HomeReportsInvestment Climate Statements...Custom Report - d1bba9ce10 hide Investment Climate Statements Custom Report Excerpts: Mozambique Bureau of Economic and Business Affairs Sort by Country Sort by Section In this section / Mozambique Executive Summary 1. Openness To, and Restrictions Upon, Foreign Investment 3. Legal Regime 5. Protection of Property Rights 6. Financial Sector 9. Corruption 10. Political and Security Environment 11. Labor Policies and Practices Mozambique Executive Summary Mozambique’s lengthy coastline, deep-water ports, favorable climate, rich soil, and vast natural resources give the country significant potential, but investors face challenges related to the business environment. The Government of the Republic of Mozambique (GRM) made progress on public financial management reforms and publishing budget and debt figures, took steps to reform State-Owned Enterprises (SOEs), and arrested or prosecuted high-level officials on corruption-related charges. It reached an agreement with the IMF and promoted dialogue with the private sector and donor community on economic reforms. Challenges include Mozambique’s opaque and complicated taxation policies, barriers to private land ownership, corruption, an underdeveloped financial system, high interest rates, poor infrastructure, and difficulties obtaining visas. Infrastructure outside of Maputo is often poor, while bureaucracy and corruption slow trade at many points of entry. Mozambican labor law makes it difficult to hire and fire workers, and court systems are bogged down in labor disputes. The domestic workforce also lacks many advanced skills needed by industry, and the visa regime makes bringing in foreign workers difficult. Insecurity related to a terrorist insurgency in northern Mozambique has resulted in multi-billion-dollar onshore LNG projects being delayed, although a smaller offshore floating LNG platform remains on track to begin production by October 2022. The COVID-19 pandemic negatively impacted the extractive industry and tourism sector, and pandemic-related restrictions affected many other economic sectors. Following a recession in 2020, the economy returned to 2.5 percent economic growth in 2021. In 2022, the GRM began to ease some restrictions, although COVID-19 measures have continued to limit the hours restaurants and other businesses can operate and impose testing requirements on travelers. Mozambique is eager to partner with the United States on climate issues, although it lacks resources. It joined the Agricultural Innovation Mission for Climate (AIM4C) and is considering joining the Global Methane Pledge. As the GRM made progress on rural electrification, it incorporated solar energy and solicited investment for hydropower projects. U.S. development agencies and international financial institutions contributed to energy projects in solar and natural gas. The U.S. Department of Energy helped identify areas where small renewable solar and wind projects could be built alongside agricultural activities. These areas may provide opportunities for sustainable foreign direct investment in the renewable energy market. Mozambique is a growing producer of critical minerals, including graphite, lithium, and titanium. In 2021, Mozambique joined the Kimberley Process Certification Scheme, enabling Mozambique to legally export diamonds. The GRM worked constructively with the United States and other members of the donor community. In March 2022, it reached an agreement with the IMF for a three-year, $470 million program that aims to reinforce economic recovery while addressing challenges related to debt and financing and encouraging good governance and improved management of public resources. The GRM is working with the U.S. Millennium Challenge Corporation (MCC) towards signing a second MCC compact (Compact II) in 2023. Compact II will entail business-enabling reforms and will undertake investments in Zambézia Province that focus on transportation infrastructure, commercial agriculture, and climate change mitigation. While Compact II is still under development, it has potential to contribute to key sectors and help create an enabling environment for additional investments. Table 1: Key Metrics and Rankings Measure Year Index/Rank Website Address TI Corruption Perceptions Index 2021 147 of 180 http://www.transparency.org/research/cpi/overview Global Innovation Index 2021 122 of 132 https://www.globalinnovationindex.org/analysis-indicator U.S. FDI in partner country ($M USD, historical stock positions) 2018 $491 https://apps.bea.gov/international/factsheet/ World Bank GNI per capita (USD) 2020 $460 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD 1. Openness To, and Restrictions Upon, Foreign Investment The GRM welcomes foreign investment and sees it as a critical driver of economic growth and job creation. Except for a few sectors related to national security, all business sectors are open to foreign investment. Mozambique’s 1993 Investment Law (no. 3/93) and a 2009 decree (no. 43/2009) govern foreign investments. Many observers perceive the Investment Law as obsolete, although the GRM has not yet taken steps to revise it. In general, large investors receive more support from the GRM than small and medium-sized investors. GRM authorities must approve all foreign and domestic investment, including guarantees and incentives. Regulations for the 