China a growing presence in Mozambican economy

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Some experts disagree with the idea that investment in the energy sector – where major projects in Mozambique involve Chinese companies – offers the best prospects for overcoming the economic crisis in the country, because China is not yet a key partner.

Ratings agency Sandpoint says that a coal power station to be built in Tete with Shanghai Electric Power and Nkondezi Energy involvement at a cost of US$25.5million is one of the projects recently launched.

China is also expected to become a major natural gas customer, with the China National Offshore Oil Corporation obtaining the first long-term contract for between two to two and a half million tons of gas annually, a quarter of the Rovuma Basin Area-A production capacity managed by the Anadarko consortium.

Economist João Mosca believes that, in the short-term, the Chinese role will not be significant, “because, fundamentally, China wants long-term resources and, in this area, has not yet stepped in as a key partner”.

Economist Rosário Fernandes sees foreign investment as important, but says that only increasing domestic direct investment can achieve robust and sustainable development.

“We have to make domestic production capacity stronger and more robust in the coming years in order to compete in the region and the world, because this is what makes for growth and reduces dependence on the outside”, Fernandes says.

Calls for a more transparent distribution of the benefits of energy resources are intensifying, in order for these resources to contribute to the solution of the current economic crisis in Mozambique.

In the economists’ opinion, investment in the energy resources sector will only help overcome current difficulties if there are clear policies to transfer revenue from this sector to others so that they can benefit the majority of Mozambicans.

Credit rating agency Standard and Poor’s latest report on Mozambique warns of current economic and financial difficulties, estimating growth in gross domestic product (GDP) of only 4% this year, the lowest for decades. The same agency forecasts GDP accelerating to 6% in 2017, and 7% in 2018, with investments in the gas sector as well as energy and transportation on the rise.

Source: VOA Português

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