Mozambique’s US$80 Billion Energy Transition Plan
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This week, we look at Mozambique’s US$80 Billion Energy Transition Plan launched at the ongoing COP climate summit held in Dubai. We also assess Nigeria’s external debt status as the president seeks parliamentary approval for an $8.6 billion loan.
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Mozambique’s US$80 Billion Energy Transition Plan
Mozambique is among the African countries that are extremely vulnerable to climate change risks due to several reasons. Its heavy dependence on agriculture leaves food production and livelihood of its citizens vulnerable to extreme weather events such as cyclones, flooding, and droughts, which have become frequent in recent years. Its population situated at the coast is also at risk from rising sea levels and coastal erosion.
From an economic perspective, its reliance on exports like mineral fuels and oil, which result in high carbon emissions, puts the country at risk of being affected by global climate change mitigation efforts. As the world shifts towards cleaner energy sources and seeks to reduce greenhouse gas emissions, Mozambique’s export markets for these carbon-intensive products may shrink, posing economic challenges for the country. Climate shocks and security risks are expected to negatively impact the economy. In fact, World Bank projections indicate that Mozambique’s GDP could fall by 1.5% in 2023-2025 and the economy could be 13% smaller by 2050 because of climate shocks and security risks.
Government Climate Responses and Energy Transition Plan
The government of Mozambique has implemented various climate change policies over the years. The policies include the National Climate Change Adaptation and Mitigation Strategy (2013–2025), National Development Strategy (2015–2035), and updated Nationally Determined Contributions (NDCs). The most recent policy is the Energy Transition Plan, which is worth $80 billion and expected to span until 2050. The plan outlines priorities and initiatives for the period between 2023-2030. It aims to promote sustainability by expanding renewable energy and increasing access to electricity in the country.
Officially launched and presented at the COP28 climate summit on December 2, the plan focuses on four strategic pillars highlighted below:
- Expansion of renewable energy capacity. This will involve modernizing the national grid to support clean energy from hydro, solar, and wind resources through renewable energy auction programme. One of the priorities is to add 3.5 Gigawatts of new hydroelectric capacity by modernizing existing plants and completing the Mphanda Nkuwa hydroelectric project by 2030.
- Promotion of green industrialization to improve domestic production and exports. The plan proposes to achieve this by developing integrated green industrial parks and corridors such as the Nacala Green Industrial Corridor.
- Foster universal access to modern energy through mini solar grids and clean cooking solution
- Transport decarbonization plan by introducing electric vehicles and natural gas-powered transport to mitigate emissions and improve the transportation sector.
While the goal is to achieve total electrification by 2030 through off-grid access, the implementation of the transition plan will continue beyond 2030, requiring an estimated investment need of US$80 billion by 2050 (US$3 billion annually).
Data Vault: The Debt Keeps Rising
This past week, Nigeria’s President Bola Tinubu requested approval from the Nigerian Parliament for US$8.6 billion in external borrowing for the 2024 fiscal year. This will bring the country’s external debt to an estimated US$51 billion next year. Nigeria’s external debt has risen in the last few years, from US$25 billion in 2018 to US$43 billion this year. External debt is currently 8.9 percent of GDP.
Source: Debt Management Office, Nigeria
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