2016 The Africa Country Series Republic of

Africa Country Series Republic of Mozambique

2016 Acknowledgements

Team Leader: Samir S. Amir Lead Researcher: Fatima Attarwala

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

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

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

For any queries or feedback regarding this report, please contact [email protected] or fatima@ pbc.org.pk

Cover Picture: Sam Ward. It is time to go to Mozambique. Africa Freak. http://africafreak. com/its-time-to-go-to-mozambique ii Republic of Mozambique The Pakistan Business Council: An Overview

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

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

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

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

The PBC’s Founding Objectives:

• To provide for the formation and exchange of views on any question connected with the conduct of businesses in and from Pakistan. • To conduct, organize, set up, administer and manage campaigns, surveys, focus groups, workshops, seminars and field work for carrying out research and raising awareness in regard to matters affecting businesses in Pakistan. • To acquire, collect, compile, analyze, publish and provide statistics, data analysis and other information relating to businesses of any kind, nature or description and on opportunities for such businesses within and outside Pakistan. • To promote and facilitate the integration of businesses in Pakistan into the world economy and to encourage the development and growth of Pakistani multinationals. • To interact with Governments in the economic development of Pakistan and to facilitate, foster and further the economic, social and human resource development of Pakistan. The PBC is a Section 42 not-for-profit Company Limited by Guarantee. Its working is overseen by a Board of Directors elected every three years by the Membership with the Board being headed by a Non-Executive Chairman. The day-to-day operations of the PBC are run by a professional secretariat headed by a full-time, paid CEO. More information on the PBC, its members, and its workings, can be found on its website: www.pbc.org.pk

Republic of Mozambique iii The PBC’s Member Companies The PBC’s Member Companies Executive Summary

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

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

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

Pakistan Mozambique 2013 2014 2013 2014 Data Sources

Real GDP (2005 base year) $144 B $152 B $13.6 B $14.6 B World Bank Real GDP Growth (2005 base Authors calculations based on 4.4% 5.4% 7% 7% year) World Bank data Real GDP per Capita $793 $814 $514 $536 World Bank

Population 181 M 185 M 26 M 27 M World Bank

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

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

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

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

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

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

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

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

Republic of Mozambique vii viii Republic of Mozambique Table of Contents

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

SECTION I Geographic and Social Indicators

Republic of Mozambique 01 02 Republic of Mozambique Geographic and Social Indicators: Location: Located on the eastern coast of Southern Africa Source: Mozambican Embassy in Brussels (Belgium)

Border Countries (6): Mozambique is bordered on the north by , west by and , northwest by , southwest by South Africa, south by Swaziland and east by the Indian Ocean Source: High Commissioner of India, Maputo (Mozambique)

Republic of Mozambique 03 Geographic coordinates: Situated between latitude 10° and 27° south and longitude 30° and 41° east Source: High Commissioner of India, Maputo (Mozambique)

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

Total Surface Area: 799,380 km2 Land: 786,380 km2 Agricultural land : 499,500 km2 Arable land : 56,619 km2 Water: 13,000 km2 Source: World Bank Coastline: 2,700 km Source: Mozambican Embassy in Brussels (Belgium)

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

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

Source: High Commissioner of India, Maputo (Mozambique)

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

Source: High Commissioner of India, Maputo (Mozambique)

Population: Population: 27 Million

Population growth rate: 2.8%

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

Rural Population: 68% - 18.5 million people

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

04 Republic of Mozambique Population by Age:

0-14 years: 45.13% (male 5,740,743/female 5,677,563) 15-24 years: 21.43% (male 2,657,099/female 2,764,109) 25-54 years: 27.09% (male 3,201,321/female 3,654,012) 55-64 years: 3.44% (male 415,357/female 455,450) 65 years and over: 2.91% (male 338,552/female 398,907) Population by Gender:

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

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

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

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

Source: World Bank

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

Source: Mozambican Embassy in Brussels (Belgium)

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

Source: Mozambican Embassy in Brussels (Belgium)

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

Republic of Mozambique 05 Political Structure: The ruling party is the Frente de Libertacão de Moçambique (Frelimo) and the opposition party is Resistencia Nacional Mocambicana (Renamo). The legislative and presidential elections of 2014 confirmed Frelimo in power. Frelimo party has been in power since independence from in 1975. However, tensions with former Renamo guerrillas have persisted.

Mozambique is a democratic republic with a unicameral or one parliament known as the Assembly of the Republic. The head of state and government is the president, who is directly elected through universal adult suffrage with a minimum of 50% of the vote. The president may serve a maximum of two consecutive five-year terms, after which the incumbent must wait a term before becoming eligible for a third term.

The Assembly of the Republic has 250 members, elected to serve a five-year term. Parties or coalitions must secure 5% or more of votes on a national basis in order to qualify for a seat under the proportional system. The president appoints the prime minister and a council of ministers (the cabinet). There are 11 constituencies, each corresponding to one of Mozambique’s provinces. The council of ministers is convened and chaired by the prime minister, under powers delegated by the president. The first multi-party democratic elections were held in 1998.

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

Source: Commonwealth of Nations4 Connectivity Roads Mozambique’s total road network length was 32,500 km in 2008.

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

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

Source: Africa Infrastructure Country Diagnostic

Airports Mozambique’s main airports are:

• Maputo International Airport

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

06 Republic of Mozambique • Nacala International Airport • Nampula International Airport • Beiro International Airport • Tete Aerodrome • Pemba Airport • Aerodrome Vilankulo • Inhambane Airfield • Aerodrom Chimoio • Aerodrome Quelimane • Aerodrome Lichinga Maputo, Nacala, Nampula, and Beiro are international airports while the rest are provincial airports.

Source: Aeroportos de Moçambique 5 Ports: Major seaports: Beira, Maputo, Nacala Embassy of Denmark in Mozambique

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

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

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

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

Railways, passengers carried (million passenger-km): 246 Source: World Bank Internet Connectivity Internet users are individuals who have used the Internet (from any location) in the last 12 months.

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

5State Airport Managing Authority

Republic of Mozambique 07 Mobile cellular subscriptions total: 18,444,219

Mobile cellular subscriptions (per 100 people): 63

Country Code: +258 Source: World Bank

08 Republic of Mozambique SECTION II Mozambique’s History

Republic of Mozambique 09 10 Republic of Mozambique Mozambique’s History Bantu speakers migrated to Mozambique in the first millennium and Arab and Swahili traders settled in the region thereafter. It was explored by Vasco da Gama in 1498 and first colonized by Portugal in 1505. By 1510, the Portuguese had control of all of the former Arab sultanates on the east African coast through a succession of military campaigns as well as by awarding large tracts of land to commercial companies chartered for the purpose.

Under Portuguese rule the largest of these companies was the Mozambique Company which was formed in 1891. Using the African population as contract labor (similar in practice to forced labor), the company developed mines and sugar and copra plantations. It also built a railway system to link with the territory of Rhodes’s British South Africa Company to the west and with the British Central African Protectorate to the northwest.

By the end of World War I, in which Portugal fought on the allied side, colonial control was established over the whole of Portuguese East Africa. However, the territory was split into two parts. One was a colony under Lisbon’s administration, the other was under company rule, with the Mozambique Company controlling the central Manica and Sofala districts along the Zambezi. When the company’s charter ended in 1942, these regions were merged with the colony.

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

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

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

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

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

Republic of Mozambique 11 independence hero Armando Guebuza, was elected president and sworn-in in February, 2005.

In October 2012, President Armando Guebuza relieved Prime Minister Aires Ali of his duties amid a cabinet reshuffle and named Alberto Vaquina as new prime minister. On October 21, 2013, the Renamo opposition movement announced it was abandoning the 1992 peace treaty with the governing FRELIMO party. The opposition and government troops had already been battling for about a year. Renamo made the announcement after government troops attacked a Renamo base where Afonso Dhlakama, Renamo’s leader, was staying. Though Renamo’s announcement to abandon the treaty initially raised concerns that the conflict between the two parties would be renewed, the two parties signed a ceasefire in August 2014.

Mozambique held general elections on October 15, 2014. The ruling party, FRELIMO, kept its majority in parliament. FRELIMO took 144 out of 250 seats while the opposition party, Renamo, took 89 seats. FRELIMO’s candidate, Filipe Nyusi, was elected president, receiving 57.03% of the vote. Afonso Dhlakama, Renamo’s candidate, received 36.61% of the vote.

12 Republic of Mozambique SECTION III Mozambique’’s Economy

Republic of Mozambique 13 14 Republic of Mozambique Mozambique’s Economy GDP The Nominal GDP of the Sub Saharan African Countries given below is the sum of gross value added by all resident producers in the economy plus taxes and minus subsidies not included in the value of the products. It is calculated without making deductions for depreciation of Mozambique’s Economyfabricated assets or for depletion and degradation of natural resources. GDP growth rates are GDP calculated on the basis of year to year changes converted to percentage. GDP per capita is calculated by dividing GDP by population. The Nominal GDP of the Sub Saharan African Countries given below is the sum of gross value added by all resident producers in the economy plus taxes and minus subsidies not included in the value of the Geographically, Sub Saharan African region is the area of the continent of Africa that lies products. It is calculated without making deductions for depreciation of fabricated assets or for south of the Sahara Desert. It comprises of 48 countries. In 2014, the World Bank estimated its depletion and degradation of natural resources. GDP growth rates are calculated on the basis of year to GDP at market prices to be at $1.729 trillion with a population of 973.4 million people. year changes converted to percentage. GDP per capita is calculated by dividing GDP by population.

Geographically, Sub Saharan African region is the area of Nominalthe continent GDP of (USD Africa that liesGDP south Growth of the GDP per capita Sub Saharan African Countries Sahara Desert. It comprises of 48 countries. In 2014, the World BankBillion) estimated its GDP at market% prices (USD) to be at $1.729 trillionNigeria with a population of 973.4 million people. 569 6.3 3,203 South Africa 350 1.5 6,482 Sub Saharan African Nominal GDP GDP Growth GDP per capita Angola (2013) Countries (USD Billion) % 138 (USD) 10.0 5,900 74 3.1 1,875 Nigeria 569 6.3 3,203 61 5.3 1,358 South Africa 350 1.5 6,482 Ethiopia 56 10.3 574 Angola (2013) 138 10.0 5,900 Tanzania 48 7.0 955 Sudan Ghana 74 3.1 39 1,875 4.0 1,442 Kenya Côte d'Ivoire 61 5.3 34 1,358 8.5 1,546 Ethiopia Congo (Democratic Republic)56 10.3 33 574 9.0 442 Tanzania Mozambique 48 7.0 16 955 7.2 586 Ghana 39 4.0 1,442 Côte d'Ivoire Mozambique’s34 Forecasted GDP8.5 Growth Rate:1,546 Congo (Democratic Republic) Categorized as “Low33 Income” among9.0 the Sub Saharan442 African economies by World Bank, Mozambique Mozambique’s GDP16 growth rate is amongst7.2 the highest 586in the region. As per the IMF, World Bank, and the African Economic Outlook, Mozambique will continue to register high growth rates in the coming years. Mozambique’s Forecasted GDP Growth Rate: Forecasted GDP Growth Rates

Categorized as “Low Income” Mozambique Sub Saharan Africa among the Sub Saharan 8.0% African economies by World 7.0% Bank, Mozambique’s GDP 6.0% growth rate is amongst the 5.0% highest in the region. As per 4.0% the IMF, World Bank, and the 3.0% African Economic Outlook, 2.0% Mozambique will continue to 1.0% register high growth rates in 0.0% the coming years. 2016 2017 2018

