MAPUTO, Mozambique – Attractive investment laws have played a pivotal role in the economic development of Mozambique, Centurion Law business advisors Chido Mafongoya and Leon van de Merwe have said.
The duo said this in a recent opinion article.
They said Mozambique was one of the fastest-growing economies in Africa for the last two and a half decades. In that period, it has outdone both regional and global growth averages with its rich oil and gas reserves that have been a ‘magnet’ for major investments from various countries across the world.
Investment laws in Mozambique have also been evolving with time to meet international best practices, they said adding that the law puts in place the requisite regulatory framework to promote Foreign Direct Investments (FDI).
“FDIs in Mozambique have been anchored by two mega-projects, namely the Mozal aluminum smelter established by mining giant BHP Billiton and the Temane gas field developed by petrochemicals firm Sasol. These projects pioneered the way for other mega projects as they proved that Mozambique was investor friendly. As a result, sizeable investments in the agriculture and tourism sectors followed as a result of investor- confidence in the country,” the duo said.
“The Mozambican Investment Law Regulation has been amended by Decree no. 20/2021, which entered into force on 13 April 2021. With the aim of adapting national and foreign investment processes (“Investment Projects”) to a new institutional framework of coordination and in the context of a policy to attract and facilitate those investments, Decree no. 20/2021, of 13 April (“Decree”), was approved, introducing amendments to the Investment Law Regulation.”
Among the amendments is that for the purposes of transferring profits abroad and re-exportable invested capital, the minimum value of foreign direct investment through the allocation of own capital shall now be MZN 7.5 million (seven million five hundred thousand meticais) and the minimum value for annual exports of goods or services shall be increased to MZN 4.5 million.
The initial investment to be made in the first two years of activity by companies established outside Industrial Free Trade Zones, but that wish to benefit from the respective regime, will now have a minimum amount equivalent to MZN 75 million.
The Agency for the Promotion of Investment & Exports (Agência para a Promoção de Investimento e Exportações, I.P. – “APIEX”) replaces the Investment Promotion Centre and the Office of Economic Zones for Accelerated Development as the entity responsible for the development, promotion and management of Investment Projects, as well as the promotion of national exports.
The transfer of an investor’s position, including in undertakings and units of the Integrated Tourism Resort Zone, shall now only be subject to authorisation by the entity that authorised the respective project and upon proof of compliance with the relevant tax obligations.
“The regulations therefore encourage national and foreign investment in the country, which further encourages a significant boost in investments,” the duo said.
“The amendments were intended for the main purpose of aligning it with the new investment institutional framework. It is also in line with investment-friendly policies which the country has been diligently pursuing. The regulations therefore encourage national and foreign investment in the country, which further encourages a significant boost in investments. It is advisable that investors take note of the new regulations and ensure that they are complaint with the same when they invest in the country.”