Chinese investment allows Mozambique to become a car manufacturer

Mozambique is expected to become a car manufacturing and exporting country this year following an investment by China Tong Jian Investment, which is also attracting other companies in the sector to Mozambique.

Danilo Nalá, the director general of the Office for Economic Areas with Accelerated Development (Gazeda), told Mozambican newspaper Correio da Manhã that investors form Saudi Arabia and Bahrain were interested in investing in tyre manufacturing in the city of Matola, on the outskirts of Maputo.

The tyre factory, which will be part of the project for the car assembly plant in Matola funded by Chinese investors, as of April 2013, may either involve acquisition of the technically bankrupt company Mabor or setting up a new unit from scratch.

According to the newspaper, “there is a lot of interest from Asia in re-launching the tyre industry,” in Mozambique.

Construction of the China Tong Jian Investment factory, costing an estimated US$200 million, is the result of an agreement the Mozambican government signed with the company in 2010.

The agreement outlines that, at an initial stage, the facility should produce around 10,000 vehicles per year, 30 percent of which for the Mozambican market and the remainder for export.

Production is then outlined to be increased to 30,000 units per year and, later, to 100,000 units.

The factory, which is located in the Machava area of Matola, in the former workshops of Mozambican state port and rail manager Portos e Caminhos de Ferro de Moçambique, will produce buses and light passenger vehicles of the Matchedje brand.

Matchedje is the name of the village in the Sanga district of Niassa province, which hosted the 2nd Congress of the Mozambique Liberation Front (Frelimo), which is the political party currently in power in the country.

China Tong Jian Investment is based in Shanghai and its largest shareholder is New Zealand’s Morgan Foundation and its business focuses on promoting China-Africa relations.

Industry and the agro-industrial sector are the Mozambican government’s focus to create almost 216,000 jobs in 2013, whilst the economy is expected to post one of the world’s highest rates of growth.

The Mozambican Economic and Social Programme for 2013, which was approved at the end of 2012, sets out the country’s macroeconomic and social targets, and for this year outlines solid economic growth driven above all by the emerging extractive industry, which is expected to grow by 18.6 percent.

The financial sector is projected to grow 17.7 percent and transport by 14.1 percent, reflecting coal exports (7.5 million tons), but the government is also expecting robust performance in sectors such as real estate, tourism and industry.

The government’s projections point to growth of 8.4 percent this year, with inflation of 7.5 percent.

The targets are in line with those of the International Monetary fund (IMF), but are some way from those of the EIU (8 percent for growth and 5.5 percent for inflation).