Business leaders and economists on Tuesday, 1 August, at the 61st edition of FACIM called for the adoption of a floating exchange rate regime and the strengthening of domestic production as measures to overcome the foreign currency shortage that continues to pressure Mozambique’s private sector.
The position was presented during a seminar organised by EuroCham under the theme ‘European Value for Mozambique: Investment, Local Production and Exports in Response to Exchange Rate Pressure’.
Economist Oldemiro Belchior highlighted Europe’s weight in financing the national economy but argued that the concentration of investment in large projects limits the impact on the broader Mozambican business community.
‘Two in every three dollars come from Europe. Europe is already the largest financier and, last year, large projects in the extractive industry sector accounted for 83% of foreign direct investment,’ he said, citing Balance of Payments data pointing to 60% growth in European investment in 2025.
According to the economist, the scale of investments does not necessarily translate into greater circulation of wealth in the national economy, since megaprojects rely heavily on imported equipment and services, while many local companies have yet to integrate into their supply chains.
José María Sánchez Castillo, president of the Mozambique-Spain Chamber of Commerce, said there was ‘cautious optimism’ regarding the country, given the potential of natural resources, energy, agriculture and tourism. However, he identified predictability, security and access to foreign currency as decisive factors for investment decisions.
‘What conditions capital expenditure? First, predictability. The investor needs to know the rules, the timelines, the tax treatment. Above all, they need to trust that the essential conditions will not change after capital has been committed. Second, security. Third, access to foreign currency,’ he said.
For Castillo, foreign exchange difficulties can undermine even economically viable projects. ‘A business can be profitable, but if it cannot pay external suppliers, import equipment or meet financial commitments, it loses viability,’ he explained.
Local Content Law Faces Business Readiness Challenge
The entry into force of Law No. 9/2026 on Local Content was identified as an opportunity to increase the participation of national companies in large projects.
The legislation establishes mandatory planning mechanisms and preferential procurement, as well as creating a regulatory authority to oversee the contracting and supply of goods and services to multinationals.
‘Finally, after more than a decade of discussion between the Government, the private sector and other stakeholders involved in this area, the law promoting local content has been approved,’ said Oldemiro Belchior.
The economist warned, however, that the existence of the law does not in itself guarantee that national companies are prepared to take advantage of the opportunities created by large investments.
‘Micro, small and medium-sized enterprises represent the backbone of inclusive, resilient, competitive and diversified growth, but they must be ready to meet the demands of large projects,’ he said.
Castillo also pointed to limitations related to the effective size of the Mozambican market. ‘Demographic size does not automatically correspond to effective market size,’ he said.
According to the president of the Mozambique-Spain Chamber of Commerce, a significant portion of the population operates in the informal economy or in low-productivity, low-income activities, leading some investors to adopt a gradual market entry strategy.
‘A very significant part of the population works in the informal economy or in low-productivity and low-income activities. For this reason, some companies conclude that demand does not yet justify a large investment,’ he explained.
As an example, he cited Spanish company Legnor, which began operations in South Africa before establishing itself in Mozambique.
Fixed Exchange Rate Deepens Pressure on Companies
Exchange rate policy was at the centre of the criticism raised during the seminar. According to Oldemiro Belchior, the maintenance of metical stability since 2021 — adopted to contain inflation and preserve international reserves — has been accompanied by a growing shortage of foreign currency in the market.
The economist linked the situation to a reduction in credit to the private sector and to difficulties faced by companies in importing machinery, fuel and intermediate goods.
‘Credit to the private sector has been declining partly due to the lack of foreign currency in the exchange market. Without the sale of foreign currency to pay for imports, it is very difficult to leverage credit growth,’ he said.
Among the factors cited for the foreign currency shortage are weak domestic production, a fall in exports — particularly coal — capital flight during the period of civil unrest, a sovereign debt rating downgrade, the closure of Mozal, and the suspension of programmes by the Trump administration.
Faced with this scenario, Belchior called for a change to the current exchange rate regime.
‘It is necessary for the exchange rate to transition from a fixed rate regime to a floating regime, so that the foreign exchange market can function freely according to the supply and demand for currencies,’ he said.
The economist linked this expectation to the new leadership at the Central Bank. ‘We hope that, with the new leadership that took office today at the Central Bank, we may see a more flexible exchange rate policy than we have seen in the past,’ he declared.
Produce More to Depend Less on Foreign Currency
Participants agreed that exchange rate reform must be accompanied by structural changes in the country’s productive base. Oldemiro Belchior advocated the renewal of the productive structure through incentives for projects capable of generating greater added value and multiplier effects in the economy.
The economist also called for stronger oversight of payments and receipts in the tourism sector, which he considers an important source of foreign currency but one that faces transparency problems in the flow of capital in and out of the country.
Belchior further appealed for greater coordination between monetary and fiscal policy, arguing that an excessive focus on inflation control had ended up constraining economic growth.
‘In the past, we pursued a monetary policy very focused on controlling inflation, but it was detrimental to economic growth. This monetary policy must converge with fiscal policy in the direction of generating economic value and better and more financing for our companies, which are the engine of transformation and growth,’ he said.
In Castillo’s view, greater domestic production could reduce pressure on the foreign exchange market by lowering the need for imports and simultaneously creating conditions to boost exports.
‘Producing what we import today reduces the need for foreign currency and, by extension, increases its inflow into the country,’ he said.
The business representative argued that the country has investment opportunities but needs to convert that potential into concrete projects. ‘Mozambique has opportunities. The challenge is to turn them into financeable and executable projects,’ he concluded.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/2026/09/02/economia/facim-2026-empresarios-defendem-taxa-flutuante-para-travar-asfixia-cambial-no-pais/
