Mozambique “is not sustainable”

mozambique economy_1

Mozambique’s economic growth is neither sustainable nor does it combat social inequalities, because it is based on foreign savings and is exposed to volatility in the world economy, two Mozambican researchers say.

The growth model of the Mozambican economy was the subject of a debate of the Second Conference on Economy and Governance held in Maputo on Thursday under the title, “Challenges and Proposals – Analysis of the Filipe Jacinto Nyusi’s First Year of Governance”.

“We grew quickly, but on the back of others’ savings. The golden rule is to use domestic savings, but what is happening is that this has only a supporting role,” said economist and director of the Institute for Economic and Social Studies, Antonio Francisco.

Estimating the internal financial resources in productive investment at only 5 percent, Francisco emphasized that it is counterproductive for the country to rely so heavily on loans and grants from the international community to sustain economic growth.

“This dependence on external resources is a trap that makes our growth model unsustainable and incapable of promoting development,” Francisco said.

António Francisco pointed to debt and dividend repatriation as negative consequences of an economy dependent on external resources.

Joao Mosca, economist with the Rural Observatory, a platform of Mozambican non-governmental organizations that defends the interests of farmers, considers the development policies that have been applied in the country an inefficient way of combating social inequalities.

“We have signs of a transformation of the rural economic structure into agribusiness at the expense of family farming, which is what the majority of the rural population is involved in and the only thing able to fight social inequalities,” Mosca said.

The economist said that foreign investment in mining and alliances between international and local capital will hamper the diversification of the economy and the building of resilience to external shocks.

“There are signs we are following the path of countries like Nigeria and Angola, which have neglected the need to diversify the economy to focus on oil production,” he said.

Source: Lusa

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