Lusa - Business News - Mozambique: Transport operators strike

Mozambique's transport sector is in crisis mode. Following a sharp fuel price increase in early 2025, operators in Maputo and surrounding provinces have begun industrial action, threatening logistics networks and commuter mobility across the country's economic hub. The government, facing political pressure and inflationary spillover risks, has announced a subsidy mechanism to prevent cascading fare hikes—a move that economists warn could strain an already fragile fiscal position.

### What triggered the transport standoff?

Fuel costs in Mozambique rose sharply in recent weeks, driven by currency depreciation (the Mozambican metical weakened 8–12% against the USD since late 2024) and global refined petroleum prices. For transport operators—already operating on thin margins in a low-income market—the margin squeeze left no choice but to demand fare increases. Operators in Maputo's minibus networks and long-haul services began selective strikes in mid-January, disrupting movement of goods, workers, and passengers across the capital and into Sofala and Gaza provinces.

The Alliance of Transport Operators, representing hundreds of informal and formal operators, cited unsustainable fuel costs and called on government to either deregulate fares immediately or provide direct compensation. The strike has already rippled into food supply chains and manufacturing logistics, with some observers reporting 15–20% delays in port-to-market transport times.

### How is the government responding?

The Ministry of Transport announced a fuel subsidy programme designed to cap operator costs and prevent fare increases trickling into consumer prices. The mechanism would operate as a direct transfer—operators submit fuel purchase receipts, and the state reimburses a portion of the spread between retail and a government-set "support price." Initial estimates peg the programme cost at 2–3 billion meticais (USD 30–50 million) monthly, though final scope remains undefined.

## Will the subsidy solve the problem—or deepen fiscal stress?

Mozambique's fiscal position is already precarious. The 2025 budget projects a deficit of 4.2% of GDP, with external debt servicing consuming 22% of government revenue. A permanent transport subsidy could push the deficit toward 5%+ by mid-year, forcing either spending cuts elsewhere or increased domestic borrowing. The central bank, already managing FX reserves of USD 3.2 billion (equivalent to ~4 months of import cover), has signaled resistance to monetizing subsidy costs—meaning the government must find fiscal space or reduce other priorities.

Investors monitoring Mozambique's macro trajectory view the subsidy as a short-term political fix masking deeper structural problems: energy import dependency, currency weakness, and weak tax revenue (14% of GDP). A prolonged subsidy could weaken Mozambique's credit rating further—Fitch and Moody's are both on negative outlook—and make future Eurobond issuance more expensive.

## What's the longer-term play?

The strike and subsidy response reveal a key tension in Mozambique's development model: growth requires affordable transport, but the state lacks the fiscal firepower to subsidize indefinitely. A sustainable fix requires faster FX generation (liquefied natural gas exports remain delayed), energy sector reform, and tax base widening—none of which offer quick political wins.

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