Source: World Bank

Republic of Mozambique 11 15

GDP

RealReal GDP GDPis calculated using 2005 as the base year. Mozambique’s real GDP has been increasing steadily overReal the GDP last decade. is calculated In 2014, using Mozambique’s 2005 as the real base GDP year.was $14.58 Mozambique’s billion and nominal real GDP GDP has was been $15.94 increasing billion.steadily over the last decade. In 2014, Mozambique’s real GDP was $14.58 billion and nominal DONEGDP was $15.94 billion. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Real GDP (USD Billion) 7.72 8.48 9.11 9.74 10.36 11.05 11.84 12.69 13.60 14.58 Real GDP growth rate 20059% 10%2006 7%2007 20087% 20096% 20107% 20117% 20127% 20137% 20147% NominalReal GDP GDP (USD (USD Billion) Billion) 7.727.72 8.318.48 9.379.11 11.499.74 10.9110.36 10.1511.05 13.1311.84 14.5312.69 16.0213.60 15.9414.58 NominalReal GDP GDP growth growth rate rate 8.79%% 9.910%% 7.47%% 6.97%% 6.4%6% 6.77%% 7.1%7% 7.2%7% 7.1%7% 7.2%7% Source: World Bank Nominal GDP (USD Billion) 7.72 8.31 9.37 11.49 10.91 10.15 13.13 14.53 16.02 15.94 Nominal GDP growth rate 8.7% 9.9% 7.4% 6.9% 6.4% 6.7% 7.1% 7.2% 7.1% 7.2%

Real GDP

$16 $14.6 $13.6 $14 $12.7

Billions $11.8 $11.1 $12 $10.4 $9.7 $9.1 $10 $8.5 $7.7 $8 $7.1

$6

$4

$2

$0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: World Bank

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

Real GDP Growth Rate 12.0%

9.9% 10.0% 8.7%

8.0% 7.4% 7.1% 7.2% 7.1% 7.2% 6.9% 6.7% 6.4% 6.0%

4.0% 12

2.0%

0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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

16 Republic of Mozambique GDP by Sector:

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

Agriculture, forestry, fishing & 2009 hunting 2013 Mining and quarrying

Manufacturing

5.0% 10.1% Electricity, gas and water 10.6% 6.2% 28.7% 30.9% Construction 9.9% Whole & retail trade and 10.3% restuarants & hotels

9.9% Transport, storage and communications 9.4% 3.6%

1.6% Finance, real estate and 11.3% 13.1% business services 13.5% 13.7% Public administration and defence 3.6% 2.2% 3.7% Other services 2.7% Source: African Economic Outlook

13

Real GDP Growth Rate 12.0%

9.9% 10.0% 8.7%

8.0% 7.4% 7.1% 7.2% 7.1% 7.2% 6.9% 6.7% 6.4% 6.0%

4.0%

2.0%

0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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

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

Agriculture, forestry, fishing & 2009 hunting 2013 Mining and quarrying

Manufacturing

5.0% 10.1% Electricity, gas and water 10.6% 6.2% 28.7% 30.9% Construction 9.9% Whole & retail trade and 10.3% restuarants & hotels

9.9% Transport, storage and communications 9.4% 3.6%

1.6% Finance, real estate and 11.3% 13.1% business services 13.5% 13.7% Public administration and defence 3.6% 2.2% 3.7% Other services 2.7% Source: African Economic Outlook Real GDP per capita Real GDP per capita 13 Mozambique’s real GDP per capita has been increasing steadily over the last decade. It increasedMozambique by ’s4.2% real GDPfrom per 2013 capita to has 2014. been increasingMozambique’s steadily overnominal the last GDPdecade. per It increased capital byin 2014 was 4.2% from 2013 to 2014. Mozambique’s nominal GDP per capital in 2014 was $585.6. $585.6. Real GDP per capita $600 $536 $514 $493 $473 $500 $454 $424 $438 $408 $390 $366 $400 $346

$300

$200

$100

$0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: World Bank

Inflation:

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

Republic of Mozambique 17

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

14

Inflation: Mozambique’s inflation has been erratic over the last decade, though continuing ona downward trend. The volatility can be attributed partly to food price shocks, as reported by the IMF6. Inflation (consumer prices) 13.2% 14% Inflation (consumer12.7% prices) 12%14% 13.2% 10.3% 12.7% 10.4%

10%12% 10.3% 10.4% 10%8% 8.2% 6%8% 7.2% 4.3% 8.2% 4% 6% 7.2% 2.6% 4.3% 3.3% 2%4% 2.7% 2.6%

0%2% 3.3% 2005 2006 2007 2008 2009 2010 2011 20122.7% 2013 2014

0% 2005 2006 2007 2008 2009 2010 2011 2012 Source:2013 World2014 Bank

Source: World Bank

CountryCountry Debt Debt

Mozambique’sMozambique’sCountry Debt gross gross governmentgovernment debt debt was 5was6.6% 56.6% of its GDP of inits 2014, GDP of whichin 2014, 8.5% of was which its domestic 8.5% was its domesticdebt anddebt 48.1 and% was 48.1% its external was debt.its external Mozambique’s debt. gross Mozambique’s government debt gross has been government rising since 201 debt1. has been Mozambique’srising since 2011.gross government debt was 56.6% of its GDP in 2014, of which 8.5% was its domestic debt and 48.1% was its external debt. Mozambique’sGross Government gross government Debt debt has been rising since 2011. External Debt Domestic Debt 60% Gross Government Debt External Debt Domestic Debt 8.5% 50%60% 8.6% 6.0% 8.5% 40%50% 3.2% 5.5% 6.3% 8.6% 6.0% 30%40% 3.2% 5.5% 6.3% 48.1% 42.4% 20%30% 40.2% 37.3% 34.5%

Percentage of GDP 31.2% 48.1% 10%20% 40.2% 42.4% 37.3% 34.5%

Percentage of GDP 31.2% 10%0% 2009 2010 2011 2012 2013 2014

0% 2009 2010 2011 2012 2013 Source:2014 IMF

Exchange Rate: Source: IMF

MeticalExchange is Rate:the official currency of Mozambique. It is subdivided into 100 centavos which have been inflated out of use. In the southern part of Mozambique, US Dollars, the South African Rand, and theMetical British is the Pound official Sterling currency are also of Mozambique. used for business It is subdivided transactions. into Metical 100 centavos has been which depreciating have been against inflated out of use. In the southern part of Mozambique, US Dollars, the South African Rand, and the British Pound Sterling are also used for business transactions. Metical has been depreciating against15

15

6Republic of Mozambique: Poverty Reduction Strategy Paper Annual Progress Report Joint Staff Advisory Note. IMF Country Report. April 2009 18 Republic of Mozambique Exchange Rate: Metical is the official currency of Mozambique. It is subdivided into 100 centavos which have been inflated out of use. In the southern part of Mozambique, US Dollars, the South African Rand, and the British Pound Sterling are also used for business transactions. Metical has been depreciatingthe US dollar against since 2013 the dueUS todollar a combination since 2013 of factors due whichto a combinationinclude the political of factorssituation, which reduction include the politicalof foreign situation, direct investment reduction flows andof foreignthe overall direct decline investment in the price of flows Mozambique’s and the products overall in decline in the US dollar since 2013 due to a combination of factors which include the political situation, reduction the priceinternational of Mozambique’s markets. products in international markets. of foreign direct investment flows and the overall decline in the price of Mozambique’s products in international markets. Mozambique Metical per US$ MZN 45 Mozambique Metical per US$ MZN 39.50 MZNMZN 45 40 MZN 34.21 MZN 39.50 MZNMZN 40 35 MZN 31.12 MZN 34.21 MZN 30 MZN 27.87 MZN 35 MZN 25.76 MZN 31.12 MZN 24.11 MZN 29.47 MZNMZN 30 25 MZN 28.62MZN 27.87 MZN 25.76 MZN 27.66 MZN 25.54MZN 24.11 MZN 20 MZN 29.47 MZN 25 MZN 27.66 MZN 28.62 MZN 25.54 MZNMZN 20 15

MZNMZN 15 10

MZN MZN10 5

MZNMZN 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 MZN 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: United Nations Treasury Mozambique’s Trade Deficit as a percentage of GDP Source: United Nations Treasury

Mozambique’sMozambiqueMozambique’s’s Trade trade DeficitTrade deficit as decreased aDeficit percentage from ofas $6.08GDP a percentage billion to $4.02 billionof resultingGDP in a decrease in trade deficit as a percentage of GDP from -45% to -28%. This was largely due to a decrease in imports of Mozambique’sMozambique’s trade trade deficit deficit decreased decreased from $6.08 from bil lion$6.08 to $4.02billion billion to $4.02 resulting billion in a decreaseresulting in tradein a decrease mineral fuels, oil and distillation products. in deficittrade asdeficit a percenta as gea ofpercentage GDP from -45%of GDPto -28%. from This -45% was largely to -28%. due toThis a decrease was largely in imports due of to a decrease in mineralimports fuels, of mineraloil and distillation fuels, oil products. and distillation products. Trade Deficit as a percentage of GDP 0% Trade Deficit as a percentage of GDP -5% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0% -10% 2005 2006-6% 2007-7% 2008 2009 2010 2011 2012 2013 2014 -5% -9% -15% -12% -10% -6% -7% -14% -21% -20% -9% -16% -15% -12% -25% -14% -21% -20% -16% -23% -30% -25% -28% -35% -23% -30% -40% -28% -35% -45% -40% -50% -45% -45% -50% -45% Source: Authors calculations based on World Bank data and Trade Maps

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

16

16

Republic of Mozambique 19 CountryCountry Risk Risk – Comparison – Comparison of LIBOR and MAIBOR of LIBOR and MAIBOR The Bank of Mozambique compiles loan and deposit interest rates monthly, disaggregated into The Bank of Mozambique compiles loan and deposit interest rates monthly, disaggregated into domestic domestic and foreign currency and by maturity. The reference rate of the Interbank Money and foreign currency and by maturity. The reference rate of the Interbank Money Market (MMI) is the Market (MMI) is the Maputo Interbank Offered Rate (MAIBOR). MAIBOR is the average of Maputo Interbank Offered Rate (MAIBOR). MAIBOR is the average of the “offer” prices of banks. This the “offer” prices of banks. This rate covers terms of one day to one year, with intervening rate covers terms of one day to one year, with intervening terms of 1, 2, and 3 weeks and 1, 2, and 3 terms of 1, 2, and 3 weeks and 1, 2, and 3 months. The graph below compares the 3 month months. The graph below compares the 3 month MAIBOR rate with 3 month London Interbank Offered MAIBORRate (LIBOR). rate LIBOR with is 3a benchmarkmonth London rate that Interbank some of the Offered world’s Rateleading (LIBOR). banks charge LIBOR each is other a benchmark for rateshort that-term some loans. of It the serves world’s as the leadingfirst step tobanks calculating charge interest each ratesother on for various short-term loans throughout loans. It theserves as theworld. first step to calculating interest rates on various loans throughout the world.

MAIBOR 3 month LIBOR 3 month

18% 16.38% 16.87% 16% 14.70% 13.24% 14% 12.88% 12.07% 12%

10%

8%

6%

4%

2% 0.34% 0.34% 0.43% 0.27% 0.23% 0.31% 0% 2010 2011 2012 2013 2014 2015

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

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

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

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

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

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

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

8Growth Pole Theory is that economic development or growth takes places around a specific pole (or cluster), rather than being uniform over a region. The pole is often characterized by core industries around which linked industries develop through direct and indirect effect. Republic of Mozambique 21

SECTION IV Mozambique’s Trade Overview

Republic of Mozambique 23 24 Republic of Mozambique Mozambique’s Trade Overview Mozambique’s bilateral trade in 2014 was $13.47 billion, a 224% increase over a 10 year period. Though Mozambique’s trade deficit has increased in recent years, it decreased by $2.06 billion from 2013 to 2014 due to a decline in imports, especially of mineral fuels, oil & distillation products.

