International experience provides examples of SEZ stimulating transformative development, but it also provides many examples of SEZ that have failed to deliver significant growth and in some cases have resulted in losses where poorly located and designed zones failed to attract investors. Mozambique is pursuing SEZ as a tool for diversifying the economy. The question SPEED sought to address in its research was Can the existing SEZ program deliver broad based economic growth?
During December 2014 CTA and SPEED undertook a series of seminars around Mozambique with the aim of sharing information and encouraging debate about competitiveness. The seminars built on work already carried out and available on this site, and focused on the impact of the coming resource boom on key sectors of the economy including agriculture, employment, tourism and manufacturing.
In November 2014, the Mozambican Tax Authority circulated a draft decree law for Transfer Pricing to the council of Ministers, CTA and other stakeholders for comment. The objective of the decree is to establish regulatory procedures for the adjustment of taxable income allowed under Law n.º 34/2007 and Law nº19/2013, in order to assist the Tax Authority in mitigating the risk of tax evasion through transfer pricing. SPEED-USAID contracted a legal expert and a tax expert to analyse the draft decree and provide commentary."
The Bank of Mozambique (BoM) has to date been successful at achieving the core elements of its mandate: Mozambique's economy is stable, inflation is low and under control and the metical exchange rate is stable in the face of both FDI and foreign aid inflows. The country is, however, set to experience an unprecedented inflow of foreign capital due to the impending LNG boom and continued developments in the mining sector. The BoM will have to remain vigilant in order to prevent a level of real effective exchange rate appreciation that impairs the country’s competitiveness in other sectors. At the same time, the BoM has to ensure that in its attempt to control the domestic currency it does not impose a level of regulation and bureaucratic burden that stifles business and generates reluctance on the part of foreign investors. Achieving this careful balance will be one of BoM’s key challenges moving forward.
In recent years, Mozambique has made significant strides towards improving the business environment and attracting investment. However, in many critical areas linked to business; namely import / export procedures, requirements for opening and closing business’s, paying taxes and getting construction permits to name a few - Mozambique consistently under-performed relative to competitors.
Price differences between Maputo and Nelspruit in South Africa have always fuelled concerns in both public and private domains. Prices in Maputo, the country’s major consumption market, are indeed significantly higher than those across the border.
The current Property (real estate) Registry Code of Mozambique corresponds to the Portuguese Property Registry Code, approved by Decree-Law No. 47.611, of March 28, 1967, which entered into force in Mozambique through Ordinance No. 23.088, of 26 December, published in the Official Gazette of Mozambique, on 12/02/1968. Thus, the Property Registry Code in force is deeply outdated and does not reflect the significant economic, political and legal changes, that have taken place, particularly with regard to the constitutional principle (see Article 109 of the Constitution of the Republic of Mozambique) which states that the land is property of the state" and should not be sold or otherwise alienated, mortgaged or pledged.
Mozambique's impending resource boom has projected the topic of Local Content to centre stage. Both the Government of Mozambique and the private sector are focused on establishing an environment that is conducive to the development and participation of Mozambican businesses and Mozambican citizens in the context of potentially substantial levels of FDI driven by the oil & gas and mining industries. At the end of 2014, the Ministry of Planning and Development (now Ministry of Economy and Finance) announced it was in the process of drafting a Local Content law in order to create an adequate legal and regulatory framework in preparation for the resource boom.