Policies Towards Foreign Direct Investment
The Government of Mozambique is open to foreign investment, which it views as a means to drive economic growth and promote job creation. Fundamentally, all business sectors are open to foreign investors. The GRM reviews and approves each foreign and domestic investment; however, there are almost no restrictions on the form or extent of foreign investment. The government’s Investment Promotion Center (CPI) has been investors’ primary contact with the government; however, CPI will merge in 2017 with two export and investment-related agencies.
Contact information for CPI is:
Investment Promotion Center (CPI)
Rua da Imprensa, 332 (ground floor)
Caixa Postal 4635, Maputo
Tel: (258) (21) 313310/75 or (21) 313295/99
Fax: (258) (21) 313325
Mozambique’s Law on Investment, No. 3/93, dated June 24, 1993, and its related regulations, govern national and foreign investment. Earlier amendments, from 1993 and 1995, were replaced by Decree No. 43/2009 in August 2009, which provided new regulations to the Investment Law.
In November 1, 2016, the Council of Ministers merged CPI, the Office of Economic Zones for Accelerated Development (GAZEDA-Portuguese acronym), and the Institute for the Promotion of Exports (IPEX- Portuguese acronym), creating the Agency for Investment Promotion and Exports (APIEX in its Portuguese acronym). The Decree will come into effect in April 2017, but the agencies will continue to have separate roles until May 2017.
CPI assists both local and foreign investors in obtaining licenses and permits. However, in general, large investors receive much more support from the government in the business registration process than small and medium-sized investors. Government authorities must approve all foreign and domestic investments that require guarantees or receive incentives under the Investment Law.
The GRM maintains an ongoing dialogue with the Confederation of the Economic Business Associations (CTA- Portuguese acronym). CTA is represented throughout the country and has 132 associations as members. CTA organizes several provincial meetings and a national event every year to provide feedback to the government on the business environment. CTA holds an annual Private Sector Conference (CASP –Portuguese acronym) with the president and quarterly Doing Business Monitoring Council (CMAM – Portuguese acronym) with the prime minister.
Despite generally conducive laws, investors in Mozambique find that public institutions have differing levels of knowledge, enforcement, and capacity to implement legislation. Courts and magistrates are overtasked and investors complain of meddling from influential local interests.
Limits on Foreign Control and Right to Private Ownership and Establishment
Mozambique’s Investment Law and regulations generally do not make distinctions based upon investor origin, nor do they limit foreign ownership or control of companies. With the exception of investments related to Security & Safety, Media & Entertainment, and certain game-hunting concessions, there have been no legal requirement that Mozambican citizens own shares of foreign investments since 2011.
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 who is familiar with the bureaucracy at the national, provincial, and district levels.
CPI assists investors in finding land for development and obtaining appropriate documentation, including appropriate 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.
Law No. 15/2011 passed in August 2011, often referred to as the “Mega-Projects Law” that governs public-private partnerships, large-scale ventures, and business concessions, states that Mozambican persons should participate in the share capital of all such undertakings in a percentage ranging from 5% to 20% of the equity capital of the project company. Regulations of this law were approved by the Council of Ministers in June 2012.
The GRM is developing a “Local Content” law defining the legal regime that would require inclusion of local goods and services by businesses operating in Mozambique. Other legal obligations being considered would give exclusivity to Mozambican legal and natural persons to import and supply final goods and services within the country. For the oil and gas sector, concessionaires would need to procure insurance with certified Mozambican companies, provided that such insurance is generally applicability and not specific to petroleum operations, construction, or to facilities. The concessionaries shall give preference to Mozambican insurers, when the locally available insurance is comparable to international standards and the prices do not exceed the price of comparable insurance coverage by more than 10 percent from international markets, inclusive of taxes and related fees.
The government recognizes and enforces the protection of private property and provides a mechanism that protects and facilitates acquisition and disposition. The government owns all land, but there is a lease system in place. Developers are entitled to 50-years leases that can be renewable for an equal period of time. Infrastructure built on leased land is owned by the license holder who can rent it or sell it to others without restrictions.
Provincial governors can approve domestic investment projects with an investment value of less than 1.5 billion meticais (approximately $55 million). Approval of the Director General of CPI is required for foreign and/or national investment projects with an investment value of less than 2.5 billion meticais (approximately $92 million). The Minister of Economy and Finances must approve foreign and/or national investment projects with an investment value of less than 13.5 billion meticais (approximately $500 million). The Council of Ministers must approve investment projects with an investment value greater than 13.5 billion meticais, including projects that require a land area greater than 10,000 hectares to be used for any purpose. Any other projects with political, social, economic, financial or environment impacts should be approved by the Council of Ministers, as proposed by the Minister of Economy and Finances.
Other Investment Policy Reviews
Mozambique has undergone investment policy reviews by both the United Nations Committee on Trade and Development (UNCTAD) and the Organization for Economic Cooperation and Development.
OECD Investment Policy Review (2013)
UNCTAD Investment Policy Review (2012)
CPI and GAZEDA are responsible for promoting and facilitating investment in Mozambique. They provide the following services to all investors: incorporation, business licensing, Entrance Visa, work permits, residence permits, identification and licensing of land, identification of business partners, troubleshooting, project monitoring, and implementation follow-up.
All information regarding registration of business and administrative practices are available at: http://www.portaldogoverno.gov.mz/por/Empresas/Registos
Investors have to 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.” Detailed information on the required documents and the corresponding agencies is available here: http://www.portaldogoverno.gov.mz/por/Empresas/Registos
In 2016, Mozambique ranked 137 among 190 countries in the World Bank Doing Business report. The report highlights that it takes 24 days to start a business, one day to receive construction permits, and 32 days to get electricity. The World Bank reports that Mozambique requires 34 days and 12 procedures to establish a foreign-owned limited liability company (LLC), which puts Mozambique at slightly better than the regional average for Sub-Saharan Africa.
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.