Mozambique WT/TPR/S/209 
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IV. TRADE POLICIES AND PRACTICES BY SECTOR    
(1) INTRODUCTION  
1. The agriculture sector is the major employer in Mozambique, absorbing around three quarters 
of the labour force;  however, its contribution to GDP was only around 25% in 2007 (Table I.1).  
Hence, raising productivity is among the key policy objectives in this sector, as this would contribute 
to poverty reduction and to attain food security, which are amongst Mozambique's overall policy 
objectives.  Government policies in this regard in clude expanding the provision of extension services, 
and supplying kits (seed, fertilizer, equipment) on credit to cereal and groundnut farmers in "high-
potential growth" areas of the country.  Natural disasters disrupt domestic production, and food-aid 
policy can be significant in alleviating hardship. Mozambique's major agricultural exports include 
cashews, cotton, sugar, tobacco, and fishery and forest ry products.  Agriculture has remained the most 
protected sector with an average tariff of 12.4% (ISIC 1), compared with an overall MFN average of 
10.1%.  Government intervention remains in place in the main subsectors:  cashews, cotton, sugar, 
and tobacco. 
2. Manufacturing activities are very limited.  Expor t-oriented production, mainly aluminium,  
takes place under the Industrial Free Zone regime.  Fore ign direct investment has been instrumental in 
the expansion of aluminium production, the exploita tion of mineral sands, coal, and natural gas, as 
well as electricity generation at the Cahora-Bassa Hy droelectric Facility (HCB) on the Zambezi river.  
Such investments have been fostered since 1999 by  generous incentives offe red under the Investment 
Code, in particular the Industrial Free Zone regime , and low (and preferential) electricity tariffs for 
industrial users.  Industrial development has been export-oriented, favouring the emergence of a dual 
economy.  Incentives were curtailed in 2002 in the Fiscal Benefits Code, and are again under review 
to attempt to increase fiscal revenue from megaprojects.  Despite promising signs from petroleum exploration activities, domestic fuel needs contin ue to be met entirely by imports, with prices 
regulated and adjusted periodically to reflect world market price developments;  biofuels production is 
expanding.  Liberalization of dow nstream petroleum activities has ta ken place at the retail level, 
although importation of fuel prod ucts is still reserved to the state-owned enterprise IMOPETRO, 
which assumed the function from PETROMOC in 1998.  Supply-side constraints in Mozambique 
remain significant, and include access to water, el ectricity, and financial services;  the environment 
for doing business is difficult and undermined by poor governance. 
3. The contribution of services to GDP has not ch anged substantially dur ing the period under 
review.  Further, development of the sector is  necessary for Mozambique's continued economic 
growth.  For, instance, access to affordable finan ce remains an outstanding constraint on business 
activity;  access for the agriculture sec tor to credit, in particular is low.  Micro-credit activities are 
expanding but generally banking and insurance rema in relatively underdeveloped.  Teledensity has 
progressed substantially as a result of the rapid increase in the use of mobile communication services, 
although provision of Internet service remains low;  privatization of the incumbent fixed-line operator 
has been postponed indefinitely.  The developmen t of Mozambique’s port and ground transportation 
links has sustained the growth of industrial activity as well as trade.  Mozambique is a gateway for its 
landlocked neighbours and to South Africa.  The re habilitation of the transportation infrastructure, 
devastated during the Civil War (which ended in 199 2), has been a major focus of government policy.  
Ports and railways in the north are operated under concessions granted to foreign investors.  This 
rehabilitation has been instrumental in the deve lopment of Mozambique’s tourism.  However, 
inadequate and costly air transport services remain an impediment for growth in the tourism sector.  
Mozambique made only few commitments under GATS.   Widening the scope of these commitments 
might support Mozambique’s efforts to overcome th ese bottlenecks, by attracting national and foreign 
investment. WT/TPR/S/209 Trade Policy Review 
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(2) AGRICULTURE AND RELATED ACTIVITIES  
(i) Overview1 
4. Agricultural activities, including farming, raisi ng livestock, fishing and forestry, contributed 
one quarter of GDP in 2007, and is estimated to remain at the same level in 2008 (Table I.1).  
