Mozambique Investment Guide

Why invest in Mozambique?

Mozambique posted the greatest diversified and sustained economic growth in Africa between 1996 and 2005, with average annual growth of 8.3 percent, according to the World Bank's Development Indicators for Africa 2007 report.

Meanwhile, the International Monetary Fund (IMF) is satisfied with the “strong and robust growth” of the country's economy in 2007, according to assistant-director of the IMF for Africa, Jean Clement. Clement said that the positive performance of the country’s economy was determined by “higher than expected tax revenues.” Due to a “prudent taxation and monetary policy,” inflation is also expected to show a good performance, remaining at a single-digit level, as has been the case over the last few years, he said.

According to Clement, the government’s reforms were successful in terms of boosting public expenditure, by applying the State Financial Administration System (SISTAFE). The Mozambican authorities’ strategy to reduce the cost of doing business in the country and widen is tax base was also reaping rewards, the IMF said.

Law nº 3/93, of 24 of June (Investment Law), and the respective Regulation, approved by decree nº 14/93, of 21 of July and altered by Decree nº 36/95, of 8 of August, define the regulatory framework of the process of realization, in Mozambique, of national and foreign investments eligible to the guarantees and fiscal incentives envisaged.

The Code of Fiscal Benefits, approved by Decree nº 16/2002, of 27 of June, establishes the framework of fiscal incentives applicable to eligible investments for that effect.

The minimum value of investment to access the guarantees and fiscal benefits are US$ 50.000 for direct foreign investment and US$ 5.000 for national direct investment.

The guarantees to investment envisaged in the legislation in force comprise:

  • Legal protection on property and rights, including industrial property rights;
  • No restriction of borrowing and payment of interest abroad;
  • Transfer of dividends abroad;
  • Arbitration according to ICSID or ICC rules for the resolutions of disputes on investments;
  • MIGA and OPIC services on issues related to investment risk insurance.

The Investment Legislation, according to the value, localization and sector of activity provides customs and fiscal benefits to eligible projects, namely Generic Benefits with its:

  • Exemptions on Importation Duties on equipment of class “K” of the Customs Tariff Schedule (the exemption is extensive to Value Added Tax).
  • Reduction of 50% on the real property transfer tax (SISA) on acquisition of immovable goods for Industry, Agro-industry and Hotels, provided that they are acquired in the first 3 (three) years counting from the investment authorization date.

Investment Tax Credit (CFI)

Fiscal Credit per Investment (CFI) during 5 fiscal exercises:

  • Nampula, Manica, Maputo Cidade and Maputo Province - 5%
  • Gaza, Sofala, Tete and Zambézia - 10%
  • Niassa, Cabo Delgado and Inhambane - 10%

Specific regimes

  • Agriculture;
  • Industrial Free Zones;
  • Tourism and Hotels;
  • Large Scale Projects
  • Rapid Development Zones;
  • Investments under the Mining Law;
  • Investments under the Petroleum Law

Ernesto Mafumo, Institute for SMEs deputy director, said that countless opportunities exist, especially for SMEs, in the extractive industry (salt and ceramics), logistics (road transport, warehouse and silos), tourism (accommodation and hospitality), services (consultancy for SMEs) and construction (building materials).

Micro-enterprises account for 90.1%, small and medium businesses make up of 6.6% and 0.7% respectively, Mafumo said. Large enterprises account for a miserable 0.1%.

He also said that the owners of several out-of-business factories (glass, textiles, paper, garments, juice and batteries) are desperately looking for partners to put them back on track.

There are also investment opportunities in the agriculture sector, especially with products such as rice, sugarcane, cotton, corn, flour, tea, coffee, cassava, fruits, bio-fuels and many more. Opportunities also exist in mining (bauxite, uranium, diamonds, oil and gas, gold, titanium and marbles and granites).

Investments in the mining sector increased to US$804.3 million in 2008 from US$424.7 million in 2007 and a mere US$100.88 million in 2004, Dr Benjamin Chilengue, director in the Ministry of Agriculture, said.

Mozambique has a population of 20.5 million people. Its GDP grew by 7% in 2008, and exports totalled US$2.4 billion and imports amounted to US$2.9-billion in 2008. The inflation rate is estimated at 11% and coming down fast.

It takes about 29 days to start a business in Mozambique compared to 155 days in DRC and some 119 days in Angola, Robbertze said.

Hercilia Hamela, of the Ministry of Agriculture's CEPAGRI (Agriculture Promotion Centre), said that her country's farming structure is made up of 99% of small-scale farmers and only 1% of medium and large-scale farmers, adding that 7 million hectares of land is available for farming.

The provinces with a high availability of farming land are Zambezi (1.36 million ha), Niassa (1.22 million ha) and Inhambane (1.07 million ha). Gaza, in the south near Maputo, also has some 866.780 ha).

This information is not enough but vital to persuade SA companies to head north-east and invest there. Historically, SA is ‘indebted' to Mozambique in one way or another. So by investing there, SA companies could be indirectly repaying that ‘debt', harvesting higher returns and seeing light at the end of tunnel.

Last Updated on Saturday 6th February 2010