2009 Code of Fiscal Benefits law (no. 4/2009), were established under a 2009 Decree (no. 56/2009). The Agency for Promotion of Investments and Exports (APIEX, Agencia para a Promocao de Investimentos e Exportacoes) is the primary investor contact within the GRM, operating under the Ministry of Industry and Commerce (MIC), with the objective of promoting and facilitating private and public investment. APIEX also oversees the promotion of national exports and assists investors 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 http://www.apiex.gov.mz/ Rua da Imprensa, 332 (ground floor) Tel: (+258) 21313310 Ahmed Sekou Touré Ave., 2539 Maputo Telephone: (+258) 21 321291 Mobile: (+258) 823056432 GRM dialogue with the private sector is primarily coordinated by Mozambique’s Ministry of Industry and Commerce (MIC). Most businesses in Mozambique interact with the GRM via the country’s largest business association, the Confederation of Economic Associations (CTA, Confederação das Associações Económicas de Moçambique). CTA was formed in 1996 and continues to be the most influential business association in Mozambique. CTA hosts an annual conference for private sector dialogue with the GRM (Conferencia Annual do Sector Privado; CASP), which is usually attended by the President of Mozambique and senior cabinet officials. With some exceptions, Mozambique’s Investment Law and its regulations generally do not distinguish between investor origin or limit foreign ownership or control of companies. The 2011 “Mega-Projects Law” (no. 15/2011) stipulates that 5 – 20 percent of the equity capital of public-private partnerships, large-scale ventures, and major business concessions be owned by Mozambicans. The Petroleum Law (no. 14/2014) 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 of this law establishes the state-owned oil company, the National Hydrocarbon Company (Empresa National das Hidrocarbonetos; ENH) as the GRM’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. Depending on the size of the investment, the GRM approves both domestic and foreign investments at the provincial or national level, but there is no other formal investment screening process. In March 2022, CTA published a report entitled “ Accelerating actions for economic recovery in Mozambique’s Private Sector.” The report lists seven key recommendations announced at the March 30-31 CASP conference: 1) Reduce the number of days required to obtain a business license; 2) reduce the cost of finance; 3) apply incentives to increase industrialization; 4) increase the number of products certified at international standards; 5) strengthen small and medium enterprises through legal reforms and payment of all government debts to companies; 6) increase agricultural productivity through fiscal reform; and 7) increase influx of international tourists to Mozambique by facilitating visas and lowering value added taxes paid by tourists. Starting a business in Mozambique is a lengthy, bureaucratic, and complex process that has contributed to Mozambique’s relatively low score on the World Bank’s Doing Business Report. In the 2020 report (the most recent available), Mozambique ranked 176 out of 190 economies worldwide for ease of starting a new business, scoring well below the regional average for sub-Saharan Africa. Its low rank is due in part to the relatively high cost of registering a business and number of procedures required to complete the process. Registering a business typically involves many steps including reserving a name, signing an incorporation contract, paying registration fees, publishing the company’s name and statutes in the national gazette, registering with the tax authority, and notifying relevant agencies of the start of activity. According to the World Bank, this process takes approximately seventeen days. There is not a business registration website; however, APIEX maintains a guide to starting a business with some resources. In 2020, the City of Maputo consolidated some of the steps by establishing a “one stop shop” (balcão de atendimento unico; BAU), reducing the number of days required to register a new company to eleven. The GRM has initiated several projects to promote competitiveness within the private sector. The MIC collaborated with CTA to create an action plan for improving the business environment (Plano de Acção para Melhorar a Ambiente de Negocios; PAMAN) in the 2019-2021 period, although the GRM achieved only 38.6 percent of the proposed reforms. In 2020, the GRM partnered with CTA to launch the Programa Nacional de Certificação Empresarial (PRONACER) to support small and medium enterprises. The GRM does not promote or incentivize outward investment. It also does not restrict domestic investors from investing abroad. However, Mozambique does require domestic investors to remit investment income from overseas, except for amounts required to pay debts, taxes, or other expenses abroad. 