PART 1. GENERAL INTRODUCTION 5 access to seaports has given transport (rail, road and ports) and related services a central role <strong>in</strong> <strong>the</strong> economy as illustrated by <strong>the</strong> Maputo, Beira and Nacala corridors. The liberal economic re<strong>for</strong>ms pursued by <strong>the</strong> government, <strong>the</strong> privatization of <strong>for</strong>merly state-owned enterprises and a variety of <strong>in</strong>centives schemes have laid <strong>the</strong> ground <strong>for</strong> profitable <strong>in</strong>vestment <strong>in</strong> a number of areas. Given <strong>the</strong> low level of diversification of <strong>the</strong> national <strong>in</strong>dustry, an <strong>in</strong>dustrial policy strategy was approved <strong>in</strong> July 2007 provid<strong>in</strong>g <strong>the</strong> basis <strong>for</strong> <strong>the</strong> development of key economic sectors. 12 Agriculture (cotton, tobacco, sugar and cashews), fish<strong>in</strong>g and aqua-culture (prawns) are <strong>the</strong> backbone of <strong>the</strong> Mozambique economy. More than 75 per cent of <strong>the</strong> population is employed <strong>in</strong> <strong>the</strong> agricultural sector. None<strong>the</strong>less, services are now becom<strong>in</strong>g a key sector <strong>for</strong> <strong>the</strong> economy. In 2007, Mozambique was upgraded from <strong>the</strong> International Monetary Fund (IMF) Poverty Reduction and Growth Facility (PRGF) programme and has s<strong>in</strong>ce pursued a macroeconomic stabilization and structural re<strong>for</strong>m programme <strong>for</strong> <strong>the</strong> 2008–2010 period, supported by a three-year Policy Support Instrument. 13 In 2008, total exports amounted to about $2.6 billion and are dom<strong>in</strong>ated by primary commodities. The ma<strong>in</strong> exports are alum<strong>in</strong>ium, electricity, tobacco, gas, prawns, sugar, cotton, cashew nuts and timber. The ma<strong>in</strong> export markets are Belgium, South Africa, Spa<strong>in</strong>, Portugal, <strong>the</strong> United K<strong>in</strong>gdom, Italy, Holland, Zimbabwe, Swaziland, Japan, <strong>the</strong> United States, Brazil and India. 14 The ma<strong>in</strong> imports are mach<strong>in</strong>ery, fuels, automobiles, cereals, electrical power and medic<strong>in</strong>es. The ma<strong>in</strong> countries from which Mozambique imports are South Africa, Australia, <strong>the</strong> United States, India, Portugal, Ch<strong>in</strong>a, Germany, France, Japan, Spa<strong>in</strong>, Italy and <strong>the</strong> United K<strong>in</strong>gdom. 15 International aid plays a pivotal role <strong>in</strong> Mozambique’s economy and <strong>in</strong> balanc<strong>in</strong>g its external accounts. Official development assistance (ODA) f<strong>in</strong>ances more than half of <strong>the</strong> government expenditure. In recent years approximately 19 donors have been provid<strong>in</strong>g direct budget support to Mozambique; <strong>the</strong>se are lead by <strong>the</strong> United K<strong>in</strong>gdom, <strong>the</strong> World Bank, <strong>the</strong> European Commission and Sweden. While <strong>in</strong> <strong>the</strong> short term <strong>in</strong>ternational donor support rema<strong>in</strong>s strong, at 14.2 per cent <strong>for</strong> 2008, this is scheduled to decrease <strong>in</strong> <strong>the</strong> medium term, <strong>for</strong> example to 12 per cent by 2010. On <strong>the</strong> expenditure side, <strong>the</strong> government plans to boost <strong>in</strong>vestment <strong>in</strong> <strong>the</strong> priority sectors of education, health, agriculture, <strong>in</strong>frastructure and governance. Mozambique has established itself <strong>in</strong> recent years as one of <strong>the</strong> lead<strong>in</strong>g <strong>for</strong>eign direct <strong>in</strong>vestment (FDI) recipient countries <strong>in</strong> Sou<strong>the</strong>rn and Eastern Africa. Lead<strong>in</strong>g <strong>in</strong>vestor's countries are South Africa, <strong>the</strong> United K<strong>in</strong>gdom, Portugal and Japan. In terms of <strong>in</strong>frastructure, <strong>the</strong> rehabilitation of <strong>the</strong> <strong>in</strong>ternal transport system has been target as a priority <strong>for</strong> <strong>the</strong> transport sector through roads and coastal shipp<strong>in</strong>g. A second Poverty Reduction Strategy Paper (PARPA) was <strong>in</strong>troduced <strong>in</strong> 2007 with <strong>the</strong> fundamental objectives of economic growth and poverty reduction. The <strong>in</strong>cidence of poverty is gradually decl<strong>in</strong><strong>in</strong>g from 54 per cent <strong>in</strong> 2003 to 45 per cent <strong>in</strong> 2009. The strategy places great emphasis on entrepreneurial <strong>in</strong>itiative and private sector growth as <strong>the</strong> driv<strong>in</strong>g <strong>for</strong>ce of economic and social development. Tourism is <strong>in</strong>creas<strong>in</strong>gly be<strong>in</strong>g recognized as a valuable source of long-term growth and a key role <strong>for</strong> Mozambique's development strategy. To a certa<strong>in</strong> extent, it appears that <strong>in</strong>vestment <strong>in</strong> <strong>the</strong> sector has matched <strong>the</strong>se high expectations. S<strong>in</strong>ce 1995, <strong>in</strong>vestments projects worth over $1.8 billion (USD) have been approved by <strong>the</strong> Investment Promotion Centre, be<strong>in</strong>g equal <strong>in</strong> value terms to 14 per cent of all approved <strong>in</strong>vestments 16 . The creative <strong>in</strong>dustries have a close l<strong>in</strong>k with <strong>the</strong> tourism <strong>in</strong>dustry. The creative <strong>in</strong>dustries are a sector with grow<strong>in</strong>g economic potential (see chapter 3), with art crafts, visual 12 M<strong>in</strong>istry of Industry and Trade (2007). Industrial Policy and Strategy, 13 IMF (2008b). 14 IPEX and INA. 15 IPEX and INA. 16 The contribution of tourism <strong>in</strong> Mozambique, present and future by Sam Jones (MPD) and Hanifa Ibrahimo (MPD), discussion paper, January 2008.
6 PART 1. GENERAL INTRODUCTION arts, and design <strong>in</strong>dustries stand<strong>in</strong>g out as <strong>the</strong> sectors with <strong>the</strong> best prospects of contribut<strong>in</strong>g to employment, exports and GDP. In addition, <strong>the</strong> creative <strong>in</strong>dustries can have a positive impact on enhanc<strong>in</strong>g gender equality, as <strong>the</strong>y offer numerous possibilities to women to be active <strong>in</strong> <strong>the</strong> creative sectors. They also contribute to social <strong>in</strong>clusion because of <strong>the</strong>ir attractiveness to young people, <strong>in</strong>clud<strong>in</strong>g those from rural communities.
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