Economic Growth and Business

Despite an annual GDP growth rate of 7.5% and a drop in the poverty rate from 69% in 1997 to 54% in 2008, more broad-based, rapid, and sustainable economic growth is needed to help create more jobs and continue to reduce widespread poverty. USAID is working to help private sector businesses become more competitive, thus generating more trade and investment opportunities. USAID programs support policy reforms to make it easier to start a new business, thus increasing the number of small and medium-sized enterprises and increasing new foreign investment. Over the long term, investments by Mozambique’s private sector will be key to catalyzing economic growth and alleviating poverty.

Improve Growth in Key Sectors
Mozambique has shown sound economic growth in recent years, but still faces obstacles in attracting enough private investment to accelerate and sustain growth. USAID is focused on increasing growth in the agriculture and tourism sectors, which show strong potential to attract private investment and create jobs. USAID’s programs provide training and access to financial services that help small and medium-sized enterprises become more efficient and productive. In turn, they become more competitive in local, regional, and international markets, and better able to attract private investment to help their businesses grow.

Better Economic Governance
The key to increasing trade and investment is creating a business climate that is open, transparent, and competitive. USAID’s trade program works with the Ministry of Industry and Commerce to strengthen its ability to negotiate and implement trade agreements. This helps Mozambique become a viable trading partner as it seeks permanent partnership in the Southern African Development Community Free Trade Area, which is essential to increase trade with regional partners. USAID also supports Mozambican business associations to help the private sector’s push to improve the investment environment, reduce obstacles to registering new small and medium-sized businesses, and decrease business costs and risks.

Invest in Green Growth
The natural beauty of Mozambique has excellent potential for high quality destination tourism. However, without large-scale international investment, the industry has yet to reach its true potential. USAID is working to create a viable tourism industry that attracts private investment, provides jobs, and preserves Mozambique’s unique natural, cultural, and historical resources. USAID also promotes investments in renewable energy to help meet the energy needs of tourism and agriculture, and in plantation forestry and ecosystem conservation to protect natural areas from degradation. This helps to create jobs for people living in these resource-rich areas.

Impact

• In 2009, USAID programs assisted the Government of Mozambique in eliminating minimum capital requirements to register a new business, helping Mozambique improve five positions in the World Bank Doing Business report (135 out 183 countries).

• USAID supported the launch of a national brand, marketing campaign, and website to promote tourism in Mozambique www.northern-mozambique.com.

• The USAID tourism program has helped restore and protect approximately 400,000 hectares of land in Gorongosa National Park.