(1) Mozambique currently has limited integration into global value chains, primarily through backward participation in extractive industries like mining and agriculture. Manufacturing and participation in GVCs is limited. (2) Major foreign investment has been extractive in nature and creates few jobs or local supplier linkages, limiting impact on poverty reduction. (3) Mozambique has a relatively weak institutional environment according to various indices, with issues like corruption and an underdeveloped legal system that hinder business integration into GVCs.

1. HOW COULD
MOZAMBIQUE BENEFIT
FROM GLOBAL VALUE
CHAINS?

2. Factor endowments in Mozambique
◦ Mozambique has the labour force that is largely unskilled and agricultural.
◦ Geographically Mozambique is far from international markets although its
position on the south east coast of Africa allows its ports to serve landlocked
countries.
◦ Land is owned by the state which provides use rights to households and
companies, although this limits the ability to use land as colateral, and land
conflicts between companies and local residentes do occur.
◦ While Mozambique has received significant foreign direct investment for
major projects, the benefits of these have not generally benefited the
population as a whole.
This Photo by Unknown
Author is licensed under
CC BY-SA

3. Mozambique´s current integration into global
value chains
◦ Mozambique´s current integration into global value chains is
limited, and principally backward participation.
◦ Some major investments include coal mining, extraction of
minerals, a major aluminum smelter, precious and semi
precious stones, and a number of agricultural value chains.
◦ Manufacturing is limited and even less common as
participation in global value chains´.
◦ Major foreign direct investment that does exist tends to be
principally extractive and creates few jobs, and has limited
local suppliers, and therefore has limited impact on poverty
reduction.
This Photo by
Unknown Author
is licensed under
CC BY-SA

4. Institutional environment and policies
◦ Mozambique has a relatively weak institutional environment:
◦ Ranks 138 overall in the doing business index, and 94 in Trading across borders.
◦ Enforcing contracts, a critical aspect of global value chain integration, ranks particularly poorly at
168.
◦ Corruption remains a significant problem in doing business in Mozambique.
◦ Transparency international ranks Mozambique at 146 out of 180 countries. Corruption at border
crossings has also been well documented.
◦ The Mozambican government has a investment promotion agency however the main form of
investment attraction has historically been to provide fiscal benefits, which can undermine domestic
revenue mobilisation.
◦ Some efforts have been made to promote linkages between major foreign direct investment and local
businesses, such as the Mozlinks programme linked to Mozal, an aluminum smelter, as well as support
agricultural value chains for export, however these tend to be shortlived and donor dependent.

5. How Could Mozambique Integrate into GVCs?
(1)
◦ Ensuring that existing major extractive industry projects benefit local populations through job
creation and linkages with local firms.
◦ Emphasis should be on upskilling of labour to global standards, and supporting local companies.
◦ Improvements in trade facilitation and transport infrastructure.
◦ Leverage the large South African market, and strategically placed Mozambican ports.
◦ Improving institutional and legal frameworks as well as cracking down on corruption.
◦ Strengthening the investment promotion agency, providing alternatives to tax breaks as a form
of investment attraction.

6. How Could Mozambique Integrate into GVCs?
(2)
◦ Ensure adequate environmental and legal protections are established in the law and actually
implemented.
◦ Continuing to engage in regional and international trade initiatives.
◦ Support the move from agriculture to basic manufacturing, through access to finance, skills, and
business support services, particularly to women entrepreneurs.
◦ Proactively seek to link agricultural value chains within the country to the global value chains.
◦ Continue to develop standards and address non tariff barriers.
◦ Maintain macroeconomic stability and address issues of conflict within the country.
◦ Build the capacity of the revenue authority in order to address transfer pricing issues.

7. Thank You