Intelligent news from Mozambique

Zitamar New Year Briefing, 2018

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Good morning, and a Happy New Year from Zitamar News. We are back from our Christmas break, and in this newsletter bring you a catch-up of the main headlines since our last Daily Briefing on 20 December.

To benefit from the full Zitamar experience in 2018 – exclusive breaking news on our website, and our Daily Briefing email – see our subscription plans here, or contact us on subscriptions@zitamar.com.

In this newsletter:

  • Mozambique population grows 40% in 10 years; Matola is now the biggest city
  • Dhlakama outlines possible governor election framework
  • Population growing, but economy stagnating
  • Washington consensus says Bank of Mozambique should cut rates faster
  • New minister, deputy, and ambassador to China
  • Tourist numbers disappoint

Mozambique population grows 40% in 10 years, and Matola is now the biggest city

Mozambique’s national statistics agency, INE, published preliminary findings from its census on 30 December. Since the last census in 2007, the country’s population has grown by more than 8 million to 28.86 million – a growth rate of around 40% – with the fastest levels of growth seen in Maputo Province and in the province of Nampula.

Maputo, with 1.1 million inhabitants, loses its position as the country’s biggest city – overtaken by neighbouring Matola, which now has 1.6 million. Nampula is the third biggest, with 743,125 – comfortably ahead of Beira, which was second largest in 2007, but is now fourth with 533,825.

Maputo City was the only province whose population remained stable, with growth concentrated in neighbouring Maputo province, because of the expansion of Matola – which is politically and administratively separate, but effectively forms a single conurbation with Maputo. Matola is the biggest municipality in the country – and will be hard-fought in 2018’s municipal elections – and is the biggest district. Its administrator, Júlio Parruque, was recently moved to become governor of Cabo Delgado.

Nampula, already Mozambique’s most populous province, grew by 50% over the past decade, to 6.1 million people – 21% of the country’s population. The next most populous province is Zambezia, with 5.1 million – a long way ahead of third-placed Tete, with 2.8 million. All three of those provinces are in the opposition’s sights for elections at the end of 2019.

Dhlakama outlines possible governor election framework

Opposition leader Afonso Dhlakama said in an interview at the end of last year that his party, Renamo, and the government are now close to agreeing a system to allow the election of provincial governors next year.

The governors will not be directly elected, as Renamo had at some moments demanded. Instead there are now three different mechanisms for choosing governors on the negotiating table for the government to choose from, Dhlakama said:

  1. The head of the party list (the first candidate on the list) which gains the most votes for provincial assembly becomes governor
  2. The party which wins the provincial assembly will select one member of the list to be governor
  3. The party which wins the provincial assembly could select any registered voter to be governor

Currently, governors are directly appointed by the country’s president.

Population growing, but economy stagnating

Also over the holiday period, the World Bank put out its latest assessment of the Mozambican economy. Mozambique’s days of high economic growth are over, the Bank says, and the feared Dutch Disease – commodity exports crowding out other sectors of the economy that could have led to more inclusive growth – is already taking hold, even before the Rovuma Basin gas projects get underway.

The manufacturing sector contracted in 2017 for the first time since 1994, the World Bank said, adding that small and medium enterprises are crowded out. A boom in coal and aluminium exports has not been enough to stop growth falling back to 3.1% in 2017, after an average of 7% per year from 2011 to 2015.

If the economy – and in particular employment – isn’t going to grow, the World Bank argues that population growth needs to fall, so that the country’s meagre resources aren’t spread too thin.

“Transforming Mozambique’s population trends into a demographic dividend is an immense challenge, but so are the potential gains,” said Peter Holland, one of the report’s authors. “Our analysis estimates that reducing fertility levels would represent an enormous boost: an estimated increase in real per capita GDP of 31 percent by 2050.”

Washington consensus says Bank of Mozambique should cut rates faster

The Bank of Mozambique’s monetary policy committee decided on 22 December to cut its policy interest rate slightly – down 150 basis points to 19.5% – after inflation finished the year at just 7.5% annually.

A policy rate above 20% was originally justified by governor Rogerio Zandamela as necessary in order to stay above the rate of inflation (that is, to be positive in ‘real terms’) – but since inflation has come back down to single figures, that no longer justifies the current policy stance.

The IMF, in its Article IV statement in the middle of December, called on the Bank of Mozambique to accelerate rate cuts – and that was echoed by the World Bank in its December report, which noted that doing so would improve the private sector’s access to financing.

Like the IMF, however, the World Bank’s recommendation came with a caveat – namely, that loosening monetary policy “requires a tighter fiscal policy response and more sustainable levels of debt.”

The World Bank also reiterated the need to take a “more proactive approach to tackling the fiscal risks coming from weak state-owned enterprises,” and called for “increased transparency in the handling of the investigation into Mozambique’s hidden debts to restore both investor and donor confidence” – issues which are hopefully near the top of finance minister Adriano Maleiane’s New Year’s to-do list.

New minister, deputy, and ambassador to China

President Filipe Nyusi completed his reshuffle on 22 December by promoting deputy minister of trade and industry, Ragendra da Sousa, to take charge of the ministry, and appointing Maria Manuela dos Santos Lucas as deputy foreign minister – recalling her from her position as ambassador to Italy, Greece, and Malta.

On 2 January, he appointed Maria Gustava as Mozambique’s ambassador to China – arguably Mozambique’s most important international relationship. Gustava replaces Aires Ali, the former Prime Minister who returned to Maputo in October having been appointed to Frelimo’s Political Commission, which meets most weeks to direct party – and hence government – policy.

Gustava moves to the China job from her post as ambassador to Indonesia, Timor Leste, Thailand, Singapore, and Malaysia – the job which was held by Carlos Agostinho do Rosário until Nyusi appointed him Prime Minister in January 2015.

Tourist numbers disappoint

Traffic at Mozambique’s borders over the festive season was down 2% on last year, and reached only 71% of forecast levels – with around 500,000 travellers crossing the border between 13 December and 1 January, according to the migration service.

307,630 people entered Mozambique – the majority of whom (59% – 192,762) were Mozambican citizens, including 25,492 Mozambicans who work on South African mines.

As usual, AIM reported, the busiest border post was Ressano Garcia on the frontier between Mozambique and South Africa. Immigration officials at Ressano Garcia handled 308,628 travellers – less than two thirds of the target figure of half a million.

The new deputy minister of the interior, Helena Kida, promised to crack down on the ‘facilitators’ who harass travellers at that border post in particular – which could make Mozambique a more attractive option for South African travellers next year.

The completion of the road from KwaZulu-Natal up to Maputo – including the Maputo-Katembe bridge – in 2018 might also help boost visitor numbers from SA. The completion of the bridge could be delayed by the rainy season, the authorities said – but it should be finished by the middle of the year in any case.

Have a great year!

© 2018, Zitamar Ltd. Reproduction and dissemination prohibited without written permission.

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