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					                                        M    O    Z   A   M    B   I   Q   U   E

                                  MOZAMBIQUE     Introduction

        ince the free and fair elections of December 2004, the new Government of the Republic of Mozambique under
        President Guebuza has been working hard to continue the excellent work done by the previous Government
        in fostering rapid development and significantly reducing poverty. Mozambique’s past economic record speaks
for itself: a reduction in absolute poverty, defined by household consumption, from about two-thirds of the population
to about half in just six years (the proportion living on less than US$1 PPP per day has fallen to less than a third of
the total population); an average 8 percent real US$ annual growth in GDP, and over 20 percent real US$ annual growth
in exports, over the last decade; and single-digit inflation for most of the past decade.

In terms of human development, too, significant improvements have been registered. Gross primary school
enrolment is well over 100 percent of the target age group, indicating that many of those who previously did not have
access to education are now being given this opportunity. The infant mortality rate has fallen by over a third in the past
decade, and vaccination coverage has increased by half. Infrastructure has been transformed. Access to safe water
has more than doubled in rural areas since 1996. The proportion of impassable roads has fallen from 50 percent
in 1992 to only 5 percent in 2003. In 2000, there were 51,000 cell phones, but there are now over one million, with
the lowest calling rates in Southern Africa.

The new Government is determined that these positive trends will continue over the long term. We are aware that,
in spite of the achievements, many challenges still remain, and are undertaking broad institutional reforms and
investments, including in areas of critical importance for the further development of the private sector. For example,
customs reform and trade facilitation initiatives are ongoing. Labour laws and employee skills are being updated.
Infrastructure, including in electricity provision and transportation, is being upgraded. Corruption, red tape and
contract enforcement deficiencies are being tackled through administrative and legal reform. New quality-control and
standards certification systems are being put in place. Access to credit is being improved and the cost of finance
lowered through reorganisation and internationalisation of the banking sector.

We are very optimistic for the future. Massive aid injections and debt relief are signs that our international partners
have confidence in our ability and commitment to achieving our goals. Business too has shown enthusiasm for
Mozambique. Investment as a percentage of GDP rose from 23 percent in 1995 to 28 percent in 2003 (this compares
with a Sub-Saharan average of 19 percent during the 1990s). Commercial agriculture, tourism, heavy industry, fishing,
labour-intensive manufacturing and mining have all benefited from substantial foreign investment, and many, many
other excellent opportunities exist. Mozambican exporters enjoy generous export preferences to major markets,
including duty-free access to the United States of America, Europe, Canada and other developed countries, as well
as to South Africa and other SADC countries. Attractive investment and operating incentives are available. The Centre
for the Promotion of Investments, CPI, will be able to advise potential investors.

We urge you to come and visit us some day soon and enjoy our warm hospitality, as business person or tourist.

                                                    A. FERNANDO
                                         Minister of Industry and Commerce

                              The Official SADC Trade, Industry and Investment Review 2006
                                                M    O    Z   A    M    B   I   Q   U   E

                                                THE LAND                                       during the dry season which is May to
                                                Geography                                      September, and from 22 to 31 degrees

                                                           ozambique lies on the east          Celsius during the wet season, namely
                                                           coast of Southern Africa.           October to April. The central and southern
                                                           Measuring a total of some           provinces are prone to severe drought,
      Head of State                             799,380 sq. km in area, the country has        devastating cyclones and floods.
      President Armando Emílio Guebuza          borders with the United Republic of
      Land Area                                 Tanzania, Zambia, Malawi, Zimbabwe,            People and History
      799,380 sq. km                            South Africa and Swaziland. The                There are many different ethnic groups
      Population                                extensive coastline stretches 2,515            in Mozambique, the largest being the
      18.96 million (2004)                      kilometres. Two of Africa’s major rivers -     Makua-Lomwe which accounts for
      Urbanisation                              the Zambezi and Limpopo - flow through         around 40 percent of the population.
      30.9% (2005)                              Mozambique to the Indian Ocean.                Others include the Shona, the main
      Capital City                                  There are a number of islands on the       ethnic grouping in Zimbabwe, and the
      Maputo              1,039,600 (2000)      coast including the Quirimba Archi-            Tsonga. The total population is
      National Day                              pelago in the region of Cabo Delgado,          approximately 18.96 million. About 30.9
      25 June (1975)                            Mozambique Island in Nampula province,         percent of the population lives in urban
      Languages                                 Chiloane Island in Sofala, the Bazaruto        areas, with Maputo and Beira being the
      Portuguese and various local              Archipelago in Inhambane and Inhaca            main centres.
      languages                                 Island in Maputo province.                         The official and business language
                                                    The national territory is characterised    is Portuguese. English is widely spoken
                                                by enormously diverse topography. There        in business and academic circles. The
                                                are vast coastal plains, uplands in the        local languages include Emakua,
                                                centre, high plateaus in the north west        Shangane, Bitanga, Xitswa, Chope,
      GMT + 2 Hours
                                                and mountains in the west. The highest         Ronga, Elomwe, Chuabo, Sena, Shona,
      Economic Indicators
                                                point is Monte Binga at 2,436 metres.          Ndau, Nyandja, Kimwani and
      Metical (MT)                                                                             Chimakonde.
      Exchange Rate                             Climate                                            In 1498, the Portuguese explorer
      MT22,581 = US$1 (2004)                    The climate varies from subtropical to         Vasco da Gama landed on the coastal
      GDP                                       tropical (south to north) and is influenced    shores of Mozambique on his way to
      US$6.0 billion (2004)                     by the monsoons of the Indian Ocean            India. The Portuguese soon established
      GDP per Capita                            and by the warm current of the                 a station on the Ilha de Moçambique
      US$317 (2004)
                                                Mozambique Channel. Temperatures               (Nampula). Initially, Portuguese colonial
                                                range from 13 to 24 degrees Celsius            occupation was limited to the coastal
      US$1.5 billion (2004)
      US$2.0 billion (2004)
      Principal Exports
      Aluminium, Prawns, Electricity,
      Cashew Nuts, Sugar, Citrus,
      Cotton, Timber, Manufactures
      Principal Imports
      Raw Materials, Spare Parts, Mining
      Equipment, Pharmaceuticals,
      Consumer Goods, Crude Oil
      Main Export Destinations
      Belgium, Zimbabwe, South Africa
      Main Import Origins
      South Africa, Portugal, Japan, USA
      Natural Resources
168   Prawns, Fish, Other Sea and
      Marine Resources, Coconuts, Coal,
      Gems, Wildlife, Beaches, Fauna,
      Flora, Gas, Wood, Precious Stones,
      Marble, Heavy Sands
      Source: SADC Secretariat.

                                       The Official SADC Trade, Industry and Investment Review 2006
                                               M    O    Z   A   M     B   I   Q    U   E

