Mozambique State Revenue Up 10.3%, PMI Hits 2022 High, Audits Uncover 10.2bn Meticais

Mozambique's economic week was defined by four headline developments: a 10.3% rise in state revenue through September, driven by value-added tax collection; a rebound in business activity, with the PMI reaching its highest level since April 2022; the identification of 10.2 billion meticais through audits of the extractive sector; and an international study projecting a potential US$324 million addition to Mozambique's GDP over ten years from artificial intelligence adoption.

State Revenue Rises 10.3%, but Public Investment Executes Only 26%

State revenue increased 10.3% in the first nine months of 2026, reaching 291.1 billion meticais — 27.2 billion meticais more than in the same period a year earlier — according to the third-quarter review of the Economic and Social Plan and State Budget (PESOE). Growth was driven primarily by net VAT collection, which rose 48.9% to 81.7 billion meticais, accounting for approximately 98.6% of the net increase in total revenue. By contrast, corporate income tax (IRPC) fell 3.8% to 74.1 billion meticais, while public expenditure declined 7% to 292.2 billion meticais, equivalent to 55% of the updated budget.

Despite the improvement in revenue collection, public investment remained constrained by weak execution of external resources, reaching only 29.2 billion meticais — equivalent to 26.2% of the annual allocation of 111.4 billion meticais. Domestically financed investment achieved an execution rate of 44.8%, while the external component stood at 18.1%, largely owing to low disbursement levels from cooperation partners. Personnel expenditure absorbed 163.4 billion meticais, around 56% of total spending, and central government debt rose to 1.138 trillion meticais in September, with the domestic component accounting for 50.4% of the total — highlighting the growing pressure of domestic borrowing on public finances.

PMI Hits Highest Since 2022, but Recovery Fails to Lift Employment

Mozambique's business activity recovered in October, with the Standard Bank Purchasing Managers' Index (PMI) rising from 50.2 points in September to 52.7 points — the highest level since April 2022. According to the report compiled by S&P Global, private sector operating conditions improved for the fourth consecutive month, driven by new orders growing at their fastest pace since June 2021. For the first time in more than two years, all five sectors tracked by the survey simultaneously recorded an increase in demand, with construction standing out, while purchases of raw materials and other inputs reached their highest rate of expansion since the survey began in March 2015.

Despite the buoyancy in orders, output rose only marginally and employment fell for the third time in the past four months, reflecting financial difficulties, limited access to credit, and supply-side constraints. Input costs also rose at their fastest rate since mid-2022, pressured by fuel, transport, and import prices. Even so, approximately 77% of surveyed firms expect to increase production over the next 12 months, in a context of favourable expectations linked to liquefied natural gas projects. Standard Bank Mozambique's chief economist, Fáusio Mussá, said these projects could sustain demand for goods and services, though the decline in employment and ongoing financial constraints continue to expose fragilities in the economic recovery.

Approximately 77% of surveyed firms expect to increase production over the next 12 months, in a context of favourable expectations linked to liquefied natural gas projects.

Extractive Sector Audits Identify 10.2 Billion Meticais

Audits conducted by the Tax Authority (AT) on extractive sector companies identified approximately 10.2 billion meticais — equivalent to 137.4 million euros — between January and September 2026, according to a report released by the institution. The figure represents amounts identified during inspection activities and does not necessarily mean the full sum has been collected. Over the same period, revenue from megaprojects grew 84% to approximately 14 billion meticais, of which 11.4 billion meticais originated from the petroleum sector and 2.5 billion meticais from mining. The AT also reported that collection of extractive industry-specific taxes rose 103%, with mining activity accounting for around 86% of this component.

As part of its expanded oversight activities, the AT monitored three international ruby auctions held between January and July, which generated US$83.73 million in sales and US$8.07 million in mining production tax. Monitoring visits were also conducted at 30 projects in the provinces of Cabo Delgado, Niassa, Nampula, and Manica, with the aim of overseeing company operations and strengthening tax controls. The audits were conducted with technical assistance from the Taxation for Inclusive Development (TEDI) project and the African Tax Administration Forum (ATAF). However, the information released does not specify how much of the 10.2 billion meticais identified has been effectively collected, remains under collection, or is under dispute — a distinction necessary to assess the financial impact of the inspection activities.

Artificial Intelligence Could Add US$324 Million to GDP Over Ten Years

Artificial intelligence could increase Mozambique's GDP by US$324 million over ten years, according to estimates from the Ayre Commonwealth Youth AI Readiness Index 2026. The study, produced by the Ayre Think Tank, places Mozambique 44th among 56 countries assessed, with a score of 38.9 out of 100 — below the readiness threshold of 53 points. Among the principal obstacles identified are limitations in access to technological infrastructure: only 36.9% of the population has access to electricity and approximately 35% uses the internet. The report also highlights labour market challenges, with 80.5% of employed young people living in poverty and only 0.3% of workers aged 15 to 24 employed in occupations with significant exposure to generative AI.

Despite these constraints, the study identifies relevant economic potential for a country with approximately 9.7 million young people aged 15 to 29, estimating a GDP-level increase of US$156 million in a conservative scenario, US$324 million in a moderate scenario, and US$491 million in an optimistic scenario over a decade. The projections, based on International Monetary Fund (IMF) scenarios, depend on improved access to technology, digital skills development, and the integration of young people into the labour market.

Among the national initiatives highlighted are the inauguration of a youth entrepreneurship incubator in Nampula and the launch of MAZA IA, developed by MOZEDU and Vodacom Mozambique, to support students and teachers in learning about artificial intelligence. The report also recommends investment in connectivity, education, entrepreneurship, and digital security, to enable the country to translate technological potential into tangible economic gains.

Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/?p=559150