GROWTH SPURT

Mozambique 2016 | AGRICULTURE | FOCUS: SPECIAL ECONOMIC ZONES FOR AGRICULTURE

With the government becoming increasingly accommodating to agriculture ventures by both locals and international investors, the country's sector is on track to take off in the coming years.

According to the World Bank, “Growth in agriculture is up to 3.2 times better at reducing poverty in low-income and resource-rich countries than an equivalent amount of GDP expansion outside of agriculture." In Mozambique, more than 80% of the population is involved in agriculture; however, the sector represents only about a fourth of national GDP. Changes in policies and regulations have the potential to benefit the vast majority of the population.

The National Agriculture Investment Plan 2014–2018 of the Ministry of Agriculture indicates that Mozambican arable land and pasture cover some 36 million hectares, of which only slightly more than 10% is cultivated. Of the 3.7 million farms in the country, 98% are considered small.
By definition, special economic zones (SEZs) are duty-free enclaves conducive to FDI. The Mozambican government has cited 24 development hubs that could be used to create SEZs for agriculture along Mozambique's six development corridors, namely the Maputo and Limpopo corridor in the south of the country, the Beira and Zambezi Valley in the center, and the Nacala and Pemba-Lichinga corridors in the north.
The 24 development hubs that have been identified are the following: In the Maputo corridor, the Manhiça and Moamba districts; in Limpopo, the Xai-Xai, Chókwè, and Massingir districts; in the Beira Corridor, the Nhamatanda, Caia, Báruè, Sussundenga, Mossurize, Macate, and Vanduzi districts; in Zambezi Valley, the Namacurra, Mocuba, and Angónia districts; in Nacala, the Malema, Ribáuè, Cuamba, Mecanhelas, and Mandimba districts; and in Pemba-Lichinga, the Balama, Namuno, Montepuez, and Nguri/Namacande districts.
Hon. José Condugua Pacheco, Minister of Agriculture and Food Security, told TBY the government is in the process of implementing both its Agriculture Investment Plan and its Agriculture and Development Strategy. Its aim is to increase production by expanding productivity, giving access to markets and promoting private investment. To do so, it has developed a package of fiscal incentives and more favorable duty regimes for agriculture. “Most imports of agricultural equipment, such as tractors and pipes for irrigation, will be duty free as part of this policy. Spare parts for those goods will face low levels of taxation, and throughout the six agriculture development corridors we plan to develop agriculture duty free zones to make the country more attractive in terms of investment," Pacheco said. The director of the Agriculture Promotion Center (CEPAGRI), Abdul César Mussuale, also told TBY an interesting incentive for the agribusiness investors is that Mozambique approved a VAT exemption for agricultural products.

In terms of land, investors should know Mozambican land is not for sale. This has some advantages and disadvantages, as getting the DUATs (the rights to use the land) may be quite a bureaucratic process; however, the land is basically free of charge. In fact, Mussuale from Cepagri told TBY investors are “paying less than $1 per hectare per annum," and can “use the land for 50 years" and renew the lease for 50 more years. In this case, the difference between a Mozambican and an international investor, according to Mr. Mussuale, is that if a Mozambican citizen requests land, they will be able to use it for a five-year period before getting a final DUAT while a foreigner would have two years to prove that their business plan is effective and that they have the capacity to use the full area that was requested. Only then will they get the final DUAT.

Regarding commodities, Mussuale said the products that hold the greatest potential for the next few years are maize, rice, beans, cassava, potato, chicken, livestock, cotton, banana, sugar, wheat, sesame, soy bean, cashew nut, and tobacco. If investors are able to take advantage of the opportunities, Mozambique will then be able to move from being an importer and become an exporting nation of agricultural products.