page_title: Portuguese Mozambique
section_title: Economy
hierarchical_section_title: Portuguese Mozambique / Economy
context_page_description: Portuguese Mozambique or Portuguese East Africa were the common terms by which Mozambique was designated during the historic period when it was a Portuguese colony. Portuguese Mozambique originally constituted a string of Portuguese possessions along the south-east African coast, and later became a unified colony, which now forms the Republic of Mozambique.
  Portuguese trading settlements and, later, colonies, were formed along the coast and into the Zambezi basin from 1498 when Vasco da Gama first reached the Mozambican coast. Lourenço Marques explored the area that is now Maputo Bay in 1544. The Portuguese increased efforts for occupying the interior of the colony after the Scramble for Africa, and secured political control over most of its territory in 1918, facing the resistance of Africans during the process.
  Some territories in Mozambique were handed over in the late 19th century for rule by chartered companies like the Mozambique Company, which had the concession of the lands corresponding to the present-day provinces of Manica and Sofala, and the Niassa Company, which had controlled the lands of the modern provinces of Cabo Delgado and Niassa.
context_section_description: Since the 15th century, Portugal founded settlements, trading posts, forts and ports in the Sub-Saharan Africa's coast. Cities, towns and villages were founded all over East African territories by the Portuguese, especially since the 19th century, like Lourenço Marques, Beira, Vila Pery, Vila Junqueiro, Vila Cabral and Porto Amélia. Others were expanded and developed greatly under Portuguese rule, like Quelimane, Nampula and Sofala. By this time, Mozambique had become a Portuguese colony, but administration was left to the trading companies (like Mozambique Company and Niassa Company) who had received long-term leases from Lisbon. By the mid-1920s, the Portuguese succeeded in creating a highly exploitative and coercive settler economy, in which African natives were forced to work on the fertile lands taken over by Portuguese settlers. Indigenous African peasants mainly produced cash crops designated for sale in the markets of the colonial metropole (the center, i.e. Portugal). Major cash crops included cotton, cashews, tea and rice. This arrangement ended in 1932 after the takeover in Portugal by the new António de Oliveira Salazar's government — the Estado Novo. Thereafter, Mozambique, along with other Portuguese colonies, was put under the direct control of Lisbon. In 1951, it became an overseas province. The economy expanded rapidly during the 1950s and 1960s, attracting thousands of Portuguese settlers to the country. It was around this time that the first nationalist guerrilla groups began to form in Tanzania and other African countries. The strong industrial and agricultural development that did occur throughout the 1950s, 1960s and early 1970s was based on Portuguese development plans, and also included British and South African investment.
  In 1959–60, Mozambique's major exports included cotton, cashew nuts, tea, sugar, copra and sisal. Other major agricultural productions included rice and coconut. The expanding economy of the Portuguese overseas province was fuelled by foreign direct investment, and public investment which included ambitious state-managed development plans. British capital owned two of the large sugar concessions (the third was Portuguese), including the famous Sena states. The Matola Oil Refinery, Procon, was controlled by Britain and the United States. In 1948 the petroleum concession was given to the Mozambique Gulf Oil Company. At Maotize coal was mined; the industry was chiefly financed by Belgian capital. 60% of the capital of the Compagnie de Charbons de Mozambique was held by the Société Minière et Géologique Belge, 30% by the Mozambique Company, and the remaining 10% by the Government of the territory. Three banks were in operation, the Banco Nacional Ultramarino, Portuguese, Barclays Bank, D.C.O., British, and the Banco Totta e Standard de Moçambique (a partnership between Standard Bank of South Africa and mainland's Banco Totta & Açores). Nine out of the twenty-three insurance companies were Portuguese. 80% of life assurance was in the hands of foreign companies which testifies to the openness of the economy.
  The Portuguese overseas province of Mozambique was the first territory of Portugal, including the European mainland, to distribute Coca-Cola. Lately the Lourenço Marques Oil Refinery was established by the Sociedade Nacional de Refinação de Petróleo (SONAREP) — a Franco-Portuguese syndicate. In the sisal plantations Swiss capital was invested, and in copra concerns, a combination of Portuguese, Swiss and French capital was invested. The large availability of capital from both Portuguese and international origin, allied to the wide range of natural resources and the growing urban population, lead to an impressive growth and development of the economy.
  From the late stages of this notable period of high growth and huge development effort started in the 1950s, was the construction of Cahora Bassa dam by the Portuguese, which started to fill in December 1974 after construction was commenced in 1969. In 1971 construction work of the Massingir Dam began. At independence, Mozambique's i
caption: Cahora Bassa Dam reservoir — the dam began construction in 1969 and was at the time one of the biggest in all of Africa.
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