Local citizens travel in a crowded bus in Maputo, Mozambique. The country’s economy has rapidly developed in recent years. However, its capital city has faced a severe public transport problem during the process of urbanization
Mozambique is one of three countries that stand out for their growth in Africa, a continent that will become increasingly important in economic terms in the coming years, according to consulting firm Deloitte.
Africa’s gross domestic product (GDP), according to a report just published on the economic outlook for the continent, is expected to expand 50 percent by 2019, to USD3.7 trillion, driven by the growing middle class and an increase in private consumption.
“An annual growth of about 8 percent would add US$1.1 trillion to Africa’s GDP by 2019, with Ethiopia, Uganda and Mozambique among the most rapidly expanding markets,” the document said.
A recent report by Standard Bank Group points to significant growth of the African middle class in the coming years – 40 million homes by 2030, in 11 of the region’s economies, but in a more pronounced way in Nigeria.
If this trend is confirmed, it will signal a change in what has been the paradigm of African economic growth in recent decades, which has mostly focused on extraction of raw materials such as oil, diamonds, natural gas and, more recently, the construction of infrastructure, such as dams, railways and highways.
As in the recent case of the Benguela Railroad, funded by China in Angola, this type of infrastructure is removing vast regions of the content from previous isolation by linking production areas to markets and creating wealth and jobs.
Deloitte said companies need “long-term strategies” for Africa, a continent where the business world still faces legal and bureaucratic barriers, along with growing opportunities in tradable goods, ranging from mobile phones to luxury products.
“Where there are challenges, there are also opportunities to innovate. Given the growth potential that the continent offers, Africa’s business opportunities may outweigh the risks,” the consultancy said.
The mobile phone market is one that has amongst the highest growth potential, with a total penetration growing to an expected 97 percent by 2017, 25 percentage points more than current penetration.
This increase, Deloitte said, is of over 334 million mobile phone subscribers.
The services sector in Mozambique is currently experiencing strong growth, benefiting from the growth surge that the country is receiving, particularly in production facilities and export of raw materials such as coal and natural gas.
The Economist Intelligence Unit projects that economic growth in Mozambique will accelerate to 7.3 percent in 2014 and 7.8 percent in 2015, driven by the coal industry and investment in infrastructure, but also by “strong growth” of the telecommunications, industry and financial services. MDT/Macauhub
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