Industry Trend Analysis - Rewards Tied To Commodities Infrastructure In High-Risk Market - SEPT 2017

BMI View: Mozambique will remain one of the riskiest markets to develop infrastructure in SSA, with investors wary of ongoing macroeconomic and political instability , lack of transparency and an overall weak business environment when compared regionally . Significant investment opportunities over coming years will focus on the development of the nascent gas industry, with several high-value, large-scale projects in the pipeline to develop the untapped reserves .

Risk/Reward Snapshot
Mozambique and SSA Region Infrastructure Risk/Reward Index
Scores out of 100, higher score = more attractive market. Source: BMI

Global and Regional Ranks

  • Regional rank (out of 18): 15

  • Global rank (out of 105): 86

Key Features and Latest Updates

  • Ongoing macroeconomic and political instability is keeping Mozambique as one of the riskiest construction markets to operate in Sub-Saharan Africa (SSA), with the country's debt load mounting and spending cuts stoking social unrest. At 9.7 out of 100, its score for the Country Risks pillar in our Infrastructure Risk/Reward Index is above only Sudan, and well below the regional average of 23.3.

  • Its performance in the Industry Risks pillar is also weak, with the score of 23.8 below the SSA average of 30.2. An acute lack of skilled labour and weak judicial system are the largest deterrents to businesses, while the entrenched position of Portuguese firms drawing on historical ties continues to crowd out competition.

  • As one of the lowest-income economies in the world and with a small urban population, Mozambique offers few investment opportunities across the wider construction market despite its yawning infrastructure deficit. It scores 49.2 for Country Rewards, below the SSA average of 50.7.

  • The largest opportunities within the construction sector will stem from the country's vast untapped gas reserves, with export terminals as well as supporting infrastructure needing to be constructed. The high value and substantial scale of these projects is boosting Mozambique's Industry Rewards score to 60.6 out of 100, the only pillar in our Index where the market ranks above the regional average.

Risk/Reward Matrix Breakdown
Mozambique and SSA Region Infrastructure Risk/Reward Index By Component
Scores out of 100, higher score = more attractive market. Source: BMI