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E.O. 12958: N/A
TAGS: ECON EAID EINV ETRD MZ
SUBJECT: Mozambique - August Economic Digest


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1. This is a brief summary of significant economic
developments in Mozambique during August 2006. We provide
it as a supplement to our other reporting. The items
discussed are:

-- Economic Growth Estimated at 10 percent

-- Oil/Gas Exploration of Zambezi Delta to Begin April 2007

-- Cooking Oil Refinery to Receive USD 2 Million Investment

-- Maputo International Trade Fair (FACIM)

-- Mozambique to Upgrade its Airports in Next Two Years






Economic Growth Estimated at 10 percent
--------------


2. According to Mozambican Prime Minister Luisa Diogo, the
Mozambican economy grew ten percent in the first six months
of 2006 compared to the same period of 2005. This exceeds
the Mozambican government's projected growth rate for 2006
of 8.2 percent. Much of this growth appears to have
occurred in the business sector, which reportedly grew by
22.4 percent between January and May 2006. At the press
briefing to discuss the growth rates, Diogo praised the
government's ability to achieve high growth despite
volatility of oil markets. Responding to criticism that
this high growth has not been matched by equivalent
increases in government services, according to Diogo the
government's policies are providing the desired results, if
not yet at the desired rate. (Note. These growth rates are
estimated from the Mozambican government and do not reflect
final numbers. End Note.)

Oil/Gas Exploration of Zambezi Delta to Begin in April 2007
-------------- --------------


3. Oil and gas exploration of the Zambezi River delta is
scheduled to begin in April 2007, after the conclusion of
environmental impact studies, according to press reports.
The concessionaire, Petronas Carigali Mozambique E&P
(PCMEP), a Malaysian company, will drill at least one well
under an agreement between Petronas and Mozambican ENH

(Empresa Nacional dos Hidrocarbonetos). The results from
this study are expected to be released in June 2007.


4. Exploration of the Zambezi River delta is in addition to
exploration rights already granted for oil and gas
exploration in the Rovuma River Basin. Seven companies,
including the American company Anadarko, currently have
rights to explore blocks within the Rovuma delta, located
near the Mozambican border with Tanzania.

Cooking Oil Refinery to Receive USD 2 Million Investment
-------------- --------------


5. The Mozambican cooking oil refinery FASOL announced on
August 22 that it would be investing USD 2 million into
renovations and upgrades of its Maputo plant. The FASOL
general director, Paulo Carvalho, made this statement on the
margins of the signing of this year's Food for Progress
agreement between the US and Mozambique. Under the FY 2006
agreement, the USG will donate 4500 tons of unprocessed
vegetable oil for sale on the Mozambican market. According
to Carvalho, this agreement will allow FASOL to purchase oil
and increase production by approximately 500%, a critical
increase necessary to respond to market demands.

Maputo International Trade Fair (FACIM)
--------------


6. The forty-second International Trade Fair (FACIM) took
place in Maputo from August 28 through September 3. At the
opening President Guebuza stressed the importance of
Mozambique's business community for the country's
development and urged that it rise to the challenges the

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pending SADC Economic Free Trade Zone will present (note -
the SADC Free Trade Zone comes in force for Mozambique in
2012). In this regard, Guebuza stressed that Mozambique
needs to increase production and improve the competitiveness
of national products. His message echoed the theme of the
Ministry of Industry and Commerce's recently launched
program - Made in Mozambique - which focuses on producing,
promoting and exporting Mozambican products.


7. The 2006 FACIM hosted 530 exhibitors from 13 different
countries, though most were Mozambican participants. One
new participant is a cheese manufacturer located in the
central province of Manica. The new company, Gouda Gold,
has the capacity to produce 1.8 tons of cheese daily and is
planning to export cheese within SADC and to the EU.

Mozambique to Upgrade its Airports in Next Two Years
-------------- --------------


8. The GRM has budgeted USD 135.5 million to rehabilitate
and upgrade its airport infrastructure around the country
over the next two years, according to a government report
released in mid-August. The work includes not only the main
airport in the capital of Maputo, but also airports in
Beira, Pemba, Quelimane, Tete, Vilankulo and Ponta de Ouro
(on the border with South Africa).


9. Mozambique's nineteen airports managed are managed by
the parastatal Airports of Mozambique. In addition, the
country counts 229 airfields, of which ten are military, 61
private and the remainder the property of the state.

Raspolic