                                                                                               GENERAL INFORMATION
                                                                                               Tropical and subtropical
                                                                                               Summer: 22-31OC, Winter: 13-24OC
                                                                                               Main Towns
areas of the country where it gradually           The capital is located on the edge of        Beira               493,947   (2000)
replaced Arab influence. Portugal began       the stunning Maputo Bay and is the hub           Nampula             349,324   (2000)
the effective occupation of what is now       for the surrounding agricultural and             Nacala              204,764   (2000)
Mozambican territory in 1885.                 fishing industries. It is famous for its         Quelimane           211,345   (2000)
    In June 1962, the National Front for      many informal markets which give an              Measures
the Liberation of Mozambique (Frente de       insight into the colourful Mozambican            Metric System
Libertação de Moçambique - ‘Frelimo’)         culture. Major tourist attractions are the       Electric Current
was established. It waged a liberation        Cathedral, the Tunduru Botanical                 220 volts AC50Hz
struggle against Portuguese rule which        Gardens and the Marginal, the palm-              Business Hours
ended on 25 June 1975, with Samora            fringed beach front road. Bilene and             Monday to Friday: 8.00am - 12.30pm
Machel, Frelimo’s president since 1969,       Ponta Malongane are popular beach                and 2.00pm - 5.00pm
becoming the first president of               camping sites a short distance from town.        Many shops open upto 6.30pm
independent Mozambique.                           Leisure and sporting facilities              and on Saturday mornings
    A new constitution was adopted in         available include the 18-hole Polana Golf
                                                                                               Banking Hours
November 1990 replacing the earlier           Club, Legends Gym, several squash
                                                                                               8.30am - 11.30am
centralised government, paving the way        courts, swimming pools, and tennis
                                                                                               Some banks also open from
for the first multiparty election in 1994     courts at Tunduru gardens. Maputo has
                                                                                               2.00pm - 4.00pm
and thereafter every five years. In 1992 a    a wide choice of restaurants and night
                                                                                               Public Holidays
UN-negotiated peace agreement with            spots including cinemas, theatres, bars
                                                                                               1 January (New Year's Day)
rebel forces ended the prolonged civil        and clubs, and a good selection of
                                                                                               3 February (Heroes’ Day)
war that had followed independence.           supermarkets and shopping centres.
                                                                                               7 April (Mozambican Women's Day)
    General elections were last held in
December 2004.                                Beira                                            25 June (Independence Day)
                                              Beira is Mozambique’s second largest             7 September (Victory Day)
MAIN CENTRES                                  city and acts as the business and                25 September (Armed Forces' Day)
Maputo                                        transport hub for the central region of the      4 October (Reconciliation Day
Maputo is the capital of Mozambique and       country. It is one of the most important            [Peace Day])
has one of the finest shipping ports in       ports and is the terminal of the oil pipeline    25 December (Family Day
Southern Africa which provides a link to      and railway line to Zimbabwe and Malawi.            [Christmas Day])
the sea for its landlocked neighbours.            The city is the gateway to the famous
Prior to independence the city was known      Gorongosa National Park and the
as 'Lourenço Marques' and had been a          Marromeu Buffalo Reserve. The terrain
popular playground for wealthy holiday-       is flat and relief from the hot tropical
makers from around Southern Africa.           climate can be found on the beautiful


                                                                                              Far left: Major investments             169
                                                                                              have been made in Mozambique's
                                                                                              industrial sector.
                                                                                              Middle: Matola Coal Terminal, part
                                                                                              of the Maputo Development Corridor.
                                                                                              Left: Sandy beaches and clear
                                                                                              waters line Mozambique's coastline.

                                      The Official SADC Trade, Industry and Investment Review 2006
                                                       M     O     Z   A   M    B    I   Q    U    E

      beaches which extend to both the north           megawatts. Electricity is also exported to         vast majority of the country’s workforce.
      and south of the city.                           Malawi, South Africa, Swaziland and                   In July 2004, the IMF Board approved
          Beira has a number of historic               Zimbabwe.                                          a new agreement in the context of the
      buildings. The Beira Cathedral was                   The country has considerable                   Poverty Reduction and Growth Facility to
      erected in 1925 and is partly built from         mineral resources, and the mining                  support the government economic
      stone from the historic 16th Century Fort        industry has the potential to play a major         programme over the period 2004-2006.
      of Sofala. The magnificent Casa Infante          role in the economy.                               With respect to the Highly Indebted Poor
      Sagres was restored in 1992 by its new               The annual inflation in 2004 stood at          Countries (HIPC) initiative the
      owners, Manica Mozambique, and Club              9.1 percent, which represents a                    government has signed bilateral
      Chines, built in 1917, has also been             slowdown by 4.7 percent in relation to the         agreements with 10 of the 12 Paris Club
      restored and is now home to the city’s           previous year.                                     creditors. Mozambique’s external debt
      archives.                                            Fiscal reforms, including the                  was estimated to be US$966 million in
                                                       introduction of value-added tax and                2002. The country’s foreign exchange
      ECONOMIC OVERVIEW                                reform of the customs service, have                and gold reserves were estimated at
      The Mozambique government has                    improved the government’s revenue                  US$1.227 billion in 2005.
      moved away from its initial post-                collection abilities. In spite of these gains,
      independence          centrally-planned          Mozambique continues to depend on                  BUSINESS AND INVESTMENT
      economy through the introduction of free         foreign assistance for much of its annual          ENVIRONMENT
      market reforms. The country’s exchange           budget. The majority of the population,            One of the government’s overall macro-
      rate is now determined by market forces,         an estimated 70 percent in 2001,                   economic targets is the accumulation of
      as are interest rates and prices.                remains below the poverty line.                    gross international reserves. It has been
      Government subsidies and restrictions            Subsistence agriculture employs the                successful so far, primarily because of
      on imports have been lifted in a bid to
      open up the economy, along with the               Foreign Reserves (US$ m; year-end)
      reduction and simplification of import
                                                                                               2000        2001       2002       2003       2004
      tariffs and the liberalisation of crop
                                                        Total reserves excl. gold            725.11       715.57    819.19     961.76 1,130.35
      marketing. Other economic reforms
      include the introduction of a privatisation      Source: IMF, International Financial Statistics.
      programme which involves the entire
      banking sector as well as various State-          Exchange Rates (period averages)
      owned manufacturing operations.                                                          2000        2001       2002       2003       2004
          Preliminary estimates of the Ministry         MT: US$                              15,447       20,704    23,678     23,782     22,581
      of Finance indicate that the GDP in 2004
                                                       Source: IMF, International Financial Statistics.
      recorded a real growth rate of 7.2 percent,
      slightly below the target of 7.8 percent. In
                                                        Gross Domestic Product (MT bn; current prices)
      general, all sectors had a satisfactory
      performance, except for construction and                                                 1998        1999       2000       2001       2002
      fisheries. The performance of the                 Total                                46,912       51,913    56,917     71,135     85,206
      construction sector was affected by the           Real change (%)                           12.6       7.5        1.6      13.9         7.7
      completion of the major investment
                                                       Source: IMF, Republic of Mozambique: Statistical Appendix, 2004.
      projects, while climate related factors
      affected the fishery output.                      Gross Domestic Product by Sector (MT bn; current prices)
          The geographic position of the
      country in relation to neighbouring                                                      1998        1999       2000       2001       2002
      landlocked countries and regions has              Agriculture                          12,756       13,231    12,346     15,555     16,645
      historically made transport services -            Fishing                                1,418       1,310     1,378      1,601      1,366
      roads, railways, ports, shipment and              Industry                             10,090       11,534    13,623     17,742     26,096
      transhipment - a central element of the               Mining                                143        73        206        254        227
      economy and a significant foreign
                                                            Manufacturing                      5,113       5,993     6,830      9,852      9,676
      exchange earner. In 2005 it is estimated
                                                            Electricity and water                 938      1,447     1,281      1,466      2,640
      that services accounted for about 34.6
      percent of GDP.                                       Construction                       3,896       4,021     5,307      6,170     13,553
          The Cahora Bassa Hydroelectric                Services                             22,648       25,838    29,570     36,237     41,099
170   Dam, which has a capacity of 1,909                    Commerce                         10,078       10,997    11,859     14,960     15,304
      megawatts a year, services an annual                  Transport and comm.                4,299       4,924     5,297      6,811      9,468
      national electricity consumption of
                                                            Other services                     8,271       9,917    12,414     14,466     16,327
      around 200 megawatts. The newly
                                                        GDP                                  46,912       51,913    56,917     71,135     85,206
      constructed aluminium smelter in
      Maputo (Mozal) consumes another 450              Source: IMF, Republic of Mozambique: Statistical Appendix, 2004.

