RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/209 
18 March 2009  
 
(09-1340) 
Trade Policy Review Body Original: English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
MOZAMBIQUE 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Mozambique is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Mozambique.Mozambique WT/TPR/G/209 
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CONTENTS 
 
    
    P a g e  
1. ECONOMIC ENVIRONMENT AND DEVELOPMENT 5 
 1.1. ECONOMIC ENVIRONMENT 5 
 1.2. D EVELOPMENT  5 
 
2. MACROECONOMIC POLICIES 6 
 2.1. F INANCE   6 
 2.2. A GRICULTURE AND MINERAL RESOURCES  7 
 2.3. S ERVICES  8 
 2.4. M ANUFACTURING  9 
 2.5. E NERGY   9 
 
3. TRADE POLICY OBJECTIVES 10 
 3.1. F OREIGN TRADE  10 
 3.2. M ULTILATERAL , REGIONAL OR PREFERENTIAL TRADING AGREEMENTS  11 
 3.3. T RADE AGREEMENTS AND INITIATIVES  11 
 
4. MOZAMBIQUE AND THE WTO 11 
 4.1. T ECHNICAL ASSISTANCE NEEDS  12 Mozambique WT/TPR/G/209 
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1. ECONOMIC ENVIRONMENT AND DEVELOPMENT 
1.1. ECONOMIC ENVIRONMENT  
1. Mozambique has produced positive economic r esults over the last decade. The economic 
environment has been transformed. Mozambique ha s a low diversified economy. It is dependent from 
agriculture.  Mozambique recorded  an average annual per capita income of USD 362 in 2006 and this 
is estimated to have been USD 466 in 2008. A co mbination of several factors: political stability, 
economic reforms, foreign investment flows, th e gradual integration into regional markets and 
continued international donor s upport have created the conditions for high economic growth rates 
recorded in recent years.  
2. The Mozambican Anti-Corruption Strategy (approved by the Council of Ministers on 11 
April 2006) is an integral part of the overall Pub lic Sector Reform Strategy, with the objective of 
improving the provision of public services to citizen s, and developing a favourable environment for 
the growth of the private sector.  
3. The eradication of corrupt practices in the area of  International trade will contribute to a much 
enhanced environment for importers and exporters by ending the misuse of personal power and by 
increasing the level of effectiveness in service pr ovision and hence the implantation of transparent 
predictable customs procedures.  
1.2. DEVELOPMENT  
4. A Poverty Reduction Strategy Paper (PARPA) was introduced in 2001 which defined the 
Government’s development objectives between 2001 and 2005. A second PARPA was approved in 
2007. The fundamental objectives of the PARPA ar e economic growth and poverty reduction. The 
PARPA places great emphasis on entrepreneurial initiative and private sector growth as the driving 
force of economic and social development.  The ro le and objective of the State within the PARPA is 
to lead the reform process in order to create a conducive environment for private sector development. 
5. With a view to securing a stable inflow of foreign capital to meet national development 
objectives, Mozambique's investment policy rests on the following pillars: 
- Security and protection of property rights as set out in the Law on Investment and 
 Land Law - Free entitlement to take out and repay fo reign loans, and to repatriate profits 
- To ensure fair and efficient dispute resolu tion, adherence to the International Centre 
 for the Settlement of Investment Disput es, supplemented by b ilateral investment 
 treaties with twenty countries 
- Negotiations of double taxation treati es with some key economic partners 
- Industrial Free Zones  - A proportional corporate income tax suppl emented by a simple progressive personal 
 income tax. 
 6. Enterprises in most sectors can apply to establis h or join an industrial free zone, except for 
natural resource projects, and fish or cashew nut s processing. The first industrial free zone was the 
Industrial Park of Beluluane, established 1999. Ou tside the park, other investment projects enjoy 
“industrial free zone” status, and these include th e MOZAL aluminium plant and the heavy sands 
projects in Moma-Nampula and Chibuto. 
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2.  MACROECONOMIC POLICIES  