Imports Exports Trade Deficit

12 $10.10 10 $8.74 Billions 8 $6.31 $6.18 6 $4.73 $4.01 $4.02 $3.76 $3.56 $3.60 $3.47 4 $2.87 $3.05 $2.41 $2.65 $2.38 $2.41 $2.15 $2.24 2 $1.75

- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (2) -$0.66 -$0.49 -$0.64 -$1.35 -$1.62 -$1.32 (4) -$2.70 -$2.71 -$4.02 (6) -$6.08 (8)

MajorMajor Imports:Imports: TheThe table table belowbelow lists lists Mozambique’s Mozambique’s top 25 importstop 25 atimports tariffs level at whichtariffs accounted level which for 45% accounted of for 45% Mozambique’s total imports in 2014. The top imports in 2014 were other petroleum oils and of Mozambique’s total imports in 2014. The top imports in 2014 were other petroleum oils preparations and unwrought aluminum. Mozambique’s total imports in 2014 were $8.7 billion. and preparations and unwrought aluminum. Mozambique’s total imports in 2014 were $8.7 billion. Table 1: Mozambique’s Top 25 Imports as HS 6 digit level Imports Imports Imports Imports Imports Imports Imports Imports Imports Imports HS 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Code Product label USDTable M 1: USDMozambique’s M USD M TopUSD 25M ImportsUSD M as HSUSD 6M digitUSD level M USD M USD M USD M Other petroleum oils and '271019 preparations 28.7 302.2 291.6 546.9 307.6 382.2 861.2 885.1 1591.7 1033.9 Aluminium unwrought, not '760110 alloyedHS Code Product label2.0 0.0 0.0 0.0 0.0 0.0 601.4 295.3 488.1 529.0 Light petroleum oils and USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M '271011 preparations 3.9 74.6 68.3 103.6 103.7 137.8 235.7 249.4 470.1 312.3 Imports 2005 Imports 2006 Imports 2007 Imports 2008 Imports 2009 Imports 2010 Imports 2011 Imports 2012 Imports 2013 Imports 2014

Other petroleum oils and '271019 28.7 302.2 291.6 546.9 307.6 382.2 861.2 885.1 1591.7 1033.9 '271600 Electrical energy preparations 79.8 83.7 107.4 122.1 127.3 157.4 314.2 306.3 292.4 269.7 Diesel powered trucksAluminium with a unwrought, not '760110 2.0 0.0 0.0 0.0 0.0 0.0 601.4 295.3 488.1 529.0 '870421 GVW not exceedingalloyed five tonnes 83.5 94.2 99.1 132.9 137.1 105.6 144.8 130.2 217.8 242.6 Rice, semi-milled or wholly Light petroleum oils and milled,'271011 whether or not polished 3.9 74.6 68.3 103.6 103.7 137.8 235.7 249.4 470.1 312.3 '100630 or glazed preparations 108.5 90.7 106.1 111.7 151.1 74.0 134.8 93.4 243.2 187.2 '100190 Wheat'271600 nes and meslinElectrical energy 49.1 66.4 79.855.3 83.7 99.7107.4 91.1122.1 127.364.2 157.4130.5314.2 103.3306.3 136.9292.4 269.7146.5 Diesel powered trucks with '300490 Medicaments'870421 nes, ina dosageGVW not exceeding23.4 five 30.2 83.542.3 94.2 48.099.1 33.7132.9 137.133.1 105.6104.4144.8 41.3130.2 124.4217.8 242.6132.8 tonnes Structures&parts of structures,i/s (ex prefabRice, bldgs semi-milled of or wholly '730890 headg'100630 no.9406) milled, whether or10.5 not 17.7 108.516.7 90.7 25.0106.1 21.1111.7 151.120.7 74.0108.5134.8 37.893.4 243.259.0 187.2111.7 polished or glazed '151110 Palm oil, crude 13.3 22.3 28.5 69.9 49.7 52.1 78.8 24.7 88.9 92.8 '100190 Wheat nes and meslin 49.1 66.4 55.3 99.7 91.1 64.2 130.5 103.3 136.9 146.5

19

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

HS Code Product label USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M Imports 2005 Imports 2006 Imports 2007 Imports 2008 Imports 2009 Imports 2010 Imports 2011 Imports 2012 Imports 2013 Imports 2014

Structures&parts of '730890 structures,i/s (ex prefab bldgs 10.5 17.7 16.7 25.0 21.1 20.7 108.5 37.8 59.0 111.7 of headg no.9406) '151110 Palm oil, crude 13.3 22.3 28.5 69.9 49.7 52.1 78.8 24.7 88.9 92.8 Fish nes, frozen, excluding '030379 heading No 03.04, livers and 27.9 28.8 24.3 34.9 36.0 33.3 54.2 45.5 86.4 84.4 roes Self-propelled excavating '842959 2.2 5.7 7.9 8.4 11.8 15.8 36.8 34.0 43.7 77.0 machinery nes Worn clothing and other worn '630900 13.8 13.4 15.2 17.5 27.5 20.0 26.7 36.8 65.6 71.4 articles Automobiles w reciprocatg '870323 piston engine displacg > 1500 18.6 22.3 29.7 40.1 53.4 34.6 46.6 27.5 61.5 61.9 cc to 3000 cc Automobiles w reciprocatg '870322 piston engine displacg > 1000 12.2 10.9 18.3 19.5 17.3 16.0 25.5 24.0 53.6 60.3 cc to 1500 cc '252329 Portland cement nes 14.0 12.3 7.8 14.8 40.4 36.7 46.8 13.4 66.9 57.6 Road tractors for semi-trailers '870120 17.9 15.8 14.1 27.8 32.7 23.3 48.8 17.9 59.6 57.6 (truck tractors) Diesel powerd trucks w a '870422 GVW exc five tonnes but not 11.6 22.9 16.9 22.4 23.0 18.1 71.3 39.5 64.3 56.3 exc twenty tonnes Bars & rods,i/nas,hr,hd or '721420 he,cntg indent,ribs,etc,prod 6.9 11.1 11.4 19.1 12.5 10.6 7.9 27.8 48.8 55.1 dur rp/tar,nes '870899 Motor vehicle parts nes 6.6 7.5 7.9 12.2 14.5 13.1 22.4 34.0 46.5 52.9 Diesel powered buses with '870210 a seating capacity of > nine 12.3 13.8 20.3 26.2 22.2 30.1 55.7 25.9 47.4 49.1 persons Parts of telephone sets, '851770 telephones for cellular 0.0 0.0 0.0 0.0 0.0 0.0 0.0 30.5 79.3 48.3 networks or for other Parts of cranes,work- '843149 trucks,shovels,and other 2.9 3.3 6.5 5.4 5.7 7.4 36.2 27.0 49.0 46.4 construction machinery Parts of lifting, handling, '843139 loading or unloading 1.2 3.7 1.5 1.6 2.4 2.1 3.8 4.1 15.2 46.2 machinery nes '282612 Aluminum fluoride 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.2 44.0

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

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

Code Product label USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M Exports 2005 Exports 2006 Exports 2007 Exports 2008 Exports 2009 Exports 2011 Exports 2012 Exports 2010 Exports 2013 Exports 2014

Bars, rods and profiles, '760410 aluminium, not alloyed 1,745.3 2,381.1 2,412.1 2,653.3 2,147.2 2,243.1 3,604.1 3,469.9 4,023.7 4,725.3 Coke&semi-coke of coal,lignite

'270400 o peat,agglomeratd o not,retort 0.0 0.0 0.0 0.0 0.0 0.0 1,348.6 1,088.6 1,063.2 1,045.7 carbon Activatd natural mineral

'380290 products;animal black,incl 0.0 0.0 0.0 0.0 0.0 0.0 20.7 435.2 526.6 484.1 spent animal black Aluminium unwrought, not '760110 alloyed 0.0 0.0 0.0 0.0 0.0 0.0 0.0 111.1 34.6 433.5

'271600 Electrical energy 1,020.5 1,401.3 1,515.9 0.0 0.0 1,159.6 276.1 - - 366.6

'271111 Natural gas, liquefied 141.8 177.8 225.3 226.4 274.4 276.5 297.2 233.4 275.5 301.2

'271121 Natural gas in gaseous state 0.0 0.0 0.0 3.0 77.5 133.8 160.9 175.1 164.0 295.3 Tobacco, unmanufactured,

'240120 partly or wholly stemmed or 0 . 0 100.2 109.6 110.9 1.4 12.7 14.7 73.1 281.4 253.5 stripped

'261400 Titanium ores and concentrates 4.5 78.8 43.3 164.8 154.6 132.1 174.7 219.1 249.9 251.4

'170111 Raw sugar, cane 0.0 0.0 5.1 28.8 43.8 19.7 122.0 211.5 126.6 134.3 Rubies,sapphires and emeralds

'710391 further worked than sawn or 37.7 30.5 59.0 0.0 58.3 4.0 87.5 146.1 185.7 81.7 rough shaped Other petroleum oils and '271019 preparations 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 78.4

'520100 Cotton, not carded or combed 15.5 48.8 29.7 50.7 8.0 33.8 71.4 46.9 87.4 60.5 Zirconium ores and '261510 concentrates 40.4 36.8 19.6 50.4 26.5 0.0 20.0 9.2 80.0 48.3 Lumber, tropical hardwood '440729 nes, sawn lengthwise >6mm 0.0 0.0 0.0 5.4 10.4 0.0 49.9 26.0 27.5 47.9 Bananas including plantains, '080300 fresh or dried 0.8 1.3 2.7 6.5 15.9 30.4 112.2 5.2 20.7 46.9 Sesamum seeds, whether or '120740 not broken 0.8 1.7 3.9 5.4 4.5 13.8 168.8 23.8 22.1 41.5 Shrimps and prawns, frozen,

'030613 in shell or not, including boiled 8.2 13.5 16.0 30.6 39.1 17.2 19.6 16.5 30.2 40.5 in shell Helicopters of an unladen '880212 weight exceeding 2,000 kg 71.7 86.3 61.7 61.9 53.3 49.4 38.0 17.5 31.5 40.3

'520300 Cotton, carded or combed 0.0 0.0 8.3 0.0 0.0 0.0 0.0 0.0 0.0 29.9 Wigs, false beards, eyebrows '670490 and the like, of other materials 14.9 8.8 11.9 1.2 0.0 1.4 18.5 38.3 19.3 29.0 Sunflower-sed or safflower oil

'151219 and their fractions, refined, but 0.0 0.0 1.5 2.3 3.7 4.2 9.1 5.4 16.3 25.8 not chemically modified Wheat bran, sharps and other '230230 residues, pelleted or not 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 5.7 25.5

'440799 Lumber, non-coniferous nes 2.7 3.2 5.1 6.4 5.3 4.6 10.8 19.9 10.5 23.5 Petroleum gases and other

'271129 gaseous hydrocarbons nes, in 1.4 3.8 3.1 15.6 10.4 9.8 9.9 29.7 5.7 23.0 gaseous state

Republic of Mozambique 27 Major Trading Partners: Major Trading Partners: In 2014, South Africa was Mozambique’s top trading partner. The bulk of Mozambique’s imports, 33%, Inwere 2014, from South Africa Africa while was 20% Mozambique’sof its exports found topa market trading in South partner. Africa. China The and bulk India of were Mozambique’s imports,among the 33%, top 10 were trading from partners South of Mozambique. Africa while 20% of its exports found a market in South Africa. China and India were among the top 10 trading partners of Mozambique. Major Importing Partners: MajorThe top 10 Importing importing partners Partners: of Mozambique are listed below. In 2014, these countries accounted for 78% of Mozambique’s total imports. The top 10 importing partners of Mozambique are listed below. In 2014, these countries accounted for 78% of Mozambique’s total imports.

