The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
To access the ICS, visit the U.S. Department of State Investment Climate Statements website.
ICS Executive Summary
Mozambique’s lengthy coastline, deep-water ports, favorable climate, rich soil, and vast natural resources give the country significant potential, but investors perceive it as a risky market. The Government of the Republic of Mozambique (GRM) announced a slate of economic reforms in August 2022, including fiscal reforms and investment incentives. As part of the economic reform package, the government simplified procedures in logistic corridors, implemented a new e-visa system to facilitate entry into the country for tourists and business, and announced its intention to exempt 29 countries including the United States from entry-visa requirements. In 2023, the government expects to begin digital business registration and pass legislation to revise the investments and labor laws. Although the government is working to improve fiscal policies at the national level, the inconsistent and unpredictable application of combined local and national taxes remains burdensome. Many business contacts have complained that other challenges to investment include corruption, barriers to private land ownership, high interest rates, and poor infrastructure. Heavy rains and tropical storms cause frequent degradation of roads, bridges, and other infrastructure. Mozambican labor laws make it difficult to hire and fire workers, and court systems are bogged down by labor disputes. The domestic workforce lacks many advanced skills needed by industry, and the complicated visa process makes hiring foreign workers difficult.
Energy companies began exporting natural gas from a floating LNG (FLNG) platform offshore of the northern province of Cabo Delgado in November 2022. However, companies have delayed two larger multi-billion-dollar onshore LNG projects due to continued terrorism-related insecurity in northern Mozambique.
Mozambique is eager to partner with the United States on climate issues but lacks resources. The GRM joined initiatives such as the Agricultural Innovation Mission for Climate (AIM4C) and the Global Methane Pledge. Mozambique is a growing producer of critical minerals, including aluminum, cobalt, graphite, and titanium, although some mines in Cabo Delgado had to temporarily suspend operations due to terrorist activity.
The GRM partnered constructively with the United States and other members of the donor community on economic reforms. In May 2022, the IMF Board approved a 36-month, $456 million program that aims to reinforce Mozambique’s economic recovery while addressing challenges related to debt and financing and encourages good governance and improved management of public resources. The GRM is working with the U.S. Millennium Challenge Corporation (MCC) to sign a second MCC compact in 2023, valued at approximately $500 million over five years. Through this compact, MCC plans to invest in transportation infrastructure, climate resilience and coastal restoration, and commercial agriculture in Mozambique’s central Zambezia Province, while promoting business-enabling reforms at the national level.
Russia’s invasion of Ukraine caused commodity price shocks that contributed to inflation in Mozambique. Higher prices for wheat and fertilizers raised food prices and decreased grain imports caused some Mozambicans to substitute locally grown staples such as cassava for imported wheat.