The story is true – as is everything we write, but perhaps this time the topic will resonate more with many and, consequently, generate debate in the comments section of the digital version – but this is not a denunciation, nor is it an attempt to hold anyone responsible. It is merely a testimony to a situation whose timing could not have been more propitious.
A few months ago, we reserved the name of a company we wanted to set up for a new project we are working on at the Legal Entities Registry Office (CREL) in Maputo. After completing our internal paperwork, we returned to CREL to finally register the company.
company. At that moment, we discovered that, in the meantime, a company with exactly the same name had been set up at the CREL in Beira while our reservation was still valid. We questioned and complained, but the fact was that, regardless of the reason, the company in Beira had already been incorporated with what was ‘our’ name. It may have been a lack of creativity on our part, but this embarrassment could have been much more costly for us, both in terms of time and money.
Our company has now been set up, but what brings us back to this issue is the structural problem and not just our particular problem.
This episode is one of many that perfectly illustrate how Mozambique continues to face considerable obstacles to development, including a large informal sector, low levels of rural banking and a fiscal deficit that limits the government’s investment capacity.
. The importance of digitising the country was evident in President Chapo’s inauguration speech, and this intention was confirmed with the creation, for the first time, of a ministerial department responsible for this goal. At a recent forum entitled ‘Digital Transformation in Legal Processes in Mozambique’, Lourino Chemane, Chairman of the Board of Directors of the National Institute of Information and Communication Technologies (INTIC), highlighted the government’s determination to modernise administrative processes and shared some ongoing initiatives in this area. These are important steps, but how can the private sector contribute to accelerating the realisation of this vision?
Digitalisation presents a transformative opportunity to overcome these obstacles and boost economic development, particularly through the formalisation of the informal sector and the expansion of financial inclusion. This article analyses Mozambique’s economic landscape in comparison with countries at a similar stage of development and proposes concrete measures to implement digital solutions with minimal budgetary impact for the state.
Overview in Mozambique
The Mozambican economy has experienced moderate growth in recent years, which has not been inclusive, with marked regional disparities and a large part of the population still living below the poverty line.
The importance of the country’s digitalisation was evident in President Chapo’s inauguration speech, and this intention was confirmed with the creation, for the first time, of a ministerial department responsible for this goal.
The public sector faces significant challenges, including administrative inefficiency, corruption and lack of transparency. These factors have hampered economic development and discouraged potential investors. Excessive bureaucracy, complex administrative processes, slow justice and the lack of computerisation of services contribute to a challenging business environment. However, what deserves greater attention is a report by the United Nations Department of Economic and Social Affairs (UNDESA, 2024), which highlights that the country has been consistently falling in the E-Government Survey ranking since 2020. It is fair to say that ‘those who do not move forward, fall behind’, as we are losing ground to other countries.
A. Examples of Strategies to Attract Investment in Digitalisation
1. Modernisation of Public Administration.
The digitalisation of public administration represents a crucial opportunity to improve government efficiency and reduce operating costs. The implementation of integrated financial management systems can contribute significantly to the elimination of ‘ghost salaries,’ a problem that drains considerable public resources. Studies indicate that countries such as Rwanda have managed to reduce personnel expenses by up to 20% after implementing digital human resource management and payroll systems.
A critical and often overlooked aspect is the security of government information. Currently, many civil servants use personal email services such as Yahoo and Hotmail for official communications, compromising sensitive government information. This practice exposes the government to significant risks of cyberattacks, espionage, and data breaches.
. The implementation of a secure government email system with end-to-end encryption and two-factor authentication is an urgent priority. Countries such as Brazil have implemented the Gov.br system, which provides official and secure email addresses for all civil servants, ensuring that communications remain secure.
The creation of a single government services portal, similar to e-Estonia (in Estonia), would allow citizens and businesses to access various public services through an integrated platform, reducing bureaucracy and increasing transparency. This type of initiative not only improves administrative efficiency but also reduces the risk of corruption.
In addition, it is essential to develop a centralised government data storage infrastructure with robust security protocols and clear information access policies. Botswana has successfully implemented a centralised management system that has improved information security and facilitated data sharing between departments, increasing efficiency.
