The Chief Economist and Director of the Economic Studies Office at Millennium bim, Oldemiro Belchior, defended on Tuesday, October 21, the need for more balanced fiscal and monetary reforms to ensure the economic diversification of Mozambique.
Speaking at the Scientific Days of the Faculty of Economics and Business at Joaquim Chissano University, under the theme “Financial System and Economic Development: Perspectives and Challenges for Mozambique”, Belchior warned that the Mozambican economy remains overly dependent on megaprojects, whose fiscal contribution is “practically insignificant.”
“We have megaprojects that pay almost nothing in taxes. They operate in special economic zones with very low tax regimes, while micro, small and medium-sized enterprises (MSMEs) — which form the true foundation of productive diversification — continue to face a heavy tax burden and difficulties in accessing finance,” he explained.
According to the economist, the unequal treatment between large ventures and smaller domestic firms creates an unfavourable environment for balanced development.
“The diversification of the productive structure lies in MSMEs. They are the ones capable of generating innovation, jobs and added value, but they need clear support policies,” he stressed.
Belchior called for the creation of fiscal incentives and financial stimulus mechanisms to make the business environment more competitive and attractive for local entrepreneurs. In this context, he highlighted the Economic Operation and Diversification Program (PRESS), recently approved by the Government, as a strategic measure to promote the growth of traditional sectors and stimulate new, nationally relevant investments.
“PRESS was designed precisely to focus on existing sectors that need revitalisation. The goal is to diversify products and the economic base, creating conditions for the different branches of the economy to flourish,” he stated.
During his speech, Belchior also addressed the role of the financial system in economic development, noting that banks should play a broader role than simply mediating between savings and investment.
“When a bank establishes itself in a district, it contributes to that region’s development. It helps modernise infrastructure, promote electrification, open roads, and stimulate local trade. Banks also have a social responsibility,” he emphasised.
He reminded the audience that the banking sector is one of the country’s largest employers and plays a crucial role in improving living standards.
“Economic development means more jobs, better access to education and health, and a higher quality of life. The banking sector participates actively in this process — both through financing and by generating direct and indirect opportunities,” he added.
On the macroeconomic front, Belchior pointed to the lack of coordination between fiscal and monetary policies as one of the main obstacles to sustainable growth. He noted that the Bank of Mozambique has been trying to control inflation by raising interest rates, but this measure ends up penalising private investment.
“When interest rates are high, no one invests. Fiscal and monetary policies must move together to ensure stability and growth,” he argued.
The economist explained that over 80% of public expenditure is committed to salaries and current expenses, limiting the State’s investment capacity.
“Without true fiscal consolidation — that is, without increasing revenues and rationalising expenses — it will be very difficult to align fiscal and monetary policies. The result will always be the same: high interest rates, low growth, and weak stimulation of the real economy,” he warned.
Meanwhile, Belchior highlighted the growing role of digitalisation in Mozambique’s financial sector. It is estimated that over 70% of banking transactions are already carried out electronically, which he said represents an important step toward financial inclusion and reduced operational costs.
“The future of banking will be increasingly digital. It will no longer be necessary to go physically to a branch to open an account or make a transfer, which will expand access to financial services and improve the efficiency of the system,” he concluded.
Text: Germano Ndlovo
