Good afternoon. News that the government has ordered cement producer Cimentos de Moçambique to lower its prices forms part of a pattern in recent state interventions in the economy. It is not clear if ministers have a legal basis for trying to dictate the price at which the company sells its cement. Officially, businesses’ profit margins are regulated, so the government could argue that it has found that Cimentos de Moçambique’s margins are too high. But it has not made this clear.
The intervention could cause significant economic damage, since the cement industry is investing in growth at the moment. There is something of a housebuilding boom, and cement producers including Cimentos de Moçambique are expanding production. The company has warned that the price control the government is trying to enforce would make its production unviable, and it would have to shut down. Whether that is true or not, this unexplained intervention could threaten the current investments.
The full Daily Briefing continues below for Pro subscribers. Subscribers to the Zitamar News tier can read the top half, including the full leader article, here.
The latest from Zitamar News:
Zitamar News
Zitamar News
Some might see this as a return to the socialist roots of the ruling Frelimo party; that would also explain the government’s plans to control rice and wheat imports. But populism is another explanation. During the protests of 2024-5 sparked by the disputed election results of October 2024, protesters went around demanding that shopkeepers lower their prices. One of their demands was for cheaper cement, to make it easier to build housing (a lot of housebuilding is carried out by households, not construction firms). Popular pressure also explains the government’s suspension of VAT on sugar, soap and cooking oil, a measure which was passed in the wake of the protests and which certainly responded to popular agitation.
