The Tobacco Industry in Mozambique

This report on the tobacco industry in Mozambique includes information on production, manufacture and retail, key trends and issues, notable players, trade and regulations. There is also information on major influencing factors such as the security situation, economic environment health and environmental issues and illegal trading. The report includes company profiles of three players including British American tobacco, Mozambique Leaf Tobacco and Afro Tobacco Company.

Introduction

• The industry is dominated by British American Tobacco and Mozambique Leaf Tobacco.
• Mozambique’s government considers the industry a major contributor to job creation and the provision of economic opportunities to the rural population.
• Nearly all tobacco is produced by smallholder farmers.
• Tobacco is mostly grown in a concessionary system, with Mozambique Leaf Tobacco holding the majority of concessions.
• Production has been highly volatile.
• While demand for tobacco from traditional global markets is declining, Asian and African demand has been growing.
• Leaf sourcing is moving to low-cost producing countries, making source markets like Mozambique attractive to investors.
• Despite the potential to increase production, climate change conditions such as droughts, floods, and cyclones, high prices of inputs and poor infrastructure can affect production.

Market Trends

• An increase in tobacco sales revenues.
• Growth in tobacco exports.
• The concession system provides smallholder farmers with a market to sell their tobacco.
• The introduction of seal (fiscal) stamps on tobacco products, to reduce illicit cigarettes.
• There is potential for increased tobacco production.

Market Opportunities

• Adequate suitable arable land for tobacco production.
• The vaping and e-cigarette industry is largely untapped.
• Unmanufactured tobacco is exempt from export taxes.

Market Challenges

• High input prices as most are imported.
• High electricity rates and unreliable electricity availability.
• Most small-scale farmers have limited access to credit and often cannot afford production inputs.
• Mozambique is a conduit route for illicit cigarette trade.
• Poor infrastructure.
• Production can be affected by droughts and adverse wet conditions.
• Shortage of management and technical skills.

Market Outlook

• Mozambique has implemented smoke-free restrictions and health warnings but has yet to implement full tobacco controls.
• Tobacco continues to be an important economic commodity that creates seasonal job opportunities and supports smallholder tobacco farmers.
• Tobacco sales revenues are forecast to grow steadily.
• Drought, flooding and cyclones highlight Mozambique’s vulnerability to climate change hazards which can affect tobacco production growth.
• Other factors such as political security and poor infrastructure all have a bearing on tobacco production.