Mozambique seeks to come onstream
The country has new wealth thanks to some big natural resource discoveries. They spell opportunity for both foreign and local institutions. How does such a small economy cope with such big demands?
Mozambique, with an annual GDP growth rate of 8%, is enjoying a spectacular boom in its natural resource-based industries, coal and natural gas, and the construction sector. As a result, investors are swarming in.
Foreign direct investment reached $5.9 billion in 2013, compared with $5.2 billion in 2012 and $2.6 billion in 2011. A favourable side-effect of this has been rising demand for investment-related financial services. Although investment banking and private equity in Mozambique are embryonic, activity in both these areas is steadily creeping up.
In 2013, Mozambique was the most targeted sub-Saharan African country by investors in terms of value, according to a Thomson Reuters report published in January.
Its sub-Saharan Africa investment banking analysis 2013 paper indicated that Mozambique accounted for 31% of all M&A activity in sub-Saharan Africa by value, making it the most targeted country in the region – more than South Africa and Nigeria.
The southern African nation enjoyed 13 M&A deals, worth a total of $9.3 billion, over 13 times the value in 2012 and the biggest yearly value total of all time, according to Lucille Quilter, deals analyst at Thomson Reuters. “By number of deals, 2013’s tally of 13 Mozambican deals was last beaten in 2011 when the country saw 18 deals throughout the year,” she says.