3. Legal Regime Investors face numerous requirements for permits, approvals, and clearances, which often take substantial time and effort to obtain. The difficulty of navigating the system creates vulnerabilities to corruption, a risk that is aggravated by relatively low wages earned by administrative clerks. Labor, health, safety, and environmental regulations may go unenforced or are selectively enforced. In some cases, civil servants have reportedly threatened to enforce antiquated regulations that remain on the books in order to obtain favors or bribes. The private sector, through CTA, maintains an ongoing dialogue with the GRM, holding quarterly meetings with the Prime Minister and an annual meeting with the President. On behalf of its members and other business associations, CTA provides feedback to the GRM on laws and regulations that impact the business environment. However, because of its exclusive role in communicating with the GRM on behalf of the private sector, some businesses have expressed concerns that not all voices are heard. In addition, some businesses have argued that CTA is not an effective advocate given its political affiliation with long-time ruling party Frelimo. Numerous other business associations exist, including a newly accredited American Chamber of Commerce (AmCham), formed in 2019 to represent the interests of the U.S. business community in Mozambique. The GRM requires businesses in certain sectors to apply for an Environmental License, via the Environmental Impact Evaluation Process, regulated under the Environmental Impact Assessment Regulation (no. 54/2015). The Ministry of Land and Environment and its subordinate institutions and directorates issue licenses following the Environmental Impact Evaluation Process, which entails creation of an Environmental and Social Management Plan (ESMP). Draft bills are made available for public comment through business associations or in public meetings. The GRM publishes changes to laws and regulations in the National Gazette, which is available electronically. 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. Overall fiscal transparency in Mozambique is improving in the wake of the “hidden debts” scandal, which broke in 2016. GRM reporting on public debts has improved, with SOE debt now included in the national budget. However, publicly available budget documents still do not provide a complete picture of the GRM’s revenue streams, particularly with regard to SOE earnings, which generally do not have publicly available audited financial statements. The GRM also maintains off-budget accounts not subject to adequate audit or oversight. For published portions of the budget that were relatively complete, the information provided was generally reliable. The March 2022 IMF agreement contains reform measures designed to improve the GRM’s public financial management. Mozambique is a member of the Southern African Development Community (SADC). In 2016, Mozambique, Botswana, Lesotho, Namibia, South Africa, and Eswatini (then-Swaziland), signed an Economic Partnership Agreement (EPA) with the European Union. Mozambique exports aluminum under this EPA agreement. The GRM ratified the World Trade Organization (WTO) Trade Facilitation Agreement (TFA) in July 2016 and notified the WTO in January 2017. The GRM established a National Trade Facilitation Committee to coordinate the implementation of the TFA. Mozambique is a member of the WTO and generally notifies the WTO Committee on Technical Barriers to Trade (TBT) of all draft technical regulations. The National Institute of Norms and Quality (Instituto Nacional de Normalização e Qualidade, INNOQ) falls under the supervision of the Ministry of Industry and Commerce and is the WTO enquiry point for TBT-related issues. INNOQ is a member of the International Standards Organization (ISO) and carries the mandate to issue ISO 9001 certificates. According to the WTO’s 2017 Trade Policy Review of Mozambique , no specific trade concerns have been raised about Mozambique’s TBT measures in the WTO TBT Committee. Like most countries in Africa, Mozambique generally uses standards based on existing ISO and International Electrotechnical Commission (IEC) standards for most products. Mozambique’s legal system is based on Portuguese civil law and customary law. The GRM updated its Commercial Code in 2005 and 2018. In recent years, Mozambique’s legal system has shown a degree of independence. In August 2021, the Maputo City Judicial Court began proceedings for 19 defendants in the “hidden debts” trial, who were accused of illicitly acquiring over $2 billion in state-backed loans under the guise of developing a tuna fishing fleet and coastal protection system. The court completed hearings in March 2022, and anticipated verdicts to be announced on August 1, 2022. It is unclear whether Mozambique’s General Prosecutor will pursue further indictments. The former Finance Minister responsible for signing the illicit state-backed loan guarantees in the scandal remains under custody in South Africa, pending possible extradition to the United States. The General Prosecutor’s office has also pursued suspects in separate corruption-related cases. The 2009 Code of Fiscal Benefits (no. 4/2009) and 2009 Decree (no. 56/2009) 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 must 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 under approximately $25 million, the governor of the province where it will be located can approve the investment. While APIEX has the authority to approve any project up to $40 million, the Minister of Economy and Finance (MEF) must approve national or foreign investments between $40 million and $225 million. If the investment occupies an area of 10,000 hectares, or an area greater than 100,000 hectares for a forestry concession, or it amounts to more than $225 million, the Council of Ministers must approve it. APIEX provides additional information regarding Mozambique’s investment requirements. The 2013 “Competition Law” (no. 10/2013), established a modern legal framework for competition and created the Competition Regulatory Authority, 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 five 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. 