Af ter experiencing its first economic contraction in nearly three decades during 2020, the Mozambican economy is expected to rebound by 2022, according to the World Bank.In its latest economic update for Mozambique, the World Bank predicts that the economy will have recovered during 2021, and that it will grow by around 4% in 2022.A combination of the 2019 f loods, Covid-19, and insurgency in the north saw nearly 3% of companies in the south of the country closing, and 39% in the violence-hit areas.“The capacity of firms to respond to such massive shocks is very limited in Mozambique. Firm survival time in the absence of revenues is short, estimated at between six and 10 weeks in Mozambique.“While the impact is significant across the board, small firms are worst affected,” state the authors.The transport sector was among the worst hit, along with tourism and mining.“The road to a resilient and inclusive recovery will be long. In the short-term, measures to support viable firms need to be strengthened.”The World Bank expects the broader economy to gradually pick up over the coming years as the global demand for commodities and domestic demand for services recover, and LNG investments gain momentum.The risks include more waves of Covid-19 due to the failure to vaccinate sufficient people and the continued stoppage of the liquid natural gas (LNG) operations in the north.Mozambique also needs to invest more in skills, infrastructure development and conditions to support the development of a local transformative industry.This will increase the resilience of the economy in the face of external global supply chain shocks, and help develop integrated local value chains.Mozambique ranked 84 (out of 160) e c onom ie s in the 2016 Logistics Performance Index, performing poorly for its trade and transport infrastructure quality and for the competence and quality of its logistics services. Mozambique also has poor levels of electricity infrastructure, and problems with transmission and distribution losses, the report states.Progress is being made. In May 2021 Mozambique began construction of gas-to-power plant and transmission line projects worth $1bn in the southern province of Inhambane.Funding is coming from the World Bank, the US, Norway, African Development Bank (Af DB), Islamic Bank, and The Opec Fund for International Development, according to statements from the World Bank and the US embassy.“Our governance aspires that more than 10 million Mozambicans will have access to electricity for the first time in their homes by 2024,” Mozambique President Filipe Nyusi said at the launch of the project.Upon completion, the gas-to-power Temane Thermal Power Plant will have a capacity of 450MW.Another positive sign is a report by Radio Mozambique that 52 companies in Tete province have resumed their activities after shutting down due to Covid-19.
