Economy of Mozambique

The economy of Mozambique is $14.396 billion by gross domestic product as of 2018, and has developed since the end of the Mozambican Civil War (1977-1992). Fiscal reforms, including the introduction of a value-added tax and reform of the customs service, have improved the government's revenue collection abilities.

Top Sectors in Mozambique

Gas and oil reserves in Mozambique

Recent oil and gas discoveries across East Africa, most notably in Mozambique and Tanzania, have seen the region emerge as a new player in the global oil and gas Industry. The discoveries have driven billions of dollars in annual investment to the region. According to BMI estimates, the finds in the last few years are more than that of any other region in the world, and the discoveries are expected to continue for the next few years.

Agriculture, fishing and forestry in Mozambique

In Mozambique, agriculture is the mainstay of the economy and the country has a great potential for growth in the sector. Agriculture employs more than 80 percent of the labour force and provides livelihoods to the vast majority of over 23 million inhabitants. Agricultural potential is high, particularly in the fertile northern regions, which accounts for the bulk of the country's agricultural surplus. The main cash crops are sugar, copra, cashew nuts, tea, and tobacco. Marine products, particularly prawns, are Mozambique's largest single export. There is an abundance of marine resources that are not fully exploited.

Mining and semi-processing in Mozambique

Mozambique exported its first batch of coal in 2011 and expects to become the world's largest coal exporter. It is also spending about US$50 billion in infrastructure projects to access its coal reserves. Mozambique is reported to have the fourth largest reserves of natural gas in the world, after Russia, Iran, and Qatar.

Mozambique - Key Economic Indicators

Exports & Imports

(i) Main Exports: Mozambique's primary exports include aluminum, liquefied natural gas (LNG), shrimp, cashew nuts, and electricity. (ii) Main Imports: The country imports a variety of goods, with the most significant categories being fuel and lubricants, machinery and spare parts, and food products.

Balance of Trade

Mozambique has historically struggled with a trade deficit, where the value of imports consistently surpasses exports. This trend continued in 2023, although the recent exploration and exploitation of LNG resources offer a potential future boost to exports.

Infrastructure Development

(i) Roads: Mozambique's road network is vast but underdeveloped, with a total length exceeding 200,000 kilometers. The government is investing in road improvements and maintenance projects. (ii) Other Projects: Alongside roads, the government is focusing on developing other critical infrastructure, including power generation (hydroelectric and LNG-based), ports, and telecommunications.

Fiscal Policy

The government aims to achieve a balance between promoting economic growth and addressing social needs through its spending and taxation policies. (i) Reducing the budget deficit remains a priority, along with improving tax collection efficiency. (ii) Investment in healthcare, education, and social safety nets is also a focus.

Monetary Policy

The Bank of Mozambique, the central bank, implements monetary policy to control inflation, currently estimated at around 8% (2023), and foster economic stability.

Trade Agreements

(i) Mozambique actively participates in regional trade agreements like the Southern African Development Community (SADC) Trade Protocol. These agreements aim to reduce trade barriers and boost regional economic integration. (ii) The country also has bilateral trade agreements with various nations, seeking to diversify its export markets and attract foreign investment.

Environmental Regulations

Mozambique has established a framework of environmental regulations to address concerns like deforestation, water pollution, and wildlife conservation. The government is working on strengthening environmental governance and promoting sustainable development practices.

Tax System in Mozambique

Capital gains tax: Still applies to profits exceeding MZN 100,000 but the rate might be subject to change based on recent legislation. It's advisable to consult a tax professional for the most up-to-date rate.
Corporate tax rate: The corporate tax rate remains at 32%.
Sales tax (VAT): The Value Added Tax (VAT) rate in Mozambique is still 17%.
Property tax: Property tax rates haven't changed significantly. They depend on location and property type. You can find details on the Mozambican tax authority website.
Payroll tax: The payroll tax structure, including contributions to Social Security, likely hasn't changed drastically. However, specific rates might have been adjusted. It's best to consult with a local payroll specialist for the latest information.
Tax deductions and credits: Tax deductions and credits in Mozambique are still generally limited.
Tax compliance: The Mozambican government's efforts to improve tax administration and collection are ongoing. It's difficult to quantify the exact progress without recent reports, but hopefully, compliance is improving.
Tax burden: The tax burden in Mozambique is likely still moderate to high for businesses, and lower for individuals. This assessment might change depending on any recent tax reforms.

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