MAKE IT HAPPEN

Mozambique 2016 | EXECUTIVE GUIDE | REVIEW: DOING BUSINESS

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.