MAKE IT HAPPEN
A pithy yet pivotal briefing on key facts the business visitor should know before arriving in the country—how to deal with red tape, regulation, and day-to-day etiquette when working in Mozambique.
The World Bank's ease of doing business ranking puts Mozambique 133rd (out of 189 countries), down five points on 2015. Yet with GDP growth of 7.5% in 2015, and forecasted growth of 8.1% in 2016, according to the World Bank, investors should have, in principle, much to be cheerful about. Mozambique has established an environment that is relatively business-friendly and open to FDI. Indeed, the country was the largest recipient of FDI of any in Africa in 2014, receiving $6.6 billion. FDI and government spending on big infrastructure projects are, to a great extent, the major drivers of growth in the country.
As with any emerging market, investing in Mozambique poses risks for foreign investors. A long-term commitment, however, and a comprehensive understanding of the current situation can more than make up for the costs incurred in setting up business in the country.
The need for diversification across the economy, especially into non-energy sectors, raises many opportunities for investors, as does the continuing, centralized, effort to modernize sections of Mozambique's industrial base. One of the strongest FDI sectors is construction, especially relating to infrastructure (pipelines, refineries), and also transport (road and rail projects), consultancy, and engineering. The government also finances many large projects across the country, and these bring opportunities for consultants, contractors, engineers, and so forth.
A big reason for the country's relatively poor performance in the World Bank's hierarchy of business-friendly countries is that it can take a long time to get things done in Mozambique. The country's bureaucracy is all pervading and can greatly increase the amount of time it takes to complete a project. It is a good idea to link up with a local partner who can help slice through the red tape and paperwork and reduce the amount of time this would otherwise take. They would also be able to speak Portuguese—the language of government and business, and vital for anyone doing business in the country. That said, there is no legal requirement to have a local partner.
With a local partner, the hurdles to setting up a local company or subsidiary in Mozambique are much lower. Establishing a subsidiary of a foreign company in the country is relatively straightforward. Both locally registered companies and foreign subsidiaries must obtain a business license, issued from the ministry most closely associated with your particular sector. Opening a bank is easier if the company has a local partner, although the central bank must approve beforehand any transfers to or from overseas. Mozambican labor law is very strict, and stipulates that only 5 to 10% of any given staff can be of foreign origin (depending on the size of the company).
Another time factor is punctuality—Mozambicans are famously relaxed about meetings. As a guest in the country, it is a good idea to try to adjust to this as much as possible. Be aware that business in Mozambique is conducted on an altogether more relaxed basis, so do not expect Western-style efficiency. Try to be realistic when scheduling appointments, and always build in an extra hour or even two—even if this means having fewer meetings each day than you would otherwise. Business attire is formal, and men should preferably don a suit and tie.
MAKE IT HAPPEN
TABLE OF CONTENTS
Review: Economy
Much to Gain
Despite numerous years of considerable economic growth, Mozambique has been unable to retain its wealth and bring more than half of its population out of poverty. Developing one of the world's largest gas reserves and becoming a regional exporter of energy may be the solution.
read articleFocus: Aluminum
Foil Plans
Mozambique is the second-largest producer of aluminum in Africa and the 14th in the world. Since 2000, it has been producing aluminum for export, and in 2015 Midal Cables opened a factory near Mozal; the country's largest aluminum smelter. This could be the start of a Mozambican aluminum value chain.
read articleInterview
Ben James, Managing Director, Baobab Resources
TBY talks to Ben James, Baobab's Managing Director, resident in Mozambique. A geologist by training, Ben has been directly involved with the development of the Company's Tete Project from a greenfields iron ore discovery to an asset on the verge of corner-stoning Mozambique's nascent steel industry.
read articleFocus: Aluminum
Aluminum Legacy
Mozambique is the second-largest producer of aluminum in Africa and the 14th in the world. Since 2000, it has been producing aluminum for export, and in 2015 Midal Cables opened a factory near Mozal; the country's largest aluminum smelter. This could be the start of a Mozambican aluminum value chain.
read articleInterview
Hon. Jorge Olívio Penicela Nhambiu, Minister, Science and Technology, Higher and Technical Vocational Education (MCTESTP)
TBY talks to Hon. Jorge Olívio Penicela Nhambiu, Minister of Science and Technology, Higher and Technical Vocational Education (MCTESTP), on bringing science and technology to rural areas and increasing research in the country.
read articleFocus: E-government + E-bau
Digital Decisions
Between 2015 and 2016, Mozambique fell five positions in the World Bank's Ease of Doing Business Index. The government is investing in the GovNET and e-BAU platforms to facilitate procedures and cut the costs of acquiring business licenses and improving services provided to the public.
read articleReview: Health
Time for a check-up
Mozambique's healthcare budget rose to $561.5 million in 2015, an increase of 1.1% on expenditure in 2014, accounting for 10.2% of the state budget. Total healthcare expenditure in 2014 was $477.5 million. The Ministry for Health oversees the sector and is responsible for setting the budget each year.
read articleInterview
Dr. João M. Carvalho Fumane, Director General , Hospital Central de Maputo (HCM)
TBY talks to Dr. João M. Carvalho Fumane, Director General of Hospital Central de Maputo (HCM), about the range of services on offer and what is being done to further excellence in the health sector
read articleInterview
Hon. Jorge Ferrão, Minister, Education and Human Development
<span style="line-height: 1.6em; background-color: initial;">TBY talks to Hon. Jorge Ferrão, Minister of Education and Human Development, on the goals of the ministry, the role of local languages, and tackling teacher absenteeism.</span>
read articleInterview
Prof. Doctor João Leopoldo da Costa, Rector, Instituto Superior de Ciências e Tecnologia de Moçambique (ISCTEM)
TBY talks to Prof. Doctor João Leopoldo da Costa, Rector of Instituto Superior de Ciências e Tecnologia de Moçambique (ISCTEM), on the perils of the internet on education and the quality of its high school.
read articleReview: Tourism
Mozambeach
With white-sand beaches, scuba diving, and game reserves among its wide range of accommodation, Mozambique is a goldmine for tourism. However, to attract the number of tourists the country is aiming for, and entitled to, it will have to compete with its considerably more popular neighbors.
read articleReview: Legal
Smart Choices
Foreign investments are sources of capital, foreign exchange, and technical know-how for developing countries such as Mozambique. Over the past three decades, Mozambique has been successfully striving to ensure a favorable legal framework for foreign private investment.
read article