Mozambique: Investing in Mozambique
Mozambique is an important destination for FDI in South-East Africa. The country recorded historically high FDI inflow levels in 2013, reaching more than USD 6 billion. According to the UNCTAD’s World Investment Report 2023, FDI inflows stood at USD 1.97 billion, down from the USD 5.1 billion recorded one year earlier, mainly due to negative intracompany loans. In terms of the sectoral distribution of investments, the mining industry retained its status as the primary recipient of inflows, capturing 78.9% of the total. It was followed by the production and distribution of electricity, gas, and water sector at 6.6%, manufacturing at 2%, and lastly, the transport, storage, and communication sector at 1% (Bank of Mozambique). According to the report from the BoM, Mauritius emerged as the primary contributor to FDI in Mozambique in 2022, accounting for 70.5%. Following Mauritius were the Netherlands, United Arab Emirates, and Italy, contributing 27.6%, 9.3%, and 7.9% respectively, to the country's total net FDI inflow. At the end of the same period, the stock of FDI totaled USD 54.1 billion, around 301.6% of the country’s GDP. According to data from the Bank of Mozambique, FDI has exhibited an upward trajectory in recent years. This trend is attributed to heightened capital inflows from major projects, particularly within the extractive industry. These projects primarily concentrate on hydrocarbon exploration and research activities in the Rovuma basin, as well as efforts to revitalize the coal and heavy sands industry. FDI in Mozambique increased by 15.2% and stood at USD 1,521.8 million in the first three quarters of 2023 compared to 2022, according to the BoM.
The government has consistently implemented reforms, maintained sound economic policies, and put in place a privatization program for public companies to attract FDI. In addition to its abundant natural resources, the country's access to the sea provides a significant advantage compared to its landlocked neighbors. Mozambique has significant and varied natural resources (energy, mines, agriculture, forestry, and fishing), and its geographical location offers a serious advantage in the transportation field. On the other hand, poor governance, an unstable political and security environment, inadequate transport and port infrastructure, vulnerability to natural disasters, and the current sovereign debt crisis are the main factors hampering FDI. National authorities must approve all foreign and domestic investment, including guarantees and incentives. With a few exceptions, Mozambique's Investment Law and its regulations typically do not differentiate based on investor origin or restrict foreign ownership or control of companies. The "Mega-Projects Law" (No. 15/2011) mandates that 5 to 20% of the equity capital of public-private partnerships, large-scale ventures, and significant business concessions must be held by Mozambicans. The country ranks 126th among the 132 economies on the Global Innovation Index 2023 and 141st out of 184 countries on the latest Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | 3,035 | 5,102 | 1,975 |
FDI Stock (million USD) | 46,280 | 50,068 | 54,114 |
Number of Greenfield Investments* | 8 | 8 | 7 |
Value of Greenfield Investments (million USD) | 705 | 2,463 | 1,369 |
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Mozambique | Sub-Saharan Africa | United States | Germany |
Index of Transaction Transparency* | 5.0 | 5.5 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 4.0 | 3.5 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 7.0 | 5.5 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Some of the reasons to invest in Mozambique are:
FDI investment has slowed dramatically since 2015, largely due to a drop in commodity prices (especially coal and aluminium) and slow negotiations in the development of hydrocarbon projects.
Among the factors that hinder FDI inflows there are:
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Latest Update: November 2024