Africa’s low capacity to generate own revenues and dependence on transfers from the Central Government are the main fiscal risks for local authorities in Mozambique. This information is contained in the report “Fiscal Risks of Local Authorities 2019–24”, prepared and released by the Ministry of Finance.
According to the Lusa news agency, the publication analyses the financial indicators of Local Decentralized Governance Bodies, with a focus on municipalities, identifying the potential fiscal risks to which they are exposed through a historical analysis, particularly reviewing the management accounts of the country’s municipalities.
“The main fiscal risks identified include low capacity to collect own revenues, high expenditure on payroll, lack of financial autonomy, dependence on Central Government transfers, as well as exposure to excessive indebtedness resulting from delays in payment to suppliers and repayment of loans contracted,” the report states.
The study — which excluded the municipality of Mocímboa da Praia in Cabo Delgado due to vandalism and destruction of documents during terrorist attacks — was produced to contribute to the improvement of public financial management, particularly at the municipal level, strengthening the capacity of these institutions to fulfil their role in the country’s socioeconomic development.
The document reveals that, during the analysed period, municipalities such as Marrupa, Chiúre, Malema, the city of Ilha de Moçambique, Ribáué, and Sussundenda had a dependence on government transfers exceeding 90%. On the other hand, municipalities including Moatize, Mandimba, Monapo, Tete, Chimoio, Mueda, Mocuba, Catandica, and Quissico recorded notable revenue growth, exceeding 100%.
“One of the critical challenges identified relates to indebtedness, as in 2024 some municipalities, such as Mandimba, Pemba, Marromeu, and Namaacha, recorded debt levels equivalent to about three times their capacity to generate own revenues, showing high fiscal vulnerability,” the report warns.
However, it also highlights that municipalities such as Angoche, Nacala, Metangula, Sussundenga, Chiúre, Malema, Inhambane, and Massinga reduced, on average, 80% of their liabilities in 2024, “thanks to improved management, implementation of new revenue collection methods, and debt renegotiation.”
The report concludes that “fiscal sustainability in the medium term depends on efficient treasury management, diversification of revenue sources, and strengthening local revenue collection capacities, so measures such as modernizing the tax administration, expanding the taxpayer base, and containing payroll expenses are essential.”
“At the same time, an integrated approach between the Central Government and local authorities is necessary, promoting fiscal decentralization and efficient management of local resources to ensure national fiscal stability, reduce excessive dependence on government transfers, and mitigate debt pressure,” the document adds.