Mozambique's Top 10 Import Partners

$12 Billions $10

$8

$6

$4

$2

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

South Africa Bahrain China Netherlands United Arab Emirates Portugal India Japan United States of America Thailand Others

Table 3: Top 10 Import Partners of Mozambique 2005 2006 2007Table 3:2008 Top 10 Import2009 Partners2010 of Mozambique2011 2012 2013 2014 Exporters USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M World 2,408.2 2,869.3 3,049.7 4,007.8 3,764.2 3,564.2 6,305.6 6,177.2 10,099.1 8,743.1 South

Exporters M M M M M M M M M M Africa 980.8 947.9 970.8 1,164.9 1,333.8 1,226.8 2,121.4 1,940.5 3,298.9 2,891.9 Bahrain 0.0 50.02005 USD 0.62006 USD 269.72007 USD 2008 USD 14.9 2009 USD 94.7 2010 USD 108.4 2011 USD 389.5 2012 USD 561.5 2013 USD 810.22014 USD China World 68.3 2,408.282.7 2,869.3103.2 3,049.7156.1 4,007.8173.1 3,764.2130.0 3,564.2373.8 6,305.6350.26,177.2 644.110,099.1 700.08,743.1 NetherlandsSouth Africa300.4 371.1980.8 947.9447.9 970.8698.0 1,164.9488.2 1,333.8642.9 1,226.8676.1 2,121.4572.91,940.5 429.53,298.9 599.32,891.9 United Arab EmiratesBahrain 37.9 114.20.0 50.099.5 103.60.6 269.775.6 14.947.6 94.7401.1 108.4454.1 389.5 862.2561.5 478.6810.2 China 68.3 82.7 103.2 156.1 173.1 130.0 373.8 350.2 644.1 700.0 Netherlands 300.4 371.1 447.9 698.0 488.2 642.9 676.1 572.9 429.523 599.3 United Arab 37.9 114.2 99.5 103.6 75.6 47.6 401.1 454.1 862.2 478.6 Emirates Portugal 85.4 89.5 103.6 115.8 142.0 154.2 225.6 304.1 483.3 456.0 India 96.7 136.8 131.8 144.4 244.7 201.7 300.5 200.9 330.1 328.1 Japan 62.6 67.3 94.0 127.8 141.6 126.3 185.4 147.2 240.3 274.5 United States 70.9 101.6 80.8 160.4 134.8 74.4 292.3 254.0 204.7 158.6 of America Thailand 42.6 36.5 55.6 87.0 127.6 52.2 119.6 80.0 153.2 140.6

28 Republic of Mozambique Table 3: Top 10 Import Partners of Mozambique 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Exporters USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M Portugal 85.4 89.5 103.6 115.8 142.0 154.2 225.6 304.1 483.3 456.0 India 96.7 136.8 131.8 144.4 244.7 201.7 300.5 200.9 330.1 328.1 Japan 62.6 67.3 94.0 127.8 141.6 126.3 185.4 147.2 240.3 274.5 United States of America 70.9 101.6 80.8 160.4 134.8 74.4 292.3 254.0 204.7 158.6 Thailand 42.6 36.5 55.6 87.0 127.6 52.2 119.6 80.0 153.2 140.6

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

Mozambique's Top 10 Export Markets $5.0 $4.5

Billions $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Netherlands South Africa Singapore India United Kingdom China United Arab Emirates Zimbabwe Switzerland Italy Others

TableTable 4: 4:Top Top 1010 Export Export Partners Partners of Mozambique of Mozambique

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Importers USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M

Total Importers1,745.3 2,381.1M 2,412.1M 2,653.3M 2,147.2M 2,243.1M 3,604.1M M 3,469.9 M 4,023.7 M 4,725.3 M

Netherlands 1,042.9 2005 USD 20.8 2006 USD 10.5 2007 USD 1,476.4 2008 USD 893.9 2009 USD 1,181.9 2010 USD 1,402.1 2011 USD 921.4 2012 USD 1,150.62013 USD 1,111.42014 USD South Africa 280.4 361.7 429.3 265.5 460.3 467.2 584.0 666.8 901.5 948.2 Total 1,745.3 2,381.1 2,412.1 2,653.3 2,147.2 2,243.1 3,604.1 3,469.9 4,023.7 4,725.3 Singapore 2.4 3.5 1.3 1.9 28.4 11.0 9.6 28.3 38.0 474.7 Netherlands 1,042.9 20.8 10.5 1,476.4 893.9 1,181.9 1,402.1 921.4 1,150.6 1,111.4 India 26.6 30.2 15.9 28.4 56.5 30.4 87.2 155.1 679.6 387.6 UnitedSouth Africa 280.4 361.7 429.3 265.5 460.3 467.2 584.0 666.8 901.5 948.2 KingdomSingapore 8.2 2.416.3 3.524.7 1.3 10.2 1.9 28.7 28.4 1.4 11.0 198.7 9.6 177.228.3 49.038.0 209.9474.7 ChinaIndia 34.1 26.632.9 30.244.0 15.951.6 28.4 74.5 56.5 79.6 30.4 167.787.2 637.3155.1 105.0679.6 204.2387.6 United Arab United Emirates 1.8 8.23.5 16.35.4 24.711.0 10.2 8.5 28.7 6.5 1.4 11.6198.7 9.0177.2 39.549.0 119.1209.9 Kingdom China 34.1 32.9 44.0 51.6 74.5 79.6 167.7 637.3 105.0 24 204.2 United Arab 1.8 3.5 5.4 11.0 8.5 6.5 11.6 9.0 39.5 119.1 Emirates Zimbabwe 46.0 76.1 73.3 81.3 73.8 72.1 127.3 82.9 74.5 106.5 Switzerland 3.1 52.6 6.9 14.3 9.6 7.8 99.8 87.2 79.3 87.9 Italy 1.7 3.2 1.5 6.9 15.7 0.4 51.7 108.0 36.0 77.9

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

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

Republic of Mozambique 29 Certified Document - which thereby allows the importer to proceed with the order.

The timeline for this procedure is as follows:

Process Working Days From receipt of PAF at INTERTEK to receipt of PAF at INTERTEK overseas office and sending of RFI (Request for 3 working days Information) letter to the exporter Arrangement of inspection from receipt of the Exporters 3 working days response to the RFI letter Availability of DUC to importer in Maputo following completion of inspection and receipt of correct final 3 working days documentation from the Exporter Delivery of the DUC by the Intertek Maputo office to the 3 working days Provinces

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

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

HS Code Exclusion Quantity from PSI Chapter 11 - Milling products, malt, starches, inulin, wheat gluten: Quantities up to 20 kgs • 1102 – Cereal flours other than of wheat or meslin Chapter 15 - Animal,vegetable fats and oils, cleavage products, etc: • 1507 – Soya bean oil & its fractions • 1508 – Ground nut oil & its fractions • 1511 – Palm oil & its fraction • 1512 – Safflower, sunflower/cotton-seed oil & its Quantities up to 20 liters fractions • 1513 – Coconut (copra), palm kernel/babassu oil & their fractions • 1515 – Fixed vegetable fats & oils & their fractions

Chapter 25 – Salt, sulphur, earth, stone, plaster, lime and cement: Quantities up to 100 kgs • 2523 - Cements, portland, aluminous, slag, supersulfate & similar hydraulic

30 Republic of Mozambique HS Code Exclusion Quantity from PSI Chapter 30 – Pharmaceutical products: • 3001 - Glands & extracts, secretions for organotherapeutic uses; heparin & it • 3002 - Human & animal blood; antisera, vaccines, toxins, micro-organism cultu • 3003 - Medicament mixtures (not 3002, 3005, 3006) not Quantities for personal use in dosage • 3004 - Medicament mixtures (not 3002, 3005, 3006), put in dosage • 3005 - Dressings packaged for medical use • 3006 - Pharmaceutical goods, specified sterile products sutures, laminaria Chapter 40 – Rubber and articles thereof: • 4011 – New pneumatic tires, of rubber Quantities up to 5 tyres • 4012 - Retreaded/used tire; solid tire, interchangeable tire treads& flaps Chapter 87 – Vehicles other than railway, tramway: • 8701 - Tractors (other than tractors of heading no 87.09) • 8702 – Public – transport type passenger motor vehicles • 8703 – Cars (incl. station wagon) New vehicles which have never been registered in the • 8704 – Trucks, motor vehicles for the transport of goods country of manufacture • 8705 – Special purpose motor vehicles (fire fight vehicles, crane lorry) • 8711 – Motorcycles, side-cars

The following imports are prohibited: 1. Merchandise with fabrication labels of false commerce or origin, books and works of art when they are counterfeit editions 2. Objects, photographs, albums, recordings of sound or images and film of a pornographic nature or other materials that were judged offensive to public morals and dignity 3. Imitations of formulas of postal franchise used in the country 4. Medication and food products harmful to public health 5. Food products that are harmful to public health that cannot be used for other purposes 6. Distilled alcoholic drinks that contain essences or chemical products recognized as harmful such as: Aldeido Benzoico, Badia, Eteres silicitos, Hissopo e Tulinana 7. Hallucinatory and psychiatric substances except when imported for hospital use 8. Other merchandise whose prohibition of importation is established by special legislation 9. Certain gases as specified below: - Chlorofluorocarbons (CFCs) - Halogens (Halon 1211, Halon 1301 and Halon 2402) - Carbon Tetrachloride of Carbon (CCL4) - Other substances banned as per the Montreal Protocol as regards substances that destroy the ozone layer as ratified by Resolution No. 8/93 of the 8th December 10. Left-hand drive vehicles used for commercial purposes. ‘Commercial purposes’ has been defined as: - sale or resale to third parties - use in transport which generates income - use in support of income

Republic of Mozambique 31

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

Republic of Mozambique 33 34 Republic of Mozambique Ease of Doing Business: Mozambique’s Ease of Doing Business rank in 2015 was 128 and 133 in 2016. Mozambique slipped 5 places in rankings of Ease of Doing Business.

TOPICS DB 2016 Rank DB 2015 Rank Change in Rank Starting a Business 124 118 -6 Dealing with Construction Permits 31 37 6 Getting Electricity 164 166 2 Registering Property 105 106 1 Getting Credit 152 150 -2 Protecting Minority Investors 99 98 -1 Paying Taxes 120 121 1 Trading Across Borders 129 129 No change Enforcing Contracts 184 184 No change Resolving Insolvency 66 65 -1

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

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

9World Bank defines ODA as disbursements of loans made on concessional terms (net of repayments of principal) and grants by official agencies of the members of the Development Assistance Committee (DAC), by multilateral institutions, and by non-DAC countries to promote economic development and welfare in countries and territories in the DAC list of ODA recipients. Republic of Mozambique 35 FDI, Net Inflows $8

$7 $6.70 Billions

$6 $5.64 $5.00 $5

$4 $3.66

$3

$2 $1.26 $0.93 $0.64 $1 $0.42 $0.12 $0.25 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: World Bank

FDI guidelines: FDI guidelines: The Government of Mozambique is receptive to foreign investment, according to the 2015 Investment The Government of Mozambique is receptive to foreign investment, according to the 2015 Climate Statement-Mozambique by the US Department of State. Mozambique’s authorities view FDI as Investment Climate Statement-Mozambique by the US Department of State. Mozambique’s authoritiesmeans to drive view economic FDI as growth means and to promote drive economicjob creation. growth Virtually alland business promote sectors job are creation. open to Virtually allforeign business investors. sectors While are the open government to foreign has processesinvestors. in placeWhile to reviewthe government and approve eachhas processesforeign and in place to domesticreview andinvestment, approve there each are almostforeign no andrestrictions domestic on the investment, form or extent there of foreign are investment.almost no restrictions on the form or extent of foreign investment.

The government's Investment Promotion Center (CPI) 10 seeks to bring investors to Mozambique and is Thean government’s investor's contact Investment with the government Promotion during Center the initial (CPI) investment10 seeks stage. to bring CPI is investors particularly to Mozambique andinterested is an investor’s in increasing contact investment with in the the central government and northern during regions the of the initial country investment in order to stage. CPI is particularlyaddress large interested regional development in increasing imbalances. investment in the central and northern regions of the country in order to address large regional development imbalances. The law and its regulations generally do not make distinctions based upon investor origin, nor do they Thelimit law foreign and ownership its regulations or control generally of companies. do However, not make 5% todistinctions 20% of the equity based capital upon of the investor project origin, norcompany do they should limit be owned foreign by citizens ownership of Mozambique. or control of companies. However, 5% to 20% of the equityForeign capital investors of wouldthe project find it beneficial company to work should with bea local owned equity by partner citize familiarns of withMozambique. the local languages and the bureaucracy at the national, provincial, and district levels. CPI assists both local and Foreignforeign investors in obtainingwould findlicenses it andbeneficial permits. However, to work in general, with a largelocal investors equity receive partner much familiar with themore local support languages from the and government the bureaucracy in the business at registration the national, process provincial, than small and and medium district-sized levels. CPI assistsinvestors. both local and foreign investors in obtaining licenses and permits. However, in general, large investors receive much more support from the government in the business registration process10 Contact than details small are further and informationmedium-sized on CPI is investors.given on page 32.

