## Growth Challenges and Policy Priorities in Mozambique

_Selected Issues Papers, February 27, 2026_

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**Canonical URL:** [Growth Challenges and Policy Priorities in Mozambique](https://www.imf.org/en/publications/selected-issues-papers/issues/2026/02/27/growth-challenges-and-policy-priorities-in-mozambique-574372)

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## Bibliographic details
- Authors: Can Sever
- Published: February 27, 2026
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229039642.018

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### Overview
- 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.

### Key Findings
- 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.

### Constraints to Inclusive, Job-Rich Growth
- 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.

### Policy Priorities and Recommendations
- 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.*

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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2026/02/27/growth-challenges-and-policy-priorities-in-mozambique-574372_