the africa country series republic of mozambique · vi republic of mozambique executive summary...

Republic of Mozambique

The Africa Country Series

2016

Africa Country Series

Republic of Mozambique

2016

ii Republic of Mozambique

AcknowledgementsTeam Leader: Samir S. AmirLead Researcher: Fatima Attarwala

Disclaimer: The findings, interpretations and conclusions expressed do not necessarily reflect the views of the Board of Directors and Members of The Pakistan Business Council or the companies they represent.

Any conclusions of analysis based on ITC, IDB, CTS, UNCTSD and WEO data are the responsibility of the author(s) and do not necessarily reflect the opinion of the WTO, IMF or UN.

Although every effort has been made to cross-check and verify the authenticity of the data, The Pakistan Business Council, or the author(s), do not guarantee the data included in this work. All data and statistics used may be subject to change.

For any queries or feedback regarding this report, please contact [email protected] or [email protected]

Cover Picture: Sam Ward. It is time to go to Mozambique. Africa Freak. http://africafreak.com/its-time-to-go-to-mozambique

iiiRepublic of Mozambique

The Pakistan Business Council: An OverviewThe Pakistan Business Council (PBC) is a business policy advocacy forum, representing private-sector businesses that have substantial investments in Pakistan’s economy. It was formed in 2005 by 14 (now 47) of Pakistan’s largest enterprises, including multinationals, to allow businesses to meaningfully interact with government and other stakeholders.

The Pakistan Business Council is a pan-industry advocacy group. It is not a trade body nor does it advocate for any specific business sector. Rather, its key advocacy thrust is on easing barriers to allow Pakistani businesses to compete in regional and global arenas.

The PBC works closely with the relevant government departments, ministries, regulators and institutions, as well as other stakeholders including professional bodies, to develop consensus on major issues which impact the conduct of business in and from Pakistan. It also serves on various taskforces and committees of the Government of Pakistan as well as those of the State Bank, SECP and other regulators with the objective to provide policy assistance on new initiatives and reforms.

The PBC conducts research and holds conferences and seminars to facilitate the flow of relevant information to all stakeholders in order to help create an informed view on the major issues faced by Pakistan.

The PBC’s Founding Objectives:

• To provide for the formation and exchange of views on any question connected with the conduct of businesses in and from Pakistan.

• To conduct, organize, set up, administer and manage campaigns, surveys, focus groups, workshops, seminars and field work for carrying out research and raising awareness in regard to matters affecting businesses in Pakistan.

• To acquire, collect, compile, analyze, publish and provide statistics, data analysis and other information relating to businesses of any kind, nature or description and on opportunities for such businesses within and outside Pakistan.

• To promote and facilitate the integration of businesses in Pakistan into the world economy and to encourage the development and growth of Pakistani multinationals.

• To interact with Governments in the economic development of Pakistan and to facilitate, foster and further the economic, social and human resource development of Pakistan.

The PBC is a Section 42 not-for-profit Company Limited by Guarantee. Its working is overseen by a Board of Directors elected every three years by the Membership with the Board being headed by a Non-Executive Chairman. The day-to-day operations of the PBC are run by a professional secretariat headed by a full-time, paid CEO. More information on the PBC, its members, and its workings, can be found on its website: www.pbc.org.pk

The PBC’s Member Companies

vi Republic of Mozambique

Executive SummaryThis Country Profile on The Republic of Mozambique is the 5th in the Africa Country Series published by the Research Unit of the Pakistan Business Council (PBC). The Africa Country Series aims to provide some insights into the hereto unexplored markets of Africa with the objective of identifying new markets for exports and investments.

For this purpose, the PBC has initiated a series of African Country Profiles to provide a snapshot of the various opportunities available for Pakistani exporters and investors. Country Profiles for Ethiopia, Nigeria, South Africa and Angola have already been published and the Country Profile of Ghana is expected to be published shortly.

The table below shows a comparison of Pakistan’s and Mozambique’s economies. With a population of 27 million people, Mozambique’s domestic market is small, but as a member of the Southern African Development Community (SADC), investors in the country gain access to the larger southern African region.

Pakistan Mozambique

2013 2014 2013 2014 Data Sources

Real GDP (2005 base year) $144 B $152 B $13.6 B $14.6 B World Bank

Real GDP Growth (2005 base year) 4.4% 5.4% 7% 7% Authors calculations based on

World Bank data

Real GDP per Capita $793 $814 $514 $536 World Bank

Population 181 M 185 M 26 M 27 M World Bank

Trade Deficit $18.6 B $22.8 B $6.1 B $4.0 B Trade Maps

FDI, net inflow $1.31 B $1.78 B $6.7 B $5.0 B World Bank

Bilateral trade between Pakistan and Mozambique was at $120 million in 2014, consisting almost entirely of Pakistan’s exports to Mozambique which were at $119 million. The bulk of Pakistan’s exports to Mozambique consisted of cereals, salt, sulphur, earth, stone, plaster, limes and cement. Pakistan’s imports from Mozambique of $1.2 million consisted of iron and steel and oil seed, fruits, grain and seeds.

Total potential trade between Pakistan and Mozambique, based on 2014’s trade patterns, was $1.68 billion (excluding petroleum products). Pakistan’s potential exports were $1.2 billion which included rice, medicaments, structures and parts of structures, sugar and cement. Potential imports from Mozambique included coke, cotton, lumber, aluminum, tobacco and beans. Total potential imports from Mozambique are $459 million (excluding petroleum products).

Mozambique’s trade deficit has decreased by $2 billion from 2013 to 2014. This is primarily due to a decline in imports of petroleum oils and liquefied butanes and an increase in exports of liquefied natural gas, activated carbon and natural mineral products and unwrought aluminum. While India and China are among Mozambique’s top 10 trading partner, the bulk of its trade is conducted with South Africa.

The 2015 Investment Climate Statement-Mozambique by the US Department of State stated

viiRepublic of Mozambique

that the IMF predicts that Mozambique will be among the World’s fastest growing economies over the next decade. However, while Mozambique’s FDI has increased steadily over the last decade, there was a decline of $1.7 billion between 2013 and 2014.

While Mozambique views FDI as means to drive economic growth and promote job creation with almost all business sectors open to foreign investors, it also suffers from widespread corruption, an underdeveloped financial system, poor infrastructure and high on-the-ground costs. Surface transportation inside the country is slow and expensive, while bureaucracy and port inefficiencies complicate imports.

viii Republic of Mozambique

ixRepublic of Mozambique

Table of Contents

EXECUTIVE SUMMARY ..................................................................................viGEOGRAPHIC & SOCIAL INDICATORS ......................................................01Location .............................................................................................................................................................03Total Area ...........................................................................................................................................................04Population .........................................................................................................................................................05Literacy Rates ....................................................................................................................................................05Political Structure ..............................................................................................................................................06Connectivity .......................................................................................................................................................06MOZAMBIQUE’S HISTORY .............................................................................09MOZAMBIQUE’S ECONOMY .........................................................................13GDP ....................................................................................................................................................................15Country Debt .....................................................................................................................................................18Exchange Rate ...................................................................................................................................................19Mozambique’s Trade Deficit as a percentage of GDP ..................................................................................19Country Risk – Comparison of LIBOR and LUIBOR .................................................................................20Economic Outlook ...........................................................................................................................................20MOZAMBIQUE’S TRADE OVERVIEW ..........................................................23Major Imports ...................................................................................................................................................25Major Exports ...................................................................................................................................................26Major Trading Partners ................................................................................................................................... 28Import Procedures and Special Restrictions ................................................................................................. 29EASE OF DOING BUSINESS, FOREIGN DIRECT INVESTMENT & MAJOR INSTITUTIONS OF MOZAMBIQUE ..............................................................33Ease of Doing Business ....................................................................................................................................35Foreign Direct Investment ..............................................................................................................................35Major Institutions of Mozambique ................................................................................................................39Major Foreign Companies in Mozambique ..................................................................................................40REGIONAL TRADE TRENDS ..........................................................................43International Trade, Investment and Development Alliances ....................................................................46PAKISTAN MOZAMBIQUE TRADE OVERVIEW ..........................................49Pakistan Mozambique Trade Potential ..........................................................................................................54MOZAMBIQUE INDIA TRADE PATTERNS ..................................................57MOZAMBIQUE CHINA TRADE PATTERNS .................................................63MAJOR INDUSTRIES OF MOZAMBIQUE ....................................................69Financial Sector ................................................................................................................................................73Funding for Infrastructure Projects ...............................................................................................................74CONCLUSION ..................................................................................................77BIBLIOGRAPHY ..............................................................................................81

01Republic of Mozambique

SECTION IGeographic and Social Indicators

02 Republic of Mozambique


Geographic and Social Indicators:

Location:Located on the eastern coast of Southern Africa

Source: Mozambican Embassy in Brussels (Belgium)

Border Countries (6): Mozambique is bordered on the north by Tanzania, west by Zambia and Zimbabwe, northwest by Malawi, southwest by South Africa, south by Swaziland and east by the Indian Ocean

Source: High Commissioner of India, Maputo (Mozambique)


Geographic coordinates: Situated between latitude 10° and 27° south and longitude 30° and 41° east


Total Area:Total surface area is a country’s total area, including areas under inland bodies of water and some coastal waterways. Land area is a country’s total area, excluding area under inland water bodies, national claims to continental shelf and exclusive economic zones.

Total Surface Area: 799,380 km2

Land: 786,380 km2

Agricultural land : 499,500 km2

Arable land : 56,619 km2

Water: 13,000 km2

Source: World BankCoastline: 2,700 km


Climate: Humid and tropical with average temperature ranging between 20°C and 31°C, the rainy season occurs between October and April

Source: Mozambican Embassy in Brussels (Belgium)Capital city: MaputoMaputo has a population of more than 2,000,000 and is the largest city in Mozambique. Other important towns are Nampula, Beira, Inhambane, Quelimane and Tete.


Provinces (10): Maputo, Gaza, Inhumbane, Sofala, Manica, Tete, Zambezia, Nampula, Niassa and Cabo Delgado. Each of these is further sub-divided into a total 128 districts. The capital city of Maputo has also been given the status of a province.


Population:Population: 27 Million

Population growth rate: 2.8%

Urban Population: 32% of total population – 8.7 million people

Rural Population: 68% - 18.5 million people

2Agricultural land refers to the share of land area that is arable, under permanent crops, and under permanent pastures2Arable land includes land under temporary crops, temporary meadows for mowing or for pasture, land under market or kitchen gardens, and land temporarily fallow


3Animism: the belief that all plants, animals, and objects have spirits

Population by Age:

0-14 years: 45.13% (male 5,740,743/female 5,677,563)



55-64 years: 3.44% (male 415,357/female 455,450)

65 years and over: 2.91% (male 338,552/female 398,907)

Population by Gender:

Females: 51.2% (13.9 million)Males: 48.8% (13.3 million)

Life Expectancy:

Population: 55 years; Male: 53 years; Female: 56 years

Literacy Rates:Percentage of the population age 15 and above who can, with understanding, read and write a short, simple statement on their everyday life. Generally, ‘literacy’ also encompasses ‘numeracy’, the ability to make simple arithmetic calculations.

Total population: 51%; Male: 67%; Female: 36%

Source: World Bank

Religions: Multi-religious: 56% of the population is Christian, 18% are Muslim, 7% have other religions (mostly animism3) and about 19% have no religion (based on 2007 census).


Languages: Portuguese is the official language of the country. Besides Portuguese, there are several native languages, spoken by large numbers of the population. These languages are protected by the Constitution and are among others: Xichangana, Xirhonga, Xitshwa, Cichopi, Bitonga, Chibalke, Cimanika, Cisena, Chitewe, Cindau, Cinyanja, Echuwabo, Elomwe, Kimwani, Shimakonde, Emakhuwa



4The Commonwealth is a voluntary association of independent sovereign states, consulting and cooperating in the common interests of their peoples. Most countries are former British colonies, however Mozambique is an exception.

Political Structure:The ruling party is the Frente de Libertacão de Moçambique (Frelimo) and the opposition party is Resistencia Nacional Mocambicana (Renamo). The legislative and presidential elections of 2014 confirmed Frelimo in power. Frelimo party has been in power since independence from Portugal in 1975. However, tensions with former Renamo guerrillas have persisted. Mozambique is a democratic republic with a unicameral or one parliament known as the Assembly of the Republic. The head of state and government is the president, who is directly elected through universal adult suffrage with a minimum of 50% of the vote. The president may serve a maximum of two consecutive five-year terms, after which the incumbent must wait a term before becoming eligible for a third term. The Assembly of the Republic has 250 members, elected to serve a five-year term. Parties or coalitions must secure 5% or more of votes on a national basis in order to qualify for a seat under the proportional system. The president appoints the prime minister and a council of ministers (the cabinet). There are 11 constituencies, each corresponding to one of Mozambique’s provinces. The council of ministers is convened and chaired by the prime minister, under powers delegated by the president. The first multi-party democratic elections were held in 1998.

Legal System: Mozambique’s legal system is based on civil law and thus legislation is the primary source of law. Courts base their judgements on legislation and there is no binding precedent as understood in common law systems. The court structure is based on a three tier system comprising of the district, province and supreme courts. Serious criminal cases are tried in the Supreme Court, which is also the final court of appeal. Smaller courts include the Administrative Court, the courts-martial, customs, maritime and labour courts. Supreme Court judges are either appointed by the president or elected by parliament. The death penalty was abolished under the 1990 constitution.

Source: Commonwealth of Nations4 Connectivity

RoadsMozambique’s total road network length was 32,500 km in 2008.

The classified network, with about 22,500 km, consists of primary and secondary networks with less than 5,000 km each, and a tertiary network of about 12,700 km.

The unclassified network is estimated to be around 6,700 km and the urban network 3,300 km

Source: Africa Infrastructure Country Diagnostic

AirportsMozambique’s main airports are:

• Maputo International Airport


• Nacala International Airport

• Nampula International Airport

• Beiro International Airport

• Tete Aerodrome

• Pemba Airport

• Aerodrome Vilankulo

• Inhambane Airfield

• Aerodrom Chimoio

• Aerodrome Quelimane

• Aerodrome Lichinga

Maputo, Nacala, Nampula, and Beiro are international airports while the rest are provincial airports.

Source: Aeroportos de Moçambique 5

Ports:Major seaports: Beira, Maputo, NacalaEmbassy of Denmark in Mozambique

Rail TransportRail Lines:Rail lines are the length of railway route available for train serviceRail lines, total route: 3,116 km

Goods transported:Goods transported by railway are the volume of goods transported by railway, measured in metric tons times kilometres travelled over a time period of a year.

Railways, goods transported (million ton-km): 1,193

Passengers carriedPassengers carried by railway are the number of passengers transported by rail times kilometres travelled over a time period of a year.

Railways, passengers carried (million passenger-km): 246Source: World Bank

Internet Connectivity Internet users are individuals who have used the Internet (from any location) in the last 12 months.

Internet Users (per 100 people): 5.9 Source: World Bank

Mobile Connectivity

5State Airport Managing Authority


Mobile cellular subscriptions total: 18,444,219

Mobile cellular subscriptions (per 100 people): 63

Country Code: +258Source: World Bank


SECTION IIMozambique’s History


Mozambique’s HistoryBantu speakers migrated to Mozambique in the first millennium and Arab and Swahili traders settled in the region thereafter. It was explored by Vasco da Gama in 1498 and first colonized by Portugal in 1505. By 1510, the Portuguese had control of all of the former Arab sultanates on the east African coast through a succession of military campaigns as well as by awarding large tracts of land to commercial companies chartered for the purpose.

Under Portuguese rule the largest of these companies was the Mozambique Company which was formed in 1891. Using the African population as contract labor (similar in practice to forced labor), the company developed mines and sugar and copra plantations. It also built a railway system to link with the territory of Rhodes’s British South Africa Company to the west and with the British Central African Protectorate to the northwest. By the end of World War I, in which Portugal fought on the allied side, colonial control was established over the whole of Portuguese East Africa. However, the territory was split into two parts. One was a colony under Lisbon’s administration, the other was under company rule, with the Mozambique Company controlling the central Manica and Sofala districts along the Zambezi. When the company’s charter ended in 1942, these regions were merged with the colony.