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.” The GRM adopted a comprehensive legal regime for bankruptcy in 2013 known as the “Insolvency Law” (no. 1/2013). This law streamlines the bankruptcy process, sets the rules for business recovery, facilitates potential recovery for struggling businesses, and establishes legal methods to declare bankruptcy. Under the law, creditors can approve a proposed rescue plan, request that a debtor be declared insolvent, and challenge suspicious transactions. 5. Protection of Property Rights The legal system recognizes and protects property rights to buildings and movable property, although private land ownership is not permitted, as all land is owned by the State. The GRM grants land-use concessions called Direitos de Uso e Aproveitamento de Terra (DUAT) for periods of up to 50 years with options to renew for additional periods. In practice, DUATs serve as proxies for land titles, although there is no robust market for DUATs as they are not easily transferable. The process to award DUATs is not transparent and the GRM at times has granted overlapping DUATs that require lengthy negotiations to resolve. It takes an average of 90 days to issue a DUAT. Banks in Mozambique tend to rely on property other than land – cars, private houses, and infrastructure – as collateral. While CTA and other entities have made efforts to make DUATs “bankable,” it is not currently possible to securitize DUATs for lending purposes. In urban areas, the DUAT of a plot passes automatically to the purchaser following the sale of a house or building. In rural areas, the purchaser of physical infrastructure or improvements and crops must request authorization from the GRM for the DUAT to be transferred. This requirement is often cited as a barrier to obtaining loans in the agricultural sector and is seen as a potential barrier to investment and the transition to more intensive commercial forms of agriculture. 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 affected communities. APIEX assists investors in finding land for development and obtaining appropriate documentation, including agricultural land. The GRM advises companies on relocating individuals currently occupying land designated for development; however, companies are ultimately responsible for planning and executing resettlement programs. Despite enforceable laws and regulations protecting intellectual property rights (IPR) and a relatively simple registration process, it remains difficult for investors to protect their IPR in Mozambique. Private sector organizations work with various GRM entities on an IPR taskforce to combat IPR infringement and related public safety issues stemming from the use of counterfeit products, but enforcement in Mozambique remains sporadic and inconsistent. Mozambique’s National Inspectorate of Economic Activities (INAE) has conducted seizures, confiscating fake Hewlett-Packard (HP) toner cartridges and falsely branded Nike, Adidas, Ralph Lauren, and other merchandise in several raids in 2019. However, in general, enforcement and prosecutions are limited. Pirated DVDs and other counterfeit goods are commonly sold in Mozambique. The Parliament passed a copyright and related rights bill in 2000 (no. 4/2001), 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 Agreement). 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. Mozambique joined the African Regional Intellectual Property Organization (ARIPO) in February 2020. Joining ARIPO paved the way for Mozambique to implement the Banjul Protocol and the GRM deposited its instrument of accession to the protocol at ARIPO in May 2020. Mozambique’s adhesion to ARIPO should facilitate filing trademarks, as ARIPO processes are standardized across all member states and valid across all jurisdictions. Mozambique is not included in the United States Trade Representative (USTR) Special 301 Report or the 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 . 6. Financial Sector The Mozambique Stock Exchange (Bolsa de Valores de Mocambique, BVM) is a public institution under the guardianship of the MEF and the supervision of the Central Bank of Mozambique. In general, the BVM is underutilized as a means of financing and investment. However, the GRM has expressed interest in reforming market rules to increase capitalization and potentially prepare to require foreign companies active in Mozambique to be listed on the local stock exchange. Corporate and GRM bonds are traded on the BVM, but there is only one dealer that operates in the country, with all other brokers incorporated into commercial banks, which act as 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 GRM issuances use a floating price regime for the coupons with no price discovery for tenures above 12 months. In 2022 the Central Bank accepted technical assistance manuals from the U.S. Securities and Exchange Commission related to regulation of the BVM. 