                                              The Official SADC Trade, Industry and Investment Review 2006
                                               M    O    Z   A   M    B   I   Q   U       E

an investment-friendly environment             Development Corporation (IDC) of South         Tete province at a total projected
attracting considerable amounts of             Africa, Mitsubishi, and the Mozambican         investment of US$1.3 billion. Present
foreign direct investment (FDI)                government. Construction on the plant          plans include the production and export
complemented by debt relief and                began in July 1998 and production started      of around 7 million tons of coal.
international aid flows.                       in 2000. Full production output of both
     The framework for both national and       MOZAL I and II is 547,606 tons. An             Labour Relations
foreign investment in Mozambique is            Industrial Free Zone has been                  The labour law of 1998 applies to all
contained in the 1993 Investment Law           established around the Mozal Smelter to        employers and employees in Mozam-
which spells out the procedures to be          encourage the establishment of                 bique, regardless of type of company,
followed, guarantees to be given and           downstream projects, which have the            origin of capital, or nationality.
incentives offered to all investors.           added incentive of availability of high             It is mandatory to enrol in the social
     A major recent investment project         quality stainless steel, low-cost labour,      security system, which covers all
has been the US$1.3 million Mozal              and one of the world’s lowest electricity      employees and provides for illness,
Aluminium Smelter, which is the largest        costs.                                         disability, old age pension and
single project of its kind undertaken in           Australian mining company Austral          assistance to beneficiaries after the death
Mozambique. The main shareholders              Coal and South Africa’s JCI are planning       of the insured.
include Billiton (Gencor), the Industrial      to mine the massive reserve of coal in the          The law accords generous rights to
                                                                                              employees. The dismissal of employees
                                                                                              without just cause is only possible after
 Investment Incentives and Guarantees
                                                                                              the payment of substantial indemnity
  According to the 1993 Investment Law, to be eligible for the guarantees and                 costs.
  financial incentives, the minimum value of direct national investment is fixed at the            Industrial relations are managed by
  equivalent in national currency of US$5,000 and, for the specific purpose of                a tripartite negotiating forum involving
  remittance of profits abroad, the minimum value of direct foreign investment is             the government, employers and trade
  fixed at US$50,000.                                                                         unions. Harmonious industrial relations
                                                                                              generally prevail between unions and
  Financial Incentives                                                                        employers. The incidence of industrial
          Exemption from customs duties on equipment for new investment project               action is low and strikes are not a
  feasibility studies, implementation and operations;                                         common feature of union activity in
          For investments in new or paralysed undertakings, a 50% reduction in                Mozambique. Independent employee
  Industrial Contribution Tax and Supplementary Tax rates for a maximum of 10                 associations include unions, federations
  years except in the case of investments located in the less-developed provinces,            and confederations.
  where the initial reduction is 80% with an effective further reduction of 50% for six            In terms of remuneration and fringe
  years;                                                                                      benefits, employers are to accord equal
          For investments in operating enterprises, deduction from taxable income             treatment and opportunity to all
  of 100% of investments made in new equipment, construction of plant and/or                  employees (national and foreign). The
  agricultural infrastructures for five years; and                                            foreign worker in Mozambique enjoys
          The right to consider certain expenses as losses, such as:                          equal rights and guarantees, excluding
  - Costs of construction or rehabilitation of public infrastructures,                        civil rights (e.g. voting rights) that are
  - Costs of training Mozambican workers, and                                                 clearly reserved for nationals. The
  - Private purchases of works of art, or other contributions to cultural development.        issuing of the resident permit is subject
                                                                                              to the approval of the Ministry of Labour.
  Guarantees                                                                                  This document is initially valid for one
         Guarantees over security and legal protection of property rights;                    year. After the 10th renewal, it is replaced
         Rights to the import of own-equity capital or loans to carry out investments;        by a permanent residence permit.
         Entitlement to just and equitable compensation in the event of expropriation         Regardless of rank and academic and
  based on absolute necessity and weighty reasons of public interest, health and              professional qualifications, an expatriate
  public order; and                                                                           may be hired when there is a shortage of
         Rights to the remittance abroad, within 90 days, of:                                 suitable local candidates with similar
  - Payments of royalties and other fees for contracting and transferring technology,         qualifications.
  - Loan repayments and interest charges due abroad,
  - Amounts paid as just and suitable compensation, if such occurs, and                       Investment Opportunities
  - Repatriation of capital invested upon liquidation or total or partial sale of the         Mozambique has vast potential for
  undertaking.                                                                                investment, commencing with the                171
      Mozambique is also a signatory to the Multilateral Investment Guarantee                 development of and/or rehabilitation of
  Agency (MIGA), the Overseas Private Investment Corporation (OPIC), and the                  projects in all sectors of the economy.
  International Convention and Centre for Settlement of Investment Disputes                   The sectors include mining, agriculture
  (ICSID).                                                                                    and forestry, fishing, manufacturing,
                                                                                              construction, tourism, financial services

                                      The Official SADC Trade, Industry and Investment Review 2006
                                                       M    O    Z    A   M    B   I   Q    U    E

      and the development of railways, roads           the VAT) on the import and production of           Interests - 18 percent.
      and ports in the country corridors, namely       specific luxury goods. These include               Royalties - 15 percent.
      the development corridors (Maputo,               luxury vehicles, tobacco and alcoholic             Branch Remittance Tax - 0 percent.
      Beira and Nacala) and the transport              beverages. Rates vary between 20 and                   The corporate tax rate for the
      corridors (Tete and Limpopo).                    75 percent.                                        agricultural sector is 10 percent until
                                                           Corporate tax rates are as follows:            2007. Thereafter it will be 35 percent. In
      Institutions for Investment,                     Corporate Income Tax - 35 percent.                 2004 the industrial sector started to
      Industry and Trade Support                       Capital Gains Tax - 18 percent.                    benefit from a special tax regime
      The Investment Promotion Agency,                 Branch Tax - 35 percent.                           comprising five categories of taxes
      Centro de Promaçao de Investimentos              Withholding Tax - 15 percent.                      varying from 0 to 25 percent.
      (CPI) was established in 1984 to simplify        Dividends - 18 percent.                                Non-resident companies without a
      the processing of business applications.
      The CPI also takes a pro-active role in
                                                        Foreign Trade in Value (US$ m)
      obtaining permits and approvals from
      different government ministries and                                                    2000          2001       2002       2003       2004
      national directorates on behalf of foreign        Exports (fob)
      investors. The Agency provides a                  Strategic products                   234.3        230.3      312.6       199.0      277.9
      'matchmaking' service for foreign
                                                            Prawns                              91.5       92.4      114.2        75.8       91.8
      investors seeking to identify local
                                                            Cashew kernels                       8.4         2.1        1.1        1.5         8.0
      Mozambican partners, and handles all
      projects related to non-mining sectors                Cotton                              25.5       18.3        15.9       32.4       35.8
      and where the equity to be invested is                Copra                                2.1         1.1        1.0        0.0         0.1
      above US$5,000 for nationals or above                 Sugar                                4.3         8.1       18.1       18.8       35.5
      US$50,000 for foreigners.                             Tyres and tubes                      0.3         4.2        1.5       11.4         1.7
          The Mozambique Institute of Export                Timber                              14.9       12.6        18.0       20.4       30.0
      Promotion (IPEX) provides technical and
                                                            Cashew nuts                         11.9       10.9        16.2        7.4       21.2
      financial assistance to exporters.
                                                            Citrus                                   -         -        0.1        0.6         0.2
          The Business Associations Working
      Commission (CTA) was established in                   Lobster                                  -         -        0.9        0.5         0.8
      1996. Its main aim is to improve the                  Tobacco                                  -         -           -      21.5       40.9
      dialogue between the private and public               Non-monetary gold                        -         -           -       0.6         1.3
      sector and by so doing remove                         Electricity                         67.0       57.3      107.4       113.3      102.3
      administrative barriers to create a
                                                            Bunkers                              8.7       23.3        18.2        8.0         8.0
      conducive environment for the business
                                                        Mozal products                          60.2      383.2      361.1       567.6      915.0
          The Local Industry Development                SASOL                                        -         -           -          -      31.3
      Institute (IDIL) has been established to          Others                                  69.5       89.6      136.1       164.0      177.4
      create opportunities for the rural areas to       Total                                364.0        703.1      809.8     1,043.8    1,503.9
      develop agro-industries and other                 Imports (cif)                      1,163.0       1,063.4   1,262.9     1,651.5    1,849.7
                                                       Source: Banco de Moçambique, Annual Report.

      TAXATION                                          Main Trading Partners (US$ m)
      The Plan of Action for Absolute Poverty
      Reduction (PARPA) and the Economic                                                     1999          2000       2001       2002       2003
      and Social Plan for 2004 have paved the           Exports to:
      way for the establishment of the Tax              Belgium                                      1         1       285         289        275
      Revenue Authority and its respective              South Africa                             71          53          29        120        154
      organic statutes, adoption of the Stamp           Zimbabwe                                 40          65          82         39         49
      Tax Code and its respective table, and
                                                        Spain                                    35          39          42         37         99
      adoption of the regulation on Government
                                                        Portugal                                 25          42          28         30         40
      Tax Administration System SISTAFE.
          The Value Added Tax (VAT) Code                Imports from:
      was successfully introduced in                    South Africa                            302         425        618         386        467
172   Mozambique on 1 June 1999. It is applied          United States of America                 44          36          31         66         68
      on the sale of goods and services within          Portugal                                 43          92          62         78         67
      the national territory, as well as on imports
                                                        Japan                                    44          51          15         43         23
      of goods to the country. The rate is 17
                                                        Australia                                13            6       109          52         12
      percent. The Specific Goods Con-
      sumption Tax is payable (in addition to          Source: IMF, Direction of Trade Statistics.