After World War II, thousands of Portuguese settlers were encouraged to migrate to Mozambique with economic benefits and the best jobs reserved for them. Punitive restrictions were imposed on indigenous Mozambicans creating a situation ripe for an independence movement. A guerilla movement demanding independence in the form of Frente de Libertação de Moçambique or the Mozambique Liberation Front (Frelimo) was formed in 1962.

By 1973, Portugal was forced to dispatch 40,000 troops to fight the rebels. A cease-fire was signed in September 1974, and after having been under Portuguese colonial rule for 470 years, Mozambique became independent on June 25, 1975. The first president, Samora Moises Machel, had been the head of the National Front for the Liberation of Mozambique (FRELIMO) in its ten-year guerrilla war for independence. He died in a plane crash in 1986 and was succeeded by his foreign minister, Joaquim Chissanó.

In 1985 the government became locked in a war with antigovernment guerrillas, the Mozambique National Resistance (MNR or Renamo), which was backed by the South African government. The guerrilla movement weakened President Chissanó’s attempts to institute socialism, which he then decided to abandon in 1989. A new constitution was drafted calling for three branches of government (the executive i.e. the president, the legislative i.e. the assembly and judicial i.e. the Supreme Court) and the granting of civil liberties. A cease-fire agreement signed in October 1992 between the government and the MNR ended 6 years of civil war.

In multiparty elections in 1994, President Chissanó won. In November 1995, the country was the first non-former British colony to become a member of the British Commonwealth. While Mozambique posted some of the highest economic growth rates in the late 1990s, it suffered enormous setbacks because of natural disasters, such as the damage caused by severe flooding in the winters of 2000 and 2001. Hundreds died and thousands were displaced.

In 2002, President Chissanó announced he would not seek a third term. FRELIMO’s candidate,


independence hero Armando Guebuza, was elected president and sworn-in in February, 2005.

In October 2012, President Armando Guebuza relieved Prime Minister Aires Ali of his duties amid a cabinet reshuffle and named Alberto Vaquina as new prime minister. On October 21, 2013, the Renamo opposition movement announced it was abandoning the 1992 peace treaty with the governing FRELIMO party. The opposition and government troops had already been battling for about a year. Renamo made the announcement after government troops attacked a Renamo base where Afonso Dhlakama, Renamo’s leader, was staying. Though Renamo’s announcement to abandon the treaty initially raised concerns that the conflict between the two parties would be renewed, the two parties signed a ceasefire in August 2014. Mozambique held general elections on October 15, 2014. The ruling party, FRELIMO, kept its majority in parliament. FRELIMO took 144 out of 250 seats while the opposition party, Renamo, took 89 seats. FRELIMO’s candidate, Filipe Nyusi, was elected president, receiving 57.03% of the vote. Afonso Dhlakama, Renamo’s candidate, received 36.61% of the vote.


SECTION IIIMozambique’’s Economy


Mozambique’s Economy

GDPThe Nominal GDP of the Sub Saharan African Countries given below is the sum of gross value added by all resident producers in the economy plus taxes and minus subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. GDP growth rates are calculated on the basis of year to year changes converted to percentage. GDP per capita is calculated by dividing GDP by population.

Geographically, Sub Saharan African region is the area of the continent of Africa that lies south of the Sahara Desert. It comprises of 48 countries. In 2014, the World Bank estimated its GDP at market prices to be at $1.729 trillion with a population of 973.4 million people.

Sub Saharan African Countries Nominal GDP (USD Billion)

GDP Growth %

GDP per capita (USD)

Nigeria 569 6.3 3,203

South Africa 350 1.5 6,482

Angola (2013) 138 10.0 5,900

Sudan 74 3.1 1,875

Kenya 61 5.3 1,358

Ethiopia 56 10.3 574

Tanzania 48 7.0 955

Ghana 39 4.0 1,442

Côte d'Ivoire 34 8.5 1,546

Congo (Democratic Republic) 33 9.0 442

Mozambique 16 7.2 586

Mozambique’s Forecasted GDP Growth Rate:Categorized as “Low Income” among the Sub Saharan African economies by World Bank, Mozambique’s GDP growth rate is amongst the highest in the region. As per the IMF, World Bank, and the African Economic Outlook, Mozambique will continue to register high growth rates in the coming years.

11

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2016 2017 2018

Forecasted GDP Growth Rates Mozambique Sub Saharan Africa

Mozambique’s Economy

GDP

The Nominal GDP of the Sub Saharan African Countries given below is the sum of gross value added by all resident producers in the economy plus taxes and minus subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. GDP growth rates are calculated on the basis of year to year changes converted to percentage. GDP per capita is calculated by dividing GDP by population.

Geographically, Sub Saharan African region is the area of the continent of Africa that lies south of the Sahara Desert. It comprises of 48 countries. In 2014, the World Bank estimated its GDP at market prices to be at $1.729 trillion with a population of 973.4 million people.

Sub Saharan African Countries

Nominal GDP (USD Billion)

GDP Growth %

GDP per capita (USD)

Nigeria 569 6.3 3,203 South Africa 350 1.5 6,482 Angola (2013) 138 10.0 5,900 Sudan 74 3.1 1,875 Kenya 61 5.3 1,358 Ethiopia 56 10.3 574 Tanzania 48 7.0 955 Ghana 39 4.0 1,442 Côte d'Ivoire 34 8.5 1,546 Congo (Democratic Republic) 33 9.0 442 Mozambique 16 7.2 586

Mozambique’s Forecasted GDP Growth Rate:

Categorized as “Low Income” among the Sub Saharan African economies by World Bank, Mozambique’s GDP growth rate is amongst the highest in the region. As per the IMF, World Bank, and the African Economic Outlook, Mozambique will continue to register high growth rates in the coming years.

Source: World Bank


Real GDPReal GDP is calculated using 2005 as the base year. Mozambique’s real GDP has been increasing steadily over the last decade. In 2014, Mozambique’s real GDP was $14.58 billion and nominal GDP was $15.94 billion.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Real GDP (USD Billion) 7.72 8.48 9.11 9.74 10.36 11.05 11.84 12.69 13.60 14.58

Real GDP growth rate 9% 10% 7% 7% 6% 7% 7% 7% 7% 7%

Nominal GDP (USD Billion) 7.72 8.31 9.37 11.49 10.91 10.15 13.13 14.53 16.02 15.94

Nominal GDP growth rate 8.7% 9.9% 7.4% 6.9% 6.4% 6.7% 7.1% 7.2% 7.1% 7.2%

12

GDP

Real GDP is calculated using 2005 as the base year. Mozambique’s real GDP has been increasing steadily over the last decade. In 2014, Mozambique’s real GDP was $14.58 billion and nominal GDP was $15.94 billion.

DONE 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Real GDP (USD Billion) 7.72 8.48 9.11 9.74 10.36 11.05 11.84 12.69 13.60 14.58 Real GDP growth rate 9% 10% 7% 7% 6% 7% 7% 7% 7% 7% Nominal GDP (USD Billion) 7.72 8.31 9.37 11.49 10.91 10.15 13.13 14.53 16.02 15.94 Nominal GDP growth rate 8.7% 9.9% 7.4% 6.9% 6.4% 6.7% 7.1% 7.2% 7.1% 7.2%

Source: World Bank

Source: World Bank

GDP Growth

Mozambique’s real GDP growth has been steady around 7% since 2010, making it one of the fastest growing economies in the region.

$7.1 $7.7

$8.5 $9.1

$9.7 $10.4

$11.1 $11.8

$12.7 $13.6

$14.6

$0

$2

$4

$6

$8

$10

$12

$14

$16

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Billi

ons

Real GDP

GDP GrowthMozambique’s real GDP growth has been steady around 7% since 2010, making it one of the fastest growing economies in the region.

13

28.7%

3.6% 11.3%

3.6% 2.7%

13.7%

9.4%

10.3%

6.2%

10.6%

2013

Source: Authors calculation based on GDP figures provided by World Bank

GDP by Sector:

The bulk of Mozambique’s GDP stems from its agriculture sector, followed by wholesale & retail trade and restaurants & hotels and manufacturing. The proportionate share of the different sectors has not changed much over the last few years. However, the share of agriculture and manufacturing has decreased whereas the share of mining and quarrying has increased since 2009.

Source: African Economic Outlook

8.7%

9.9%

7.4% 6.9%

6.4% 6.7% 7.1% 7.2% 7.1% 7.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Real GDP Growth Rate

30.9%

1.6% 13.1%

3.7% 2.2%

13.5%

9.9%

9.9%

5.0% 10.1%

2009 Agriculture, forestry, fishing &huntingMining and quarrying

Manufacturing

Electricity, gas and water

Construction

Whole & retail trade andrestuarants & hotelsTransport, storage andcommunicationsFinance, real estate andbusiness servicesPublic administration anddefenceOther services


14

Real GDP per capita

Mozambique’s real GDP per capita has been increasing steadily over the last decade. It increased by 4.2% from 2013 to 2014. Mozambique’s nominal GDP per capital in 2014 was $585.6.

Source: World Bank

Inflation:

Mozambique’s inflation has been erratic over the last decade, though continuing on a downward trend. The volatility can be attributed partly to food price shocks, as reported by the IMF6.

6Republic of Mozambique: Poverty Reduction Strategy Paper Annual Progress Report Joint Staff Advisory Note. IMF Country Report. April 2009

$346 $366 $390 $408 $424 $438 $454 $473

$493 $514

$536

$0

$100

$200

$300

$400

$500

$600

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Real GDP per capita

13

28.7%

3.6% 11.3%

3.6% 2.7%

13.7%

9.4%

10.3%

6.2%

10.6%

2013

Source: Authors calculation based on GDP figures provided by World Bank

GDP by Sector:

The bulk of Mozambique’s GDP stems from its agriculture sector, followed by wholesale & retail trade and restaurants & hotels and manufacturing. The proportionate share of the different sectors has not changed much over the last few years. However, the share of agriculture and manufacturing has decreased whereas the share of mining and quarrying has increased since 2009.

Source: African Economic Outlook

8.7%

9.9%

7.4% 6.9%

6.4% 6.7% 7.1% 7.2% 7.1% 7.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Real GDP Growth Rate

30.9%

1.6% 13.1%

3.7% 2.2%

13.5%

9.9%

9.9%

5.0% 10.1%

2009 Agriculture, forestry, fishing &huntingMining and quarrying

Manufacturing

Electricity, gas and water

Construction

Whole & retail trade andrestuarants & hotelsTransport, storage andcommunicationsFinance, real estate andbusiness servicesPublic administration anddefenceOther services

GDP by Sector:The bulk of Mozambique’s GDP stems from its agriculture sector, followed by wholesale & retail trade and restaurants & hotels and manufacturing. The proportionate share of the different sectors has not changed much over the last few years. However, the share of agriculture and manufacturing has decreased whereas the share of mining and quarrying has increased since 2009.

Real GDP per capita Mozambique’s real GDP per capita has been increasing steadily over the last decade. It increased by 4.2% from 2013 to 2014. Mozambique’s nominal GDP per capital in 2014 was $585.6.


6Republic of Mozambique: Poverty Reduction Strategy Paper Annual Progress Report Joint Staff Advisory Note. IMF Country Report. April 2009

Inflation:Mozambique’s inflation has been erratic over the last decade, though continuing on a downward trend. The volatility can be attributed partly to food price shocks, as reported by the IMF6.

15

Source: World Bank

Country Debt

Mozambique’s gross government debt was 56.6% of its GDP in 2014, of which 8.5% was its domestic debt and 48.1% was its external debt. Mozambique’s gross government debt has been rising since 2011.

Source: IMF

Exchange Rate:

Metical is the official currency of Mozambique. It is subdivided into 100 centavos which have been inflated out of use. In the southern part of Mozambique, US Dollars, the South African Rand, and the British Pound Sterling are also used for business transactions. Metical has been depreciating against

7.2%

13.2%

8.2%

10.3%

3.3%

12.7%

10.4%

2.7%

4.3%

2.6%

0%

2%

4%

6%

8%

10%

12%

14%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Inflation (consumer prices)

37.3% 40.2% 31.2% 34.5%

42.4% 48.1%

3.2% 6.0%

6.3% 5.5%

8.6% 8.5%

0%

10%

20%

30%

40%

50%

60%

2009 2010 2011 2012 2013 2014

Perc

enta

ge o

f GDP

Gross Government Debt External Debt Domestic Debt

15

Source: World Bank

Country Debt

Mozambique’s gross government debt was 56.6% of its GDP in 2014, of which 8.5% was its domestic debt and 48.1% was its external debt. Mozambique’s gross government debt has been rising since 2011.

Source: IMF

Exchange Rate:

Metical is the official currency of Mozambique. It is subdivided into 100 centavos which have been inflated out of use. In the southern part of Mozambique, US Dollars, the South African Rand, and the British Pound Sterling are also used for business transactions. Metical has been depreciating against

7.2%

13.2%

8.2%

10.3%

3.3%

12.7%

10.4%

2.7%

4.3%

2.6%

0%

2%

4%

6%

8%

10%

12%

14%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Inflation (consumer prices)

37.3% 40.2% 31.2% 34.5%

42.4% 48.1%

3.2% 6.0%

6.3% 5.5%

8.6% 8.5%

0%

10%

20%

30%

40%

50%

60%

2009 2010 2011 2012 2013 2014

Perc

enta

ge o

f GDP

Gross Government Debt External Debt Domestic Debt

Country Debt Mozambique’s gross government debt was 56.6% of its GDP in 2014, of which 8.5% was its domestic debt and 48.1% was its external debt. Mozambique’s gross government debt has been rising since 2011.


Exchange Rate:Metical is the official currency of Mozambique. It is subdivided into 100 centavos which have been inflated out of use. In the southern part of Mozambique, US Dollars, the South African Rand, and the British Pound Sterling are also used for business transactions. Metical has been depreciating against the US dollar since 2013 due to a combination of factors which include the political situation, reduction of foreign direct investment flows and the overall decline in the price of Mozambique’s products in international markets.

Mozambique’s Trade Deficit as a percentage of GDPMozambique’s trade deficit decreased from $6.08 billion to $4.02 billion resulting in a decrease in trade deficit as a percentage of GDP from -45% to -28%. This was largely due to a decrease in imports of mineral fuels, oil and distillation products.

16

the US dollar since 2013 due to a combination of factors which include the political situation, reduction of foreign direct investment flows and the overall decline in the price of Mozambique’s products in international markets.

Source: United Nations Treasury

Mozambique’s Trade Deficit as a percentage of GDP

Mozambique’s trade deficit decreased from $6.08 billion to $4.02 billion resulting in a decrease in trade deficit as a percentage of GDP from -45% to -28%. This was largely due to a decrease in imports of mineral fuels, oil and distillation products.

Source: Authors calculations based on World Bank data and Trade Maps

MZN 25.76

MZN 25.54

MZN 24.11 MZN 27.66

MZN 34.21

MZN 28.62

MZN 27.87

MZN 29.47

MZN 31.12

MZN 39.50

MZN 0

MZN 5

MZN 10

MZN 15

MZN 20

MZN 25

MZN 30

MZN 35

MZN 40

MZN 45

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mozambique Metical per US$

-9% -6% -7%

-14% -16% -12%

-23%

-21%

-45%

-28%

-50%

-45%

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Trade Deficit as a percentage of GDP

16

the US dollar since 2013 due to a combination of factors which include the political situation, reduction of foreign direct investment flows and the overall decline in the price of Mozambique’s products in international markets.

Source: United Nations Treasury

Mozambique’s Trade Deficit as a percentage of GDP

Mozambique’s trade deficit decreased from $6.08 billion to $4.02 billion resulting in a decrease in trade deficit as a percentage of GDP from -45% to -28%. This was largely due to a decrease in imports of mineral fuels, oil and distillation products.

