Mozambique continues to assert itself as one of the most promising investment destinations in Africa, largely driven by liquefied natural gas (LNG) megaprojects in the Rovuma Basin. However, behind this potential, deep structural challenges persist—such as corruption, institutional instability, and regulatory unpredictability—which continue to undermine investor confidence and limit the country’s regional competitiveness.
Despite moderate signs of economic recovery, with GDP growth forecasts of around 2.5% in 2025 and 3.2% in 2026, this performance still rests on fragile foundations. The economy remains heavily dependent on extractive sectors, with low levels of diversification and productive investment concentrated in natural resource-related areas.
At the same time, domestic consumption continues to be the main driver of growth, while private investment remains volatile and constrained by structural uncertainties. This model raises concerns about its medium- and long-term sustainability, particularly in a context where the business environment is influenced by institutional factors that go beyond traditional macroeconomic indicators.
It is within this context that Diário Económico (DE) gathered insights from various voices in the business and institutional sectors, including EuroCam, businessman Evaristo Madime, and economist Egas Daniel, to understand the main constraints and prospects for the country’s business environment.
EuroCam Highlights Opportunities and Institutional Constraints
In an exclusive interview with DE, the European Business Association in Mozambique (EuroCam) describes the country’s business environment as a complex combination of structural opportunities and persistent institutional constraints.
According to the association, legal instability, bureaucracy, and limited regulatory predictability increase the perceived risk for investors, delaying decisions on long-term, capital-intensive projects. At the same time, deficiencies in transport, energy, and logistics infrastructure contribute to higher operational costs—with logistics playing a significant role—reducing international competitiveness, especially in export-oriented sectors such as mining and agriculture, which rely heavily on efficient supply chains.
“The Mozambican business environment can be described as economically promising, but with institutional challenges, requiring investors to adopt robust risk management strategies and prioritize medium- to long-term investment horizons,” EuroCam states.
The institution emphasizes that, on one hand, Mozambique benefits from abundant natural resources, a strategic location in Southern Africa, and a market with high growth potential. On the other hand, it faces institutional weaknesses that continue to weigh heavily on risk assessments. In this context, EuroCam considers that “regulatory predictability, administrative efficiency, and access to foreign currency are as decisive as the country’s economic potential itself,” adding that international perceptions of governance and transparency continue to strongly influence the country’s positioning in global investment markets.
According to the organization, three main factors guide investment decisions. The first is the potential of natural and energy resources, particularly natural gas, mining, and electricity generation. The second relates to relative macroeconomic stability, evidenced by moderate inflation—between 3.2% and 4.3% in recent averages—and a trend toward a reduction in the central bank’s policy rate. Finally, institutional and operational factors emerge, namely regulatory predictability, availability of foreign currency, infrastructure quality, and administrative efficiency.
Despite the opportunities, EuroCam draws attention to persistent obstacles such as complex licensing procedures, the involvement of multiple entities, lengthy timelines, and inconsistent interpretations of legislation—factors that increase costs and generate legal uncertainty. These are compounded by the high cost of capital, limited access to credit, and incomplete monetary transmission, in a context where the benchmark interest rate hovered around 20% in 2025, constraining productive investment.
Additionally, foreign currency shortages, exchange rate volatility, and heavy dependence on imports of intermediate goods and equipment continue to pose significant challenges for foreign investors. Nevertheless, the organization acknowledges that “this confidence has been tested in recent years by episodes of institutional instability, security challenges in some regions, and structural limitations in the business environment.” In this context, the prevailing sentiment among European investors is described as “cautious confidence,” strongly dependent on the continuity and depth of economic and institutional reforms in the country.
Business Perception: Private Sector Confidence Declining
In practice, private sector perception is markedly negative. Evaristo Madime, co-president of the Federation of Chambers of Commerce of Mozambique and former president of the Mozambique–United States Chamber of Commerce, believes that the business environment has deteriorated sharply in recent years, particularly in the post-election period between late 2024 and early 2025.
“The business climate has deteriorated drastically,” he states, stressing that “recent events have deeply shaken the confidence of both foreign and domestic investors.”
According to his remarks to DE, this context has translated into tangible losses for the business sector, including the destruction or compromise of infrastructure and assets. “Many companies have lost significant assets, forcing them to reassess the level of risk associated with investing in the country,” he highlights.
Added to this scenario is a more recent constraint with immediate impacts: the shortage of foreign currency. “Currently, many companies face serious difficulties accessing foreign currency, which limits their ability to make payments abroad and compromises their normal operations,” explains Madime, who is also chairman of the board of the Pharmaceutical Industry (INFARMA).
The problem particularly affects the industrial sector. “The lack of foreign currency prevents the import of goods and especially impacts industries that depend on acquiring raw materials abroad to sustain production,” he adds.
Madime also warns that foreign currency shortages go beyond the strictly economic dimension, representing an institutional risk as well. In contexts of severe constraints on access to essential resources such as foreign currency, the likelihood of informal allocation mechanisms increases, with negative impacts on transparency and market functioning.
