What are the prospects for Mozambique to diversify its economy on the back of ‘local content’?
In recent years, Mozambique has made international headlines for the significant hydrocarbon deposits found offshore. These have increased the country’s extractive resource endowments, in addition to its mining and onshore natural gas sector.
It is expected that these industries will contribute to economic diversification and social development, not least by means of procuring locally produced goods and services and hiring Mozambicans.
A key factor to achieve this is building domestic capital—in people, institutions, and infrastructure. Looking at the policy environment, this paper argues that the prospects are extremely challenging for ‘local content’ to provide the link between the extractive industries and the economic diversification of the local economy.
The country urgently needs institutional changes that support broader and rural-focused private sector development.