Located in the southwestern indentation of inner Fernao Veloso Bay, it is the deepest natural port on the east coast of Africa.

Nacala was founded as a little town and developed as a deep waters port and an industrial, agricultural and exporting centre during the last period of the Portuguese rule of the territory which ended in the mid-1970s.

Other important employers were the seaport, its small modern hospital, and services (banking, insurance and administration).

[1] Nacala is site of one of three cement works in Mozambique.

The railway system was managed by the Railroad Development Corporation until September 2008 when it was sold to a group of Mozambican investors.