The businessman also addressed the issue of government debt to suppliers. “This situation is driving many companies into bankruptcy and reducing market liquidity, as these companies owe each other and are unable to maintain a regular flow of economic activity,” he notes.
Still, he acknowledges some recent progress. “Regarding procedures for business creation, the country has made progress in simplifying the process, making it relatively easier and less bureaucratic,” he says. However, he stresses that these advances remain insufficient: “We are still seen as a country where the process takes too long,” adding that Mozambique is still frequently ranked among the most bureaucratic countries when it comes to setting up and managing businesses.
“The lack of foreign currency prevents the import of goods and especially impacts industries that depend on acquiring raw materials abroad to sustain production” – Evaristo Madime, co-president of the Federation of Chambers of Commerce of Mozambique
The businessman also highlights the decisive role of governance and transparency in the country’s attractiveness. “When international perception points to high levels of corruption, this inevitably reduces investor interest, as they fear facing additional informal costs to operate,” he explains.
Even so, he sees encouraging signs in the current government cycle. “There are indications of a commitment to making the country more transparent and aligned with international best practices in governance,” he notes, adding that this effort could gradually improve Mozambique’s image among investors. “It seems we are trying to follow the right path, which is a positive sign,” he emphasizes.
In the context of recent improvements in the business environment, he also highlighted security issues, particularly kidnappings, “which seem to indicate that the situation is under control,” he concluded.
Corruption as a Systemic Economic Risk
For economist Egas Daniel, any analysis of Mozambique’s business environment must necessarily consider the quality of its institutions. According to the expert, the country faces a structural paradox: despite its high economic potential, it remains constrained by institutional weaknesses that hinder development.
“Mozambique has resources and potential, but remains limited by weak institutions,” he stresses. One of the main indicators of this reality is the Corruption Perceptions Index, in which the country scored around 21 points in 2025, a level comparable to Guinea-Bissau, the lowest among Portuguese-speaking African countries (PALOP). According to the economist, “high levels of corruption entail real and measurable economic costs,” noting that “companies lose resources due to informal payments, administrative delays, and additional intermediation costs.”
Moreover, he adds, “corruption distorts competition, favoring companies with privileged access and reducing the role of efficiency as the main criterion for competitiveness in the market.”
Reforms as a Condition for the Future
To strengthen Mozambique’s economic competitiveness in Southern Africa, EuroCam advocates the urgent implementation of structural reforms considered a priority.
Among the main measures, the organization highlights the need for regulatory simplification, digitalization of public services, and greater fiscal predictability. It also points to the deepening of the financial system, investment in logistics and energy infrastructure—essential to reduce structural costs—and the diversification of the productive base, currently overly dependent on aluminum, coal, and gas, which account for around 70% of exports.
According to EuroCam, “the reform with the greatest potential impact would be administrative and regulatory simplification throughout the entire investment cycle,” particularly through integrated licensing, digitalization of processes, and greater fiscal stability.
For his part, Evaristo Madime argues that the business environment is heavily constrained by the high tax burden, resulting from the state’s dependence on a small number of taxpayers with greater financial capacity. “The solution lies in broadening the tax base, allowing more taxpayers to contribute smaller amounts, similar to what happens with VAT. In Mozambique, the rate is high due to low adherence, unlike neighboring countries where broader participation allows lower rates,” he explains.
Additionally, foreign currency shortages, exchange rate volatility, and the strong dependence on imports of intermediate goods and equipment continue to pose significant challenges for foreign investors.
He also advocates reducing taxes such as Corporate Income Tax, arguing that this could encourage voluntary compliance and reduce tax evasion. “It is about finding a balance between rates that are competitive enough to attract taxpayers and reasonable levels that promote compliance,” he emphasizes. He adds that the combination of central taxes, local levies, and multiple smaller fees ultimately creates a heavy and unstable fiscal environment for businesses.
Meanwhile, economist Egas Daniel argues that improving the business environment requires deep institutional reforms aimed at greater transparency, predictability, and efficiency. Among the priorities, he highlights strengthening commercial justice—to ensure swift and impartial dispute resolution—digitalizing public services such as business registration and the tax system to reduce corruption and discretion, and reforming public procurement processes to make them more transparent and competitive.
The analyst also advocates strengthening independent anti-corruption institutions, with political continuity and adequate operating conditions, in order to increase investor confidence.
Convergence of Views on Solutions
Sources agree on a common assessment: Mozambique has the economic and strategic conditions to position itself as a high-potential investment destination, mainly driven by gas megaprojects and natural resources. However, this potential continues to be significantly limited by persistent structural weaknesses—namely corruption, institutional instability, bureaucracy, and regulatory unpredictability—which increase perceived risk and hinder investment decisions.
EuroCam, Evaristo Madime, and Egas Daniel all point to the same central conclusion: current economic growth is insufficient and vulnerable, as it is based on a poorly diversified foundation with weak links to the national productive sector. At the same time, the recent deterioration in business confidence—exacerbated by constraints such as foreign currency shortages and high operating costs—reinforces the need for structural change.
Text: Germano Ndlovo
