Policies Towards Foreign Direct Investment

The GRM is open to foreign investment, seeing it as a driver of economic growth and job creation.  All business sectors are open to foreign investors, with the exception of a few sectors related to national security.  The GRM reviews and approves each foreign and domestic investment; there are almost no restrictions on the form or extent of foreign investment.

APIEX (Agencia para a Promocao de Investimentos e Exportacoes –Agency for Promotion of Investments and Exports) is the primary investor contact within the GRM, operating under the Ministry of Industry and Commerce.  Its objective is to promote and facilitate private and public investment. It also oversees the promotion of national exports.  It can assist with administrative, financial, and property issues.  Through APIEX, investors can receive exemptions from some customs and value-added tax (VAT) duties when importing “class K” equipment, which includes capital investments.

Contact information for APIEX is:

Agency for Promotion of Investments and Exports

Rua da Imprensa, 332 (ground floor)

Tel: (+258) 21313310

Ahmed Sekou Toure Ave., 2539

Tel: (+258) 21 321291/2/3

Mobile: (+258 ) 823056432

Mozambique’s Law on Investment, No. 3/93, passed in 1993, and its related regulations, govern national and foreign investment.  In August 2009, Decree No. 43/2009 replaced earlier amendments from 1993 and 1995, providing new regulations to the Investment Law.  In general, large investors receive more support from the government in the business registration process than small and medium-sized investors do.  Government authorities must approve all foreign and domestic investment requiring guarantees and incentives.  Regulations for the Code of Fiscal Benefits were established by Decree No. 56/2009 and approved in October 2009. The Code of Fiscal Benefits, Law No. 4/2009, passed in January 2009, can be found at: http://investmentpolicyhub.unctad.org/InvestmentLaws/laws/110 .

The GRM, through the Confederation of Business Associations (Portuguese acronym – CTA), Mozambique’s primary business and industry association, maintains an ongoing dialogue with the private sector, holding quarterly meetings with the Prime Minister and an annual meeting with the President.  CTA provides feedback to the GRM on laws and regulations that impact the business environment.

Limits on Foreign Control and Right to Private Ownership and Establishment

Mozambique investment law and its regulations generally do not distinguish between investor origin or limit foreign ownership or control of companies.  With the exception of security, safety, media, entertainment, and certain game hunting concessions, there were no legal requirements that Mozambican citizens own shares of foreign investments until 2011.

Law No. 15/2011, passed in August 2011 and often referred to as the “Mega-Projects Law,” governs public-private partnerships, large-scale ventures, and business concessions.  It states that Mozambican persons should participate in the share capital of all such undertakings in a percentage ranging from 5 percent to 20 percent of the equity capital of the project company.  Implementing regulations were approved by the Council of Ministers in June 2012.

Article 4.1 in Law 14/2014, often referred to as The Petroleum Law, states that the GRM regulates the exploration, research, production, transportation, trade, refinery, and transformation of liquid hydrocarbons and their by-products, including petrochemical activities.  Article 4.6 established state-owned oil company ENH as the government’s exclusive representative for investment and participation in oil and gas projects.  ENH typically owns up to 15 percent of shares in oil and gas projects in the country.

Other Investment Policy Reviews

Mozambique has undergone investment policy reviews by the following international organizations:

OECD Investment Policy Review (2013)

http://www.oecd.org/daf/inv/investment-policy/mozambique-investment-policy.htm 

WTO Trade Policy review – Report by the Secretariat – Mozambique – Revision (2017)

https://www.wto.org/english/tratop_e/tpr_e/tp454_e.htm 

UNCTAD Investment Policy Review (2012)

http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=222 

Business Facilitation

APIEX is the government entity that promotes and facilitates investment in Mozambique.  It provides support to investors for the following services: incorporation, business licensing, entrance visas, work permits, residence permits, identification and licensing of land, identification of business partners, troubleshooting, project monitoring, and implementation follow-up.

