Business Potential
31st March, 2015
Maputo, Mozambique
Mozambique & Brazil - A Case for Collaboration
2
Agenda
13:00– 13:15 Welcome by Standard Bank Mozambique
13:15 – 14:30 Lunch and interactive Presentations
Country Economic overview
Sectorial opportunities in the country
14:30 – 15:00 Networking
14:55 – 15:00 Closing
120 YEARS OF HISTORY IN MOZAMBIQUE
31st March 2015 Fausio Mussa
Chief Economist Standard Bank - Mozambique
Economic Update
Stepping into the future...
2015 & Beyond
120 YEARS OF HISTORY IN MOZAMBIQUE
Topics for discussion
• Establishing business in Mozambique/ Land
• Mozambican economy growth prospects
• Current account, foreign direct investment and currency
• Inflation
• Government finances
• Monetary policy and interest rate
120 YEARS OF HISTORY IN MOZAMBIQUE
• Economic activity expected to remain strong but current floods could reduce GDP growth to 6,5% y/y • Weak coal price is likely to discourage increase in production despite Nacala line coming on stream • Low fuel prices expected to delay further the development of natural gas projects/lowering FDI • Less accommodative monetary policy and fiscal consolidation required for macroeconomic stability
175.1
50
207.4
48
237.5
49
267.9
45
295.1
79
345.2
16
384.9
97
423.7
33
465.3
25
8,7%
9,9%
7,4%
5,8%6,5%
7,1%7,4%7,1%7,3%7,4%
6,5%
0%
2%
4%
6%
8%
10%
12%
150.000
200.000
250.000
300.000
350.000
400.000
450.000
500.000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015(*
)
PIB anual (Annual GDP) base2009
Nominal (MT10^6) Cresc Real (Real Growth)
Agricultura (Agriculture)
23,4%
Pescas (Fisheries)
1,7%
Ind.Extractivas (Extractive Industries)
3,1%
Manufactura (Manufacturin
g)11,3%
Prod&Distrib Electr&Gás (Electricity &
Gas)2,9%
Construção (Construct.)
2,6%
Comércio (Trade)10,1%
Transp.Armaz. e
Comunicações (Transport
Storage &Com.)8,8%
Activ.Financeiras (Financial
Activities)6,6%
Activ.Imobiliarias (Property)
7,0%
Outros (Others)22,6%
Estrutura do PIB 2014 base 2009 (GDP Structure 2014 new base 2009)
120 YEARS OF HISTORY IN MOZAMBIQUE
• Mozambique runs a structural current account deficit which has been financed by FDI and Donor Support
Cerveja (Beer); 18,6;
0.2%
Cimento (Cemment);
111; 1%
Medicamentos (Medicine);
125; 2%
Oleo Alimentar (Coocking
Oil); 143; 2%
Electricidade (Electricity);
262; 3%
Cereais (Cereals); 356; 4%
Automoveis (Vehicles); 508; 6%
Combustiveis (Fuels);
1.112; 13%
Bens de Capital (Capital Goods);
2.052; 24%
Outros (Others);
3.791; 45%
Importaçoes (Imports 2013 U$ million)
Combustiveis Reexportaçao
(Fuels reexport); 32 ;
1%
Algodao (Cotton); 99 ;
2%
Açucar (Sugar); 186 ;
4%
Tabaco (Tobacco); 251 ; 6%
Gas Natural (N Gas); 230 ;
6%
Electricidade (Electricity);
270 ; 7%
Areias Pesadas (H
Sands); 131 ; 3%
Carvao (Coal); 503 ;
12%
Aluminio (Allummium); 1.063 ; 26%
Others; 1.358 ; 33%
Exportaçoes (Exports 2013 U$million)
120 YEARS OF HISTORY IN MOZAMBIQUE
• Resources Sector (coal and natural gas) is the dominant player in terms of Foreign Direct Investment inflows (accounting for more than 80% on inflows), helping to finance current account deficit
