Large investments in bio-fuels are currently in process in Mozambique. This analysis seeks to assess the macroeconomic implications of biofuels investment for growth and income distribution using an economywide framework. Results suggest that biofuels provide Mozambique with an opportunity to substantially enhance economic growth and poverty reduction. The primary biofuels scenario modeled here results in increases in the average annual economic growth rate of 0.6% and reductions in poverty incidence by six percentage points at the end of a 12 year phase in period. Institutional arrangements and production technologies matter. We find that an outgrower approach is much more strongly pro-poor due to greater use of unskilled labor and the accrual of land rents to smallholders compared with a plantation approach. The growth and poverty reduction benefits of outgrower schemes are further enhanced if the schemes result in technology spillovers to other crops.