7. Mozambique remains a successful transition economy, with an economic growth rate 
averaging 8 per cent over the last five years and has sustained macroeconomic and political stability. 
Despite the strong economic growth, there are still major concerns in terms of the impact of the 
macroeconomic policies on poverty reduction.  
8. Real GDP growth moderated slightly to an est imated 7.1 per cent in 2007, down from 8 per 
cent in 2006, mostly due to oil price increases a nd a downturn in traditional exports. Given to the 
adverse conditions in international markets, the grow th rate in 2008 is expected to slow down to 6.5%. 
Nevertheless, GDP per capita h as registered a significant increase from 230.8 USD in 2001 to an 
estimated amount of 466.7 USD in 2008.  
9. The country also made significant progress in the macroeconomic front, mainly in fiscal and 
monetary policies. The Central Bank of Mozambique ’s monetary policy aims to stabilize the local 
currency and keep inflation at one digit.  
10. Inflation was significantly reduced between 2002 and 2007. However, the sharp increase in 
oil and food prices in the international markets, co mpounded locally with a series of natural disasters, 
has led to an inflation increase during the first semester of 2008.  
11. Recent economic developments show that the country’s output is driven mainly by 
investments in mineral resources, industry, services, and agro-industry and this has been  possible due 
to the sound macroeconomic reforms that attract foreign direct investme nt as well as the good 
performance of the construction sector.  
12. The country’s national accounts show that pub lic investment as proportion of GDP has 
remained stable over the period 2001-08. Moreover, priv ate investment also rema ined stable thanks to 
significant flows of foreign direct investment and donor-funded infrastructure rehabilitation 
programmes. Consumption figures are stable wh ile the country’s external demand position has 
improved slightly over the period, mostly due to an increase in electricity and natural gas exports as 
well as the mega-projects (particularly those of MOZAL and SASOL). Nevertheless, the balance of 
trade is expected to deteriorate in 2008, due to a rise in the price of food and fuel imports and 
continuing slow performance of traditional exports  like cashew nuts, sugar, tobacco and prawns. 
13. Fiscal policy was oriented in line with the main objectives for poverty reduction, mostly 
through the implementation of tax reforms and s ubstantial progress in the reporting and management 
of public finances. Revenue collection procedur es improved over the period 2002-07, leading to tax 
revenue reaching an estimated 14.1 per cent of  GDP in 2007, from 10.5 per cent in 2002.  
2.1. FINANCE  
14. The government is implementing reforms in the fi nancial sector in order to: 1) modernize and 
expand the financial system; 2) promote the entran ce of new financial institutions; 3) promote the 
expansion of the banking network, particularly in ru ral areas; 4) promote microfinance institutions; 5) 
increase the level of monetization; 6) expand financ ial services in rural areas; 7) develop financial 
services for SME’s and family enterprises, and 8) impr ove the insurance, pensions and social security 
sectors. 
15. The government has taken a number of measures, building on the reforms, to liberalise the 
exchange rate and has introduced, in 2005, a multilate ral system of exchange rate determination on 
the MCI (interbank exchange market) an d of foreign exchange auctions.  Mozambique WT/TPR/G/209 
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16. In the sphere of reform of the taxation system , there is a programme of fiscal and customs 
reform which foresees the adjustment and establishmen t of new taxes and legislation. The objectives 
of this reform are: 
- the progressive increase of tax receipts 
- the simplification of the tax system 
- the broadening of the tax base - the modernisation of tax administration 
- the facilitation of legitimate commerce 
- the protection of the national and regional economy, and 
- the improvement of the security of international trade. 
 
