Mozambique’s sugar exports surge 36% despite climate challenges  

MOZAMBIQUE – Mozambique’s sugar exports generated US$14.7 million in the first half of the year, marking a 36 percent increase compared to the US$10.8 million recorded during the same period in 2023, according to data from the Bank of Mozambique. 

The recovery in exports comes after a challenging first quarter, which saw a 70.7 percent year-on-year decline in revenue due to adverse weather conditions.  

The central bank’s mid-year report attributes the improved performance to a recovery in production following climate-related disruptions that severely impacted the sector last year. 

Sugar remains one of Mozambique’s key agricultural exports, with production concentrated in provinces like Sofala, home to the Mafambisse Sugar Mill.  

However, the mill’s director, Pascoal Macule of Tongaat Hulett, highlighted ongoing challenges stemming from climate change and unfavorable weather patterns. 

“Bad weather and the El Niño phenomenon have led to significant declines in production. We lost around 8,000 hectares of sugarcane fields in Nhamatanda due to drought,” Macule said. 

The Mafambisse Sugar Mill has an annual production capacity of 92,000 tonnes but has struggled to meet this target.  

To address these issues, Tongaat Hulett, which also operates the Xinavane Sugar Mill, recently announced an investment of 500 million rand (€25 million) aimed at revitalizing both facilities and ensuring future sustainability. 

Despite the promising rebound in exports, the sector faces mounting financial pressures due to the removal of the Value Added Tax (VAT) exemption on sugar, edible oils, and soaps at the end of 2023. 

The executive director of the Association of Sugar Producers of Mozambique (APAMO), Orlando da Conceição, noted that the absence of VAT exemptions has significantly increased operational costs for sugar producers. 

“We tried for a year to advocate for maintaining the VAT exemption, engaging with the Ministry of Economy and Finance and parliament, but we were unsuccessful. While we accept the government’s position, it will negatively impact our financial stability and cash flow,” said da Conceição. 

The VAT exemption had previously provided a buffer against rising costs, particularly as producers are required to meet additional obligations, including sugar fortification. 

The government remains firm on its decision not to reinstate the VAT exemption, emphasizing its commitment to fiscal policies.  

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