Index trend
Previous Quarterly Editions
Expropriation Risk: 68 68 66 66 ►Political Violence Risk:58 57 66 66 ►Terrorism Risk:42 44 44 60 ▲Exchange Transfer and Trade Sanction Risk: 63 63 63 63 ►Sovereign Default Risk:83 83 83 75 ▼
Overall Risk Temperature: 67 (Medium high -2) TREND ▼
Special topic: Political polarization
Political polarization in Mozambique was historically shaped by the conflict and war after independence (1976–1992) between the Frelimo government and its arch-rival Renamo, initially supported by Rhodesia and apartheid South Africa. The rivalry persisted after Renamo transformed into the Frelimo government’s main political and electoral opposition in the 1990s. However, due to the de facto winner-takes-all system — the party that wins the presidential elections and a majority in parliament takes all — the opposition was never able to convert its high numbers of votes into any executive power.
There was regional polarization as well, as Frelimo typically controlled the capital and the south, while Renamo was stronger in the populous central and northern provinces.
The rivalry was also fueled by the constant suspicion of widespread election fraud carried out by Frelimo, allegations often backed by findings of irregularities by foreign observer missions. Frelimo remained in power, and gradually, its party leadership became transformed from national liberators to an elite fraught with corruption.
By the local elections in 2023, it was clear Mozambique’s large youth population had lost faith in Frelimo and attempted to vote for the opposition parties. In Maputo, a young and popular politician called Venâncio Mondlane claimed victory, then running for Renamo. Frelimo declared its own candidate a victor, but the demonstrations that followed were the largest ever — before they were repressed by police violence.
However, the 2023 events proved a mere preamble to the popular uprising in 2024, following the October general elections for president, the legislature and the provincial parliaments. Once again, Frelimo and its presidential candidate were declared the victors after what was clearly state-organized electoral fraud on a grand scale, and once again Mondlane became the key figure, as he claimed to have won. Hundreds of thousands of people, if not millions, then took part in nationwide protests not only against electoral fraud and the Frelimo government but also in favor of Mondlane. The near revolutionary movement included large demonstrations; several general strikes; border closures; and widespread attacks against Frelimo offices, police stations and vehicles. This year, the movement has dissipated somewhat, perhaps due to exhaustion, although no political solution or settlement has eased the underlying tension.
In one sense, polarization in Mozambique has reached extreme levels, as never before had popular anger reached such extreme levels and mobilized so many in political action and activism — and never before had demonstrators been met with such intense police repression. Credible statistics indicate more than 600 dead since October 2024, including policemen who were killed by civilians. With an unyielding ruling party, the conflict now seems intractable.
Yet the term ‘polarization’ might imply roughly equal forces pitted against each other, whereas, in Mozambique, popular anger has swept previous differences aside and led to public unity in opposition to the elite. As such, it may be better described as ‘the people against the party’.
TREND ►
Expropriation risk has risen slightly.
Mozambique’s constitution embraces the rule of law and sets down the state as the custodian of all land and resources. However, legal changes and regulations can be used to resume state control over land and concessions from private investors when politically expedient.
This rarely happens to foreign investors if they have strong backing from major players. In late December 2024, a court in the northern city of Nampula ordered the seizure of an aircraft belonging to a South African air carrier after a dispute between members of a local business family in the city and the air carrier’s onboard staff. The company promptly halted all flights to Mozambique, but after a few days the row was defused by the intervention of central authorities in both countries.
The current political climate makes sustained threats to Western-based investors quite unlikely, although it is possible that, in local incidents, small investments in tourism or leisure real estate could suffer expropriation. Expropriation risk is related to corruption and local politics rather than hostile political ideology.
The political violence risk has sharply increased in Mozambique. The first risk is the war in the northern province of Cabo Delgado, running since 2017. Currently, a negotiated solution is not in prospect. A second anti-government militia, the Naparamas, also sprung up in 2024.
