Pillar 1: Structural Transformation of the Economy

Strategic Context

Pillar 1 aligns with Mozambique's ambition to leverage its strategic location and resources (e.g., 3rd largest proven gas reserves in Africa) to become a middle-income economy. It builds on existing corridors (Maputo, Beira, Nacala) and emerging ones like Macuse to integrate with SADC markets, while addressing structural weaknesses like low manufacturing output (~10% of GDP) and high informal employment (~80% of workforce). Success depends on balancing extractive revenues with investments in agriculture and SMEs, alongside governance reforms to ensure equitable growth.

For deeper details, the full ENDE document may is available for download through Mozambique's Ministry of Economy and Finance or the Assembly of the Republic post-publication. 

Pillar 1 of Mozambique's National Development Strategy (ENDE) 2025–2044 focuses on the structural transformation of the economy, aiming to diversify and modernize Mozambique's economic base to achieve sustainable, inclusive, and competitive growth. 

This pillar is central to the strategy's vision of transitioning the country from a resource-dependent economy—reliant on extractives like natural gas, coal, and minerals—toward a diversified one that emphasizes value-added industries, agriculture, manufacturing, and services. It seeks to address Mozambique's economic vulnerabilities, such as high public debt (~100% of GDP in recent years), low industrialization, and dependence on volatile commodity markets, while fostering job creation, private sector development, and regional integration. Below is a detailed overview based on available information, including key objectives, strategies, investments, and challenges.

Key Objectives - Pillar 1 is designed to:

Strategies and Priority Areas

The pillar outlines several strategies to achieve structural transformation, aligned with national priorities and international frameworks like the African Union Agenda 2063 and UN Sustainable Development Goals (SDGs):

Industrialization and Value Addition:

Develop industrial parks and special economic zones (e.g., Nacala Special Economic Zone) to attract manufacturing and processing industries.

Promote value-added processing of raw materials, such as transforming cashews, cotton, and timber into finished products rather than exporting raw commodities.

Support small and medium enterprises (SMEs) through access to credit, training, and market linkages.

Agricultural Modernization:

Enhance productivity in agriculture, which employs ~70% of the workforce, by introducing climate-resilient crops, irrigation systems, and mechanization.

Focus on high-value crops like cashews, sesame, and horticulture, with investments in agro-processing for export markets (e.g., fruit juices, nut products).

Strengthen rural infrastructure (e.g., storage, transport) to reduce post-harvest losses (~30% for some crops).

Extractive Sector Optimization:

Leverage existing resources (e.g., LNG projects in Cabo Delgado, coal in Tete, heavy sands in Zambezia) to fund broader economic development while ensuring 20% revenue sharing with local communities as mandated by the Mining Law (Law 20/2014).

Develop downstream industries linked to extractives, such as petrochemicals or fertilizer production from natural gas.

Private Sector and Investment:

Attract foreign direct investment (FDI) through tax incentives, public-private partnerships (PPPs), and streamlined regulations. In 2025, FDI in Mozambique is projected at ~$2–3 billion, driven by energy and mining.

Support entrepreneurship via incubators and startup programs, targeting youth and women to address unemployment (~20% national rate).

Trade and Regional Corridors:

Expand and modernize economic corridors (Maputo, Beira, Nacala, and emerging Macuse) to facilitate trade with SADC countries like South Africa, Zimbabwe, Malawi, and Zambia. These corridors handle ~80% of Mozambique's trade volume.

Develop logistics infrastructure, such as the Macuse Port and 600 km railway (~$5 billion project), to boost coal and agricultural exports.

Digital and Technological Innovation:

Promote digital economy growth through ICT infrastructure (e.g., broadband expansion) and e-commerce platforms to integrate SMEs into global markets.

Invest in renewable energy and green technologies to support industrial growth while aligning with environmental goals.

Estimated Investment

Total for Pillar 1: Approximately US$114 billion over 2025–2044, covering infrastructure, industrial development, and agricultural modernization.

Funding Sources:

State Budget: Domestic revenues from taxes and royalties (e.g., ~10.6% of GDP from extractives in 2022).

Foreign Investment: FDI from partners like China, Japan, and the EU, particularly for energy and transport projects.

Development Aid: Grants and loans from institutions like the World Bank, African Development Bank (AfDB), and bilateral donors.

Private Sector: PPPs for projects like ports, railways, and industrial zones, with incentives for investors.

Key Projects: Include Macuse Port and rail (~$2.7–5 billion), Nacala Corridor upgrades (~$500 million), and agricultural irrigation schemes (e.g., Zambezi Valley projects).

Key Economic Indicators and Targets

GDP Growth: Aims to sustain 5–7% annual growth to reach middle-income status by 2044 (2025 GDP ~$23.77 billion).

Poverty Reduction: Reduce poverty rate from ~46% (2023) to below 30% by 2044, focusing on rural job creation.

Export Growth: Increase non-extractive exports (e.g., agriculture, manufactured goods) to diversify from ~70% reliance on minerals/gas.

Employment: Create millions of jobs, particularly in SMEs and agro-industry, to absorb the growing youth population.

Challenges and Risks

Debt Burden: Mozambique's public debt (~$14 billion in 2025, ~100% of GDP) limits fiscal space for public investments, requiring careful debt management post-2016 "hidden debt" crisis.

Security Issues: The ongoing insurgency in Cabo Delgado (affecting the Nacala Corridor) disrupts northern projects and deters investors, with over 1.3 million displaced since 2017.

Climate Vulnerability: Cyclones (e.g., Idai 2019, Chido 2024) damage infrastructure and agriculture, necessitating resilient investments.

Governance and Corruption: Weak enforcement of revenue-sharing and community benefits (e.g., mining royalties) fuels local discontent. Civil society (e.g., Budget Monitoring Forum) critiques limited transparency in ENDE planning.

Implementation Capacity: Bureaucratic inefficiencies and skill shortages may delay projects like industrial parks or rail expansions.

Global Market Risks: Volatility in commodity prices (e.g., coal, gas) impacts export revenues, critical for funding diversification.

Progress and Implementation (as of September 2025)

Recent Developments: The ENDE was re-approved in March 2025 and passed parliamentary debate in April 2025, with Pillar 1 projects prioritized in the 2025–2029 Five-Year Government Programme. Examples include:

Macuse Port and Rail: US$900 million secured (May–July 2025) for pre-construction, targeting 2026 start.

Agricultural Investments: Ongoing irrigation projects in Zambezia and Tete to boost rice and maize yields.

FDI Inflows: Algeria and other partners expressed interest in mining/energy projects in 2025, supporting corridor development.

Monitoring: Annual reviews will track GDP growth, job creation, and export diversification. The Ministry of Economy and Finance oversees coordination, with stakeholder input from SADC and civil society.

Criticisms: Civil society notes insufficient public consultation and vague metrics for industrial growth. Youth unemployment and rural-urban disparities remain pressing concerns.