Government authorities must approve all foreign and domestic investment requiring29 guaranties and incentives. For investment projects submitted to CPI, final approval is granted by the following government entities:

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

10Contact details are further information on CPI is given on page 32. 36 Republic of Mozambique 2) The Director General of CPI for foreign and/or national investment projects with an investment value of less than 2.5 billion meticais (about $92 million) 3) The Minister of Planning and Development for foreign and/or national investment projects with an investment value of less than 13.5 billion meticais (about $500 million) 4) The Council of Ministers for : a) investment projects with an investment value greater than 13.5 billion meticais (about $500 million) b) investment projects that require a land area greater than 10,000 hectares, to be used for any purpose, except if located on a forest area greater than 100,000 hectares c) any other projects that have foreseeable political, social, economic, financial, or environment impacts such that their nature should be reviewed and decided by the Council of Ministers, at the proposal of the Minister of Planning and Development The Foreign Exchange Law requires companies to remit their export earnings to Mozambique and convert 50% of the export earnings to the local currency. This is called an “export surrender” requirement. FDI into Mozambique must be registered with the Central Bank within 90 days to allow for the monitoring of foreign exchange. Private individuals are limited to a maximum of $5,000 per foreign exchange transaction and larger transactions require the approval of the Central Bank.

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

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

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

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

The Mozambican banking community uses property other than land, such as cars, private houses and infrastructure, as collateral. Access to credit for the private sector remains difficult and expensive. Interest rates for commercial loans in the local currency are generally around 18% to 22% per year. Republic of Mozambique 37 CPI, as part of its goal of attracting foreign investment, assists investors with finding suitable land for development and obtaining the appropriate documentation. This includes government assistance to find appropriate agricultural land. The government advises companies on relocating individuals currently occupying land designated for development, however the companies are ultimately responsible for planning and executing resettlement programs.

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

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

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

• job creation for Mozambican nationals • the exportation of at least 85% of annual production and • a minimum investment of $50,000 Almost all industries, with the exception of prospecting and exploration of natural resources, processing of raw cashew nuts and seafood (including prawns) can be authorized under an Industrial Free Zone status. Free Zone concessions are granted for a renewable period of 50 years.

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

38 Republic of Mozambique Major Institutions:

Bank of Mozambique:

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

Website: http://www.bancomoc.mz

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

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

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

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

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

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

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

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

Republic of Mozambique 39 Ministry of Industry and Trade: Mozambique’s Ministry of Industry and Trade encourages and supports local businesses and supports local state bodies in the promotion of economic activities. Currently, it does not have a functional website.

Address: Praça 25 de Junho 300, Maputo, Mozambique

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

Address: Rua Mateus Sansao Mutemba, Maputo

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

Corporation Home Country Sector Aquatec Lda Portugal Wholesale trade Banco Internacional De Mocambique S A R L Portugal Finance

Basil Read South Africa Real Estate Development

Food products, beverages, Cervejas De Mocambique Sarl United Kingdom and tobacco Non-metallic mineral Cimbetao – Cimpor Betao Mozambique Sarl Portugal products Non-metallic mineral Cimentos De Mocambique Sarl Portugal products Chemicals and chemical Colgate Palmolive Mocambique L D A United States products Food products, beverages, Companhia Industrial Do Monapo Lda Portugal and tobacco E C L Servicos Ltda Canada Machinery and equipment Electricidade De Mocambique E P France Electricity, gas and water Engil Mocambique Lda Portugal Construction Enop – Engenharia E Obras Publicas Lda Portugal Research and development Entreposto Frigorifico De Pesca De Mozambique Lda Japan Forestry and fishing Eskom Holdings SOC Ltd South Africa Energy Exploracoes Mineiras De Mocambique Limitada United Kingdom Mining and quarrying Hotel Tivoli Hostelaria E Servicos Lda Portugal Hotels and restaurants Illovo Mozambique South Africa Sugar Producer Impar – Companhia De Seguros De Mocambique SARL Portugal Insurance J L M Industries Lda South Africa Distributive trade Macaloe Lda Portugal Public administration Mitsubishi Corporation Japan Conglomerates Food products, beverages, Mocambique Farms Lda and tobacco

40 Republic of Mozambique Corporation Home Country Sector Mocambique Leaf Tobacco Importacao E Exportacao Food products, beverages, United States Limitada and tobacco Opca-Obras Publicas E Cimentos Armados SA Portugal Construction Food products, beverages, Parmalat Mocambique Produtos Alimentares Lda Italy and tobacco Food products, beverages, Parmalat Sarl Central Leteira De Maputo Italy and tobacco Sasol Petroleum Temane Limitada South Africa Petroleum Siemens Limitada Germany Wholesale trade Soares Da Costa Mocambique S A R L Bahamas Research and development Soares Da Costa Mocambique Sarl Bahamas Construction Sociedade Geral De Empreitadas Lda Spain Construction Sociedade Mocambicana Do Acumulador Tudor SARL Portugal Wholesale trade Standard Bank Mozambique South Africa Banking Steeladale Mocambique Lda South Africa Machinery and equipment Teixeira Limitada Portugal Wholesale trade Teixeria Duarte Engenharia E Construccoes Portugal Construction (Mocambique) Lda

Republic of Mozambique 41

SECTION VI Regional Trade Trends

Republic of Mozambique 43 44 Republic of Mozambique Regional Trade Trends Sub-Saharan Africa is the one the least diversified regions in the world with its participation in global production and trade largely confined to energy products and other commodities. Exports from the region are significant in the energy, mining and metal ores sectors. While Sub-Saharan Africa is largely disconnected from international trade flows, China has become an increasingly important trading partner in the region.

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

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

Table 5: Mozambique’s Regional Trade Trends – Imports Inter- regional Mozambique’s Imports Mozambique’s Imports Imports from Africa from the World as a % USD M USD M of world Imports HS Description 2012 2013 2014 2012 2013 2014 % Code All products 2,099 3,570 3,125 6,177 10,099 8,743 36% '271600 Electrical energy 306 292 270 306 292 270 100% Diesel powered trucks with '870421 a GVW not exceeding five 82 140 161 130 218 243 66% tonnes Fish nes, frozen, excluding '030379 heading No 03.04, livers and 41 78 71 46 86 84 85% roes Structures&parts of '730890 structures,i/s (ex prefab bldgs 19 32 64 38 59 112 57% of headg no.9406) Other petroleum oils and '271019 30 25 63 885 1,592 1,034 6% preparations Bars & rods,i/nas,hr,hd or '721420 he,cntg indent,ribs,etc,prod 22 42 42 28 49 55 75% dur rp/tar,nes Self-propelled excavating '842959 7 16 39 34 44 77 51% machinery nes Parts of cranes,work- '843149 trucks,shovels,and other 14 35 35 27 49 46 76% construction machinery '100590 Maize (corn) nes 4 14 34 4 17 35 98% Mixtures of odoriferous '330210 substances for the food or 44 18 34 46 21 34 98% drink industries

Republic of Mozambique 45 Table 6: Mozambique’s Regional Trade Trends - Exports Inter- regional Mozambique’s Exports to Mozambique’s Exports imports Africa from the World as a % USD M USD M of world Imports HS Description 2012 2013 2014 2012 2013 2014 % Code All products 846 1,164 1,208 3,470 4,024 4,725 26% '271111 Natural gas, liquefied 175 120 295 175 164 295 100% '271121 Natural gas in gaseous state 73 281 253 73 281 253 100% '271600 Electrical energy 233 276 206 233 276 301 68% Activatd natural mineral '380290 products;animal black,incl 6 0 40 111 35 433 9% spent animal black Other petroleum oils and '271019 30 50 34 47 87 60 56% preparations Helicopters of an unladen '880212 0 0 30 0 0 30 100% weight exceeding 2,000 kg Bananas including plantains, '080300 15 16 27 24 22 42 66% fresh or dried Wigs, false beards, eyebrows '670490 5 16 26 5 16 26 99% and the like, of other materials Petroleum gases and other '271129 gaseous hydrocarbons nes, in 0 0 20 0 0 20 100% gaseous state Wheat bran, sharps and other '230230 19 8 17 20 11 24 73% residues, pelleted or not

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

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

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

Africa Free Trade Zone (AFTZ) or Tripartite Free Trade Area (TFTA): In 2008, the three main trading blocs in Africa, i.e. SADC, the (EAC) and the Common Market for Eastern and Southern Africa (COMESA) agreed to form the Africa Free Trade Zone (AFTZ) or Tripartite Free Trade Area (TFTA). The purpose of the free trade zone is to increase intra-regional trade, boost growth and strengthen the bloc’s bargaining power when negotiating international deals. The countries included in this deal 46 Republic of Mozambique are , , Sudan, Angola, Botswana, , , , Malawi, Mauritius, Mozambique, Namibia, , Seychelles, Swaziland, South Africa, Tanzania, , Zambia, and Zimbabwe. AFTZ has not been implemented as yet.

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

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

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

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

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

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

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

11Australasia, a region of Oceania, comprises of Australia, New Zealand, the island of New Guinea and neighboring islands in the Pacific Ocean. Republic of Mozambique 47 Indian Ocean Rim Association (IORA): The Indian Ocean is the world’s third largest ocean. The Indian Ocean Rim is a region comprised of the states whose shores are washed by the waters of the Indian Ocean. The region is divided into a number of sub-regions which includes Australasia11, Southeast Asia, South Asia, West Asia and Eastern & Southern Africa and the regional groupings such as ASEAN, SAARC and SADC. The Indian Ocean Rim Association (IORA) is an international organization with 21 Member States: Australia, Bangladesh, Comoros, India, Indonesia, Iran, Kenya, Madagascar, Malaysia, Mauritius, Mozambique, Oman, Seychelles, Singapore, Somalia, South Africa, Sri Lanka, Tanzania, Thailand, UAE and Yemen.

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

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

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

48 Republic of Mozambique SECTION VII Pakistan Mozambique Trade Overview

Republic of Mozambique 49 50 Republic of Mozambique PakistanPakistan Mozambique Mozambique Trade Overview: Trade Overview:

BilateralBilateral trade trade between between Pakistan Pakistan and Mozambique and Mozambique was $120 million was in $1202014, millionwhich consist in 2014,ed mostly which of consisted Pmostlyakistan’s of exports Pakistan’s to Mozambique exports. Bilateral to Mozambique. trade between Bilateral the two countries trade betweenwas less than the 1% two of countries was Pakistan’sless than total 1% bilateral of Pakistan’s trade with total the wbilateralorld. However, trade Pakistan’s with the exports world. to MozambiqueHowever, Pakistan’shave almost exports to tripledMozambique over the last have 10 years almost to $119 tripled million over in 2014. the Atlast $1.2 10 million years in to 201 $1194, Pakistan’s million imports in 2014. from At $1.2 million Mozambique on the other hand are a very small proportion of Mozambique’s total exports and Pakistan’sin 2014, totalPakistan’s imports. imports from Mozambique on the other hand are a very small proportion of Mozambique’s total exports and Pakistan’s total imports. Pakistan Mozambique Trade Overview

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

$140 $118 $119 $118 $120 $117 Millions $94 $100 $93 $80 $78 $80 $74 $58 $63 $60 $49 $58 $48 $43 $47 $43 $41 $39 $40 $28 $18 $20 $11 $5 $2 $1 $0 $1 $2 $1 $1 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: Trade Maps

Pakistan’sPakistan’s Exports Exports to Mozambique to :Mozambique: The bulk of Pakistan’s exports to Mozambique consisted of cereals, salt, sulphur, earth, stone, The bulk of Pakistan’s exports to Mozambique consisted of cereals, salt, sulphur, earth, stone, plaster, limesplaster, and cement.limes and The tablescement. below The shows tables Pakistan’s below top shows 10 exports Pakistan’s to Mozambique top 10 in exports2014 at HS to 2 Mozambique Levelin 2014 and topat HS 20 exports2 Level at andHS 6 digittop level.20 exports at HS 6 digit level.

