Economic light dimming
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.”