This week, Mozambique saw progress and challenges on several fronts. Among the main news items were IPEME’s initiative to increase transparency in public tenders, the second consecutive month of price deflation and the significant growth in state revenues in the first half of 2024. Finally, the news of the postponement of ExxonMobil’s Final Investment Decision (FID) on the liquefied natural gas (LNG) project in the Rovuma basin to 2026 has left many investors apprehensive.
The issue of transparency in public tenders has been a recurring concern, especially for Micro, Small and Medium-sized Enterprises (MSMEs), which have recently revealed that they face difficulties in accessing these opportunities due to the lack of clarity in the processes.
To tackle this challenge, the Institute for the Promotion of Small and Medium-sized Enterprises (IPEME) announced in an interview with Diário Económico (DE) that it is about to finalise the implementation of a new database.
According to Alfredo Cavele, the organisation’s representative, this tool will allow MSMEs to access information on tenders in real time, simplifying bureaucratic processes and eliminating the barriers that prevent their participation. This effort to improve transparency is in line with the new SME law, which is currently being approved, and promises to create a more favourable environment for these companies, which represent the vast majority of the business fabric in Mozambique.
“The National Statistics Institute (INE) reported that the country registered deflation of 0.05 per cent. Although this drop in prices can be seen as a temporary relief for consumers, it contrasts with accumulated inflation of 1.15 per cent for the year and year-on-year inflation of 2.97 per cent”
This focus on transparency and improving the business environment becomes even more relevant when you consider the growth in state revenues. In the first half of 2024, revenues totalled 168.8 billion meticals (2.6 billion dollars), an increase of 15% on the same period last year.
This growth, which represents 44 per cent of the annual target set in the Economic and Social Plan and State Budget (PESOE 2024), reflects a robust economic performance, but also highlights the need for careful management of public finances.
The Executive’s spokesman, Filimão Suaze, emphasised that a large part of the expenditure was directed towards paying salaries, an area that continues to be a significant challenge for the government, as indicated by the International Monetary Fund (IMF). The need to reduce spending on the wage bill has led the government to commit to eliminating 5,000 ‘ghost workers’ in the coming months.
While the government is endeavouring to maintain fiscal balance, the economy is also facing challenges in terms of price stability. The National Statistics Institute (INE) reported that the country registered deflation of 0.05 per cent.
Although this drop in prices can be seen as a temporary relief for consumers, it contrasts with accumulated inflation of 1.15 per cent for the year and year-on-year inflation of 2.97 per cent.
Deflation was mainly driven by lower prices for food and non-alcoholic drinks, but the volatility of prices for certain food products, such as corn and fresh fish, remains a concern. This situation highlights the difficulties in controlling inflation and suggests the need for additional policies to stabilise prices and protect households’ purchasing power.
In the energy sector, economic and political uncertainties are reflected in the postponement of ExxonMobil’s Final Investment Decision (FID) on the natural gas project in the Rovuma basin. Initially scheduled for 2025, the FID has been postponed to 2026, as announced by Mozambican President Filipe Nyusi after a meeting with representatives of the company.
This postponement not only prolongs the expectations of economic return from this project, but also increases the pressure on the government to guarantee the stability necessary for the resumption and progress of gas megaprojects in the Cabo Delgado region.
The postponement also emphasises the importance of addressing security challenges in the region, where TotalEnergies has already suspended its operations since 2021.
Felisberto Ruco (DE)