Table 7: Pakistan's Exports to Mozambique at HS 2 Table 7: Pakistan’s Exports to Mozambique digit level at HS 2 digit level 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS Code Description USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M TOTAL HSAll products Code 43.4Description 46.7 43.5 49.2 58.0 94.1 80.0 74.3 117.9 119.2 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M '10 Cereals 40.8 43.9 38.6 41.9 39.2 73.8 61.0 53.2 74.0 69.1 Salt, sulphur, earth,TOTAL stone, All products 43.4 46.7 43.5 49.2 58.0 94.1 80.0 74.3 117.9 119.2 plaster, lime and '25 cement'10 Cereals0.0 0.0 0.01 40.8 0.0243.9 38.611.9 41.913.8 39.2 11.473.8 61.011.6 53.2 28.2 74.0 30.469.1 Salt, sulphur, earth, stone, '25 0.0 0.0 0.01 0.02 11.9 13.8 11.4 11.6 28.2 30.4 plaster, lime and cement 39 Wadding, felt, nonwovens, '56 0.0 0.1 0.1 0.5 0.6 0.5 0.3 0.3 3.4 7.5 yarns, twine, cordage, etc Other made textile articles, '63 0.8 0.9 1.5 1.6 2.5 1.3 1.6 2.1 3.1 4.3 sets, worn clothing etc Cereal, flour, starch, milk '19 0.0 0.02 0.0 0.04 0.1 0.02 0.1 0.3 2.2 2.0 preparations and products Sugars and sugar '17 0.4 0.5 0.8 1.0 0.5 0.7 0.9 1.1 1.4 1.4 confectionery

Republic of Mozambique 51 Table 7: Pakistan’s Exports to Mozambique at HS 2 digit level

HS Code Description 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M

'55 Manmade staple fibres 0.03 0.0 0.0 0.1 0.2 0.2 0.4 0.4 0.4 0.7 Vehicles other than railway, '87 0.1 0.1 0.1 0.2 0.3 0.6 0.6 0.7 0.7 0.5 tramway '30 Pharmaceutical products 0.1 0.1 0.2 0.2 0.1 0.2 0.3 0.3 0.4 0.5 Machinery, nuclear reactors, '84 0.03 0.1 0.6 0.6 0.5 0.5 0.4 1.2 0.6 0.4 boilers, etc

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

Table 8: Pakistan’s Exports to Mozambique at HS 6 digit level

HS Code Description 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M

TOTAL All products 43.4 46.7 43.5 49.2 58.0 94.1 80.0 74.3 117.9 119.2 Rice, semi-milled or wholly '100630 milled, whether or not 40.8 43.9 37.7 40.4 33.4 63.8 56.9 51.6 73.9 68.2 polished or glazed '252329 Portland cement nes 0.0 0.0 0.0 0.0 6.9 13.7 11.0 11.4 28.0 30.3 Sacks & bags,for packing of '630539 goods,of other man-made 0.0 0.0 0.009 0.0 0.0 0.002 0.1 0.8 1.4 2.1 textile materials Uncooked pasta, not stuffed '190219 0.0 0.002 0.0 0.01 0.0 0.004 0.01 0.3 2.1 1.9 or otherwise prepared, nes Worn clothing and other '630900 0.0 0.0 0.06 0.03 0.1 0.4 0.6 0.9 1.3 1.2 worn articles Chewing gum containing '170410 0.3 0.3 0.5 1.0 0.5 0.6 0.7 0.8 1.0 1.0 sugar, except medicinal '100640 Rice, broken 0.0 0.0 0.9 1.5 5.8 10.0 4.0 1.6 0.02 0.9 Plain weave polyester stapl '551341 fib fab,<85%,mixd w/ 0.0 0.0 0.0 0.0 0.12 0.03 0.13 0.29 0.40 0.63 cot,<=170g/m2,printd Waddg of oth textile '560129 materials&articles thereof,o/t 0.0 0.0 0.06 0.23 0.38 0.46 0.04 0.12 0.63 0.49 sanitary articles Sugar confectionery nes '170490 (includg white chocolate),not 0.14 0.15 0.26 0.07 0.007 0.03 0.21 0.29 0.44 0.40 containg cocoa Tents, of other textile '630629 0.0 0.0 0.42 0.0 0.03 0.009 0.02 0.0 0.0 0.3 materials '870190 Wheeled tractors nes 0.022 0.0 0.04 0.1 0.3 0.2 0.2 0.6 0.6 0.3 Toilet&kitchen linen,of terry '630260 towellg or similar terry fab,of 0.1 0.1 0.3 1.0 2.1 0.8 0.5 0.3 0.2 0.3 cotton '300490 Medicaments nes, in dosage 0.1 0.1 0.1 0.1 0.0 0.1 0.2 0.2 0.3 0.2 Milk not concentrated & '040120 unsweetened exceeding 1% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.06 0.23 not exceeding 6% fat Used or new rags of textile '631090 0.0 0.0 0.009 0.031 0 0.005 0.005 0.06 0.03 0.20 materials, not sorted

52 Republic of Mozambique Table 8: Pakistan’s Exports to Mozambique at HS 6 digit level

HS Code Description 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M

Mixtures of juices '200990 unfermentd¬ spiritd 0.0 0.0 0.0 0.0 0.0 0.0 0.001 0.0 0.04 0.18 whether o not sugard o sweet Carboys, bottles, flasks, '701090 jars, pots, phials and other 0.004 0.0 0.0 0.0 0.159 0.51 0.39 0.14 0.50 0.16 containers, of Sardines,sardinella&brislg o '160413 sprats prep o presvd,whole o 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.37 0.15 pce ex mincd

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

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

HS Code Description 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M

TOTAL All products 2.1 18.3 4.8 0.8 0.3 1.2 1.7 11.3 1.3 1.2 '72 Iron and steel 0.28 0.05 0 0.04 0.02 0.03 0 0 0.03 0.69 Oil seed, oleagic fruits, grain, '12 0 0 0.6 0.2 0.1 0.8 0.1 0 0.1 0.4 seed, fruit, etc, nes Vegetable textile fibres nes, '53 0 0 0 0 0 0 0 0 0.14 0.12 paper yarn, woven fabric '30 Pharmaceutical products 0 0 0 0 0 0 0 0.008 0 0.01 Raw hides and skins (other '41 0 0 0.04 0.03 0 0 0 0.05 0.04 0.009 than furskins) and leather Edible vegetables and certain '07 0 0.03 0 0 0 0 0.92 0 0 0.004 roots and tubers

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

Table 10: Pakistan’s Imports from Mozambique at HS 6 digit level

HS Code Description 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M

TOTAL All products 2.1 18.3 4.8 0.8 0.3 1.2 1.7 11.3 1.3 1.2 Semi-fin prod,i/nas,rect/sq '720711 cross-sect cntg by wgt<.25% 0 0 0 0 0 0 0 0 0 0.7 c,wdth<2X thk Cereal straw&husks, '121300 0 0 0 0 0 0 0 0 0.06 0.3 unprepd, whether or not

Republic of Mozambique 53 Table 10: Pakistan’s Imports from Mozambique at HS 6 digit level

HS Code Description 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M

Coconut, abaca Manila hemp '530500 or Musa textilis Nee, ramie, 0 0 0 0 0 0 0 0 0.14 0.1 agave and othe Groundnuts, shelled, whether or not broken (excl. '120242 0 0 0 0 0 0 0 0 0.06 0.06 seed for sowing, roasted or otherwise co Dressings&similar '300590 articles,impreg or coatd or 0 0 0 0 0 0 0 0 0 0.01 packagd for md use,nes Whole raw hides and skins '410150 of bovine "incl. buffalo" or 0 0 0 0 0 0 0 0.05 0.03 0.007 equine animals, Beans dried, shelled, whether '071339 0 0 0 0 0 0 0.8 0 0 0.004 or not skinned or split, nes Raw hides and skins of '410390 0 0 0 0.02 0 0 0 0 0.01 0.002 animals, nes '732690 Articles, iron or steel, nes 0 0 0 0.001 0 0 0 0 0 0.001

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

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

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

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

54 Republic of Mozambique Table 11: Pakistan’s Potential Exports to Mozambique (excluding petroleum products oil) at HS 6 digit level Pak’s Exports Mozambique’s Pakistan’s to Export HS Imports from Exports to the Description Mozambique Potential Code World 2014 World 2014 2014 USD M USD M USD M USD M Rice, semi-milled or wholly milled, '100630 68 187 1,895 119 whether or not polished or glazed '300490 Medicaments nes, in dosage 0.24 133 87 86 Structures&parts of structures,i/s (ex '730890 0.001 112 50 50 prefab bldgs of headg no.9406) Refined cane or beet sugar, solid, '170199 0 32 289 32 without flavouring or colouring matter '252329 Portland cement nes 30 58 502 27 '870190 Wheeled tractors nes 0.3 22 26 22 Telephones for cellular networks '851712 0 31 20 20 mobile telephones or for other wirele Gas turbines nes of a power exceeding '841182 0 15 23 15 5000 KW Undenaturd ethyl alcohol of an alcohol '220710 0 14 246 14 strgth by vol of 80% vol/higher '870899 Motor vehicle parts nes 0.05 53 13 13 '210690 Food preparations nes 0.03 13 20 13 Instruments and appliances used in '901890 0.118 13 320 12 medical or veterinary sciences, nes '630900 Worn clothing and other worn articles 1.2 71 14 12 Parts of boring or sinking machinery, '843143 0 13 12 12 whether or not self-propelled Lead-acid electric accumulators of a '850710 0 12 17 12 kind usd f startg piston engines Air conditioning machines window or '841510 0 10 16 10 wall types, self-contained Parts&accessories of automatic data '847330 0.02 33 10 10 processg machines&units thereof '190531 Sweet biscuits 0.07 10 21 10 Rail or tramway construction material '730290 0 9 9 9 of iron or steel, nes Articles of plastics or of other materials '392690 0.001 8.6 10.2 8.6 of Nos 39.01 to 39.14 nes

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

Table 12: Pakistan’s Potential Imports from Mozambique (excluding petroleum products) at HS 6 digit level Pak’s Mozambique’s Pak’s Imports Import HS Imports From Exports to Description from the World Potential Code Mozambique World USD M USD M USD M USD M Coke&semi-coke of coal,lignite o '270400 0.0 484.1 52.5 52.5 peat,agglomeratd o not,retort carbon '520100 Cotton, not carded or combed 0.0 48.3 521.6 48.3

Republic of Mozambique 55 Table 12: Pakistan’s Potential Imports from Mozambique (excluding petroleum products) at HS 6 digit level Pak’s Mozambique’s Pak’s Imports Import HS Imports From Exports to Description from the World Potential Code Mozambique World USD M USD M USD M USD M Lumber, tropical hardwood nes, sawn '440729 0.0 46.9 45.8 45.8 lengthwise >6mm '760110 Aluminium unwrought, not alloyed 0.0 366.6 35.7 35.7 '440799 Lumber, non-coniferous nes 0.0 23.0 17.2 17.2 Tobacco, unmanufactured, partly or '240120 0.0 251.4 15.0 15.0 wholly stemmed or stripped Kidney beans&white pea beans drid '071333 0.0 13.7 55.5 13.7 shelld,whether o not skinnd o split Parts of boring or sinking machinery, '843143 0.0 11.2 60.9 11.2 whether or not self-propelled Measuring or checking instruments, '903180 0.0 8.3 17.5 8.3 appliances and machines, nes '440399 Logs, non-coniferous nes 0.0 8.1 7.0 7.0 Peas dried, shelled, whether or not '071310 0.0 6.2 120.0 6.2 skinned or split Leguminous vegetables '071390 dried,shelled,whether or not skinnd or 0.0 5.9 61.0 5.9 split,nes '880330 Aircraft parts nes 0.0 5.4 38.7 5.4 '440349 Logs, tropical hardwoods nes 0.0 10.2 5.0 5.0 Beans dried, shelled, whether or not '071339 0.0 5.5 4.9 4.9 skinned or split, nes '110100 Wheat or meslin flour 0.0 14.6 4.9 4.9 Urea,wthr/nt in aqueous solution in '310210 0.0 4.2 222.1 4.2 packages weighg more than 10 kg Parts and accessories for use with the '901590 0.0 4.0 8.3 4.0 apparatus of heading No 90.15 '320210 Synthetic organic tanning substances 0.0 3.9 17.9 3.9 Tubes,pipe&hollow profiles,al/s,(o/t '730650 0.0 3.7 4.4 3.7 stain) wld,of circ cross sect,nes

56 Republic of Mozambique SECTION VIII Mozambique India Trade Patterns

Republic of Mozambique 57 58 Republic of Mozambique Mozambique India Trade Patterns 5% of Mozambique’s international bilateral trade was with India in 2014. In recent years, Mozambique’s trade balance has been in surplus. India was one of the top 10 trading partners of Mozambique in 2014. Mozambique's Exports to India Mozambique's Imports from India Trade Balance

