The guide to doing business in Mozambique
Jointly prepared by Morais Leitão Galvão Teles Soares da Silva & Associados and HRA Advogados, the guide provides a brief description of several aspects of Mozambican legislation and the operations of the legal system.
Doing Business Mozambique is a guide jointly prepared by Morais Leitão Galvão Teles Soares da Silva & Associados (Morais Leitão) and HRA Advogados (HRA), member of Morais Leitão Legal Circle.
Mozambique is an important destination in what refers to foreign direct investment in Southern Africa. Apart from the abundant natural resources, the country’s access to the sea offers a significant advantage when compared to other landlocked neighbouring countries.
The Mozambican Government has consistently implemented reforms, maintaining sound economic policies and approving privatisations programmes for public companies, which has had a positive effect on the potential investors universe.
In 2019, the World Bank forecasted the gross domestic product growth of the Mozambique to reach 2%, below the average of 3,7% in the period between 2016-2018; the lowest since 2000. This is mainly due to the devastating impact of tropical cyclones Idai and Kenneth. The World Bank expects the economic growth to recover to circa 4% by 2021.
As many other countries, Mozambique has been facing its fair share of hurdles in its recent past, namely regarding public debt, inflation and the impact of previously undisclosed debt, which has taken a toll on public opinion.
Politically, Filipe Nyusi is, since 2014, the President of Republic (having been re-elected in 2019) and the leader of party in Power, FRELIMO (Frente de Libertação de Moçambique). There is some floating political instability in what refers to the relation of FRELIMO with the major opposition party.
Mozambique has sought, over the past few years, to re-establish the macro economical stability and trust and is trying to overcome the difficult scenery verified in 2016/2017. Pursuant to the hidden debt crisis, the Government has taken various measures aiming at stabilising the bank sector, while the Central Bank has also faced the low foreign exchange reserves, the inflation pressures and the devaluation of the national currency. Notwithstanding this, the country remains in debt distress.
Mozambique still presents potential – in many cases unparalleled – for foreign investors seeking to invest in Sectors such as Oil and Gas, Mining, Construction, Energy, Agriculture and Tourism, among others.
Mozambique is the country with the third highest proven reserves of natural gas in Africa, surpassed only by Algeria and Nigeria. In accordance with recent data from the National Institute for Petroleum, these reserves are of circa 100 trillion cubic feet. Without prejudice to the existence of onshore fields located in the southern part of the country, the offshore field in the area of the Rovuma Basin has become the focus of international attention, with several international players showing their interest in the area (ENI, Total, Anadarko/Occidental Petroleum and Exxon) over the last few years.
In what refers to the Liquified Natural Gas (LNG), despite there currently being LNG infrastructures in Mozambique, it is expected that the first floating LNG facility to be constructed in the African Continent will be in Mozambique and that it shall commence operations by 2024.
Mozambique is also renowned as a metal exporter and, in what refers to the Mining Sector, it shall be highlighted that the Country has significant deposits of coal, ruby, titanium, marble, copper, gold, among others. In this Sector also, world-renowned international players, from Brazil, Australia and India, namely, have been investing therein. As such, a continuous and growth investment influx is expected, which shall grant Mozambique with an even more significant competitiveness in this area.
Mozambique is a country with enormous potential in what refers to the tourism sector, whether regionally, whether internationally. Such is a result not only from its features from a natural resources standpoint and its history and culture, but also due to the proximity of the Republic of South Africa, one of the most thought destinies in Africa and in the World. In this Sector there is a hardly paralleled range of opportunities for potential investors, especially when compared to other countries of Southern Africa.
As such, in all the Sectors referred above, the possibility for investors seeking to enter into the Mozambican market, as investors, providers of services, of know-how, of equipment, among others, is very vast.