2009 2010 2011 2012 2013 Total
Industria Extractiva
(Extractive Industries) 489,9 938,3 2.126,2 4.374,2 5.469,8 13.398,4
Manufactura (Manufaturing) 85,9 1,1 317,1 391,6 -143,7 652,0
Transporte
Armanzenamento,
Comunicações (Transport,
Warehousing, Comms)
128,5 24,2 87,5 98,7 271,7 610,6
Agricultura (Agriculture) 142,2 1,0 9,1 153,9 115,0 421,3
Serviços Financeiros
(Financial Services) 9,5 34,9 42,9 43,4 107,5 238,2
Comercio (Trade) 16,4 0,0 5,5 71,0 48,1 141,0
Imobiliario (Property) -1,9 0,8 14,3 40,6 137,4 191,2
Construção (Construction) -2,0 8,0 15,0 28,7 63,2 112,9
Hoteis e Restaurantes
(Hotels and Restaurants) 23,6 4,3 15,9 26,5 39,5 109,8
Produção e Distribuição de
Electricidade Agua e Gas
(Production and Distribution
of Electricity, Gas, Water)
0,0 0,4 8,6 -31,6 72,0 49,3
Outros (Others) 0,3 4,8 20,9 432,4 -5,3 453,1
Total 892,5 1.017,9 2.662,8 5.629,4 6.175,1 16.377,8
-8.000
-6.000
-4.000
-2.000
0
2.000
4.000
6.000
8.000
2010
2011
2012
2013
2013 (
9M
)
2014 (
9M
)
US
D 1
0^
6
Défice da Conta Corrente e Investimento Directo Estrangeiro (External Current Account Dedifict and FDI)
Investimento DirectoEstrangeiro (ForeignDirect Investment)
Deficit da ContaCorrente (CurrentAccount Deficit)
120 YEARS OF HISTORY IN MOZAMBIQUE
• Following a long period of currency stability, supported by FDI/Reserves, local currency volatility to USD increased since Dec/2014 trading above MZN/USD35. Central Bank annual net sales of foreign currency to support the market increased from USD623.4million in 2013 to USD1207.7 million in 2014 but was insufficient to contain depreciation as reserves remained under pressure closing below target.
2
3
3
4
4
5
5
6
6
7
7
0
500
1.000
1.500
2.000
2.500
3.000
3.500
Dec-0
9F
eb-1
0A
pr-
10
Jun
-10
Au
g-1
0O
ct-
10
Dec-1
0F
eb-1
1A
pr-
11
Jun
-11
Au
g-1
1O
ct-
11
Dec-1
1F
eb-1
2A
pr-
12
Jun
-12
Au
g-1
2O
ct-
12
Dec-1
2F
eb-1
3A
pr-
13
Jun
-13
Au
g-1
3O
ct-
13
Dec-1
3F
eb-1
4A
pr-
14
Jun
-14
Au
g-1
4O
ct-
14
Dec-1
4F
eb-1
5
US
D m
illio
n
Mo
nth
s
Reservas internacionais liquidas e cobertura de importações (Net international reserves and import cover)
Reservas (Net International Reserves)
Meses de cobertura (Import cover months)
0
1
2
3
4
5
6
7
8
9
10
0
5
10
15
20
25
30
35
40
45
50
Dec-0
9
Ap
r-10
Au
g-1
0
Dec-1
0
Ap
r-11
Au
g-1
1
Dec-1
1
Ap
r-12
Au
g-1
2
Dec-1
2
Ap
r-13
Au
g-1
3
Dec-1
3
Ap
r-14
Au
g-1
4
Dec-1
4
MZ
M/U
SD
& M
ZM
/EU
R
MZ
M/
ZA
R
Taxas de câmbio no MCI (MCI foreign exchange rates)
MZM/USD
MZM/EUR
MZM/ZAR
120 YEARS OF HISTORY IN MOZAMBIQUE
• Metical appreciation to the SA Rand (3,9% y/y in 2014) combined with stable administered prices (including fuels) and quick recovery from Q1 2014 floods helped to contain inflation at low historical levels. Current floods combined with Metical weakness to the USD will drive inflation up but average is likely to remain within Government target of 5.1%
Maputo
1,23% m/m
2,09% y/y
2,14% média (average)
Beira
0,45% m/m
4,22% y/y
2,26% média (average)
Nampula
2,61% m/m
6,68% y/y
3,62% média (average)
CPI?
CPI?