                                              The Official SADC Trade, Industry and Investment Review 2006
                                                M    O   Z   A    M     B   I   Q    U   E

permanent establishment in Mozam-                  A substantial trade imbalance             imported components. The minimum
bique are subject to a 15 percent              however persists although the opening         investment required to obtain a licence
withholding tax on gross income derived        of the Mozal aluminium smelter, the           to develop and administer an IFZ is set
from activity carried out in Mozambique        country’s largest foreign investment          at US$5 million and the minimum
and related to intellectual or industry        project to date, has increased export         amount of investment required to qualify
property, industrial, commercial or            earnings. Additional investment projects      for direct investment under the IFZ regime
scientific know-how, technical assist-         in titanium extraction and processing         and for an IFZ certificate is US$5,000.
ance and the use of agricultural,              and garment manufacturing should                   Mozambique is eligible for duty-free
industrial, commercial or scientific           further improve the balance of trade.         export quotas to the European Union
equipment.                                         While exports estimated at                markets and to the United States of
    The top personal income tax rate is        US$1,503.9 million recorded a 44              America and other developed economies
20 percent.                                    percent growth in the year 2004, imports      under the GSP. Mozambique also has a
    Double taxation treaties exist with        to the tune of US$1,849.7 million             special trade agreement with South
Portugal, Mauritius and Italy.                 observed an annual increase of                Africa.
                                               approximately 12 percent during the
FOREIGN TRADE                                  same period. Mozambique's main export         Membership of
Mozambique’s export commodities                partners are Belgium, South Africa and        International Organisations
include aluminium, prawns, electricity,        Zimbabwe. South Africa, the United            Mozambique is a member of the Southern
cashew nuts, sugar, citrus, cotton,            States of America and Portugal make up        African Development Community
manufactured products and timber. The          its main import partners.                     (SADC), African Union (AU), United
main import goods include raw materials,                                                     Nations, World Trade Organisation
spare parts, mining equipment,                 Export Promotion                              (WTO), World Bank and International
pharmaceuticals, consumer goods,               The cornerstone of Mozambique’s push          Monetary Fund (IMF).
chemical goods and crude oil.                  to expand its export markets are the
    Agricultural exports are constrained       Industrial Free Zones (IFZs). An export       FINANCE
by the weaknesses of the rural sector,         industry located in an IFZ enjoys full        In 1978 all private banks operating in
including poor infrastructure and an           exemption of customs duties, VAT, and         Mozambique were nationalised and
underdeveloped trading network. Aside          import or export taxes on construction        merged into two State institutions, the
from cashew nuts and cotton, other sub-        material, machinery and equipment. IFZ        Banco de Moçambique (the Central Bank)
sectors that could make a significant          enterprises are also exempted from            and the Banco Popular de Desen-
contribution to exports, such as copra,        income tax. The proposed sites for the        volvimento (BPD).
tea and tobacco are still stagnant. Sugar      development of IFZs are at the Industria          After 1992, the government’s
has great potential with sugar exporters       Ceramica de Mozambique site in Maputo         economic reform programme covered
to benefit from the United States of           province, Sofala province near the port of    the financial sector. Foreign banks were
America quota allocations and also from        Beira, Nampula province and the port of       allowed to invest in Mozambique, interest
the liberalisation of the European             Nacala. The Beira and Maputo free trade       rates were deregulated, and the
Union’s trade regime applicable to least       zones have been officially approved.          regulatory and commercial activities of
developed countries.                               National and foreign investors may        the Central Bank were separated. Banco
    Exports of manufactured goods,             hold licences for the development and/        de Moçambique assumed the Central
which account for more than 10 percent         or administration of IFZs. The IFZs are       Bank function while Banco Comercial de
of total exports, have performed well in       geared towards exports, although a            Moçambique (BCM) led the commercial
recent years. Textiles, tyres and              maximum of 15 percent of their output         banking sector.
processed raw materials drive the              may be sold on the domestic market,               Liberalisation attracted many new
sector.                                        against payment of customs duties on          entrants into the banking sector. Until
                                                                                             1992, the Banco Standard Totta de
 Government Finances (MT bn)                                                                 Moçambique (BSTM) was the only private
                                             2002                2003               2004     bank operating in the country. Since then,
 Fiscal revenue                             10,629           13,695             14,434       it has been joined by the Banco de
                                                                                             Fomento a Exterior (BFE) and the Banco
 Non-fiscal revenue                          1,428            1,019                 2,128
                                                                                             Internacional de Moçambique (BIM),
 Grants                                     10,027           10,027             10,811
                                                                                             whose main shareholder is the Banco
 Total revenue                              22,084           24,741             27,373       Comercial Português. The Banco
 Current expenditure                        13,469           15,119             19,006       Comercial de Investimentos (BCI)
 Capital expenditure                        12,155           13,369             12,880       opened in mid-1997. Other international      173

 Net loans                                   3,414                481                842     banking groups are also opening
                                                                                             subsidiaries in Mozambique. The
 Total expenditure                          29,038           28,969             32,728
                                                                                             transformation of the banking sector has
 Overall balance                             6,745            4,018                 5,355
                                                                                             been rapid, and the branch network has
Sources: Banco de Moçambique, Annual Report; Budget Execution Table - MPF.                   expanded throughout the country.

                                     The Official SADC Trade, Industry and Investment Review 2006
                                                      M    O      Z   A   M   B   I   Q   U   E

