The official currency is the New Metical (as of November 2016, 1 USD is roughly equivalent to 75 New Meticals), which replaced old Meticals at the rate of a thousand to one. The old currency was redeemable at the Bank of Mozambique until the end of 2012. The US$, South African rand, and recently the euro are also widely accepted and used in business transactions. The minimum legal salary is around US$60 per month. Mozambique is a member of the Southern African Development Community (SADC). The SADC free trade protocol is aimed at making the Southern African region more competitive by eliminating tariffs and other trade barriers. The World Bank in 2007 talked of Mozambique’s ‘blistering pace of economic growth’. A joint donor-government study in early 2007 said ‘Mozambique is generally considered an aid success story.’ The IMF in early 2007 said ‘Mozambique is a success story in Sub-Saharan Africa.’ Yet, despite this apparent success, both the World Bank and UNICEF used the word ‘paradox’ to describe rising chronic child malnutrition in the face of GDP growth. Between 1994 and 2006, average annual GDP growth was approximately 8%, however, the country remains one of the poorest and most underdeveloped in the world. In a 2006 survey, three-quarters of Mozambicans said that in the past five years their economic position had remained the same or become worse.
The resettlement of civil war refugees and successful economic reform has led to a high growth rate: the country enjoyed a remarkable recovery, achieving an average annual rate of economic growth of 8% between 1996 and 2006 and between 6–7% from 2006 to 2011. The devastating floods of early 2000 slowed GDP growth to 2.1% but a full recovery was achieved in 2001 with growth of 14.8%.. Rapid expansion in the future hinged on several major foreign investment projects, continued economic reform, and the revival of the agriculture, transportation, and tourism sectors. In 2013 about 80% of the population was employed in agriculture, the majority of whom were engaged in small-scale subsistence farming which still suffered from inadequate infrastructure, commercial networks, and investment. However, in 2012, more than 90% of Mozambique’s arable land was still uncultivated.
In 2013, a BBC article reported that, starting in 2009, Portuguese had been returning to Mozambique because of the growing economy in Mozambique and the poor economic situation in Portugal.
More than 1,200 state-owned enterprises (mostly small) have been privatised. Preparations for privatisation and/or sector liberalisation are underway for the remaining parastatal enterprises, including telecommunications, energy, ports, and railways. The government frequently selects a strategic foreign investor when privatising a parastatal. Additionally, customs duties have been reduced, and customs management has been streamlined and reformed. The government introduced a value-added tax in 1999 as part of its efforts to increase domestic revenues. Plans for 2003–04 include Commercial Code reform; comprehensive judicial reform; financial sector strengthening; continued civil service reform; and improved government budget, audit, and inspection capability. Further political instability resulting from the floods left thousands homeless, displaced within their own country.
Mozambique’s economy has been shaken by a number of corruption scandals. In July 2011, the government proposed new anti-corruption laws to criminalise embezzlement, influence peddling and graft, following numerous instances of the theft of public money. This has been endorsed by the country’s Council of Ministers. Mozambique has convicted two former ministers for graft in the past two years.
Mozambique was ranked 116 of 178 countries in anti-graft watchdog Transparency International’s latest index of global corruption. According to a USAID report written in 2005, “the scale and scope of corruption in Mozambique are cause for alarm.”
In March 2012, the government of the southern Mozambican province of Inhambane uncovered the misappropriation of public funds by the director of the Provincial Anti-Drugs Office, Calisto Alberto Tomo. He was found to have colluded with the accountant in the Anti-Drugs Office, Recalda Guambe, to steal over 260,000 meticais between 2008 and 2010.
The government of Mozambique has taken steps to address the problem of corruption, and some positive developments can be observed, such as the passages of several new anti-corruption bills in 2012.
In 2012, large natural gas reserves were discovered in Mozambique, revenues which have the potential to dramatically change the economy.