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. According to a December 2021 Mozambican Bank Association (MBA) survey, there are 20 commercial banks operating in Mozambique. The top three banks – Banco Comercial e de Investimentos (BCI), Banco Internacional de Moçambique SA (BIM), and Standard Bank – account for 68 percent of total banking assets. However, Mozambique’s other banks have been gaining market share. MyBucks Banking Corporation SA, Societe Generale Mocambique SA and Banco Nacional de Investimento SA have recorded impressive asset growth rates of 78 percent, 64 percent, and 51 percent respectively in recent years. The non-performing loan ratio for the sector improved from 11.3 percent in December 2019 to 10.2 percent in December 2020, the most recent years for which such figures are available. It was possible to see an increase in the expected credit losses going into the income statement for the year 2020 when compared to the year 2019. The total level of impairment going into the income statement increased from 4.8 billion meticais to 6.3 billion meticais for the period 2019 to 2020. Despite recent challenges including the COVID-19 pandemic, damaging cyclones, and terrorist activity in Cabo Delgado province, Mozambique’s economy has been recovering following a recession in 2020. According to the 2021 MBA survey, Mozambique’s banking system has continued to grow at around 17 percent annually, with an annual increase in the volume of deposits of 22 percent, an increase in financing by 10 percent, and an expansion in the number of bank branches nationwide by 2 percent over the previous year. According to 2019 FinScope data, only 21 percent of the population had access to a bank account, which is well below the country’s target of 60 percent. As of March 2021, Mozambique had 719 bank agencies, 1,742 ATMs, and 36,839 point of sale devices. Most banking locations are concentrated in provincial capitals, and rural districts often have no banks at all. Thanks to the partnership between mobile communications companies and banks for electronic or mobile-money transactions, access to financial services is improving, with many Mozambicans using the mobile money service M-PESA. The number of services available from ATMs is also increasing. There are 1,697 banking agents in the country that provide basic banking services to customers without access to a bank branch. With financing already prohibitively expensive for most Mozambicans, the Central Bank increased interest rates by 200 basis points to 15.25 percent in March 2022, following commodity price rises associated with the Russian invasion of Ukraine. Credit is allocated on market terms, but eligibility requirements exclude much of the population from obtaining credit. Banks request collateral, but since DUATs generally cannot be used as collateral, the majority of Mozambican applicants do not qualify for loans. Foreign investors’ export activities in food, fuel, and health markets have access to credit in foreign currency. All other sectors have access to credit only in the local currency. In October 2020, Mozambique’s Central Bank published an initial proposal for a Sovereign Wealth Fund (SWF) to manage the expected increase in GRM revenues from natural gas projects in northern Mozambique. The GRM is still studying the proposal, although the March 2022 IMF program includes adoption of a SWF law as one of its proposed reforms, and President Nyusi has recently signaled that implementing the SWF remains a GRM priority. The initial SWF draft from the Central Bank calls for 50 percent of GRM revenue from extractive industries to be used to fund the SWF for a period of 20 years, and sets up strict payout criteria for any withdrawals from the SWF before it reaches maturity. In general, the GRM’s proposal follows the Santiago Principles, and the Central Bank consulted with the International Forum of Sovereign Wealth Funds to refine its proposal. The GRM’s National Petroleum Institute (INP) estimates total government revenues from LNG projects in the Rovuma Basin would amount to $49.4 billion over the lifetime of the projects through 2048. A Central Bank proposed model published in 2020 had estimated total revenues could amount to as much as $96 billion. However, delay of both the Area 1 and Area 4 onshore projects and fluctuating international energy prices could impact Mozambique’s real returns from this sector. In March 2021, TotalEnergies declared force majeure and halted work on its Area 1 project, citing concerns over insecurity around the project site in Cabo Delgado province. The Exxon-Mobil-led Area 4 onshore project has yet to see a Final Investment Decision (FID). The Eni-led Floating LNG platform, also part of Area 4, is set to begin LNG production in 2022, with projected production of 3.4 million tons per annum. 