          The Commonwealth Development                was tantalite, which grew by 277.4                near the Zimbabwe border, the gold
      Corporation (CDC), together with a group        percent, due to the new mine opening in           reserves in this area have not been fully
      of development finance institutions, has        Zambezia province.                                exploited and it is estimated that output
      established Mozambique’s first venture              The government is actively                    could be increased to between 5 and 10
      capital fund, the Mozambique Investment         encouraging foreign investment in the             tonnes per year.
      Company. In addition, the CDC has made          mining sector. A new mining and                        Some 50,000 artisanal workers mine
      a number of important investments,              geological policy has been introduced.            alluvial gold and gemstones. Artisanal
      including the country’s first leasing firm,     Applications for mining and exploration           alluvial workings near Lake Nyasa is
      the United Leasing Company (ULC).               rights are handled by the National                estimated to have produced around 12
          In October 1999, a stock market was         Directorate of Mines, through the Ministry        tonnes of gold since 1990, most of which
      inaugurated in Maputo (Bolsa de Valores         of Mineral Resources and Energy.                  is sold illegally to the United Republic of
      de Moçambique - BVM). The exchange                  Corporate income tax on mining                Tanzania.
      was opened with the support of the Lisbon       companies is 35 percent, with a 50                     Substantial coal deposits have been
      Stock Exchange and the World Bank.              percent reduction over the first 10 years         found in the Tete Province. Mozambique
          The insurance market is still               from the start of production. Incentives in       currently exports coal to Nigeria and South
      immature. A commission for the                  the mining sector include:                        Africa.
      inspection of the insurance activity,           • Exploration and development                          The extensive heavy mineral sands
      involving all the existing insurance            expenditures may be accumulated and               along Mozambique’s 2,515-kilometre
      companies, has been set up at the               carried forward until the first year of           coastline give it the potential to become
      Ministry of Planning and Finance and            production;                                       the world’s largest producer of ilmenite.
      tasked with drawing up proposals for            • A choice of depreciation rates;                 Billiton, Southern Mining Corporation
      specific regulations to create an enabling      • Exemption on import duties for all              (SMC) and Kenmare Resources Plc are
      environment for the growth of the industry.     equipment, material and subcontractors;           three companies presently looking into
          Foreign investors are allowed to            • Exemption from dividend with-                   the possibility of starting mining
      operate both local and foreign currency         holding tax; and                                  operations on these deposits.
      accounts. Foreign retention accounts,           • Exemption from sales tax, duties and                 There is considerable potential for
      where foreign currency receipts from            taxes on mineral exports.                         Mozambique to become a major producer
      Mozambique-derived production and                   Mozambique has one official gold              of natural gas. Proved reserves of natural
      sales are received and held in foreign          mine, the Monarch Mine, operated by               gas stands at 63.71 billion cubic metres
      bank accounts, are permitted on a case-         Mincor de Moçambique, that produces               (2002 estimates) and include three
      by-case basis.                                  around 400 kilogrammes per year.                  onshore gasfields at Pande, Temane
          The right of foreign investors to           Located in the Manica greenstone belt,            and Buzi-Divinhe. Pande’s reserves are
      repatriate capital, dividends and other
      distributions of profit is guaranteed by         Mining Industry (annual growth rates; %)
      law. Firms are obliged to register all
                                                                                                      2002              2003               2004
      imports of goods or money with the
      Central Bank. Future repatriation of non-        Coal                                           57.7              -15.6              -55.0
      registered investment is not guaranteed.         Bauxite                                          6.1              29.3              -23.9
                                                       Processed bentonite                           128.3               18.0              -15.5
      MINING                                           Selected bentonite                             -23.0             -57.9              -32.5
      Exploration work carried out over the last
                                                       Marble in plates                               -34.8               2.5               33.6
      20 years has led to the discovery of
                                                       Marble block-type                              41.6                -0.2              36.5
      important deposits of heavy mineral
      beach sands, coal, gold, tantalum-               Faceable garnet                                  0.0             -61.3              511.0
      niobium and other rare metals, graphite,         Gold                                           -23.2            271.6               -10.8
      black granite, gemstones and other               Aquamarine                                     -44.9             -69.4              132.1
      dimension stones. The result of this             Tourmalines                                   578.6             370.4               170.2
      increased geological knowledge has               Tantalite                                      73.7             302.3               277.4
      been an increase in investment by
                                                       Beryl                                        6,687.5              44.2              -65.1
      leading international and regional mining
                                                       Sand                                           71.3               72.4                 4.2
          The production of minerals in 2004           Limestone                                      78.4                3.6               18.2
      recorded a growth of 216 percent,                Riolites                                       57.2                -9.6                5.8
174   compared to the previous year. This              Granites                                         1.2             -19.5                -3.4
      growth is explained by the entry into            Durmortiorite                                  -20.0               0.0              182.5
      production of Temane natural gas, and
                                                       Natural gas                                    94.6                4.1          91,405.1
      production of dumortiorite, which grew
                                                       Total                                          52.1               31.6              215.7
      by 182.5 percent, against the zero growth
      rate observed in 2003. Another contributor      Sources: Banco de Moçambique, Annual Report; MPF-05.

                                             The Official SADC Trade, Industry and Investment Review 2006
                                                 M     O   Z   A     M     B   I   Q   U   E

estimated at more than 2.1 Tcf, Temane           Mozambique are planning to build a joint       to GDP in 2005. Overall production grew
at around 1.0 Tcf, and Buzi has                  fuel refinery, to be based in Mozambique,      by 9 percent in 2004.
recoverable reserves of around 10 Bcf.           with a capacity of 10,000 barrels per day.          The production of export crops
    Mozambique launched its First                Funding is coming from the Government          increased by 10.5 percent in 2004
Offshore Licensing Round in March 2000,          of Iran.                                       reversing the negative results achieved
when 14 blocks, mainly in the                                                                   in 2003. This growth was determined by
Mozambique basin, were offered. Blocks           AGRICULTURE                                    the increase in the production of cotton
are awarded under Production Sharing             Mozambique has immense agricultural            (69.9 percent), citrus (1.6 percent) and
Agreements between the government,               potential, with an estimated 36 million        tea leaves (19.2 percent) while cashew
Empresa Naçional de Hidrocarbonetos              hectares of arable land, of which only 10      nuts, copra and sugar cane witnessed
de Moçambique (ENH) and private oil              percent is presently in productive use.        drops of 32.6, 3.1 and 3.3 percent,
companies. Companies presently                   The wide diversity of soil types and the       respectively, in comparison with 2003.
involved in the upstream industry include        diverse climatic conditions in the country          At present the agricultural sector is
Enron Oil and Gas Resources Inc, Energy          are suitable for a large variety of crops.     still dominated by the family sub-sector
Africa, Sasol Petroleum International,           Most of the agriculture practised in           which accounts for 90 percent of the
Leopardus Resources Limited, Lonrho              Mozambique is non-irrigated. However,          cultivated areas and includes 2.5 million
de Provuma Petroleum, Zarara                     Mozambique’s network of more than 60           households. This sub-sector relies on
Petroleum Resources, Elf, TotalFinaElf           rivers has allowed for the construction of     rain-fed farming and has very basic
SA, BP, Trefoil Limited and Western.             irrigation schemes. Total potential            techniques resulting in low yields. The
    In 2000 the State-owned oil company          irrigated area is estimated at 3.3 million     remaining arable land is cultivated by
Empresa Naçional de Hidrocarbonetos              hectares. The main irrigation systems          large commercial farms that concentrate
(ENH) successfully negotiated with               are at Chokwe and the sugar plantations        on cash and export crops.
Sasol Petroleum International and Enron          in Incomati, Maragra, Buzi, Mafambisse              In 1996 the Mozambican government
Oil and Gas to construct a US$1 billion,         and Luambo, covering a total of some           launched an ambitious commercial
590-kilometre pipeline for the transport         59,000 hectares. The Zambezi Valley            agriculture joint venture between South
of gas from the Pande and Temane                 has great investment potential in the          African farmers and Mozambique
gasfields to South Africa’s Gauteng              agricultural sector offering both excellent    (MOZAGRIUS, coordinated by the Ministry
province. An existing pipeline between           arable land and readily available              of Agriculture and Rural Development), a
Beira and Harare has been extended               irrigation. To assist the development of       broadly successful scheme to attract
and is now operating close to full capacity.     this area, the government set up the           farmers from South Africa to the largest
There are proposals to use these                 Zambezi Planning Office in 1997 to             and most fertile northern province of
reserves for industrial projects in the          promote and coordinate social and              Niassa. Farmers participating in the
Beira area.                                      economic development. Special tax              scheme have already settled in Niassa.
    The downstream oil industry in               incentives are also offered.                   There is also an influx of farmers from
Mozambique relies on imports, mainly                  Agriculture is the backbone of the        Zimbabwe who have settled in the Manica
from South Africa. The State-owned oil           economy providing employment for over          province.
company Petromoc has the major market            75 percent of the workforce and                     In the early 1970s, sugar was the
share. Malawi, Zimbabwe and                      contributing an estimated 24.2 percent         country’s third major export commodity
                                                                                                and one of the main employment
 Agricultural Production (annual growth rates; %)                                               generators with 45,000 workers. It
                                                                                                currently employs 17,000 seasonal and
                                               2002                2003                2004
                                                                                                permanent workers. The redevelopment
 Industrial                                    57.2             109.3                  10.5
                                                                                                of the sugar industry was launched at the
 Smallholder                                    5.2                 3.4                 8.8     end of 1999, with a special five-year
     Marketed                                   9.5                 4.3                12.1     incentive scheme for the sector. Sugar
     Own consumption                            2.9                 2.8                 6.9     mill rehabilitation is in progress at two
 Total                                          7.3                 9.8                 9.0     sites with investment funding from
                                                                                                Tongaat Hulett Inc., the Arab Bank for
Sources: Banco de Moçambique, Annual Report; MPF-05.
                                                                                                Economic Development in Africa
                                                                                                (BADEA), the OPEC Fund and the Credit
 Fishery Production (annual growth rates; %)
                                                                                                Guarantee Insurance Corporation from
                                               2002                2003                2004     South Africa.
 Industrial                                     -6.5                -9.2                -3.2         The recent initiative by the European
 Smallholder                                    -1.4               41.6                 -4.4    Union to liberalise all trade with least       175

     Marketed                                   0.6                53.8                 -5.5    developed countries includes sugar.
                                                                                                Although the sugar import regime’s
     Own consumption                            -3.0               30.8                 -3.2
                                                                                                complete liberalisation will not occur until
 Total                                          -4.6               11.1                 -3.8
                                                                                                2008, the initiative could potentially have
Sources: Banco de Moçambique, Annual Report; MPF-05.                                            a very beneficial impact on the sector.