17. The programme continues to build on the f oundation reforms establis hing Value-Added Tax 
and Personal and Corporate Income Taxes. In 2004, the Government introduced the single tax-identification number (NUIT), which allows better control of revenues from collective and singular 
persons. The entrance into force of the Central Revenue Authority to replace the previous General 
Directorate of Customs and Tax, has given a new im pulse to reforms by creating new synergies in the 
formulation of a common strategy and better u se of human, material and financial resources. 
18. In 2003 new regulations on pre-shipment insp ection (PSI) were introduced, with the aim of 
reducing the time spent in customs procedures. The se regulations abolished the requirement for an 
Import Pre-Shipment Declaration, except for sen sitive products (see Annex I). The government 
continued to refine its customs regime, passing two new customs regulations in 2008. These new 
regulations specify how customs exemptions fo r duty-free shops and cabotage (maritime freight 
within the country) are to be administered.   
2.2. A
GRICULTURE AND MINERAL RESOURCES  
19. Mozambique has immense agricultural potential which contributed with 23.6 percent of the 
GDP in 2007.  
20. In addition to the vast areas of productive arab le land there are large tracts suitable for 
livestock production. As result of the “fomento” prog ram (imports of cattle th rough public funds as 
well as intensive work on disease control, through subsid ised credit and credit in kind i.e. the loan of 
animals directly to farmers) livestock numbers ha ve been increasing. Recen t surveys suggest that 
there are as many as 1 million bovines currently being bred.  Investment in poultry farming has also 
been increasing. Despite these improvements Mozambique  continues to be a net importer of of cereal 
products.  During the 2007/2008 commercial year, for example the trade deficit of cereals, mainly wheat and rice, was estimated to be around 450.000 tons.  
21. The Mozambican Agriculture sect or has been developing stra tegies and programs to increase 
production and productivity with the aim of becoming competitive in the international market and to 
capture international trade opportunities available to Mozambique. To support this process the 
Government approved the ‘Green Revolution strategy’ in 2007. 
22. The Green Revolution aims to transform the subs istence agricultural sector into a commercial 
agricultural sector. The main focus is on food pr oduction, mainly cereals, oil crops and tubers, 
focused on small and medium households. To a lesse r extent, there is a focus on poultry production. 
23. In line of the Green Revolution, in 2008 the Government approved the Plan of Action for 
Food Production (PAPA) to offset the world food crisis that was affecting the country. The main WT/TPR/G/209 Trade Policy Review 
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objective is to reduce imports of rice, wheat and potatoes by 50% by 2011 through technical 
assistance (irrigation, farm implements, improved seeds, fertiliser and pesticides). 
24. Mozambique is rich in natural resources, ma ny of which have a high economic and export 
value.  Many of Mozambique’s resources are cu rrently under-exploited.  There is potential for 
development of industries such as tourism, agricultu re and fishing, hydroelectricity and mining.  
25. On sustainable development, the Government  does acknowledge that sound management of 
its natural resources and environmental control are essential for Mozambique’s sustainable development.  
26. The main environmental issues currently affecting Mozambique include deforestation, 
desertification, degradation of coastal areas, loss of wildlife and other biodiversity resources, the use 
of environmentally harmful products and the co ntinued use of obsolete and environmentally  
damaging technologies. In recognition of these cha llenges, the government has established a National 
Strategy for Sustainable Development to integrat e environmental consider ation into its economic 
policies and poverty alleviation programmes.  
27. In the mining industry, a new Mining Code was adopted in 2002 and regulations revised in 
2006. These revised regulations allow both foreigners and nationals to engage in prospecting activities 
and obtain mining concessions, although permits for some categories of small-scale activity are 
reserved for Mozambicans. With the exception of  salt mining, mining and quarrying activities are 
subject to a low tariff of 2.5%.  
28. The upstream petroleum operations are subject to the Petroleum Law enacted in 2001 and its 
Regulations issued in 2004. 
29. In 2007, exports of natural gas were substa ntial, at $120 million, representing a 10% increase 
compared to the previous year.  
2.3. S
ERVICES  
30. The Mozambican service sectors have unde rgone significant and substantial reform. 
Continued implementation of a privatization and li beralization program in many service sectors will 
help the sectors continue to devel op.  Continued foreign investment will make a valuable contribution 
to the competitiveness of the sectors.  
31. The transport sector is not run as a government monopoly.  The 5th Freedom of the Air is 
currently being introduced, allowing foreign carriers to drop off and pick up passengers from third 
countries. 
32. Over recent years the Mozamb ican telecommunications sector has undergone significant 
changes characterised by a growing level of liberali sation.  There are two mobile providers MCel as 
the public Enterprise and ‘Vodacom’, a private provider. The Government plans to implement further 
liberalisation by granting further licences to incr ease competition.  The telecommunications regulators 
recognise the key roll that foreign investment a nd service providers will play in developing the 
Mozambican telecommunications networks.   
33. The Mozambican financial serv ices sector has undergone si gnificant reform and is now 
characterised by a relatively high levels of competit ion and foreign participants in the market  with 
fourteen commercial banks now operating in the country.  Mozambique WT/TPR/G/209 
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34. Under the insurance law of 2003, foreign insu rance providers are not required to become 
incorporated in Mozambique; they can simply open a branch office. As a result, four foreign-owned 
insurance companies have entered into the market, previously dominated by the state-owned insurer, 
substantially reducing concentration in the sector. 
35. Mozambique’s tourism sector has seen particul ar growth and investment in the development 
of beach destinations along the coast. Mozambique’s  potential as a leading tourism destination is not 
restricted only to its beaches. Its national parks,  mountains, lakes and lagoons, and exceptional flora 
and fauna offer ample opportunities. 
2.4. MANUFACTURING  
 