Lengthy registration procedures can be problematic for any investor – national or foreign – but those unfamiliar with Mozambique and the Portuguese language face greater challenges.  Some foreign investors find it beneficial to work with a local equity partner familiar with the bureaucracy at the national, provincial, and district levels.

In 2019, Mozambique ranked 135 among 190 countries in the World Bank Doing Business report.  The report states that Mozambique performs slightly better than the sub-Saharan average for the ease of doing business but below peers such as Botswana and South Africa in the region.  Mozambique ranks 174 out of 190 countries in how easy it is to start a business, taking 17 days to complete the process, requiring 10 procedures, and costing 120 percent of the per capita income.  The report also indicates that getting credit and enforcing contracts are comparatively more challenging in Mozambique than most countries.  The GRM has made improvements in areas such as getting construction permits and electricity.

Outward Investment

The GRM does not promote or incentivize outward investment.  It also does not restrict domestic investors from investing abroad.  The law does request that domestic investors remit investment income from overseas, except for amounts required to pay debts, taxes, or other expenses abroad.

The United States negotiated a Bilateral Investment Treaty (BIT) with Mozambique that went into force on March 3, 2005.  In June 2005, the two countries signed a Trade and Investment Framework Agreement (TIFA), establishing a Trade and Investment Council to discuss bilateral and multilateral trade and investment issues.  The Council held its first meeting in October of 2006.

In 2016, the United States and the GRM held the fourth round of TIFA talks, continuing the collaborative work of addressing trade constraints, improving Mozambique’s business and investment environment, and expanding and diversifying trade between the United States and Mozambique.  The talks also discussed how the U.S. government could work with the GRM to meet its World Trade Organization (WTO) obligations, and advance trade facilitating activities related to sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT).

Mozambique has also signed bilateral investment agreements with Algeria, BLEU (Belgium-Luxembourg Economic Union) , Brazil, China, Cuba, Denmark, Egypt, Finland, France, Germany, India, Indonesia, Italy, Japan, Mauritius, Netherlands, Portugal, South Africa, Sweden, Switzerland, Turkey, United Arab Emirates, the United Kingdom, Vietnam, and Zimbabwe.

Mozambique does not have a bilateral taxation treaty with the U.S. government, but has double taxation treaties with Portugal, Mauritius, Italy, South Africa, Botswana, India, Vietnam, Macau, Oman, and the UAE.  Double taxation treaties with Qatar and Uruguay are under negotiation.

Transparency of the Regulatory System

Investors face myriad requirements for permits, approvals, and clearances that take substantial time and effort to obtain.  The difficulty of navigating the system provides opportunities for corruption and bribery when officials facilitate routine transactions.  Regulations in the areas of labor, health and safety, and the environment often go unenforced, or are selectively enforced.  In addition, civil servants have threatened to enforce antiquated regulations that remain on the books to obtain favors or bribes.

Draft bills are usually made available for public comments through the business associations or relevant sectors or in public meetings.  Changes to laws and regulations are published in the National Gazette.  Public comments are usually limited to input from a few private sector organizations, such as CTA.  There have been complaints of short comment periods and that comments are not properly reflected in the National Gazette.  The GRM is considering a law that would make public consultation on future legislation mandatory.

International Regulatory Considerations

Mozambique is a member of SADC (Southern African Development Community).  In June 2016, the SADC EPA Group, which includes Mozambique, Botswana, Lesotho, Namibia, South Africa, and Swaziland, signed an Economic Partnership Agreement with the European Union. Mozambique exports aluminum under the EPA agreement.

The GRM ratified the Trade Facilitation Agreement (TFA) in July 2016 and notified the WTO in January 2017.  A National Trade Facilitation Committee was established to coordinate the implementation of the TFA.