Source: Authors calculations based on World Bank data and Trade Maps

MZN 25.76

MZN 25.54

MZN 24.11 MZN 27.66

MZN 34.21

MZN 28.62

MZN 27.87

MZN 29.47

MZN 31.12

MZN 39.50

MZN 0

MZN 5

MZN 10

MZN 15

MZN 20

MZN 25

MZN 30

MZN 35

MZN 40

MZN 45

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mozambique Metical per US$

-9% -6% -7%

-14% -16% -12%

-23%

-21%

-45%

-28%

-50%

-45%

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Trade Deficit as a percentage of GDP


Country Risk – Comparison of LIBOR and MAIBORThe Bank of Mozambique compiles loan and deposit interest rates monthly, disaggregated into domestic and foreign currency and by maturity. The reference rate of the Interbank Money Market (MMI) is the Maputo Interbank Offered Rate (MAIBOR). MAIBOR is the average of the “offer” prices of banks. This rate covers terms of one day to one year, with intervening terms of 1, 2, and 3 weeks and 1, 2, and 3 months. The graph below compares the 3 month MAIBOR rate with 3 month London Interbank Offered Rate (LIBOR). LIBOR is a benchmark rate that some of the world’s leading banks charge each other for short-term loans. It serves as the first step to calculating interest rates on various loans throughout the world.

Economic outlook:Despite maintaining high real GDP growth rates on average, Mozambique remains amongst the poorest countries of Sub-Saharan Africa.

As per the World Bank’s 2015 report, Mozambique’s real GDP growth rate reached 5.9% in the first quarter of 2015, supported by trade, manufacturing, extractive industries, transport and communication and electricity production. Mozambique’s annual growth has averaged 7% over the past two decades. Sound macroeconomic management, large-scale foreign-investment projects and significant donor support have contributed significantly to such performance. IMF has predicted that Mozambique’s real GDP growth rate will at 6.5% in 2016.

According to the African Development Bank, the main challenge to Mozambique in the short run is to remain attractive in terms of FDI, while ensuring fiscal and debt sustainability. Consecutive high fiscal deficits, reaching 10.0% of GDP in 2014, have pushed public debt to 56.8% of GDP.

Mozambique’s current development strategy is structured along Regional Spatial Development Initiatives Programs7 (RSDIP) and Growth Poles (GP)8. Using these strategies, Mozambique intends to develop key industries around which growth can be structured in underdeveloped areas that have high potential with the help of private sector investments. This approach is

Country Risk – Comparison of LIBOR and MAIBOR The Bank of Mozambique compiles loan and deposit interest rates monthly, disaggregated into domestic and foreign currency and by maturity. The reference rate of the Interbank Money Market (MMI) is the Maputo Interbank Offered Rate (MAIBOR). MAIBOR is the average of the “offer” prices of banks. This rate covers terms of one day to one year, with intervening terms of 1, 2, and 3 weeks and 1, 2, and 3 months. The graph below compares the 3 month MAIBOR rate with 3 month London Interbank Offered Rate (LIBOR). LIBOR is a benchmark rate that some of the world’s leading banks charge each other for short-term loans. It serves as the first step to calculating interest rates on various loans throughout the world.

Ice Benchmark Administration & Bank of Mozambique Economic outlook: Despite maintaining high real GDP growth rates on average, Mozambique remains amongst the poorest countries of Sub-Saharan Africa. As per the World Bank’s 2015 report, Mozambique’s real GDP growth rate reached 5.9% in the first quarter of 2015, supported by trade, manufacturing, extractive industries, transport and communication and electricity production. Mozambique’s annual growth has averaged 7% over the past two decades. Sound macroeconomic management, large-scale foreign-investment projects and significant donor support have contributed significantly to such performance. IMF has predicted that Mozambique’s real GDP growth rate will at 6.5% in 2016. According to the African Development Bank, the main challenge to Mozambique in the short run is to remain attractive in terms of FDI, while ensuring fiscal and debt sustainability. Consecutive high fiscal deficits, reaching 10.0% of GDP in 2014, have pushed public debt to 56.8% of GDP.

16.38% 16.87%

14.70% 13.24%

12.07% 12.88%

0.34% 0.34% 0.43% 0.27% 0.23% 0.31%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2010 2011 2012 2013 2014 2015

MAIBOR 3 month LIBOR 3 month


anchored on large public projects that have the potential for spillover growth by attracting small and medium-sized enterprises up and downstream of largescale investment projects.

An example of the above strategy is the Maputo Development Corridor, which is a transportation route that comprises road, rail, border posts, port and terminal facilities. It joins Maputo with different industrialized regions of Southern Africa (Botswana, Zimbabwe, South Africa and Swaziland). The African Development Bank describes it as “among the most well-developed corridors in sub-Saharan African [that has been] highly successful in generating local economic development”.

Other key sectors include the extractive sector; however Mozambique’s coal production in 2015 was lower than expected, as reported by the African Development Bank. To increase revenue and also to increase domestic participation, Mozambique’s government revised the legal and fiscal framework for the mining and hydrocarbons sector. These revisions include a concession contract for a local Liquefied Natural Gas (LNG) plant, and an international tender for the exploration of new oil and gas fields that could potentially open up prospects for hydrocarbon discoveries.

According to the World Bank, Mozambique’s rapid economic growth over the past 20 years has had only a moderate impact on poverty reduction and the geographical distribution of poverty remains largely unchanged. Constraints faced by Mozambique include lack of economic diversification, weak institutions, high costs of financing and weak infrastructure development that hampers private sector competitiveness in general and that of the Small and Medium Enterprises (SMEs) in particular.

7The Spatial Development Initiative (SDI) methodology was developed in South Africa in 1996 as an integrated planning tool aimed at promoting investment in regions of the country that were underdeveloped but had potential for growth. The methodology involves a process in which the public sector develops or facilitates conditions conducive to private sector investment and Public-Private-Community Partnerships.

8Growth Pole Theory is that economic development or growth takes places around a specific pole (or cluster), rather than being uniform over a region. The pole is often characterized by core industries around which linked industries develop through direct and indirect effect.


SECTION IVMozambique’s Trade Overview


Mozambique’s Trade Overview Mozambique’s bilateral trade in 2014 was $13.47 billion, a 224% increase over a 10 year period. Though Mozambique’s trade deficit has increased in recent years, it decreased by $2.06 billion from 2013 to 2014 due to a decline in imports, especially of mineral fuels, oil & distillation products.

Major Imports:The table below lists Mozambique’s top 25 imports at tariffs level which accounted for 45% of Mozambique’s total imports in 2014. The top imports in 2014 were other petroleum oils and preparations and unwrought aluminum. Mozambique’s total imports in 2014 were $8.7 billion.

Table 1: Mozambique’s Top 25 Imports as HS 6 digit level

HS Code Product label

Imp

orts

200

5 U

SD

M

Imp

orts

200

6 U

SD

M

Imp

orts

200

7 U

SD

M

Imp

orts

200

8 U

SD

M

Imp

orts

200

9 U

SD

M

Imp

orts

201

0 U

SD

M

Imp

orts

201

1 U

SD

M

Imp

orts

201

2 U

SD

M

Imp

orts

201

3 U

SD

M

Imp

orts

201

4 U

SD

M

'271019 Other petroleum oils and preparations 28.7 302.2 291.6 546.9 307.6 382.2 861.2 885.1 1591.7 1033.9

'760110 Aluminium unwrought, not alloyed 2.0 0.0 0.0 0.0 0.0 0.0 601.4 295.3 488.1 529.0

'271011 Light petroleum oils and preparations 3.9 74.6 68.3 103.6 103.7 137.8 235.7 249.4 470.1 312.3

'271600 Electrical energy 79.8 83.7 107.4 122.1 127.3 157.4 314.2 306.3 292.4 269.7

'870421Diesel powered trucks with a GVW not exceeding five tonnes

83.5 94.2 99.1 132.9 137.1 105.6 144.8 130.2 217.8 242.6

'100630Rice, semi-milled or wholly milled, whether or not polished or glazed

108.5 90.7 106.1 111.7 151.1 74.0 134.8 93.4 243.2 187.2

'100190 Wheat nes and meslin 49.1 66.4 55.3 99.7 91.1 64.2 130.5 103.3 136.9 146.5

19

Major Imports:

The table below lists Mozambique’s top 25 imports at tariffs level which accounted for 45% of Mozambique’s total imports in 2014. The top imports in 2014 were other petroleum oils and preparations and unwrought aluminum. Mozambique’s total imports in 2014 were $8.7 billion.



Imports 2005

USD M

Imports 2006

USD M

Imports 2007

USD M

Imports 2008

USD M

Imports 2009

USD M

Imports 2010

USD M

Imports 2011

USD M

Imports 2012

USD M

Imports 2013

USD M

Imports 2014

USD M

'271019 Other petroleum oils and preparations 28.7 302.2 291.6 546.9 307.6 382.2 861.2 885.1 1591.7 1033.9

'760110 Aluminium unwrought, not alloyed 2.0 0.0 0.0 0.0 0.0 0.0 601.4 295.3 488.1 529.0

'271011 Light petroleum oils and preparations 3.9 74.6 68.3 103.6 103.7 137.8 235.7 249.4 470.1 312.3

'271600 Electrical energy 79.8 83.7 107.4 122.1 127.3 157.4 314.2 306.3 292.4 269.7

'870421 Diesel powered trucks with a GVW not exceeding five tonnes 83.5 94.2 99.1 132.9 137.1 105.6 144.8 130.2 217.8 242.6

'100630

Rice, semi-milled or wholly milled, whether or not polished or glazed 108.5 90.7 106.1 111.7 151.1 74.0 134.8 93.4 243.2 187.2

'100190 Wheat nes and meslin 49.1 66.4 55.3 99.7 91.1 64.2 130.5 103.3 136.9 146.5

'300490 Medicaments nes, in dosage 23.4 30.2 42.3 48.0 33.7 33.1 104.4 41.3 124.4 132.8

'730890

Structures&parts of structures,i/s (ex prefab bldgs of headg no.9406) 10.5 17.7 16.7 25.0 21.1 20.7 108.5 37.8 59.0 111.7

'151110 Palm oil, crude 13.3 22.3 28.5 69.9 49.7 52.1 78.8 24.7 88.9 92.8

$2.41 $2.87 $3.05 $4.01 $3.76 $3.56

$6.31 $6.18

$10.10

$8.74

$1.75 $2.38 $2.41 $2.65 $2.15 $2.24

$3.60 $3.47 $4.02

$4.73

-$0.66 -$0.49 -$0.64 -$1.35 -$1.62 -$1.32

-$2.70 -$2.71

-$6.08

-$4.02

(8)

(6)

(4)

(2)

-

2

4

6

8

10

12

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Billi

ons

Imports Exports Trade Deficit




Imp

orts

200

5 U

SD

M

Imp

orts

200

6 U

SD

M

Imp

orts

200

7 U

SD

M

Imp

orts

200

8 U

SD

M

Imp

orts

200

9 U

SD

M

Imp

orts

201

0 U

SD

M

Imp

orts

201

1 U

SD

M

Imp

orts

201

2 U

SD

M

Imp

orts

201

3 U

SD

M

Imp

orts

201

4 U

SD

M

'730890Structures&parts of structures,i/s (ex prefab bldgs of headg no.9406)

10.5 17.7 16.7 25.0 21.1 20.7 108.5 37.8 59.0 111.7

'151110 Palm oil, crude 13.3 22.3 28.5 69.9 49.7 52.1 78.8 24.7 88.9 92.8

'030379Fish nes, frozen, excluding heading No 03.04, livers and roes

27.9 28.8 24.3 34.9 36.0 33.3 54.2 45.5 86.4 84.4

'842959 Self-propelled excavating machinery nes 2.2 5.7 7.9 8.4 11.8 15.8 36.8 34.0 43.7 77.0

'630900 Worn clothing and other worn articles 13.8 13.4 15.2 17.5 27.5 20.0 26.7 36.8 65.6 71.4

'870323Automobiles w reciprocatg piston engine displacg > 1500 cc to 3000 cc

18.6 22.3 29.7 40.1 53.4 34.6 46.6 27.5 61.5 61.9

'870322Automobiles w reciprocatg piston engine displacg > 1000 cc to 1500 cc

12.2 10.9 18.3 19.5 17.3 16.0 25.5 24.0 53.6 60.3

'252329 Portland cement nes 14.0 12.3 7.8 14.8 40.4 36.7 46.8 13.4 66.9 57.6

'870120 Road tractors for semi-trailers (truck tractors) 17.9 15.8 14.1 27.8 32.7 23.3 48.8 17.9 59.6 57.6

'870422Diesel powerd trucks w a GVW exc five tonnes but not exc twenty tonnes

11.6 22.9 16.9 22.4 23.0 18.1 71.3 39.5 64.3 56.3

'721420Bars & rods,i/nas,hr,hd or he,cntg indent,ribs,etc,prod dur rp/tar,nes

6.9 11.1 11.4 19.1 12.5 10.6 7.9 27.8 48.8 55.1

'870899 Motor vehicle parts nes 6.6 7.5 7.9 12.2 14.5 13.1 22.4 34.0 46.5 52.9

'870210Diesel powered buses with a seating capacity of > nine persons

12.3 13.8 20.3 26.2 22.2 30.1 55.7 25.9 47.4 49.1

'851770Parts of telephone sets, telephones for cellular networks or for other

0.0 0.0 0.0 0.0 0.0 0.0 0.0 30.5 79.3 48.3

'843149Parts of cranes,work-trucks,shovels,and other construction machinery

2.9 3.3 6.5 5.4 5.7 7.4 36.2 27.0 49.0 46.4

'843139Parts of lifting, handling, loading or unloading machinery nes

1.2 3.7 1.5 1.6 2.4 2.1 3.8 4.1 15.2 46.2

'282612 Aluminum fluoride 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.2 44.0

Major Exports Mozambique’s total exports in 2014 were $4.7 billion of which $1 billion comprised of unalloyed bars and rods of aluminum which were 22% of Mozambique’s total exports. The remaining 24 products of Mozambique’s top 25 exports consisted of 67% of its total exports in 2014.


