Mozambique recorded, in 2022, a 61.3% reduction in the flow of Foreign Direct Investment (FDI), having totalled US$1.9 billion (equivalent to 11.7% of GDP) when compared to the US$5.1 billion (32.3% of GDP) recorded in 2021.
According to data in the annual balance of payments bulletin, released recently by the Bank of Mozambique (BoM), FDI from 2018 to 2021 showed an upward trend, influenced by increased capital inflows from large projects, associated to the extractive industry, with a focus on hydrocarbon prospecting and research activities in the Rovuma basin, as well as for the revitalisation of the coal and heavy sands industry.
Meanwhile, in 2022, FDI from large projects registered a drop compared to 2021, due to disinvestment by companies in the coal industry.
In turn, “the flow of companies that do not belong to the category of large projects showed, over the period under review, a mixed behaviour characterised by increases and decreases, although a significant part of the investments made were aimed at responding to requests from these FDI ventures.
The report also indicates that, in terms of the sectoral distribution of FDI, the mining industry maintained its position as the largest recipient of investment flows, receiving a total of US$1.5 billion, (78.9 percent of total FDI), followed by the production and distribution of electricity gas and water with $130.2 million (6.6% of total FDI), manufacturing with $40.5 million (2% of total FDI) and, finally, the transport, storage and communication sector with $11.6 million (1% of total FDI).
“The distribution of FDI in the extractive industry was mostly absorbed by natural gas exploration preparation activities, with the activity recording an annual growth in FDI inflow of 5.3 per cent, corresponding to an inflow of $2.2 billion. However, the FDI inflow from coal mining activities fell by over 100 percent, determined by net payment of loans and trade credits totalling US$736.5 million, as compared to a net inflow of US$1.1 billion recorded in 2021,” the report said.
The report from the BoM highlights that Mauritius was the main partner of FDI in Mozambique, with 70.5 percent, followed by the Netherlands, United Arab Emirates and Italy, with 27.6 percent, 9.3 percent and 7.9 percent of the country’s total (net) FDI, respectively.