Legal System and Judicial Independence

Mozambique’s legal system is based on Portuguese civil law and customary law.  In December 2005, the Parliament approved major revisions to the Commercial Code – the result of a collaborative effort starting in 1998 between the Mozambican government, the private sector, and donors.  The previous Commercial Code was from the colonial period, with clauses dating back to the 19th century, and it did not provide an effective basis for modern commerce or resolution of commercial disputes.  The revised code went into effect July 1, 2006.  In April 2018, the Council of Ministers passed new provisions for the Commercial Code, which were debated and approved in Parliament.

Laws and Regulations on Foreign Direct Investment

The Code of Fiscal Benefits, Law No. 4/2009, passed in January 2009, and Decree No. 56/2009, approved in October 2009, form the legal basis for foreign direct investment in Mozambique. Operating within these regulations, APIEX analyzes the fiscal and customs incentives available for a particular investment.  Investors must establish foreign business representation and acquire a commercial representation license.  During project development, investors must document their community consultation efforts related to the project.  If the investment requires the use of land, the investor will also have to present, among other documents, a topographic plan or an outline of the site where the project will be developed.

If the investment involves an area under 1,000 hectares and the investment is up to approximately USD 25 million, the governor of the province where it will be located can approve the investment.  APIEX has the authority to approve any project between USD 25 million and approximately USD 40 million.  The Minister of Economy and Finance must approve national or foreign investment between approximately USD 40 million and USD 225 million.  If the investment (national or foreign) occupies an area of 10,000 hectares or an area superior to 100,000 hectares for a forestry concession, or it amounts to more than USD 225 million, the project must be approved by the Council of Ministers.

On February 21, 2017, the GRM approved a new regulation to facilitate visas for foreign nationals intending to invest in projects in Mozambique.  The measure reduced the minimum investment amount required from USD 50 million to USD 500,000 for an investment visa.  Under the new visa regulations, citizens of nations that have Mozambican embassies or consulates may now also request visas upon entry for the purposes of short-term tourism and/or business.  The new border visa is valid for stays of up to 30 days and allows two entries.  It cannot be renewed or extended in Mozambique.

Competition and Anti-Trust Laws

Law 10/2013, passed on April 11, 2013, and known as the Competition Law, established a modern legal framework for competition in Mozambique and created the Competition Regulatory Authority.  A budget has still not been allocated to this body, and the GRM needs to appoint a board of directors.  The framework is inspired by the Portuguese competition enforcement system.  Violating the prohibitions contained in the Competition Law (either by entering into an illegal agreement or practice or by implementing a concentration subject to mandatory filing) could result in a fine of up to 5 percent of the turnover of the company in the previous year.  Competition Regulatory Authority decisions may be appealed in the Judicial Court in Maputo, for cases leading to fines or other sanctions, or to the Administrative Court for merger control procedures.

Expropriation and Compensation

While there have been no significant cases of nationalization since the adoption of the 1990 Constitution, Mozambican law holds that “when deemed absolutely necessary for weighty reasons of national interest or public health and order, the nationalization or expropriation of goods and rights shall (result in the owner being) entitled to just and equitable compensation.” No American companies have been subject to expropriation issues in Mozambique since the adoption of the 1990 Constitution.

Dispute Settlement

ICSID Convention and New York Convention

Mozambique acceded in 1998 to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Investor-State Dispute Settlement

For disputes between U.S. and Mozambican companies where a Bilateral Investment Treaty (BIT) violation is alleged, recourse via the international Alternative Dispute Resolution may also be available.  No investment disputes in the past ten years have involved U.S. investors. Investors who feel they have a dispute covered under the BIT should contact the U.S. Embassy.

International Commercial Arbitration and Foreign Courts

In 1999, the Parliament passed Law no. 11/99 (Law on Arbitration), which allows access to modern commercial arbitration for foreign investors.  The Judicial Council approved Resolutions No. 1/CJ/2017 and No. 2/CJ/2017 in 2017, creating the Regulations of Mediation Services in Judicial Courts and the Judicial Mediators’ Code of Conduct.  These new resolutions are designed to promote the mediation process as an alternative to litigation.

