Eco­nomic light dim­ming

Finweek English Edition - - Economic Trends & Analysis - HOWARD PREECE

MOZAM­BIQUE – the “mini-Tiger” of sub-Sa­ha­ran Africa be­tween 1992 and 2007 – has run into a sharp slow­ing of its eco­nomic growth. Stan­dard Bank says: “Eco­nomic ac­tiv­ity in that coun­try slowed to 3,5% year-on-year in the first quar­ter of 2008 from 10,3% in the pre­ced­ing three months.” The bank adds: “The sec­ondary sec­tor, which largely en­com­passes in­dus­try, was the key lag­gard.

“The dis­mal per­for­mance of the sec­tor was due to the 9% year-on-year con­trac­tion of the sec­ond largest sec­tor af­ter agri­cul­ture – man­u­fac­tur­ing – and the 10,4% de­cline in the elec­tric­ity and wa­ter sec­tor.”

Stan­dard com­ments: “Main­te­nance work at an im­por­tant SA sub-sta­tion – Apollo – and the re­cent slow­ing de­mand from Mozam­bique’s largest mar­ket for elec­tric­ity, Eskom, ex­plains the elec­tric­ity and wa­ter sec­tor’s de­cline. Eskom asked its main cus­tomers, in­clud­ing Mozal, to cut their elec­tric­ity con­sump­tion by 10% ear­lier this year.”

Mozal is an alu­minium smelter near Ma­puto con­trolled by BHP Bil­li­ton but in which SA’s In­dus­trial De­vel­op­ment Cor­po­ra­tion has a more than 20% stake. The slow­down in elec­tric­ity sup­ply from Eskom to Mozal has had a neg­a­tive ef­fect on Mozam­bique’s in­dus­trial pro­duc­tion. It also shows there are two-way im­ports and ex­ports of power be­tween SA and Mozam­bique.

Stan­dard com­ments: “The poor per­for­mance over­all of Mozam­bique’s man­u­fac­tur­ing in­dus­try this year has been cen­tral to the de­clin­ing eco­nomic growth rate as a whole.”

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