Mozambique Banks on Agriculture and SMEs to Revive Economy

Mozambique is banking on agriculture and fresh investment to drive economic recovery, with President Daniel Chapo launching a new $40m fund for small businesses at the 60th Maputo International Trade Fair (FACIM).

Opening the fair on Monday, Chapo highlighted the need to improve the business climate for investors while ensuring growth benefits local communities. “Mozambique has a geostrategic location, with ports, development corridors and various other potentialities; vast resources, mineral, natural, agricultural, tourist, and above all a humble, hard-working, friendly and welcoming people,” he said.

At home, he stressed, development must begin with ordinary citizens. “Economic independence starts with agriculture workers, farmers, the youth, women – all of us together.”

The World Bank-backed Mutual Guarantee Fund will provide credit guarantees for at least 15,000 small and medium-sized enterprises (SMEs), a sector the government says is critical to job creation. “We know that high interest rates have been almost insurmountable barriers for small- and medium-sized businesses, which represent the heart of the national business fabric,” Chapo said. “This instrument is not just a financial mechanism; it is a bridge to the recovery of the Mozambican economy.”

Mozambique’s growth is projected at just 3 per cent in 2025, down from 5.4 per cent in 2023, as the country grapples with debt scandals, post-election unrest, and an ongoing insurgency in Cabo Delgado that has stalled TotalEnergies’ $20bn liquefied natural gas project.

“The economy of Mozambique was prepared for the next 20, 30 years to rely on natural resources … But now the most recent problem is the insurgency in the northern part of the country. So that affects the economy of Mozambique deeply,” said Borges Nhamirre, a researcher with the Institute for Security Studies. “Mozambique needs to bet on producing its own food … The land for agriculture is available, and water is also available. So, the problem is just mentality and a bit of capital.”

Agriculture dominated the trade fair, with provinces showcasing rice, bananas, cashews, coffee, honey and seafood. For Gaza province official Lucia Matimele, investment is the missing piece. “We have land, we have water, we have farmers! What we need is investment,” she said. “We can feed our people best … We need big industry getting into this business.”

Matimele said production is not the main challenge, but processing and distribution. “Small farmers need guarantees that what they produce will be sold and not go to waste … FACIM helps us by giving us a secure market.”

Historians and analysts agree that funding is key to breaking cycles of stagnation. “If you don’t have funds, you can [still] start a very nice business, but there will be a certain way you will get stuck – you’ll need equipment, you’ll need to pay people, you’ll need a truck, you’ll need to put up a fence; for whatever, you will need money,” said historian Rafael Shikhani.

He added that economic stability is vital to preventing political and social unrest. “There is a cycle of crisis: if there is an economic crisis, it leads to a political crisis, and it leads to social unrest. If you deal with economics and you feed people, there will be no more social unrest, and there will be no political crisis. So, you start with economics. Give people food, give people jobs, give people hope – they will work and make money.”

For provincial leaders like Matimele, the message is clear. “Investment is the right way to follow. If we have investment, we can solve all the issues.”