The Center of Arbitration, Conciliation, and Mediation (CACM) offers commercial arbitration. During 2018, CACM handled 20 cases of commercial arbitration, and another five cases are in process.  CACM has 298 arbitrators, 11 of which are international.  One of the main constraints to the use of arbitration is that many contracts do not incorporate a clause that allows conflicts to be resolved via arbitration instead of in the courts.

Bankruptcy Regulations

In June 2014, the GRM passed a comprehensive legal regime for bankruptcy, streamlining the bankruptcy process and setting the rules for business recovery.  Globally, Mozambique stands at 84 of 190 economies on the ease of resolving insolvency issues, according to the 2018 Doing Business Report.

Investment Incentives

The Code of Fiscal Benefits contains specific incentives for entities that intend to invest in certain geographical areas within Mozambique that have natural resource potential but which lack infrastructure and have low levels of economic activity.  Rapid Development Zones (RDZ) were also created to facilitate investment.  Investments in these zones are exempt from import duties on certain goods and are granted an investment tax credit equal to 20 percent of the total investment (with a right to carry the credit forward for five years).  Additional modest incentives are available for professional training and the construction and rehabilitation of public infrastructure, including, but not limited to roads, railways, water supply, schools, and hospitals.

The Code of Fiscal Benefits, Law No. 4/2009, passed in 2009, is available at: https://investmentpolicyhubold.unctad.org/InvestmentLaws/laws/108 .  The Regulations for the Code of Fiscal Benefits are set forth in Decree No. 56/2009, which was approved in October 2009.  APIEX can assist companies with the investment incentives stipulated in the Code of Fiscal Benefits

Foreign Trade Zones/Free Ports/Trade Facilitation

Mozambique has seven free trade zones in the country, which provide a variety of fiscal exemptions depending on the sector of investment as well as the project location.  Investors should pay close attention to documents and procedures requested in order to establish a business locally or to request fiscal and customs incentives if investing in an industrial free zone. Information regarding business registration and administrative practices are available at: http://www.portaldogoverno.gov.mz/por/Empresas/Registos .

Performance and Data Localization Requirements

The government generally does not require investors to purchase from local sources, nor does it require technology or proprietary business information to be transferred to a local company; however, a proposed “Local Content” law could create additional requirements in this realm.

Regulations for new mining and petroleum laws may require investors to give preference to local sources available in Mozambique if the goods or services are of an internationally comparable quality and competitively priced.

Companies may hire foreign workers only when there are not sufficient Mozambican workers available that meet specific job qualifications.  The Ministry of Labor enforces quotas for foreign workers as a percentage of the workforce within individual private companies.  All investments must specify the number and category of Mozambican and foreign workers.

There are currently no data localization policies in effect in Mozambique.  The government agency responsible for enforcing IT policies and rules is:

UTICT – Unidade Tecnica de Implementacao da Politica de Informatica
Technical Implementation Unit for IT Policy
Tel: (258) 21 309 398; 21 302 241
Mobile (258) 305 3450
Email: cpinfo@infopol.gov.mz

Real Property

The legal system recognizes and protects property rights to buildings and movable property. Private ownership of land, however, is not allowed in Mozambique.  Land is owned by the State. The government grants land-use concessions called DUATs (Direitos de Uso e Aproveitamento de Terra, or a land-use title) for periods of up to 50 years, with options to renew for an additional 50 years.  Essentially, land-use concessions serve as proxies for land titles.  There is no robust market in land user rights and land use titles are not easily transferable.  The process to award land concessions is not transparent and the government at times has granted overlapping land concessions.  It takes an average of 90 days to issue a land title for most of the concessions.  The Mozambican banking community uses property other than land – cars, private houses, and infrastructure – as collateral, as it is not possible to securitize property for lending purposes.

Investors should be aware of the requirement to obtain endorsement of their projects in terms of land use and allocation at a local level from the affected communities.  APIEX assists investors in finding land for development and obtaining appropriate documentation, including agricultural land.  The government advises companies on relocating individuals currently occupying land designated for development; however, companies are ultimately responsible for planning and executing resettlement programs.

