KEY RESULTS

• The Enhanced Integrated Framework (EIF) supported the revitalization of Mozambique’s inter-ministerial trade committee – the Inter-Institutional Committee – and its National Trade Facilitation Committee. The EIF also supported preliminary work towards the development of a database on international trade statistics.
• The establishment of international trade statistics data collection and publishing mechanisms, along with capacity development for trade data collection, both supported by the EIF, contributed to building an evidence base for increasing exports and access to international markets in the country. 
• An EIF-supported information-sharing and awareness-raising event on preferential trade agreements and trade diversification opportunities brought together trade-related stakeholders, including micro-, small- and medium-sized enterprises (MSMEs). It inspired the formation of the MozExport Conference, which is now an annual export promotion event run by the Ministry of Industry and Commerce.

Stretching along the Indian Ocean coastline from southern to eastern Africa, Mozambique is endowed with rich arable land, water sources, energy, and mineral resources, including newly discovered natural gas deposits off its coast. The country is strategically located as a gateway to global markets for its bordering landlocked neighbours – Malawi, Zambia, Zimbabwe and Eswatini. 

Mozambique’s main economic sectors are agriculture, mining and extractive industries, energy, transport and logistics, as well as tourism. There is also a growing manufacturing and industrial sector focused mainly on textiles, cement and agro-processing. Mozambique also provides services, including financial, telecommunications and retail services. Of its population of around 33 million, 70% are mainly employed in agriculture, primarily in small-scale or subsistence farming.

The country is a member of the Southern African Development Community and, in 2023, ratified the African Continental Free Trade Area (AfCFTA). It receives preferential treatment under the African Growth and Opportunity Act, enabling duty-free entry of a wide range of Mozambican products to the United States of America. Mozambique also benefits from reduced tariffs or duty-free entry into the European Union under the Everything but Arms arrangement. Additionally, it has a bilateral trade agreement with Malawi. 

Despite its prospects, Mozambique’s economic growth has been hampered by a range of challenges, such as the 2019 Cyclones Idai and Kenneth, which exacerbated food insecurity and caused extensive damage to infrastructure. Growing resource conflicts in the northern provinces of Cabo Delgado have also heightened insecurity.

The EIF has played a significant role in supporting Mozambique’s trade-related priorities by strengthening institutions for trade policy development to foster economic progress and promote sustainable development.

Planning for progress

In 2004, the Integrated Framework – the EIF’s predecessor – supported Mozambique’s first Diagnostic Trade Integration Study (DTIS). It was entitled "Removing Obstacles to Economic Growth in Mozambique", with the United States Agency for International Development (USAID) as the main implementing partner. In 2014, the Government of Mozambique embarked on the development of a revised DTIS, conducted by the UN Conference on Trade and Development (UNCTAD) and financed by the EIF. Validated in 2015, the DTIS Update (DTISU) addressed important changes in the intervening decade, such as economic progress, the discovery of natural resources, new national strategies and trade negotiations.

A National Implementation Unit (NIU), established within the Ministry of Industry and Commerce in 2012, together with representatives from the Ministry of Economy and Finance and the private sector, supported the DTISU development process. The NIU coordinated consultations with private sector stakeholders in six provinces on the potential of trade for job creation, MSME development, and linkages to economic growth. The NIU also conducted documentary and statistical research and coordinated the discussion of successive drafts of the DTISU with government officials, civil society and the donor community.

The DTISU revealed a weak record in job creation, with unemployment at 27% at the time and the formal economy accounting for only one-third of employment. It also highlighted Mozambique’s comparative advantage to other least developed countries due to its geographic location, natural resources (including natural gas, coal, titanium and hydropower), underdeveloped agricultural land, fisheries, and its people. The DTISU recommended increasing Mozambique’s productive capacity in order to exploit new trade opportunities, create jobs and reduce poverty. This was to be achieved by identifying a trade and investment policymaking roadmap, developing a policy on trade in selected services, and conducting an assessment for further progress on trade facilitation.

Enhancing trade policy coordination 

The EIF further supported the establishment of the National Implementation Arrangement (NIA) for trade policy coordination, comprising a National Steering Committee (NSC), an EIF Focal Point and the EIF Donor Facilitator in Mozambique. The EIF NIA was established to ensure the long-term sustainability of Aid for Trade initiatives beyond EIF funding. More specifically, the NSC’s main functions were overall monitoring of the EIF process and activities, including mainstreaming trade into national development plans, ensuring coordination and buy-in from relevant government and non-governmental institutions, and ensuring that trade-related issues were brought to the attention of donors. 

A second phase of institutional capacity strengthening under the EIF commenced in 2022. Project staff were hired to revitalize the NIU under the National Director of Foreign Trade, serving as the EIF Focal Point. The NIU is based in the Ministry of Industry and Commerce’s National Directorate of Trade, taking on the role of assisting the EIF Focal Point in coordinating                                                                                                                                                                                                             the NSC’s functions. This has led to the resumption of NSC meetings, with representatives from 30 government agencies and departments. The meetings effectively revitalized the NSC’s commitment to, and ownership of, the NIU and its oversight of the national trade agenda. During the same period, government–donor coordination benefitted from the active participation of USAID as the EIF Donor Facilitator.

The NIU’s mandate extended to providing technical, logistical and secretariat support to the National Trade Facilitation Committee (NTFC), established by the Government of Mozambique in 2018. The NTFC forms part of the implementation of the World Trade Organization Trade Facilitation Agreement and its role is to simplify, harmonize, standardize, and make trade procedures more transparent. The NIU’s support to the NTFC also included cooperation with the EU "PROMOVE Comércio" Technical Assistance for Trade Facilitation Programme in Mozambique (2019-2020). This programme aimed to reinforce government capacity to implement trade facilitation reforms and address barriers to trade.

The EIF also supported the 2022 revitalization of an inter-ministerial trade committee – the Inter Institutional Committee – chaired by the Permanent Secretary of the MIC. The committee began processes to develop, amongst others, an external trade directory, a national export strategy, a guide to trade negotiations and a toolkit on access to markets.

A "coffee exhibition", an event organized by the NIU at the 57th Edition of the Maputo International Fair (FACIM 2022), brought together 170 trade-related stakeholders, the majority of them MSMEs. The NIU’s "coffee exhibition" event inspired the formation of the MozExport Conference, which is now an annual export promotion event run by the Ministry of Industry and Commerce. Women representing different trade organizations and government institutions, including formal and informal traders and potential exporters, were selected for training during FACIM 2022. They are now more familiar with trade-related topics.

Past lessons and actions informing the future

The EIF’s sustained support to Mozambique for over a decade contributed to strengthening the country’s ability to engage in international trade negotiations. It also effectively built capacity within the MIC and financed the country's participation in international negotiations, including accession to the AfCFTA. Additionally, the partnership between the EIF and the Government of Mozambique enabled the integration of trade into sector strategies for agriculture, fisheries, tourism and energy. Mozambique also successfully leveraged support from USAID to the MIC to revise the Mozambican Trade Policy and Strategy. 

While the period from 2012 to 2022 faced some challenges around staffing, the months from March 2022 to the conclusion of the second phase of trade institutional capacity building in August 2023 produced key results. These achievements were built on earlier incremental but sustainable inputs that opened the pathway to revitalizing institutional trade coordination mechanisms, including the National Trade Facilitation Committee. In those final months, a functional NIU supported international trade inquiries at three border posts, collected international trade statistics, and conducted capacity-building sessions on trade data collection.

Mozambique provides a valuable lesson on the possibilities of what can be achieved in a short timeframe towards supporting trade diversification.