Mozambique targets value chains to reduce reliance on extractive industries

The Mozambican government intends to move away from policies that concentrate growth in the extractive sector, instead prioritising value chains, citing the structural weaknesses of the national economy, which is still recovering from a year of contraction. A report from the Ministry of Finance on the 2025 budget execution notes “a current trend of relatively lower economic growth,” highlighting the need for “robust and consistent economic measures to galvanise the main productive sectors.” The report adds that “this assessment reinforces the need for a more prudent and selective economic policy orientation, capable of addressing structural weaknesses and avoiding the recurrence of constraints” observed in recent years. “Policies that deepen the concentration of growth in primary sectors, particularly the extractive industry, without the proper development of value chains should be discouraged,” the report states.

“Similarly, the expansion of current public expenditure, without a direct impact on productive capacity, as well as the dispersion of public investment in projects with limited economic effect, proved insufficient to halt the contraction of gross domestic product [GDP].” The Mozambican economy recovered in the final quarter of 2025, reversing four consecutive quarters of decline, growing by 4.67%, but closed the year with a year-on-year decrease of 0.52%, the National Institute of Statistics (INE) announced last week. The economy nonetheless reversed a year of contractions, stemming from the violent protests following the general elections of 9 October 2024, which caused over 400 deaths and destroyed businesses and public infrastructure over more than five months. In the third quarter of 2025, according to the INE, GDP at market prices declined by 0.85% compared with the same period in 2024.

Decreases were also recorded in the first and second quarters of 2025, at 3.92% and 0.94% respectively, as well as in the fourth quarter of 2024, at 5.68%. Mozambique’s economy remains heavily dependent on coal and natural gas extraction, which dominate national exports, according to previous central bank data. “On the other hand, policies that compromise macroeconomic stability through fiscal imbalances, inflationary pressures, or exchange rate instability tend to worsen domestic demand weakness and private investment contraction, as evidenced by the poor performance of several tertiary sector branches in 2025,” the 2025 budget execution document notes. Conversely, the report adds, “economic balance data indicate an effective alignment of strategies and policies to guide them towards the recovery of the productive base,” focusing on “manufacturing, energy, construction, agriculture, and logistics services—sectors with strong multiplier effects on the economy, whose performance has significantly influenced overall economic activity.” Regarding public investment, the report stresses the need for “a more selective and productive approach, prioritising critical economic infrastructure and interventions with high multiplier effects, capable of stimulating youth employment and self-employment and boosting domestic production.” “Simultaneously, strengthening support instruments for the private sector, particularly micro, small, and medium-sized enterprises, is crucial to revitalise the domestic market, stimulate commerce, including the informal sector,” the report concludes.