36. The Government's Industrial Policy, coveri ng the period 2007-11, identifies and focuses on 
the following products as key manufacturing prior ities: Food processing and agro-industries:  These 
include salt, sugar, copra, processed fish, processed  fruit and cashew nuts. ‘Lower Priority’ products 
include: milling products, sisal, tea, bakery produc ts, pasta, processed meat, tobacco, animal feed, 
dairy products and liqueurs; Textile  and Clothing and Metallurgy.   
37. Metallurgy products are to be promoted, li nked where possible to the existing Mozal 
Aluminium smelting plant based near Maputo, as ke y earners of foreign ex change. The government 
encourages the establishment of more plants in Be luluane to promote linkages by supplying services 
to Mozal. It also encourages the establishment of plants in Dondo and Nacala to supply services to 
Beira and Nacala harbours respectively, and other industries within the foreseen industrial parks. 
38. A strategy to assist the development and re vitalization of industries in Mozambique was 
approved by the Government in October 2008, and focused on three pillars, namely: (i) the 
development of agrarian land within the rural areas, (ii) the exemption of enterprises in industrial free 
zones from personal income tax during the first te n years of operations and reduction of 50% for 
subsequent years (iii) development of infrastructures , consisting of building industrial infrastructures 
valued at 1.2  million USD within the industria l parks of Beluluane, Dondo and Nacala in the 
Provinces of Maputo, Sofala and Nampula, resp ectively. This program will be fulfilled in 
coordination with the provision of water a nd electricity for the industrial parks. 
2.5. ENERGY  
 