9. Corruption While corruption remains a major concern in Mozambique, the GRM has undertaken some steps to address the problem. Working with the IMF, it published the July 2019 Diagnostic Report on Transparency, Governance and Corruption , which identifies 29 anti-corruption reform measures. The March 2022 IMF agreement intends to use these measures as benchmarks for subsequent reforms. The Mozambican judicial system conducted a trial for 19 defendants in the “hidden debts” case, hearing from more than 70 witnesses. The trial was aired publicly in a positive step to counter the perception that senior Mozambican government officials can commit crimes with impunity. The Maputo City Court has set sentences for August 1, 2022; the court has announced it is considering seizing assets of the accused to partially compensate the nation for the over $2 billion in fraudulent state-backed loans. Mozambique’s civil society and journalists remain vocal on corruption-related issues. Action related to the “hidden debts” scandal is being led by a civil society umbrella organization known as the Budget Monitoring Forum (Forum de Monitoria de Orcamento, FMO) that brings together around 20 different organizations for collective action on transparency and corruption issues. A civil society organization that participates in the FMO, the Center for Public Integrity (CIP), also continues to publicly pressure the GRM to act against corrupt practices. CIP finds that many local businesses are closely linked to the GRM and have little incentive to promote transparency. Contact at the government agency or agencies that are responsible for combating corruption: Ana Maria Gemo Central Anti-Corruption Office (Gabinete Central de Combate a Corrupção) Avenida 10 de Novembro, 193 +258 82 3034576 gabinetecorrupção@yahoo.com.br Contact at a “watchdog” organization: Borges Nhamirre Project Coordinator Extractive Industries Center for Public Integrity (CIP, Centro de Integridade Publica) Rua Fernão Melo e Castro, 124 +258 84 8866440 borgesfaduco@gmail.com 10. Political and Security Environment In July 2021, Mozambican security forces deployed to Cabo Delgado Province were joined by Rwandan and SADC military contingents. Since that time, the combined forces have made security gains against the Islamic State in Mozambique (ISIS-M). However, the ongoing insurgency continues to deter investment in northern Mozambique. Sporadic terrorist attacks continue to occur, mainly against civilians, in the northern provinces. As of mid-2022, TotalEnergies had yet to resume construction of its Area 1 LNG facility following suspension of its operations and declaration of force majeure in April 2021. The United States designated ISIS-M as a Foreign Terrorist Organization and Specially Designated Global Terrorist Group in March 2021. ISIS provides support to combatants in northern Mozambique and occasionally claims credit for their attacks. Since 2017, the ISIS affiliate carried out more than 500 deliberate attacks against unarmed civilians, causing an estimated 3,100 deaths and up to 800,000 internally displaced persons (IDPs). As of April 2022, the GRM had begun implementing plans to stabilize the region with support from the international donor community and encouraging IDPs to return to their homes. Following the ceasefire and peace agreement signed in August 2019, Mozambique’s disarmament, demobilization, and re-integration (DDR) of ex-combatants from political opposition group Renamo is nearing conclusion. The October 2021 death of Mariano Nhongo, leader of the Renamo Military Junta splinter group, corresponded with a drop in the number of attacks along major highways in Manica and Sofala provinces. 11. Labor Policies and Practices According to the International Labor Organization (ILO), an estimated six million Mozambicans, or 80 percent of the economically active population in Mozambique, work in the informal sector. Mozambique’s Ministry of Labor generally had not effectively enforced minimum wage, hour of work, and occupational safety and health standards in the informal economy; labor law is only enforced in the formal sector. There is an acute shortage of skilled labor in Mozambique. As a result, many employers hire foreign employees who have required skills. The GRM limits the number of expatriates a business can employ in relation to the number of Mozambican citizens it employs. The GRM passed labor regulations in 2016 strengthening the requirement for employers to devise skills transfer programs to train 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, although unions must be approved by the government. The GRM takes 45 days to register employers’ or workers’ organizations, a delay the ILO has deemed excessive. Approximately three 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 law does not allow workers to strike until a complex mediation and arbitration process has been conducted, which typically takes two to three weeks. The law also provides for voluntary arbitration for “essential services” personnel monitoring the weather and fuel supply, postal service workers, export-processing-zone workers, and those loading and unloading animals and perishable foodstuffs. With support from international donors, the GRM is reviewing its Labor Law to align with international conventions related to forced labor, health and safety issues in mining, and the worst forms of child labor. The proposed revisions would extend the maternity leave period from 60 to 90 days; address sexual harassment; incorporate special conditions in the fisheries sector; provide for telework and intermittent work; address suspension of contracts in cases of force majeure or for technological, structural or market reasons; address private employment agencies; and provide for recruitment of retired persons. CTA and donors are applying pressure for the draft law to be reviewed by the Labor Consultative Commission (CCT) then sent to the Council of Ministers and the Parliament for approval. Edit Your Custom Report