Intellectual Property Rights

The Parliament passed a copyright and related rights bill in 2000, which, when combined with the 1999 Industrial Property Act, brought Mozambique into compliance with the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  The law provides for the security and legal protection of industrial property rights, copyrights, and other related rights.  In addition, Mozambique is a signatory to the Bern Convention, as well as the New York and Paris Conventions.

Despite enforceable laws and regulations protecting intellectual property rights (IPR) and providing recourse to criminal or administrative courts for IPR violations, it remains difficult for investors to enforce their IPR.  The registration process is relatively simple and private sector organizations have been working with various government entities on an IPR taskforce to combat IPR infringement and related public safety issues.

IPR enforcement in Mozambique remains sporadic and inconsistent.  Mozambique’s National Inspectorate of Economic Activities (INAE) has increased seizures of counterfeit goods since 2017, confiscating Hewlett-Packard (HP) toner cartridges, Nike, Adidas, and Ralph Lauren and other falsely branded merchandise in several large busts, but raids and prosecutions are limited. Pirated copies of audio, videotapes, DVDs, and other counterfeit goods are commonly sold in Mozambique.

Mozambique is not included in the United States Trade Representative (USTR) Special 301 Report or Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at https://www.wipo.int/directory/en/details.jsp?country_code=MZ 

Capital Markets and Portfolio Investment

The Mozambique Stock Exchange (BVM – Portuguese acronym) is a public institution under the guardianship of the Minister of Economy and Finance and the supervision of the Central Bank of Mozambique.  Corporate and government bonds are traded on the BVM and there is only one dealer that operates in the country, with all other brokers incorporated into commercial banks, which act as the primary dealers for treasury bills.  The secondary market in Mozambique remains underdeveloped.  Available credit instruments include medium and short-term loans, syndicated loans, foreign exchange derivatives, and trade finance instruments, such as letters of credit and credit guarantees.  The BVM remains illiquid, in the sense that very limited activity occurs outside the issuing time.  Investors tend to hold their instruments until maturity.  The market also lacks a bond yield curve as government issuances use a floating price regime for the coupons with no price discovery for tenures above 12 months.

The GRM notified the IMF that it has accepted the obligations of Article VIII sections 2, 3, and 4 of the IMF Articles of Agreement, effective May 20, 2011.

Money and Banking System

The Mozambican Association of Banks (AMB) and KPMG reported in 2017 that the four largest commercial banks accounted for almost 98 percent of the profits in Mozambique’s banking sector.  The remaining 15 banks earned 2 percent of banking profits.  The number of bank branches in Mozambique rose from 616 in 2015 to 637 in 2016 with the bulk of these branches concentrated in major cities; rural districts often have no banks at all.  Credit is allocated on market terms but eligibility requirements exclude much of the population from obtaining credit. Banks request collateral, but since land cannot be used as collateral, the majority of individuals do not qualify for loans.  Foreign investor export activities in critical areas related to food, fuel, and health markets have access to credit in foreign and local currencies.  All other sectors have access to credit only in the local currency.

Seeking to strengthen the banking sector in 2017, the Central Bank increased shareholder capital requirements from USD 1 million to USD 25 million and raised the capital adequacy ratio from 9 percent to 12 percent.  Although non-performing loans (NPLs) as a percentage of bank loans had declined to 11.1 percent at the end of 2018 from a high of 13.8 percent reached at the end of 2017, it remains elevated and relatively high compared to 2015 and 2016, when NPLs were 4 percent and 6 percent.  Even so, the IMF has stated that the banking system remains stable, and noted that the the Bank of Mozambique (BOM) has continued to address banking sector vulnerabilities.

