MacroEconomic Indicators
 

Currency	Metical (Mt) US$ 1.00= Mts. 23,638.51as on 29.3.2004
GDP Per Capita	US$ 197.4 (2002)
GDP Growth	8.3% (2002)
Inflation rate	9.1% (2002)
Exports	US$ 682.02 million (2002)
Imports	US$ 1209.70 million (2002)
Balance of Payment	(-) US$ 1455.79 (2002)

Source: Statistical Year Book 2002

Mozambique is essentially agriculture based economy, which contributes more than 30% of the GDP. More than 75% population is employed in the agriculture sector. The main crops are maize, rice, beans, vegetables, cassava, cotton, tobacco and sugarcane. Its main exports are prawns and shrimps, cashew nuts, cotton, copra and sugar. However, severe floods in recent years and severe droughts in some parts of the country have adversely affected this sector. Agricultural productivity remains well below the African and regional average although this sector has considerable potential for further growth.

Mozambique follows a liberalized import/export regime with few restrictions. Mozambique has also harmonized its import duty structure. Import duties are assessed on CIF value of the most imports at varying rates between 2.5% and 35%. The rates vary according to the classification of goods - Basic goods (exempt), Raw materials (2.5%), Fuel (5%), Equipment (5%), intermediate (7.5%) and consumer goods (35%).

Historical evidence suggests that Indians arrived in Mozambique even earlier than the Portuguese. The links between Mozambique and India go back to several centuries, and traders from Southern India probably visited Mozambique even before Vasco da Gama set on a journey to India. India extended moral support to Mozambique in its freedom struggle against the colonial rule. Indian Ambassador was present in Maputo when the Portuguese flag was brought down on 25^th June, 1975. The leadership in the two countries have maintained cordial and close working relationship. India contributed in Mozambique’s peace and stability by contributing in the UN peacekeeping operations after the signing of the Peace Accord in 1992. However, after the 1992 Peace Accord and the end of apartheid in South Africa, the priorities of Mozambique underwent considerable change and India did not find any place of importance in their scheme of things, as it earlier had when Mozambique was one of the frontline states. South Africa being their immediate neighbour has emerged as their principal economic partner. At the same time, Mozambique’s dependence on foreign aid on day-to-day basis even to organize the elections or balance their budget, has forced Mozambique to woo the western donor countries. In spite of these compulsions, Mozambican Government led by President Chissano see India as a developmental role model and would like to benefit from Indian experience in developing their agro-based economy. For this very reason, Mozambique has, from time to time, sought our assistance in the fields of agriculture, agro-processing, ICT, health, rural development etc. President Chissano has been advocating strong commercial and economic links with developing countries, especially, India, in the true spirit of South-South Cooperation. 

Mozambique opened its High Commission in New Delhi in December 2001. The first Mozambican High Commissioner in India presented his credentials in April 2002.

Economic Cooperation

Mozambican President Joaquim Alberto Chissano accompanied by the Ministers of Foreign Affairs, Agriculture & Rural Development, Health, Industry and Commerce, Higher Education and Science & Technology paid an official visit to India from May 10 - 15, 2003. During the visit, two MOUs - one on cooperation in Agriculture and second on Science & Technology were signed. The implementation of these agreements will also have some spin-off for Indian business. Other areas of bilateral cooperation identified are coconut and coir processing, health and SMEs.

Prime Minister announced a grant of US$ 200,000 per year for the next five years to finance specific projects to be identified jointly. Out of the Africa Fund of $ 200 million, the Prime Minister announced a $ 20 million fresh credit line for Mozambique. This would provide the necessary push for Indian exports of plant and machinery for joint venture projects financed under the credit line. Against the grant of US$ 200,000 per year announced by Prime Minister for the next five years, the Government of Mozambique have opted for a coir processing plant to be set up with Indian assistance. The matter is being processed for an early implementation.

Under HIPC initiative, Government of India has decided to write off Government-to-Government debt of approximately 18.34 crores owed by Government of Mozambique to India. Formal letters in this regard are likely to be exchanged shortly. As regard the private debt amounting to Rs. 20.27 crores, the matter is under discussions for converting this debt into Indian investments in Mozambique.

One sector on which the Mozambicans are keen is cooperation in the health sector. The Mozambicans are keen for training of their personnel and for setting up laboratories for quality control in the pharmaceutical sector. They have also proposed (to some private sector firms) to set up manufacturing units in Mozambique including anti-retrovirals. Such a unit could cater not only to Mozambique but the entire SADC region. 

