IMPORT AND EXPORT POLICIES FOR FDI IN MOZAMBIQUE

The reasoning for choosing this topic of Import and Export is based on the fact that
we need to understand how the goods are allocated, kept, and distributed through
various channels before reaching the consumers. One of the notable features of
economic globalization is the increased flows of Foreign Direct Investment (FDI)
around the world. Over the last decades, FDI flows have grown twice as fast as trade.
The rapid growth in FDI over the last few decades has spurred a large body of
empirical literature to examine the determinants and the growth-enhancing effects
of FDI.
Mozambique, officially the Republic of Mozambique (Portuguese: Moçambique or
República de Moçambique, is a country located in south-eastern Africa bordered by
the Indian Ocean to the east, Tanzania to the north, Malawi and Zambia to the
northwest, Zimbabwe to the west, and Eswatini and South Africa to the southwest.
The sovereign state is separated from the Comoros, Mayotte, and Madagascar by the
Mozambique Channel to the east. The capital and largest city is Maputo.
The only official language in Mozambique is Portuguese, regarded as the unity
language, spoken by most in urban areas and among the younger educated
population. Common native languages include Tsonga, Makhuwa, Sena, and Swahili
and it is composed of overwhelmingly Bantu people.
The largest religion in Mozambique is Christianity, with significant minorities
following Islam and African traditional religions. The country's population of around
31 million as of 2022 estimates also with its currency being the “Metical” and its GDP
of the year 2022 economic growth accelerated to 4.4% next year aiming at a 5.3%
increase, after growth of 2.8% this, marking its recovery from last year’s 1.3%
shrinkage in the gross domestic product, according to an analysis released on
Monday by Fitch Solutions, a financial consultancy
Having to urge to learn how certain products can travel all over the world and reach
us at times in shorter or longer periods is a must-know because it helps us be aware
of how the industry works and in this case having a special look into Mozambique’s
Import and export aspects of things.
Mozambique is a scenic country in south-eastern Africa. Mozambique is rich in
natural resources, is biologically and culturally diverse, and has a tropical climate. Its
extensive coastline, fronting the Mozambique Channel, which separates mainland
Africa from the island of Madagascar, offers some of Africa’s best natural harbors.
As noted in the introduction, the crucial role of FDI in terms of capital formation,
spillover effects on trade, and technological progress have led to the development of
theoretical and empirical literature which have focused on identifying the possible
determinants of FDI. This section provides a survey of the theoretical and empirical
literature on FDI regarding its impact of it on the recipient economy.
Mozambique with ability to attract FDI, an important successes factor has been the
role of large-scale investment in the industrial sector and extractive industries known
as mega-projects Mozal projects for aluminum and Sasol projects in the gas sector
were well settled while sub-Saharan Africa remains lower at 2.2 % in 2013.
Mozambique’s FDI inflows start to decrease from 41.8 % in 2013 to 26.13 % in 2015
(World Bank).
Since 1992, Mozambique has been with higher imports, taking the country to a trade
deficit. The increase in imports is fuelled by the increase in consumption of goods
and services, and in 2013 expanded to 84.007 %. The increase in imports takes the
trade and current account to a deficit.

