 UAE Lebanon 1% 2% 5,000 Other 12 20 1,500 13% UAE Other 3% 16% 4,000 Lebanon 9 15 2% USA 7% 1,000 3,000 India South Africa India 6 10 50% 43% 2,000 7% South 500 Africa Canada 3 5 5% 14% 1,000 Netherlands 20% USA 17% 0 - - - 2005 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Ex volume -left axis Export right axis Ex volume -left axis Export right axis Source: UN Comtrade

Table 2.2: Cashew nuts export world ranking Mozambique: cashew nuts exports in shell and shelled 2006 ranking Exports value (USD) 2014 ranking Exports value (USD) (thousand tonne) (million USD) 10 20 1 India 544,229,716 1 Viet Nam 1,931,387,530 2 Viet Nam 455,763,308 2 India 883,240,879 8 16 3 Brazil 187,538,588 3 Cote d’Ivoire 818,171,096 4 Netherlands 107,124,478 4Tanzania 391,880,956 6 12 5 Cote d’Ivoire 92,376,962 5 Netherlands 199,009,852 4 8 6 Indonesia 56,584,795 6 Brazil 110,302,452 7Tanzania 49,900,621 7 Indonesia 103,642,649 2 4 8 Mozambique 36,688,195 8 Nigeria 91,662,971 9 Benin 16,553,863 9 UAE 90,739,498 0 0 2005 2012 2013 2014 2015 10 Belgium 16,342,431 10 Germany 68,597,104 11 USA 12,775,166 11 Benin 65,149,698 Volume - casehew huts in shell Volume - casehew huts shelled 12 Germany 9,148,000 12 Burkina Faso 42,951,571 Value - casehew huts in shell Value - casehew huts shelled 13 Ghana 9,012,535 13 Belgium 29,418,299 Source: UN Comtrade 14 Italy 7,495,788 14 Guinea 23,445,523 15 United Kingdom 6,173,580 15 Singapore 19,222,269 This may be partly explained by the percentage of Mozambique’s global market share in cashew nut 16 Singapore 3,770,318 16 Mozambique 19,092,930 the total crop that is processed, with shelled nuts has dropped signiﬁ cantly from 2.25% in 2006 to 17 Kenya 3,258,871 17 USA 16,441,894 having a greater market value than unshelled or raw 0.38% in 2014, and the country has slipped in world cashew, as illustrated in Figure 2.5. The higher mar- rankings from 8th to 16th place over the same period 18 Hong Kong 1,742,720 18 United Kingdom 15,997,026 ket value of shelled nuts means there is upside po- (Table 2.2). There is a remarkable growth in cashew 19 Greece 1,682,427 19 Italy 11,712,756 tential for the economy of Mozambique to add value export by African countries, notably in West Africa, 20 Sri Lanka 1,148,251 20 Austria 6,644,115 before exporting, yet it requires greater competitive- where the export value in Cote d’Ivoire has doubled, World Total 1,632,531,586 World Total 4,994,341,256 ness to access the export markets. and where Benin and Burkina Faso have appeared Mozambique % 2.25% Mozambique % 0.38% India is the principal export destination for Mozam- as important exporters. As to Mozambique’s neigh- Source: UN Comtrade bican cashew but in the last ﬁ ve years the USA bour Tanzania, the value of exports of cashew nuts and Canada have become important markets tak- has increased by a factor of eight over the period ing a 17 and 14 percent market share respectively 2006 to 2014. By contrast the value of Mozambican Sesame (Fig.2.5) exports have almost halved over the same period. Mozambican farmers have been encouraged to is considered more favourable to that of other more produce sesame as the price paid for the product traditional cash crops such as cotton and tobacco.

8 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 9 Figure 2.5: Mozambique cashew nuts export destinations

2006-2010 Average 2011-2015 Average

UAE Lebanon 1% 2% Other 13% UAE Other 3% 16% Lebanon 2% USA 7% India South Africa India 50% 43% 7% South Africa Canada 5% 14% Netherlands 20% USA 17%

Source: UN Comtrade

Table 2.2: Cashew nuts export world ranking

2006 ranking Exports value (USD) 2014 ranking Exports value (USD) 1 India 544,229,716 1 Viet Nam 1,931,387,530 2 Viet Nam 455,763,308 2 India 883,240,879 3 Brazil 187,538,588 3 Cote d’Ivoire 818,171,096 4 Netherlands 107,124,478 4Tanzania 391,880,956 5 Cote d’Ivoire 92,376,962 5 Netherlands 199,009,852 6 Indonesia 56,584,795 6 Brazil 110,302,452 7Tanzania 49,900,621 7 Indonesia 103,642,649 8 Mozambique 36,688,195 8 Nigeria 91,662,971 9 Benin 16,553,863 9 UAE 90,739,498 10 Belgium 16,342,431 10 Germany 68,597,104 11 USA 12,775,166 11 Benin 65,149,698 12 Germany 9,148,000 12 Burkina Faso 42,951,571 13 Ghana 9,012,535 13 Belgium 29,418,299 14 Italy 7,495,788 14 Guinea 23,445,523 15 United Kingdom 6,173,580 15 Singapore 19,222,269 16 Singapore 3,770,318 16 Mozambique 19,092,930 17 Kenya 3,258,871 17 USA 16,441,894 18 Hong Kong 1,742,720 18 United Kingdom 15,997,026 19 Greece 1,682,427 19 Italy 11,712,756 20 Sri Lanka 1,148,251 20 Austria 6,644,115 World Total 1,632,531,586 World Total 4,994,341,256 Mozambique % 2.25% Mozambique % 0.38%

Source: UN Comtrade

Sesame

Mozambican farmers have been encouraged to is considered more favourable to that of other more produce sesame as the price paid for the product traditional cash crops such as cotton and tobacco.

Positioning of Mozambique in the International Trade 2016 9 The fi rst sesame processing plant in Mozambique Mozambique has largely maintained its global rank- Table 2.3: Sesame exports word ranking was installed in the port city of Nacala in 2010. ing in relation to the value of sesame exports slip- 2006 ranking Exports (USD) 2014 ranking Exports (USD) Export volumes have shown considerable varia- ping one place from 11th in 2006 to 12th in 2014. tion over the period 2005-2015 (Fig 2.6) especially Export value tripled over the period, but global mar- 1 India 171,301,580 1 India 813,601,513 when compared to global trends which show steady ket share dropped by almost a third from 1.82% to 2 Ethiopia 160,618,956 2 Ethiopia 714,545,764 growth in both export volumes and market value 1.26% over the 10-year period (Table 2.3). India and 3 Fmr Sudan 143,712,121 3 Nigeria 553,561,191 Ethiopia are the dominant market players for sesa- over the same period (Fig. 2.6). 4 China 55,915,893 4Tanzania 324,414,519 me with their export value increasing fi vefold over Asia, particularly China and Japan, are the princi- the last 10 years. Mozambique appears to have per- 5 Paraguay 28,363,175 5 Burkina Faso 131,838,092 pal export destinations for Mozambican sesame ac- formed less well than other African sesame export- 6Tanzania 21,135,390 6 China 97,584,787 counting for 71% of exports in the period 2006-10 and ers. The export value of Tanzanian sesame has in- 7 Netherlands 19,080,060 7 Paraguay 78,608,002 rising to 77% in the period 2011-15. Export of sesame creased by over 15 times since 2006 placing it in 4th 8 Guatemala 16,206,568 8 Pakistan 65,401,723 to neighbouring South Africa has maintained a con- position in global ranking in 2014. Nigeria, Burkina 9 Mexico 15,696,397 9 Uganda 55,165,179 sistent 8% share but exports to Turkey which took Faso and Uganda have all overtaken Mozambique 10 Bolivia 13,736,288 10 Guatemala 52,858,249 15% of volume in the period 2006-10 have fallen off in the global rankings, with the value of Ugandan 11 Mozambique 13,499,546 11 Netherlands 47,432,050 signifi cantly in the last fi ve years to just 2% (Fig. 2.7). sesame increasing tenfold over the period. 12 Pakistan 10,884,218 12 Mozambique 40,453,920 13 Venezuela 9,700,650 13 Mexico 26,141,253 Figure 2.6: Mozambique sesame exports and global trends 14 Thailand 7,736,563 14 Egypt 17,106,452 15 Turkey 7,261,183 15 Germany 16,640,180 Mozambique Global trend 16 Uganda 4,547,430 16 Greece 14,489,832 (thousand tonnes) (million USD) (thousand tonnes) (million USD) 17 Germany 4,351,000 17 USA 14,140,743 50 50 2,000 4,000 18 Nicaragua 4,319,270 18 Bolivia 13,018,099 40 40 19 Greece 3,090,870 19 Nicaragua 12,986,969 1,500 3,000 20 Egypt 2,925,392 20 Afghanistan 11,861,646 30 30 World Total 742,134,620 World Total 3,203,518,646 1,000 2,000 20 20 Mozambique % 1.82% Mozambique % 1.26% Source: UN Comtrade 500 1,000 10 10

0 0 --

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Almonds Export volume - left axis Exports value - right axis Export volume - left axis Exports value - right axis Almond is a relatively new export crop for Mozam- destination (Fig. 2.9). Exports to Singapore have Source: UN Comtrade bique with very little production prior to 2005. Export seen a signifi cant fall over the period 2006-14 and volumes and values have shown signifi cant varia- China has dropped out of the top 8 export destina- Figure 2.7: Mozambique sesame export destinations tion (Fig 2.8) in marked contrast to global trends tions. 2006-2010 Average 2011-2015 Average which have shown substantial growth over the pe- Despite variable export volumes, Mozam- India riod 2005-15. bique’s global ranking in terms of export value 1% Singapore India 2% 2% The Netherlands has continued as the major des- for almond has improved substantially, climb- South Africa UAE 2% Other 2% tination for Mozambican almonds over the last 10 ing from 43rd place in 2006 to 14th place in 8% Other 8% years but exports to the USA and South Africa have 2014, and with global market share growing UAE 2% seen signifi cant growth in the period 2011 to 2015 from almost zero to 0.29% over the same pe- South Africa Turkey 3% and Australia has appeared as a notable export riod (Table2.4). 15% Turkey 6% China 63% Japan China Japan 61% 9% 16%

Source: UN Comtrade

10 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 11 Table 2.3: Sesame exports word ranking

2006 ranking Exports (USD) 2014 ranking Exports (USD) 1 India 171,301,580 1 India 813,601,513 2 Ethiopia 160,618,956 2 Ethiopia 714,545,764 3 Fmr Sudan 143,712,121 3 Nigeria 553,561,191 4 China 55,915,893 4Tanzania 324,414,519 5 Paraguay 28,363,175 5 Burkina Faso 131,838,092 6Tanzania 21,135,390 6 China 97,584,787 7 Netherlands 19,080,060 7 Paraguay 78,608,002 8 Guatemala 16,206,568 8 Pakistan 65,401,723 9 Mexico 15,696,397 9 Uganda 55,165,179 10 Bolivia 13,736,288 10 Guatemala 52,858,249 11 Mozambique 13,499,546 11 Netherlands 47,432,050 12 Pakistan 10,884,218 12 Mozambique 40,453,920 13 Venezuela 9,700,650 13 Mexico 26,141,253 14 Thailand 7,736,563 14 Egypt 17,106,452 15 Turkey 7,261,183 15 Germany 16,640,180 16 Uganda 4,547,430 16 Greece 14,489,832 17 Germany 4,351,000 17 USA 14,140,743 18 Nicaragua 4,319,270 18 Bolivia 13,018,099 19 Greece 3,090,870 19 Nicaragua 12,986,969 20 Egypt 2,925,392 20 Afghanistan 11,861,646 World Total 742,134,620 World Total 3,203,518,646 Mozambique % 1.82% Mozambique % 1.26% Source: UN Comtrade

Almonds

Almond is a relatively new export crop for Mozam- destination (Fig. 2.9). Exports to Singapore have bique with very little production prior to 2005. Export seen a signifi cant fall over the period 2006-14 and volumes and values have shown signifi cant varia- China has dropped out of the top 8 export destination (Fig 2.8) in marked contrast to global trends tions. which have shown substantial growth over the pe- Despite variable export volumes, Mozam- riod 2005-15. bique’s global ranking in terms of export value The Netherlands has continued as the major des- for almond has improved substantially, climb- tination for Mozambican almonds over the last 10 ing from 43rd place in 2006 to 14th place in years but exports to the USA and South Africa have 2014, and with global market share growing seen signifi cant growth in the period 2011 to 2015 from almost zero to 0.29% over the same pe- and Australia has appeared as a notable export riod (Table2.4).

Positioning of Mozambique in the International Trade 2016 11 Figure 2.8: Mozambique almonds exports and global trends Table 2.4: Almonds export world ranking

Mozambique Global trend 2006 Ranking Exports (USD) 2014 Ranking Exports (USD) (thousand tonnes) (million USD) (thousand tonnes)(million USD) 1 USA 1,781,207,394 1 USA 4,437,673,773 10 20 1,400 7,000 2 Spain 364,748,850 2 Spain 629,664,636 1,200 6,000 3 Italy 64,777,202 3 Australia 391,949,143 8 4 Chile 49,204,000 4 UAE 264,534,132 15 1,000 5,000 5Greece 46,190,654 5 Hong Kong 152,413,174 6 800 4,000 10 6 Netherlands 42,505,831 6 Germany 135,562,116 600 3,000 4 7 Germany 40,899,692 7 Netherlands 109,080,317 5 400 2,000 8 France 39,876,596 8 Italy 106,480,302 2 9 UAE 26,440,633 9 Belgium 71,413,371 200 1,000 10 Australia 25,769,830 10 Turkey 70,759,557 0 0 - - 11 Belgium 22,474,353 11 Chile 43,719,074 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 12 Hong Kong 21,717,756 12 United Kingdom 35,697,238 Export volume - left axis Exports value - right axis Export volume - left axis Exports value - right axis 13 Morocco 12,167,285 13 Benin 22,492,107 14 United Kingdom 7,459,634 14 Mozambique 18,849,840 Source: UN Comtrade 15 Tunisia 6,796,223 15 France 15,137,819 16 Turkey 5,479,747 16 Greece 11,564,900 Figure 2.9: Mozambique almonds export destinations 17 Syria 3,661,593 17 Czech Rep. 9,670,837 2006-2010 Average 2011-2015 Average 18 Portugal 3,416,027 18 Austria 8,069,514 Canada 19 Denmark 3,203,058 19 Sweden 7,167,306 3% 43 Mozambique 155,907 20 Poland 6,992,729 Singapore Other India Other 3% 12% World Total 2,588,741,297 World Total 6,613,605,950 4% 17% Mozambique % 0.01% Mozambique % 0.29% Netherlands Netherlands 29% 26% Source: UN Comtrade India China 4% Australia 4% USA 9% 9% USA Singapore 22% South Africa 19% South Africa 18% 20% Cotton

Historically cotton has been an important agricultural Malaysia appearing as important trading partners

Source: UN Comtrade export crop for Mozambique. Produced on large plan- (Fig. 2.11). tations during the colonial period, cotton today is one Mozambique’s importance as a cotton exporter has of the major sources of income for rural households marginally improved over the period 2006-2014 in central and northern Mozambique. Nevertheless, climbing from 23rd to 18th place in the global rank- as noted in Chapter 1, the global price of cotton is ing by export value and with global market share notably volatile and as a result, the export volume and increasing from 0.48% to 0.54% over the same pe- value of Mozambican cotton has shown considerable riod (Table 2.5). The USA, India and Australia are variation over the last 10 years with growth in the pe- the market leaders with the latter two more than riod 2010-2013 corresponding with global price fl uc- doubling the value of cotton exports over the last tuation (Fig. 2.10). Global export volume and value 10 years. In Africa, Mozambique is outperformed have also varied showing signifi cant growth from by West African countries with the export value of 2009, peaking in 2012, before tailing off to 2014. cotton in Benin and Cote d’Ivoire growing by signifi - Asia is the principal market for Mozambican cotton cantly more than for Mozambique, and Nigeria and with Indonesia being the principal destination in the Burkina Faso overtaking Mozambique in the world period 2011-15 but with Singapore, Vietnam and rankings.

