Newsroom > Blog
Browse more
Straight Talk About Mozambique's Complexity
We’ve been hosting members of Renew Capital Angels Network this week in Maputo, Mozambique. This is my fourth trip to this amazing country. And when I think of Mozambique, I think of stunning beaches, an unfortunate reputation for corruption and the challenge of not speaking Portuguese. Also liquified natural gas, or LNG, comes to mind. My approach to trying to understand a bit about this complex and beautiful place involves trying to put my finger on what really drives its national identity, exploring its beautiful places and flavors and identifying areas where positive change is happening. Here is a bit of what we have pieced together from our conversations with people this week in Maputo and our desk research.
Mozambique: The Hard Facts
- Poverty: Depending upon your source 65-75% of the population lives below the poverty line and it’s gotten worse the last 10 years. (360 Mozambique)
National Identity: Unidad National
Mozambique achieved independence from Portugal in 1975, but a subsequent 16-year civil war between two political groups, FRELIMO and RENAMO, hindered national progress. The war, driven by demands for leadership representation from the central and northern regions, underscored the need for inclusive governance. War sucks. A lot of people died. They don’t want to go back to all that. So today, the phrase "Unidade Nacional" (national unity) reflects the collective understanding that national progress and cohesion depend on shared leadership across all regions. This principle is a cornerstone in evaluating policies, initiatives and business ventures to ensure they align with the country's goals for a unified future. And of course corruption is just part of the way things are done around here.
Chapo’s Challenge: Can a Lawyer from Central Mozambique Chart a New Course?
The national election is on October 9th, 2024. FRELIMO's presidential candidate, Daniel "Chapo," is the first since Mozambique's independence to have no military background. Yep – read that again. He’s a lawyer, born in Inhaminga in central Mozambique. Chapo's focus on national unity is significant – not sure yet what that means, but this is what the people say. He was a governor in Inhambane Province, near Maputo, until earlier in 2024 and he is known for improving healthcare and fostering trust. He is expected to win by a wide margin due to RENAMO’s current fragmentation. Supporters believe he will make progress in infrastructure and healthcare, strengthening the social contract. Critics assume he’ll be a puppet.
Mozambique’s LNG Mirage: Is the Gas Boom a Bust?
Here’s a brief timeline of LNG in Mozambique:
2010-2013 - LNG Discovery - Mozambique discovered 150 trillion cubic feet of natural gas reserves. Subsequent concessions were sold to major organizations.
- Total's Onshore LNG Project: Expected to produce 13.1 million tons per year, but delayed due to insurgency and security issues. Force majeure declared in April 2021.
- ExxonMobil's Rovuma LNG Project: Planned capacity of 15.2 million tons per year, with final investment decisions delayed due to security concerns.
- Coral South Floating Production Facility (ENI): Capacity of 3.4 million tons per year, exports began in 2022.
- 2017 - Insurgency in Cabo Delgado: Began in 2017, causing significant delays and security issues.
- 2019 - Cyclone Kenneth: Devastated the economy and impacted LNG projects.
2024 - Recent News:
- Mozambique's new sovereign wealth fund, part of the agreement with the IMF, aims to manage $91.7B from LNG exports over the next few decades, with a focus on transparency and governance. (Bloomberg)
- Rwandan Security Involvement: Rwandan security company Isco Segurança has been hired to guard TotalEnergie’s $20B gas project. This move has sparked criticism over Rwanda's economic interests in Mozambique. (FT)
- Ghost Workers: Mozambique plans to remove 5,000 ghost workers, aiming to reduce public worker spending and unlock a $60M IMF fund. No wonder 72% of tax revenue is spent on public wages. (Bloomberg)
Mozambique’s Startup Ecosystem
The startup ecosystem is fairly nascent. However, the discovery of natural gas reserves and rich mineral deposits and the country’s strategic location have positioned Mozambique as an interesting player to watch among Africa’s startup ecosystems.
We that hear aquaculture, fintech and the energy sectors have seen some activity in recent years, but we mostly looked at deals in the logitech space. We saw some fintechs but they still have significant progress to make before they can compete with their counterparts in Nigeria or Kenya.
More importantly, the government is modernizing its investment and banking regulations to create a more conducive investment environment. Read: it won’t take three years to get a license. Yeah…let’s see about that!
If you’re looking for evidence that things are moving, the government's promotion of Small and Medium Enterprises (IPEME) is providing support to budding entrepreneurs. Although we couldn’t find many examples yet, I’m sure they’ll be sprouting up soon.
Additionally, organizations like MozInnovation Lab and Standard Bank Incubator have been playing a crucial role in nurturing startups by offering mentorship, training and access to funding. Key sectors include agriculture, fintech, energy and health tech, so we should have plenty of pipeline to look at, right? Sidenote: a large investment group just told us they see only two to five legit deals per month. We need to get this ecosystem activated, ASAP!
And for the challenges: The typical stuff - developing a regulatory environment, inadequate infrastructure including the internet and a pretty significant skills gap, in particular for tech-related fields. Nothing new.
I’d conclude with one word: pipeline! We need more. We want more. Mozambique, you are beautiful. We see your potential. Let’s do this!
Go Deeper on Mozambique?
If you are interested in entering Renew Capital’s pipeline, visit venturelab.renewcapital.com. And if you want to read more of our thoughts on other African Startup Ecosystems visit our Ecosystem Fact Sheet webpage.
Renew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. For the latest on investing in Africa, subscribe and follow us at our social links below.
Related Posts