Table 2: Mozambique’s Top 25 Exports at HS 6 digit level

Code Product label

Exp

orts

200

5 U

SD

M

Exp

orts

200

6 U

SD

M

Exp

orts

200

7 U

SD

M

Exp

orts

200

8 U

SD

M

Exp

orts

200

9 U

SD

M

Exp

orts

201

0 U

SD

M

Exp

orts

201

1 U

SD

M

Exp

orts

201

2 U

SD

M

Exp

orts

201

3 U

SD

M

Exp

orts

201

4 U

SD

M

'760410 Bars, rods and profiles, aluminium, not alloyed

1,745.3

2,381.1

2,412.1

2,653.3

2,147.2

2,243.1

3,604.1

3,469.9

4,023.7

4,725.3

'270400Coke&semi-coke of coal,lignite o peat,agglomeratd o not,retort carbon

0.0

0.0

0.0

0.0

0.0

0.0

1,348.6

1,088.6

1,063.2

1,045.7

'380290Activatd natural mineral products;animal black,incl spent animal black

0.0

0.0

0.0

0.0

0.0

0.0

20.7

435.2

526.6

484.1

'760110 Aluminium unwrought, not alloyed

0.0

0.0

0.0

0.0

0.0

0.0

0.0

111.1

34.6

433.5

'271600 Electrical energy 1,020.5

1,401.3

1,515.9

0.0

0.0

1,159.6

276.1

-

-

366.6

'271111 Natural gas, liquefied 141.8

177.8

225.3

226.4

274.4

276.5

297.2

233.4

275.5

301.2

'271121 Natural gas in gaseous state 0.0

0.0

0.0

3.0

77.5

133.8

160.9

175.1

164.0

295.3

'240120Tobacco, unmanufactured, partly or wholly stemmed or stripped

100.2

109.6

110.9

1.4

12.7 0.0

14.7 73.1

281.4

253.5

'261400 Titanium ores and concentrates 4.5

78.8

43.3

164.8

154.6

132.1

174.7

219.1

249.9

251.4

'170111 Raw sugar, cane 0.0

0.0

5.1

28.8

43.8

19.7

122.0

211.5

126.6

134.3

'710391Rubies,sapphires and emeralds further worked than sawn or rough shaped

37.7

30.5

59.0

0.0

58.3

4.0

87.5

146.1

185.7

81.7

'271019 Other petroleum oils and preparations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.3

78.4

'520100 Cotton, not carded or combed 15.5

48.8

29.7

50.7

8.0

33.8

71.4

46.9

87.4

60.5

'261510 Zirconium ores and concentrates

40.4

36.8

19.6

50.4

26.5

0.0

20.0

9.2

80.0

48.3

'440729 Lumber, tropical hardwood nes, sawn lengthwise >6mm

0.0

0.0

0.0

5.4

10.4

0.0

49.9

26.0

27.5

47.9

'080300 Bananas including plantains, fresh or dried

0.8

1.3

2.7

6.5

15.9

30.4

112.2

5.2

20.7

46.9

'120740 Sesamum seeds, whether or not broken

0.8

1.7

3.9

5.4

4.5

13.8

168.8

23.8

22.1

41.5

'030613Shrimps and prawns, frozen, in shell or not, including boiled in shell

8.2

13.5

16.0

30.6

39.1

17.2

19.6

16.5

30.2

40.5

'880212 Helicopters of an unladen weight exceeding 2,000 kg

71.7

86.3

61.7

61.9

53.3

49.4

38.0

17.5

31.5

40.3

'520300 Cotton, carded or combed 0.0

0.0

8.3

0.0

0.0

0.0

0.0

0.0

0.0

29.9

'670490 Wigs, false beards, eyebrows and the like, of other materials

14.9

8.8

11.9

1.2

0.0

1.4

18.5

38.3

19.3

29.0

'151219Sunflower-sed or safflower oil and their fractions, refined, but not chemically modified

0.0

0.0

1.5

2.3

3.7

4.2

9.1

5.4

16.3

25.8

'230230 Wheat bran, sharps and other residues, pelleted or not

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.2

5.7

25.5

'440799 Lumber, non-coniferous nes 2.7

3.2

5.1

6.4

5.3

4.6

10.8

19.9

10.5

23.5

'271129Petroleum gases and other gaseous hydrocarbons nes, in gaseous state

1.4

3.8

3.1

15.6

10.4

9.8

9.9

29.7

5.7

23.0


Major Trading Partners:In 2014, South Africa was Mozambique’s top trading partner. The bulk of Mozambique’s imports, 33%, were from South Africa while 20% of its exports found a market in South Africa. China and India were among the top 10 trading partners of Mozambique.

Major Importing Partners:The top 10 importing partners of Mozambique are listed below. In 2014, these countries accounted for 78% of Mozambique’s total imports.

Table 3: Top 10 Import Partners of Mozambique

Exporters

2005

US

D

M

2006

US

D

M

2007

US

D

M

2008

US

D

M

2009

US

D

M

2010

US

D

M

2011

US

D

M

2012

US

D

M

2013

US

D

M

2014

US

D

M

World 2,408.2 2,869.3 3,049.7 4,007.8 3,764.2 3,564.2 6,305.6 6,177.2 10,099.1 8,743.1

South Africa 980.8 947.9 970.8 1,164.9 1,333.8 1,226.8 2,121.4 1,940.5 3,298.9 2,891.9

Bahrain 0.0 50.0 0.6 269.7 14.9 94.7 108.4 389.5 561.5 810.2

China 68.3 82.7 103.2 156.1 173.1 130.0 373.8 350.2 644.1 700.0

Netherlands 300.4 371.1 447.9 698.0 488.2 642.9 676.1 572.9 429.5 599.3

United Arab Emirates 37.9 114.2 99.5 103.6 75.6 47.6 401.1 454.1 862.2 478.6

Portugal 85.4 89.5 103.6 115.8 142.0 154.2 225.6 304.1 483.3 456.0

India 96.7 136.8 131.8 144.4 244.7 201.7 300.5 200.9 330.1 328.1

Japan 62.6 67.3 94.0 127.8 141.6 126.3 185.4 147.2 240.3 274.5

United States of America 70.9 101.6 80.8 160.4 134.8 74.4 292.3 254.0 204.7 158.6

Thailand 42.6 36.5 55.6 87.0 127.6 52.2 119.6 80.0 153.2 140.6

23

Major Trading Partners:

In 2014, South Africa was Mozambique’s top trading partner. The bulk of Mozambique’s imports, 33%, were from South Africa while 20% of its exports found a market in South Africa. China and India were among the top 10 trading partners of Mozambique.

Major Importing Partners:

The top 10 importing partners of Mozambique are listed below. In 2014, these countries accounted for 78% of Mozambique’s total imports.


Exporters 2005

USD M 2006

USD M 2007

USD M 2008

USD M 2009

USD M 2010

USD M 2011

USD M 2012

USD M 2013

USD M 2014

USD M

World 2,408.2 2,869.3 3,049.7 4,007.8 3,764.2 3,564.2 6,305.6 6,177.2 10,099.1 8,743.1 South Africa 980.8 947.9 970.8 1,164.9 1,333.8 1,226.8 2,121.4 1,940.5 3,298.9 2,891.9 Bahrain 0.0 50.0 0.6 269.7 14.9 94.7 108.4 389.5 561.5 810.2 China 68.3 82.7 103.2 156.1 173.1 130.0 373.8 350.2 644.1 700.0

Netherlands 300.4 371.1 447.9 698.0 488.2 642.9 676.1 572.9 429.5 599.3 United Arab

Emirates 37.9 114.2 99.5 103.6 75.6 47.6 401.1 454.1 862.2 478.6

$0

$2

$4

$6

$8

$10

$12

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Billi

ons

Mozambique's Top 10 Import Partners

South Africa Bahrain China Netherlands

United Arab Emirates Portugal India Japan

United States of America Thailand Others


Major Exporting Partners:79% of Mozambique’s total exports in 2014 were to the top trading partners listed below:

Table 4: Top 10 Export Partners of Mozambique

Importers

2005

US

D

M

2006

US

D

M

2007

US

D

M

2008

US

D

M

2009

US

D

M

2010

US

D

M

2011

US

D

M

2012

US

D

M

2013

US

D

M

2014

US

D

M

Total 1,745.3 2,381.1 2,412.1 2,653.3 2,147.2 2,243.1 3,604.1 3,469.9 4,023.7 4,725.3

Netherlands 1,042.9 20.8 10.5 1,476.4 893.9 1,181.9 1,402.1 921.4 1,150.6 1,111.4

South Africa 280.4 361.7 429.3 265.5 460.3 467.2 584.0 666.8 901.5 948.2

Singapore 2.4 3.5 1.3 1.9 28.4 11.0 9.6 28.3 38.0 474.7

India 26.6 30.2 15.9 28.4 56.5 30.4 87.2 155.1 679.6 387.6

United Kingdom 8.2 16.3 24.7 10.2 28.7 1.4 198.7 177.2 49.0 209.9

China 34.1 32.9 44.0 51.6 74.5 79.6 167.7 637.3 105.0 204.2

United Arab Emirates 1.8 3.5 5.4 11.0 8.5 6.5 11.6 9.0 39.5 119.1

Zimbabwe 46.0 76.1 73.3 81.3 73.8 72.1 127.3 82.9 74.5 106.5

Switzerland 3.1 52.6 6.9 14.3 9.6 7.8 99.8 87.2 79.3 87.9

Italy 1.7 3.2 1.5 6.9 15.7 0.4 51.7 108.0 36.0 77.9

Import Procedures and Special Restrictions:The Government of Mozambique requires a pre-shipment inspection (PSI) for most imports for which INTERTEK Government and Trade Services have been designated. This includes the requirement of a physical inspection in the exporter’s country to establish compliance with order specification and assessment of price, customs classification and import duties payable.

Importers are required to complete a Pre-Advice Form (PAF) for all imports subject to inspection. Upon receipt of the PAF from the importer, INTERTEK contacts the exporter and arranges inspection in the country of supply through their network of overseas offices. Upon satisfactory findings, INTERTEK issues a Documento Único Certificado (DUC) – Single

24


Exporters 2005

USD M 2006

USD M 2007

USD M 2008

USD M 2009

USD M 2010

USD M 2011

USD M 2012

USD M 2013

USD M 2014

USD M

Portugal 85.4 89.5 103.6 115.8 142.0 154.2 225.6 304.1 483.3 456.0 India 96.7 136.8 131.8 144.4 244.7 201.7 300.5 200.9 330.1 328.1 Japan 62.6 67.3 94.0 127.8 141.6 126.3 185.4 147.2 240.3 274.5

United States of America 70.9 101.6 80.8 160.4 134.8 74.4 292.3 254.0 204.7 158.6

Thailand 42.6 36.5 55.6 87.0 127.6 52.2 119.6 80.0 153.2 140.6

Major Exporting Partners:

79% of Mozambique’s total exports in 2014 were to the top trading partners listed below:

Table 4: Top 10 Export Partners of Mozambique

Importers 2005

USD M 2006

USD M 2007

USD M 2008

USD M 2009

USD M 2010

USD M 2011

USD M

2012

USD M 2013

USD M 2014

USD M

Total 1,745.3 2,381.1 2,412.1 2,653.3 2,147.2 2,243.1 3,604.1 3,469.9 4,023.7 4,725.3 Netherlands 1,042.9 20.8 10.5 1,476.4 893.9 1,181.9 1,402.1 921.4 1,150.6 1,111.4 South Africa 280.4 361.7 429.3 265.5 460.3 467.2 584.0 666.8 901.5 948.2

Singapore 2.4 3.5 1.3 1.9 28.4 11.0 9.6 28.3 38.0 474.7 India 26.6 30.2 15.9 28.4 56.5 30.4 87.2 155.1 679.6 387.6

United Kingdom 8.2 16.3 24.7 10.2 28.7 1.4 198.7 177.2 49.0 209.9

China 34.1 32.9 44.0 51.6 74.5 79.6 167.7 637.3 105.0 204.2 United Arab

Emirates 1.8 3.5 5.4 11.0 8.5 6.5 11.6 9.0 39.5 119.1

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Billi

ons

Mozambique's Top 10 Export Markets

Netherlands South Africa Singapore India

United Kingdom China United Arab Emirates Zimbabwe

Switzerland Italy Others


Certified Document - which thereby allows the importer to proceed with the order.

The timeline for this procedure is as follows:

Process Working Days

From receipt of PAF at INTERTEK to receipt of PAF at INTERTEK overseas office and sending of RFI (Request for Information) letter to the exporter

3 working days

Arrangement of inspection from receipt of the Exporters response to the RFI letter 3 working days

Availability of DUC to importer in Maputo following completion of inspection and receipt of correct final documentation from the Exporter

3 working days

Delivery of the DUC by the Intertek Maputo office to the Provinces 3 working days

Therefore from the receipt of the Pre-Advice Form by INTERTEK to the point by which the importer can proceed with the order, the process takes 12 working days.

Exclusion from PSI List:The list of good indicated below are subject to compulsory PSI above the exclusion quantity. The quantities indicated under the exclusion column refer to single transaction that may be declared on one clearance without requiring PSI. The list uses the international Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS) of tariff nomenclature.

HS Code Exclusion Quantity from PSI

Chapter 11 - Milling products, malt, starches, inulin, wheat gluten:

• 1102 – Cereal flours other than of wheat or meslinQuantities up to 20 kgs

Chapter 15 - Animal,vegetable fats and oils, cleavage products, etc:

• 1507 – Soya bean oil & its fractions• 1508 – Ground nut oil & its fractions• 1511 – Palm oil & its fraction• 1512 – Safflower, sunflower/cotton-seed oil & its

fractions• 1513 – Coconut (copra), palm kernel/babassu oil &

their fractions• 1515 – Fixed vegetable fats & oils & their fractions

Quantities up to 20 liters

Chapter 25 – Salt, sulphur, earth, stone, plaster, lime and cement:

• 2523 - Cements, portland, aluminous, slag, supersulfate & similar hydraulic

Quantities up to 100 kgs


HS Code Exclusion Quantity from PSI

Chapter 30 – Pharmaceutical products:

• 3001 - Glands & extracts, secretions for organotherapeutic uses; heparin & it

• 3002 - Human & animal blood; antisera, vaccines, toxins, micro-organism cultu

• 3003 - Medicament mixtures (not 3002, 3005, 3006) not in dosage

• 3004 - Medicament mixtures (not 3002, 3005, 3006), put in dosage

• 3005 - Dressings packaged for medical use

• 3006 - Pharmaceutical goods, specified sterile products sutures, laminaria

Quantities for personal use

Chapter 40 – Rubber and articles thereof:

• 4011 – New pneumatic tires, of rubber

• 4012 - Retreaded/used tire; solid tire, interchangeable tire treads& flaps

Quantities up to 5 tyres

Chapter 87 – Vehicles other than railway, tramway:

• 8701 - Tractors (other than tractors of heading no 87.09)

• 8702 – Public – transport type passenger motor vehicles

• 8703 – Cars (incl. station wagon)

• 8704 – Trucks, motor vehicles for the transport of goods

• 8705 – Special purpose motor vehicles (fire fight vehicles, crane lorry)

• 8711 – Motorcycles, side-cars

New vehicles which have never been registered in the country of manufacture

The following imports are prohibited:1. Merchandise with fabrication labels of false commerce or origin, books and works of art

when they are counterfeit editions

2. Objects, photographs, albums, recordings of sound or images and film of a pornographic nature or other materials that were judged offensive to public morals and dignity

3. Imitations of formulas of postal franchise used in the country

4. Medication and food products harmful to public health

5. Food products that are harmful to public health that cannot be used for other purposes

6. Distilled alcoholic drinks that contain essences or chemical products recognized as harmful such as: Aldeido Benzoico, Badia, Eteres silicitos, Hissopo e Tulinana

7. Hallucinatory and psychiatric substances except when imported for hospital use

8. Other merchandise whose prohibition of importation is established by special legislation

9. Certain gases as specified below: - Chlorofluorocarbons (CFCs) - Halogens (Halon 1211, Halon 1301 and Halon 2402) - Carbon Tetrachloride of Carbon (CCL4) - Other substances banned as per the Montreal Protocol as regards substances that destroy the ozone layer as ratified by Resolution No. 8/93 of the 8th December

10. Left-hand drive vehicles used for commercial purposes. ‘Commercial purposes’ has been defined as:

- sale or resale to third parties

- use in transport which generates income

- use in support of income


SECTION VEase of Doing Business, Foreign Direct Investment and Major Institutions of Mozambique


Ease of Doing Business:Mozambique’s Ease of Doing Business rank in 2015 was 128 and 133 in 2016. Mozambique slipped 5 places in rankings of Ease of Doing Business.

TOPICS DB 2016 Rank DB 2015 Rank Change in Rank

Starting a Business 124 118 -6

Dealing with Construction Permits 31 37 6

Getting Electricity 164 166 2

Registering Property 105 106 1

Getting Credit 152 150 -2

Protecting Minority Investors 99 98 -1

Paying Taxes 120 121 1

Trading Across Borders 129 129 No change

Enforcing Contracts 184 184 No change

Resolving Insolvency 66 65 -1

Foreign Direct Investment (FDI):The graph below shows FDI, net inflows (Balance of Payments, current US$). FDI refers to direct investment equity inflows which equals the sum of equity capital, reinvested of earnings and other capital.

As per the African Development Bank, FDI inflow is one of the main drivers of economic growth in Mozambique. FDI was mostly linked to natural resource exploitation, Official Development Assistance (ODA)9 and agriculture. The 2015 Investment Climate Statement-Mozambique by the US Department of State stated that the IMF predicts that it will be among the world’s fastest growing economies over the next decade. However, while Mozambique’s FDI has increased steadily over the last decade, there was a decline of $1.7 billion between 2013 and 2014.

9World Bank defines ODA as disbursements of loans made on concessional terms (net of repayments of principal) and grants by official agencies of the members of the Development Assistance Committee (DAC), by multilateral institutions, and by non-DAC countries to promote economic development and welfare in countries and territories in the DAC list of ODA recipients.