Export has been increasing since the establishment of the open market and economy
to Foreign Direct Investment; the greater increase was from 2000 to 2001, increased
by 8%. During 2015 the decrease in exports was affected by the fall in prices of
commodities such as gas, aluminum, cotton, and shrimp. Also, imports declined by
4.7%. But the expanding dependencies on imports are still a major challenge for
Mozambique.
Now another question that may arise is how the FDI in Mozambique is following
through.
What countries invest in Mozambique?
South Africa is Mozambique's largest trading partner. China, India, the Netherlands,
and Portugal are also important trading partners. The largest bilateral donor of
development assistance is the United States. U.S. and French investment in the oil
and gas sector will create significant demand for U.S. exports.
Mozambique Foreign Direct Investment (FDI) increased by 443.2 USD mn in Jun
2022, compared with an increase of 1.4 USD bn in the previous quarter. Mozambique
Foreign Direct Investment: USD mn net flows data is updated quarterly, available
from Mar 1996 to Jun 2022.
Following along the lines of FDI import and export policies on a general aspect of
things the major factors would have been the following:
1 Trade/Government Policies- Many countries have some trade barriers which stop
you from buying or selling a particular product in the country.
2 Impact of Exchange Rates
3 Competitiveness
4 Inflation Rate
5 Domestic GDP
6 Foreign GDP-
7 Export Subsidies
8 Quality
Now going back to the main focus being Mozambique :
1. Issues for Mozambique
Within this domestic and international context, we now go on to examine some
important trade policy
issues facing Mozambique. We begin with key issues arising from participating in
regional and
international agreements.
2. The SADC Trade Protocol
The SADC Trade Protocol (TP) suffers from several keys and possibly even fatal
weaknesses.
Without improvement in some of these key areas, the Trade Protocol is likely to be
of very little value in increasing regional integration or the development of its
Member States.
• SADC’s small size means the TP will be useful only if it serves as a platform for
increasing
competitiveness in the global economy (Flatters 2001a).
• Rules of origin as currently agreed are likely to make the TP, at best, irrelevant.
Transparent
and often relatively low tariffs have been replaced by much more serious,
burdensome and
less transparent barriers to trade in the form of rules of origin (Flatters 2002b)
How can Mozambique make the best use of the SADC Trade Protocol?
• Change rules of origin: Mozambique has been one of the most articulate and
consistent
opponents of current rules of origin. The TP has a built-in review process that is
scheduled
for 2004. There might be some payoff to efforts devoted to rallying the support of
other
Member States are now beginning to recognize the costs of the current rules of
origin.
There might also be payoffs in improving market access to the EU (see the following
section).
• Backloading and differentiation of tariff reduction schedules: Mozambique’s
preferential
tariff reductions are heavily backloaded, especially on trade with South Africa.
• The gains from tariff reductions will come only when Mozambique reduces its
import
duties; why delay (e.g. wheat flour)?
• The greatest gains are likely to come on imports from South Africa rather than
other
Member States, from whom Mozambique imports very little. Therefore, tariff
reductions
on South African trade should come earliest (or no later than other tariff reductions).

WTO Negotiations
Because of its small size, Mozambique has very little to offer to trade partners and
thus has virtually
no influence in gaining market access under current WTO processes. Furthermore,
the mercantilistic
fiction underlying WTO negotiations might divert and delay efforts to pursue
domestic
reforms. Special and differential status conferred on poor countries like Mozambique
might provide a
further excuse to delay domestic reform. The main potential value of the WTO would
be in the:
• improved market access to external markets, almost all of which will be achieved
regardless
of Mozambique’s participation, and
• any leverage the process confers on domestic liberalization efforts (if it does not do
the
opposite by entrenching mercantilist and protectionist attitudes).
The most important benefit Mozambique might gain from the WTO process would
be to bind current
tariff rates to remove the temptation and the ability to impose arbitrary tariff
surcharges in
response to domestic protectionist pressures. The binding of rates in this fashion
might also gain
some credit for Mozambique in bargaining for key market access concessions from
others.
To finalize we have to take into consideration that Mozambique is a developing
country that has a lot to offer for example, for 2023, GDP growth is expected to
accelerate to 6.5%, “on the back of increases in liquefied natural gas production and
exports”, but of course, there is always be drawbacks as funds need to elevate more
and more as time goes on to support the needs and wants.
Reference: https://tinyurl.com/35r2emyt
https://www.acismoz.com/wp-content/uploads/2017/06/081%20Trade%20Policy
%20Strategies%20for%20Mozambique%20%20(2002).pdf
https://digitalexim.com/10-factors-that-influences-the-value-of-a-countrys-exports-
imports/ https://clubofmozambique.com/news/mozambique-gdp-expected-to-
grow-5-3-in-2022-6-5-in-2023-fitch-solutions-224333/#:~:text=For%202023%2C
%20GDP%20growth%20is,exports%E2%80%9D%2C%20Fitch%20Solutions%20adds.
file:///C:/Users/Cheve/AppData/Local/Microsoft/Windows/INetCache/IE/
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AN3IKC20/materials_03[1].pdf https://iclg.com/practice-areas/foreign-direct-
investment-regimes-laws-and-regulations/mozambique
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https://www.bartleby.com/essay/Mozambique-Foreign-Direct-Investment-And-
Economic-Development-P3L5CCVKLD47W
https://www.macaubusiness.com/mozambique-gdp-growth-to-accelerate-to-4-4-in-
2022-from-2-8-in-2021-fitch/