The country is currently at a cross roads and can either turn left or do the right thing. It is reasonable to say that in spite of its infant stage, Mozambique’s extractive industry can be weighed in terms of positives and negatives. Some of the following factors can help one make an interpretation of whether Mozambique is turning left or doing the right thing.
Mozambique is presently one of the top destinations of foreign direct investment (FDI) in the world. This is mainly attributed to its developing extractive industry, which attracts international investors and other fortune-seekers. An administrator from the Central Bank has recently affirmed that FDI grew by 40% this year.
Furthermore, Mozambique’s GDP is currently growing at 7.2% annually. In the mining district of Moatize, investments in the Coal Mining Project are creating jobs for local communities. In fact, a part of the local population in Moatize works in construction projects and other low-skilled laboured jobs linked with mining operations in the district.
In addition, the presence of Vale and Rio Tinto in Moatize offers a great opportunity for the involvement of local small and medium enterprises in the provision of goods and services to the multinationals. This can create jobs and support local entrepreneurs.
The 2009 Industrial Development Report highlights that a resource-based economy should generate large revenues giving governments the ability to invest in its development programmes and in the enhancement of the country’s public services.
Therefore, this shows that if well-managed, the extractive industry can improve the lives of ordinary Mozambicans. A report titled “Mining Versus the Communities by the Southern African Resource Watch”, which focuses on the two relocated communities surrounding the extractive projects, points out that if the companies are properly taxed and the state uses revenues to invest in the surrounding communities and the country at large, then Mozambique can escape the aid trap.
Although the extractive industry and macroeconomic growth numbers look promising, Carlos Nuno Castel-Branco, a well-known academic in Mozambique asserts that the mega-projects, large-scale capital-intensive projects such as the coal mining projects by Vale and Rio Tinto, will not benefit the Mozambican economy. Castel-Branco defends this claim by asserting that Mozambique does not have ownership or control over the projects.