29

Source: World Bank

FDI guidelines:

The Government of Mozambique is receptive to foreign investment, according to the 2015 Investment Climate Statement-Mozambique by the US Department of State. Mozambique’s authorities view FDI as means to drive economic growth and promote job creation. Virtually all business sectors are open to foreign investors. While the government has processes in place to review and approve each foreign and domestic investment, there are almost no restrictions on the form or extent of foreign investment. The government's Investment Promotion Center (CPI) 10 seeks to bring investors to Mozambique and is an investor's contact with the government during the initial investment stage. CPI is particularly interested in increasing investment in the central and northern regions of the country in order to address large regional development imbalances. The law and its regulations generally do not make distinctions based upon investor origin, nor do they limit foreign ownership or control of companies. However, 5% to 20% of the equity capital of the project company should be owned by citizens of Mozambique.

Foreign investors would find it beneficial to work with a local equity partner familiar with the local languages and the bureaucracy at the national, provincial, and district levels. CPI assists both local and foreign investors in obtaining licenses and permits. However, in general, large investors receive much more support from the government in the business registration process than small and medium-sized investors.

10 Contact details are further information on CPI is given on page 32.

$0.12 $0.25 $0.42 $0.64 $0.93

$1.26

$3.66

$5.64

$6.70

$5.00

$0

$1

$2

$3

$4

$5

$6

$7

$8

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Billi

ons

FDI, Net Inflows

FDI guidelines:The Government of Mozambique is receptive to foreign investment, according to the 2015 Investment Climate Statement-Mozambique by the US Department of State. Mozambique’s authorities view FDI as means to drive economic growth and promote job creation. Virtually all business sectors are open to foreign investors. While the government has processes in place to review and approve each foreign and domestic investment, there are almost no restrictions on the form or extent of foreign investment.

The government’s Investment Promotion Center (CPI)10 seeks to bring investors to Mozambique and is an investor’s contact with the government during the initial investment stage. CPI is particularly interested in increasing investment in the central and northern regions of the country in order to address large regional development imbalances.

The law and its regulations generally do not make distinctions based upon investor origin, nor do they limit foreign ownership or control of companies. However, 5% to 20% of the equity capital of the project company should be owned by citizens of Mozambique.

Foreign investors would find it beneficial to work with a local equity partner familiar with the local languages and the bureaucracy at the national, provincial, and district levels. CPI assists both local and foreign investors in obtaining licenses and permits. However, in general, large investors receive much more support from the government in the business registration process than small and medium-sized investors.

Government authorities must approve all foreign and domestic investment requiring guaranties and incentives. For investment projects submitted to CPI, final approval is granted by the following government entities:

1) The Provincial Governor for domestic investment projects with an investment value of less than 1.5 billion meticais (about $55 million)

10Contact details are further information on CPI is given on page 32.


2) The Director General of CPI for foreign and/or national investment projects with an investment value of less than 2.5 billion meticais (about $92 million)

3) The Minister of Planning and Development for foreign and/or national investment projects with an investment value of less than 13.5 billion meticais (about $500 million)

4) The Council of Ministers for :

a) investment projects with an investment value greater than 13.5 billion meticais (about $500 million)

b) investment projects that require a land area greater than 10,000 hectares, to be used for any purpose, except if located on a forest area greater than 100,000 hectares

c) any other projects that have foreseeable political, social, economic, financial, or environment impacts such that their nature should be reviewed and decided by the Council of Ministers, at the proposal of the Minister of Planning and Development

The Foreign Exchange Law requires companies to remit their export earnings to Mozambique and convert 50% of the export earnings to the local currency. This is called an “export surrender” requirement. FDI into Mozambique must be registered with the Central Bank within 90 days to allow for the monitoring of foreign exchange. Private individuals are limited to a maximum of $5,000 per foreign exchange transaction and larger transactions require the approval of the Central Bank.

The administrative procedures required for the repatriation of capital, profits and dividends, can take a significant amount of time and require coordination with the Ministry of Finance to obtain tax clearance.

Currently, investors in the agriculture and fishery sectors receive the most generous tax incentives. The Code of Fiscal Benefits contains some specific incentives granted to entities that intend to invest in certain geographical areas within Mozambique that have great natural resource potential but which lack infrastructure and have low levels of economic activity. For this purpose the Rapid Development Zones (RDZ) regime was created, covering the Zambeze River Valley Zone, Niassa Province, Nacala District, Moçambique Island, Ibo Island, and other areas approved by the Government. Investments in these zones are exempt from import duties on certain goods and are granted an investment tax credit equal to 20% of the total investment (with a right to carry forward for five years).

Additional modest incentives are available for professional training and in the construction and rehabilitation of public infrastructure, including but not limited to roads, railways, water supply, schools, and hospitals. Specific performance requirements are built into mining concessions and management contracts, and sometimes into the sale contracts of privatized entities.

Investments involving partnerships with the government usually include milestones that must be met for the investor’s project to continue. The government generally does not require investors to purchase from local sources nor does it require technology or proprietary business information be transferred to a local company.

The Mozambican banking community uses property other than land, such as cars, private houses and infrastructure, as collateral. Access to credit for the private sector remains difficult and expensive. Interest rates for commercial loans in the local currency are generally around 18% to 22% per year.


CPI, as part of its goal of attracting foreign investment, assists investors with finding suitable land for development and obtaining the appropriate documentation. This includes government assistance to find appropriate agricultural land. The government advises companies on relocating individuals currently occupying land designated for development, however the companies are ultimately responsible for planning and executing resettlement programs.

There are a variety of state-owned enterprises that compete with the private sector. Some of the largest state-owned companies – Telecomunicações de Moçambique (TDM), Aeroportos de Moçambique (ADM), Electricidade de Mocambique (EDM) and Linhas Aéreas de Moçambique (LAM) – have monopolies in their respective industries (landline telephones, airports, electricity, and air transportation). In some cases, state owned companies enter into joint ventures with private firms to deliver certain services. For example, Portos e Caminhos de Ferro de Moçambique (CFM), which has a monopoly in ports and railways, is privately managed under a public-private partnership agreement. Some of these state-run enterprises benefit from state subsidies.

The estimated workforce is approximately 9.6 million, out of a total population of nearly 27 million. The majority of Mozambique’s workforce has not completed secondary school, which presents a significant skills deficit. Foreign workers must possess professional qualifications and may only be contracted where there are no Mozambicans with such qualifications or their number is insufficient. In 2009, the Ministry of Labor began enforcing quotas for foreign workers as a percentage of the workforce within individual private companies. Quota levels are dependent on the size of the company.

The government has established export processing zones called Industrial Free Zones that provide customs and tax exemptions and other benefits, including profit repatriation, to companies approved by the Industrial Free Zone Council. There are three essential requirements for Industrial Free Zone status:

• job creation for Mozambican nationals

• the exportation of at least 85% of annual production and

• a minimum investment of $50,000

Almost all industries, with the exception of prospecting and exploration of natural resources, processing of raw cashew nuts and seafood (including prawns) can be authorized under an Industrial Free Zone status. Free Zone concessions are granted for a renewable period of 50 years.

According to the 2015 Investment Climate Statement-Mozambique by the US Department of State, Mozambique is a challenging place to do business and offers high risks and the potential for high returns for experienced investors. Investors must factor in widespread corruption, an underdeveloped financial system, poor infrastructure, and high on-the-ground costs. Surface transportation inside the country is slow and expensive, while bureaucracy, port inefficiencies, and corruption complicate imports. Despite these challenges, foreign investment levels continue to rise and investors are seeing some business climate improvements.


Major Institutions:

Bank of Mozambique:

Bank of Mozambique is Mozambique’s central bank. Its mission is to preserve the value of the national currency and promote a sound and efficient domestic financial sector.

Website: http://www.bancomoc.mz

Ministry of Finance:The Ministry of Finance is responsible for managing Mozambique’s public finance which includes organizing and managing financial administration of the state system, administering the tax and customs structure, preparing and executing the budget and treasury and managing the financial, monetary and foreign exchange markets.

Website: http://www.mf.gov.mz

Ministry of Foreign Affairs and Cooperation:Mozambique’s Ministry of Foreign Affairs and Cooperation is responsible for the implementation of foreign policy. It aims to promote friendly relations with other people, governments and international organizations and contribute to the preservation of international peace and security.

Website: http://www.minec.gov.mz

Investment Promotion Centre (CPI):Mozambique’s Investment Promotion Center (CPI)’s mission is to create a network of contacts between national suppliers and large purchasing companies. It aims to ensure that domestic firms have access to opportunities in large companies locally and abroad through expansion of domestic and foreign direct investment.

Website: http://www.cpi.co.mz

Institute for Export Promotion (IPEX):Created in 1990, Mozambique’s Institute for Export Promotion is a non-profit organization with a socio-economic unit that aims to promote and coordinate the implementation of measure and policies that develop Mozambique’s exports.

Website: http://www.ipex.gov.mz/


Ministry of Industry and Trade:Mozambique’s Ministry of Industry and Trade encourages and supports local businesses and supports local state bodies in the promotion of economic activities. Currently, it does not have a functional website.

Address: Praça 25 de Junho 300, Maputo, Mozambique

Chamber of Commerce: The Mozambique Chamber of Commerce began in 1980 with the intention of promoting trade among local and foreign companies. Its membership is open to enterprises, institutions and citizens either national or foreign. Currently its membership covers key economic sectors of the country, such as agriculture, fishing, tourism, insurance, health, industrial, banks, transport, services and foreign trade enterprises. Currently, it does not have a functional website.

Address: Rua Mateus Sansao Mutemba, Maputo

Major Foreign Companies in Mozambique:Some of the top foreign companies operating in Mozambique are:

Corporation Home Country Sector

Aquatec Lda Portugal Wholesale trade

Banco Internacional De Mocambique S A R L Portugal Finance

Basil Read South Africa Real Estate Development

Cervejas De Mocambique Sarl United Kingdom Food products, beverages, and tobacco

Cimbetao – Cimpor Betao Mozambique Sarl Portugal Non-metallic mineral products

Cimentos De Mocambique Sarl Portugal Non-metallic mineral products

Colgate Palmolive Mocambique L D A United States Chemicals and chemical products

Companhia Industrial Do Monapo Lda Portugal Food products, beverages, and tobacco

E C L Servicos Ltda Canada Machinery and equipment

Electricidade De Mocambique E P France Electricity, gas and water

Engil Mocambique Lda Portugal Construction

Enop – Engenharia E Obras Publicas Lda Portugal Research and development

Entreposto Frigorifico De Pesca De Mozambique Lda Japan Forestry and fishing

Eskom Holdings SOC Ltd South Africa Energy

Exploracoes Mineiras De Mocambique Limitada United Kingdom Mining and quarrying

Hotel Tivoli Hostelaria E Servicos Lda Portugal Hotels and restaurants

Illovo Mozambique South Africa Sugar Producer

Impar – Companhia De Seguros De Mocambique SARL Portugal Insurance

J L M Industries Lda South Africa Distributive trade

Macaloe Lda Portugal Public administration

Mitsubishi Corporation Japan Conglomerates

Mocambique Farms Lda Mauritius Food products, beverages, and tobacco


Corporation Home Country Sector

Mocambique Leaf Tobacco Importacao E Exportacao Limitada United States Food products, beverages,

and tobacco

Opca-Obras Publicas E Cimentos Armados SA Portugal Construction

Parmalat Mocambique Produtos Alimentares Lda Italy Food products, beverages, and tobacco

Parmalat Sarl Central Leteira De Maputo Italy Food products, beverages, and tobacco

Sasol Petroleum Temane Limitada South Africa Petroleum

Siemens Limitada Germany Wholesale trade

Soares Da Costa Mocambique S A R L Bahamas Research and development

Soares Da Costa Mocambique Sarl Bahamas Construction

Sociedade Geral De Empreitadas Lda Spain Construction

Sociedade Mocambicana Do Acumulador Tudor SARL Portugal Wholesale trade

Standard Bank Mozambique South Africa Banking

Steeladale Mocambique Lda South Africa Machinery and equipment

Teixeira Limitada Portugal Wholesale trade

Teixeria Duarte Engenharia E Construccoes (Mocambique) Lda Portugal Construction


SECTION VIRegional Trade Trends


Regional Trade Trends Sub-Saharan Africa is the one the least diversified regions in the world with its participation in global production and trade largely confined to energy products and other commodities. Exports from the region are significant in the energy, mining and metal ores sectors. While Sub-Saharan Africa is largely disconnected from international trade flows, China has become an increasingly important trading partner in the region.

In 2014, Mozambique’s bilateral trade with Africa was 32% of its total bilateral trade. Imports from Africa were 36% of its total imports from the world, whereas its exports to Africa were 26% of its exports to the world.

Mozambique’s top import from Africa, electrical energy, was also among its top exports to Africa. Other than the African countries, Mozambique exported electrical energy to UAE in 2014. No significant exports of electrical energy to countries outside Africa have been reported prior to 2014.

Table 5: Mozambique’s Regional Trade Trends – Imports

Mozambique’s Imports from Africa

USD M

Mozambique’s Imports from the World

USD M

Inter-regional Imports as a %

of world Imports

HS Code Description 2012 2013 2014 2012 2013 2014 %

All products 2,099 3,570 3,125 6,177 10,099 8,743 36%

'271600 Electrical energy 306 292 270 306 292 270 100%

'870421Diesel powered trucks with a GVW not exceeding five tonnes

82 140 161 130 218 243 66%

'030379Fish nes, frozen, excluding heading No 03.04, livers and roes

41 78 71 46 86 84 85%

'730890Structures&parts of structures,i/s (ex prefab bldgs of headg no.9406)

19 32 64 38 59 112 57%

'271019 Other petroleum oils and preparations 30 25 63 885 1,592 1,034 6%

'721420Bars & rods,i/nas,hr,hd or he,cntg indent,ribs,etc,prod dur rp/tar,nes

22 42 42 28 49 55 75%

'842959 Self-propelled excavating machinery nes 7 16 39 34 44 77 51%

'843149Parts of cranes,work-trucks,shovels,and other construction machinery

14 35 35 27 49 46 76%

'100590 Maize (corn) nes 4 14 34 4 17 35 98%

'330210Mixtures of odoriferous substances for the food or drink industries

44 18 34 46 21 34 98%


Table 6: Mozambique’s Regional Trade Trends - Exports

Mozambique’s Exports to Africa

USD M

Mozambique’s Exports from the World

USD M

Inter-regional imports as a %

of world Imports

HS Code Description 2012 2013 2014 2012 2013 2014 %

All products 846 1,164 1,208 3,470 4,024 4,725 26%

'271111 Natural gas, liquefied 175 120 295 175 164 295 100%

'271121 Natural gas in gaseous state 73 281 253 73 281 253 100%

'271600 Electrical energy 233 276 206 233 276 301 68%

'380290Activatd natural mineral products;animal black,incl spent animal black

6 0 40 111 35 433 9%

'271019 Other petroleum oils and preparations 30 50 34 47 87 60 56%

'880212 Helicopters of an unladen weight exceeding 2,000 kg 0 0 30 0 0 30 100%

'080300 Bananas including plantains, fresh or dried 15 16 27 24 22 42 66%

'670490 Wigs, false beards, eyebrows and the like, of other materials 5 16 26 5 16 26 99%

'271129Petroleum gases and other gaseous hydrocarbons nes, in gaseous state

0 0 20 0 0 20 100%

'230230 Wheat bran, sharps and other residues, pelleted or not 19 8 17 20 11 24 73%

Southern African Development Community (SADC) and Common Market for Eastern and Southern Africa (COMESA) are the two main regional trade agreements in Africa. Another important regional trade agreement is the Eastern African Community (EAC). Mozambique joined COMESA in 1994 but withdrew in 1997.

International Trade, Investment and Development Alliances:

SADC:Formed in 1992, the Southern African Development Community (SADC) is a Regional Economic Community comprising of 15 members: Angola, Botswana, Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.

