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Mozambique Economic Acceleration Package

Economic Acceleration Package 

In response to different challenges, such as the suspension of international funding to the Government’s Budget, the insurgency in Cabo Delgado, the Covid-19 pandemic, and the risk of natural disasters in the country, the Mozambican Government launched 20 reform measures. Launched by President Filipe Nyusi in August 2022, they are aimed to put the private sector at the center of the country’s economic development. President Nyusi’s administration has expressed interest in completing these reforms by the end of his term in 2024. These reforms will make it easier for U.S. companies across all the sectors and in particular agriculture and power generation to enter the Mozambican markets and move capital in and out of the country.

The reforms are divided into two areas: 1) a set of fiscal and economic reforms and 2) improvements to the business environment.  

 

Fiscal and Economic Reforms

  • VAT reduction from 17% to 16%. 
  • VAT exemption on the import of factors of production for agriculture and electrification  
  • Corporate Income Tax (IRPC) cut from 32% to 10% for agriculture, aquaculture and urban transportation. 
  • Establishing fiscal incentives for new investments in key sectors, namely: agriculture, agroprocessing, manufacturing, tourism, and urban transportation over the next 3 years. 
  • Simplifying the process of repatriation of foreign earnings with the purpose of reducing repatriation costs and increasing market attractiveness to potential investors.   
  • Increasing supervision of natural resources’ export operations to stop illegal trade and protect the industry.   
  • Stimulating the national construction industry by promoting local production of construction materials.  
  • Allocating 10% of tax revenues from natural resources to the development of the province where the extraction is made, focusing on financing infrastructure and economic development projects.  
  • Creating a Guarantee Fund to increase the access to and decrease the cost of financing for SMEs.  
  • Blending of imported fuels with biofuels compulsory, thus protecting the environment, and reducing the import bill. 

 

Business Environment Reforms

  • Increasing competitiveness of airports and national logistics corridors.  
  • Stimulating local production of goods purchased in bulk and periodically by the Government.  
  • Revision of visa policies including visa exemption to citizens of countries with a low risk of migration, longer visa periods for foreigners with investments in Mozambique. 
  • Revision and adjustment of Labor and Investment laws to promote employment and investment. 
  • Simplifying administrative processes between the government, companies and the population, including the elimination of mandatory business licenses in certain sectors. 
  • Improving the legal environment for companies through reforms of some elements of the justice system. 
  • Strengthening the supervision of social welfare funds. 
  • Simplification of Public Administration institutions by merging similar institutions and ensuring better efficiency and quality of services. 
  • Creation of a Sovereign Wealth Fund and a regulatory framework to ensure the transparent use of the LNG projects’ revenue.  
  • Reform of the State’s internal auditing systems to promote transparency and accountability. 

 

For more information contact us at office.maputo@trade.gov

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