This information is derived from the State Department's Office of Investment Affairs’ Investment Climate Statement; EB-ICS-DL@state.gov.
Below is the Executive Summary for the State Department’s 2022 Investment Climate Statement on Mozambique.
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.
Mozambique’s lengthy coastline, deep-water ports, favorable climate, rich soil, and vast natural resources give the country significant potential, but investors face challenges related to the business environment. The Government of the Republic of Mozambique (GRM) made progress on public financial management reforms and publishing budget and debt figures, took steps to reform State-Owned Enterprises (SOEs), and arrested or prosecuted high-level officials on corruption-related charges. It reached an agreement with the IMF and promoted dialogue with the private sector and donor community on economic reforms. Challenges include Mozambique’s opaque and complicated taxation policies, barriers to private land ownership, corruption, an underdeveloped financial system, high interest rates, poor infrastructure, and difficulties obtaining visas. Infrastructure outside of Maputo is often poor, while bureaucracy and corruption slow trade at many points of entry. Mozambican labor law makes it difficult to hire and fire workers, and court systems are bogged down in labor disputes. The domestic workforce also lacks many advanced skills needed by industry, and the visa regime makes bringing in foreign workers difficult.
Insecurity related to a terrorist insurgency in northern Mozambique has resulted in multi-billion-dollar onshore LNG projects being delayed, although a smaller offshore floating LNG platform remains on track to begin production by October 2022.
The COVID-19 pandemic negatively impacted the extractive industry and tourism sector, and pandemic-related restrictions affected many other economic sectors. Following a recession in 2020, the economy returned to 2.5 percent economic growth in 2021. In 2022, the GRM began to ease some restrictions, although COVID-19 measures have continued to limit the hours restaurants and other businesses can operate and impose testing requirements on travelers.
Mozambique is eager to partner with the United States on climate issues, although it lacks resources. It joined the Agricultural Innovation Mission for Climate (AIM4C) and is considering joining the Global Methane Pledge. As the GRM made progress on rural electrification, it incorporated solar energy and solicited investment for hydropower projects. U.S. development agencies and international financial institutions contributed to energy projects in solar and natural gas. The U.S. Department of Energy helped identify areas where small renewable solar and wind projects could be built alongside agricultural activities. These areas may provide opportunities for sustainable foreign direct investment in the renewable energy market. Mozambique is a growing producer of critical minerals, including graphite, lithium, and titanium. In 2021, Mozambique joined the Kimberley Process Certification Scheme, enabling Mozambique to legally export diamonds.
The GRM worked constructively with the United States and other members of the donor community. In March 2022, it reached an agreement with the IMF for a three-year, $470 million program that aims to reinforce economic recovery while addressing challenges related to debt and financing and encouraging good governance and improved management of public resources. The GRM is working with the U.S. Millennium Challenge Corporation (MCC) towards signing a second MCC compact (Compact II) in 2023. Compact II will entail business-enabling reforms and will undertake investments in Zambézia Province that focus on transportation infrastructure, commercial agriculture, and climate change mitigation. While Compact II is still under development, it has potential to contribute to key sectors and help create an enabling environment for additional investments.