The Central Bank, in 2016, took administrative control over Moza Banco, Mozambique’s fourth largest commercial bank, dissolving its board and replacing it with a provisional board.  Moza Banco’s shareholders failed to recapitalize the bank in March 2017 and the BOM recapitalized the bank by purchasing 80 percent of Moza Bank’s shares using the Central Bank’s pension fund.  In 2018, the BOM twice sanctioned commercial banks operating in the domestic market that did not meet the necessary reporting requirements for suspicious transactions, fining five banks more than a million dollars for providing incomplete information and failing to control transactions vulnerable to money laundering.

During 2018, the BOM introduced changes in the banking system in order to improve the sector. The BOM now has the power to issue rules on foreign exchange.  In October 2018 through 10/GBM/2018, it established parameters to help it identify credit institutions that could pose a systematic risk to the Mozambican banking system.  The BOM also set out the Code of Conduct for Credit Institutions and Financial Companies in 2/GBM/2018 to specify responsibilities that financial institutions have related to providing information to clients, data protection, and abusive contracts.  The BOM also liberalized commercial banks’ current operations, doing away with Central Bank pre-authorizations for some capital operations, such as the registration of foreign exchange.

In terms of monetary policy, the BOM has also been cautiously easing monetary policy in response to reduced inflationary pressures.  The Monetary Policy Committee cut the policy rate by 750 basis points, stabilizing it at 14.25 percent.

Foreign Exchange and Remittances

Foreign Exchange

In December 2017, Mozambique approved new exchange control rules in Decree 49/2017. Residents in Mozambique are now required to remit export earnings to Mozambique into an export earnings account in foreign currency, which can only be used for specifically defined purposes.  Under the new decree, the mandatory registration of foreign exchange operations will now be processed electronically in real time by the commercial banks.  Applications for capital operations are now processed by commercial banks and forwarded to the Central Bank of Mozambique.  Foreign direct investment (FDI) up to USD 250,000 no longer requires prior authorization from the Bank of Mozambique and only needs to be registered with the commercial bank handling the transactions.  Shareholder and intercompany loans made by foreign entities up to USD 5 million require no authorization from the Central Bank, provided the loans are interest free or lower than the base lending rate for the relevant currency, the repayment period is at least three years, and no other fees or charges apply.

A special foreign exchange regime for oil, gas, and mining sectors allows for greater flexibility in foreign exchange and financing operations.  The law, which went into force in January 2018, stipulates that profits from petroleum rights are entirely taxed at an autonomous tax rate of 32 percent.  The law also guarantees tax stabilization for up to 10 years, starting from the beginning of commercial production with an investment amount of USD 100 million.  The Ministry of Economy and Finance can also approve the use of U.S. dollars, if the company has invested at least USD 500 million and more than 90 percent of its transactions are in U.S. dollars.  The law also revoked a 50 percent tax rate reduction related to the production tax that was available when extracted products were used locally.

Remittance Policies

Under the 2017 Decree, there is no longer an obligation to convert 50 percent of export proceeds into the local currency.  The new decree only requires that a sufficient quantity be converted into the local currency to cover payments to residents locally.

Sovereign Wealth Funds

The GRM is exploring establishing a sovereign wealth fund for LNG revenues that are expected in the next decade.  Currently there is an off-budget account for capital gains revenues.  The Budget Law authorizes the government to save or spend windfall revenues on investment projects, debt repayment, and emergency programs.  However, there are limited details on how off-budget spending should be planned and approved.

In March 2018, the Parliament passed a new law that broadens the definition of state-owned enterprises (SOEs) to include all public enterprises and shareholding companies.  The law seeks to unify SOE oversight and harmonize the corporate governance structure, placing additional financial controls, borrowing limits, and financial analysis and evaluation requirements for borrowing by SOEs.  The law requires the oversight authority to publish a consolidated annual report on SOEs, with additional reporting requirements for individual SOEs.  The Council of Ministers approved regulations for the SOE law in early 2019, but there has still not been a meaningful increase in public disclosure by the state owned companies.  In December 2017, the Council of Ministers also approved a decree to manage government guarantees and public debt that clearly defines the instruments for guarantees and state borrowing.