SADC Economic Partnership Agreement (EPA) group, which comprises of Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland, concluded negotiations with EU in 2014. The EPA is a Free Trade Agreement negotiated between West Africa and European Union.

Africa Free Trade Zone (AFTZ) or Tripartite Free Trade Area (TFTA): In 2008, the three main trading blocs in Africa, i.e. SADC, the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) agreed to form the Africa Free Trade Zone (AFTZ) or Tripartite Free Trade Area (TFTA). The purpose of the free trade zone is to increase intra-regional trade, boost growth and strengthen the bloc’s bargaining power when negotiating international deals. The countries included in this deal


are Egypt, Libya, Sudan, Angola, Botswana, Burundi, Comoros, Djibouti, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, Swaziland, South Africa, Tanzania, Uganda, Zambia, and Zimbabwe. AFTZ has not been implemented as yet.

“Everything But Arms” (EBA):Under “Everything But Arms” (EBA), the EU offers duty-free, quota-free treatment for Least Developed Countries (LDCs) for all their exports except arms and armaments. There are currently 49 beneficiaries of this scheme, of which Mozambique is one.

Generalized Scheme of Preferences (GSP):The European Union’s Generalized Scheme of Preferences (GSP) allows developing country exporters to pay less or no duties on their exports to the EU. This gives them vital access to EU markets and contributes to their economic growth. Practically, this means partial or entire removal of tariffs on two thirds of all product categories. Mozambique qualifies for GSP but not GSP Plus.

African Growth and Opportunity Act (AGOA):The African Growth and Opportunity Act, passed by the US in 2000, allows 39 Sub-Saharan Africa countries including Mozambique preferential access to the US market through lower tariffs or no tariffs on a specified list of products that encompass approximated 7,000 products at the tariff line.

The eligibility criteria for GSP and AGOA substantially overlap and countries must be GSP eligible in order to receive AGOA’s trade benefit, however GSP eligibility does not imply AGOA eligibility.

Bilateral Investment Treaties (BIT):A bilateral investment treaty (BIT) is an agreement concluded between two countries which defines the broad terms and conditions under which private and public companies invest in each other territories. Mozambique is one of the African countries with which United States has concluded a BIT.

Mozambique has also signed BITs with Algeria, Belgium Luxembourg Economic Union (BLEU), China, Cuba, Denmark, Finland, France, Germany, India, Indonesia, Italy, Japan, Mauritius, Netherlands, Portugal, South Africa, Sweden, Switzerland, United Kingdom, and Vietnam.

Trade and Investment Framework Agreement (TIFA):Trade and Investment Framework Agreement (TIFA) provide strategic framework and principles for dialogue on trade and investment issues between the United States and the other parties to the TIFA. These agreements generally go beyond the BIT model. United States has concluded TIFAs with various African countries which include Mozambique as well as various regional country groups, such as COMESA and EAC.

11Australasia, a region of Oceania, comprises of Australia, New Zealand, the island of New Guinea and neighboring islands in the Pacific Ocean.


Indian Ocean Rim Association (IORA):The Indian Ocean is the world’s third largest ocean. The Indian Ocean Rim is a region comprised of the states whose shores are washed by the waters of the Indian Ocean. The region is divided into a number of sub-regions which includes Australasia11, Southeast Asia, South Asia, West Asia and Eastern & Southern Africa and the regional groupings such as ASEAN, SAARC and SADC. The Indian Ocean Rim Association (IORA) is an international organization with 21 Member States: Australia, Bangladesh, Comoros, India, Indonesia, Iran, Kenya, Madagascar, Malaysia, Mauritius, Mozambique, Oman, Seychelles, Singapore, Somalia, South Africa, Sri Lanka, Tanzania, Thailand, UAE and Yemen.

IORA’s purpose is to promote sustained growth and balanced development for its member states and to create common ground for regional economic cooperation. For this purpose, six priority areas were identified for cooperation which comprised of maritime safety & security, trade & investment facilitation, fisheries management, disaster risk management, academic, science & technology and tourism & cultural exchanges.

African, Caribbean & Pacific Group of States (ACP):The African, Caribbean and Pacific Group of States (ACP) is an organization created by the Georgetown Agreement in 1975. It is composed of 79 African, Caribbean and Pacific states, with all of them (except Cuba) signatories of the Cotonou Aggreement, also known as the “ACP-EC Partnership Agreement” which binds them to the European Union. There are 48 countries from Sub-Saharan Africa, 16 from the Caribbean and 15 from the Pacific.

The ACP Group’s main objectives are sustainable development with establishment and consolidation of peace and stability in a free and democratic society. The ACP Group also aims at poverty reduction and the establishment of a new, fairer and a more equitable world order.


SECTION VIIPakistan Mozambique Trade Overview


Pakistan Mozambique Trade Overview:Bilateral trade between Pakistan and Mozambique was $120 million in 2014, which consisted mostly of Pakistan’s exports to Mozambique. Bilateral trade between the two countries was less than 1% of Pakistan’s total bilateral trade with the world. However, Pakistan’s exports to Mozambique have almost tripled over the last 10 years to $119 million in 2014. At $1.2 million in 2014, Pakistan’s imports from Mozambique on the other hand are a very small proportion of Mozambique’s total exports and Pakistan’s total imports.

Pakistan’s Exports to Mozambique:The bulk of Pakistan’s exports to Mozambique consisted of cereals, salt, sulphur, earth, stone, plaster, limes and cement. The tables below shows Pakistan’s top 10 exports to Mozambique in 2014 at HS 2 Level and top 20 exports at HS 6 digit level.

Table 7: Pakistan’s Exports to Mozambique at HS 2 digit level

HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

M

TOTAL All products 43.4 46.7 43.5 49.2 58.0 94.1 80.0 74.3 117.9 119.2

'10 Cereals 40.8 43.9 38.6 41.9 39.2 73.8 61.0 53.2 74.0 69.1

'25 Salt, sulphur, earth, stone, plaster, lime and cement 0.0 0.0 0.01 0.02 11.9 13.8 11.4 11.6 28.2 30.4

'56 Wadding, felt, nonwovens, yarns, twine, cordage, etc 0.0 0.1 0.1 0.5 0.6 0.5 0.3 0.3 3.4 7.5

'63 Other made textile articles, sets, worn clothing etc 0.8 0.9 1.5 1.6 2.5 1.3 1.6 2.1 3.1 4.3

'19 Cereal, flour, starch, milk preparations and products 0.0 0.02 0.0 0.04 0.1 0.02 0.1 0.3 2.2 2.0

'17 Sugars and sugar confectionery 0.4 0.5 0.8 1.0 0.5 0.7 0.9 1.1 1.4 1.4

39

Pakistan Mozambique Trade Overview:

Bilateral trade between Pakistan and Mozambique was $120 million in 2014, which consisted mostly of Pakistan’s exports to Mozambique. Bilateral trade between the two countries was less than 1% of Pakistan’s total bilateral trade with the world. However, Pakistan’s exports to Mozambique have almost tripled over the last 10 years to $119 million in 2014. At $1.2 million in 2014, Pakistan’s imports from Mozambique on the other hand are a very small proportion of Mozambique’s total exports and Pakistan’s total imports.

Source: Trade Maps

Pakistan’s Exports to Mozambique:

The bulk of Pakistan’s exports to Mozambique consisted of cereals, salt, sulphur, earth, stone, plaster, limes and cement. The tables below shows Pakistan’s top 10 exports to Mozambique in 2014 at HS 2 Level and top 20 exports at HS 6 digit level.

HS Code Description

Table 7: Pakistan's Exports to Mozambique at HS 2 digit level

2005 USD M

2006 USD M

2007 USD M

2008 USD M

2009 USD M

2010 USD M

2011 USD M

2012 USD M

2013 USD M

2014 USD M


'10 Cereals 40.8 43.9 38.6 41.9 39.2 73.8 61.0 53.2 74.0 69.1

'25

Salt, sulphur, earth, stone, plaster, lime and cement 0.0 0.0 0.01 0.02 11.9 13.8 11.4 11.6 28.2 30.4

$2

$18

$5 $1 $0 $1 $2 $11

$1 $1

$43 $47 $43 $49

$58

$94

$80

$74

$118 $119

$41

$28 $39

$48 $58

$93

$78

$63

$117 $118

$0

$20

$40

$60

$80

$100

$120

$140

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mill

ions

Pakistan Mozambique Trade Overview

Pak's Imports from Mozambique Pak's Exports to Mozambique Trade Balance



HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

M

'55 Manmade staple fibres 0.03 0.0 0.0 0.1 0.2 0.2 0.4 0.4 0.4 0.7

'87 Vehicles other than railway, tramway 0.1 0.1 0.1 0.2 0.3 0.6 0.6 0.7 0.7 0.5

'30 Pharmaceutical products 0.1 0.1 0.2 0.2 0.1 0.2 0.3 0.3 0.4 0.5

'84 Machinery, nuclear reactors, boilers, etc 0.03 0.1 0.6 0.6 0.5 0.5 0.4 1.2 0.6 0.4

Pakistan’s top 20 exports to Mozambique in 2014 at HS 6 digit level are given below:


HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

M


'100630Rice, semi-milled or wholly milled, whether or not polished or glazed

40.8 43.9 37.7 40.4 33.4 63.8 56.9 51.6 73.9 68.2

'252329 Portland cement nes 0.0 0.0 0.0 0.0 6.9 13.7 11.0 11.4 28.0 30.3

'630539Sacks & bags,for packing of goods,of other man-made textile materials

0.0 0.0 0.009 0.0 0.0 0.002 0.1 0.8 1.4 2.1

'190219 Uncooked pasta, not stuffed or otherwise prepared, nes 0.0 0.002 0.0 0.01 0.0 0.004 0.01 0.3 2.1 1.9

'630900 Worn clothing and other worn articles 0.0 0.0 0.06 0.03 0.1 0.4 0.6 0.9 1.3 1.2

'170410 Chewing gum containing sugar, except medicinal 0.3 0.3 0.5 1.0 0.5 0.6 0.7 0.8 1.0 1.0

'100640 Rice, broken 0.0 0.0 0.9 1.5 5.8 10.0 4.0 1.6 0.02 0.9

'551341Plain weave polyester stapl fib fab,<85%,mixd w/cot,<=170g/m2,printd

0.0 0.0 0.0 0.0 0.12 0.03 0.13 0.29 0.40 0.63

'560129Waddg of oth textile materials&articles thereof,o/t sanitary articles

0.0 0.0 0.06 0.23 0.38 0.46 0.04 0.12 0.63 0.49

'170490Sugar confectionery nes (includg white chocolate),not containg cocoa

0.14 0.15 0.26 0.07 0.007 0.03 0.21 0.29 0.44 0.40

'630629 Tents, of other textile materials 0.0 0.0 0.42 0.0 0.03 0.009 0.02 0.0 0.0 0.3

'870190 Wheeled tractors nes 0.022 0.0 0.04 0.1 0.3 0.2 0.2 0.6 0.6 0.3

'630260Toilet&kitchen linen,of terry towellg or similar terry fab,of cotton

0.1 0.1 0.3 1.0 2.1 0.8 0.5 0.3 0.2 0.3

'300490 Medicaments nes, in dosage 0.1 0.1 0.1 0.1 0.0 0.1 0.2 0.2 0.3 0.2

'040120Milk not concentrated & unsweetened exceeding 1% not exceeding 6% fat

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.06 0.23

'631090 Used or new rags of textile materials, not sorted 0.0 0.0 0.009 0.031 0 0.005 0.005 0.06 0.03 0.20



HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

M

'200990Mixtures of juices unfermentd&not spiritd whether o not sugard o sweet

0.0 0.0 0.0 0.0 0.0 0.0 0.001 0.0 0.04 0.18

'701090Carboys, bottles, flasks, jars, pots, phials and other containers, of

0.004 0.0 0.0 0.0 0.159 0.51 0.39 0.14 0.50 0.16

'160413Sardines,sardinella&brislg o sprats prep o presvd,whole o pce ex mincd

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.37 0.15

Pakistan’s Imports from Mozambique:Pakistan’s imports from Mozambique in 2014 consisted of iron and steel, oil seed, fruits, grain and seeds. The tables below show Pakistan’s imports from Mozambique at HS 2 digit Level and HS 6 digit level since 2005.

Table 9: Pakistan’s Imports from Mozambique at HS 2 digit level

HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

M


'72 Iron and steel 0.28 0.05 0 0.04 0.02 0.03 0 0 0.03 0.69

'12 Oil seed, oleagic fruits, grain, seed, fruit, etc, nes 0 0 0.6 0.2 0.1 0.8 0.1 0 0.1 0.4

'53 Vegetable textile fibres nes, paper yarn, woven fabric 0 0 0 0 0 0 0 0 0.14 0.12

'30 Pharmaceutical products 0 0 0 0 0 0 0 0.008 0 0.01

'41 Raw hides and skins (other than furskins) and leather 0 0 0.04 0.03 0 0 0 0.05 0.04 0.009

'07 Edible vegetables and certain roots and tubers 0 0.03 0 0 0 0 0.92 0 0 0.004

Only 9 products at HS 6 digit level were imported from Mozambique by Pakistan in 2014.


HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

M


'720711Semi-fin prod,i/nas,rect/sq cross-sect cntg by wgt<.25% c,wdth<2X thk

0 0 0 0 0 0 0 0 0 0.7

'121300 Cereal straw&husks, unprepd, whether or not 0 0 0 0 0 0 0 0 0.06 0.3



HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

M

'530500Coconut, abaca Manila hemp or Musa textilis Nee, ramie, agave and othe

0 0 0 0 0 0 0 0 0.14 0.1

'120242

Groundnuts, shelled, whether or not broken (excl. seed for sowing, roasted or otherwise co

0 0 0 0 0 0 0 0 0.06 0.06

'300590Dressings&similar articles,impreg or coatd or packagd for md use,nes

0 0 0 0 0 0 0 0 0 0.01

'410150Whole raw hides and skins of bovine "incl. buffalo" or equine animals,

0 0 0 0 0 0 0 0.05 0.03 0.007

'071339 Beans dried, shelled, whether or not skinned or split, nes 0 0 0 0 0 0 0.8 0 0 0.004

'410390 Raw hides and skins of animals, nes 0 0 0 0.02 0 0 0 0 0.01 0.002

'732690 Articles, iron or steel, nes 0 0 0 0.001 0 0 0 0 0 0.001

Mozambique’s Honorary Consulate in Karachi:220 Delhi Mercantile Co-operative Housing Society, Sirajuddaula Road

Phone: +92 21 34382848-9, +92 300 8235495Fax: +92 21 34381014

Trade Potential:Potential trade indicates the fullest possible extent of trade that can take place between two countries, given their current export and import patterns. It is calculated by subtracting Pakistan’s exports (imports) to Mozambique from the minimum of Pakistan exports (imports) and Mozambique’s imports (exports) at HS 6 digit level. Give the infeasibility of trade in petroleum oil between Pakistan and Mozambique, potential trade figures are calculated by excluding such products. Trade potential does not account for differences in consumer preferences or distances between different markets. Total potential trade between Pakistan and Mozambique, based on 2014’s trade patterns, was $1.68 billion.

