Bakeries in Mozambique have had to put up the price of bread because of rising production costs, according to the Mozambican Association of Breadmakers (AMOPÃO), which claims prices haven’t been put up since 2017. Already 70 bakeries have been forced to close and the price rises raise the prospect of civil unrest.
The industry association also says that 70 bakeries across Mozambique have closed in recent months as they have been unable to meet rising costs for wheat, water and electricity. According to the Mozambican press, the most popular loaf of bread in Mozambican cities has risen in price by 2.5 meticais, equivalent to 25%, and now costs 12.5 meticais ($0.18).
The last time the price of flour rose sharply, in 2016, the government reintroduced subsidies to prevent an increase in the cost of bread. In September 2010, when the Mozambican government announced that food subsidies would end and the price of bread would jump 20%, there were widespread riots. The resulting crackdown by security forces killed 13 protestors.
The Mozambican government has little room for manoeuvre: two powerful cyclones early in 2019 killed hundreds and devastated Mozambique’s food supply. The cyclones drove up the price of maize, a food staple. In most markets, prices rose by between 6%-31 from October 2019 to November 2019. %In the Gorongosa area, which is also an internal conflict zone, maize grain prices at the end of 2019 were double their 2018 levels and 51% above the five-year average.
The country has discovered massive unauthorized government debt, prompting aid donors to suspend budgetary support. Mozambique’s total external debt shot up to $14.78bn in 2019, according to the IMF, a rise of 30% on the previous two years.
As a response to the COVID-19 pandemic, the government introduced VAT and import tariff exemptions on food, medicine and medical equipment and has been forced into higher spending to respond to the health crisis and humanitarian needs. In May, the government extended the VAT exemption on sugar, vegetable oil and soap until the end of 2020.
