Growth Challenges and Policy Priorities in Mozambique

Selected Issues Papers, February 27, 2026

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Mozambique’s economy has slowed sharply since 2016 with two-thirds of the population below the poverty line.
Structural transformation has favored extractive industries (in particular, capital-intensive LNG projects) over manufacturing.
Informality dominates, accounting for about 95 percent of jobs.
Agriculture employs three-quarters of the population but suffers from low productivity and limited access to inputs and finance.
Over half a million young people enter the job market annually, while job creation remains weak.
Human development indicators are among the world’s lowest, with fiscal pressures constraining social and development spending.

Growth slowdown since 2016 has coincided with a concentration of investment in extractive, capital-intensive projects rather than labor-intensive manufacturing.
High informality and low agricultural productivity limit employment opportunities for the large share of the population working in agriculture.
Demographic pressure on the labor market is substantial: over half a million young people enter the job market annually.
Public finances are constrained, limiting the government’s capacity to expand social and development spending needed to improve human development indicators.

Dependence on extractive industries (notably capital-intensive LNG projects) that generate limited direct employment.
Agriculture’s low productivity and restricted access to inputs and finance impede structural transformation and rural incomes.
Widespread informality (about 95 percent of jobs) reduces tax bases, worker protections, and opportunities for productivity gains.
Weak human development outcomes limit labor force quality and long-term growth prospects.
Fiscal pressures reduce room for investment in social services and development priorities.

Promote economic diversification away from a narrow extractive-led model toward sectors that can generate more employment.
Foster job-rich growth through policies that support manufacturing and other labor-intensive sectors.
Modernize agriculture by improving productivity and expanding access to inputs and finance for farmers who represent three-quarters of the population.
Improve governance to enhance the efficiency and equity of public spending and investment.
Expand access to finance to support firms, especially small and informal enterprises, to scale and formalize.

Growth Challenges and Policy Priorities in Mozambique, By Can Sever, February 27, 2026.

sipea2026014 — Growth Challenges and Policy Priorities in Mozambique
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