Financing the Mozal Proect - What solution would you recommend to the IFC? How would this strategy help Mozambique? What are some weaknesses of this strategy? What are its outweighing strengths?

Essay by jesika369University, Master'sA-, February 2004

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The IFC should immediately seize the opportunity presented in the financing of Mozal. Investment in the project on the part of the IFC would generate valuable social, financial, and economic benefits, not only for the people and government of Mozambique but on a more global level as well, allowing the international investors, suppliers, distributors, and sponsors involved in the deal to enjoy the catalytic effects spurred by the project and the investment itself. The Mozal Project is the perfect trigger to boost the economy of the emerging market, post-conflict Mozambique and improve the quality of life for its people on every level. While such an investment, which would be the largest single FDI project for this debt-ridden country, may be intimidating, it has strong sponsors and promising financial prospects.

Approval of the financing of Mozal by the IFC is in perfect accordance with the IFC's mission, as it would be promoting sustainable private sector investment in the developing country of Mozambique while at the same time helping to reduce poverty and improve people's lives.

There are various sources for the viability of this project. Firstly, the aluminum industry demand is strong and is expected to grow at 2% to 3% per year; combined with the efficiency and low cost advantages that Mozal would have to offer, revenues would far outweigh costs, thus generating positive cash flows within a short amount of time. Secondly, a plethora of opportunities for Mozambican businesses would be created through the policy of outsourcing all non-core activities to local companies. Not only will this provide jobs and valuable training for Mozambicans, but it may also encourage the establishment of joint ventures between international and local contractors. Furthermore, sponsors of the project will launch extensive education, prevention, and treatment programs for AIDS, the main epidemic of...