The recently released 2024 Investment Climate Statements by the US Department of State gives readers a Mozambique’s 2024 investment snapshot – US DoS highlighting the country strategic position, its rich natural resources, and investment potential.
The comprehensive report sheds light on both the promising opportunities and the significant challenges facing investors in the region.
According to the report, Mozambique’s extensive coastline, deep-water ports, and abundant natural resources create a fertile ground for investment, particularly in the mining and energy sectors.
Coal remains the country’s largest export, and Mozambique is a global leader in ruby production. Additionally, the recent commencement of natural gas exports from a floating LNG platform off the northern province of Cabo Delgado signals the country’s growing influence in the energy market. Plans for a second floating LNG platform are underway, despite the delays in larger onshore LNG projects due to security concerns.
However, the 2024 Investment Climate Statements underscore several critical challenges that could hinder Mozambique’s investment potential. Corruption remains a pervasive issue, with recent incidents in the agricultural sector involving international companies facing discriminatory practices and asset seizures by politically connected domestic competitors. The ongoing Islamic State-linked insurgency in Cabo Delgado adds to the instability, affecting major projects and deterring potential investors.
The Mozambican government has made strides in improving the business environment through fiscal reforms and visa liberalisation. The introduction of a revised investment law in 2023 is a significant step forward, offering new tax incentives and facilitating the transfer of land use rights. However, as of early 2024, the implementing regulations for this law are still pending, leaving many aspects of its application undefined.
Mozambique’s legal system, heavily influenced by the notorious outdated Portuguese civil and customary law, is gradually evolving to support better governance and transparency. The successful conviction of several key figures in the “hidden debts” scandal of 2016, and ongoing efforts to reform state-owned enterprises, reflect the government’s commitment to addressing past misdeeds and enhancing fiscal transparency.
The country’s infrastructure, however, continues to pose significant challenges. Frequent degradation due to heavy rains and tropical storms, coupled with inadequate education levels among the workforce, hampers industrial growth and complicates investment efforts. In addition, Mozambican labour laws, which favour domestic employment and complicate the hiring of foreign workers, further limit the ease of doing business in the country.
Despite these hurdles, Mozambique remains keen to partner with the United States and other international players, particularly on climate issues. The country’s participation in initiatives such as the Agricultural Innovation Mission for Climate (AIM4C) and the Global Methane Pledge highlights its commitment to sustainable development, even as it struggles with the resources to implement effective programmes.
The 2024 Investment Climate Statements by the US Department of State provide a nuanced view of Mozambique’s investment landscape. While the country offers immense potential, particularly in the mining and energy sectors, significant risks and challenges persist. Investors must navigate a complex environment marked by corruption, legal uncertainties, and infrastructural weaknesses, but with careful planning and strategic partnerships, the opportunities could outweigh the risks.
This analysis serves as a reminder that Mozambique’s path to becoming a major player in the global economy is fraught with both opportunities and challenges. Investors and policymakers alike should pay close attention to these dynamics as they shape the future of this resource-rich nation.
You can read the full 2024 Investment Climate Statements by the US Department of State here.
Further Africa
