Republic of Mozambique: Selected Issues

This Selected Issues paper focuses on growth challenges and policy priorities in Mozambique. Mozambique stands at a critical juncture in its development trajectory. Mozambique’s economy has slowed sharply since 2016 with two-thirds of the population below the poverty line. The paper addresses gaps in physical infrastructure and human capital, emphasizing fiscal constraints that limit investment in education, health, and connectivity. While over half a million young people enter the job market annually, job creation remains weak, as structural transformation has favored extractive industries over manufacturing. Agriculture, employing three-quarters of the population, suffers from low productivity and limited access to inputs and finance. Informality dominates, accounting for about 95 percent of jobs. Human development indicators are among the world’s lowest, with fiscal pressures constraining social and development spending. In order to tackle Mozambique’s growth challenges, reforms must promote economic diversification, job-rich growth, agricultural modernization, improved governance, and expanded access to finance.