Building Domestic Value Added Key to Leveraging Foreign Investment in Mozambique, Says Economist
Building Domestic Value Added Key to Leveraging Foreign Investment in Mozambique, Says Economist
When foreign direct investment (FDI) is limited to resource extraction, it becomes problematic and creates an "economic enclave" with weak connections to other sectors, limiting diversification and leaving the economy vulnerable to shocks, Clésio Foia told Sputnik Africa.
Key points:
🟠Extractive projects are capital-intensive (financial, human, equipment), meaning they absorb little labor and have a limited transformative effect on the economy.
🟠In 2024, Mozambique's FDI was about $3.25 billion (15.4% of GDP), yet GDP grew only 2.1%, while public debt reached 71.8% of GDP.
🟠Excessive reliance on foreign financing creates vulnerabilities: commodity price shocks, fiscal risk, and profit repatriation.
🟠The decisive indicator should be domestic value added per dollar of foreign investment.
Subscribe to @sputnik_africa
