Industrialisation 134. Mozambique was rated the sixth most industrialised economy in SSA during the late colonial period. Independence from Portugal in 1975 and the political turmoil that followed, however, led to a sharp decline in industrial activity, with manufacturing output falling by over 30 per cent between 1974 and 1976. A key factor behind this debacle was the departure of around 200 000 Portuguese settlers in the aftermath of independence – they had supported the growth of the manufacturing sectors by providing skilled labour and creating a growing demand for locally produced manufactured goods. 135. In response to this state of affairs, the post-independence FRELIMO government adopted a model of central planning of the economy. It intervened in numerous industrial firms abandoned by their Portuguese owners and formulated a strategy aimed at ending underdevelopment by the 1990s, based on a process of accelerated industrialisation. Despite these intentions, by 1985 manufacturing activity had reached a historical low, with production down to levels previously seen in the early 1960s and the utilisation of capacity estimated to be below 30 per cent in most industries. 136. In 1986, the Mozambican government initiated a process of structural reform and economic liberalisation that has continued to the present. In the two decades since then, manufacturing activity has experienced a substantial recovery overall, with the share of manufacturing value added over GDP reaching a historical peak of 14.8 per cent in 2004. However, this figure hides a less impressive reality, characterised by a growing concentration of manufacturing production in a small number of industries and firms, and a general thinning out and weakening of Mozambique’s manufacturing base, with manufacturing employment falling from over 111 000 workers in 1987 to 31 500 in 2005. By 1999, only nine firms accounted for 56 per cent of industrial production, with the two largest firms (South African Breweries and Coca-Cola) being responsible for 25.7 per cent of industrial output. This process of growing concentration has continued in the 2000s, as several industrial megaprojects have been established in Mozambique. 137. Mozal, an aluminium smelter operating outside Maputo since 2000, and perhaps the most renowned of these projects, alone accounted for 6.7 per cent of the country’s GDP, 38 per cent of its growth and 55 per cent of its exports in 2004, while only employing around 1 100 workers. Meanwhile, other traditionally important sectors have fared less well. Some have almost disappeared, such as garments and textiles, which barely accounted for 0.1 per cent of manufacturing production in 2005, down from 23 per cent in 1988, or the cashew nut industry, which was one of the most important in the world in the 1970s. Several factors have been identified as currently constraining manufacturing development in Mozambique. The most frequently cited are investment climate constraints imposed by a burdensome regulatory and administrative 138. 73