12 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 13 Table 2.4: Almonds export world ranking

2006 Ranking Exports (USD) 2014 Ranking Exports (USD) 1 USA 1,781,207,394 1 USA 4,437,673,773 2 Spain 364,748,850 2 Spain 629,664,636 3 Italy 64,777,202 3 Australia 391,949,143 4 Chile 49,204,000 4 UAE 264,534,132 5Greece 46,190,654 5 Hong Kong 152,413,174 6 Netherlands 42,505,831 6 Germany 135,562,116 7 Germany 40,899,692 7 Netherlands 109,080,317 8 France 39,876,596 8 Italy 106,480,302 9 UAE 26,440,633 9 Belgium 71,413,371 10 Australia 25,769,830 10 Turkey 70,759,557 11 Belgium 22,474,353 11 Chile 43,719,074 12 Hong Kong 21,717,756 12 United Kingdom 35,697,238 13 Morocco 12,167,285 13 Benin 22,492,107 14 United Kingdom 7,459,634 14 Mozambique 18,849,840 15 Tunisia 6,796,223 15 France 15,137,819 16 Turkey 5,479,747 16 Greece 11,564,900 17 Syria 3,661,593 17 Czech Rep. 9,670,837 18 Portugal 3,416,027 18 Austria 8,069,514 19 Denmark 3,203,058 19 Sweden 7,167,306 43 Mozambique 155,907 20 Poland 6,992,729 World Total 2,588,741,297 World Total 6,613,605,950 Mozambique % 0.01% Mozambique % 0.29% Source: UN Comtrade

Cotton

Historically cotton has been an important agricultural Malaysia appearing as important trading partners export crop for Mozambique. Produced on large plan- (Fig. 2.11). tations during the colonial period, cotton today is one Mozambique’s importance as a cotton exporter has of the major sources of income for rural households marginally improved over the period 2006-2014 in central and northern Mozambique. Nevertheless, climbing from 23rd to 18th place in the global rank- as noted in Chapter 1, the global price of cotton is ing by export value and with global market share notably volatile and as a result, the export volume and increasing from 0.48% to 0.54% over the same pe- value of Mozambican cotton has shown considerable riod (Table 2.5). The USA, India and Australia are variation over the last 10 years with growth in the pe- the market leaders with the latter two more than riod 2010-2013 corresponding with global price fl uc- doubling the value of cotton exports over the last tuation (Fig. 2.10). Global export volume and value 10 years. In Africa, Mozambique is outperformed have also varied showing signifi cant growth from by West African countries with the export value of 2009, peaking in 2012, before tailing off to 2014. cotton in Benin and Cote d’Ivoire growing by signifi - Asia is the principal market for Mozambican cotton cantly more than for Mozambique, and Nigeria and with Indonesia being the principal destination in the Burkina Faso overtaking Mozambique in the world period 2011-15 but with Singapore, Vietnam and rankings.

Positioning of Mozambique in the International Trade 2016 13 Figure 2.10: Mozambique cotton exports and global trends Table 2.5: Cotton exports world ranking

Mozambique Global trend 2006 ranking Exports (USD) 2014 ranking Exports (USD) (thousand tonnes) (million USD) (thousand tonnes) (million USD) 1 USA 4,641,121,974 1 USA 4,501,584,351 70 120 12,000 25,000 2 India 992,939,039 2 India 2,880,677,123 60 3 Australia 764,544,644 3 Australia 1,812,264,006 100 10,000 20,000 4Greece 414,035,736 4 Brazil 1,359,826,889 50 80 8,000 5 Brazil 342,721,628 5 Burkina Faso 496,611,800 40 15,000 6 Mali 254,078,848 6Greece 417,961,866 60 6,000 30 7 Syria 194,266,487 7 Cote d’Ivoire 323,251,535 10,000 40 4,000 8 Kazakhstan 180,750,202 8 Benin 288,167,103 20 9Turkey 138,555,686 9 Pakistan 251,777,123 20 5,000 10 2,000 10 Egypt 132,516,874 10 Nigeria 181,961,335 11 Pakistan 116,820,039 11 Turkey 170,720,195 0 - - - 12 Cote d’Ivoire 113,524,524 12 Cameroon 160,565,582 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 13 Cameroon 103,741,608 13 Spain 153,810,726

Export volume - left axis Exports value - right axis Export volume - left axis Export value - right axis 14 Spain 97,902,716 14 Argentina 120,577,571

Source: UN Comtrade 15 Benin 90,837,230 15 UAE 89,942,916 16 Zimbabwe 83,120,690 16 Egypt 89,613,305 Figure 2.11: Mozambique cotton export destinations 17 Fmr Sudan 71,116,956 17 Kazakhstan 80,264,846 18 Tanzania 69,077,820 18 Mozambique 77,354,954 2003-2007 Average 2011-2015 Average 19 Mexico 62,996,162 19 Germany 75,878,216 Malaysia 23 Mozambique 45,691,101 20 Zambia 67,173,377 4% Indonesia World Total 9,599,912,474 World Total 14,287,068,758 14% Other 16% Indonesia Mozambique % 0.48% Mozambique % 0.54% 24% Source: UN Comtrade Portugal Other 10% 44% Viet Nam 7% China 10% Bangladesh Singapore 16% 9%

Mauritius China Banana 10% 14%

South Africa Bananas are one of the most common fruit crops Africa as the principle export destination, although 9% grown in Mozambique, but like Sesame, the com- in the last 5 years the market has become more di- Bangladesh Thailand 3% 7% mercialisation of Banana is a fairly recent develop- versiﬁ ed with the notable entry of the Gulf States Pakistan 3% ment and banana is a relatively new export crop for (Fig. 2.13). the country. Approximately 60% of banana produc- Growth in the value of Mozambique’s banana exports Source: UN Comtrade tion is undertaken on medium to large commercial has been impressive in the last ten years with the plantations mainly in Maputo, Manica and Nampula country climbing in world ranking from 53rd place in Provinces. Export volume and value of Banana has 2006 to 20th place in 2014 and market share growing grown signiﬁ cantly over the last 10 years from al- from nearly zero to 0.41% over the same period (Ta- most zero in 2004 outperforming the global trend ble 2.6). It appears that Mozambique has few com- (Figs. 2.12). petitors in the Southern Africa region and looking to The market for Mozambican banana over the last 10 Africa as a whole, Mozambique is outperformed in years has been dominated by neighbouring South West Africa only by Cameroon and Cote d’Ivoire.

14 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 15 Table 2.5: Cotton exports world ranking

2006 ranking Exports (USD) 2014 ranking Exports (USD) 1 USA 4,641,121,974 1 USA 4,501,584,351 2 India 992,939,039 2 India 2,880,677,123 3 Australia 764,544,644 3 Australia 1,812,264,006 4Greece 414,035,736 4 Brazil 1,359,826,889 5 Brazil 342,721,628 5 Burkina Faso 496,611,800 6 Mali 254,078,848 6Greece 417,961,866 7 Syria 194,266,487 7 Cote d’Ivoire 323,251,535 8 Kazakhstan 180,750,202 8 Benin 288,167,103 9Turkey 138,555,686 9 Pakistan 251,777,123 10 Egypt 132,516,874 10 Nigeria 181,961,335 11 Pakistan 116,820,039 11 Turkey 170,720,195 12 Cote d’Ivoire 113,524,524 12 Cameroon 160,565,582 13 Cameroon 103,741,608 13 Spain 153,810,726 14 Spain 97,902,716 14 Argentina 120,577,571 15 Benin 90,837,230 15 UAE 89,942,916 16 Zimbabwe 83,120,690 16 Egypt 89,613,305 17 Fmr Sudan 71,116,956 17 Kazakhstan 80,264,846 18 Tanzania 69,077,820 18 Mozambique 77,354,954 19 Mexico 62,996,162 19 Germany 75,878,216 23 Mozambique 45,691,101 20 Zambia 67,173,377 World Total 9,599,912,474 World Total 14,287,068,758 Mozambique % 0.48% Mozambique % 0.54% Source: UN Comtrade

Banana

Bananas are one of the most common fruit crops Africa as the principle export destination, although grown in Mozambique, but like Sesame, the com- in the last 5 years the market has become more di- mercialisation of Banana is a fairly recent develop- versiﬁ ed with the notable entry of the Gulf States ment and banana is a relatively new export crop for (Fig. 2.13). the country. Approximately 60% of banana produc- Growth in the value of Mozambique’s banana exports tion is undertaken on medium to large commercial has been impressive in the last ten years with the plantations mainly in Maputo, Manica and Nampula country climbing in world ranking from 53rd place in Provinces. Export volume and value of Banana has 2006 to 20th place in 2014 and market share growing grown signiﬁ cantly over the last 10 years from al- from nearly zero to 0.41% over the same period (Ta- most zero in 2004 outperforming the global trend ble 2.6). It appears that Mozambique has few com- (Figs. 2.12). petitors in the Southern Africa region and looking to The market for Mozambican banana over the last 10 Africa as a whole, Mozambique is outperformed in years has been dominated by neighbouring South West Africa only by Cameroon and Cote d’Ivoire.

Positioning of Mozambique in the International Trade 2016 15 Figure 2.12: Mozambique banana exports and global trends Table 2.6: Banana exports world ranking

Mozambique Global trend 2006 ranking Exports (USD) 2014 ranking Exports (USD) (thousand tonnes) (million USD) (thousand tonnes) (million USD) 1 Ecuador 1,213,576,373 1 Ecuador 2,620,664,069 150 50 30,000 18,000 2 Belgium 1,151,309,846 2 Belgium 1,335,550,929 3 Costa Rica 645,152,006 3 Philippines 1,137,315,622 120 40 25,000 15,000 4 Colombia 525,457,557 4 Colombia 835,546,254 20,000 12,000 5 Germany 406,015,000 5 Guatemala 721,443,494 90 30 6 Philippines 405,444,333 6 USA 470,246,918 15,000 9,000 7 USA 240,069,557 7 Germany 391,873,334 60 20 10,000 6,000 8 Guatemala 233,031,692 8 Dominican Rep. 331,572,516 9 Honduras 131,525,973 9 Netherlands 249,783,121 30 10 5,000 3,000 10 Ghana 118,945,693 10 France 246,041,287

- - - - 11 Cote d’Ivoire 115,625,889 11 Honduras 221,616,975 12 France 114,726,827 12 Mexico 179,693,289 2004 2006 2008 2010 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Export volume - left axis Export value - right axis 13 Netherlands 112,765,451 13 Cote d’Ivoire 139,788,913 Export volume - left axis Export value - right axis 14 Panama 110,162,330 14 Spain 139,233,789 Source: UN Comtrade 15 Italy 104,865,505 15 Peru 119,415,764 16 Cameroon 64,653,451 16 Panama 97,900,985 Figure 2.13: Mozambique banana export destination 17 Dominican Rep. 58,149,595 17 Cameroon 77,074,916 18 Sweden 45,166,669 18 Italy 60,192,897 2006-2010 Average 2012-2015 Average 19 Brazil 38,555,322 19 Czech Rep. 49,747,656 Other Other 3% Kuwait 53 Mozambique 1,670,994 20 Mozambique 41,533,060 2% 2% Iran World Total 6,251,811,011 World Total 10,080,297,698 4% UAE Mozambique % 0.03% Mozambique % 0.41% 4% Source: UN Comtrade Iran 16%

Saudi Arabia 18% Sugar South Africa 82% South Africa Historically, Mozambique has been a major sugar 50% over the same period (Fig. 2.14). The glob- 69% producer but by 1980 production had fallen to a sig- al sugar price is subject to volatility and due to nifi cant low level as a result of the civil war. The re- excess supply has fallen since 2011. The value vitalisation of Mozambique’s sugar industry is con- of Mozambican sugar exports has mirrored this sidered a major success story attracting investment trend. Source: UN Comtrade from South Africa and Mauritius. Europe is the principle destination for Mozambican Sugar is both exported, as cane or syrup (molas- sugar exports with over 70% of exports going to ses), and imported as refi ned, white sugar mainly Portugal, Spain and Italy in the period 2011 to 2015 to meet demand from beverage companies and a and these markets growing signifi cantly over the number of breweries. Exports by volume have ris- last 10 years. (Fig. 2.15) en over the last ten years to over 300,000 tonnes Mozambique’s global ranking in the sugar market in 2015 and have outperformed the global trend by export value has improved climbing, from 69th where volumes have increased by approximately place in 2006 to 64th place in 2014 (Table 2.7).

16 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 17 Table 2.6: Banana exports world ranking

2006 ranking Exports (USD) 2014 ranking Exports (USD) 1 Ecuador 1,213,576,373 1 Ecuador 2,620,664,069 2 Belgium 1,151,309,846 2 Belgium 1,335,550,929 3 Costa Rica 645,152,006 3 Philippines 1,137,315,622 4 Colombia 525,457,557 4 Colombia 835,546,254 5 Germany 406,015,000 5 Guatemala 721,443,494 6 Philippines 405,444,333 6 USA 470,246,918 7 USA 240,069,557 7 Germany 391,873,334 8 Guatemala 233,031,692 8 Dominican Rep. 331,572,516 9 Honduras 131,525,973 9 Netherlands 249,783,121 10 Ghana 118,945,693 10 France 246,041,287 11 Cote d’Ivoire 115,625,889 11 Honduras 221,616,975 12 France 114,726,827 12 Mexico 179,693,289 13 Netherlands 112,765,451 13 Cote d’Ivoire 139,788,913 14 Panama 110,162,330 14 Spain 139,233,789 15 Italy 104,865,505 15 Peru 119,415,764 16 Cameroon 64,653,451 16 Panama 97,900,985 17 Dominican Rep. 58,149,595 17 Cameroon 77,074,916 18 Sweden 45,166,669 18 Italy 60,192,897 19 Brazil 38,555,322 19 Czech Rep. 49,747,656 53 Mozambique 1,670,994 20 Mozambique 41,533,060 World Total 6,251,811,011 World Total 10,080,297,698 Mozambique % 0.03% Mozambique % 0.41% Source: UN Comtrade

Sugar

Historically, Mozambique has been a major sugar 50% over the same period (Fig. 2.14). The glob- producer but by 1980 production had fallen to a sig- al sugar price is subject to volatility and due to nifi cant low level as a result of the civil war. The re- excess supply has fallen since 2011. The value vitalisation of Mozambique’s sugar industry is con- of Mozambican sugar exports has mirrored this sidered a major success story attracting investment trend. from South Africa and Mauritius. Europe is the principle destination for Mozambican Sugar is both exported, as cane or syrup (molas- sugar exports with over 70% of exports going to ses), and imported as refi ned, white sugar mainly Portugal, Spain and Italy in the period 2011 to 2015 to meet demand from beverage companies and a and these markets growing signifi cantly over the number of breweries. Exports by volume have ris- last 10 years. (Fig. 2.15) en over the last ten years to over 300,000 tonnes Mozambique’s global ranking in the sugar market in 2015 and have outperformed the global trend by export value has improved climbing, from 69th where volumes have increased by approximately place in 2006 to 64th place in 2014 (Table 2.7).

