Mozambique Approves $5 Billion Investment Projects Marking Economic Recovery and Energy Transformation

The Mozambican government has approved 115 investment projects valued at about US$5 billion in the first half of 2025, with the potential to create 17,000 jobs, signaling a dramatic turnaround for the Southern African nation after years of economic and political challenges.

Prime Minister Benvinda Levi announced the figures on August 30 at the closing of the 60th Maputo International Fair (FACIM), highlighting the country’s economic resilience and growing appeal to international investors despite facing significant headwinds from climate shocks, post-election tensions, and ongoing security challenges in the northern provinces.

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Green Energy Revolution Takes Center Stage

The largest project is Green Energy Mozambique, a US$3 billion industrial park in Sofala province that represents the centerpiece of the country’s ambitious energy transition strategy. The complex is expected to generate 10,000 direct jobs and boost production of key materials including aluminum, steel, cement, batteries, and solar panels, positioning Mozambique at the forefront of Africa’s renewable energy manufacturing sector.

This massive industrial development aligns with Mozambique’s broader $80 billion energy transition strategy announced by President Filipe Nyusi at COP28, which aims to leverage the country’s vast renewable resources to position it as a sustainable investment destination and regional energy hub by 2050.

The Green Energy Mozambique project reflects growing international confidence in the country’s renewable energy potential. With 23,000 GW of solar potential and global horizontal irradiation varying between 1,785 and 2,206 kWh/m²/year, Mozambique offers some of the most attractive conditions for solar development in Africa.

Foreign Investment Surge Demonstrates Confidence

More than 88% of total investment was directed to Sofala province, far ahead of the capital Maputo, reflecting a strategic shift toward developing the country’s industrial corridors and leveraging its extensive coastline and deep-water port infrastructure.

Foreign capital accounted for US$3.2 billion of the total investment, with contributions from investors spanning 25 countries. The funds mainly target industry, transport, communications, and services sectors, demonstrating international confidence in Mozambique’s economic prospects despite ongoing challenges.

According to UNCTAD data, Mozambique ranked fourth in Africa for foreign direct investment inflows in 2024, reaching US$3.55 billion, up from US$2.5 billion in 2023 when it placed sixth. This significant improvement positions the country among Africa’s most attractive investment destinations.

The investment surge comes as Mozambique’s national electrification program has achieved remarkable progress, with electricity access rates rising from 31% in 2018 to 60% in 2024, according to Electricidade de Moçambique (EDM). This improvement in basic infrastructure has enhanced the country’s appeal to industrial investors.

Economic Recovery After Multiple Challenges

Prime Minister Levi said the results show the Mozambican economy is rebounding after climate shocks and post-election tensions, with the private sector driving growth. The investment approval figures represent a significant achievement considering the challenges Mozambique has faced, including the aftermath of the $2 billion hidden debt scandal that rocked the country in 2016, devastating cyclones, and ongoing insurgency in the gas-rich northern Cabo Delgado province.

The country’s GDP growth is projected at 3% for 2025, recovering from 1.8% in 2024 and building on the 5.4% growth achieved in 2023. While modest, this trajectory represents steady progress for an economy that has weathered significant storms.

Strategic Policy Reforms Drive Investment Climate Improvement

The investment boom reflects the success of comprehensive reforms implemented by the Mozambican government. In recent years, Mozambique has pursued systematic reforms to attract capital, including the creation of the Investment and Export Promotion Agency (APIEX) and the adoption of a new investment law in 2023.

The revised investment law (nr. 8/2023) establishes new tax incentives for businesses, includes provisions to facilitate the transfer of land use rights (DUATs), and implements reforms specifically designed to encourage foreign direct investment. The country now offers comprehensive tax and customs incentives, along with special economic zones focused on agriculture, aquaculture, and less-developed regions.

These reforms have streamlined the investment process significantly. Foreign direct investment up to USD 250,000 no longer requires prior authorization from the Bank of Mozambique and only needs registration with commercial banks handling the transactions, reducing bureaucratic barriers that previously deterred smaller investors.

Massive Infrastructure Development Program

The investment approvals are supported by major international funding commitments that will provide the infrastructure foundation necessary for sustained economic growth. The World Bank recently approved the $100 million ASCENT Mozambique project, supplemented by an additional $31 million from the Mozambique Energy for All Multi-Donor Trust Fund, aimed at accelerating sustainable energy access across the country.

This project will provide new electricity access to nearly one million people, offer improved cooking solutions to 90,000 individuals, and connect 68 schools, clinics, and other public facilities over six years. Such infrastructure development is crucial for supporting the industrial expansion envisioned in the approved investment projects.

Additionally, the African Development Bank provided $2.5 million through its Sustainable Energy Fund for Africa (SEFA) to develop renewable energy resources, including feasibility studies for solar floating power plants and energy battery storage systems across 10 sites.