                                        The Official SADC Trade, Industry and Investment Review 2006
                                                        M    O    Z    A   M    B   I   Q    U   E

      LIVESTOCK PRODUCTION                              of shrimp aquaculture. The first major         manufacturing operations in Moz-
      Mozambique has excellent climatic and             foreign investment came from the French        ambique include light engineering, food
      land conditions for the development of            firm Aquamar, Lda which is currently           industries, textiles, brewing, soft drinks,
      livestock. The rearing of cattle, pigs, goats,    managing a prawns and shrimp farming           cement, oils, soaps and chemicals. The
      rabbits and poultry has great potential as        operation at Quelimane, Zambezia               Mozal Aluminium Project has laid down
      the existing supply does not meet                 province. Prawn exports generated              a further foundation for the development
      domestic demand, with significant                 revenues of US$91.8 million in 2004,           of a downstream manufacturing industry.
      volumes of meat, poultry and dairy                equivalent to a 21 percent growth in
      products currently being imported, mainly         relation to the previous year.                 TOURISM
      from South Africa and Europe.                         Opportunities also exist for the culture   Mozambique has 2,515 kilometres of
          Livestock production increased by             of oysters, mussels, algae and pearls.         Indian Ocean coastline dotted with sandy
      12.5 percent in 2004. Of this figure, cattle                                                     beaches and clear water, colonial hotels,
      production grew by 11.3 percent whereas           FORESTRY                                       an abundance of some of the world’s
      the production of chicken and eggs                Mozambique has an estimated 19 million         most exquisite seafood, as well as an
      increased by 12.8 percent and 35.9                hectares of productive woodland.               interior with beautiful scenery and wildlife.
      percent respectively.                             Tropical hardwoods are the most                Each of its provinces has its own unique
                                                        valuable products, although pine and           cultures, languages, dance, music and
      FISHERIES                                         eucalyptus plantations also exist. The         handicraft.
      The fisheries sector is a major source of         more important species include umbila,             Activities related to restaurants and
      foreign exchange earnings, accounting             jambirre, chanfuta and African                 hotels grew by 1.1 percent in 2004 driven
      for around 2 percent of GDP in 2004. The          sandalwood.                                    by enhanced foreign air traffic as well as
      sector recorded negative rates in 2004                The country’s logging capacity is          by the hosting of international events.
      (a reduction of 8 percent in relation to          estimated at around 500,000 cubic              Further improvements are expected in
      2003) due to unfavourable climatic                metres per year. Current off-take is well      the near future based on investment
      conditions. The country has a potential           below this level. Apart from the natural       projects to the tune of US$480 million
      catch of fish and shellfish of some               forests, there is potential for the            approved during the year under review.
      300,000 tonnes a year. The sector has             development of plantation forests with             Beach tourism has expanded along
      both industrial and small-scale fisheries         around one million hectares of land with       the southern coast, including the islands
      and employs up to 100,000 people, 90              suitable conditions available. The natural     of the environmentally unique Bazaruto
      percent of whom are artisanal fishermen           potential of the sector, coupled with the      archipelago in Inhambane province.
      or involved in fish processing and                present under-development, offers a            Important tourism nodes have also
      marketing activities.                             wide range of opportunities for investors      developed on the south coast at
          The Mozambican fishing fleet is               to meet expanding local and international      Inhambane, Xai-Xai, Inhaca Island and
      limited, although there are a number of           demand for timber, construction                Ponta do Ouro. Other major tourist
      direct licensing schemes and joint                materials, furniture, and pulp for the paper   attractions include the Ibo Islands and
      venture companies with Japanese,                  industry.                                      the city of Pemba in the north of the
      Spanish, Portuguese and South African                                                            country. Mozambique Island, also in the
      fishing firms. Prawns and shrimp are              INDUSTRY                                       north, is a major historical and cultural
      harvested mainly by these companies.              The manufacturing industry grew                attraction reflecting indigenous African
      Activities undertaken towards the                 approximately by 13 percent in 2004, as        culture and architecture as well as Arab
      industrialisation of the sector have              a result of the entry in production of Mozal   and Portuguese influences.
      resulted in a rise of industrial fisheries,       Phase II in the second half of 2003. In the        Ten percent of Mozambique’s total
      with particular reference to lobster (100         period under review there was a                land area is allocated for wildlife
      percent), squid and octopus (175                  considerable contribution of the mining        management, including national parks,
      percent), Kapenta (67.6 percent), crayfish        industry following production from             game reserves and hunting areas.
      (20 percent), and squid and octopus               Temane gas plant from February 2004.           Rehabilitation of several of the country’s
      (73.5 percent).                                   The sector has benefited from the              game parks with World Bank and
          The main export species include               stabilisation of the macro-economic            European Union funding is underway
      crayfish, shrimp, fish and langoustine.           situation, changes to the import tariff        including the cross-border Great
      Mozambique exports primarily raw fish.            structure that have lowered the costs of       Limpopo Transfrontier Park. The object-
      The government strategy is to promote             intermediate and capital goods, and the        ive of the government’s National Tourism
      the value-added in this sector and it thus        rapid increase in demand resulting from        Strategy is to promote high-value,
      welcomes foreign investors who can                massive foreign investment and high            low-volume tourism. Demand for quality
176   provide semi-industrial shrimp vessels            economic growth. Industry’s contribution       accommodation is strong and is being
      as well as installations of processing            to GDP in 2005 is estimated at 41.2            addressed by investment.
      plants and fishing infrastructure.                percent.
          Aquaculture in Mozambique is in its               Mozambique’s industrial sector is          WATER
      infancy and its future development is a           concentrated in the urban centres of           Mozambique possesses a vast
      top priority for the government, especially       Maputo, Beira and Nampula. The main            hydrographic network, with more than 60

                                               The Official SADC Trade, Industry and Investment Review 2006
                                                  M    O    Z   A    M    B   I   Q    U   E

