, ,

Mozambique Receives Funding to Improve Infrastructure

A steadily growing economy and an ample supply of natural resources make Mozambique a natural target for foreign investment. The southern African country is classified as low-income and remains one of the most under-developed nations in the world, but it manages to attract millions of dollars every year in foreign aid and is working to continue economic development and build its infrastructure.

In fact, improving infrastructure in Mozambique is the purpose for the more than $32 billion that the U.S. plans to invest in the country within the next several years. Increased and updated infrastructure in Mozambique’s natural resource industries — including the natural gas and coal industries — will help maintain the nation’s economic growth, which is expected to be eight percent or higher until at least 2019.

Infrastructure investments will also be made for transportation, as improvements are needed desperately for roads, railway systems and ports. These investments will come in addition to the more than $5 billion that the U.S. has invested in Mozambique over the past two years.

If used effectively, this aid could make Mozambique one of the biggest coal and natural gas producers in Africa and significantly grow its gross domestic product (GDP.) Recent discoveries of additional natural gas reserves in the country have already brought in over $1 billion for Mozambique.

Financial services company Deutsche Bank has praised Mozambique for its “ambitious policy agenda,” which has attracted investors. Massive infrastructure renovations and additions are by no means a small task, and proposing them was risky for the Mozambican government; if foreign aid did not present itself, the government would be making a promise it could not keep.

To put the $32 billion U.S. investment into perspective, Mozambique’s current GDP is estimated at $15 billion. Despite this massive cash influx, Mozambique has become less reliant on foreign aid over the past few years. The economic growth America’s investment is projected to incite should allow Mozambique to become less and less dependent on foreign aid in the years to come.

The U.S. is likely to see at least a partial return on investment, as Mozambican industries reinvigorated by improved infrastructure will produce more exports, allowing the country to trade with the U.S. in global markets. A healthy economy for Mozambique also puts capital in the hands of people who can use it to purchase American goods.

– Elise L. Riley ​
Sources: Macau Hub, World Bank, AllAfrica
Photo: Maca Hub