$800 $680 $700 Millions $600 $500 $388 $400 $349 $301 $330 $328 $300 $245 $202 $201 $155 $200 $137 $132 $144 $97 $87 $100 $57 $59 $27 $30 $16 $28 $30 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -$100 -$70 -$46 -$107 -$116 -$116 -$200 -$188 -$171 -$213 -$300

Mozambique’s top imports from India consisted of pharmaceutical products, vehicles, machinery and cereals. Mozambique’s top imports from India at HS Level 2 are given below: Mozambique’s top imports from India consisted of pharmaceutical products, vehicles, machinery and cereals. Mozambique’s top imports from India at HS Level 2 are given below: Table 13: Mozambique’s Imports from India at HS 2 digit level 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HS Code Product label USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M Table 13: Mozambique’s Imports from India at HS 2 digit level TOTAL All products 96.7 136.8 131.8 144.4 244.7 201.7 300.5 200.9 330.1 328.1 Pharmaceutical '30 products 16.8 17.9 24.4 31.5 20.2 20.8 49.9 36.8 55.4 102.1 VehiclesHS other Code Description

than railway, 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M '87 tramway 13.4 16.3 16.4 32.3 16.6 9.8 USD M 36.7 23.0 USD M 40.4 42.8 Machinery, nuclear reactors, boilers, '84 etc TOTAL All 5.0products 8.2 10.7 96.711.1 136.8 14.9131.8 144.411.1 244.737.3 201.7 43.3300.5 200.926.0 330.129.4328.1 '30 Pharmaceutical products 16.8 17.9 24.4 31.5 20.2 20.8 49.9 36.8 55.4 102.1 '10 Cereals 4.8 12.6 25.5 1.2 0.7 0.4 1.3 9.9 54.0 22.3 Vehicles other than railway, '87 13.4 16.3 16.4 32.3 16.6 9.8 36.7 23.0 40.4 42.8 tramway '72 Iron and steel 2.2 1.7 4.2 3.4 5.8 7.5 10.1 14.7 13.1 18.6 Machinery, nuclear reactors, Electrical, '84 5.0 8.2 10.7 11.1 14.9 11.1 37.3 43.3 26.0 29.4 electronic boilers, etc '85 equipment'10 Cereals0.8 2.3 8.3 4.814.3 12.6 8.625.5 7.81.2 0.74.0 0.4 7.41.3 11.69.9 54.012.4 22.3 Plastics and'72 Iron and steel 2.2 1.7 4.2 3.4 5.8 7.5 10.1 14.7 13.1 18.6 '39 articles thereof 1.4 3.7 4.0 5.2 10.7 3.7 4.0 5.3 7.6 8.8 Electrical, electronic '85 0.8 2.3 8.3 14.3 8.6 7.8 4.0 7.4 11.6 12.4 equipment Articles of iron or '73 steel '39 Plastics1.2 and articles2.8 thereof6.5 1.46.2 3.7 9.84.0 13.55.2 10.776.1 3.7 14.14.0 5.37.8 7.66.9 8.8 Salt, sulphur,'73 Articles of iron or steel 1.2 2.8 6.5 6.2 9.8 13.5 76.1 14.1 7.8 6.9 earth, stone, plaster, lime and Salt, sulphur, earth, stone, '25 9.9 6.2 0.3 0.6 8.4 4.2 2.1 0.9 13.2 6.4 '25 cement plaster,9.9 lime and6.2 cement 0.3 0.6 8.4 4.2 2.1 0.9 13.2 6.4 Other made textile articles, '63 1.5 2.3 1.3 1.8 2.8 3.0 4.8 3.5 5.3 6.2 sets, worn clothing etc 46

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

Republic of Mozambique 59 Table 14: Mozambique’s Exports to India at HS 2 digit level

HS Code Description 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M

TOTAL All products 26.6 30.2 15.9 28.4 56.5 30.4 87.2 155.1 679.6 387.6 Mineral fuels, oils, '27 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 527.2 170.2 distillation products, etc Miscellaneous chemical '38 0.0 0.0 0.0 0.0 0.0 0.0 0.0 44.1 11.3 155.3 products Edible vegetables and certain '07 3.3 1.0 4.8 8.3 35.0 15.7 23.7 18.5 15.9 33.1 roots and tubers Edible fruit, nuts, peel of '08 17.0 23.4 10.3 13.4 13.3 8.7 42.1 4.2 7.0 10.9 citrus fruit, melons '78 Lead and articles thereof 0.0 0.0 0.0 0.9 0.2 1.8 0.3 0.2 0.7 3.1 '26 Ores, slag and ash 0.0 0.0 0.0 0.0 1.3 0.2 17.8 47.5 107.3 2.8 Machinery, nuclear reactors, '84 0.0 0.01 0.1 0.1 0.4 0.0 0.1 0.7 0.0 2.5 boilers, etc '72 Iron and steel 4.2 3.5 0.0 4.0 4.7 1.6 1.8 17.6 2.6 1.9 Oil seed, oleagic fruits, grain, '12 0.0 0.6 0.1 0.0 0.9 1.2 0.4 0.1 1.6 1.5 seed, fruit, etc, nes Pearls, precious stones, '71 0.1 0.1 0.0 0.2 0.1 0.1 0.2 0.1 0.5 1.4 metals, coins, etc

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

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

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

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

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

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

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

Republic of Mozambique 61

SECTION IX Mozambique China Trade Patterns

Republic of Mozambique 63 64 Republic of Mozambique MozambiqueMozambique China Trade China Patterns Trade Patterns While China is not Mozambique’s top trading partner, it is among Mozambique’s top ten Whiletrading China partners. is not Mozambique’s Mozambique’s top trading trade partner, with it is Chinaamong Mozambique’s has increased top steadilyten trading and significantly partners. Mozambique’s trade with China has increased steadily and significantly over the last 10 years. Theover bulk the of lastthis trade 10 years. consists The of Mozambique’s bulk of this importstrade consistsof machinery, of Moza electronicmbique’s equipment imports and of machinery, vehicleselectronic from equipmentChina and Mozambique’s and vehicles exports from of wood, China articles and of Mozambique’s wood and miscellaneous exports chemical of wood, articles productsof wood. Except and formiscellaneous 2012 when Mozambique chemical exported products. mineral Except fuels tofor China, 2012 Mozambique’s when Mozambique trade with exported Chinamineral has be fuelsen in todeficit. China, Mozambique’s trade with China has been in deficit.

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

$800 $700 $637 $644 $600 Millions $374 $350 $400 $287 $204 $156 $173 $130 $168 $200 $68 $83 $103 $105 $74 $80 $34 $33 $44 $52 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -$200 -$34 -$50 -$59 -$104 -$99 -$50 -$206 -$400

-$496 -$600 -$539

-$800

The table listing the top 10 Mozambique’s imports to China in 2014 at HS 2 digit level is.given below: The table listing the top 10 Mozambique’s imports to China in 2014 at HS 2 digit level is given below: Table 15: Mozambique’s Imports from China at HS 2 digit level HS 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Code Product label USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M TOTAL All products 68.3 Table82.7 15: Mozambique’s103.2 156.1 Imports173.1 from China130.0 at HS373.8 2 digit level350.2 644.1 700.0 Wood and articles of wood, wood '44 charcoal 8.5 9.9 15.2 21.4 23.4 28.2 161.3 64.0 103.5 137.2 Miscellaneous '38 chemicalHS products Code 10.3 Description13.2 10.3 19.3 20.6 12.7 21.4 39.4 109.0 110.9 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M Oil seed, oleagic USD M USD M fruits, grain, seed, '12 fruit, etc, nes 4.2 8.6 10.6 21.5 18.0 10.1 33.3 29.2 74.6 83.9 TOTAL All products 68.3 82.7 103.2 156.1 173.1 130.0 373.8 350.2 644.1 700.0 Wood and articles of wood, '44 8.5 9.9 15.2 21.4 23.4 28.2 161.3 64.0 103.5 137.2 '26 Ores, slag and ash wood3.1 charcoal033.2 1.1 3.8 13.8 4.2 6.0 32.0 28.5 45.8 Fish, crustaceans, Miscellaneous chemical molluscs, aquatic'38 10.3 13.2 10.3 19.3 20.6 12.7 21.4 39.4 109.0 110.9 '03 invertebrates nes products3.7 4.1 2.4 12.3 11.4 7.0 8.0 22.0 25.6 38.7 Oil seed, oleagic fruits, grain, '12 4.2 8.6 10.6 21.5 18.0 10.1 33.3 29.2 74.6 83.9 seed, fruit, etc, nes '26 Ores, slag and ash 3.1 033.2 1.1 3.8 13.8 4.2 6.0 32.0 28.5 45.8 Fish, crustaceans, molluscs, 49 '03 3.7 4.1 2.4 12.3 11.4 7.0 8.0 22.0 25.6 38.7 aquatic invertebrates nes Tanning, dyeing extracts, '32 1.8 2.0 3.6 7.0 4.6 4.8 10.5 13.1 22.9 26.3 tannins, derivs,pigments etc '52 Cotton 1.4 1.4 1.8 3.5 5.3 4.9 8.0 11.8 19.4 25.4 '72 Iron and steel 2.3 3.6 2.7 2.9 3.5 3.5 8.4 11.1 16.2 21.4 Pearls, precious stones, '71 1.8 1.7 2.2 3.6 5.2 3.4 9.3 13.7 18.7 21.0 metals, coins, etc

Republic of Mozambique 65 Table 15: Mozambique’s Imports from China at HS 2 digit level

HS Code Description 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M

Salt, sulphur, earth, stone, '25 0.7 0.8 0.6 1.2 1.4 1.1 2.2 3.0 10.3 14.5 plaster, lime and cement

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

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

HS Code Description 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD M USD M USD M USD M USD M USD M USD M USD M USD M USD M

TOTAL All products 34.1 32.9 44.0 51.6 74.5 79.6 167.7 637.3 105.0 204.2 Wood and articles of wood, '44 22.2 23.1 25.6 31.2 29.8 48.9 58.6 106.0 44.2 95.9 wood charcoal Miscellaneous chemical '38 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 8.4 33.7 products Oil seed, oleagic fruits, grain, '12 3.6 3.7 10.4 17.6 30.4 12.8 14.5 12.1 17.4 27.5 seed, fruit, etc, nes '26 Ores, slag and ash 0.0 0.0 0.0 0.2 3.9 5.3 54.5 47.4 4.9 23.9 Fish, crustaceans, molluscs, '03 0.0 0.1 0.4 0.2 0.7 0.2 1.4 4.1 8.9 7.0 aquatic invertebrates nes Tanning, dyeing extracts, '32 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.9 tannins, derivs,pigments etc '52 Cotton 8.0 5.0 5.1 0.3 0.0 1.1 8.7 12.2 16.3 3.5 '72 Iron and steel 0.0 0.1 0.0 1.1 0.7 0.2 0.2 0.0 0.1 3.2 Pearls, precious stones, '71 0.1 0.0 0.0 0.1 0.0 0.0 0.1 0.1 0.3 1.4 metals, coins, etc Salt, sulphur, earth, stone, '25 0.0 0.0 0.0 0.0 4.0 0.1 0.1 0.1 2.7 1.3 plaster, lime and cement

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

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

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

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

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

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

Republic of Mozambique 67

SECTION X Major Industries of Mozambique

Republic of Mozambique 69

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

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

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

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

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

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

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

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

Several manufacturing industries have recently been highlighted by Mozambique’s Investment Republic of Mozambique 71 Promotion Centre (CPI) as noteworthy industries including textiles, aluminum, iron and steel and coal and gas. CPI plans to invest in adding value to its primary product in order to maximize the country’s natural resources.

Agriculture/Agro processing:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

12These are Cervejas de Moçambique (Beers of Mozambique), Companhia Moçambicana de Hidrocarbonet (Mozambican Hydrocarbon Company), Engineering and Construction (CETA) and Empresa Moçambicana de Seguros (Emose) Republic of Mozambique 73 commercial banks remains high at 21%.

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

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

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

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

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

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

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

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

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

Republic of Mozambique 75

SECTION XI Conclusion

Republic of Mozambique 77 78 Republic of Mozambique Conclusion: Mozambique is a small country in terms of population and GDP but has prospects of growth for Pakistan’s exports as well as investments. It is one of the fastest growing economies in the region with a stable growth rate of approximately 7% which has been consistently maintained over the last decade. Mozambique is one of the member countries of the Southern African Development Community and hence provides access to markets bigger than its 27 million population. Its geostrategic location as a port providing access to landlocked African countries is one of its asset.

