Zoned Out

Under Decree No. 75 of 24th December 2007 Mozambique, aware of increasing national and foreign private investment interest—established an office to manage special economic zones called GAZEDA. Since then, this entity has designated several areas in the country as Industrial Free Zones (IFZs) and Special Economic Zones (SEZs), granting them assorted incentives for investment.

As Danilo Nalá, General Director of GAZEDA, explained to TBY there are three main differences between IFZs and SEZs: size, type of activity and product destination. SEZs are bigger than IFZs and can handle a diversity of activities, while IFZs are smaller and fenced. The output of SEZs can be 100% sold locally, but the regulation states that at least 70% of production realized in IFZs must be exported.

In terms of fiscal incentives IFZs have seven more years of Corporate Income Tax (IRPC) exemption until the 10th fiscal year, while SEZs only have until the third. After that, IFZs offer a 50% reduction on the IRPC rate from the 11th to the 15th fiscal year, while SEZs offer the same reduction from the fourth to the 10th. Once those periods are completed, a 25% reduction is established for the whole life cycle of a project at an IFZ, while this only applies from year 11 to 15 in SEZs.

GAZEDA currently manages several areas including the Nacala, Mocuba and Manga-Mungassa SZEs, the Beluluane and Mocuba IFZs and the Tourism SEZ in Nampula.

The Beluluane IFZ occupies 700 ha and is strategically situated 16km from Maputo city. Some of the most remarkable projects ever realized in the country, such as the Mozal aluminium smelter, the first major FDI project in Mozambique’s history, contributing around 7% to GDP since 2001, as well as the recently-established Midal Cables, which is situated within the boundaries of this industrial park. In terms of logistics, the IFZ is on the backbone of the Maputo Corridor, a transportation infrastructure comprising road, rail, border posts, port, and terminal facilities. As Barbara Mommen, CEO of the Maputo Corridor Logistics Initiative (MCLI), explained to TBY, MCLI has invested “$350 million on the building and maintenance of the road,” and over the next sixteen years it will invest a further $400 million on the road and rail infrastructure.

The Nacala SEZ, established in 2007, is situated in the north of Mozambique in the Nampula province. It is about 200km from the provincial capital Nampula and has easy access to Tanzania from the north and Zambia and Malawi through the Nacala Development Corridor, a road and rail infrastructure that is being rehabilitated and that, according to Fernando Freitas, Administrator of Somague Moçambique and one of the contractors of Vale for the development of this project, should be completed, “…by the end of 2015″. Two areas, 10 and 20 minutes away from the port and the recently inaugurated International Airport of Nacala, respectively, have been designed for the deployment of IFZs. According to the IMF, $1.2 billion has already been committed to these areas with 53 approved investments, several in the field of agro-processing.

Besides Maputo in the south and Nacala in the north, GAZEDA is locating the SEZs strategically throughout the country. The Mocuba SEZ is located in the Zambézia province and includes an Industrial Free Zone, while Manga-Mungassa is in Beira, only 6 and 12 km away from the airport and port of Beira, respectively.

The only sector-dedicated zone today is the Tourism Special Economic Zone in Nampula created in August 2013. The area has 1,750 ha divided among the continental part as well as the Crusse and Jamali Islands. According to Danilo Nalá, this zone will attract around $5 billion over the next ten years. In an interview, he also told TBY that GAZEDA was looking at other sectorial zones in the fields of agriculture, fish processing, and logistics.

These new special economic zones will play a vital role in sustaining the inflow of FDI into the country, while supporting development throughout Mozambique’s provinces.