39. The energy sector’s crucial role in the devel opment of the country and for the fight against 
poverty is reaffirmed in the Second Action Plan fo r the Reduction of Absolute Poverty (PARPA II), 
2006-2009, and in the Five Years’ Government Plan (PQD) 2005-2009.   
40. This sector is playing an increasingly importa nt role in the economy of Mozambique. By 
2005 the energy sector accounted for close to five  percent of GDP in Mozambique, and for a much 
higher share of gross national investment. Sin ce 2000 annual domestic production of energy has 
increased by 40% while export volume has increased by  300%. This is mainly due to the start of 
natural gas production and export as well as increased production and export of hydroelectric power 
from the Cahora-Bassa hydro-electric dam.  
41. In 2007, electrical energy exports were about  $245 million, a 32.9% increase compared to 
2006.  
42. The Government, in December 2006, approved Decree nº 63/2006, 26 of December 2006, 
which updates the procedures for importation and ex portation, distribution and commercialization of 
petroleum products. In general, in the energy sector the Government is pursuing the following WT/TPR/G/209 Trade Policy Review 
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strategic goals: i) improving the efficiency of ener gy suppliers and reducing the cost of supply; ii) 
increasing the access of productive sectors, as well as hospitals and schools, to modern sources of energy; iii) increasing the access of households to  modern sources of energy; iv) increasing the 
efficiency of energy use; v) generation of public  revenue and foreign exch ange, in part, through 
exports.  
3.  TRADE POLICY OBJECTIVES  
 
43. The objective of Mozambique's external trad e policy is the creation of an environment 
conducive to promoting the competitiveness of Moza mbican products in the international markets, 
especially those of the developed economies of Eur ope, America, and Asia.  This does not prejudice 
the promotion of intra-African trade, an important part of Mozambique’s trade policy.  Trade policies 
are formulated with a view to aiding Mozambique's  industrialization process by creating linkages with 
international value chains and, importantly, by re ducing the barriers to imports of key inputs. In 
pursuing its trade policy objectives Mozambique is  fully engaged in multilateral, regional and bi-
lateral trade negotiations.  
3.1. F
OREIGN TRADE  
 44. Steady growth in exports of electricity, natu ral gas and aluminium has helped improve the 
balance of trade. To illustrate, for the first quarter  of 2007 mega-projects accounted for 81 per cent of 
exports, but only 24 per cent of imports, which may explain a slight improvement in the external 
demand position during the period 2005-07. A relative ly strong performance of traditional exports 
also helped reduce the trade deficit in this period. 
45. However, a rise in the import bill for petroleu m and cereals in 2008 is expected to lead to 
substantial deterioration of the current balance.  While these inflationary pressures show signs of 
subsiding, a fall in the price of Mozambique's key export commodities could continue to put upward 
pressure on the trade deficit in 2009. 
46. Since the early 1990s, exports have expanded at  an average rate of 10 percent per year. 
47. In 2007, Mozambique recorded total exports of 2,412,120 (million USD). Most Mozambican 
exports are destined to the Organisation for Economic Co-operation a nd Development (OECD) 
countries. Mozambique’s exports to SADC made up 20. 78% of the total, of which 17.18% of the total 
was accounted for by South Africa. 
48. Mozambique’s main agricultural exports are cash ew nuts, sugar cane, cotton fibre and timber.  
Other products include sisal, tobacco and fruits such  as banana, citrus and mango. The main fisheries 
product, prawns, continues to be among the countr y's top exports (and the biggest agricultural export 
in 2007. 
49. Over the past five years imports have tende d to rise in line with exports as the major 
exporting mega-projects also require substantial imports of machinery a nd primary inputs. Other 
imports have also increased, including consumer goods, and agricultural inputs.  
50. Mozambique's import profile is limited in terms of its product mix, with over 40% of imports 
being accounted for by four HS chapters. These ma in import products are: machinery, electrical 
goods, vehicles and cereals. 
51. The import profile is also concentrated in te rms of trade partners: 33% of Mozambique’s 
imports came from South Africa in 2007, making it Mozambique’s largest source of imported goods. Mozambique WT/TPR/G/209 
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Mozambique's imports from the wider SADC region,  including South Africa, constituted 35% of the 
total. Due to the inputs required by the aluminium industry, the Netherlands has also became a major 
trade partner, supplying around 15% of imports in recent years. 
3.2. MULTILATERAL , REGIONAL OR PREFERENTIAL TRADING AGREEMENTS  
 
