The economic week in Mozambique was marked by important issues that directly affect development, especially with regard to improving the business environment, which has been weakened following the general demonstrations that took place in the country. On the other hand, there was a ‘glimmer of hope’ with the measures proposed by Daniel Chapo’s government.
On Wednesday 19 February, as promised, the Executive announced a downward revision of fuel prices, justifying the measure with the fall in purchase prices on the international market and the need to reduce the cost of living.
In general terms, the price of a litre of petrol went from 86.25 meticals to 85.82 meticals, while oil fell from 87.05 meticals to 69.35 meticals per litre. Diesel, previously priced at 91.23 meticals, is now being sold at 86.79 meticals per litre. Cooking gas maintained its price of 86.05 meticals per kilogram, while natural gas for vehicles fell from 44.52 meticals per litre to 43.40 meticals.
‘The reasons for this adjustment include the fall in the cost of purchasing oil products internationally, the need to alleviate the economic impact of fuel and to reduce the cost of living. We hope that this reduction will help restore families‘ purchasing power and reduce the costs of products and services that depend directly on fuel,’ said Paulo da Graça, president of the Energy Regulatory Authority (Arene).
Also this week, Mozambique Airlines (LAM) took the decision to suspend the Maputo-Lisbon route due to the high accumulated losses, which exceed 21 million dollars (1.3 billion meticals) since the route was inaugurated in December 2023.
The company’s spokesman, Alfredo Cossa, explained that the measure was taken as part of the implementation of the 100-day governance plan, emphasising that other loss-making routes will also be suspended, such as the Maputo-Harare-Lusaka route, which generated losses of 307 thousand dollars (19.6 million meticals).
The company now intends to strengthen its presence in lucrative regional markets, such as Johannesburg and Dar es Salaam. However, the priority will be the domestic market, with the intention of guaranteeing a more efficient, profitable operation with better services and reduced prices.
Looking at business-related aspects, the private sector made it known that the business environment saw the biggest drop ever in the Business Robustness Index, from 30 per cent in the third quarter to 25 per cent in the fourth quarter of 2024 – a drop of five percentage points. This contraction reflects the structural and cyclical difficulties faced by companies, with accumulated losses of more than 32.2 billion meticals (505 million dollars).
During the presentation of a report, the Confederation of Economic Associations of Mozambique (CTA) also said that the macroeconomic environment remained unstable throughout the quarter, with mixed indicators. Inflation fell from 9.32 per cent in the third quarter of 2023 to 3.28 per cent in the fourth quarter of 2024, reflecting less pressure on prices, without, however, having a significant effect on purchasing power.
The national business community has revealed that it faces the problem of a shortage of foreign currency, compromising companies’ ability to honour commitments made to international suppliers. It is estimated that unmet foreign exchange needs in the first quarter of 2025 will exceed 23.9 billion meticals (375 million dollars), mainly affecting the industrial (41 per cent), aviation (25 per cent) and commercial (21 per cent) sectors.
In the meantime, faced with the economic challenges, the CTA is proposing a series of measures, namely facilitating access to credit (by reducing interest rates and creating subsidised lines of finance), implementing favourable tax and customs policies (such as exempting the payment of tax fines and interest and making customs audits more flexible) and investing in logistical infrastructures, in order to reduce transport costs and boost business competitiveness.
Text: Cleusia Chirindza