State-owned enterprises have their origin in the socialist period directly following Mozambique’s independence in 1975, with a variety of SOEs competing with the private sector in the Mozambican economy.  Government participation varies depending on the company and sector. SOEs are managed by the Institute for the Management of State Participation (IGEPE – Portuguese acronym).  Following past privatization and restructuring programs, IGEPE now holds majority and minority interests in 128 firms, down from 156.

Some of the largest SOEs, such as Airports of Mozambique (ADM) and Airlines of Mozambique (Travel – airports and air transportation), and Electricity of Mozambique (Energy & Mining – electrical utility), have monopolies in their respective industries.  In some cases, SOEs enter into joint ventures with private firms to deliver certain services.  For example, Ports and Railways of Mozambique (CFM-Portuguese acronym) offers concessions for some of its ports and railways. Many SOEs benefit from state subsidies.  In some instances, SOEs have benefited from non-competed contracts that should have been competitively tendered.  SOE accounts are generally not transparent and not thoroughly audited by the Supreme Audit Institution.  SOE debt represents an unknown, but potentially significant liability for the GRM.

Privatization Program

Mozambique’s privatization program has been relatively transparent, with tendering procedures that are generally open and competitive.  Most remaining parastatals operate as state-owned public utilities, with government oversight and control, making their privatization more politically sensitive.  While the government has indicated an intention to include private partners in most of these utility industries, progress has been slow.

Larger companies and foreign investors in Mozambique tend to follow their own responsible business conduct (RBC) standards.  For some large investment projects, RBC-related issues are negotiated directly with the GRM.  Responsible business conduct is an increasingly high-profile issue in Mozambique, especially in the extractive industries, with some projects requiring resettlement of communities.

The National Assembly passed an anti-corruption bill in 2004.  Mozambique established an anti-corruption unit, the Central Office for Fighting Corruption (GCCC), within the Office of the Attorney General to investigate corruption-related crimes.  In 2005, the government passed Decree 22/2005, which created provincial-level offices to combat corruption.  The 2012 Law on Public Integrity banned government officials and parliamentarians from simultaneously holding positions in SOEs.  Mozambique passed a Right to Information law in 2014, which came into force in January 2016, although there have been cases of some journalists being denied requests for information.

Though Mozambique has made progress developing the legal framework to combat corruption, the policies and leadership necessary to ensure effective implementation have been insufficient.

Mozambique fell five places to 158 out of 180 countries in Transparency International’s 2018 Corruption Perceptions Index.  Corruption is a concern across the government, and senior officials often have conflicts of interest between their public roles and their private business interests.  There are also frequent reports of corruption and bribe-seeking among Mozambican police forces.

A few civic organizations and journalists remain vocal on corruption-related issues.  One NGO, the Center for Public Integrity (Portuguese acronym -CIP), continues to publicly pressure the government to act against corrupt practices.  CIP finds that many local businesses are closely linked to the government and have little incentive to promote transparency.  Despite strong rules prohibiting the bribery of public officials, enforcement remains limited.

In 2018, there was an increase in the number of corruption cases involving high-level government officials, including the former Minister of Transport and Communications and the former Mozambique ambassador to the United States, who were convicted by the courts for abuse of power.

Resources to Report Corruption

Contact at government agency or agencies responsible for combating corruption:

Ana Maria Gemo
Central Anti-Corruption Office (Gabinete Central de Combate a Corrupcao)
Avenida 10 de Novembro, 193
+258 82 3034576
gabinetecorrupção@yahoo.com.br

Contact at “watchdog” organization

Fatima Mimbire
Project Coordinator Extractive Industries
Center for Public Integrity (Centro de Integridade Publica)

Rua Fernão Melo e Castro, 124
+258 82 5293957
fatima.mimbire@cipmoz.org

Between 2013 and 2016, Mozambique experienced waves of politically motivated violence due to a simmering armed conflict between GRM forces and the main opposition party Renamo.  Tensions peaked in 2016, a year that saw GRM forces deploy armed convoys along the country’s two main commercial highways to counter Renamo attacks.  Thousands of Mozambicans sought asylum in neighboring Malawi to avoid the conflict.  International human rights organizations described alleged human rights violations against the refugees and their families carried out by GRM forces, as well as allegations of mass graves.  Political killings, attacks on public transportation, and kidnappings were also attributed to Renamo by Human Rights Watch.

