Maputo, Mozambique, 14 March – The Mozambican economy is growing far above the regional average due to international investors continuing to focus on the country, but Mozambique has to improve its business climate further, according to the survey office of Portuguese bank BPI.

“The main catalyst for Mozambique’s performance was its capacity to keep investments in the country despite the adverse global context, which shows the confidence foreign investors have in the country’s future development,” said BPI in its most recent report on the Mozambican economy.

According to the latest projections the economy grew by 4.5 percent in 2009, slowing against 2008 (6.8 percent) and the average over the last three years (7.5 percent).

However performance is much better than the average for sub-Saharan Africa last year (1.3 percent) and the same is expected to happen this year (projection of 4.1 percent).

Despite the level of investment some projects inked to mining resources were brought to a halt and the steel making sector was penalised by the closure of a factory and suspension of construction of another by ArcelorMittal.

However, “in contrast, in the same area a metallurgical unit was opened that required investment of US$50 million, whose investors are from South Africa and China,” with 40 percent each, the remainder being in Mozambican hands.

This unit, it added, has a production capacity of 200,000 tonnes and is focused on exports to South Africa, China and Turkey.

The Mozambican Centre for Investment Promotion (CPI) in 2009 approved projects valued at a total of US$5.8 billion, which created 125,000 jobs in several sectors, including agri-forestry, hotels and tourism.

The director of the CPI, Mahomed Rafique, said Portugal, India, Mauritius and Norway were some of the countries that invested in agri-forestry, especially in plantations for paper production.

The mining and oil and gas sectors in Mozambique are this year due to receive investments of over US$1.3 billion, according to projections announced in February by Mozambique’s Mining Resources minister, Esperança Bias.

Mozambique improved its classification in the latest Doing Business list from the World Bank, mainly thanks to greater ease in starting a business, “which is important for attracting investors.”

However, the position “is still low” (135th), “which reflects a high level of bureaucracy,” said the BPI bank survey office.

Despite the international economic and financial crisis of 2008 and 2009, the country’s banking system remained strong.

“The indicators of financial solidity show that the financial system is in good health, although the International Monetary Fund has warned of the need to create a contingency plan for the sector, to boost the authorities’ capacity to deal with banks with financial problems,” said the report.

The “strong rate of growth” of the Mozambican economy was driven by the maintenance of investment projects by foreign investors, but also by “the support given by fiscal policy and dynamic internal demand.,” it added.

In terms of sectors, the main contribution came from agricultural production, thanks “to efforts made by the authorities to develop the sector and the favourable weather conditions.”

As well as this, it said, “the fact that the Mozambican economy is still in an initial stage of development and the existence of several mega-projects in the country also increases the need for technical assistance and services to be provided to companies due to a lack of specialised staff, which contributed to the great dynamism of the balance of services.”

Projection for the Mozambican economy point to increased growth in 2010 (5.5 percent) and 2011 (6 percent).