Export Potential:Pakistan can potentially export $1.2 billion worth of goods to Mozambique, excluding petroleum products. High potential export products to Mozambique include rice, medicaments, structures and parts of structures, sugar, and cement. The top 20 potential exports to Mozambique at HS 6 level are shown in the table below:


Table 11: Pakistan’s Potential Exports to Mozambique (excluding petroleum products oil) at HS 6 digit level

HS Code Description

Pak’s Exportsto

Mozambique 2014

USD M

Mozambique’sImports from World 2014

USD M

Pakistan’s Exports to the

World 2014USD M

Export PotentialUSD M

'100630 Rice, semi-milled or wholly milled, whether or not polished or glazed 68 187 1,895 119

'300490 Medicaments nes, in dosage 0.24 133 87 86

'730890 Structures&parts of structures,i/s (ex prefab bldgs of headg no.9406) 0.001 112 50 50

'170199 Refined cane or beet sugar, solid, without flavouring or colouring matter 0 32 289 32

'252329 Portland cement nes 30 58 502 27

'870190 Wheeled tractors nes 0.3 22 26 22

'851712 Telephones for cellular networks mobile telephones or for other wirele 0 31 20 20

'841182 Gas turbines nes of a power exceeding 5000 KW 0 15 23 15

'220710 Undenaturd ethyl alcohol of an alcohol strgth by vol of 80% vol/higher 0 14 246 14

'870899 Motor vehicle parts nes 0.05 53 13 13

'210690 Food preparations nes 0.03 13 20 13

'901890 Instruments and appliances used in medical or veterinary sciences, nes 0.118 13 320 12

'630900 Worn clothing and other worn articles 1.2 71 14 12

'843143 Parts of boring or sinking machinery, whether or not self-propelled 0 13 12 12

'850710 Lead-acid electric accumulators of a kind usd f startg piston engines 0 12 17 12

'841510 Air conditioning machines window or wall types, self-contained 0 10 16 10

'847330 Parts&accessories of automatic data processg machines&units thereof 0.02 33 10 10

'190531 Sweet biscuits 0.07 10 21 10

'730290 Rail or tramway construction material of iron or steel, nes 0 9 9 9

'392690 Articles of plastics or of other materials of Nos 39.01 to 39.14 nes 0.001 8.6 10.2 8.6

Import Potential:Pakistan can potentially import $459 million worth of goods from Mozambique, excluding petroleum products. Coke, cotton, lumber, aluminum, tobacco and beans are among the top potential imports.

Table 12: Pakistan’s Potential Imports from Mozambique (excluding petroleum products) at HS 6 digit level

HS Code Description

Pak’s Imports From Mozambique

USD M

Mozambique’s Exports to

WorldUSD M

Pak’s Imports from the World

USD M

Import PotentialUSD M

'270400 Coke&semi-coke of coal,lignite o peat,agglomeratd o not,retort carbon 0.0 484.1 52.5 52.5

'520100 Cotton, not carded or combed 0.0 48.3 521.6 48.3


Table 12: Pakistan’s Potential Imports from Mozambique (excluding petroleum products) at HS 6 digit level

HS Code Description

Pak’s Imports From Mozambique

USD M

Mozambique’s Exports to

WorldUSD M

Pak’s Imports from the World

USD M

Import PotentialUSD M

'440729 Lumber, tropical hardwood nes, sawn lengthwise >6mm 0.0 46.9 45.8 45.8

'760110 Aluminium unwrought, not alloyed 0.0 366.6 35.7 35.7

'440799 Lumber, non-coniferous nes 0.0 23.0 17.2 17.2

'240120 Tobacco, unmanufactured, partly or wholly stemmed or stripped 0.0 251.4 15.0 15.0

'071333 Kidney beans&white pea beans drid shelld,whether o not skinnd o split 0.0 13.7 55.5 13.7

'843143 Parts of boring or sinking machinery, whether or not self-propelled 0.0 11.2 60.9 11.2

'903180 Measuring or checking instruments, appliances and machines, nes 0.0 8.3 17.5 8.3

'440399 Logs, non-coniferous nes 0.0 8.1 7.0 7.0

'071310 Peas dried, shelled, whether or not skinned or split 0.0 6.2 120.0 6.2

'071390Leguminous vegetables dried,shelled,whether or not skinnd or split,nes

0.0 5.9 61.0 5.9

'880330 Aircraft parts nes 0.0 5.4 38.7 5.4

'440349 Logs, tropical hardwoods nes 0.0 10.2 5.0 5.0

'071339 Beans dried, shelled, whether or not skinned or split, nes 0.0 5.5 4.9 4.9

'110100 Wheat or meslin flour 0.0 14.6 4.9 4.9

'310210 Urea,wthr/nt in aqueous solution in packages weighg more than 10 kg 0.0 4.2 222.1 4.2

'901590 Parts and accessories for use with the apparatus of heading No 90.15 0.0 4.0 8.3 4.0

'320210 Synthetic organic tanning substances 0.0 3.9 17.9 3.9

'730650 Tubes,pipe&hollow profiles,al/s,(o/t stain) wld,of circ cross sect,nes 0.0 3.7 4.4 3.7


SECTION VIIIMozambique India Trade Patterns


46

Mozambique’s top imports from India consisted of pharmaceutical products, vehicles, machinery and cereals. Mozambique’s top imports from India at HS Level 2 are given below:


Table 13: Mozambique’s Imports from India at HS 2 digit level 2005

USD M 2006

USD M 2007

USD M 2008

USD M 2009

USD M 2010

USD M 2011

USD M 2012

USD M 2013

USD M 2014

USD M



'87

Vehicles other than railway, tramway 13.4 16.3 16.4 32.3 16.6 9.8 36.7 23.0 40.4 42.8

'84

Machinery, nuclear reactors, boilers, etc 5.0 8.2 10.7 11.1 14.9 11.1 37.3 43.3 26.0 29.4

'10 Cereals 4.8 12.6 25.5 1.2 0.7 0.4 1.3 9.9 54.0 22.3

'72 Iron and steel 2.2 1.7 4.2 3.4 5.8 7.5 10.1 14.7 13.1 18.6

'85

Electrical, electronic equipment 0.8 2.3 8.3 14.3 8.6 7.8 4.0 7.4 11.6 12.4

'39 Plastics and articles thereof 1.4 3.7 4.0 5.2 10.7 3.7 4.0 5.3 7.6 8.8

'73 Articles of iron or steel 1.2 2.8 6.5 6.2 9.8 13.5 76.1 14.1 7.8 6.9

'25

Salt, sulphur, earth, stone, plaster, lime and cement 9.9 6.2 0.3 0.6 8.4 4.2 2.1 0.9 13.2 6.4

$27 $30 $16 $28 $57 $30

$87 $155

$680

$388

$97 $137 $132 $144

$245 $202

$301

$201

$330 $328

-$70 -$107 -$116 -$116

-$188 -$171 -$213

-$46

$349

$59

-$300

-$200

-$100

$0

$100

$200

$300

$400

$500

$600

$700

$800

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mill

ions

Mozambique's Exports to India Mozambique's Imports from India Trade Balance

Mozambique India Trade Patterns5% of Mozambique’s international bilateral trade was with India in 2014. In recent years, Mozambique’s trade balance has been in surplus. India was one of the top 10 trading partners of Mozambique in 2014.

Mozambique’s top imports from India consisted of pharmaceutical products, vehicles, machinery and cereals. Mozambique’s top imports from India at HS Level 2 are given below:

Table 13: Mozambique’s Imports from India at HS 2 digit level

HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

MTOTAL All products 96.7 136.8 131.8 144.4 244.7 201.7 300.5 200.9 330.1 328.1


'87 Vehicles other than railway, tramway 13.4 16.3 16.4 32.3 16.6 9.8 36.7 23.0 40.4 42.8


'10 Cereals 4.8 12.6 25.5 1.2 0.7 0.4 1.3 9.9 54.0 22.3

'72 Iron and steel 2.2 1.7 4.2 3.4 5.8 7.5 10.1 14.7 13.1 18.6

'85 Electrical, electronic equipment 0.8 2.3 8.3 14.3 8.6 7.8 4.0 7.4 11.6 12.4

'39 Plastics and articles thereof 1.4 3.7 4.0 5.2 10.7 3.7 4.0 5.3 7.6 8.8

'73 Articles of iron or steel 1.2 2.8 6.5 6.2 9.8 13.5 76.1 14.1 7.8 6.9


'63 Other made textile articles, sets, worn clothing etc 1.5 2.3 1.3 1.8 2.8 3.0 4.8 3.5 5.3 6.2

Mozambique’s top exports to India included mineral fuels, chemicals and vegetables. The table below lists the top exports from Mozambique to India at HS 2 Level in 2014:


Table 14: Mozambique’s Exports to India at HS 2 digit level

HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

M


'27 Mineral fuels, oils, distillation products, etc 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 527.2 170.2

'38 Miscellaneous chemical products 0.0 0.0 0.0 0.0 0.0 0.0 0.0 44.1 11.3 155.3

'07 Edible vegetables and certain roots and tubers 3.3 1.0 4.8 8.3 35.0 15.7 23.7 18.5 15.9 33.1

'08 Edible fruit, nuts, peel of citrus fruit, melons 17.0 23.4 10.3 13.4 13.3 8.7 42.1 4.2 7.0 10.9

'78 Lead and articles thereof 0.0 0.0 0.0 0.9 0.2 1.8 0.3 0.2 0.7 3.1

'26 Ores, slag and ash 0.0 0.0 0.0 0.0 1.3 0.2 17.8 47.5 107.3 2.8


'72 Iron and steel 4.2 3.5 0.0 4.0 4.7 1.6 1.8 17.6 2.6 1.9

'12 Oil seed, oleagic fruits, grain, seed, fruit, etc, nes 0.0 0.6 0.1 0.0 0.9 1.2 0.4 0.1 1.6 1.5

'71 Pearls, precious stones, metals, coins, etc 0.1 0.1 0.0 0.2 0.1 0.1 0.2 0.1 0.5 1.4

Mozambique and India Ties:India and Mozambique have a centuries old connection which has grown stronger over time. Hindu traders pre-date Vasco da Gama’s visit late 15th century while Muslim traders from India were part of Mozambique’s commercial establishment long before the arrival of the Portuguese in the early 16th century. However, under the Portuguese government in around 1960s, Indian nationals were repatriated to India and some were forced to live in concentration camps for 6 months. Nevertheless, after the end of the civil war in 1992, the Indian community in Mozambique became active in trade and investment once again.

As per the Indian embassy in Mozambique, there are approximately 20,000 people of Indian origin in Mozambique currently and between 1500 to 2000 Indian nationals. The Indian community is mostly involved in trading, retail or wholesale businesses. A few persons of Indian origin also hold official positions. The Indian Business Council in Maputo was set up in 2001. Its main objective is to promote business ties between India and Mozambique.

Several Line of Credits (LOCs) have been extended to Mozambique by India for various projects in the infrastructure, agriculture and energy sectors. As per the investment data released by Mozambique’s Investment Promotion Center (CPI), India with a total approved investment of $104.75 million in September 2012 was the 9th largest investor in Mozambique with Brazil, Portugal and South Africa occupying the first 3 places.

However, these figures do not include investments in extractive industry, which is outside the purview of CPI, or investments by companies which did not invest through CPI. Indian companies that are actively participating in Mozambique’s developmental activities include Coal India Limited, Coal Venture International, Tata Mozambique, Tata Steel, JSW Steel,


Essar Group, JSPL, Adani Group, Patel Engineering, Videocon, BPCL, Varun Beverages, Angelique International Limited, Overseas Infrastructure, Mohan Energy Corporation and Jaguar Overseas.

Furthermore, during the President of Mozambique’s state visit to India in 2010, India offered a credit assistance of $500 million to Mozambique. In 2015, Mozambique’s President Nyusi visited India after assuming office. India was his first destination in Asia.

India also provides training to Mozambican government nominees each year in a wide range of disciples under the Indian Technical and Economic Cooperation (ITEC) / Special Commonwealth Assistance for Africa Program (SCAAP).


SECTION IXMozambique China Trade Patterns


Mozambique China Trade PatternsWhile China is not Mozambique’s top trading partner, it is among Mozambique’s top ten trading partners. Mozambique’s trade with China has increased steadily and significantly over the last 10 years. The bulk of this trade consists of Mozambique’s imports of machinery, electronic equipment and vehicles from China and Mozambique’s exports of wood, articles of wood and miscellaneous chemical products. Except for 2012 when Mozambique exported mineral fuels to China, Mozambique’s trade with China has been in deficit.

The table listing the top 10 Mozambique’s imports to China in 2014 at HS 2 digit level is given below:

Table 15: Mozambique’s Imports from China at HS 2 digit level

HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

M


'44 Wood and articles of wood, wood charcoal 8.5 9.9 15.2 21.4 23.4 28.2 161.3 64.0 103.5 137.2



'26 Ores, slag and ash 3.1 033.2 1.1 3.8 13.8 4.2 6.0 32.0 28.5 45.8

'03 Fish, crustaceans, molluscs, aquatic invertebrates nes 3.7 4.1 2.4 12.3 11.4 7.0 8.0 22.0 25.6 38.7

'32 Tanning, dyeing extracts, tannins, derivs,pigments etc 1.8 2.0 3.6 7.0 4.6 4.8 10.5 13.1 22.9 26.3

'52 Cotton 1.4 1.4 1.8 3.5 5.3 4.9 8.0 11.8 19.4 25.4

'72 Iron and steel 2.3 3.6 2.7 2.9 3.5 3.5 8.4 11.1 16.2 21.4


49

Mozambique China Trade Patterns

While China is not Mozambique’s top trading partner, it is among Mozambique’s top ten trading partners. Mozambique’s trade with China has increased steadily and significantly over the last 10 years. The bulk of this trade consists of Mozambique’s imports of machinery, electronic equipment and vehicles from China and Mozambique’s exports of wood, articles of wood and miscellaneous chemical products. Except for 2012 when Mozambique exported mineral fuels to China, Mozambique’s trade with China has been in deficit.

The table listing the top 10 Mozambique’s imports to China in 2014 at HS 2 digit level is.given below:



2005 USD M

2006 USD M

2007 USD M

2008 USD M

2009 USD M

2010 USD M

2011 USD M

2012 USD M

2013 USD M

2014 USD M


'44

Wood and articles of wood, wood

charcoal 8.5 9.9 15.2 21.4 23.4 28.2 161.3 64.0 103.5 137.2

'38 Miscellaneous

chemical products 10.3 13.2 10.3 19.3 20.6 12.7 21.4 39.4 109.0 110.9

'12

Oil seed, oleagic fruits, grain, seed,

fruit, etc, nes 4.2 8.6 10.6 21.5 18.0 10.1 33.3 29.2 74.6 83.9

'26 Ores, slag and ash 3.1 033.2 1.1 3.8 13.8 4.2 6.0 32.0 28.5 45.8

'03

Fish, crustaceans, molluscs, aquatic invertebrates nes 3.7 4.1 2.4 12.3 11.4 7.0 8.0 22.0 25.6 38.7

$34 $33 $44 $52 $74 $80 $168

$637

$105 $204

$68 $83 $103 $156 $173 $130

$374 $350

$644 $700

-$34 -$50 -$59 -$104 -$99 -$50

-$206

$287

-$539 -$496

-$800

-$600

-$400

-$200

$0

$200

$400

$600

$800

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mill

ions

Mozambique's Exports to China Mozambique's Imports from China Trade Balance



HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

M


The table below lists the top 10 Mozambique’s exports to China at HS 2 digit level:

Table 16: Mozambique’s Exports to China at HS 2 digit level

HS Code Description

200

5 U

SD

M

200

6 U

SD

M

200

7 U

SD

M

200

8 U

SD

M

200

9 U

SD

M

201

0 U

SD

M

201

1 U

SD

M

201

2 U

SD

M

201

3 U

SD

M

201

4 U

SD

M


'44 Wood and articles of wood, wood charcoal 22.2 23.1 25.6 31.2 29.8 48.9 58.6 106.0 44.2 95.9



'26 Ores, slag and ash 0.0 0.0 0.0 0.2 3.9 5.3 54.5 47.4 4.9 23.9

'03 Fish, crustaceans, molluscs, aquatic invertebrates nes 0.0 0.1 0.4 0.2 0.7 0.2 1.4 4.1 8.9 7.0

'32 Tanning, dyeing extracts, tannins, derivs,pigments etc 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.9

'52 Cotton 8.0 5.0 5.1 0.3 0.0 1.1 8.7 12.2 16.3 3.5

'72 Iron and steel 0.0 0.1 0.0 1.1 0.7 0.2 0.2 0.0 0.1 3.2



Mozambique China Ties:The Government of Mozambique established diplomatic ties with China as soon as Mozambique became independent in 1975. China responded by granting an interest-free loan of $56 million and sent the first in a continuing series of medical teams to Mozambique that has continued up to the present day. As per the Chinese Embassy, since the first medical team arrived in 1976, Chinese medical staff have treated 1.3 million patients in Mozambique and trained more than 2,000 Mozambicans

By the late 1990s, China Mozambique ties deepened with Chinese Premier Li Peng visiting Mozambique in 1997 and Joaquim Alberto Chissano, the second President of Mozambique, visiting China in 1998.

