Mozambique looks up: Lonrho dominates in outside investment

WALKING along the wide Portuguese-style avenues of the seafront capital of Maputo, sipping a cold Laurentina beer in a street cafe, or munching on grilled prawns in an outdoor restaurant, it is hard to imagine that Mozambique is the world's poorest country.

But with a per capita income of dollars 70 to dollars 80 per year, 60 per cent illiteracy, an infant mortality rate of 325-to-375 per thousand and a total economic output worth dollars 1.2bn, Mozambique has a tight grip on the bottom rung of the global economic ladder.

'The regrettable fact is that the country is producing almost nothing,' said John Hewlett, chief executive of the Lonrho subsidiary that is the country's biggest foreign company.

Yet there is hope of economic growth in the aftermath of the country's first democratic elections last week and the stability they promise. The economy grew by 5.6 per cent in 1993, the first full year of peace. Similar growth is expected this year. Inflation, officially above 40 per cent, remains high but the slide of the national currency, the metical, against the pound and the dollar has slowed.

Much of the future will depend on the attitude of foreign investors, since with foreign exchange earnings of some dollars 150m per year and a foreign debt at nearly dollars 6bn, Mozambique has little domestic capital for investment. The Mozambique Liberation Front (Frelimo) government abandoned its socialist policies in 1987 and embraced a structural adjustment programme drawn up with help from the International Monetary Fund and the World Bank. International aid since then has totalled nearly dollars 6bn.

So far, though, foreign investors have shown little interest, despite Mozambique's rich deposits of minerals, vast fertile farmland and tourist potential. Last year foreign investment was estimated at a mere dollars 25m.

'Investors are not exactly in a queue. And if they were they would wait until after the elections,' Mr Hewlett said.

Lonrho has been the pioneering foreign investor, with interests in tomato and cotton farming, the Cardoso Hotel in Maputo, gold mining, an oil pipeline and a dollars 4.8m joint project with Royal Ordnance and Mechem, the South African arms company, to clear landmines from the countryside.

Lonrho accounts for the bulk of dollars 101m in British investment in Mozambique, which accounts for nearly half of all foreign investment.

Part of the problem in attracting outside investors is that while the government says it is keen, businessmen report that bureaucracy is still plodding. Joe Sandercock, BP's director-general in Mozambique, points to another problem. 'Middle management simply does not exist. There are virtually no skilled workers,' he said. 'For any company that wants to come to Mozambique, investment in training is crucial.'

On paper, Mozambique's natural resources look impressive. Coal deposits of six billion tonnes in Tete province, 40 billion cubic metres of natural gas under Inhambane, a million hectares of forest with eucalyptus, pine and rare hardwoods, pegamite deposits in Zambezia province that can be mined for beryl, mica, bismuth, and semi- precious stones, and what is believed to be the world's largest reserve of tantalite.

Mozambican officials hope the country's largely unspoiled beaches could attract 300,000 tourists a year, bringing in dollars 80m. More than dollars 100m worth of tourist projects have been approved by the Center for Investment Promotion.

In the shorter term, now that the Renamo rebels have shifted their war from the bush to the ballot box, the economy might get a boost from its main ports, Maputo in the south, Beira in the centre and Nacala in the north - east Africa's best natural deep harbour.

'The real asset Mozambique has is to service the hinterland, but there needs to be a change of business culture for that to become truly efficient,' says Mr Hewlett. Right now the ports are running at a fraction of potential capacity, so companies in Zimbabwe, Malawi and Zambia prefer to use more efficient ports, such as Durban's in South Africa.

Nevertheless, businessmen who know Mozambique, such as Mr Hewlett, see potential. 'If Mozambicans would open themselves to a free flow of people and funds, and lift all controls on investment policy, they could create a minor Brazil in Africa,' he said.

(Photograph omitted)

News
people

Arts and Entertainment
JJ Abrams' seventh Star Wars, The Force Awakens
filmsThe first glimpse of Episode VII has gone online after weeks of anticipation
News
Michael Buerk in the I'm A Celebrity jungle 2014
people
Arts and Entertainment
The cast of Downton Abbey in the 2014 Christmas special
art

Presents unwrapped, turkey gobbled... it's time to relax

PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Citifocus Ltd: German Speaking Client Specialist

£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...

Citifocus Ltd: Performance & Risk Oversight

£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...

h2 Recruit Ltd: Sales Director - SaaS (SME/Channel) - £140,000 OTE

£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...

h2 Recruit Ltd: Telesales Executive - Cloud Software/SaaS - £37,000 OTE

£25000 - £37000 per annum + benefits: h2 Recruit Ltd: Are you seeking to furth...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game