This Wednesday, 9 August, marks one year since Mozambique’s President, Filipe Nyusi, announced the launch of the Economic Acceleration Package (EAP) to help develop key sectors of the Mozambican economy.
One year on, DE interviewed entrepreneurs who are generally positive about the EAP, but also describe some challenges in implementing the measures.
Of the 20 measures announced, just under 15 have been approved and are in force, including: the reduction of the VAT rate from 17% to 16%; VAT exemption on the import of inputs in the agriculture and electrification sectors; reduction of the IRPC rate from 32% to 10% in agriculture, aquaculture and urban transport; simplification of administrative processes in relations between the state, companies and people and the revision of the general visa regime in Mozambique.
According to the executive director of the Association of Commerce, Industry and Services (ACIS), Edson Chichongue, “the EAP is a relevant instrument and represents a step that the Government needed to take”, especially in a context in which the business sector is experiencing many shocks, including the covid-19 pandemic, climate change and the war in Ukraine “. However, for the ACIS representative, “it is still too early to make a really positive assessment, as challenges remain regarding the implementation of some of the measures”, he points out.
“The private sector is still stifled. But there is hope that some things may happen, with the approval and implementation of more measures,” he adds.
For his part, the president of the Association of European Entrepreneurs in Mozambique (EUROCAM) and the Mozambique-Italy Chamber of Commerce, Simone Santi, emphasises the importance of the SAP to help develop business and boost the partnership between the public and private sectors, as well as contribute to reducing bureaucracy. “We are pleased with the measures already approved, from the increase in the validity period of discharge certificates to the visa exemption measure for several countries. On our side in particular, the balance is positive, as based on the approval of the new regime, 10 European countries have benefited from exemption, which shows the recognition of Europe as a major investor,” he added.
“We are satisfied with the measures already approved, from the increase in the validity period of discharge certificates to the visa exemption measure for several countries. From our side in particular, the balance is positive, as based on the approval of the new regime, 10 European countries have benefited from exemption, which shows the recognition of Europe as a leading investor”.
Simone Santi, President of the Association of European Entrepreneurs in Mozambique (EUROCAM) and the Mozambique-Italy Chamber of Commerce
Still, Simone Santi calls for the extension of the visa system to more European countries, as a way to make the national market even more attractive to European visitors and investors. “We are asking for the introduction of Greece and Cyprus, because they have a good diplomatic base in the country and are members of EUROCAM”.
The feeling of positivity is also expressed by the president of the Tourism, Hotel and Restaurant Sector of the Confederation of Economic Associations (CTA), Muhammad Abdulla, who, despite the various constraints related to the current economic situation, lists the implementation of measures that are, according to him, “being carried out at a good pace”, something that he considers “very motivating” for entrepreneurs. “The balance is positive, in fact. Our concerns as a private sector are being addressed and we are moving towards the recovery of economic stability. Today we are seeing a great influx of tourists from various corners of the world, thanks to the e-Visa”, he explained.
“The balance is positive, indeed. Our concerns as a private sector are being addressed and we are moving towards the recovery of economic stability.”
Muhammad Abdulla, President of the Tourism, Hotels and Restaurants Department of the Confederation of Economic Associations (CTA)
Under the visa exemption measure for some countries introduced in May, more than 13,000 foreign citizens entered Mozambique for tourism and business purposes.
In a more macro analysis, the economist and researcher at the Centre for Public Integrity (CIP), Estrela Charles, is more reticent, saying that the SAP “does not show the impact” that could be predicted when it was launched, that is, “the Government did not announce how much it costs to implement the measures”, she recalls. “When we talk about the implementation of the measures, it means that the Government will have expenses and this has not been mentioned. We know that it is intended to create economic growth, but what are the implications. So, one of the great weaknesses of this package is that it does not present a timetable for progress”, he explained.
After Estrela Charles, he explains how, in his opinion, and in terms of implementation, “many short-term measures are already being implemented” which he considers positive. However, he warns of the importance of monitoring measures 1, 2 and 3, in order to assess their impact on the activity of economic agents and, ultimately, on citizens. “On tax measures, we must analyse whether the sectors covered are evolving and what the benefits are for the end consumer. These VAT and IRPC reductions are already in force, but companies and the CTA itself are unable to give the state of play and present the gains that are being made,” she said.
In the researcher’s view, after a year, “the measures are not having a direct impact on reducing the cost of living and increasing production”, she points out. “The measures are good in theory but, in practice, they require much more exercise and delivery from the Government to be able to materialise in effective gains for the real economy”, she stresses. He goes on to point out more flaws in the implementation of this first post-SAP year: “They (the measures) fail because they lack detail and there is no implementation schedule. The SAP does not present a plan and alternative scenarios. What is known is that they should be implemented by 2024. I have some reservations whether everything will be done properly, given that elections are coming up,” he concluded.
The SAP is composed of 20 measures based on two areas of great relevance to Mozambican economic growth, the first being linked to fiscalisation and stimulation of the economy and the second related to improving the business environment, transparency, governance, and acceleration of strategic infrastructure projects.