Positioning of Mozambique in the International Trade 2016 17 Figure 2.14: Mozambique sugar export/import and global trends Table 2.7: Sugar exports world ranking 2006 ranking Exports (USD) 2014 ranking Exports (USD) Mozambique Global trend (incl. sugar confectionery) 1 Brazil 6.347.522.140 1 Brazil 9.616.252.505 (thousand tonnes) (million USD) (thousand tonnes) (million USD) 2 France 1.845.479.894 2 Thailand 2.971.493.438 400 200 80,000 60,000 3 Germany 1.621.460.000 3 Germany 2.518.813.552 50,000 4 Belgium 1.411.180.375 4 USA 2.267.758.308 300 150 60,000 40,000 5 USA 1.042.843.156 5 Netherlands 1.818.248.331 6 Thailand 873.841.792 6 France 1.729.429.451 200 100 40,000 30,000 7 Netherlands 866.789.002 7 Mexico 1.721.427.209 20,000 8 Mexico 857.568.289 8 China 1.540.350.663 100 50 20,000 10,000 9 Canada 712.393.121 9 Belgium 1.364.298.276 10 United Kingdom 710.806.172 10 India 1.306.197.907 - - - - 11 India 680.052.657 11 Guatemala 1.051.411.878 2005 2007 2009 2010 2013 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 12 Colombia 568.786.182 12 Canada 934.930.883 Expots volume - left axis Import volume - left axis Expots volume - left axis Import value - right axis 13 Spain 520.577.315 13 Colombia 819.552.311 Expots value - right axis Import value - right axis 14 Poland 480.908.894 14 Spain 720.900.869

Source: UN Comtrade 15 China 462.420.105 15 Poland 679.670.253 16 Italy 407.703.221 16 Turkey 669.764.958 Figure 2.15: Mozambique sugar export destinations 17 United Arab Emirates 404.844.228 17 United Kingdom 645.645.649 18 South Africa 397.755.299 18 United Arab Emirates 576.019.561 2006-2010 Average 2011-2015 Average 19 Mauritius 357.019.910 19 South Africa 526.583.005 69 Mozambique 48.010.267 64 Mozambique 86.484.255 United France Other Grand Total 28.259.217.357 Grand Total 44.354.416.786 Kingdom 6% 15% 17% Mozambique % 0,17% Mozambique % 0,19% Portugal 25% Source: UN Comtrade Kenya Other 13% 48% Netherlands France 6% 9% Spain Italy 24% 22% Crustaceans Finland 8% Mozambique is famous for its seafood with prawn has reduced over the last 5 years with increasing and shrimp accounting for approximately 80% of Portugal volumes being exported to Asia and notably to Chi- 7% export volume of crustaceans. Nevertheless, export na which accounts for 18% of export volume. volumes and value have fallen by two thirds over Source: UN Comtrade The decline in the export value of Mozambican the last ten years in contrast to global trends where crustacean is reﬂ ected its global ranking that has volumes have steadily increased and export values fallen from 30th place in 2006 to 44th place in 2014 have risen signiﬁ cantly (Figs. 2.16). with a fall in global market share of more than two Europe is the principal export destination for Mo- thirds from 0.63% to 0.19% over the same period zambique’s crustaceans with Spain and Portugal (Table 2.8). On a more positive note, Mozambique consistently taking over 50% of export volume (Fig. appears to have few regional competitors in this 2.17). However, the importance of these markets sector.

18 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 19 Table 2.7: Sugar exports world ranking 2006 ranking Exports (USD) 2014 ranking Exports (USD) 1 Brazil 6.347.522.140 1 Brazil 9.616.252.505 2 France 1.845.479.894 2 Thailand 2.971.493.438 3 Germany 1.621.460.000 3 Germany 2.518.813.552 4 Belgium 1.411.180.375 4 USA 2.267.758.308 5 USA 1.042.843.156 5 Netherlands 1.818.248.331 6 Thailand 873.841.792 6 France 1.729.429.451 7 Netherlands 866.789.002 7 Mexico 1.721.427.209 8 Mexico 857.568.289 8 China 1.540.350.663 9 Canada 712.393.121 9 Belgium 1.364.298.276 10 United Kingdom 710.806.172 10 India 1.306.197.907 11 India 680.052.657 11 Guatemala 1.051.411.878 12 Colombia 568.786.182 12 Canada 934.930.883 13 Spain 520.577.315 13 Colombia 819.552.311 14 Poland 480.908.894 14 Spain 720.900.869 15 China 462.420.105 15 Poland 679.670.253 16 Italy 407.703.221 16 Turkey 669.764.958 17 United Arab Emirates 404.844.228 17 United Kingdom 645.645.649 18 South Africa 397.755.299 18 United Arab Emirates 576.019.561 19 Mauritius 357.019.910 19 South Africa 526.583.005 69 Mozambique 48.010.267 64 Mozambique 86.484.255 Grand Total 28.259.217.357 Grand Total 44.354.416.786 Mozambique % 0,17% Mozambique % 0,19%

Source: UN Comtrade

Crustaceans

Mozambique is famous for its seafood with prawn has reduced over the last 5 years with increasing and shrimp accounting for approximately 80% of volumes being exported to Asia and notably to Chi- export volume of crustaceans. Nevertheless, export na which accounts for 18% of export volume. volumes and value have fallen by two thirds over The decline in the export value of Mozambican the last ten years in contrast to global trends where crustacean is reﬂ ected its global ranking that has volumes have steadily increased and export values fallen from 30th place in 2006 to 44th place in 2014 have risen signiﬁ cantly (Figs. 2.16). with a fall in global market share of more than two Europe is the principal export destination for Mo- thirds from 0.63% to 0.19% over the same period zambique’s crustaceans with Spain and Portugal (Table 2.8). On a more positive note, Mozambique consistently taking over 50% of export volume (Fig. appears to have few regional competitors in this 2.17). However, the importance of these markets sector.

Positioning of Mozambique in the International Trade 2016 19 Figure 2.16: Mozambique crustaceans exports and global trends Table 2.8: Crustaceans exports world ranking

Mozambique Global trend 2006 ranking Exports (USD) 2014 ranking Exports (USD) (thousand tonnes) (million USD) (thousand tonnes) (million USD) 1 Canada 1,444,389,184 1 India 3,834,859,472 25 100 3,000 30,000 2 Viet Nam 1,421,035,051 2 Ecuador 2,580,590,424 3 Thailand 1,192,221,015 3 Viet Nam 2,553,754,261 20 80 2,500 25,000 4 Indonesia 1,067,782,393 4 Canada 2,295,764,945 2,000 20,000 5 India 922,800,349 5 China 2,043,897,702 15 60 6 Ecuador 591,886,549 6 Indonesia 1,815,229,830 1,500 15,000 7 USA 588,027,358 7 USA 1,138,532,729 10 40 1,000 10,000 8 Bangladesh 482,589,875 8 Thailand 966,598,099 9 Australia 481,733,373 9 Argentina 776,825,030 5 20 500 5,000 10 United Kingdom 467,255,007 10 Australia 699,795,116 11 Denmark 418,859,591 11 Netherlands 621,758,630 - - - - 12 China 398,469,866 12 Russian Federation 548,821,139 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 13 Mexico 374,697,119 13 Denmark 491,329,091 Export volume - left axis Export value - right axis Export volume - left axis Export value - right axis 14 Argentina 371,517,765 14 United Kingdom 441,933,755 Source: UN Comtrade 15 Belgium 360,933,410 15 Mexico 423,084,461 16 Netherlands 315,433,450 16 Malaysia 418,278,046 Figure 2.17: Mozambique crustaceans export destinations 17 Malaysia 286,190,492 17 Belgium 413,414,836 2006-2010 Average 2011-2015 Average 18 Brazil 241,114,229 18 Spain 409,786,537 19 Spain 239,386,924 19 Honduras 345,303,963 USA China Other Thailand 3% 0,4% 6% 3% France France 30 Mozambique 90,802,806 44 Mozambique 50,769,320 3% 3% World Total 14,340,753,842 World Total 26,304,890,877 Other 8% Mozambique % 0.63% Mozambique % 0.19% Japan Source: UN Comtrade 3% Viet Nam Portugal 3% 29% China South Africa Spain 11% 15% 47%

China 2.3 Main Food Imports Portugal 18% Spain 23% 26% Mozambique is a net importer of basic foods includ- 2015 with volume increasing ﬁ vefold over the pe- ing cereals (maize, wheat, and rice) and substan- riod. As Figure 2.18 illustrates, there is a high cor- tial quantities of meat and livestock products. Food relation between the increase in food imports and imports have risen substantially between 2001 and population growth. Source: UN Comtrade

20 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 21 Table 2.8: Crustaceans exports world ranking

2006 ranking Exports (USD) 2014 ranking Exports (USD) 1 Canada 1,444,389,184 1 India 3,834,859,472 2 Viet Nam 1,421,035,051 2 Ecuador 2,580,590,424 3 Thailand 1,192,221,015 3 Viet Nam 2,553,754,261 4 Indonesia 1,067,782,393 4 Canada 2,295,764,945 5 India 922,800,349 5 China 2,043,897,702 6 Ecuador 591,886,549 6 Indonesia 1,815,229,830 7 USA 588,027,358 7 USA 1,138,532,729 8 Bangladesh 482,589,875 8 Thailand 966,598,099 9 Australia 481,733,373 9 Argentina 776,825,030 10 United Kingdom 467,255,007 10 Australia 699,795,116 11 Denmark 418,859,591 11 Netherlands 621,758,630 12 China 398,469,866 12 Russian Federation 548,821,139 13 Mexico 374,697,119 13 Denmark 491,329,091 14 Argentina 371,517,765 14 United Kingdom 441,933,755 15 Belgium 360,933,410 15 Mexico 423,084,461 16 Netherlands 315,433,450 16 Malaysia 418,278,046 17 Malaysia 286,190,492 17 Belgium 413,414,836 18 Brazil 241,114,229 18 Spain 409,786,537 19 Spain 239,386,924 19 Honduras 345,303,963 30 Mozambique 90,802,806 44 Mozambique 50,769,320 World Total 14,340,753,842 World Total 26,304,890,877 Mozambique % 0.63% Mozambique % 0.19% Source: UN Comtrade

2.3 Main Food Imports

Mozambique is a net importer of basic foods includ- 2015 with volume increasing ﬁ vefold over the pe- ing cereals (maize, wheat, and rice) and substan- riod. As Figure 2.18 illustrates, there is a high cor- tial quantities of meat and livestock products. Food relation between the increase in food imports and imports have risen substantially between 2001 and population growth.

Positioning of Mozambique in the International Trade 2016 21 Figure 2.18: Food products imported by Mozambique 2001-2015 Wheat

(million USD) (million People) As bread is a staple food for many Mozambican last ﬁ ve years have witnessed greater diversity families, wheat is one of the country’s major food in supply with Australia emerging as a signiﬁ cant 600 30 imports. During the period 2006 to 2010, the supplier and imports from the UEA, Canada, and 550 USA, Germany and Argentinian were the princi- Russia all growing. In contrast, imports from the 500 28 pal suppliers, with 70% of wheat imports coming USA have seen a reduction of approximately two 450 from these countries (Fig. 2.20). However, the thirds. 26 400

350 24 Figure 2.20: Wheat import origins 300 2006-2010 Average 2011-2015 Average 22 250 South Africa 1% 200 10 Australia 150 4% UAE Other 4% 11% Germany 100 6% Other 18 17% Australia 50 24% USA 0 16 33% Russian 4% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Ukraine 6% UAE Brazil 12% Canada 7% Mozambique Rice Wheat 6% Argentina 14% population - right axis Germany Canada USA 23% 8% Russian 10% Maize Frozen sh Live animals & Meats 10%

Source: UN Comtrade; UN, World Population Prospects The 2015 Revision Source: UN Comtrade Moreover, Mozambique’s population is expected stantial growth in domestic agricultural produc- to continue to grow exponentially reaching a pro- tion, the import of basic foodstuffs will continue to Maize jected 40 million by 2030 and over 60 million by increase with resulting implications for the coun- 2050 (Fig 2.19). This suggests that without sub- try’s trade balance. Maize imports are sourced principally from emerged as the supplier of 11% of imported within the SADC region with neighbouring South maize and imports from Malawi, although small, Figure 2.19: Population trends and projections for Mozambique Africa being the dominant supplier (Fig. 2.21). have tripled from 1 % to 3 % over the last ten However, during the last ﬁ ve years, Zambia has years. (million People) 140 Figure 2.21: Maize import origins

120 2006-2010 Average 2011-2015 Average Other Zambia Malawi 6% 2% Other 100 1% 2% United Kingdom USA 3% 2% 80

Malawi 60 11%

20 South Africa 91% South Africa 0 82% 1990 2000 2013 2030 2050 2100

0-14 14-65 65+

Source: UN World Population Prospects The 2015 Revision Source: UN Comtrade

22 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 23 Wheat

As bread is a staple food for many Mozambican last ﬁ ve years have witnessed greater diversity families, wheat is one of the country’s major food in supply with Australia emerging as a signiﬁ cant imports. During the period 2006 to 2010, the supplier and imports from the UEA, Canada, and USA, Germany and Argentinian were the princi- Russia all growing. In contrast, imports from the pal suppliers, with 70% of wheat imports coming USA have seen a reduction of approximately two from these countries (Fig. 2.20). However, the thirds.

Figure 2.20: Wheat import origins

2006-2010 Average 2011-2015 Average South Africa 1% Australia 4% UAE Other 4% 11% Germany 6% Other 17% Australia 24% USA 33% Russian 4% Ukraine 6% UAE Brazil 12% Canada 7% 6% Argentina 14% Germany Canada USA 23% 8% Russian 10% 10%

Source: UN Comtrade

Maize

Maize imports are sourced principally from emerged as the supplier of 11% of imported within the SADC region with neighbouring South maize and imports from Malawi, although small, Africa being the dominant supplier (Fig. 2.21). have tripled from 1 % to 3 % over the last ten However, during the last ﬁ ve years, Zambia has years.

Figure 2.21: Maize import origins

2006-2010 Average 2011-2015 Average Other Zambia Malawi 6% 2% Other 1% 2% United Kingdom USA 3% 2%

Malawi 11%

South Africa 91% South Africa 82%

Source: UN Comtrade

Positioning of Mozambique in the International Trade 2016 23 Rice Frozen sh

Despite some domestic production, Mozam- supplier accounting for over 50% of rice imports The value of frozen fi sh imports has steadily grown Supply is dominated by two southern African countries bique depends on imports for two-thirds of total and supply from Vietnam has doubled (Fig. 2.22). over the last 15 years with a notable increase to over with Namibia supplying 60% of frozen fi sh imports and rice consumption. Most of the rice imported to Imports from Pakistan, a major supplier in the pe- $80 million per year in the last three years (Fig 2.23). a further 26% coming from South Africa (Fig. 2.23). Mozambique comes from Asia, although in the riod 2006 to 2010, fell by almost half to 18% over last fi ve years Thailand has become the principal the last fi ve years. Figure 2.23: Frozen fi sh imported by Mozambique & import origins

Other Figure 2.22: Rice import origins (million USD) 8% 100 Japan 2% 2006-2010 Average 2011-2015 Average New Zealand 4% UAE Other Japan Other 80 2% 2% 2% 21% China UAE 3% 6% 60 India Viet Nam 8% 7% South Africa 40 26% Thailand Namibia Viet Nam 36% India 60% 11% 14% 20 Thailand 54% Pakstan Pakstan 18% - 35% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: UN Comtrade

Source: UN Comtrade Tomatoes

Almost all fresh tomatoes imported into Mozambique has, in fact, varied over the period 2002 to 2014, yet Box 2.1: Food security and trade come from neighbouring South Africa and despite Mozambique has consistently imported fresh toma- According to The State of Agricultural Commodity Markets 2015-2016, a report prepared by FAO, population increases, some increase in domestic production, imported toes over the last ten years. The value of imported urbanization, and changing patterns of consumption, suggest that global food production will need to increase by 60% by tomatoes dominate Mozambique’s urban retail mar- preserved tomatoes has also slowly increased as a 2050 from the 2005–07 baseline and this will have signiﬁ cant implications for Africa where nearly all major food commodi- ket (Fig.2.24). The value of imported fresh tomatoes proportion of the total value of imported tomato. ties have a net import status, a situation that is expected to intensify. Trade affects the structure of domestic production and the productivity and composition of agricultural output, which in turn affects food availability, access, and utilization. Figure 2.24: Tomatoes imported by Mozambique & Fresh tomatoes import origin

The theme of the report for the 2015-16 edition is “Trade and food security: achieving a better balance between national pri- Other (million USD) 2% orities and the collective good” highlighting the importance of an integrated approach to food security. The report explains 5 that although openness to trade can resolve some of the problems related to food availability, and may lead to downward pressures on food prices, it also carries risks, potentially leaving countries exposed to short-term market shocks and import surges that can effectively undermine nascent domestic food production. Moreover, the increasingly globalized nature of 4 agricultural commodity markets means that the actions of one country or trading group can have knock-on effects for the rest of the world. Changes in production, market stability and trade policy in one major importer or exporter can have major 3 implications for world markets that will impact on global supplies and prices, and potentially on food security. The report also articulates that changing trading patterns can impact on domestic production and consumption of food 2 at all stages of the value chain. Increases in food imports can undermine domestic production and cause economic South Africa disruption that reduces incomes, raises unemployment and affects the welfare and food security of some population 98% groups. Moreover, individual countries are often more vulnerable than those that are members of regional trading blocs 1 which can facilitate a pooling of the risks associated with globalization and short term disruptions to domestic production.