India extended credit lines in 1982 (now approximately at US$ 10 million). Indian experts from RITES, TCIL and IIP have till recently assisted the Mozambican railways, telecommunications and PETROMAC. Indian experts have also worked in the Ministry of Commerce, Agriculture and Finance and also in the Eduardo Mondlane University under the Commonwealth Special Fund for Mozambique. Three Indian experts from RITES are presently working with the Mozambican Rail and Port Company (CFM). Their number is likely to increase to 15 in the near future. TCIL completed a US$ 2.5 million IDA-funded project for establishment of telephone exchange and lines in the province of Pemba in 2001. Under the Africa Fund, India provided machinery, material and equipment to Mozambique at a total cost of Rs. 8.9 million in 2002. This included an ambulance, which was donated to Foundation for Community Development (FDC).

In March 2003, the Government of India announced donation of medicines/pharmaceuticals worth US$ 100,000 for organisation of AU Summit in Maputo in July 2003. These medicines were formally handed over to the Vice Minister of Health at INS Suvarna on 30.6.2003.

Under the ITEC/SCAAP programme, 90 Mozambican officials have so far received training in India in various technical institutes. The Joint Commission has recommended doubling of slots for Mozambique for the current financial year from 15 to 30.

Under South-South Cooperation, a tripartite agreement was signed between India, FAO and Mozambique in Rome in March 2001. Under this agreement, 65 Indian experts and technicians are to be deputed to Mozambique to assist upliftment of irrigation and agriculture facility in Mozambique. Three technicians have already arrived in Mozambique and have been deployed in the province of Zambezia. 

FICCI organized Second India Afrca Health Summit from September 19 - 21, 2003 in Mumbai. FICCI also organized India Africa Meet on Water Partnership on February 11 - 12, 2004 at Pune. Representatives from the respective Mozambican Ministries attended the meetings. 

TRADE

Trade has been modest and it is much below its potential, though there is vast scope for increase. While India’s exports to Mozambique remained at the same level in 2000-01 and and 2001-02, our exports registered an increase of 53.49% in 2002-03 amounting to Rs. 226 crores as compared to Rs. 147 crores in 2002-03. Indian imports from Mozambique which had gone down in the year 2001-02 as compared to 2000-01, registered an increase of 326% over that of previous year, amounting to Rs. 134.40 crores as against Rs. 31.53 crores. The main reason for increase in our imports is due to increased availability of raw cashew nut, which forms bulk of our imports from Mozambique.

The main items imported by Mozambique from India are: drugs & pharmaceuticals, cotton yarn, fabrics, etc., transport equipments, rice (other than basmati), rubber products (excluding footwear), metals, primary and semi-finished iron & steel, miscellaneous processed items and fine chemicals and others. The main items exported to India include cashew nuts (raw), cotton raw and waste, coal/coke & briquettes, pulses and others.

India figures among the country’s top ten marketing partners both in terms of import and export. As per the latest available figures (2002), the country imports mainly from South Africa (27.1%) followed by Portugal (6.1%) and USA (4.4%) with India figuring in 4th position at 4.2% while the country’s main exports are to Belgium (41.4%) followed by South Africa (17.7%) and Switzerland (8.5%) with India in 7th position at 2.1%.

INDIA’s EXPORTS TO MOZAMBIQUE
(figures in rupees crore)
Sl. No.	Items	2000-01	2001-02	2002- 03	Apr. 2002 - Jul. 2002	Apr. 2003 - Jul. 2003
1.	Drugs, Pharmaceuticals and Fine Chemicals	4.74	13.45	35.82	19.82	7.52
2.	RMG cotton, incdg. man- made yarn/fabrics/made-ups/textiles, silk etc.	1.43	30.67	34.33	10.25	8.70
3.	Transport equipments	29.65	34.88	29.14	7.96	8.02
4.	Rice other than Basmati	--	11.68	25.72	4.99	25.98
5.	Cotton Yarn, fabrics, made ups etc.	43.62	22.49	23.85	6.02	4.18
6.	Plastic & Linoleum products	3.05	3.83	10.27	1.32	0.40
7.	Primary and semi-finished iron and steel	5.65	5.81	8.78	--	3.32
8.	Manufactures of metals	3.18	4.34	7.25	3.13	2.14
9.	Machinery & Instruments	4.77	2.12	6.89	1.80	8.45
10	Rubber Manufactures products excluding footwear	4.39	3.27	5.22	1.81	1.75
11.	Inorganic/Organic/Agro Chemicals	0.17	0.55	4.49	4.14	0.42
12.	Glass/Glassware/Ceramics etc.	--	6.54	3.51	0.28	5.97
13	Misc. Processed items	5.64	1.80	3.25	1.36	0.33
14.	Marine Products	--	--	1.88	--	--
15.	Electronic goods	0.05	1.12	1.19	0.94	--
16.	Sugar	--	0.19	1.05	0.12	0.12
17.	Others	29.36	4.49	23.35	2.10	4.03
	TOTAL	145.70	147.23	225.99	66.04	81.33

