Extractives and economic diversification in Mozambique: will local content do the trick?

Research Findings - It is unlikely that the extractives sector can any time soon be used to finance visionary transformation strategies aimed at achieving economic diversification. Due to the country’s fiscal situation and delays in developing the offshore natural gas sector, it seems that extractives will not provide additional revenues for at least another decade, if not longer. If the fiscal crisis results in the further deterioration of the provision of public goods and services, the business environment will become worse for the country’s micro, small and medium-sized enterprises. There is the risk that the gap will widen even further between the skills and entrepreneurial capabilities available in the country, and those required by foreign investment projects and their supply chains. Such a prospect does not match well with the expectations that local content policies can provide the silver bullet for diversifying the economy.