Mozambique: getting easier to do business

The covid pandemic has shaken the government out of complacency

For years, meetings of the Business Environment Monitoring Council, between the government and the private business association CTA, resembled a kind of ‘wailing wall’. The CTA would bring its laundry list of grievances, which the government would listen to, without taking any decisions.

But the covid pandemic forced the government to take action on many of the economic problems that have plagued the country since the financial and budgetary crisis precipitated in 2016 by the so-called ‘hidden debts’ scandal.

Last August, president Nyusi launched the PAE package, which included a number of short to medium term measures to improve the Mozambican economy. VAT was reduced from 17% to 16%, tax on profits from agriculture were cut from 32% to 10% for three years, and electronic visas for business and tourism were introduced.

Visa exemptions for 74 countries, with or without reciprocity, are about to be published, there will be a revised commercial code and a much awaited labour law which businesses are expecting will finally reverse most of the socialist-inspired protection clauses for workers, making it easier to hire and fire — and simpler to hire skilled labour from abroad.

A law on cashews is on the cards, as well a foreign investment law, both of which have raised the eyebrows of local businesses. Some voices also argued for less regulation on timber exports, which is controversial as the government is advocating for more local manufacturing of wooden products, such as furniture and school desks.

Prime minister Adriano Maleiane said business tax reductions can be applied on a case by case basis, but that tax income is needed in a country that is too used to tax exemptions. He also repeated platitudes calling on Mozambique to start exporting more than it imports — something far easier said than done. Optimistically, he is hoping that figures will show economic growth of 4.1% in 2022, driven mainly by agriculture production. 

There is hope more progress will follow next year, instead of turning back towards the spirit of the wailing wall.

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Agenda:

• Today: Council of Ministers to consider new Labour Law

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