The implications and impact of trade policy and food security policy are intertwined, emphasizing the importance 0 2002 2004 2006 2008 2010 2012 2014 of coordination among the key ministries and institutions of agriculture and trade. However, the report indicates many countries are not fully coordinating and prioritizing trade and food security issues in an integrated manner. Tomatoes fresh Tomatoes preserved Greater coherence between trade and domestic production policy is of the utmost importance to stabilize food security and reduce the vulnerability of developing countries to external shocks. Source: UN Comtrade

Source: FAO, The State of Agricultural Commodity Markets 2015-2016

24 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 25 Frozen sh

The value of frozen ﬁ sh imports has steadily grown Supply is dominated by two southern African countries over the last 15 years with a notable increase to over with Namibia supplying 60% of frozen ﬁ sh imports and $80 million per year in the last three years (Fig 2.23). a further 26% coming from South Africa (Fig. 2.23).

Figure 2.23: Frozen ﬁ sh imported by Mozambique & import origins

Other (million USD) 8% 100 Japan 2% New Zealand 4% 80

South Africa 40 26% Namibia 60% 20

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: UN Comtrade

Tomatoes

Almost all fresh tomatoes imported into Mozambique has, in fact, varied over the period 2002 to 2014, yet come from neighbouring South Africa and despite Mozambique has consistently imported fresh toma- some increase in domestic production, imported toes over the last ten years. The value of imported tomatoes dominate Mozambique’s urban retail mar- preserved tomatoes has also slowly increased as a ket (Fig.2.24). The value of imported fresh tomatoes proportion of the total value of imported tomato.

Figure 2.24: Tomatoes imported by Mozambique & Fresh tomatoes import origin

Other (million USD) 2% 5

2 South Africa 98% 1

0 2002 2004 2006 2008 2010 2012 2014

Tomatoes fresh Tomatoes preserved

Source: UN Comtrade

Positioning of Mozambique in the International Trade 2016 25 Meats and Live animals

The import of meat to Mozambique has stead- supplier (Fig. 2.25). Imports of beef and bovine ily increased over the last 15 years and broadly products were almost negligible for much of the correlates with population growth (as seen in Fig. period 2001 to 2010 (averaging just $1 million per Chapter 2.26). Despite commercial investment in Mozam- year) but have witnessed a marked growth over III bique’s poultry industry, poultry imports (mainly the last 5 years. Import of pork and other meats frozen chicken) account for the majority of im- has been small and fairly consistent for much of ported meat with volumes increasing substantially the period although has seen some growth in the over the last 15 years, the majority coming from last 3 years. Live animal imports come almost en- Brazil, although South Africa is also an important tirely from South Africa and Zimbabwe.

Figure 2.25: Mozambique meats and live animals imports and import origins

(million USD) 60

40 Global & Regional Trends

10 3.1 Demographic Trends and Food Security - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Demography as a factor of socio-economic change Population growth leads to various socio-economic Bovine meat Fowls meat Swine meat Other meats Live animals impacts on every aspect of human development. changes, including increased demand for food and The global population is expected to grow by ap- growth in available labour force. If the working age proximately 30% during the next 35 years, from 7.3 population can be equipped with the appropriate skill- billion in 2015 to 9.7 billion in 2050, according to UN set and absorbed into the labour force, then popula- Meat of Fowls Meat of Bovine Live Animals World Population Prospects. As Figure 3.1 shows, tion growth can contribute positively to domestic pro- Italy Other Zambia Other population in Africa is projected to grow at a faster duction, economic growth and the balance of trade. Portugal 3% 4% 3% 2% 2% Other Swaziland rate. In 2015, Africa accounted for 16% of the global However, if domestic production of food is unable to 6% 4% population, but by 2050, this is projected to rise to keep pace with population growth, dependence of Italy USA 2% 9% over 25% with the population of Africa exceeding food imports will increase, making a country more Zimbabwe that of both China and India. vulnerable to global commodity price ﬂ uctuations. 25% South Africa 16% Brazil South Africa South Africa 67% 89% 70%

Source: UN Comtrade

26 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 27 Chapter III

Global & Regional Trends

3.1 Demographic Trends and Food Security

Demography as a factor of socio-economic change Population growth leads to various socio-economic impacts on every aspect of human development. changes, including increased demand for food and The global population is expected to grow by ap- growth in available labour force. If the working age proximately 30% during the next 35 years, from 7.3 population can be equipped with the appropriate skill- billion in 2015 to 9.7 billion in 2050, according to UN set and absorbed into the labour force, then popula- World Population Prospects. As Figure 3.1 shows, tion growth can contribute positively to domestic pro- population in Africa is projected to grow at a faster duction, economic growth and the balance of trade. rate. In 2015, Africa accounted for 16% of the global However, if domestic production of food is unable to population, but by 2050, this is projected to rise to keep pace with population growth, dependence of over 25% with the population of Africa exceeding food imports will increase, making a country more that of both China and India. vulnerable to global commodity price ﬂ uctuations.

Positioning of Mozambique in the International Trade 2016 27 Figure 3.1: World population trends 1980-2050 Box 3.1: Changing dietary habits and diversi cation of foods demand 1980 2015 2050 The OECD-FAO Agriculture Outlook 2015-2024 (2015) shows consumption patterns of basic foodstuffs for least (4,440 million) (7,349 million) (9,725 million) developed countries (LDCs) in comparison to developed countries for the periods 2002-04, 2012-14 and projected for 2024 (Fig. 3.4). Food consumption in LDCs has been growing and this trend is projected to continue over the next 10 years. As economic development in LDCs improves, calorie consumption increases and the population starts to consume a greater variety of foods. However, whilst the pattern for developed countries shows a balanced consumption across different food types, consumption in LDCs, even as they start to grow and diversify, is dominated by cereals. Increases in consumption of protein rich meat and dairy products are still signiﬁ cantly smaller. Nevertheless, the pattern of food consumption certainly changes, and to respond to this growing demand for food China, 1,376 India, 1,311 China, 978 India, 697 and greater dietary variations, LDCs will have to increase domestic production of cereal and meats, or import these Africa, 2,478 India, 1,705 commodities in increasing volumes. Moreover, increasing domestic meat production is likely to require a concomitant increase in domestic cereal production (or imports) to provide animal feed. This suggests that in order to un- derstand changing dietary and food consumption patterns, it is necessary to take a holistic look at the food value chain and to see how economic development will impact on the supply and demand for food. South- Europe, 694 Other, 615 Africa, 1,186 Other, 1,112 Eastern Latin Other, 1,478 Asia, America, Figure 3.3: Calorie intake per capita in LDCs and Developed countries 792 784 (kcal/day/person) South-Eastern South-Eastern 3,000 Asia, 258 Asia, 633 Latin Latin North America, North Europe, America, North America, Europe, Ameri- 2,500 Africa, 478 365 America, 254 738 634 358 China, 1,348 707 ca, 433

Source: UN, World Population Prospects The 2015 Revision 2,000

1,500 Figure 3.2 illustrates the difference between the pro- consumption has been outstripping production duction and consumption of wheat, rice and maize which has led to sharp growth in imports volumes. in Sub-Saharan Africa (excluding South Africa) for Population growth in the region is likely to exacer- 1,000 the periods 2002-04, 2012-14 and projected for bate this trend to 2024 with net imports rising even 2024. The trend shows that for both wheat and rice, further. 500

- Figure 3.2: Cereals production, consumption and net import – Sub-Saharan Africa (excl. South Africa) 2002-04 2012-14 2024 2002-04 2012-14 2024 ave ave ave ave Wheat Rice Maize Least Developed Countries Developed Countries Cereals Dairy Meat Fish Vegetable oils Sugar Other (million tonnes) (million tonnes) (million tonnes) (million tonnes) (million tonnes) (million tonnes) 40 40 40 40 140 40 Source: OECD-FAO, Agricultural Outlook 2015-2024 35 35 35 35 35 120 30 30 30 30 30 100 25 25 25 25 25 80 20 20 20 20 20 3.2 Demographic Trends and Socio-Economic Structure 15 60 15 15 15 15 10 An analysis of the structure of global population by percentage of the elderly population doubling from 40 10 10 10 10 5 age group over the last 35 years (1980-2015) shows 8% to 16% of the total, indicating a decline in the that the labour force (those in the 15-65 age group) importance of what is termed the “demographic bo- 20 0 5 5 5 5 has increased as a percentage of the total popula- nus”. However, an examination of continental data

0 0 0 0 0 -5 tion, but has been accompanied by an increase in suggests that Africa will contradict the global trend 2002-2004 2012-2014 2024 2002-2004 2012-2014 2024 2002-2004 2012-2014 2024 ave ave ave ave ave ave the elderly, dependent population (over 65s). How- with the labour force, as a percentage of total popu- ever, projections anticipate a marked change oc- lation, continuing to grow for the next 30 years, thus Production Consumption Production Consumption Production Consumption curring over the next 35 years with the working age maintaining the demographic bonus for the conti- Net Import - right axis Net Import - right axis Net Import - right axis population falling back (from 66% to 63%) but the nent. Source: OECD-FAO, Agricultural Outlook 2015-2024

28 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 29 Box 3.1: Changing dietary habits and diversi cation of foods demand The OECD-FAO Agriculture Outlook 2015-2024 (2015) shows consumption patterns of basic foodstuffs for least developed countries (LDCs) in comparison to developed countries for the periods 2002-04, 2012-14 and projected for 2024 (Fig. 3.4). Food consumption in LDCs has been growing and this trend is projected to continue over the next 10 years. As economic development in LDCs improves, calorie consumption increases and the population starts to consume a greater variety of foods. However, whilst the pattern for developed countries shows a balanced consumption across different food types, consumption in LDCs, even as they start to grow and diversify, is dominated by cereals. Increases in consumption of protein rich meat and dairy products are still signiﬁ cantly smaller. Nevertheless, the pattern of food consumption certainly changes, and to respond to this growing demand for food and greater dietary variations, LDCs will have to increase domestic production of cereal and meats, or import these commodities in increasing volumes. Moreover, increasing domestic meat production is likely to require a concomitant increase in domestic cereal production (or imports) to provide animal feed. This suggests that in order to un- derstand changing dietary and food consumption patterns, it is necessary to take a holistic look at the food value chain and to see how economic development will impact on the supply and demand for food.

Figure 3.3: Calorie intake per capita in LDCs and Developed countries

(kcal/day/person) 3,000

2,500

2,000

1,500

1,000

500

- 2002-04 2012-14 2024 2002-04 2012-14 2024 ave ave ave ave Least Developed Countries Developed Countries Cereals Dairy Meat Fish Vegetable oils Sugar Other

Source: OECD-FAO, Agricultural Outlook 2015-2024

3.2 Demographic Trends and Socio-Economic Structure

An analysis of the structure of global population by percentage of the elderly population doubling from age group over the last 35 years (1980-2015) shows 8% to 16% of the total, indicating a decline in the that the labour force (those in the 15-65 age group) importance of what is termed the “demographic bo- has increased as a percentage of the total popula- nus”. However, an examination of continental data tion, but has been accompanied by an increase in suggests that Africa will contradict the global trend the elderly, dependent population (over 65s). How- with the labour force, as a percentage of total popu- ever, projections anticipate a marked change oc- lation, continuing to grow for the next 30 years, thus curring over the next 35 years with the working age maintaining the demographic bonus for the conti- population falling back (from 66% to 63%) but the nent.

Positioning of Mozambique in the International Trade 2016 29 Figure 3.4: World demographic trends by age group 1980-2050 Looking in more detail at the changes expected to of the population that forms the labour force. Howev- the population structure in Mozambique, Figure 3.6 er, this trend is changing. By 2050, those of working 1980 2015 2050 shows a dependency rate of approximately 50/50 for age are expected to comprise 61% of the population (4,440 million in Total) (7,349 million in Total) (9,725 million in Total) 2015, that is 49% of the population economically in- supporting the remaining 39%, representing a signiﬁ - (age) (age) (age) 6% 8% 85+ 100+ 100+ 16% active (under 15s and over 65s) dependent on 51% cant potential demographic bonus for the country. 95-99 0-14 75-79 0-14 26% 95-99 21% 0-14 35% 90-94 15-65 15-65 90-94 15-65 Figure 3.6: Demographic age pyramid - Mozambique 70-74 59% 85-89 66% 63% 65+ 65+ 85-89 65+ 65-69 80-84 80-84 1980 2015 60-64 75-79 75-79 70-74 70-74 55-59 85+ 85+ 4% 65-69 65-69 4% 50-54 75-79 75-79 0-14 60-64 60-64 0-14 45-49 55-59 70-74 15-29 55-59 70-74 24% 15-29 40-44 50-54 45% 33% 35% 50-54 Famele 65-69 30-65 Famele 65-69 30-65 35-39 45-49 45-49 27% 28% 65+ Male 60-64 65+ Male 60-64 30-34 40-44 40-44 35-39 55-59 55-59 25-29 35-39 30-34 30-34 50-54 50-54 20-24 25-29 25-29 45-49 45-49 15-19 20-24 20-24 40-44 40-44 10-14 15-19 15-19 10-14 35-39 35-39 5-9 10-14 5-9 5-9 30-34 30-34 0-4 0-4 0-4 25-29 25-29 - 200 400 600 800 - 200 400 600 800 20-24 20-24 (million people) - 200 400 600 800 (million people) (million people) Africa Asia America 15-19 15-19 Africa Asia America Africa Asia America Europe Other 10-14 10-14 Europe Other Europe Other 5-9 5-9 Source: UN, World Population Prospects The 2015 Revision 0-4 0-4

4.5 3.5 2.5 1.5 0.5 0.5 1.5 2.5 3.5 4.5 4.5 3.5 2.5 1.5 0.5 0.5 1.5 2.5 3.5 4.5 Moreover, the average age of the population in has remained in the upper teens, between 17 to (million people) (million people)

Africa is signiﬁ cantly lower than for other con- 19. Looking ahead, the average age of the global Source: UN, World Population Prospects The 2015 Revision tinents and is aging at a slower rate (Fig. 3.5), population is expected to increase to 33 by 2030 with the average age and ageing rate lower still and 36 by 2050, but for Mozambique a smaller Not only is the world’s population growing, but it is becom- Population projections for 2015 indicate that out of the to- for Mozambique. Whilst the average age of the rise is foreseen from 17 to 19 by 2030 and then ing more urbanised. The proportion of the world’s popula- tal of c. 25 million inhabitants, 32% live in urban areas and global population has risen from 22 to 29 over to 22 by 2015, with similar trends for Africa as tion living in urban areas is expected to increase from 54% 68% in rural areas. By 2030 the urban population of Mo- the last 25 years (1990-2015), the average age a whole. Population aging is most prominent for in 2014 to 66% in 2050. The population of Mozambique zambique is expected to account for 38% of the total and of the population in both Africa and Mozambique China and Latin America. is also rapidly urbanising. In 1990, 75% of the population in less than 35 years’ time, by 2050, half of Mozambique’s lived in rural areas and the remaining 25% in urban areas. population is projected to live in towns or cities.

