Trade Performance Review 2005: Mozambique

Year of publication: 
2005
Author(s): 
Bruce Byiers & Adriano Ubisse
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Mozambique's trade balance with the RoW has become increasingly negative in the five years to 2002, as Table 1 shows, with notable drops in 2000 and 2002 due to surges in domestic demand for imports, accompanied by a lesser increase in export production. As Table 1 illustrates, the value of imports doubled in 2000, and continued to increase up to 2002. These were partially offset by a near trebling of exports in 2001, which also continued to grow, although at a slower rate than imports. 

A consistently negative trade balance may be considered normal for an aid-dependent, poor country such as Mozambique, reflecting demand for high-value manufactured goods which outstrips the income from exports of low-value primary goods.

However, as this report will show, fluctuations in the overall trade balance with the RoW also reflects Mozal, the US$1.4-billion ‘mega-project' whose size relative to Mozambique's economy as a whole was very significant.

The Mozal aluminium smelter, under construction from 1998 to September 2000, increased the value of goods imported in those years, particularly in the final stages of 2000. Since all production is exported, the start of production at full potential in 2001 was reflected in a surge in the value of world exports in that year, and a marginal increase in 2002. As well as exporting all production, all major production inputs to Mozal are imported, which explains the continued high level of post-construction imports. Additionally, construction of a second phase of Mozal, which was set to double aluminium production capacity, further increased imports from 2001. The second phase was completed in April 2003 and reached full production capacity later that year. Despite Mozal's importance, it is likely that import demand will continue to be far greater than the country's export performance, even when aluminium production is excluded.

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