2. Blockchain Technology for Document Certification
The implementation of blockchain technology for civil document certification represents a significant opportunity for Mozambique. This technology allows for the creation of immutable and transparent records, making it difficult to falsify documents and reducing corruption. Its application in registry and notary services could transform processes that are traditionally time-consuming and vulnerable to fraud. The case of Ghana, which has implemented a blockchain-based land registration system blockchain, demonstrates the potential of this technology. The system has significantly reduced land disputes and increased investor confidence in the market. In Mozambique, where land issues are often complex, a similar solution could have considerable impacts.
3. Identification and Management of BD
A national digital identification system, integrated with various government databases, could revolutionise public service delivery in Mozambique. This system would facilitate access to essential services such as health and education, as well as simplifying administrative processes for citizens and businesses.
Investing in digitalisation enables the country to overcome major structural challenges
India, with its Aadhaar system, demonstrates the transformative potential of large-scale digital identification.
This system has enabled the Indian government to target subsidies more efficiently, reducing fraud and ensuring that benefits reach their intended recipients.
In Mozambique, something similar could improve the efficiency of social programmes and reduce misappropriation.
4. Digitisation of healthcare
The digitisation of the health sector, particularly in the management of the medicine supply chain, represents an opportunity to improve efficiency and reduce fraud. Digital medicine tracking systems, from procurement to the distribution of prescriptions to patients, can significantly reduce the diversion and counterfeiting of pharmaceutical products.
Tanzania has successfully implemented an electronic logistics management system for medicines, which has reduced shortages of essential medicines in health facilities from 26% to 7%. In Mozambique, a similar system could substantially improve access to healthcare.
B. Formalisation of the Informal Sector through Digitalisation
The informal sector represents a significant part of the Mozambican economy, accounting for around 40% of GDP. This sector, while vital to the livelihoods of millions of Mozambicans, operates outside the tax and regulatory system, limiting the state’s ability to collect revenue and implement effective economic policies.
1. Low-Cost Strategies for Digital Formalisation Public-Private Partnerships for Simplified Registration
Instead of developing costly government systems, Mozambique can partner with technology companies to create mobile platforms for simplified business registration. A revenue-sharing model can be implemented, where technology companies receive a small percentage of the registration fees or taxes collected through the platform.
Senegal implemented the ‘e-Tax’ system through a partnership with mobile operators, allowing small traders to register and pay simplified taxes via mobile phone. The system did not require significant initial investment from the government and is financed by a small commission on transactions.
Gradual Micro Registration with Incremental Benefits.
A gradual formalisation system can encourage informal traders to enter the formal system step by step, with minimal initial requirements and immediate benefits. For example, simple registration via SMS could grant access to microcredit or basic insurance, encouraging enrolment without significant costs to the state.
Ghana has implemented the ‘Susu Digital’ system, which allows informal traders to register via mobile phone and access basic financial services. The system was financed by private financial institutions that benefit from the expansion of their customer base
Expanding Rural Banking through Digital Solutions. Low banking penetration in rural areas of Mozambique limits access to credit, hinders safe savings and restricts economic growth. Digitalisation offers innovative solutions to expand financial services to remote areas without the need for costly traditional banking infrastructure.
2. Low-Cost Strategies for Rural Banking Partnerships with Telecommunications Operators
The government can establish strategic partnerships with telecommunications operators to expand mobile money services in rural areas. These partnerships can include regulatory incentives rather than direct subsidies, such as preferential spectrum licences in exchange for rural expansion commitments.
Tanzania has significantly expanded rural financial inclusion through partnerships with mobile operators, offering regulatory incentives for coverage expansion in rural areas. As a result, the financial inclusion rate increased from 16% to 65% in less than a decade, without significant direct government investment.
Digital Banking Agents
The banking agent model, where local merchants act as access points to basic financial services, can be expanded through simple mobile applications. The government can facilitate this process through appropriate regulation, without the need for direct investment.
Brazil has significantly expanded its network of banking agents in rural areas through favourable regulation, allowing small merchants to offer basic banking services. The model did not require direct government investment and increased financial inclusion in remote areas.
Blockchain for Rural Microfinance
Blockchain-based platforms can facilitate peer-to-peer microloans for farmers and rural entrepreneurs, bypassing the need for traditional banking infrastructure. The role of the government would be mainly regulatory, ensuring consumer protection without direct investment.
Uganda has implemented the Agriledger platform to connect smallholder farmers with financiers and buyers. The system was developed by a private company with regulatory support from the government, at no significant cost to the public purse.