Figure 3.5: World population median age trends 1990-2050 Figure 3.7: World urban population growth rates & Rural/urban population trends for Mozambique1990-2050 (age) 60 (% of urban population) (% of rural/urban population in Mozambique) 100 100 90 50 50 China 80 80 45 46 75 43 42 70 71 42 40 41 Europe 68 40 38 62 38 37 60 60 35 35 36 3433 North America 50 51 30 49 30 2928 40 40 38 25 26 25 Latin America 32 24 24 30 29 22 21 22 25 20 18 19 19 World 20 20 18 17 17 16 10 Africa 10 0 0 1990 2000 2015 2030 2050 1990 2000 2015 2030 2050 Mozambique 0 Africa World Asia % of urban population % of rural population 1990 2000 2015 2030 2050 Europe Northern America Latin America Source: UN, World Population Prospects The 2015 Revision Source: UN, World Urbanization Prospects The 2014 Revision

30 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 31 Looking in more detail at the changes expected to of the population that forms the labour force. Howev- the population structure in Mozambique, Figure 3.6 er, this trend is changing. By 2050, those of working shows a dependency rate of approximately 50/50 for age are expected to comprise 61% of the population 2015, that is 49% of the population economically in- supporting the remaining 39%, representing a signiﬁ - active (under 15s and over 65s) dependent on 51% cant potential demographic bonus for the country.

Figure 3.6: Demographic age pyramid - Mozambique

1980 2015

85+ 85+ 4% 4% 75-79 75-79 0-14 0-14 70-74 15-29 70-74 24% 15-29 45% 33% 35% Famele 65-69 30-65 Famele 65-69 30-65 27% 28% 65+ Male 60-64 65+ Male 60-64 55-59 55-59 50-54 50-54 45-49 45-49 40-44 40-44 35-39 35-39 30-34 30-34 25-29 25-29 20-24 20-24 15-19 15-19 10-14 10-14 5-9 5-9 0-4 0-4

4.5 3.5 2.5 1.5 0.5 0.5 1.5 2.5 3.5 4.5 4.5 3.5 2.5 1.5 0.5 0.5 1.5 2.5 3.5 4.5 (million people) (million people)

Source: UN, World Population Prospects The 2015 Revision

Not only is the world’s population growing, but it is becom- Population projections for 2015 indicate that out of the to- ing more urbanised. The proportion of the world’s popula- tal of c. 25 million inhabitants, 32% live in urban areas and tion living in urban areas is expected to increase from 54% 68% in rural areas. By 2030 the urban population of Mo- in 2014 to 66% in 2050. The population of Mozambique zambique is expected to account for 38% of the total and is also rapidly urbanising. In 1990, 75% of the population in less than 35 years’ time, by 2050, half of Mozambique’s lived in rural areas and the remaining 25% in urban areas. population is projected to live in towns or cities.

Figure 3.7: World urban population growth rates & Rural/urban population trends for Mozambique1990-2050

(% of urban population) (% of rural/urban population in Mozambique) 100 100 90 80 80 75 71 70 68 60 60 62 50 51 49 40 40 38 32 30 29 25 20 20 10 0 0 1990 2000 2015 2030 2050 1990 2000 2015 2030 2050 Africa World Asia % of urban population % of rural population Europe Northern America Latin America

Source: UN, World Urbanization Prospects The 2014 Revision

Positioning of Mozambique in the International Trade 2016 31 As urban areas grow, they become important demand. Figure 3.8 shows growth in the ser- clusters for economic development and invest- vice sector as a percentage of GDP in relation Box 3.2: Consumption in developing & emerging countries – Bottom of Pyramid ment due to the benefits of economies of ag- to change in the urban population for Mozam- Global Consumption Data prepared by the World Bank provides meticulously disaggregated information on con- glomeration. However, with urbanisation the bique, South Africa, Brazil and India. All coun- sumption patterns in 92 developing and emerging countries ranked into four income groups (Fig 3.10). It clearly structure of the economy also tends to shift tries show greater dependence on the service shows how consumption patterns change according to income strata, with an average close to 50% of income be- to one which is more service sector driven as sector as urbanisation increases. Even with a ing spent on food and beverages for the low income and poorest population strata. The potential commercial impli- economic actors become concentrated in ur- relatively low urbanisation rate, the service sec- cations of this area worth consideration, particularly the structure of economy is dynamically transforming. Countries ban areas and engage in the supply of services tor in Mozambique already contributes over with low income and the poorest populations tend to have the greatest population growth and urbanisation rates. and greater concentrations of population create 50% to GDP. If economic development and growth were anticipated in these countries, the expected change in consumption patterns that would likely to follow could point to some interesting business and investment opportunities that could lead to greater diversiﬁ cation of the economy. Figure 3.8: Trend of urbanization and services value added (% of GDP) 1980-2014 (Services, etc. value added % of GDP) Figure 3.10: Consumption patterns by sector and income segment – 2010 (average of 92 countries) 100

Lowest 54 90 48 7 637010 Consumer segmentation is based on income per capita (PPP, USD basis using local cur- Low 42 71110 75 71 11 80 rency exchange rate as of 2010) Middle 35 10 11 10 8761 13 Lowest: below $2.97 per capita a day 70 2014 2014 South Africa High 21 19 12 9 7743 20 Low: between $2.97 and $8.44 per capita 60 Brazil a day 2014 0102030405060708090 100(%) 50 2014 Middle: between $8.44 and $23.03 per cap- Mozambique 1980 Food and Beverages Transport Housing ita a day 1980 Health & Education Clothing and Footwear ICT 40 Higher: above $23.03 per capita a day India Energy & Water Utility Financial Service Others 30 Source: World Bank, Global Consumption Database 1980 20 1980

10 10 20 30 40 50 60 70 80 90 100 3.3 Energy Demand and Industrialization (% of urban population) Source: UN, World Urbanization Prospects The 2014 Revision; World Bank A key sector for future trade and development in Mo- COP21 climate change conference. This is predicted zambique, Figure 3.11 shows that global energy de- to lead to signifi cant changes in fuel sources used for As an indication of the dynamic of service sec- Figure 3.11 shows the growth in international tourism mand increased by over 50% during the period 1990 power generation. Historically, coal and oil have been tor growth in Mozambique, Figure 3.10 shows the and tourism derived revenue over the same period to 2013 and during this period, the quantity of energy the predominant fuels used to generate power with growth in the number of mobile phone subscriptions and indicates a similar trend in a key service sector used for power generation almost doubled. Demand for consumption of both increasing over the period 1990 in the period 2001 to 2013, increasing from nearly that creates jobs and new business opportunities in energy is expected to continue to grow to 2030. How- to 2013. However, the importance of these fuels needs zero in 2001 to over 12 million subscriptions in 2012. both urban areas and other tourist attractions. ever, the rate of growth is estimated by the IEA to slow, to decrease during the period 2013 to 2030 with gas, based on the assumptions and recommendations of the biofuels and renewables taking on greater signifi cance. Figure 3.9: Mobile and fi xed telephone subscription & International tourism arrivals and revenues

(million subscriptions) (million people) (million USD) Figure 3.11: Energy demand by sector & Total primary energy demand by resource 14 2.5 350 (Mtoe) (Mtoe) 300 18,000 18,000 12 2.0 16,000 16,000 10 250 14,000 14,000 1.5 8 200 12,000 12,000 10,000 10,000 6 1.0 150 8,000 8,000 4 100 6,000 6,000 0.5 2 50 4,000 4,000 2,000 2,000 0 0 0 2001 2003 2005 2007 2009 2011 2013 2001 20032005 2007 2009 20112013 - - 1990 2013 2030 1990 2013 2030 Mobile Celular Fixed telephone International tourism, arrivals - left axis Coal Oil Gas Nuclear Power generation Industry Transport Buildings International tourism, revenue - right axis Hydro Bioenergy Other renewables Source: INE Source: IEA, World Energy Outlook 2015

32 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 33 Box 3.2: Consumption in developing & emerging countries – Bottom of Pyramid Global Consumption Data prepared by the World Bank provides meticulously disaggregated information on consumption patterns in 92 developing and emerging countries ranked into four income groups (Fig 3.10). It clearly shows how consumption patterns change according to income strata, with an average close to 50% of income being spent on food and beverages for the low income and poorest population strata. The potential commercial implications of this area worth consideration, particularly the structure of economy is dynamically transforming. Countries with low income and the poorest populations tend to have the greatest population growth and urbanisation rates. If economic development and growth were anticipated in these countries, the expected change in consumption patterns that would likely to follow could point to some interesting business and investment opportunities that could lead to greater diversiﬁ cation of the economy.

Figure 3.10: Consumption patterns by sector and income segment – 2010 (average of 92 countries)

Lowest 54 48 7 637010 Consumer segmentation is based on income per capita (PPP, USD basis using local cur- Low 42 71110 75 71 11 rency exchange rate as of 2010) Middle 35 10 11 10 8761 13 Lowest: below $2.97 per capita a day

High 21 19 12 9 7743 20 Low: between $2.97 and $8.44 per capita a day 0102030405060708090 100(%) Middle: between $8.44 and $23.03 per cap- Food and Beverages Transport Housing ita a day Health & Education Clothing and Footwear ICT Higher: above $23.03 per capita a day Energy & Water Utility Financial Service Others

Source: World Bank, Global Consumption Database

3.3 Energy Demand and Industrialization

A key sector for future trade and development in Mo- COP21 climate change conference. This is predicted zambique, Figure 3.11 shows that global energy de- to lead to signiﬁ cant changes in fuel sources used for mand increased by over 50% during the period 1990 power generation. Historically, coal and oil have been to 2013 and during this period, the quantity of energy the predominant fuels used to generate power with used for power generation almost doubled. Demand for consumption of both increasing over the period 1990 energy is expected to continue to grow to 2030. How- to 2013. However, the importance of these fuels needs ever, the rate of growth is estimated by the IEA to slow, to decrease during the period 2013 to 2030 with gas, based on the assumptions and recommendations of the biofuels and renewables taking on greater signiﬁ cance.

Figure 3.11: Energy demand by sector & Total primary energy demand by resource

(Mtoe) (Mtoe) 18,000 18,000 16,000 16,000 14,000 14,000 12,000 12,000 10,000 10,000 8,000 8,000 6,000 6,000 4,000 4,000 2,000 2,000 - - 1990 2013 2030 1990 2013 2030 Coal Oil Gas Nuclear Power generation Industry Transport Buildings Hydro Bioenergy Other renewables Source: IEA, World Energy Outlook 2015

Positioning of Mozambique in the International Trade 2016 33 Turning to the economic impact of the energy and illustrating that as the country became less depend- Box 3.3: COP 21 and energy demand forecast – IEA Bridge Scenario industrial sectors, Figure 3.13 shows the contribution ent on oil, and began to diversify its economy, then Development in Mozambique remains challenged by climate change and natural disasters with studies pointing of industry to GDP for Africa and the Gulf States for it became less dependent on the industrial sector to the intensifying magnitude and frequency of fl oods and droughts. With energy production and use accounting 2014. The average contribution of the industrial sec- for GDP growth, dropping from a 40% to 26% con- for over two thirds of global greenhouse-gas emissions, delegates to the COP21 conference in 2015 agreed to a tor to GDP for both Sub-Saharan Africa and world- tribution to GDP. This would seem to suggest that programme of deep cuts to emissions whilst seeking to maintain global growth and enhance energy security, par- wide is less than 30% (27% and 26% respectively). as Mozambique becomes an exporter of mineral re- ticularly for poor and developing nations. For oil producing and resource rich countries, the sources, and particularly gas, it risks becoming over- The International Energy Agency reveals in its World Energy Outlook Special Report (2015) that, the use of low- percentage tends to be much higher, for instance in dependent on the industrial sector. However, as the carbon energy is expanding and there are indications that a break in the linkage between economic growth and a DR Congo, Gabon, Algeria and the Gulf States. Ni- case of Nigeria shows, there is also an opportunity concomitant growth in emissions may be taking place. In 2014 over half of new power generation capacity used geria is an interesting case where the data has been to take steps to promote greater economic diversity renewables and although the global economy grew by 3%, CO2 emissions remained stable for the fi rst time in over disaggregated for the periods 2000-04 and 2010-14, and more balanced economic development. 40 years. Moreover, the energy intensity of the global economy dropped by 2.3% in 2014, more than double the average rate of fall over the last decade. The IEA believes that by 2020 a peak in the use of fossil fuels can be achieved through using existing technologies Figure 3.13: Industry, value added (% of GDP) 2014 – Sub-Saharan Africa + Gulf States and without changing the development prospects of any one region. This is referred to as the “Bridge Scenario” and Ichievement would be a clear indication of a collective determination to tackle climate change and maintain (Industry, value added % of GDP) global warming below the 2 °C limit considered critical by COP 21 delegates. The Bridge Scenario envisages the 69 long-term decarbonisation of the energy sector through the adoption of fi ve measures: 68 65 64 Increasing energy effi ciency, particularly in the industrial, construction and transport sectors. Gradually phasing out ineffi cient, coal-fi red power plants and banning their construction. 57 56 Promoting investment in renewable energy technology with the aim of increasing funding from the current $270 billion to $400 billion by 2030. Phasing out of fossil-fuel subsidies by 2030. 46 Reducing methane emissions in oil and gas production. 40 39 39 Source: IEA, World Energy Outlook 2015 38 36 33 32 32 29 29 29 29 28 27 26 26 25 Figure 3.12, based on EIA assumption, emphasizes other renewable energy sources. In fact, the reduc- 24 23 23 22 22 21 this prediction showing a fall in the use of coal and tion in the use of oil and the increase in the use of 20 19 17 17 oil for power generation for the period 2013 to 2030 gas had already become established as a trend in 16 16 15 15 and increases in the use of gas nuclear, hydro and the period 1990 to 2013. 14 14 10

Figure 3.12: Electricity generation trend by resource – IEA bridge scenario

(TWh) Qatar Egipt Mali Chad OmanKuwaitGabon Algeria Guinea TunisiaGhana Benin NigerKenya 35,000 LesothoNamibia Senegal Uganda Malawi EthiopiaRwanda Botswana Marocco Tanzania Congo Rep. Mauritania Zimbabwe Saudi Arabia South Africa Burkina Faso CaboMadagascar VerdeSierra Leone World (2013) Mozambique Guinea-Bissau 1,002 221 16 30,000 2,242 209 Congo, Dem. Rep 30,618 Sub.Saharan Africa Nigeria(2000-04 ave) Nigeria(2010-14 ave.) 848 1,885 Sao Tome and Princepe 1,528 25,000 Source: World Bank 624 35 134 5 308 2,197 1,578 23,233 3,266 464 (2,134) 20,000 Other (629) 5% Coal 5,187 24% (194) 15,000 Other Hydro 19% 16% 2,144 174 Coal 11,826 10,000 2,013 23,233 TWh 41% 30,618 TWh Oil Hydro 1,760 (2013) (2030) 2% 18% 1,310 Nuclear Gas 11% 5,000 4,425 Gas 24% 22% Oil Nuclear 5% 13% -

Oil Oil Oil Coal Gas Coal Gas CSP Coal Gas CSP HydroOther Hydro Wind Hydro Wind Nuclear Nuclear Solar PV Nuclear Solar PV Marine 1990 total Bioenergy 2013 total Bioenergy 2030 total Geothermal Geothermal Source: IEA, World Energy Outlook 2015

34 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 35 Turning to the economic impact of the energy and illustrating that as the country became less depend- industrial sectors, Figure 3.13 shows the contribution ent on oil, and began to diversify its economy, then of industry to GDP for Africa and the Gulf States for it became less dependent on the industrial sector 2014. The average contribution of the industrial sec- for GDP growth, dropping from a 40% to 26% con- tor to GDP for both Sub-Saharan Africa and world- tribution to GDP. This would seem to suggest that wide is less than 30% (27% and 26% respectively). as Mozambique becomes an exporter of mineral re- For oil producing and resource rich countries, the sources, and particularly gas, it risks becoming over- percentage tends to be much higher, for instance in dependent on the industrial sector. However, as the DR Congo, Gabon, Algeria and the Gulf States. Ni- case of Nigeria shows, there is also an opportunity geria is an interesting case where the data has been to take steps to promote greater economic diversity disaggregated for the periods 2000-04 and 2010-14, and more balanced economic development.

