Business opportunities abound for South Africa and Mozambique
22 October 2015
South African businesses and investors have been urged to make the most of the opportunities available in Mozambique, especially in light of the newly discovered gas reserves in the neighbouring country.
The South Africa-Mozambique Business Forum met in the capital, where commitments were made to up cooperation across various fields. The forum was attended by the two countries’ Heads of State and key figures in the business arena.
Photo: President Fillipe Jacinto Nyusi receives wreath fron Minister of Arts and Culture Nathi Mthetwa at Isivivane, Freedom Park
The delegations identified tourism, transport, communications, science and technology as some of the strategic areas of cooperation. However, collaboration in unearthing business potential in energy and mineral resources took centre stage.
“South Africa and Mozambique boast a long standing cooperation in the field of energy.
“The energy cooperation between the two countries is characterised by sharing of energy and power resources, focusing on power plants and related infrastructure undertaken by Eskom and EDM [Electricidade de Moçambique], as well as the natural gas business to advance the development of gas to power projects.
“Mozambique offers great possibilities considering the newly discovered gas reserves. Our Ministers will ensure the implementation of our agreements in the energy sectors, particularly in oil and gas sectors.
“There are opportunities for South African companies to enter the Mozambique hydrocarbons sector in ways beneficial to both countries,” said President Jacob Zuma.
The Mozambican energy sector received an estimated $3.238 billion investment for just five projects investment in 2014. CPI data shows that the sector accounted for 45.6% of total investments approved by the Mozambique Investment Promotion Centre. Investments are said to have reached $7.102 billion for 487 projects.
There have been significant natural gas discoveries in Mozambique's northern offshore Rovuma basin since 2010. Mozambique's Tete province is estimated to have large untapped coal reserves of 25 billion short tons.
The International Energy Agency, however, states that inland transportation and port capacity restraints pose a challenge to Mozambique’s coal production growth in the future.
The International Monetary Fund estimates that coal and natural gas production could potentially increase Mozambique's economic growth rate by two percentage points annually from 2013 to 2023. The IMF also estimates that Mozambique grew by 7% in 2013.
In 2014, total trade between South Africa and Mozambique was recorded just below R44 billion, increasing from R29 billion in 2012. South Africa has emerged as the main trading partner for Mozambique and its main source of foreign direct investments.
Over 300 South African companies have invested in Mozambique and it is now part of the top five of South Africa's trade partners in the region.
President Zuma said the scope to further growth remains, hence they convened the business forum.
Broader economic cooperation
South Africa and Mozambique have two agreements that serve as a framework for economic engagement. The Promotion and Reciprocal Protection of Investments Agreement was entered into in February 2000. It seeks to encourage new South African investments in Mozambique.
The Department of Trade and Industry entered into a Memorandum of Understanding on Economic Co-operation in 2005. Cooperation within the MoU covers a wide spectrum of areas such as technical capacity-building, industry collaboration, spatial development initiative programme implementation and trade facilitation.
Furthermore, the Avoidance of Double Taxation Agreement and the Agreement on One-Stop Border Posts were signed during the last Heads of State Bilateral Economic Forum in September 2007.
The two countries are also working together in the development of five spatial development corridors namely the Maputo Development Corridor, Beira Spatial Development Initiative (SDI), Limpopo Valley SDI, Zambezi Valley SDI and the Nacala Development Corridor.
President Zuma said the initiatives are testaments to the regional integration efforts which are key to Africa's development agenda for intra-Africa trade.
Mozambican President Filipe Jacinto Nyusi said he was happy to partner with South Africa.
“South Africa is our neighbour and we are looking forward to doing business together,” he said.
President Nyusi and his delegation are expected to visit Limpopo on Friday before returning to Mozambique. Limpopo Premier Chupu Mathabatha is expected to welcome the delegation.
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