Why did many Mozambicans remain in poverty despite economic growth and foreign investment?

Mozambique’s struggle with poverty despite periods of economic growth and foreign investment is rooted in a complex history of structural, political, and financial challenges.

• Historical Legacy: The colonial economy was designed to benefit the state and Portuguese settlers, excluding most Africans from skilled or managerial roles. Post-independence efforts to restructure the economy through nationalization were initially unproductive, leading to the collapse of key agricultural and distribution systems.1
• Debt and Financial Instability: The country has faced significant financial crises, including an alarming admission of $2 billion in undeclared debt, a portion of which could not be accounted for. This led to the suspension of aid from the International Monetary Fund and World Bank, which exacerbated existing economic hardships.23
• Structural Vulnerabilities: While the economy has grown through resource exploitation, such as natural gas and hydroelectric power, these sectors have historically had limited immediate impact on the broader population. Furthermore, the economy remains highly vulnerable to natural disasters like droughts and flooding, which frequently disrupt the agricultural sector that employs about four-fifths of the workforce.245