rivers rising in the interior and emptying       Cahora Bassa Dam, the M’panda Uncua             State shipping company, Navinter, all
into the Indian Ocean. All the lakes and         Dam and the Alto Malema Dam are                 but ceased operations. The sector was
rivers together represent some 13                planned. Generating plants are due to           opened to private operators in 1996 and
percent of Mozambique’s surface area.            begin operations in 2006.                       four foreign-owned companies,
     The most important rivers are, from             The African Development Fund (ADF)          including the privatised Navinter, now
north to south, the Rovuma, Messalo,             is financing Mozambique’s rural                 provide container services between
Lurio, Licungo, Zambezi, Pungue, Buzi,           electrification project to the tune of US$14    Nacala, Quelimane, Beira, Pemba and
Save, Limpopo, Incomati, Umbeluzi and            million. Under the project, 19 towns have       Maputo, and on to Durban. Strong growth
Maputo rivers. These rivers are shared           been identified in Gaza, Inhambane, Tete        in coastal traffic, particularly to the smaller
with other countries in the region, with         and Nampula provinces. Most of the              northern ports of Quelimane, Nacala and
the exception of the Messalo, Lurio and          money will be spent on the construction         Pemba, is an indication of increasing
Licungo rivers. Because of its size and          of an 895-kilometre 33kV overhead line,         commercial activity in the northern
economic importance, the Zambezi river           72 kilometres of 0.4/0.22 kV overhead           provinces.
is notable in this regard, since it is shared    lines, and the erection of 76 transformer
by eight countries. The Cahora Bassa             stations. Additional funding has been           Harbours and Rail
Dam, one of the largest hydroelectric            sourced from the OPEC Fund and EDM.             Mozambique’s three main ports, at
schemes in the world, straddles the                  At least six billion tonnes of coal         Maputo, Beira and Nacala, form the hubs
Zambezi in Mozambique.                           reserves are known to lie in Tete province.     of the transport system. The port of
     Lake Niassa lies in the far north of the    Foreign companies that have expressed           Maputo serves South Africa, Swaziland
country and about one-third of the Lake          an interest include Brazil’s Companhia          and Zimbabwe, while the ports of Beira
is in Mozambican territory. This is the last     do Vale do Rio Doce and South Africa’s          and Nacala handle cargo from Malawi,
of the Great Lakes in the Rift Valley. Its       Johannesburg Consolidated Invest-               Zambia, Zimbabwe, and occasionally
deepest parts are on the eastern side,           ments, which have been conducting joint         from Botswana and the Democratic
inside Mozambique.                               preparatory studies for undertaking             Republic of Congo. All of the ports have
     Government has undertaken to                mining.                                         container facilities.
supply water for domestic and industrial                                                             Since the late 1980s, rehabilitation
purposes in urban centres.                       TRANSPORT                                       programmes have attracted sizeable
                                                 Roads                                           contributions from the donor community.
ENERGY                                           Mozambique is strategically located in          The first phase of the modernisation of
In July 1997, the Mozambican parliament          the region and has a long tradition in          the Beira port was finished in 1992, with
passed a law liberalising the electricity        rendering transport and logistical              the opening of a US$100 million
market, which is now open to private             services to the business community not          container terminal. The port is now able
sector generators. The country has               only in Mozambique but also in the              to handle some 7.5 million tonnes of
enormous resources for the production            northern and eastern regions of                 cargo per year and vessels weighing up
of energy, namely, large hydro resources,        Botswana, South Africa, Swaziland,              to 50,000 tonnes can enter it. The port of
coal, natural gas, biomass and high              Zambia and Zimbabwe.                            Maputo has reorganised its manage-
levels of solar radiation. The production            The connection to the neighbouring          ment, turning several of its terminals -
of electricity for the domestic market grew      countries was always accorded priority,         container, citrus, coal and sugar - over to
by 12 percent in 2004, which reflects the        to the detriment of internal links,             private companies.
increase of domestic demand deriving             especially in the rural areas. The northern         The government has concessioned
from economic growth and rural                   part of the country is particularly affected,   the massive ports and railways company,
electrification.                                 while the west-east connections are             Portos a Caminhos de Ferro de
    Hydropower sources are the most              generally better than the north-south           Moçambique, EP (CFM), Mozambique’s
easily available. Cahora Bassa, the              connections.                                    largest public sector employer, to a
second largest hydroelectric dam in                  Mozambique has a total of 30,400            consortium of companies. The principal
Africa, is situated on the Zambezi river in      kilometres of roads of which 5,685 are          railway lines run from Maputo to South
Mozambique. The dam company,                     paved and 24,715 kilometres are                 Africa, Beira to Zimbabwe, and Nacala to
Hidroeléctrica de Cahora Bassa (HCB),            unpaved (1999 estimate). Rehabilitation         Malawi, covering a distance of 3,123
is 82 percent owned by the Portuguese            of the internal transport system has been       kilometres.
government and 18 percent owned by               targeted as a priority for the transport
Mozambique. The dam is linked to South           sector through the Roads and Coastal            Air
Africa by a 1,400-kilometre direct current       Shipping (ROCS) Programme led by the            Air traffic had a growth rate of 238.2
line. The net hydropower potential for           World Bank. The costs of the required           percent in 2004, owing to the opening of
electricity production is estimated at           investments are estimated to amount to          new entry points to the country, the              177
14,000 megawatts of which only 2,075             US$406 million for the programme.               implementation of the new civil aviation
megawatts is exploited today. Of this                                                            policy, the streamlining of the licensing
figure, 92 percent is produced at the            Coastal Shipping                                and aircraft entry procedures, the
Cahora Bassa. Three additional dams              Coastal shipping has picked up after the        increase of tourist activities and traffic
on the Zambezi river, namely the Northern        collapse during the mid-1990s when the          related to international events.

                                         The Official SADC Trade, Industry and Investment Review 2006
                                                       M    O    Z   A    M    B   I   Q   U   E

           Scheduled services on main routes           Deutsche Telekom. Communication                out of seven adults according to the World
      are provided by the State airline Linhas         services surged by 15.7 percent in 2004        Bank, 50 percent of whom will develop
      Aéreas de Moçambique (LAM).                      (an increase of 12.9 percent from 2003),       AIDS in the next three to eight years. To
      Scheduled services to internal destina-          determined by the entry into operation of      prevent this, a national strategy against
      tions not served by LAM are provided by          another mobile telephone operator in           AIDS was approved in 1999, focusing on
      several private charter airlines.                Mozambique.                                    education and awareness-raising.
           International services are provided             More than 99 percent of TDM's
      from Maputo to Lisbon, Mauritius, Addis          subscribers are connected to digital           HUMAN RESOURCES
      Ababa, Johannesburg, Durban,                     exchanges and the remainder to                 Mozambique’s labour force is perceived
      Richard’s Bay, Harare, Manzini and               analogue exchanges, which are                  to be friendly, enthusiastic, trainable,
      Blantyre, by various airlines. International     gradually being replaced. There were           hardworking and relatively low-cost.
      flights from Beira go to Johannesburg,           83,700 main lines in use in 2002. The              Apart from the Eduardo Mondlane
      Harare and Blantyre. A large share of            mobile telephone network coverage has          University, Paedagogical University
      intercontinental travel to and from              been extended to cover all the major           (Universidade Pedagógica, mainly for
      Mozambique is directed through                   centres resulting in 428,900 subscribers       teacher training) and the Higher Institute
      Johannesburg. There are an estimated             in 2003.                                       for International Relations, all of them
      158 airports in Mozambique of which 22               TDM is updating its National               public institutions, Mozambique now has
      have paved runways.                              Backbone Transmission Network (wet             several private institutions like the
                                                       and dry network) with the help of Alcatel.     Universidade Católica, based in Beira,
      Transport Corridors                              This will allow the corporation to link        the Instituto Superior Politécnico e
      The Maputo transport and development             some of the main towns located along           Universitário, in Maputo and Zambezia,
      corridor project was conceived by the            the coast, thereby extending its network       and the Instituto Superior de Ciência e
      governments of Mozambique and South              regionally and internationally. There are      Tecnologia de Moçambique. A number
      Africa as a private sector-led initiative to     five satellite earth stations, namely, two     of others are planned for the near future.
      improve transport and infrastructure and         Atlantic Ocean and three Indian Ocean.         Although the government has
      to generate 'development spin-offs' along            As a parastatal, TDM used to play the      recognised the importance of vocational
      road and rail routes shared by the two           roles of both regulator and service            and technical training facilities, they still
      countries. The improved railway line and         provider. As part of the ongoing economic      remain poorly developed.
      new toll road links South Africa’s Gauteng       and social reforms, the government has             The literacy rate is 46.4 percent.
      and Mpumalanga provinces with the port           established the National Telecom-
      of Maputo. In mid-1996 the two                   munication Institute to restructure the
      governments agreed to put up 10 percent          industry, which is now mandated to              National Anthem
      of the funding for the corridor, with the        formulate policy and supervise                  Viva viva a Frelimo
      rest to be provided by private investors         implementation of laws and regulations.         Guia do povo Moçambicano
      who would invest in and operate the                  In a bid to encourage private sector        Povo heroico que d'armas em punho
      road, rail and port infrastructure.              participation, the government has               O colonialismo derrubou.
      Trans-African Concessions (TRAC), a              defined the supply, sale, installation and
                                                                                                       Todo o povo unido
      French-led international consortium, won         maintenance of terminal equipment,
                                                                                                       Desde o rovima até ao Maputo
      the contract for the Maputo-Gauteng toll         including connection to the public
                                                                                                       Luta contra o imperialismo
      road to build and operate the road for a         network, to be open to free competition.
                                                                                                       Continua e sempre vencerá.
      30-year period before handing it over to
      the State. The toll road opened for traffic      POSTAL SERVICES
      in 2000. The last toll plaza opened in           Mail services from post offices and private
                                                                                                       Viva Moçambique
      January 2001.                                    courier services enable the business
                                                                                                       Viva a bandeira símbolo nacional
          Several other potential transport and        community to maintain international
                                                                                                       Viva Moçambique
      development corridors are envisaged,             links. Most post offices offer facsimile
                                                                                                       Que por ti o povo lutará.
      including the expansion of the Beira and         and telephone services.
      Nacala corridors and a Maputaland
                                                                                                       Unidos ao mundo inteiro
      tourism corridor running south from              HEALTH CARE
                                                                                                       Lutando contra a burguesia
      Maputo to Ponta do Ouro and northern             The main illnesses present in
                                                                                                       Nossa pátria será o túmulo
      KwaZulu-Natal in South Africa.                   Mozambique are malaria, diarrhoea and
                                                                                                       Do capitalismo e exploração.
                                                       cholera, with children being the most
      TELECOMMUNICATIONS                               affected group. Hospitals are found in all
                                                                                                       O povo Moçambicano
178   The Mozambique Telecommunications                the provincial capitals. The largest
                                                                                                       De operários e camponeses
      Company (TDM) remains 100 percent                hospital is located in Maputo. Private
                                                                                                       Engajados no trabalho
      government-owned but much has been               health clinics also exist in the major
                                                                                                       A riqueza sempre brotará.
      done to commercialise the corporation.           cities.
      Cellular services were introduced in 1997            It is estimated that approximately 1.3      Coro (Repeat)
      through MCel - a joint venture with              million inhabitants are HIV-positive, one

