Good afternoon. Mozambican businesses will not be pleased to hear about the latest news that points to ever-falling inflows of foreign currency (mainly US dollars) into the country. As a net exporter of electricity, sales of power form a significant part of its exports, over 5% last year. Electricity exports fell by almost 37% in 2025 compared to 2024, according to the latest figures from the Bank of Mozambique, a drop of just over $230m. Total exports also fell 5%. Much of that fall is a fall in government revenue, through the government’s majority ownership of the Cahora Bassa hydroelectric dam.
It has been clear for some time now that drought conditions have had a severe effect on electricity generation at Cahora Bassa, whose reservoir is fed by the Zambezi river. What is happening now, however, is that that trend is combining with other trends to compound the pressure on the country’s net exports, and therefore how much foreign currency is coming in. Electricity generation is expected to pick up now that water levels are rising in the rainy season, but that does not necessarily affect the long-term trend, which could well be one of declining water levels.
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Mozambique’s current account deficit, the amount by which the cost of its imports exceeds the cost of its exports, has been on a downward trend since the end of 2023. If we exclude the periods when the figures were affected by the covid-19 pandemic and by the import of the multi-billion-dollar Coral South floating gas platform in 2022, then the current account deficit in the fourth quarter of last year was the worst since 2019, according to figures from Trading Economics. One industry that exported more last year compared to 2024 was aluminium production, in the form of the Mozal aluminium smelter. But the smelter was shut down last month, with no chance of it restarting this year even if a new buyer is found. Meanwhile, heavy mineral sands exports are being hit by a fall in global prices.