Agricultural activities occupied around 14 million pe ople in 2007, with a greater share of women 
employed in the sector than men.  The largest empl oyers are the sugar estates;  and commercial farms.  
Agricultural products (cashews, tobacco, cotton, suga r, and fishery and forestry products) are also 
important exports (Chapter I(3)(i)). 
5. Just over 10% of Mozambique’s 36 million hectar es of arable land are cultivated.  According 
to the last agricultural census, conducted in 1999-2000, Mozambique’s 3.1 million smallholders 
occupy about 95% of cultivated land.  These farm s produce basic food crops (beans, cassava, maize, 
groundnuts, and rice), mainly for s ubsistence purposes, as well as c ash crops (cotton and tobacco), 
and cashew nuts.  The average size of most farms in Mozambique is around 1.2 hectares, and use of 
credit and inputs is low2, leading to relatively low yields by regional standards.  The authorities are 
however distributing "kits" (seeds, fertilizer, e quipment) on credit to producers of cereals and 
groundnuts, for use in the 2008/09 season, in selected "high-potential" areas of the country, to 
increase productivity.3  Cotton and tobacco are produced mainly under "out-growing" contracts with 
cotton and tobacco companies, under which the comp anies provide seeds, fertilizers, and inputs on 
credit, which farmers repay once the company has pu rchased the harvested crop;  farmers may form 
associations to interact more effectively with buyers.   
6. Food habits have changed in Mozambique.  As  the country develops, demand is increasing 
for cereals (rice and wheat) and milk products, which are mainly imported, as well as for horticultural 
products, also imported but increasingly cultivated in peri-urban areas.  In addition,  spending on food 
accounts for a substantial share of low-income hou sehold expenditures, hence any increase in the 
price of food has a substantial impact on levels of  poverty.  As a result, the Government perceives 
food security as a priority, and hopes to improve it by fostering a "green revolution". 
7. Natural disasters, such as droughts and flooding, periodically disrupt production in certain 
parts of the country.  At the time of the first TPR of Mozambique, major floods had decimated the anticipated 1999/2000 season output, and floods again affected produc tion in 2007/08.  Aside from 
the 2004/05 agricultural season, production of most basic crops has risen steadily since 2002, mainly as a result of an increase in land under cultivation (T able IV.1).  In particular, maize production was 
up by 25% between 2002 and 2006, but declined al most by 20% in 2007/08;  cassava and maize are 
the staple foods. With respect to cash crops, betw een 2002 and 2006 the production of tobacco more 
than doubled, while production of  cotton increased by 38% (Table IV .2).  There was a 30% increase 
in sugar cane output, and 25% for raw cashew nuts, ov er the same period.  In contrast, livestock herds 
have decreased sharply, with the exception of ca ttle, where numbers increased by one third between 
2002 and 2007. 
                                                     
 
1 The main sources for this section are:  CEPAGR I (2006);  Republic of Mozambique (2007);  WRI 
(2003);  FAO (undated);  and USAID (2004) Vol. 2, Chapter 10. 
2 According to CEPAGRI (2006), the share of small holders that use inputs is:  access to credit (4%); 
access to price information (30%);  access to extension services 15%;  use of  fertilizer (4%);  use of irrigation 
(4%);  use of pesticides (5%);  us e of animal traction (10%); use of vaccination services for cattle (cattle-
owners) (62%). 
3 Government of Mozambique online information, "Crise alimentar pode ser oportunidade para relançar 
produção", 28 April 2008.  Viewed at: http://www.por taldogoverno.gov.mz/noticias/agricultura/abril2008/ 
nots_ag_242_abr_08 [2 June 2008]. Mozambique WT/TPR/S/209 
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Table IV.1 
Production of basic food crops, 2002-07 
Product 2002 2003 2004 2005 2006 2007 Change  
2002-07 (%) 
Maize 1,114,772 1,178,792 1,060,396 942,000 1,395,474 1,133,911 2 
Sorghum 138,318 190,820 152,910 115,000 201,758 166,873 21 
Millet 12,184 21,609 18, 305 15,000 22,363 24,816 104 
Rice (milled) 93,362 117,48 3 91,242 65,000 97,611 103,011 10 
Beans (Nhemba) 53,724 53,724 50,862 48,000 71,170 62,188 16 
Beans (Jugo) 22,000 18,000 12,500 7,000 11,608 20,250 -8 
Beans (Manteiga) 35,683 40,854 44,927 49,000 49,627 54,515 53 
Sweet potato 455,950 877,165 .. .. 915,252 861,433 89 
Peanuts 101,074 87,463 90,232 93,000 84,623 101,311 0 
Cassava 3,555,278 6,547,298 .. .. 6,658,708 4,959,275 39 
.. Not available.  
