The Dilemma of Small Business in Mozambique: A Research Note

A vast portion of the economic activity in Mozambique consists of small businesses. Moreover, these business activities are often either informal or unrecorded in official sources (Dana, 1996; Fialho, 1996; Fungulane, 1999). Not surprising, the accuracy of the statistical coverage is poor and uneven.¹ For example, calculations of the economic contribution of the informal sector by the Instituto Nacional de Estatistica (INE) and the Italian Government Co-operation Agency suggest that the real GDP is underestimated by some 79% (Economist Intelligence Unit, 1998). Abreu and Abreu (1996), of the Central Bank in Mozambique, using a monetarist approach, have estimated that the informal sector accounts for at least 33% of the Mozambican GNP. In Beira, the second largest city in Mozambique, Navaia and Kaufmann (1999) estimate that at least 60% of the firms are informal businesses.