Mozambique has been an example of reconciliation and reconstruction after the 1992 peace agreement put an end to a protracted civil war and established a multi-party democracy. The peace agreement also facilitated decisive reforms, progressively paving the way for economic recovery, despite the remaining high levels of poverty.
Today, the country is at an important crossroads.
In the political sphere, the last electoral cycle (2013-2014) marked the resurgence of persistent and important divergences between the Government (Frelimo party) and the opposition, in particular the Renamo.
The objective of promoting a more inclusive political system and putting an end to the cycle of political violence will be key to restoring a broader consensus across society and establishing the necessary conditions for the sustainable development of Mozambique.
Also, as regards the economic and social areas, the discovery of vast gas deposits off-shore and prospects for extensive coal mining should continue to contribute to an increasing flow of foreign investment, expand national revenues and boost the economy. The possibility of Mozambique becoming a middle income country by the end of the next decade is realistic, while the country'sstructural dependence on donors will continue decreasing.
Another crucial challenge is to accompany this economic transformation with a genuine inclusive growth agenda, social stability and reforms aimed at improving the country's governance bottle-necks.
Moreover, Mozambique's current development model continues to be dependent on “mega projects”, which, alone, will not easily address all of the fundamental shortages in terms of infrastructure, energy, human resources and the financial system. In this regard the weakness of Mozambican SMEs and the slow development of the agriculture sector should also be addressed as a matter of priority as they require the definition and implementation of long term policies.
The above mentioned political, economic and social challenges remain important references for EU-Mozambique relations.
The EU remains a significant partner of Mozambique. Together with Member States, the EU contributes approximately two thirds of the country's international aid, estimated at some 20% of the national budget. The EU is also a key trade partner for Mozambique (1st client, 3rd supplier), while EU companies are among the main investors in the country. The US, South Africa and emerging countries such as Brazil and China are also important players in the region.
Mozambique is part of the EU-ACP Cotonou Agreement. The 11th EDF National Indicative Programme (2015-2020) initial allocation amounts to €734m in grants, and will focus on good governance and rural development.
On a regional level, Mozambique should, in the longer term, be one of the largest beneficiaries of the regional integration in the Southern African Development Community (SADC). The country's geographical location is a considerable strength: a large volume of SADC goods transits through Mozambique, along corridors linking Mozambique's ports with neighbouring landlocked countries as well as parts of South Africa.
An Economic Partnership Agreement (EPA) was recently signed by the EU and the SADC region, offering Mozambique duty-free and quota-free access to the EU market.