Source: Information provided by the  Mozambican authorities. 
Table IV.2 
Production of cash crops, 2002-06 
Product 2002 2003 2004 2005 2006 Change  
2002-06 (%) 
Cotton seed 82,980 54,144 92,000 78,500 114,829 38 
Raw cashew nuts 50,177 63,818 42,988 104,337 62,821 25 
Sugar cane 1,586,260 1,940,799 1,873,262 2,246,985 2,060,317 30 
Green tea 12,579 12,690 15,127 16,000 16,000 27 
Citrus fruit 24,025 30,000 30,000 30,000 32,000 33 
Copra 45,740 47,600 47,000 74,000 47,000 3 
Tobacco 25,611 37,051 49,528 65,042 59,071 131 
Sunflower seed 4,149 6,400 6,127 7,000 7,000 69 
Source:  Information provided by the Mozambican authorities. 
(ii) Agricultural policy 
8. Mozambique’s long standing objective is to commercialize agriculture, shifting production 
away from mainly subsistence activities and prom oting access to international markets.  A well- 
developed agriculture sector is ke y to poverty reduction in rural areas.  Hence PARPA II outlines an 
agricultural policy that is also integrated into Mozambique’s five-year development plan for 2005-09, 
and its annual plans.  The agriculture three-year pl ans (the latest was issu ed in June 2008), include 
sectoral strategies for cashews, cotton, suga r, tobacco, livestock, and forestry products.4  In 2008, the 
Government reiterated the need to attain "food security" in particular  given the sharp increase in food 
prices since 2007.  
9. The Ministry of Agriculture elaborates the na tional strategy for the sector’s development, 
which is contained in the "Vision for agriculture" (2003), the "Priorities for agricultural development" 
                                                      
4 The programme on cereals is designed to expand the production of cereals and milling capacity to 
reduce imports of rice, wheat, and flour; the programme on beans and soja is designed to support expanded production of animal feed;  the programme on roots and tubercles is intended to encourage production and 
consumption of potatoes in urban areas, and to support the animal feed industry;  and the programme on 
horticultural products in "green zones" is intended to supply proximity markets where demand for such products is greatest. WT/TPR/S/209 Trade Policy Review 
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(2006), and "Mozambique’s green re volution" (October 2007).  The latte r strategy has five pillars:  
the proper management of natural resources;  the expansion of the areas under cultivation and 
adoption of productivity-enhancing techniques of pr oduction;  the development of new markets;  
credit facilitation;  and human and social capital formation.  To complement this strategy for 
increased agricultural production and productivity, th e Government also has a policy to develop the 
road transport infrastructure to better integrate pr oduction zones and markets.  In order to promote 
investment in the sector, incentives are available to projects in agri-business, in particular, a reduced 
corporate tax rate of 10% as opposed to 32% until  the end of 2010.  These incentives are currently 
under examination and may be curtailed (Chapter II(4)(iii)). 
10. The Agricultural Sector Public Expenditure Program Project (PROAGRI)5, financed with 
foreign aid6, was launched in 1999 on the basis of the Gove rnment’s "Letter of Agricultural Sector 
Development Policy".  Phase I, which covered 1999- 04, concerned mainly the decentralization of 
extension services supplied by the Ministry of Agricu lture to farmers;  further decentralization is 
planned, as only 15% of small fa rm holders have access to the extension services supplied by the 
National Directorate of Agrarian Extension.7  Phase II started in 2005, and is concerned mainly with 
increasing productivity and production by supplying extension services to a larger population of 
farmers, with the target of 20% penetration by 200 9.  NGOs are also active in  the agriculture sector, 
mainly in providing extension services. 
11. The institutions in charge of the different agricultural activities are:  the Ministry of 
Agriculture;  the Cotton Institute of Mozambique (I AM);  the National Cashew Institute (INCAJU);  
the National Institute for Agrarian Research (IIAM);  and the Centre for the Promotion of Agriculture 
(CEPAGRI).  The IAM administers the policy on cotton adopted in 19988, and INCAJU administers 
the cashew processing promotion strategy, also in place since 1998.9  The IIAM is responsible for 
research in agriculture, producing the basic seeds th at are supplied to commercial seed companies and 
farmers contracted to produce certified seeds.  CEPAGRI promotes investment in export-oriented 
agri-business.    
12. The laws regulating agriculture in Mozambique  concern the use of land, forests and fauna, 
seeds, fertilizers, animal health, and sanitary a nd phytosanitary measures, as well as the specific 
regimes for cotton, tobacco, sugar, and cashew nuts (see section (iii) below).  Although land is 
abundant, title to land remains a controversial issu e, and there is no market for land as such.  The 
Mozambican Constitution reserves ownership of la nd to the State alone, but domestic and foreign 
persons may obtain non-transferable usag e rights under the Land Law adopted in 199710, upon 
application to the Cadastre (Chapter II (4)(ii)).   The Land Law also recognizes customary rights to 
land in the countryside, although conflicts with potential investors occur periodically.11  According to 
the World Bank’s assessment of PROAGRI, 2,388 la nd titles had been granted by provinces by the 
end of 2006, compared to just 646 at the end of 2000.12  Most farmers, are subsistence farmers and are 
                                                      
5 World Bank (1999). 
6 Donors have also financed other projects such as rural water supply off-budget. 
7 The World Bank has found such services to be especially significant in expanding agricultural 
production in Mozambique, raising incomes by about 8.4% (World Bank, 1999). 
8 Resolution No 15/98 of 22 September 1998. 
9 Law No. 13/99 of 1 November 1999.  Ebizguides online information, "Mozambique:  INCAJU:  
Cashew Promotion Institute".  Viewed at: http ://www.ebizguides.com/guides/sponsors/alone.php? 
sponsor=285&country=1 [29 June 2008]. 
10 Law No. 19/97 of 1 October 1997.  An explanation of the law and regulations is available in Caldeira 
and Frey (2004). 
11 DeWit (2002). 
12 World Bank (1999). Mozambique WT/TPR/S/209 
 Page 53 
 
 
not formally licensed, and hence are not taxed.  However they require a licence to have access to 
credit or any fiscal incentives.  The Government’s  Agricultural Development Fund (FDA) provides 
credit to farmers, and micro-credit institu tions are also active in the countryside. 
13. The IAM and the Ministry of Agriculture set  minimum purchasing prices for growers of 
cotton and tobacco, respectively, wh ile the National Institute of Sugar (INA) sets a monthly minimum 
domestic price for sugar, and INCAJU sets an "i ndicative" export price for raw cashew nuts.  For 
other agricultural products, the main instruments affecting prices are the customs tariff or VAT 
exemptions to local producers (Chapter III(2)(ii)(d )).  Surtaxes apply to imported sugar, and export 
taxes are levied on raw cashew nuts.  Mozambique's  tariff gives relatively higher nominal protection 
to agricultural products than to non-agricultural products:  the simple average applied tariff on 
agricultural products in 2008 (ISIC definition, includ ing livestock, fishing and forestry), is 12.4% 
(Table AIV.1), compared with an overall average of 10.1%.  Agricultural products, including 
foodstuffs, may be subject to sanitary and ph ytosanitary measures (Chapter III (2)(vii)). 