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Energy Sector Transformation Drives Growth

The energy sector represents the cornerstone of Mozambique’s economic transformation strategy. The country has already commissioned 125 MW of solar power plants under public-private partnerships, with 60 MW already connected to the national grid through projects like Mocuba and Metoro.

Major international energy companies are making substantial commitments to Mozambique’s energy future. The consortium of EDF, TotalEnergies, and Sumitomo Corporation was selected to develop the massive 1,500 MW Mphanda Nkuwa hydropower project on the Zambezi River, representing one of the largest renewable energy investments in Southern Africa.

This project will contribute significantly to regional energy security while establishing Mozambique as a green energy hub for southern African countries. The development reflects the growing international recognition of Mozambique’s strategic importance in the regional energy landscape.

Natural Gas Resources Complement Renewable Strategy

While renewable energy dominates the current investment focus, Mozambique’s vast natural gas reserves continue to attract significant international attention. The country possesses 180 trillion cubic feet of natural gas reserves, representing the third-largest reserves in Africa.

The Mozambique LNG project, despite facing security challenges in Cabo Delgado province, remains a cornerstone of the country’s long-term economic strategy. The project, which received a Final Investment Decision of US$20 billion in 2019, involves plans for approximately 65 trillion cubic feet of recoverable natural gas through a two-unit liquefaction project with expansion capacity of up to 43 million tonnes per annum.

The European Union’s consideration of natural gas as a transitional green energy source has further enhanced the investment attractiveness of Mozambique’s gas sector, potentially opening new avenues for sustainable financing of gas-to-power projects.

Financial Support Mechanisms Strengthen Investment Appeal

Prime Minister Levi highlighted the launch of a US$250 million mutual guarantee fund during the FACIM fair to support economic recovery and expand private sector participation. This fund represents a crucial financial mechanism to de-risk investments and encourage broader private sector engagement in the country’s development priorities.

The guarantee fund complements other international financial support mechanisms, including the IMF’s $456 million program approved in May 2022, which aims to reinforce Mozambique’s economic recovery while addressing challenges related to debt sustainability and encouraging good governance.

The country is also working with the U.S. Millennium Challenge Corporation (MCC) on a second compact valued at approximately $500 million over five years, demonstrating sustained international confidence in Mozambique’s reform trajectory.

Regional Integration and Strategic Location

Mozambique’s geostrategic location as the gateway to landlocked countries in Southern Africa continues to attract logistics and transport investments. The country’s extensive coastline with deep-water ports, including the strategic ports of Maputo, Beira, and Nacala, positions it as a critical hub for regional trade flows.

The development of industrial corridors, particularly the Nacala corridor mentioned in the government’s energy strategy, represents a key component of the country’s approach to integrated development that combines infrastructure, energy, and industrial development in coordinated packages.

Domestic investment, while smaller at US$144 million, reflects growing confidence among local entrepreneurs and businesses in the country’s economic trajectory. This domestic participation is crucial for ensuring that economic growth benefits are broadly distributed across Mozambican society.

Challenges and Risk Mitigation Strategies

Despite the positive investment momentum, Mozambique continues to face significant challenges that require careful management. The ongoing insurgency in Cabo Delgado province, while primarily affecting the northern regions, continues to create security concerns that impact investor confidence, particularly in the extractive industries.

The country remains classified as being in debt distress, although its debt is assessed as sustainable on a forward-looking basis according to the African Development Bank. Poverty remains high at an estimated 74.5% in 2023, with about 24 million people living in poverty, highlighting the critical importance of ensuring that new investments translate into broad-based economic benefits.

Climate vulnerability represents another ongoing challenge, with Mozambique ranking among the most climate-vulnerable countries in the world. However, the focus on renewable energy and climate-resilient infrastructure development in the current investment wave demonstrates the government’s commitment to building resilience while pursuing growth.

Future Outlook and Investment Prospects

The achievements announced during FACIM 2025 align with Mozambique’s strategy to strengthen its appeal to international investors while building local capacity and ensuring inclusive economic growth. The combination of policy reforms, international financial support, and major infrastructure investments creates a foundation for sustained economic expansion.

The success of the Green Energy Mozambique project and other major investments approved in the first half of 2025 could serve as catalysts for additional investment flows, particularly if the projects demonstrate successful implementation and positive returns for investors.

Looking ahead, Mozambique’s commitment to achieving universal energy access by 2030, combined with its vast renewable energy potential and strategic location, positions the country to play an increasingly important role in Africa’s economic development and energy transition.

The government’s ability to maintain political stability, continue implementing reforms, and effectively manage the security challenges in the north will be crucial factors determining the success of this ambitious investment program and the country’s broader economic transformation goals.

The investment approvals announced in H1 2025 represent more than just economic statistics – they signal Mozambique’s emergence as a serious contender in Africa’s race for sustainable development and energy leadership, offering hope for millions of citizens seeking prosperity after years of adversity.

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By: Montel Kamau

Serrari Financial Analyst

1st September, 2025