Moody’s expects floods to cut growth

The international ratings agency Moody’s on 9 February stated that the heavy rains and flooding that have hit the centre and north of Mozambique are likely to cut between 0.2 and 0.5 per cent from its 2015 forecast of 7.5 per cent growth in GDP.

About 160,000 people were severely affected by the flooding in the central province of Zambezia with the reported death toll reaching 159.

The agency outlined the scale of the destruction, pointing out that “continued rainfall has caused severe damage to the Zambezi and Licungo River basin regions’ infrastructure, especially in Zambezia province to the north where almost twenty per cent of the country’s population resides. Damage to roads and bridges has cut access by land to almost seventy per cent of Zambezia province. Downed power lines and electricity towers have left several parts of northern Mozambique without power. Water and sanitation facilities, regional telecommunication systems as well as thousands of houses are damaged”.

It pointed out that the insurance sector is relatively underdeveloped, leading to “a sizable portion of the damage bill for public infrastructure falling on the government”.

The analysis also highlights the resulting problems caused by delays to investment in the extractive industries and the development of the Special Economic Zone in Mocuba district in Zambezia.

In addition to slower growth, the analysis also points to an increase in government deficit and debt.