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Outlook is positive, challenges remain

Map of Mozambique

Mozambique is still one of the ten poorest countries in the world. After a civil war lasting almost 20 years, the country was able to look back on a reconstruction with considerable economic success. Annual economic output increased by an average of 8% between 1993 and 2015.

The long-term outlook remains positive. Mozambique has huge gas reserves in the north of the country, which will be extracted in the coming years. This could give a powerful boost to the economy.

However, the discovery of hidden public debt plunged the country into a continuing economic crisis in 2016, which was exacerbated by the impacts of the coronavirus pandemic and natural disasters, with the result that the Mozambican economy slipped into recession in 2020. Poverty is also widespread, with more than 60% of the population still living below the poverty line. Reasons include the low level of education, a lack of transparency, frequent natural disasters such as floods and the over-indebtedness of the state, which prevent broad-based growth. Violent conflicts are also occurring in the north of Mozambique, which is why many people are leaving the region and seeking refuge in communities further south.

On behalf of the German Federal Government, KfW is cooperating with Mozambique in the following areas:

  • peaceful and inclusive societies
  • sustainable economic development, training and employment
  • climate and energy, Just Transition

On behalf of the German Federal Government, KfW is supporting the Mozambican government and selected municipalities in the provinces of Inhambane, Manica and Sofala in the construction and rehabilitation of roads, markets, administrative buildings, water mains and protective measures against the effects of climate change.

Islamic militias have been active in the north of Mozambique, in the province of Cabo Delgado, since 2017. Many families have left their homes due to attacks. In cooperation with UNICEF, KfW promotes internally displaced people and host communities, for example by improving the equipment of health facilities or offerings for learning and playing.

To ensure that economic growth also reaches poorer sections of the population, KfW is committed to the development of the financial sector. It enables Mozambican banks to grant loans to farmers at favourable interest rates. The farmers can use these to buy seeds, tools and fertilisers to create additional jobs and new income opportunities. KfW also supports selected vocational schools in providing more and better vocational training.

So far, only around 40% of Mozambique’s households have access to electricity. KfW is financing the modernisation and construction of hydropower plants and solar power plants as well as the expansion of the electricity grid.

KfW is supporting Mozambique in its efforts to overcome the still widespread poverty and is supporting a change that is intended to improve living conditions for all.

Project information – Urban development

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Director KfW Office: Steffen Beitz
Avenida Armando Tivane No. 849

+258 21 48 87 08 / +258 48 87 09 / +258 48 50 41
Fax: +258 21 48 87 09

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