Last year marked 30 years of development cooperation between the EU and Mozambique. The EU Delegation remained in Mozambique during the country’s civil war and has continued to provide support for national development programmes. Ambassador Sven Kühn von Burgsdorff, since September 2014 Head of the EU Delegation, has already worked in Mozambique between 1992 and 96. He discusses Mozambique’s impressive economic performance as well as the country’s challenges and potential.
European Times: Can you describe relations between the EU and Mozambique?
Sven Kühn von Burgsdorff: In its more than 30 years here, the EU Delegation has always adjusted to realities on the ground. During the civil war, we tried to address Mozambique’s humanitarian needs. After the 1992 peace accord, the Delegation supported Mozambique’s political and economic transition. Following the 1994 multiparty elections, we began to focus on economic governance, rule of law and social inclusion. Since 2000, the EU has been supporting Mozambique’s efforts to achieve UN Millennium Development Goals. Today, the EU is entering into a new phase in its relations with Mozambique as we try to help this country make the most of its tremendous natural resources, for example in mining and agriculture, as well as its relatively untapped strategic advantage as Southern Africa’s gateway to the Indian Ocean and beyond.
European Times: How is the EU supporting Mozambique’s economic progress?
Sven Kühn von Burgsdorff: The EU provides financial support for Mozambique’s development and is also a major trade partner and key source of FDI. Mozambique participates in the EU-Africa-Caribbean-Pacific Cotonou Agreement and will soon benefit from the Economic Partnership Agreement (EPA) between the EU and the Southern African Development Community through which SADC countries have duty-free, quota-free access to the EU market. Under the 11th European Development Fund (EDF) agreement, which focuses on good governance and rural development, Mozambique will receive €734 million, the second-highest EDF allocation after Ethiopia’s. The EU has confidence in Mozambique’s new government. Mozambique has generally demonstrated good management although in the past more could have been done to fight corruption and to ensure inclusive political governance. We will therefore focus in our next good governance programme on sound and transparent public financial management and effective rule of law. As to rural development the EU will take a multi-sectoral approach, concentrating on areas with growth potential where we can actually make a difference. The EU will pool resources from various EU instruments and work with EU member states to create synergies in support of the Mozambique government’s national development programmes.
European Times: What are your projections for Mozambique’s economy?
Sven Kühn von Burgsdorff: Mozambique has been achieving tremendous growth rates since the mid-1990s, with an average 7.5% annual GDP growth, the highest in Africa. Moreover, the country still has significant development potential, particularly in the extractive industries, energy, and services, including logistics services taking advantage of Mozambique’s ports and transport corridors. Mozambique has the highest confirmed finds of gas deposits in sub-Saharan Africa, but exploiting these and other resources will require substantial foreign investment. Mozambique has to prove to foreign investors that it is capable of providing a stable environment over the long term and to its people that the natural resource revenues will be managed in a way that promotes inclusive and sustainable development.
European Times: What are some recent trends in FDI in Mozambique?
Sven Kühn von Burgsdorff: Mozambique is very open to FDI, and has attracted around €1.6 billion in approved and vetted foreign-investment projects each year for the past three years. Much of this investment has been in mega-projects in the coal, energy, water and gas sectors, but some has focused on small and medium-sized enterprises. In fact, a large portion of EU investment in Mozambique in recent years has been from Portugal, and most of that investment has been in SMEs. Thanks to the forthcoming EU-SADC EPA, European companies will be able to count on more of a level playing field in Mozambique. To help support EU investors here, European companies are working to set up a European business association to represent EU private-sector interests. Mozambique’s agriculture sector is a very promising investment opportunity, and EU investors could get involved in public-private partnerships, including in the field of vocational training. Mozambique also has significant tourism potential. The capital, Maputo, is a very interesting hub with an impressive colonial heritage.
European Times: What are the main challenges Mozambique faces?
Sven Kühn von Burgsdorff: Poverty, illiteracy, unemployment, a lack of know-how and technologies, poorly developed infrastructure, public financial management, notably at provincial/district level and with respect to public procurement, and limited access to financing for the private sector, especially in rural areas, are among the problems for which Mozambique must find solutions. The current government has promised that Mozambique’s political and economic development will be inclusive, and it must follow up on this promise. The next five years are crucial for Mozambique. The country needs to create the right framework – legally, institutionally and in terms of capacity – to properly absorb growing domestic revenues and achieve sustainable, inclusive economic growth.
European Times: What is your personal message about Mozambique?
Sven Kühn von Burgsdorff: Mozambique has huge potential but is facing huge challenges. With the right political will, stability, good governance and inclusion, Mozambique will have a bright future.