After a cessation of hostilities was declared in December 2016, the GRM and Renamo made significant progress towards a lasting peace in 2017 and 2018.  The GRM and Renamo agreed to a power-sharing decentralization package in February 2018, which was incorporated into the Mozambican Constitution by Parliament in May 2018, and will allow for the first time, the election of provincial governors during the October 2019 elections.  Work continues on the implementation of the second element of the peace process having to do with the disarmament, demobilization, and reintegration of Renamo combatants.

On the security front, the GRM faces significant challenges in its efforts to combat transnational and organized crime, prevent the spread of violent extremism, and curb poaching and illegal wildlife trafficking.  Since 2017, Islamic extremists have carried out unprecedented attacks against government facilities and communities in Cabo Delgado province, killing scores of government security personnel and local villagers, often exhibiting extreme brutality.  The frequency and severity of the attacks increased in 2018.  On February 21, 2019, an attack was carried out against a convoy of a contractor working for an international oil company, the first attack on a multinational project by the extremists.  These attacks highlight long-simmering economic and social risk factors for radicalization in the north and underscore the need for national counterterrorism and countering violent extremism (CVE) strategies.

The labor market is dominated by the informal economy with the vast majority of people (approximately 80 percent) working in subsistence agriculture, particularly in rural areas.  People in cities often work in informal trade.

There is an acute shortage of skilled labor in Mozambique.  As a result, many employers import foreign employees to fill these skill gaps.  The GRM maintains quotas that limit the number of foreign nationals a business can employ in relation to the number of Mozambican citizens it employs.  The government passed a labor regulation in 2016 strengthening the requirement for employers of foreign nationals to devise a skills transfer program that trains Mozambican nationals to eventually replace the foreign workers.

The constitution and law provide that workers, with limited exceptions, may form and join independent trade unions, conduct legal strikes, and bargain collectively.  The law requires government approval to establish a union.  The government has 45 days to register employers’ or workers’ organizations, a delay the International Labor Organization (ILO) deemed excessive. Approximately 3 percent of the labor force is affiliated with trade unions.  An employee fired with cause does not have a right to severance, while employees terminated without cause do.  Unemployment insurance does not exist and there is not a social safety net program for workers laid off for economic reasons.

The GRM is reviewing the Labor Law to align it with international conventions related to forced labor, health and safety issues in mining, and the worst forms of child labor.  The proposed law would also extend the maternity leave period from 60 to 90 days.  The new labor law will also address sexual harassment.

The Overseas Private Investment Corporation (OPIC), an independent U.S. government agency that assists with project finance, through loans or loan guaranties, and political risk insurance, signed an investment incentive agreement with Mozambique in 1999.  Potential for OPIC investment is likely to increase in line with Mozambique’s own expected economic growth due to commercialization of Mozambique’s natural resources.  The recently approved Build Act has merged OPIC and USAID finance programs into one institution; the U.S. International Development Finance Corporation (USIDFC).  This new development finance institution has greatly increased its financial capabilities and scope of work, including the ability to make equity investments, as well as provide technical assistance, small grants, and local currency loans.  The USIDFC has also relaxed its preference for projects with U.S. investors.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Table 3: Sources and Destination of FDI

Table 4: Sources of Portfolio Investment

Data not available.

Elizabeth Filipe
Economic Assistant
Avenida Kenneth Kaunda, 193
Maputo, Mozambique
(258) 2149-2797
FilipeEC@state.gov