(Source: DGCI&S)

(Source DGCI&S)

Potential of Trade:

There is great potential to increase India’s exports in the fields of drugs, pharmaceuticals, hospital supplies, cotton yarn, fabrics, transport vehicles, electric machinery, electric meters and grains like rice and maize. Mozambique is strategically located in the way that it has 2270 kms long coastline (longer than US’s west coast) in addition to providing access to land-locked countries like Zambia, Zimbabwe, Malawi and Swaziland. The country has excellent natural harbours and rich resources of minerals and ores. Mozambican entrepreneurs have also expressed interest in the rural technologies developed by CSIR and are keen to import manufacturing equipment from India.

Major Thrust Areas of Trade

1. Drugs and Pharmaceuticals and hospital supplies
2. Transport Equipment
3. Rice other than basmati
4. RMG cotton incl. Accessories, cotton yarn/fabrics, made-ups etc.
5. Plastic and Linoleum
6. Manufactures of metals
7. Inorganic/organic/agro-chemicals
8. Machinery and instrument, primary and semi-finished iron and steel

According to statistics released by the Government of Mozambique, direct foreign investment by Indian companies and individual investors in Mozambique was US$ 4.065 million during the period January 1992 - December 2000. However, there is no investment from Mozambique in India so far.

Since return of peace and establishment of democracy in Mozambique, the last 10 years have seen rapid economic growth in Mozambique. Mozambique’s strategic location, abundance of natural resources and political stability in the country has resulted in renewed interest in Mozambican economy by Indian investors. Mozambique’s membership of SADC, benefits extended by the US under AGOA and by European Union via COTONOU agreement make Mozambique very attractive for foreign investment. There are possibilities of Indian companies investing in Mozambique in garments SMEs in the field of food processing and agro-based industries, soap manufacturing, minerals, commercial farming, coconut processing, etc.

Potential Areas of Growth and Cooperation

Mozambique has great natural resources, the potentials of which have still not been fully tapped. These include, (a) enough cultivable land (b) water (25 rivers flowing in the country (c) coal and natural gas resources (d) fishery (e) forests (f) minerals such as semi-precious stones, limestone, apartite, graphite, fluorite, bentonite, etc. The major industries in Mozambique are: (a) agro-industries (b) wood and furniture (c) metallurgy and metal working (d) hotel and tourism.

There is a huge potential for cooperation between Indian and Mozambique in various fields. For India, these potential areas include (a) agriculture and agro-processing industries (b) information technology (c) pharmaceuticals (d) health services (e) education (f) science and technology (g) industry and trade (h) public works and housing (i) transport and communications (j) training for Mozambican personnel in various fields. 

Constraints in Bilateral Trade

1. Lack of direct shipping
2. Language - Portuguese being the official language for all correspondence
3. Access to Information - Exporters in India are not aware of potentials in Mozambique. Similarly, Mozambican businessmen are not aware of the great strides made by India in various fields like Industry, IT, communications etc., principally because of the language barrier.
4. Difficult access to credit - Small business and enterprises are not able to obtain credit because of high cost and prohibitive interest rates.

Agreements

A cultural agreement between India and Mozambique was signed in 1982 and ratified in 1984 but could not be implemented because of poor economic conditions prevailing in the country.

A trade agreement was signed between the two countries on 19.2.1982 but has been overtaken by the latest global developments and the need to negotiate a new trade agreement was discussed during the first meeting of Indo-Mozambican Joint Commission in December 2002. The second meeting of the Joint Commission is likely to take place in the second half of this year.

Agreement on establishment of Inter-Governmental Joint Commission was signed in Maputo during the visit of EAM to Mozambique in 1999.

MOU for cooperation in agriculture and an agreement on science and technology were signed during President Chissano’s visit to India in May 2003.

Draft agreement on Bilateral Promotion and Reciprocal Protection of Investment (BIPA) has been initialed and the agreement is to be signed formally in the near future.

An agreement on cooperation in health sector was signed in New Delhi during the visit of the Mozambican Health Minister in February 2004.

Indian Community

There are about 900 persons of Indian nationality and over 16,000 persons of Indian origin, holding Mozambican and Portuguese passports. A majority of the persons of Indian origin are engaged in the wholesale and retail trade and originally hail from Gujarat, Goa, Daman and Diu. Along with other Asian communities, they control about 40% of the trade in Mozambique.