Warning of Covid-19 impact

The Mozambican government on Thursday warned citizens of the “enormous” impact that the respiratory disease COVID-19, caused by the new coronavirus first detected in the Chinese city of Wuhan, might have on the Mozambican economy. Speaking to reporters at the end of an extraordinary meeting of the Council of Ministers (Cabinet), the government spokesperson, Deputy Justice Minister Filimao Suaze, said that the impact would be felt most heavily on sectors and companies that depend on importing goods from China.

The disruption caused by the coronavirus in China led many Chinese factories to shut down or reduce production, and this has had knock-on effects on supply chains across the globe.

Suaze warned that the usual calendar for importing goods is likely to be disrupted. Mozambique imports a wide variety of equipment and machinery from China, and Suaze warned of delays in receiving these goods. There could also be restrictions on importing wheat (and hence on producing bread). China is the world’s largest producer of wheat, producing over 134 million tonnes of this grain a year. The Chinese wheat harvest structures world grain markets.

He warned that the disruption caused by COVID-19 could also result in further devaluation of the Mozambican currency, the metical, against the US dollar.

Edson Chichongue, the executive director of the Mozambican Commercial, Industrial and Services Association (ACIS), told reporters that 15 of the Association’s 600 members have been severely affected and forced to cut their production. These companies usual import material from South Africa – but it turns out that their South African partners are dependent on imports from China. Many of the ACIS associates are medium and large companies, and their managers need to travel regularly outside the country, which is becoming difficult given the restrictions imposed in response to the coronavirus.

Some companies now have containers full of goods in China which have not been cleared to leave. One Mozambican businessmen, Atul Laxmissancar, cited by the independent daily “O Pais”, claimed he had many goods tied up in China and that his losses are “incalculable

Informal traders (known as “mukheristas”), who bring goods from South Africa into Mozambique, claim that their business has been badly hit, and they may have no alternative but to put up their prices.