C. Alternative Financing Models
1. Results-based Public-Private Partnerships (PPPs).
Instead of initial investment, the government can establish PPP contracts where private partners invest in digital infrastructure and are remunerated based on predefined results, such as the number of formal registrations or rural bank accounts opened. Rwanda used this model to digitise its business registration system, with the private partner receiving payments based on the increase in the tax base resulting from formalisation, making the project self-financing.
2. Impact Financing and International Donors
Digitisation projects with clear social impact can attract impact financing and support from international donors. The government can act as a facilitator, creating a favourable regulatory environment and coordinating efforts without direct financial contribution.
Malawi attracted funding from the World Bank and impact investors for its digital identity programme, which was implemented without significant pressure on the national budget.
3. Revenue-sharing models
Digital systems can be financed through revenue-sharing models, where promoters receive a small percentage of the transactions or benefits generated by the system. Zambia has implemented a digital tax payment system where the technology company receives a small percentage of the additional revenue generated, making the system self-financing and aligning incentives for efficiency.
D. How to do it? – Phased and Scalable Implementation Localised Pilot Projects
Starting with pilot projects in specific areas allows approaches to be tested with minimal investment before scaling up. These pilots can be funded by development partners or private companies interested in demonstrating the viability of the solutions. Benin implemented a pilot digital identity system in one province before expanding nationwide, reducing initial risks and costs.
Modular Approach
Developing systems in independent but interoperable modules allows for gradual implementation in line with available funding, rather than large initial investments. Estonia, often cited as a success story in e-governance, developed its digital system in a modular fashion over more than a decade, allowing each component to generate value before investing in the next.
E. How is it paid for? The Return on Investment in Digitisation
Investment in digitisation offers a considerable return in the medium and long term. World Bank studies indicate that countries that have invested significantly in digital infrastructure and electronic public services have seen substantial improvements in government efficiency and economic growth.
Estonia estimates that its digital signature system saves the equivalent of 2% of GDP annually. In Mozambique, where administrative inefficiency represents a significant cost to the economy, the potential savings through digitisation are substantial.
Digitisation is now a must for institutions.
Conclusion
The potential applications are vast. No sector of activity is immune to this transformation, and the only limitation to its application is our own imagination. Imagine simplifying the process of enrolling our children in school and digitally recording their entire academic performance through college. Imagine the instant updating of the national curriculum and the adoption of the best available content. Imagine the entire licensing and registration process for anything on a blockchain that is impenetrable to duplication and falsification: this could relieve our courts and bring confidence to our system. Imagine our corn, cashew, tea or cotton producers being able to offer traceability and proof of quality for their products, access real-time market price information and free themselves from the cartels that keep their prices low, as happened in Kenya with the M-Farm platform.
It will not be an easy process, especially as it requires a change in mindset and the breaking of some taboos, with the potential for job losses in a country where employment is already scarce. But the main thing we need to bear in mind is that once the genie is out of the bottle, there is no putting it back in again. And instead of resisting the potential impacts of digitalisation, we should embrace its inevitability and the contribution it can make to reducing (and doing so even faster) the gap between us and more developed countries.
Digital transformation is not computerisation; it is not about spreading the use of computers, but about changing an entire process, a culture and a way of interacting between the state and its citizens. It represents an opportunity for our economy with the potential to improve government efficiency, reduce corruption, attract foreign investment and stimulate inclusive economic growth. The experience of countries such as Tanzania, Zambia, Cambodia and Ghana offers valuable lessons on how to implement digital solutions effectively and sustainably, even in resource-constrained contexts.
To realise this potential, strong political commitment, strategic partnerships with the private sector and the international community, and a phased implementation plan that takes into account our context are needed. By investing in digitalisation, Mozambique can overcome some of its structural challenges and position itself as a regional leader in digital innovation, creating a more resilient, transparent and inclusive economy for all Mozambicans.
The journey to digitalisation is a challenge, but also an opportunity. By embracing this transformation, we will be shaping a more prosperous future for Mozambique and ensuring that future generations can benefit from a more efficient and inclusive business environment.
Marcelo Tertuliano & Bruno Chicalia • Partners at CTJ marcelo.tertuliano@ctjconsultoria.com bruno.chicalia@ctjconsultoria.com