Figure 3.13: Industry, value added (% of GDP) 2014 – Sub-Saharan Africa + Gulf States

(Industry, value added % of GDP)

69 68 65 64

57 56

40 39 39 38 36 33 32 32 29 29 29 29 28 27 26 26 25 24 23 23 22 22 21 20 19 17 17 16 16 15 15 14 14 10

Qatar Egipt Mali Chad OmanKuwaitGabon Algeria Guinea TunisiaGhana Benin NigerKenya LesothoNamibia Senegal Uganda Malawi EthiopiaRwanda Botswana Marocco Tanzania Congo Rep. Mauritania Zimbabwe Saudi Arabia South Africa Burkina Faso CaboMadagascar VerdeSierra Leone World (2013) Mozambique Guinea-Bissau Congo, Dem. Rep Sub.Saharan Africa Nigeria(2000-04 ave) Nigeria(2010-14 ave.) Sao Tome and Princepe

Source: World Bank

Positioning of Mozambique in the International Trade 2016 35 Figure 3.15: Fuel price trends and global GDP & Government revenue in oil producing countries Box 3.4: Global Value Chains (GVCs) – opportunities and risks (index, USD basis 2005=100) (index, USD basis 2005=100) Global Value Chains (GVCs) represent a systeI which ﬁ nished goods are no longer produced in a single country of 200 500 a single location. Rather the components of a product are both manufactured and assembled in various locations 450 across the globe. Thus the structure of a country’s production capacity and its economic success is deterI by its 250 400 ability to become, and stay part of, one or more global value chains. The web of global production is becoming 350 more and more complex and changing rapidly, as the mobility of human resources, capital, goods, information 150 300 drastically increase. 250 Economic growth in East Asia, attained by addressing the demand for manufactured goods from advanced coun- 100 200 tries and integration into GVCs, has encouraged other countries to adopt an export-led approach to development. 150 The Industrial Development Report 2013 (2013) explains that being a part of GVCs, can improve the development of industry in four main ways: 50 100 Increases in revenue from trade integration encourage exporters to upgrade technology. 50 International trade exposes ﬁ rms to forms of competition that they may not face in the domestic market. 0 0

Foreign buyers may exert pressure in relation to quality and price forcing fi rms to improve their effi ciency 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2000 2001 2002 20032004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 It can improve access to advanced equipment and research and development facilities. Fuel/energy prince index World GDP Angola Gov. general revenue Nigeria Gov. general The Industrial Development Report 2016 (2015) emphasizes that although the exports of African countries are revenue Sub-Sahara Africa GDP Mozambique GDP Gabon Gov. general revenue Fuel/energy price index already integrating into GVCs, they tend to be at the lower end of the value chain involving the products of primary production processes (such as minerals and rIaterials) which tend to offer few opportunities for the type of tech- Source: IMF, World Economic Outlook nological innovation that would create greater potential for growth and economic expansion. It also leaves these countries extremely vulnerable to volatility in the world economy, notably commodity prices. Trade openness can create opportunities but excessive dependence on primary industry and low-tech manufacturing may dispropor- Finally, in relation to energy demand, Figures 3.16 fuel/energy price index. However, for Mozam- tionately expose developing nations to international markets leading to signifi cant variation in government revenue. looks at the relationship between changes in the bique, reductions in FDI have only noticeably cor- fuel/energy price index and FDI over the period responded to drops in the fuel/energy price in- Source: UNIDO, Industrial Development Report 2013, 2016 2000 to 2014 at a global level, and specifi cally dex in the last 3 years, with investment growing in Nigeria and Mozambique. At the global level, for most of the period 2000 to 2012 regardless of There is a strong correlation between changes in nue. Economic growth in Sub-Saharan Africa, although there is a time lag, there appears to be changes to fuel and energy prices. However, for the fuel/energy price index (including crude oil, nat- including Mozambique, seems to be more sensi- strong correlation between the variables with no- Nigeria, a bigger and more mature economy, the ural gas and coal prices) and world export values. tive to falls in the fuel/energy price index than ticeable drops in FDI following reductions in the correlation is more marked. The export of mineral fuels and oils is the biggest is the case for the global economy as a whole. component of world trade, and has had a signifi cant Similarly, Figure 3.15 shows a particularly strong Figure 3.16: Fuel price trend and global FDI trend & Mozambique and Nigeria FDI trend impact on trade trends over the period 2002 to 2014 correlation between the fuel/energy price index and government revenue in three resource-rich as highlighted in Figure 3.14. (billion USD) (index, USD basis 2005=100) (billion USD) (index, USD basis 2005=100) African countries over the period 2000 to 2014, 2,000 250 10 250 Changes in the fuel/energy price index also ap- an important factor for Mozambique to take into 1,800 9 pear to impact on GDP and government reve- consideration. 1,600 200 8 200 1,400 7 Figure 3.14: Fuel price trends and world trade (exports) 2002-2014 1,200 150 6 150 (billion USD) (USD, Index 2005=100)) 1,000 5 20,000 200 800 100 4 100 18,000 180 600 3 Other 16,000 160 400 50 2 50 14,000 140 Vehicles (excl. railway) 200 1 12,000 120 - - - - Machinery, nuclear reactor 10,000 100 boiler, etc 2000 2001 2002 2003 2004 2005 2006 20072008 2009 2010 2011 2012 2013 2014 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 8,000 80 Electrical, Electronic Africa America Mozambique Nigeria Fuel/energy price-right axis 6,000 60 Equipment Asia Europa Mineral fuel, oils, etc 4,000 40 Oceania Fuel/energy price-right axis

2,000 20 Fuel /energy price Source: UNCTAD; IMF, World Economic Outlook - 0 indx - right axis

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: UN Comtrade; IMF, World Economic Outlook

36 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 37 Figure 3.15: Fuel price trends and global GDP & Government revenue in oil producing countries

(index, USD basis 2005=100) (index, USD basis 2005=100) 200 500 450 250 400 350 150 300 250 100 200 150 50 100 50 0 0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2000 2001 2002 20032004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Fuel/energy prince index World GDP Angola Gov. general revenue Nigeria Gov. general revenue Sub-Sahara Africa GDP Mozambique GDP Gabon Gov. general revenue Fuel/energy price index

Source: IMF, World Economic Outlook

Finally, in relation to energy demand, Figures 3.16 fuel/energy price index. However, for Mozam- looks at the relationship between changes in the bique, reductions in FDI have only noticeably cor- fuel/energy price index and FDI over the period responded to drops in the fuel/energy price in- 2000 to 2014 at a global level, and speciﬁ cally dex in the last 3 years, with investment growing in Nigeria and Mozambique. At the global level, for most of the period 2000 to 2012 regardless of although there is a time lag, there appears to be changes to fuel and energy prices. However, for strong correlation between the variables with no- Nigeria, a bigger and more mature economy, the ticeable drops in FDI following reductions in the correlation is more marked.

Figure 3.16: Fuel price trend and global FDI trend & Mozambique and Nigeria FDI trend

(billion USD) (index, USD basis 2005=100) (billion USD) (index, USD basis 2005=100) 2,000 250 10 250 1,800 9 1,600 200 8 200 1,400 7 1,200 150 6 150 1,000 5 800 100 4 100 600 3 400 50 2 50 200 1 - - - -

2000 2001 2002 2003 2004 2005 2006 20072008 2009 2010 2011 2012 2013 2014 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Africa America Mozambique Nigeria Fuel/energy price-right axis Asia Europa Oceania Fuel/energy price-right axis

Source: UNCTAD; IMF, World Economic Outlook

Positioning of Mozambique in the International Trade 2016 37 3.4 SDGs and Trade Regional integration will be an important means to achieving this through reducing trade barriers and SDGs In 2015, United Nations member states unanimous- all export measures with equivalent effect, in introducing policy reforms that allow large, small and ly agreed on a set of Sustainable Development accordance with the mandate of the Doha micro enterprises to integrate more effectively into regional and global value chains. This will require support AAAA Goals (SDGs) with the aim of ending poverty by Development Round from the international community including regional 2030. The SDGs are a set of 17 aspirational goals Goal 8: Promote sustained, inclusive and sus- development banks. Moreover, Aid for Trade will need with 169 specifi c development targets. The 2030 tainable economic growth, full and productive to give special attention to LDCs particularly through AfT IPOA agenda is the foundation on which efforts to secure employment and decent work for all the Enhanced Integrated Framework for Trade-Related sustainable and inclusive development will be built Technical Assistance. Target 8.a: Increase aid-for-trade support over the next 15 years and in September 2015 the Rome for developing countries, particularly LDCs, Government of Mozambique committed itself to im- Declaration including through the Enhanced Integrated plementing the 2030 Agenda and working towards Framework for LDCs the achievement of the SDGs. Goal 10: Reduce inequality within and among Trade, and the government revenue derived from it, countries Figure 3.17: Global development initiatives related to trade agenda will make an important contribution to fi nancing the implementation of the SDGs and will have a positive Target 10.b: Implement the principle of special impact on socio-economic development if it can be and differential treatment (SDT) of developing MDG SDGs effectively harnessed. A number of the SDGs have countries, in particular least developed coun- (2000) (2015) direct linkages to trade, for example: tries, in accordance with WTO agreement Brussel Plan Istanbul Plain of Action of Action Goal 2: End hunger, achieve food security and Goal 17 Strengthen the means of implementation (2001) (2011) improved nutrition and promote sustainable ag- and revitalize the global partnership for sustain- riculture able development Monterry Doha Addis Ababa Consensus Declaration Acton Agenda Target 2.b: Correct and prevent trade restric- Target 17.11: Signifi cantly increase the ex- (2002) (2008) (2015) tions and distortion in world agricultural mar- ports of developing countries, in particular AfT - Hong Kong WTO Ministerial kets, including by the parallel elimination of with a view to doubling the LDC share of Conference (2005) all forms of agricultural export subsidies and global exports by 2020 Rome Declaration on World Food Security(1996)

Box 3.5: Trade and Development Agenda Source: OECD/WTO, Aid for Trade at a Glance 2015 Trade is a key factor in economic development and can improve the access of developing countries to essential goods and services by further reducing their costs and trade defi cits. It is widely agreed that trade, development, and poverty reduction are intrinsically linked. Sustained growth is strongly associated with poverty reduction, and trade and growth are strongly linked. Trade is an important source of both fi nancial and non-fi nancial means for development. International trade is an important source of revenue and capital investment that is essential for structural transformation. The 2030 development agenda requires signifi cant increases in development fi nance and international trade could play an important contributory role, particularly for LDCs. Trade policy should not only promote trade, but use improvements in trade to promote more inclusive and sustainable development. The Aid-for-Trade Initiative helps countries improve policy coherence in relation to trade and economic development whilst adhering to wider social and environmental development objectives The Rome Declaration (1996) considers trade to be a key element in achieving world food security through enabling food consumption to exceed food production and helping to overcome variations in production and consumption. The Addis Ababa Action Agenda (2015) notes the importance of trade fi nance for maximizing a country’s trading potential through allowing it to seize opportunities to use trade as an engine for development. The Agenda advocates for a signifi cant increase world trade, seeking to double the share of global exports of LDCs by 2020, but in a way which is consistent with the attainment of the sustainable development goals.

38 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 39 Regional integration will be an important means to achieving this through reducing trade barriers and SDGs introducing policy reforms that allow large, small and micro enterprises to integrate more effectively into regional and global value chains. This will require support AAAA from the international community including regional development banks. Moreover, Aid for Trade will need to give special attention to LDCs particularly through AfT IPOA the Enhanced Integrated Framework for Trade-Related Technical Assistance. Rome Declaration

Figure 3.17: Global development initiatives related to trade agenda

MDG SDGs (2000) (2015)

Brussel Plan Istanbul Plain of Action of Action (2001) (2011)

Monterry Doha Addis Ababa Consensus Declaration Acton Agenda (2002) (2008) (2015) AfT - Hong Kong WTO Ministerial Conference (2005)

Rome Declaration on World Food Security(1996)

Source: OECD/WTO, Aid for Trade at a Glance 2015

Positioning of Mozambique in the International Trade 2016 39 Figure 4.1: Organigram – Ministry of Industry and Commerce

Instituição Subordinadas/Tuteladas

Ministro IPEX Instituto para a Promoção de Vice Ministro Exportações Chapter IV Secretaria Permanente ICM Instituto de Cereais de Moçambique

IPI Instituto da Propriedade Colectivos de MIC Industrial Gabinete do Ministro Conselho Coordenador INNOQ Instituto Nacional de (uma vez por ano) Normalização e Qualidade Gabinete Jurídico IPEME Instituto Promoção das Pequenas e Medias Empresas Conselho Consultivo (bimensalmente) INAE Inspecção Nacional das Inspeção da Industria e Actividades Económicas Comercio Conselho Técnico BMM Bolsa de Mercadorias de (semanal) Moçambique

BAU Balcões de Atendimento Único

Policy and Institutional DNI DNCI DNCE DASP DPE DTIC DAF DRH DA DCI Direcção Direcção Direcção Dirceção Direcção do Departa- Departa- Departa- Departa- Departa- Nacional da Nacional do Nacional do Nacional da Planicação mento de mento de mento de mento de mento de Industria Comercio Comercio Apoio ao e Estudos Tecnologias Adminis- Recursos Aquisições Comuni- Interno Externo Desenvolvi- de tração e Humanos cação e mento do Informação e Finanças Imagem Framework for Trade in Sector Comuni- Privado cação Mozambique

Box 4.1: Functions attributed to the Ministry of Industry and Commerce 4.1 Policy and Institutional Framework in the Trade Sector Preparation of proposals and monitoring the implementation of policies and industrial development strategies; Trade is a cross-cutting issue which impacts nearly revised in April 2016 and attribute 16 functions to Promotion of a legal and institutional framework for the development of the sector; the Ministry (Box 4.1). every sector and which therefore requires a holis- Promotion of services relating to standards and quality; tic and integrated approach to ensure effective and To operationalize these functions, MIC has defi ned Protection of industrial property rights and combating unfair competition; effi cient policy measures. Moreover, given that the four key policy areas private sector is the key player in the trade sector, Streamlining the inspection and supervision of economic activities; the role of government in terms of promoting and 1. Industry Promote measures that protect consumer rights; facilitating the role of the private sector in economic 2. Internal commerce Coordinate with other government agencies to ensure competition; development and improving the business environ- Inter-sectoral coordination for private sector development; ment is critical to the growth of both domestic and 3. External commerce Promotion of industrialization and the modernize the economy; international trade. 4. Support to the Private Sector Promotion of industrial production, agro-processing and industrial competitiveness; The Ministry of Industry and Commerce (MIC) is the and these are refl ected in the organizational struc- Promote cooperation with a view to mobilizing technical assistance and sector programs; key institution with the mandate to promote trade, ture of the Ministry that was redefi ned in its Statute. improve competitiveness and coordinate this cross- There are also a number of specialized institutions Promote the development of infrastructure for agricultural marketing and to support industrial activity; cutting issue across various sectors and institutions that perform specifi c functions in in the context of Development and promotion of exports; in order to maximize efforts to improve trade. The the mandate of the MIC and fall under the Ministry’s Promote the development of products with added value and local content; statute setting out the competencies of MIC were supervision (Fig. 4.1). Promotion of industrial research and development; and Promote the participation of the private sector in industrial development, trade and services.