                                              The Official SADC Trade, Industry and Investment Review 2006
         M    O    Z   A   M    B   I   Q   U   E


The Official SADC Trade, Industry and Investment Review 2006
                                                M    O    Z   A   M    B   I   Q   U   E

      Trade Contacts Diplomatic
                                                                                                33-3, Ohyama-cho, Shibuya-Ku
                                                                                                151-0065 Tokyo
                                                                                                Tel: (8103) 3485 7621 / 3485 8258
                                                                                                Fax: (8103) 3485 7622

      Rua da Imprensa, 332 r/c Bloco
      Caixa Postal 4635, Maputo
                                                                                                KENYA (Republic of)
                                                                                                P.O. Box 66923, Nairobi
                                                                                                Tel: (2542) 22 1979 / 21 4191
                                                                                                Fax: (2542) 22 2446 / 21 4712

      Tel: (2581) 42 2525 / 42 2456/7
      Fax: (2581) 42 2459
                                                                                                MALAWI (Republic of)
                                                                                                P.O. Box 30579, Lilongwe 3
                                                                                                Tel: (2651) 78 4100 / 78 4696
                                                                                                Fax: (2651) 78 1342

                                                                                                PORTUGAL (Republic of)
      MINISTRY OF INDUSTRY                       ANGOLA (Republic of)                           Av. de Berna nr. 7, 1050 Lisboa
      AND TRADE                                  Caixa Postal 12117, Luanda                     Tel: (3511) 796 1672
                                                 Tel: (2442) 33 1158                            Fax: (3511) 793 2720
      Caixa Postal 2030, Maputo
      Tel: (2581) 42 6091/3/4/5/7                Fax: (2442) 33 2883 / 33 4871
                                                                                                THE RUSSIAN FEDERATION
      Fax: (2581) 43 1206                        BELGIUM (Kingdom of)                           129090 Ul. Guilyarovskovo
                                                 Boulevard Saint-Michel 97                      20 Moscow
      MOZAMBIQUE                                 1040 Brussels                                  Tel: (795) 284 4007 / 284 8325
      CHAMBER OF COMMERCE                        Tel: (322) 736 0096 / 736 2564                 Fax: (795) 200 4235
      Rua Mateus S. Muthemba, 452                Fax: (322) 735 6207
                                                                                                SOUTH AFRICA (Republic of)
      Caixa Postal 1836, Maputo                                                                 199 Beckett Street, Arcadia 0083
                                                 BRAZIL (Federative Republic of)
      Tel: (2581) 49 1970 / 49 2687              Shis QL12, Conjunto 07                         P.O. Box 40750, Pretoria 0001
      Fax: (2581) 49 2211                        Casa 09 - Lago Sul                             Tel: (2712) 343 7840
                                                 Brasilia - DF, CEP 71630-275                   Fax: (2712) 343 6714
      MOZAMBIQUE/PORTUGAL                        Tel: (5561) 248 4222 / 2485319
                                                                                                SWAZILAND (Kingdom of)
      CHAMBER OF COMMERCE                        Fax: (5561) 248 3917
                                                                                                P.O. Box 1212, Mbabane
      Rua Mateus S. Muthemba, 452, Maputo                                                       Tel: (268) 404 3700
                                                 CHINA (People's Republic of)
      Tel: (2581) 49 6227                                                                       Fax: (268) 404 3692
                                                 1-7-2 Ta Yuan Diplomatic Office
      Fax: (2581) 49 6361                        Building, Beijing 100 600
                                                                                                SWEDEN (Kingdom of)
                                                 Tel: (8610) 6532 3664 / 6532 3578
      MOZAMBIQUE/SOUTH AFRICA                                                                   P.O. Box 5801, 10248 Stockholm
                                                 Fax: (8610) 6532 5189
                                                                                                Tel: (468) 666 0350
                                                 CUBA (Republic of)                             Fax: (468) 663 6729
                                                 7 ma Av. nr. 2203, entre 22 y 24
      Av. 10 Novembro, FACIM, Maputo                                                            TANZANIA (United Republic of)
                                                 Miramar-C, Havana
      Tel: (2581) 43 1621 / 42 1892                                                             P.O. Box 9370, Dar es Salaam
                                                 Tel: (537) 24 2443/5
      Fax: (2581) 43 1621 / 42 1899                                                             Tel: (25522) 11 6502
                                                 Fax: (537) 24 2232
                                                                                                Fax: (25522) 11 6502
      MOZAMBIQUE/USA                             EGYPT (Arab Republic of)
                                                                                                UNITED KINGDOM
      CHAMBER OF COMMERCE                        3, Abu El Feda St 9th Floor
                                                                                                21 Fitzroy Square, London W1P 5HJ
      Rua Mateus S. Muthemba, 452, Maputo        Zamalek, Cairo
                                                                                                Tel: (44207) 383 3800
                                                 Tel: (202) 332 0647
      Tel: (2581) 49 2904                                                                       Fax: (44207) 383 3801
                                                 Fax: (202) 332 0383
      Fax: (2581) 49 2779
                                                                                                UNITED NATIONS
                                                 ETHIOPIA (Federal
                                                                                                420 East, 50th Street
      MOZAMBIQUE INSTITUTE OF                    Democratic Republic of)
                                                                                                New York, NY 10022
      EXPORT PROMOTION (IPEX)                    P.O. Box 5671, Addis Ababa
                                                                                                Tel: (1212) 644 6800 / 644 5965
      Av. 25 de Setembro, 1008, 3rd Floor        Tel: (2511) 71 2588/9
                                                                                                Fax: (1212) 644 5972
                                                 Fax: (2511) 71 0021
      Caixa Postal 4487, Maputo
      Tel: (2581) 30 7257/8                                                                     UNITED STATES OF AMERICA
                                                 FRANCE (Republic of)
      Fax: (2581) 30 7256                                                                       1990 M Street NW, Suite 570
                                                 82, Rue Laugier 75017 Paris
                                                                                                Washington DC 20036
                                                 Tel: (331) 4764 9132
                                                                                                Tel: (1202) 293 7146/9
      UTRE, TECHNICAL UNIT FOR                   Fax: (331) 4415 9013
                                                                                                Fax: (1202) 835 0245
                                                 GERMANY (Federal Republic of)
      (Office for Restructuring of Large                                                        ZAMBIA (Republic of)
                                                 Adenauerallee 46-A, 53113 Bonn
      Enterprises)                                                                              P.O. Box 34877, Lusaka
                                                 Tel: (49228) 26 2993 / 26 3921
180   Rua da Imprensa, 256                                                                      Tel: (2601) 22 0333 / 23 9135
                                                 Fax: (49228) 21 3920
                                                                                                Fax: (2601) 22 0345
      Predio 33 anadres, Suites 704-708
      Caixa Postal 4350, Maputo                  ITALY (Republic of)
                                                                                                ZIMBABWE (Republic of)
                                                 C.P. 00195, Rome
      Tel: (2581) 42 6514/5/6                                                                   P.O. Box 4608, Harare
                                                 Tel: (3906) 3751 4675 / 3751 4852
      Fax: (2581) 42 1541                                                                       Tel: (2634) 79 0837/9
                                                 Fax: (3906) 3751 4699
      E-mail:                                                                  Fax: (2634) 73 2898

                                       The Official SADC Trade, Industry and Investment Review 2006