52. As a member of the African Caribbean and Pacific (ACP) group of countries Mozambique 
used to benefit from unilateral preferences to access the EU (European Union) market. This 
agreement is currently in the process of being tran sformed into the Economic Partnership Agreements 
(EPAs) negotiated between the European Commissi on (EC) and regional groups of ACP countries.  
Mozambique is negotiating an EPA with a group of SADC countries.  
53. Mozambique is a member of the Southern African Development Community (SADC). SADC 
is a regional political and economic  cooperation organisation which comprises 15 member States all 
in the Southern and Central African region.  Mozambique is a signatory to the SADC Trade Protocol which sets out an ambitious timetable for regional in tegration. In January 2008 the SADC Free Trade 
Agreement (FTA) was implemented. The SADC re gion intends to establish a SADC Customs Union 
in 2010, a SADC Common Market by 2015, a SADC Central Bank and Monetary Union by 2016 and a SADC Regional Currency by 2018.   
54. The reduction of intra-regional tariff barriers began with the implementation of the SADC 
Trade Protocol in 2000, which was notified to the WTO in 2004. 
3.3. T
RADE AGREEMENTS AND INITIATIVES  
 
55. Mozambique signed a Trade and Investment Framework Agreement with the United States of 
America in 2005 which aims to strengthen commerc ial ties between the two countries and improve 
the business environment. Specific trade-related elem ents include: trade facilitation; promotion of 
trade in services; improvement of trade-related infra structure, and a number of trade-related policies. 
56. Mozambique concluded a bilateral trade agr eement with Malawi in 2006 which provides for 
elimination of tariffs on all items with the exception of arms, oil, office supplies and some agricultural 
goods. A similar agreement was reached with Zimbab we in 2004, covering all products with the 
exception of arms, automobiles and some agricultural products. 
57. In addition to these negotiated mu lti-lateral and bi-lateral agreements Mozambique has also 
been a beneficiary of unilateral preference schem es, such as the Everything But Arms (EBA) initiative 
granted by the European Commission and the Africa  Growth and Opportunity Act (AGOA), granted 
by the US Government to a group of African countries. 
58. In 2005 China announced that it would exte nd preferential, duty-free access to LDCs, 
including Mozambique, on a limited range of pr oducts (around 400), while in 2008 Mozambique 
subscribed to India's Duty-Free Tariff Preference Scheme (DFTP) for LDCs.  
4. MOZAMBIQUE AND THE WTO  
 
59. As a WTO member Mozambique has adopted the commitments which resulted from the 
Uruguay Round in their entirety. Mozambique, an LDC, benefits from special and differential 
treatment (S&DT) afforded to all LDCs.   
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4.1. TECHNICAL ASSISTANCE NEEDS  
 
60. Mozambique emphasises the need for im proving infrastructure to promote trade 
competitiveness, market access and reduce production a nd transactional costs. Efforts must be made 
to ensure that Aid for Trade achieves its objec tives of promoting growth and poverty reduction, 
addressing infrastructure bottlenecks, establishing m echanisms that reflect national development 
priorities and strategies, and that assist with regi onal integration. Mozambique reaffirms its position 
that Aid for Trade should be additionally, non-cond itionality and provision of resources in the form of 
grants to countries. 
61. Mozambique's aid for trade needs is substantia l and focus on tackling supply-side constraints, 
including infrastructure bottle-necks. Mozambique participates in the Integrated Framework to 
systematically identify and tackle constrai nts to its participation in global trade. 
62. Mozambique is currently engaged in trade nego tiations which cover a br oad range of complex 
subjects and will soon face the challenges of impl ementation. It foresees substantial technical 
assistance needs to facilitate, inter alia: 
- the compliance of Mozambican exports with  technical regulations, including sanitary 
 and phyto-sanitary requirements 
- the implementation and developmen t of the domestic legal framework. 
 
 
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