40 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 41 Figure 4.1: Organigram – Ministry of Industry and Commerce

Instituição Subordinadas/Tuteladas

Ministro IPEX Instituto para a Promoção de Vice Ministro Exportações Secretaria Permanente ICM Instituto de Cereais de Moçambique

BAU Balcões de Atendimento Único

DNI DNCI DNCE DASP DPE DTIC DAF DRH DA DCI Direcção Direcção Direcção Dirceção Direcção do Departa- Departa- Departa- Departa- Departa- Nacional da Nacional do Nacional do Nacional da Planicação mento de mento de mento de mento de mento de Industria Comercio Comercio Apoio ao e Estudos Tecnologias Adminis- Recursos Aquisições Comuni- Interno Externo Desenvolvi- de tração e Humanos cação e mento do Informação e Finanças Imagem Sector Comuni- Privado cação

Box 4.1: Functions attributed to the Ministry of Industry and Commerce Preparation of proposals and monitoring the implementation of policies and industrial development strategies; Promotion of a legal and institutional framework for the development of the sector; Promotion of services relating to standards and quality; Protection of industrial property rights and combating unfair competition; Streamlining the inspection and supervision of economic activities; Promote measures that protect consumer rights; Coordinate with other government agencies to ensure competition; Inter-sectoral coordination for private sector development; Promotion of industrialization and the modernize the economy; Promotion of industrial production, agro-processing and industrial competitiveness; Promote cooperation with a view to mobilizing technical assistance and sector programs; Promote the development of infrastructure for agricultural marketing and to support industrial activity; Development and promotion of exports; Promote the development of products with added value and local content; Promotion of industrial research and development; and Promote the participation of the private sector in industrial development, trade and services.

Positioning of Mozambique in the International Trade 2016 41 The policy measures of MIC in relation to trade de- Priority III: Promoting employment, productivity Given the multi-sectoral and cross-cutting nature of in relation to the implementation of the Strategic Plan velopment is guided by several strategic documents and competitiveness trade promotion in a global economy, it is of the ut- for the Development of the Agricultural Sector 2010- such as “Politica e estrategia commercial 1998,” “Es- most importance that in exercising its functions, MIC 2019; with the Ministry of the Sea, Inland Water and Priority IV: Developing economic and social in- trategia para a melhoria do ambiente de negocias coordinates and collaborates with other Ministries Fishery (MMAIP) regarding the National Programme frastructure em Moçambique 2013-2017,” “Politica e estrategia and participates in the formulation and implementa- for the Development of Fishing 2010-2019; and with industrial 2016”, and “Programa de integração de Priority IV: Ensuring sustainable and transparent tion of policy and strategies that are relevant for its Ministry of the Economy and Finance (MEF) related comercialização agricola” (Fig. 4.2). National and in- management of natural resources and the envi- remit. For instance, policy coordination is important to the Integrated Investment Programme for strate- ter-ministerial strategy in realtion to trade is defi ned in ronment with the of Agriculture and Food Security (MASA) gic infrastructure development. the National Development Strategy 2015-35 (ENDE) The Programme adopts a holistic approach and and the Government’s Five Year Plan (PQG) for the establishes an integrated programme which seeks Figure 4.2: Policy and strategic framework – Ministry of Industry and Commerce period 2015-2019. The ENDE articulates the path to to improve the country’s competitiveness and pro- industrialization in Mozambique linking various sec- ductivity, transform agriculture and modernize and tors, including education and health with the objec- (National Level) PQG 2015-2019 PES 2016 industrialise the economy with a focus on increasing tive of promoting economic development through exports. The PQG is operationalized by the Plano diversifi cation with a focus on four priority sectors: (MIC) Economic Social (PES), an annual plan of actions Politica e estratégia comercial 1998 agriculture and fi sheries’ transformative industry, implemented by the Ministries, funded though both mineral extractive industry, and tourism. Estudo Diagnostico para Integração internal and external sources, and approved by par- do Comercio (EDIC) 2014 The PQG sets out the Government’s priorities and de- liament. velopment objectives for the period 2015-19 and was Politica e estratégia industrial 2016 approved by Parliament in April 2015. The central ob- The competencies attributed to MIC are directly jective of the programme is to improve the living condi- linked to the priorities, pillars and strategic objec- Estratégia para a Melhoria do Estratégia Nacional de Ambiente de Negócios em tives, of the PQG, such as: Politica e Estratégias Desenvolvimento Moçambique (EMAN 2) 2013-2017 tions of the Mozambican people by increasing employ- ligado ao missão de MIC ment, production and competitiveness, creating wealth 2015-2035 (ENDE) Priority II: Reduction of malnutrition through the Programa Integrado de Comerciali- and generating balanced and inclusive development, improving the supply of fortifi ed foods zação Agrícola (PICA) in an environment of peace, security, harmony, solidar- Priority III: Promotion of Industrialization, market- Lei do Sistema Nacional de ity, justice and cohesion among Mozambicans. ing, exports, and training of local producers Qualidade The Programme establishes fi ve key development Estrategia para o Desenvolvimento Priority V: Construction of silo complex das Pequenas e Medias Empresas priorities: em Mocambique 2007 Moreover, MIC is the key Ministry responsible for Priority I: Consolidating national unity, peace and the achievement of a number of strategic objectives (Other Ministry) Politica e Estratégias MASA - PEDSA, PNISA, etc. sovereignty ligado nos outros sectores MMAIP - PDP, PESPA, etc. related to Priority III in the PQG, for which the key (e.g. MASA, MMAIP, MEF) MEF - PII, etc. Priority II: Developing human and social capital strategic objective are as follows:

Priority III: Promote Employment and Improve Productivity and Competitiveness Strategic Objective (i) Strategic Objective (ii) Strategic Objective (iv) Increase production and productivity Promote industrialization and the Promote the value chain of primary in all sectors with emphasis on agri- modernisation of the economy and products ensuring the integration of local content. Box 4.2: Trade related issues coordination mechanism – Aid for Trade and EIF in culture. increase exports. Mozambique Increase production and pro- Promote exports to allow traders to Strengthen the integration and ductivity in staple food crops to take advantage of market oppor- growth of national industries in The Enhanced Integrated Framework (EIF) is the only global initiative on Aid for Trade (AfT) for Least Developed the value chains of mega-projects achieve food self-suffi ciency. tunities created by the multilateral Countries. Mozambique became eligible for support under the Integrated Framework (IF) in 2004 and later by the with a focus on small and medium- EIF in 2010. Support is given under Tier 1 and Tier 2 projects. Current support is for Tier 1 projects which include Promote agricultural marketing in trading system. sized Mozambican companies. an update of the Diagnostic of Trade Integration Study (DTIS), capacity building for trade-related institutions, and the domestic and foreign markets, Diversify the base and export des- Support the establishment of in- trade mainstreaming actions such as workshops and studies. Tier 2 projects are based on the priorities defi ned in with a focus cereals and giving tinations. dustrial parks, aqua culture and the DTIS Action Matrix fi nalized in 2014. The EIF is also providing technical assistance to national stakeholders to preference to those involved in Implement SADC to consolidate special economic zones and other identify, select, prioritize, and draft small-scale business development projects and mobilize fi nancial resources. storage networks and agro pro- the Free Trade Zone. facilities to support the develop- cessing, to improve the balance of ment of the productive sector. One of the key challenges faced by Mozambique in the area of trade policy in general, and AfT in particular, is the Encourage the development of payments. weakness of coordination mechanisms at institutional and policy levels. There is no single body responsible for the manufacturing to increase added Promote the incubation of technology companies and competition in coordination of trade issues and mechanisms tend to be established on an ad hoc basis to address specifi c issues. value in order to reduce trade im- business ideas for the development balances. of new products and services.

42 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 43 Given the multi-sectoral and cross-cutting nature of in relation to the implementation of the Strategic Plan trade promotion in a global economy, it is of the ut- for the Development of the Agricultural Sector 2010- most importance that in exercising its functions, MIC 2019; with the Ministry of the Sea, Inland Water and coordinates and collaborates with other Ministries Fishery (MMAIP) regarding the National Programme and participates in the formulation and implementa- for the Development of Fishing 2010-2019; and with tion of policy and strategies that are relevant for its Ministry of the Economy and Finance (MEF) related remit. For instance, policy coordination is important to the Integrated Investment Programme for strate- with the of Agriculture and Food Security (MASA) gic infrastructure development.

Figure 4.2: Policy and strategic framework – Ministry of Industry and Commerce

(National Level) PQG 2015-2019 PES 2016

(MIC) Politica e estratégia comercial 1998

Estudo Diagnostico para Integração do Comercio (EDIC) 2014

Politica e estratégia industrial 2016

Estratégia para a Melhoria do Estratégia Nacional de Ambiente de Negócios em Politica e Estratégias Desenvolvimento Moçambique (EMAN 2) 2013-2017 ligado ao missão de MIC 2015-2035 (ENDE) Programa Integrado de Comerciali- zação Agrícola (PICA)

Lei do Sistema Nacional de Qualidade

Estrategia para o Desenvolvimento das Pequenas e Medias Empresas em Mocambique 2007

(Other Ministry) Politica e Estratégias MASA - PEDSA, PNISA, etc. ligado nos outros sectores MMAIP - PDP, PESPA, etc. (e.g. MASA, MMAIP, MEF) MEF - PII, etc.

Box 4.2: Trade related issues coordination mechanism – Aid for Trade and EIF in Mozambique The Enhanced Integrated Framework (EIF) is the only global initiative on Aid for Trade (AfT) for Least Developed Countries. Mozambique became eligible for support under the Integrated Framework (IF) in 2004 and later by the EIF in 2010. Support is given under Tier 1 and Tier 2 projects. Current support is for Tier 1 projects which include an update of the Diagnostic of Trade Integration Study (DTIS), capacity building for trade-related institutions, and trade mainstreaming actions such as workshops and studies. Tier 2 projects are based on the priorities defi ned in the DTIS Action Matrix fi nalized in 2014. The EIF is also providing technical assistance to national stakeholders to identify, select, prioritize, and draft small-scale business development projects and mobilize fi nancial resources. One of the key challenges faced by Mozambique in the area of trade policy in general, and AfT in particular, is the weakness of coordination mechanisms at institutional and policy levels. There is no single body responsible for the coordination of trade issues and mechanisms tend to be established on an ad hoc basis to address specifi c issues.

Positioning of Mozambique in the International Trade 2016 43 also the tripartite SADC-EAC-COMESA which is on a Trade Facilitation Agreement (Bali Min- Two examples are worth noting. The EIF National Steering Committee was set up to monitor the implementation of currently being negotiated isterial Declaration adopted on December the EIF at national level. It meets on a quarterly under the chairmanship of the Director of External Trade (MIC) its 2013) which will enter into once two-thirds of members comprise representatives from the public and private sectors, civil society, academia and development Unilateral initiatives: This mainly refers to the WTO members have completed the ratifica- partners. Despite the importance of the issues addressed by the EIF the level of engagement by stakeholders Preferential Trade Agreements (PTA) provided to tion process. In Mozambique the ratification needs to improve. The establishment of the National Committee on Trade Facilitation was a recommendation of the LDCs, including the African Growth and Oppor- process is on-going (as of July 2016). Mo- 2013 WTO’s Trade Facilitation Agreement and is expected to be set up as a sub-group Inter-Ministerial Group for tunity Act (AGOA). (Table 4.1) the Removal of Trade Barriers (GIRBI - Grupo Inter-Ministerial de Remoção de Barreiras ao Investimento) which zambique participates in several negotiations meets quarterly under the chairmanship of the MIC at technical level, and the Prime Minister at political level. These Multilateral Agreements: this refers to the trade in the Doha round as a group of ACP (African, examples show how that whilst mechanisms are structured in a manner to produce results, at the same time they negotiations among WTO member countries. Caribbean and Pacific countries with prefer- pose challenges for the coordination of efforts at a national level. The Doha Round is the current trade negotia- ences in the EU), the African Group (African At the policy level coordination is also essential. On the one hand, policy instruments such as the African Union’s tion round launched in 2001, also known as members of the WTO), LDCs, G-33 (Coalition Comprehensive African Agriculture Development Program (CAADP), PQG 2015-2019 and the National Strategic Doha Development Agenda as it focusses on of developing country pressing for flexibility Plan for the Development of the Agricultural Sector (PEDSA) stress the importance of the need to increase produc- trade prospects of developing countries. In to undertake limited market opening in agri- tion, productivity, jobs and income from agricultural products. On the other hand, the government needs to ensure 2013, WTO members concluded negations culture). that the operationalization of these policies and strategies are effectively aligned with MIC’s policy instruments including the Industrial Policy and Strategy 2015-2025, the Trade Policy and Strategy, and DTIS 2014 to better facilitate integration of the domestic economy with regional and global value chains. Table 4.1: Preferential Trade Agreements - Mozambique Year of Entry into CountryType PTA sub-schemes EIF Coordination Mechanism - Inter-institutional committee Force EU GSP 1971 GSP+, Everything but Arms (LDCs) Japan GSP 1971 LDCs Private Sector (CTA, Norway GSP 1971 GSP zero, GSP plus etc.) Multilateral Switzerland GSP 1972 LDSs and countries undergoing debt relief Cooperation Australia GSP 1974 LDCs MASA (WTO, UN, IFI, etc.) New Zealand GSP 1972 LDCs MIREME MMAIP Canada GSP 1974 LDCs USA GSP 1979 LDCs USA Other PTAs 2000 Textile and apparel benefi ts MCT MEF Academia/ Morocco LDC-specifi c 2001 Think-tank MIC (UEM, ACIS, Turkey GSP 2002 LDSs, Special incentive arrangement CEMO, etc.) Iceland GSP 2002 MTC MINEC Chinese Taipei LDC-specifi c 2003 Tajikistan LDC-specifi c 2003 Bilateral MITADER MITESS Cooperation Kyrgyz LDC-specifi c 2006 India LDC-specifi c 2008 China LDC-specifi c 2010 Civil Society, Russia GSP 2010 LDCs Media Kazakhstan GSP 2010 LDCs Belarus GSP 2010 LDCs Chile LDC-specifi c 2014 Thailand LDC-specifi c 2015 4.2 International Trade Agreements Source: WTO

There are a number of international trade agreements Bilateral Agreements: Agreements with Zimba- in force in Mozambique which provide the framework bwe (2004) and Malawi (2006) Trade tariff are a key measure in international trade was set at 100%. On non-agriculture products, the for the promotion of bilateral and multi-lateral trade. Regional Agreements: These include the SADC to promote trade and also nurture domestic indus- applied tariff was 9.5%, while the bound tariff was International trade agreements, to which Mozam- Free Trade Zone, the SADC-EU Economic Part- try and business. In 2014, the applied tariff for agri- 22.8%. Figure 4.3 shows the tariff applied to prod- bique is a party, can be grouped in to four types: nership Agreements (signed in June 2016), and cultural products was 13.8%, while the bound tariff ucts imported in Mozambique in 2014.