Following the high level state visits, China and Mozambique signed a Trade Agreement and an Agreement on the Promotion and Reciprocal Protection of Investment and set up a Joint Economic and Trade Commission in 2001. China relieved partially the expired debt of Mozambique which should have been repaid by the end of 1999.


Most of China’s engagement in Mozambique is now focused on the economic relationship. A third of all roads in the country are being built by Chinese companies in addition to the auditor-general’s office, Maputo International Airport, national soccer stadium, national conference center, communications networks and water supply projects. China began offering five scholarships annually in 1992; about 200 hundred students were studying in China by 2012.

The largest Chinese investment so far is Wuhan Iron and Steel Corporation’s $800 million to develop coal reserves for export to China and purchase of an 8% share of Riversdale, an Australian company, for $200 million that has coal concessions in Mozambique.

President Guebuza during a six-day state visit to China in 2011 signed 12 financial agreements with China, including $15.8 million for distance education and science and technology programs, half as donations and half as interest-free credit.


SECTION XMajor Industries of Mozambique


Major Industries of MozambiqueMozambique has a wealth of natural resources, including deposits of iron ore, gold, bauxite, graphite, marble and limestone. There are also rare and important minerals such as tantalite and ilmenite (a source of titanium).

The major industrial units are located in the main corridors of Mozambique: Maputo, Beira and Nacala. In the last 10 years, a total of 130 new small and medium-sized units opened in the whole country, providing 125,000 jobs, mostly in the sectors of agro-industry, engineering and furniture. However, employment remains a source of serious concern to the government, states the business development profile prepared by the Danish Embassy in Mozambique. The textile and clothing sectors are a priority in government’s strategy in the creation of work opportunities.

Mining:Mining is propelling current GDP growth in Mozambique but it is also poses a major challenge for the environment as well as for population resettlement, compensation, risk and preparedness for environmental disasters, states the African Economic Outlook report on Mozambique in 2015. In 2012 government revenues from the extractive industries reached approximately $100 million, increasing by almost 60% over 2011.

One the most important exports of Mozambique is aluminum. Since the opening of a large smelter, Mozal, near Maputo in 2000, aluminum exports have become one of the top exports of Mozambique ($1.4 billion in 2014, nearly 30% of Mozambique’s exports). Low global prices for this commodity can seriously affect the economy.

Other mega projects include Sasol in natural gas, Moma and Chibuto in titanium mining, Moatize in mineral coal, Cahora Bassa and MPanda Nkua hydroelectric dam and generating station. The Tete highlands have large reserves of coal, which is exported to India and China. An LNG project was launched in December 2014 which will invest $40 billion in the country by 2020.

Manufacturing: The main manufacturing products in Mozambique include: wheat flour, food, beverages, aluminum, petroleum products, textiles, cement, glass and tobacco. Almost all manufacturing takes place in the major urban areas of Maputo, Beira, and Nampula. Agriculture continues to play a predominant role in the country, which is reflected in the food and beverage production, with the most important product in terms of commercial value being beer.

The manufacturing sector employs 2.8% of the work force and is dominated by the Mozal aluminum smelting plant. In 2014, a $150 million landmark investment by China Tong Jian Investment Company and the Mozambican government was made in an automotive assembly company.

Local manufacturing industries that settle in Mozambique receive a full exemption from paying company taxation (IRPC) for 10 years and 50% in the subsequent 5 years. The government is encouraging the companies to use the cotton produced locally to manufacture fabric.

Several manufacturing industries have recently been highlighted by Mozambique’s Investment


Promotion Centre (CPI) as noteworthy industries including textiles, aluminum, iron and steel and coal and gas. CPI plans to invest in adding value to its primary product in order to maximize the country’s natural resources.

Agriculture/Agro processing:

As per the business development profile prepared by the Danish Embassy in Mozambique, agriculture is one of the key sectors of Mozambique’s economy. Its potential is high particularly in the fertile northern regions. The important cash crops in Mozambique include sugar, tobacco copra, cashew nuts, tea and cotton.

Agriculture employs 80% of the economically active population, nonetheless, the agricultural output is low. This sector is comprised of subsistence farming, which is still precarious, as well as commercial agriculture. Most farmers are still engaged in subsistence agriculture, lowering the sector’s contribution to the economy and government revenue.

The government encourages farmers to produce industrially convertible crops, such as jatropha and cane to be used in biodiesel. Several companies are already implementing such projects. The production of cereals and seeds are currently a top priority in the country.

Poor roads and high transport costs limit the movement of surplus crops impacting production costs. The sector faces challenges such as inadequate infrastructure, limited access to finance and poor knowledge of export markets. Food processing and nutrition constitute a challenge for the agricultural sector in Mozambique.

Fisheries: The fishing industry represents an important sector in Mozambican economy, states the business development profile prepared by the Danish Embassy in Mozambique. The long coastline is an economic resource as many species are under exploited, for example tuna fish, which has a high demand in international market.

The ports have received large investments to improve their facilities. The Ministry of Fisheries engages in quality control checks both onboard licensed boats as well as its scientific operation rooms within the ports ensuring a high quality product ready for export.

A great area of opportunity is the creation of processing industry. Furthermore, there are a few aquaculture firms that have the potential of generating large revenues. This sector however, would improve if there was a higher international effort to end clandestine fishing, states the report prepared by the Danish Embassy in Mozambique.

Tourism:Tourism was a very profitable industry in the pre-independence days of Mozambique. However, despite its wildlife, historical heritage, beaches and other natural and man-made resources, Mozambique has one of the lowest tourist numbers of South Africa’s neighboring countries despite South Africa being the top tourist destination in Africa. However, tourist numbers have increased in the past years. 75% of the tourists visiting Mozambique are from South Africa due to the location of Mozambique.


Tourism holds enormous potential for the development of the Mozambican economy. It is believed that in the next 10 years Mozambique will be a privileged tourist destination in Africa.

The government has revised its tourism incentives by including tax incentives for companies that contribute to the development of infrastructure in an effort to moderate this obstacle hindering the sector.

Ecotourism also contributes to the economic growth of the country. The government provides opportunities for communities to develop community-based tourism in Maputo Game Reserve (Maputo Province), Limpopo International Park (Gaza Province), Tchuma Tchato (Tete), Niassa Reserve (Niassa Province).

Forestry:Mozambique is rich in forest resources. The forests in the northern part of the country are dense and less explored. Niassa has the largest forest area of the country. The government is mainly interested in projects based on the sustainable use of resources and benefitting the local communities. Wood export is only permitted through a licensing regime. Exported wood include Pangapanga, Umbila, Pau-Preto, Pau-Ferro and are exported to Italy, Japan, Germany and South Africa. High quality wood is used by the communities for arts and crafts.

Financial SectorMozambique’s financial sector has seen fast expansion during recent years though it is still considered underdeveloped. Approximately 90% of Mozambicans are without an account with a formal financial institution and formal credit is available to only an estimated 3% of the population.

The banking sector has 19 registered banks accounting for 95% of total financial system assets stated a report by the African Economic Outlook. However, 87% of the total financial sector’s assets are concentrated in the five main banks raising concerns about competition and broad access to funding. The sector is fast expanding both in assets and geographical coverage, and is deemed to be healthy and stable with regulatory authorities performing regular audits and stress tests. The latest available data for 2014 reveals an average bank capital adequacy ratio of 15.9% and reserves ratio of 10.1%, while non-performing loans remain below 4% in accordance with international standards.

There are three mobile-based retail services, two leasing companies and one factoring company. Insurance penetration is still limited (about 1.4% of GDP in 2012), while the roll out of the centralized national payment system – SIMO – has faced considerable delays.

The Mozambique Stock Exchange (BVM) has currently four stocks listed12, as well as government and corporate bonds, with overall securities representing just 6% of GDP. Despite rapid economic expansion, access to finance remains the top constraint for business development. According to the FinScope 2012 survey, 75% of micro, small and medium-sized enterprises are financially excluded. In addition, the average one-year lending rate from

12These are Cervejas de Moçambique (Beers of Mozambique), Companhia Moçambicana de Hidrocarbonet (Mozambican Hydrocarbon Company), Engineering and Construction (CETA) and Empresa Moçambicana de Seguros (Emose)


commercial banks remains high at 21%.

New laws were approved for the creation of private credit registry bureaus and the creation of a movable collateral registry. These are crucial elements for reducing the cost of finance. However approval of the regulatory frameworks has been delayed, as is also the case with the new Anti-Money Laundering/Combating the Financing of Terrorism law, as well as the Deposit Insurance Fund. All of these laws were expected to be fully implemented in 2015.

Funding for Infrastructure:Mozambique has a strategic location which can be used to generate economic development. Ports are a crucial investment as goods travel by sea. Mozambican ports serve as a transit point for import goods for landlocked African countries.

There has been a 16% improvement in the road network and a 5% improvement in railway coverage extension in recent years. An important benchmark for Mozambique’s infrastructure was the completion of a bridge over the Zambezi River that joins central to northern Mozambique.

Despite these developments, access to rural areas is in part limited. However, means of communication have improved greatly. Telephones, cellular phones and access to telecommunications are available and in use throughout the country, allowing a flow of communications. Moreover, Mozambique is now connected by Fiber Optic cable which contributes to the cohesive connection of stations in the country.

While much activity is currently underway in certain infrastructure sectors such as transportation and power, the country has seen little activity in other key areas, including education, public health, waste, water and public buildings, states KPMG’s research on Mozambique. In part, this is because the country is still largely reliant on foreign aid with little to no additional funds available to channel into capital investments of the size and scope required. Progress is also being hampered by a lack of skills and capability in domestic infrastructure contracting and development.

Mozambique has substantial coal deposits, much of which is export grade coking coal. Some of the world’s largest international mining organizations are active across the country, particularly in the mineral-rich Tete province. Rio Tinto, an Anglo-Australian mining organization, owns a 2,500 square kilometre concession thought to hold more than 4 billion tons of coal and Vale, a Brazilian mining conglomerate, holds 35- year concessions on a district with an estimated 6 billion tons of coal.

While much investment is already being poured into these and other concessions, export capability is currently being strangled by poor infrastructure linking the mine pits to export markets. In response, many of the global companies operating in the region are actively seeking agreements with the government to build transport and logistics infrastructure, including dedicated bulk railway lines and expanded or rehabilitated port facilities.


World Bank Group (WBG) AssistanceSince 1984, the World Bank Group (WBG) has been providing development assistance to Mozambique in accordance with the country’s needs and priorities. The assistance started with economic stabilization in the 1980s, followed by post-war reconstruction in the early 1990s, this was followed by a comprehensive support strategy in the late 1990s. Currently there is a Country Partnership Strategy (CPS) for FY2012-2015, which involves close collaboration with the government, development partners, and civil society to ensure sustainable and inclusive growth. The WBG has initiated the process of updating its operational strategy, by launching the preparation of the Systematic Country Diagnostic (SCD), a first step towards developing the new Country Partnership Framework (CPF), which will replace the current CPS.

The World Bank portfolio for Mozambique as of September 2015 consists of 23 IDA funded projects and a net commitment of $1.7 billion. The portfolio is diverse, covering a broad range of sectors and themes, including infrastructure development (transportation, energy, water and sanitation), public sector management and governance, health and education, social protection, agriculture and rural development, as well as budget support.


SECTION XIConclusion


Conclusion:Mozambique is a small country in terms of population and GDP but has prospects of growth for Pakistan’s exports as well as investments. It is one of the fastest growing economies in the region with a stable growth rate of approximately 7% which has been consistently maintained over the last decade. Mozambique is one of the member countries of the Southern African Development Community and hence provides access to markets bigger than its 27 million population. Its geostrategic location as a port providing access to landlocked African countries is one of its asset.

Bilateral Trade: The bilateral trade between Pakistan and Mozambique consists almost entirely of Pakistan’s exports to Mozambique. In 2014, out of bilateral trade of $120 million, $119 million were Pakistan’s exports to Mozambique of cereals, salt, sulphur, earth, stone, plaster, limes and cement. This is a very small percentage of Pakistan’s potential exports to Mozambique which consist of rice, medicaments, structures and parts of structures, sugar, and cement, among other products.

Pakistan’s imports from Mozambique were $1.2 million while potential imports from Mozambique are $459 million consisting of coke, cotton, lumber, aluminum, tobacco and beans among other goods.

Investment Opportunities:Almost all sectors of Mozambique’s economy are open to foreign investment. For firms fulfilling the essential requirements of job creation, exports of Mozambique’s products and a minimum investment of $50,000. Industrial Free Zones have been established which provide customs and tax exemptions and other benefits. Other than the Industrial Free Zones, investors in the agriculture and fishery sectors receive the most generous tax incentives.

The main sectors of Mozambique include mining, especially aluminum which is among Mozambique’s top exports, and the manufacturing sector. Wheat flour, food, beverages, aluminum, petroleum products, textiles, cement, glass and tobacco are some of the main manufacturing products of Mozambique, of which textile and clothing sectors are a priority for the government for job creation.

Agriculture is one of key sectors with potential for investment in Mozambique’s fertile northern regions. The important cash crops in Mozambique include sugar, tobacco copra, cashew nuts, tea and cotton. Fisheries and tourism are also important sectors of the economy.

While Mozambique has a myriad of possible investment opportunities, foreign investors also face a multitude of problems which include widespread corruption, an underdeveloped financial system, poor infrastructure and high on-the-ground costs. Surface transportation inside the country is slow and expensive, while bureaucracy and port inefficiencies complicate imports.


SECTION XIIBibliography


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Bowker, Tom. Mozambique Turns to IMF for Emergency Loan as Currency Falls. Bloomberg. 30th October 2015. http://www.bloomberg.com/news/articles/2015-10-30/mozambique-turns-to-imf-for-286-million-loan-as-currency-slumps

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Mozambique. Forbes. http://www.forbes.com/places/mozambique


Mozambique’s Trade OverviewRepublic of Mozambique Guidelines for Importers. Intertek. June 2014. http://www.intertek.com/uploadedFiles/Intertek/Divisions/Oil_Chemical_and_Agri/Media/pdfs/Mozambique%20Importer%20Guidelines.pdf

Ease of Doing Business, Foreign Direct Investment and Major InstitutionsDoing Business. Ease of Doing Business in Mozambique. http://www.doingbusiness.org/data/exploreeconomies/mozambique/

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Regional Trade TrendsTrade Agreements. Mozambique. Focus Africa. http://focusafrica.gov.in/Mozambique_Trade_Agreement.html African Free Trade Zone is Agreed. BBC News. http://news.bbc.co.uk/2/hi/7684903.stm Trade Agreements. Africa Economic Development Institute. http://africaecon.org/index.php/trade_agr/view_trade_agreement/22/0/_/0

AGOA Country Eligibility. http://agoa.info/about-agoa/country-eligibility.html

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Mozambique China Trade PatternsMozambique. China.org.cn. http://www.china.org.cn/english/features/focac/183432.htmBrautigam, Deborah. Will Africa Feed China? Oxford University Press. July 2015. https://

books.google.com.pk/books?id=u6h_CgAAQBAJ&pg=PA53&lpg=PA53&dq=CHina%E2%80%99s+premier+visit+to+Mozambique+in+1990s&source=bl&ots=ZQ6_rRFCg-&sig=MlWW_vFxZuvd-wtlEl4IyCiPpQs&hl=en&sa=X&ved=0ahUKEwiUrIKI3orLAhXLno4

KHbGsB-oQ6AEIHTAB#v=onepage&q=CHina%E2%80%99s%20premier%20visit%20to%20Mozambique%20in%201990s&f=false

Shinn, David H. China’s Involvement in Mozambique. http://intpolicydigest.org/2012/08/02/chinas-involvement-in-mozambique/

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