A second risk is possible military confrontation between the government and Renamo forces. In 2024, the current Renamo leadership fumbled its politics and lost much of its support among young Mozambicans to the independent Mondlane. Yet Renamo has a stronger organization and more historic base as the anti-Frelimo party. If it reconnects with the youth and Mondlane, it could prove a formidable challenge to Frelimo and the state. Due to its past, violence cannot be ruled out.
The third area of political violence risk is the massive popular frustration due to generalized economic and social hardship, and the distrust in Frelimo. There are reports of campaigns of ‘death squads’ organized by intelligence forces against anti-government youth. In this area, the warnings of previous risk analyses of Mozambique became reality in late 2024. As government forces clashed with young demonstrators in the cities across the country, political violence levels were higher and more widespread than at any time since the civil war. With a newfound political leader — Mondlane — outside of Renamo, the movement was sustained much longer than previous anti-government protest movements. Without any political solution hitherto, the turmoil seems set to continue. With the exhaustion of widespread popular demonstrations, it is probable that political violence will change form and be characterized by fewer activists but with more extreme leaders.
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The main terrorism risk in the country remains the northern insurgency. Part of the insurgent network seems to be inspired by jihadism and linked to the Islamic State, while others are motivated by greed or local grievances. Thousands of troops from Rwanda and the Southern African Development Community (the SAMIM coalition) have helped the inefficient Mozambican forces fight the insurgency. In mid-2024, the SAMIM troops were withdrawn.
In 2025, the insurgents have taken advantage of the weakened political legitimacy and operational capacity of the Mozambican government and carried out an increasing number of attacks, though they rarely spread beyond Cabo Delgado province. The insurgents have carried out their attacks mainly against civilian populations and government agencies, and significant attacks on foreign people or infrastructure have not taken place since 2021.
In late 2024, especially after the elections in October, another insurgent armed group known as the Naparamas carried out attacks against government forces in the provinces of Nampula and Zambézia. They employ a traditionalist style and message, and organize as a local militias.
There is a heightened risk of further terrorist attacks from these known groups — and even by hitherto unknown rogue groups that may form in the chaotic situation of the post-2024 election period.
Recent new legislation against money laundering can create delays in cross-border transactions. However, there is no or very small risk that Mozambique will become subject to trade sanctions, as international actors seeking leverage over Mozambique would threaten to withhold development aid before imposing sanctions.
TREND ▼
Mozambique’s overall macroeconomic situation remains dire and has taken a serious hit during the months of political turmoil since the elections in October 2024. In March 2025, the International Monetary Fund (IMF) found that overall economic activity had plummeted during the last quarter of 2024, leaving the overall growth in 2024 at a mere 1.9%. That figure is way below population growth of close to 3%. The 63% poverty rate is thus likely to increase in the years to come. The high poverty rate reflects low productivity.
The unpopular government faces the irreconcilable imperatives of avoiding cuts in public welfare, subsidies and wages; investing and stimulating economic growth; paying off debt; and maintaining fiscal discipline.
Public finances remain strained by dangerously high public debt levels. In recent years, the government has managed to reduce foreign debt, which now stands at $10 billion. This equals about 66% of GDP, down from almost 100% in 2020. However, while the government has paid off external debt, it has done so by steadily taking on domestic debt, so that in total public sector debt remains at 100%. There is no or little room for increasing the uptake of loans from the small domestic financial sector, and so this avenue for financing public expenditure is close to its limit. With little hope of rapid increase in the revenue from taxes — in particular as increases from the offshore gas income keep being delayed — the government will find it increasingly difficult to service its foreign debt.
At the same time, expenditure is difficult to control, with security operations in the north of the country incurring huge costs as well as a need to dish out patronage for the regime’s clients in connection with this year’s elections. The tendency of the regime to encourage or allow public enterprises to take on debt in less-than-transparent ways comes with a constant hazard of more ‘debt bombs’ being detonated.
S&P and Fitch both downgraded Mozambique’s credit rating from CCC+ to CCC in October 2024 and February 2025, respectively, indicating a substantial risk of default.
