Mozambique - Country Commercial Guide
Market Challenges
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Despite Mozambique’s longstanding investment potential, the business climate poses distinct challenges. The Central Bank has maintained a stable exchange rate and kept inflation under control at the expense of high interest rates which make credit unaffordable for most locals and businesses.  While the government has committed to attracting large scale investments through statements and economic reform initiatives, it continues to be characterized by a bureaucracy that remains largely unresponsive to the needs of the private sector, particularly small-to-medium-sized enterprises. Most companies cite challenges in the business environment as one of the main challenges in Mozambique, as well as the lack of skilled labor. In addition, a top-down, hierarchical decision-making process can hinder market efficiency.


Even though Mozambique’s labor force is growing, the labor market is rigid, and well-educated workers are scarce. One of Mozambique’s greatest challenges continues to be a shortage of skills in its workforce, which is reflected in its rank of 185th out of 191 countries on the United Nation’s 2021 Human Development Index. Maputo City, if it were a country, would place 141st. On August 25, the Mozambican parliament passed a revised labor law in 2023, which expanded worker benefits – including provisions on harassment, mixed remuneration, alternative work schedule regimes, and suspension of employment for reasons of force majeure – and established equal treatment of both foreign and domestic workers.

Land Rights

Although land ownership by private individuals is not permitted in Mozambique, land can be leased for renewable 50-year periods.  The 1997 Land Law grants a land use right (Direito do Uso e Aproveitamento da Terra; DUAT), which is roughly comparable to a long-term lease. DUATs cannot easily be used as collateral for financing. The bureaucratic process of acquiring a DUAT, as well as construction permits, can be lengthy and complicated. Companies are advised to approach the leasing of land with great caution and to consult with local attorneys to ensure sellers are legitimate and transactions are legal. Parliament passed a new investment law in 2023 with provisions designed to facilitate transfer of DUATs.  The government has also undertaken an effort to revise its Land Law, aiming to be more transparent and market-friendly, although it remains unclear whether this effort will address problems with the DUATs’ transferability and bankability.

Infrastructure Deficiencies

Although large improvements are being made especially in Maputo and other urban centers, most of Mozambique has poor basic infrastructure.  Road infrastructure is generally poor, except for large stretches of the main north-south EN1 highway and the EN4 highway connecting Maputo with the South African border. Many bridges get washed out during rainy season and the government struggles to replace them.  Asphalt roads are often crumbling or pitted with potholes, making driving slow and dangerous.  Many secondary and tertiary dirt roads are poorly maintained.  Although the government is expanding electricity access – often through renewable microgrids – power supply is often insufficient and unreliable.  Cellular telephone coverage is primarily concentrated in urban areas and is sometimes unavailable in rural areas.  Other communications networks are underdeveloped.

Access to Finance

Inflationary pressures compel the Central Bank to maintain tight monetary policy through steep interest rates and high reserve requirements for commercial banks.  This makes access to finance a major constraint for individuals and businesses.  Commercial banks generally charge high interest rates, partially due to a lack of credit history or rating systems, making it difficult for small to medium-sized enterprises (SMEs) to find affordable financing. Payments for imported goods can be difficult, as foreign currency payments outside the country must be approved by the Central Bank.

2022 Russian Invasion of Ukraine and Commodities Price Increases

Russia’s invasion of Ukraine is threatening global food security. In Mozambique, commodity price increases have contributed to inflation, led to labor strikes and service disruptions for public transportation, and threats by the baker’s association to stop bread production. Volatility in the global oil and gas market forced the Government of Mozambique to announce fuel price increases. On May 11, 2023, ARENE, Mozambique’s Regulatory Energy Authority, increased diesel prices to 94.75 MZN/liter (5.60 USD/gallon), a 7.71% increase. Vehicular natural gas prices also increased to 45.16 MZN/liter (2.69 USD/gallon), a 3.27% increase. However, gasoline prices declined to 85.49 MZN/liter (5.07 USD/gallon). While the government is exploring different ways to support poor households to mitigate the decline in purchasing power and the high cost of living, is not expected to subsidize bread and transport costs, though it does continue to subsidize fuel imports.

Northern Insurgency

Since October 2017, Islamic extremists have been carrying out attacks on both civilian and military targets in Mozambique’s northern-most Cabo Delgado Province. Sporadic attacks occurred in neighboring Niassa and Nampula Provines in 2021 and 2022 but have generally been contained to Cabo Delgado province within the last year. Cabo Delgado is also where major natural gas reserves and minerals are located. The United Nations Refugee Agency reported in February 2023 that over 350,000 people had returned to their homes after being displaced by the violence. In attempts to curtail the spread of violence, in April 2023 the Government of Mozambique legalized the creation of local militias under the military to fight the insurgents.

The TotalEnergies-led Mozambique LNG project in Area 1 has been suspended under force majeure since a March 2021 insurgent attack on the Town of Palma in Cabo Delgado.  However, industry analysts expect TotalEnergies to lift force majeure on the project in early 2024.  On September 27, TotalEnergies CEO Patrick Pouyanné told a group of analysts in Paris that his company is aiming to restart work on its project by the end of 2023.  The ExxonMobil and Eni-led Area 4 consortium expects to reach a final investment decision on its own onshore project following TotalEnergies’ resumption in Area 1.  

Lack of Transparency

A lack of transparency in government procurement and slowness in government decision making can delay projects and even make them unsustainable. Mozambican law requires public tenders for any government project valued at more than $10 million, but tenders are often still not issued and some of those that have been issued have not been competed fairly.

Due Diligence Concerns

The U.S. law enforcement community urges businesses and investors to practice caution and conduct proper due diligence when engaging in business ventures in Mozambique due to frequent use of legitimate businesses to conceal illicit activities, the practice of trade-based money laundering, and systemic corruption across many government sectors. Doing so will promote the best interests of both U.S. and Mozambican trade partners.  The government of Mozambique is working to strengthen its legal and regulatory framework for anti-money laundering and countering financing of terrorism (AML/CFT) after it was added to the financial action task force’s “grey list” (jurisdictions for increased monitoring) in October 2022.

The U.S. Government recommends that U.S. businesses seek assistance from reliable auditing and consulting firms or the U.S. Commercial Service to receive local market counseling and vetting for potential local partners.