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

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

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

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

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

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

Republic of Mozambique 79

SECTION XII Bibliography

Republic of Mozambique 81 82 Republic of Mozambique Bibliography All International Trade Data Trade Maps. International Trade Center. Trademap.org

Social and Geographic Indicators

High Commission of India, Maputo. http://www.hicomind-maputo.org/

Mozambique Embassy, Brussels. http://www.embassyofmozambique.be/

World Bank Database. http://data.worldbank.org/indicator

Mozambique. Commonwealth of Nations. http://www.commonwealthofnations.org/

Mozambique will have just three international airports. Macauhub. September 7th, 2015. http://www.macauhub.com.mo/en/2015/09/07/mozambique-will-have-just-three- international-airports/

Airports of Mozambique. http://www.aeroportos.co.mz/

Map. Wiki Commons. Derived from a United Nations Map. https://commons.wikimedia. org/wiki/File:Un-mozambique.png

Denmark in Mozambique. Ministry of Foreign Affairs of Denmark. http://mozambique. um.dk

Dominguez-Torres, Carolina, Briceño-Garmendia, Cecilia. Mozambique’s Infrastructure: A Continental Perspective. Africa Infrastructure Country Diagnostic. June 2011. http://www. ppiaf.org/sites/ppiaf.org/files/publication/AICD-Mozambique-country-report.pdf

The World Factbook. Central Intelligence Agency. https://www.cia.gov/library/ publications/the-world-factbook/geos/mz.html

Political Structure Mozambique. History and Politics. https://www.issafrica.org/af/profiles/Mozambique/ Politics.html

Rainha, Paula. Republic of Mozambique – Legal System and Research. NYU Law. Hauser Global Law School. May/June 2008. http://www.nyulawglobal.org/globalex/ Mozambique.html

Mozambique. African Development Bank Group. http://www.afdb.org/en/countries/ southern-africa/mozambique/

The local government system in Mozambique. Country Profile: Mozambique. Commonwealth Local Government Forum. http://www.clgf.org.uk/userfiles/1/files/

Republic of Mozambique 83 Mozambique%20local%20government%20profile%202011-12.pdf

Mozambique Country Profile. BBC. http://www.bbc.com/news/world-africa-13890416

Mozambique’s History History of Mozambique. History World. http://www.historyworld.net/wrldhis/ PlainTextHistories.asp?historyid=ad29

Mozambique Profile. Timeline. BBC. http://www.bbc.com/news/world-africa-13890720

Mozambique. InfoPlease. http://www.infoplease.com/country/mozambique. html?pageno=6

A Brief Modern History of Mozambique. http://www.oberlin.edu/news-info/98oct/brief_ history.html

Mozambique’s Economy World Bank Database. http://data.worldbank.org/indicator

Mozambique Overview. The World Bank. http://www.worldbank.org/en/country/ mozambique/overview#1

Santos, André Almeida, Roffarello, Luca Monge, Filipe, Manuel. Mozambique. 2015. African Economic Outlook. http://www.africaneconomicoutlook.org/fileadmin/uploads/ aeo/2015/CN_data/CN_Long_EN/Mozambique_GB_2015.pdf

Santos, André Almeida, Roffarello, Luca Monge, Filipe, Manuel. Mozambique. 2015. African Economic Outlook. http://www.africaneconomicoutlook.org/fileadmin/uploads/ aeo/2015/CN_data/CN_Long_EN/Mozambique_GB_2015.pdf

Republic of Mozambique: Fourth Review Under the Policy Support Instrument and Request for Modification of Assessment Criteria—Staff Report; Debt Sustainability Analysis; Press

Release on the Executive Board Discussion; and Statement by the Executive Director for Mozambique. Country Report No. 12/148. IMF. June 2012. http://www.imf.org/external/ pubs/ft/scr/2012/cr12148.pdf

Fifth Review Under The Policy Support Instrument And Request For Modification Of Assessment Criteria. Republic Of Mozambique. IMF Country Report No. 13/1. IMF. January 3, 2013. https://www.imf.org/external/pubs/ft/scr/2013/cr1301.pdf

Republic Of Mozambique Third Review Under The Policy Support Instrument—Staff Report And Press Release. IMF Country Report No. 15/12. IMF. January 2015. https://www.imf. org/external/pubs/ft/scr/2015/cr1512.pdf

Staff Report For The 2015 Article Iv Consultation, Fifth Review Under The Policy Support Instrument, Request For Modification Of Assessment Criteria, And Request For An 18-Month Arrangement Under The Standby Credit Facility—Press Release; Staff Report;

84 Republic of Mozambique And Statement By The Executive Director For The Republic Of Mozambique. Republic of Mozambique. IMF Country Report No. 16/9. IMF. January 2016. http://www.imf.org/ external/pubs/ft/scr/2016/cr1609.pdf

United Nations Treasury. http://treasury.un.org/operationalrates Mozambique New Metical. Oanda. http://www.oanda.com/currency/iso-currency-codes/ MZN

Intervention by the Bank of Mozambique “slows depreciation” of the metical. MacauHub. July 14th, 2015. http://www.macauhub.com.mo/en/2015/07/14/intervention-by-the- bank-of-mozambique-slows-depreciation-of-the-metical/

3-Month London Interbank Offered Rate (LIBOR), based on U.S. Dollar (USD3MTD156N). Economic Research. Federal Reserve Bankk of St. Louis. https://research.stlouisfed.org/ fred2/series/USD3MTD156N/downloaddata

London Interbank Offered Rate. The Wall Street Journal. http://online.wsj.com/mdc/ public/page/2_3020-libor.html

MAIBOR. Bank of Mozambique. http://www.bancomoc.mz/fm_MercadosMMI.aspx?id=2

Republic of Mozambique: Poverty Reduction Strategy Paper Annual Progress Report Joint Staff Advisory Note. IMF. https://books.google.com.pk/books?id=IWjIONnPYckC&pg=PA3&lpg=PA3&dq=Mozam bique%27s+inflation+volatility&source=bl&ots=secI9qlarS&sig=TKzbqgJJpuLISF5tmMjUdf qAMsk&hl=en&sa=X&v

The Geography of Transport Systems. Growth Poles Theory. https://people.hofstra.edu/ geotrans/eng/ch2en/conc2en/growthpoles.html

Spatial Development Initiative. Maputo Corridor Logistics Initiative. http://www.mcli. co.za/mcli-web/mdc/sdi.htm

Sub-Saharan Africa Dealing with the Gathering Clouds. October 2015. Regional Economic Outlook. IMF. https://www.imf.org/external/pubs/ft/reo/2015/afr/eng/pdf/sreo1015. pdf

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

Republic Of Mozambique: Country Strategy Paper 2011-2015. August 2011. African

Development Bank Group. http://www.afdb.org/fileadmin/uploads/afdb/Documents/

Policy-Documents/Mozambique%20-%202011-15%20CSP.pdf

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

Republic of Mozambique 85 Mozambique’s Trade Overview Republic of Mozambique Guidelines for Importers. Intertek. June 2014. http://www. intertek.com/uploadedFiles/Intertek/Divisions/Oil_Chemical_and_Agri/Media/pdfs/ Mozambique%20Importer%20Guidelines.pdf

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

2013 Investment Climate Statement – Mozambique. March 2013. US Department of State. http://www.state.gov/e/eb/rls/othr/ics/2013/204700.htm

Investment Climate Statement, Mozambique. Openness to, and restrictions upon, Foreign

Investment. http://photos.state.gov/libraries/mozambique/164103/nguluvep/ics.pdf

Bank of Mozambique. http://www.bancomoc.mz

Ministry of Finance. http://www.mf.gov.mz

Ministry of Foreign Affairs and Cooperation. http://www.minec.gov.mz

Investment Promotion Centre. http://www.cpi.co.mz

Institute for Export Promotion (IPEX). http://www.ipex.gov.mz/

Foreign Multinational Corporations in Mozambique. Afribiz. http://www.afribiz.info/ content/2010/foreign-transnational-corporations-in-mozambique/

Major Corporations Organizations in Mozambique. Commonwealth Network. http://www. commonwealthofnations.org/sectors-mozambique/business/major_corporations/

Regional Trade Trends Trade Agreements. Mozambique. Focus Africa. http://focusafrica.gov.in/Mozambique_Trade_Agreement.html

African Free Trade Zone is Agreed. BBC News. http://news.bbc.co.uk/2/hi/7684903.stm

Trade Agreements. Africa Economic Development Institute. http://africaecon.org/index. php/trade_agr/view_trade_agreement/22/0/_/0

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

US-Africa Bilateral Agreements. Bilateral Investment Treaties. http://agoa.info/bilaterals. html

86 Republic of Mozambique Generalized System of Preferences. List of Beneficiaries. United Nations Conference of Trade and Development. http://unctad.org/en/docs/itcdtsbmisc62rev5_en.pdf

Generalised Scheme of Preferences. Trade. European Commission. http://ec.europa.eu/ trade/policy/countries-and-regions/development/generalised-scheme-of-preferences/

Investment Policy Hub. Mozambique. Bilateral Investment Treaties. Mozambique. http:// investmentpolicyhub.unctad.org/IIA/CountryBits/143

African, Caribbean and Pacific Group of States. http://www.acp.int/content/secretariat- acp

Mozambique: January 2001. World Trade Organization. https://www.wto.org/english/ tratop_e/tpr_e/tp154_e.htm

Indian Ocean Rim Association. http://www.iora.net/about-us/membership.aspx

COMESA: History. Global Edge. Michigan State University. http://globaledge.msu.edu/ trade-blocs/comesa/history

Pakistan Mozambique Trade Overview Honorary Consulate of Mozambique in Karachi. Embassy Page. https://embassy-finder. com/mozambique_in_karachi_pakistan

Mozambique Honorary Consulate. Pakistan Business Journal. http://www. pakistanbusinessjournal.com/b2b-directory/mozambique-honorary-consulate_75538.html

Mozambique India Trade Patterns High Commission of India, Maputo. http://www.hicomind-maputo.org/

Mozambique China Trade Patterns Mozambique. China.org.cn. http://www.china.org.cn/english/features/focac/183432.htm Brautigam, Deborah. Will Africa Feed China? Oxford University Press. July 2015. https:// books.google.com.pk/books?id=u6h_CgAAQBAJ&pg=PA53&lpg=PA53&dq=CHina% E2%80%99s+premier+visit+to+Mozambique+in+1990s&source=bl&ots=ZQ6_rRFCg- &sig=MlWW_vFxZuvd-wtlEl4IyCiPpQs&hl=en&sa=X&ved=0ahUKEwiUrIKI3orLAhXLno4

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

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

Major Industries Sector Profile: Mozambique. Focus Africa. http://focusafrica.gov.in/Sector_Profile_ Mozambique.html

Republic of Mozambique 87 Denmark in Mozambique. Ministry of Foreign Affairs. Business Development Profile.

Mozambique. http://mozambique.um.dk/da/~/media/Mozambique/Documents/ Content%20Danish/Danida%20Business/Business%20Development%20Profile%20 Mozambique.ashx

Stock Exchange of Mozambique. http://www.bolsadevalores.co.mz/

Infrastructure and Economic Development – Mozambique’s Promising Future. http:// www.kpmg.com/africa/en/issuesandinsights/articles-publications/press-releases/pages/ infrastructure-and-economic-development-mozambique.aspx

Industry and Manufacturing Expertise in Mozambique. Commonwealth of Nations. http://www.commonwealthofnations.org/sectors-mozambique/business/industry_and_ manufacturing/e =0ahUKEwjvz9XL8ZTLAhXQwY4KHQLeAkQQ6AEIOjAH#v=onepage& q=Mozambique’s%20inflation%20volatility&f=false

88 Republic of Mozambique

8th Floor, Dawood Centre, M. T. Khan Road, Karachi, Pakistan

Telephone: +92-21 35630528-29 Fax: +92-21 35630530 Website: www.pbc.org.pk Press (Pvt) Ltd. Times The Printed & Designed at: