Mozambique

Business outline for Mozambique

 Mozambique is in south-east Africa and borders (anti-clockwise, from north) the United Republic of Tanzania, Malawi, Zambia, Zimbabwe, South Africa, Swaziland, and the Indian Ocean. The country is divided into eleven provinces (from south to north):

Maputo, Maputo city, Gaza, Inhambane, Manica, Sofala, Zambézia, Tete, Nampula, Niassa, and Cabo Delgado

 Economic Overview

For 10 years, Mozambique’s growth has been one of the highest in sub-Saharan Africa. However, it only reached 6.5% in 2010, due to the impact of the international crisis, and should stabilize in the coming years. Growth is driven by export activities, very capitalistic and dominated by mega projects, as well as by private investment.

Mozambique’s economic policy is in direct keeping with the IMF’s Policy Support Instrument (PSI/ISPE), which was adopted in June 2007 for a length of 3 years. The priorities are to strengthen the macroeconomic stability, manage the debt and economic development. The acceleration of public investment in the infrastructures, the improvement of public finances management, a reform of fiscal policy and a better monitoring of the financial system are emphasized.

Despite the good macro-economic performance and the social progress already made, Mozambique remains heavily dependent on foreign aid. The majority of its population remains below the poverty threshold and many are suffering from AIDS.

FDI in Figures

Mozambique is the third FDI destination country in southern Africa. The flows have been sustained in recent years, despite the world economic crisis.

The country has a significant and varied natural resource potential (energy, mines, agriculture, forestry, fishing and tourism), and its geographical location gives it an advantageous position in the transport area, in relation to landlocked neighbours. Its consistency in implementing reforms and healthy economic policies, as well as its public company privatization program, offer good opportunities to foreign investors.

The main sectors that interest foreign investors to Mozambique are energy, agribusiness, fishing, finance and tourism. The major foreign investors are South Africa (over 60%), Portugal, Great Britain, Hong Kong, and the Netherlands.

Foreign Trade Overview

Mozambique is open to foreign trade, which represents over 70% of the GDP. The country’s trade policy aims at bringing structural reforms to customs duties, customs procedures and VAT, in order to encourage exports. Customs duties are still comparatively high, though the country does not have any non-tariff trade barriers. Additionally, the trade regulation is in the process of being decentralized in order to make it more favourable to business.

Mozambique’s trade balance is in deficit and should remain deficitary in the coming years.  Mozambique mainly exports aluminium, prawns, cashews, cotton, sugar, lemons, timber and electricity to the Netherlands, South Africa and Zimbabwe. It imports machinery, equipment, vehicles, fuels, chemical products, metal products, food and textile, from South Africa, the Netherlands, India and China.

 Key investment sectors:

Agriculture

This sector offer vast opportunities for the production of cereals , fruits , flowers, vegetables for the local market and for export.  The country has been exporting various products notably baby-corn, citrus, cashews nuts, various fruits, peppers & paprika to competitive markets in Europe.  The Zambezi valley represents an excellent opportunity for Agricultural sector

Fisheries & Aquaculture

This sector has been developing with the presence of local foreign companies and has seen strong growth and strong presence in European, Asia markets in terms of prawns and various sea products.  The country has enamours potential along its 2,700 kilometres India ocean coastline combined with excellent natural conditions.

Tourism and Hotels

This sector has been growing steadily in recent years given the major potential that the country has and the public investment made, in terms of infrastructure which means allowing access to previous inaccessible locations.  The country offers unique investment in national parks and reserves, the possibility of private game farms, beach tourism along 2,700 kilometres cost and on island archipelagos.

Public Infrastructure

The government of Mozambique in partnership with the private sector has been investing in the development of public infrastructure such as roads, bridges, telecommunications, energy, among many other sectors.  Consequently various opportunities abound and investors are therefore challenged to create innovative way of investing in these sectors and ensure turnover of the capital as well as profit through Public-Private-Partnership (PPP)

Mineral Resources

Investment opportunities for exploration, extraction, processing, and utilization of various types of resources of which the most important are natural gas, coal, gold, titanium, illuminate, zircon, rutile, tantalite, marble and precious stones

Energy

Natural gases, rehabilitations and construction of hydro electric, dams.  Renewable energy such as solar, oleic and bio fuels.

Investment Incentives:

The incentive legislation, according to the value, localization and sector of activity provides customers 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) an acquisition of immovable goods for industry, agro-industry and hotels, providing that they are acquired in the first 3 years counting from the investment authorization date

 

Investment Tax Credit (CFI)

Fiscal credit per investment (CFI) during 5 fiscal exercise:

  • Nampula, Manica, Maputo Cidade and Manputo province – 5%
  • Gaza, Sofala, Tete and Zambezia – 10%
  • Niassa, Cabo delgado and Inhambane – 10%

 

Source

http://www.investmozambique.com/