44 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 45 also the tripartite SADC-EAC-COMESA which is on a Trade Facilitation Agreement (Bali Min- currently being negotiated isterial Declaration adopted on December 2013) which will enter into once two-thirds of Unilateral initiatives: This mainly refers to the WTO members have completed the ratifica- Preferential Trade Agreements (PTA) provided to tion process. In Mozambique the ratification LDCs, including the African Growth and Oppor- process is on-going (as of July 2016). Mo- tunity Act (AGOA). (Table 4.1) zambique participates in several negotiations Multilateral Agreements: this refers to the trade in the Doha round as a group of ACP (African, negotiations among WTO member countries. Caribbean and Pacific countries with prefer- The Doha Round is the current trade negotia- ences in the EU), the African Group (African tion round launched in 2001, also known as members of the WTO), LDCs, G-33 (Coalition Doha Development Agenda as it focusses on of developing country pressing for flexibility trade prospects of developing countries. In to undertake limited market opening in agri- 2013, WTO members concluded negations culture).

Table 4.1: Preferential Trade Agreements - Mozambique Year of Entry into CountryType PTA sub-schemes Force EU GSP 1971 GSP+, Everything but Arms (LDCs) Japan GSP 1971 LDCs Norway GSP 1971 GSP zero, GSP plus Switzerland GSP 1972 LDSs and countries undergoing debt relief Australia GSP 1974 LDCs New Zealand GSP 1972 LDCs Canada GSP 1974 LDCs USA GSP 1979 LDCs USA Other PTAs 2000 Textile and apparel benefi ts Morocco LDC-specifi c 2001 Turkey GSP 2002 LDSs, Special incentive arrangement Iceland GSP 2002 Chinese Taipei LDC-specifi c 2003 Tajikistan LDC-specifi c 2003 Kyrgyz LDC-specifi c 2006 India LDC-specifi c 2008 China LDC-specifi c 2010 Russia GSP 2010 LDCs Kazakhstan GSP 2010 LDCs Belarus GSP 2010 LDCs Chile LDC-specifi c 2014 Thailand LDC-specifi c 2015

Source: WTO

Trade tariff are a key measure in international trade was set at 100%. On non-agriculture products, the to promote trade and also nurture domestic indus- applied tariff was 9.5%, while the bound tariff was try and business. In 2014, the applied tariff for agri- 22.8%. Figure 4.3 shows the tariff applied to prod- cultural products was 13.8%, while the bound tariff ucts imported in Mozambique in 2014.

Positioning of Mozambique in the International Trade 2016 45 Figure 4.3: Average MFN applied duties 2014 – Mozambique 4.3 Business Environment in Mozambique Clothing Fish & sh products Animal products Doing Business Beverages & tobacco Coee, tea Fruit, vegetables, plants “Doing Business”, annually produced by World performs relatively well in relation to dealing with Dairy products Bank Group since 2003, measures 10 aspects construction permits, resolving insolvency, pro- Textiles Cereals & preparations of a country’s legal and regulatory framework to tecting minority investors and registering proper- Leather, footwear, etc. Wood, paper, etc. compare the ease of doing business in global ty, while under-performing in the area of connect- Oilseeds, fat & oils context. According to Doing Business 2016, Mo- ing to electricity, accessing credit and enforcing Sugars and confectionery Electrical machinery zambique was positioned in 133rd place in the contracts. It is worthwhile to note that Rwanda Transport equipament index of a total of 189 countries. Table 4.3 shows records excellent performance in terms of getting Minerals & metals Non-electrical machinery a comparison of the rankings of Sub-Saharan Af- credit which position the country 2nd rank among Petroleum rican countries and highlights that Mozambique Sub-Saharan African countries. Chemicals Cotton 0 246810 12 14 16 18 20 Table 4.3: Doing Business 2016 (comparison w/selected countries in Sub-Saharan Africa) Source: WTO s 89) y der ty

Trade agreements and investment agreements are and human resources between two or more countries. y mits y it enc r inseparable legal frameworks in global economic sys- Table 4.2 shows the bilateral investment agreements v oper icit s tem, as both promote ﬂ ows of goods, ﬁ nancial means, in force in Mozambique and/or signed bilaterally. ontracts oss Bor r edit xe ing Pr Ac s Ta uction Pe er

Table 4.2: Bilateral investment agreements – Mozambique or ving Insol cing C ting a Business ecting Minor ting Cr ting Electr or est

CountryYear of SignatureYear of Entry into Force ying ot v ading onstr egist esol Get Pr Global Rank (out of 1 Star Dealing with C Get R In Pa Enf R Zimbabwe 1990 Tr Portugal 1996 1998 Mauritius 32 3219431411 Mauritius 1997 2003 Rwanda 62 14 3 8119528 20 6 South Africa 1997 1998 Botswana 72 28 11 103107 6321 3 Algeria 1998 2000 South Africa 73 17 10 31 11 71221162 Egypt 1998 Italy 1998 2003 Seychelles 95 22 20 16213153 7234 United States of America 1998 2005 Zambia 9781411322 9426 22 15 Indonesia 1999 2000 Namibia 101 35 5241 749151011 China 2001 2002 Swaziland 105 32 8251510228 14110 Cuba 2001 2002 Kenya 108 31 28 12 17 3171122929 Netherlands 2001 2004 Sweden 2001 2007 Ghana 114 13 23 954415361436 Denmark 2002 2002 Lesotho 114 15 38 20 13 33 12 16 2822 France 2002 2006 Uganda 122 36 33 30 18 4121419614 Germany 2002 2007 Cabo Verde 126 71217413371011239 Switzerland 2002 2004 Mozambique 133 18 1281233122020465 United Arab Emirates 2003 Finland 2004 2005 Tanzania 139 21 21 32233202640312 United Kingdom 2004 2004 Malawi 141 33 4357331712162837 United States of America (TIFA) 2005 2005 Zimbabwe 155 43 46 27 16 12 724838 33 BLEU (Belgium-Luxembourg 2006 2009 Angola 181 27 13 29 38 45 423414739 Economic Union) Source: World Bank, Doing Business 2016 Viet Nam 2007 2007 India 2009 2009 Spain 2010 Japan 2013 2014 Brazil 2015 Singapore 2016 Source: UNCTAD

46 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 47 4.3 Business Environment in Mozambique

Doing Business

“Doing Business”, annually produced by World performs relatively well in relation to dealing with Bank Group since 2003, measures 10 aspects construction permits, resolving insolvency, pro- of a country’s legal and regulatory framework to tecting minority investors and registering proper- compare the ease of doing business in global ty, while under-performing in the area of connect- context. According to Doing Business 2016, Mo- ing to electricity, accessing credit and enforcing zambique was positioned in 133rd place in the contracts. It is worthwhile to note that Rwanda index of a total of 189 countries. Table 4.3 shows records excellent performance in terms of getting a comparison of the rankings of Sub-Saharan Af- credit which position the country 2nd rank among rican countries and highlights that Mozambique Sub-Saharan African countries.

Table 4.3: Doing Business 2016 (comparison w/selected countries in Sub-Saharan Africa) s 89) y der ty y mits y it enc r v oper icit s ontracts oss Bor r edit xe ing Pr Ac s Ta uction Pe er or ving Insol cing C ting a Business ecting Minor ting Cr ting Electr or est ying ot v ading onstr egist esol Get Pr Global Rank (out of 1 Star Dealing with C Get R In Pa Enf R Tr Mauritius 32 3219431411 Rwanda 62 14 3 8119528 20 6 Botswana 72 28 11 103107 6321 3 South Africa 73 17 10 31 11 71221162 Seychelles 95 22 20 16213153 7234 Zambia 9781411322 9426 22 15 Namibia 101 35 5241 749151011 Swaziland 105 32 8251510228 14110 Kenya 108 31 28 12 17 3171122929 Ghana 114 13 23 954415361436 Lesotho 114 15 38 20 13 33 12 16 2822 Uganda 122 36 33 30 18 4121419614 Cabo Verde 126 71217413371011239 Mozambique 133 18 1281233122020465 Tanzania 139 21 21 32233202640312 Malawi 141 33 4357331712162837 Zimbabwe 155 43 46 27 16 12 724838 33 Angola 181 27 13 29 38 45 423414739

Source: World Bank, Doing Business 2016

Positioning of Mozambique in the International Trade 2016 47 WEF Global Competitiveness Index Box 4.3: Logistics Performance Index (LPI) The Global Competitiveness Index, initiated by the licly available sources such as the United Nations. The Logistics Performance Index has been prepared annually by the World Bank since 2010 and it represents an in- According to its 2015-2016 edition, Mozambique oc- World Economic Forum in 2004, assesses a country’s teractive benchmarking tool created to help countries identify the challenges and opportunities they face in their per- performance in relation to a set of institutions, poli- cupies 133rd place of a total of 140 countries. Table formance on trade logistics and what they can do to improve their performance. The LPI 2016 allows for comparisons cies, and factors that determine current and medium- 4.4 shows a comparison of the rankings of Sub-Sa- across 160 countries. Mozambique scores relatively well at 9th position in the index for the Southern African region term economic prosperity. The index integrates both haran African countries, in which Mozambique per- and in 88th place globally and performs well on international shipments and tracking and tracing of goods. Overall macroeconomic and micro business aspects of com- forms relatively well in relation to labour market effi - Mozambique’s performance in the index has improved since 2010 particularly in relation to timeliness of shipping, petitiveness into a single index made up of over 110 ciency and innovation, whilst there is a more negative customs and tracking and tracing which probably refl ects works undertaken to upgrade the port of Nacala. variables, of which two thirds come from the Execu- perception regarding infrastructure, fi nancial market tive Opinion Survey, and one third comes from pub- development and the health and education sector. Figure 4.4: LPI – Mozambique 2010 vs 2016

Customs Customs: The efﬁ ciency of customs and border Table 4.4: GCI 2015-2016 global ranking (comparison w/selected countries in Sub-Saharan Africa) management clearance. 5

y Infrastructure: The quality of trade and transport

y 4

40) Timeliness of Infrastructure infrastructure. shipmant 3 y icienc

f International shipments: The ease of arranging icienc 2 f eadiness et competitively priced shipments. imar k 1 et ef e et ef k Logistics quali ty and competence

k 0 : The compe- e tence and quality of logistics services—truck- uctur ation et siz oeconomic ing, forwarding, and customs brokerage. onment v k elopment vir v Tracking and Tracking and tracing: The ability to track and trace inancial mar

echnological r International tracing Mar de T Business sophistication Inno F Labor mar Global rank (out of 1 Institutions Infrastr Macr en Health and pr education Higher education and training Goods mar Shipments consignments. Mauritius 46 34 37 73 42 52 25 57 34 65 119 34 78 Timeliness of shipment: The frequency with South Africa 49 38 68 85 126 83 38 107 12 50 29 33 38 Logistics quality which shipments reach consignees within Rwanda 58 17 97 92 88 120 44 828 103 126 69 46 scheduled or expected delivery times Botswana 71 37 96 9 119 100 95 39 63 91 105 111 102 Mozambique 2016 Mozambique 2010 Namibia 85 44 66 71 116 109 85 49 50 87 114 77 74 Cote d’Ivoire91628574 129 108 75 69 60 102 81 93 53 Zambia 96 46 120 83 122 78 53 87 62 108 89 85 52 Table 4.5: LPI 2016 Sub-Saharan Africa ranking (comparison w/selected countries) Seychelles 97 61 47 61 64 92 65 43 106 71 140 62 87

Kenya 99 91 99 123 114 98 84 31 42 94 71 48 41 y e Gabon 103 78 110 18 111 125 124 71 97 112 110 129 129 ence erall Cape Verde 112 66 94 124 51 81 99 125 111 77 138 106 100 uctur oms Lesotho 113 45 113 44 130 116 88 75 127 123 133 105 70 national king and Rank LPI Ov er ac

Tanzania 120 96 127 84 124 135 121 46 101 131 72 114 105 imeliness of Cust Infrastr Int Shipments Logistics qualit Tr tracing T shipment Regional Global and compet Zimbabwe 125 112 129 104 106 117 131 134 124 118 115 130 128 South Africa 120182123221724 Swaziland 128 74 104 93 135 118 111 101 82 125 132 123 124 Kenya 242394246403846 Madagascar 130 129 138 101 123 131 119 42 133 129 106 119 106 Botswana 357485470757043 Mozambique 133 126 126 122 133 136 112 98 126 124 101 120 83 Uganda 458516774575945 Malawi 135 92 135 140 121 133 117 29 100 133 127 121 121 Tanzania 561606063586064

Source: World Economic Forum, The Global Competitiveness Report 2015-2016 Rwanda 662527659635869 Namibia 77973648686 100 85 Burkina Faso 88184718371 103 88 Mozambique 98488 116 58 109 79 97 Ghana 10 88 93 86 85 98 101 82 Nigeria 11 90 92 96 118 74 82 95 Togo 12 92 89 117 93 106 91 76 Côte d’Ivoire13957089 105 87 89 128 Source: World Bank, Connecting to Compete Trade Logistics in the Global Economy 2016

48 Positioning of Mozambique in the International Trade 2016 Positioning of Mozambique in the International Trade 2016 49 Box 4.3: Logistics Performance Index (LPI) The Logistics Performance Index has been prepared annually by the World Bank since 2010 and it represents an in- teractive benchmarking tool created to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance. The LPI 2016 allows for comparisons across 160 countries. Mozambique scores relatively well at 9th position in the index for the Southern African region and in 88th place globally and performs well on international shipments and tracking and tracing of goods. Overall Mozambique’s performance in the index has improved since 2010 particularly in relation to timeliness of shipping, customs and tracking and tracing which probably reﬂ ects works undertaken to upgrade the port of Nacala.

Figure 4.4: LPI – Mozambique 2010 vs 2016

Customs Customs: The efﬁ ciency of customs and border management clearance. 5 4 Infrastructure: The quality of trade and transport Timeliness of Infrastructure infrastructure. shipmant 3 2 International shipments: The ease of arranging 1 competitively priced shipments. 0 Logistics quali ty and competence: The competence and quality of logistics services—truck- ing, forwarding, and customs brokerage.

Tracking and International Tracking and tracing: The ability to track and trace tracing Shipments consignments. Timeliness of shipment: The frequency with Logistics quality which shipments reach consignees within scheduled or expected delivery times Mozambique 2016 Mozambique 2010

Table 4.5: LPI 2016 Sub-Saharan Africa ranking (comparison w/selected countries) y e ence erall uctur oms national king and Rank LPI Ov er ac imeliness of Cust Infrastr Int Shipments Logistics qualit Tr tracing T shipment Regional Global and compet South Africa 120182123221724 Kenya 242394246403846 Botswana 357485470757043 Uganda 458516774575945 Tanzania 561606063586064 Rwanda 662527659635869 Namibia 77973648686 100 85 Burkina Faso 88184718371 103 88 Mozambique 98488 116 58 109 79 97 Ghana 10 88 93 86 85 98 101 82 Nigeria 11 90 92 96 118 74 82 95 Togo 12 92 89 117 93 106 91 76 Côte d’Ivoire13957089 105 87 89 128 Source: World Bank, Connecting to Compete Trade Logistics in the Global Economy 2016

Positioning of Mozambique in the International Trade 2016 49 Reference

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50 Positioning of Mozambique in the International Trade 2016