Inflação - Moçambique (Moz Inflation (Fev2015)
1,56% m/m
3,99% y/y
2,67% média (average)
0
2
4
6
8
10
12
14
16
18
20
Dec
/200
9M
ar/2
010
Jun/
2010
Sep
/201
0D
ec/2
010
Mar
/201
1Ju
n/20
11S
ep/2
011
Dec
/201
1M
ar/2
012
Jun/
2012
Sep
/201
2D
ec/2
012
Mar
/201
3Ju
n/20
13S
ep/2
013
Dec
/201
3M
ar/2
014
Jun/
2014
Sep
/201
4D
ec/2
014
Mar
/201
5Ju
n/20
15S
ep/2
015
Dec
/201
5
Inflação Moç.(Mozambique Inflation)
Anual (Annual)
Média (Average)
Annual (forecast)
Average (forecast)
Pre
vis
ão (
Fore
cast)
120 YEARS OF HISTORY IN MOZAMBIQUE
• Monetary aggregates expected to grow at lower pace in the region of 19% from 28.3% private sector credit expansion last year and 22,2% M3 growth as inflation is likely to maintain an upward trend
0
2
4
6
8
10
12
14
16
18
Dec-0
9F
eb
-10
Ap
r-10
Jun
-10
Au
g-1
0O
ct-
10
Dec-1
0F
eb
-11
Ap
r-11
Jun
-11
Au
g-1
1O
ct-
11
Dec-1
1F
eb
-12
Ap
r-12
Jun
-12
Au
g-1
2O
ct-
12
Dec-1
2F
eb
-13
Ap
r-13
Jun
-13
Au
g-1
3O
ct-
13
Dec-1
3F
eb
-14
Ap
r-14
Jun
-14
Au
g-1
4O
ct-
14
Dec-1
4F
eb
-15
%
Taxas de Juro do Mercado Monetário I. & Inflação Média Maputo (Interbank Money Market Interest
Rates & Maputo Avegare Inflation)
FPC
BTs 3M (3Month TBs)
Inflação (Inflation
FPD
0
10
20
30
40
50
60
Dec-0
9F
eb-1
0A
pr-
10
Jun
-10
Au
g-1
0O
ct-
10
Dec-1
0F
eb-1
1A
pr-
11
Jun
-11
Au
g-1
1O
ct-
11
Dec-1
1F
eb-1
2A
pr-
12
Jun
-12
Au
g-1
2O
ct-
12
Dec-1
2F
eb-1
3A
pr-
13
Jun
-13
Au
g-1
3O
ct-
13
Dec-1
3F
eb-1
4A
pr-
14
Jun
-14
Au
g-1
4O
ct-
14
Dec-1
4F
eb-1
5
%
Variação % anual de gregados monetários a/a e Taxa de Juro Prime Rate (Annual change in monetary
agregates and prime lending interest rates)
M3
Crédito a Economia (PSCE)
Base Monetária (Reserve Money)
Taxa de Juro Prime (Prime Lending Interest Rate)
120 YEARS OF HISTORY IN MOZAMBIQUE
• 2015 budget is expected to be presented towards March-end by new Government
• Expenditure at 47% of GDP is high
• Donor support remains important as it finances 32,5% of the deficit representing 5,7% of GDP in 2014
• Budget will remain under pressure as windfall capital gains tax is unlikely to be repeated this year
• External debt is growing towards sustainability limit of 40% NPV of GDP
• Government policies including tariffs placed some SOEs (State Owned Companies) cash flows under extreme pressure
JULY2014 (2014 Budget ammendment)
New Budget Aug2014 USD million % of GDP % change
Fiscal Revenue 155.573.918,4 4.953,4 29,1% 5,6
Government Expenditure 249.093.761,4 7.931,0 46,6% 3,4
Fiscal Deficit -93.519.843,05 (2.977,6) -17,5% 0,0
GRANTS 30.402.000,00 968,0 5,7%
INTERNAL BORROWINGS (BOND) 5.465.000,00 174,0 1,0%
EXTERNAL LOANS 57.652.843,05 1.835,6 10,8%
93.519.843,05 2.977,6 17,5%
Fiscal Revenues 132.261.464,5 4.211,1 24,7% 4,5
Non Fiscal Revenues 9.404.990,6 299,4 1,8% 0,0
Consigned Revenues 8.221.231,0 261,8 1,5% 0,0
Capital Revenues 3.187.402,7 101,5 0,6% 0,0
discrepanc.? 2.498.829,6 79,6 0,5%
Total Revenue 155.573.918,39 4.953,4 29,1% 5,6
0,0 0,0%
Current Expenditure 144.553.867,8 4.602,5 27,0% 3,2
Investment Expenditure 104.539.893,6 3.328,5 19,5% 3,7
internal component 46.260.338,4 1.472,9 8,6% 8,9
external component 58.279.555,3 1.855,6 10,9% 0,0
Total Expenditure 249.093.761,4 7.931,0 46,6% 3,4
GDP 2014e 534.998,00 17.034,0
MZM/USD 31,4
120 YEARS OF HISTORY IN MOZAMBIQUE
Thank you
120 YEARS OF HISTORY IN MOZAMBIQUE
Nota
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ter sido tomado na elaboração deste documento,
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reliable. Whilst every care has been taken in
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accuracy or completeness of the information set
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