14. In view of the periodic natural disasters affecting agriculture in Mozambique, the Government 
has a policy towards food aid, which is elaborated  by the National Institute for Disaster Management 
(INGC) and implemented by the World Food Programme.13   
(iii) Policy by subsector14 
(a) Sugar 
15. Sugar is produced on the estates of Xinavane a nd Maragra located in Maputo province, and of 
Sena and Mafambisse located in the central province of Sofala.15  About 32,000 hectares were planted 
with sugar cane in 2008, with e xpansion to 50,000 anticipated for 2010-12, to coincide with the 
introduction, under the EC’s EBA initiative, of qu ota-free and duty-free access for sugar produced by 
LDCs16, and the further opportunities from the liberalization of the sugar market among SADC 
members in 2012, under the SADC Protocol on Sugar.   In addition, companies are investing in sugar 
cane production and facilities to produce bioethanol.  Th is is as a result of the interest in energy 
diversification.17 
16. The sugar estates owned by the sugar companies produce raw sugar cane, which is either 
milled on-site or exported to South Africa to be re fined, then imported to Mozambique, to supply the 
domestic market or for export, Mozambique does not  have sufficient milling capacity to process all 
                                                      
13 WFP online information.  Viewed at http ://www.wfp.org/country_bri ef/indexcountry.asp? 
country=508 [10 July 2008]. 
14 Sources for this section include USAID (200 4);  and Commonwealth Secretariat (undated). 
15 The State is a minority shareholder in the sugar companies of Sena (5%), Mafambisse (25%), and 
Xinavane (12%).  The Mafambisse and Xinavave companies are majority owned by Tongaat-Hulett of South Africa, vertically integrated with the South African sugar mills.  Illove owns the Maragra sugar company. 
16 AfricaNews, "Mozambique set to rise sugar production", 18 June 2008.  Viewed at:  
http://www.africanews. com/site/list_messages/18978; an d "Tongaat-Hulett Group to expand sugar production 
in Mozambique for the EU market", 25 January 20 07.  Viewed online at:  http://www.tongaat. 
co.za/imc/sens/sens_display.asp?yr=2007&sens=70 [10 October 2008]. 
17 Engineering News , "Procana ethanol project, Gaza, Mozambique ", 20 June 2008.  Viewed at:  
http://www.engineeringnews.co.za/artic le.php?a_id=136097 [10 October 2008];  "Mozambique President sets 
biofuels objectives: no diversion of food produc tion, all refining in Mozambique".  Viewed at: 
http://biofuelsdigest.com/blog2/2008/01/29/mozambique-p resident-sets-biofuels-objectives-no-diversion-of-
food-production-all-refining-in-mozambique/ [10 October 2008];  and "PETROMOC to JV in $400 million 
sugarcane ethanol project in Mozambique", 18 Marc h 2008.  Viewed at:  http://biofuelsdigest.com/ 
blog2/2008/03/18/petromoc-to-jv-in-400-million-sugarcane-ethanol-project-in-mozambique/ [10 October 2008].  WT/TPR/S/209 Trade Policy Review 
Page 54 
 
 
the sugar cane it produces;  however, once the sugar harvest is over, the mills are idle.  The sugar 
subsector is a major contributor to employme nt, with more than 25,000 people engaged on a 
permanent or seasonal basis by the sugar companie s (i.e. estates and mills).  Rehabilitation of the 
sugar estates devastated by the Civil War was among the priorities for Government policy in the mid 
1990s. 
17. Investors obtain fiscal benefits, including borde r tax exemptions, for imported equipment, as 
well as guaranteed minimum prices for raw and processed sugar.  The minimum price policy has been in place since 1999;  prices are revised annually.  In February 2008, Mozambican minimum prices 
were US$385/tonne for raw sugar and US$450/tonne for processed sugar, with an import surtax, set 
on a monthly basis, levied on the c.i.f. price, plus the 7.5% tariff on imports of processed sugar.   
Sugar is exempt of VAT.  The sugar companies’ distribution agency, National Distributor of Sugar 
(DNA), controls the commercialization of sugar throughout Mozambique.  DNA also controls sugar 
exports.  Under preferential access arrangements, Mozambican exported sugar is sold at guaranteed 
prices (above the world market price) on the EC and United States markets.  Mozambique also 
exports to other markets.  In 2007, the sugar companies produced 243,000 tonnes, and exported 
94,000 tonnes of sugar, earning US$46 million (Table IV.3). 
Table IV.3 
Sugar exports under preferential regimes, 2001-07 
(US$ and tonnes) 
Market (tonnes) Year 
 Quantity 
(tonnes) Value 
(US$) US EBA Stream 2 
of EBA CQ 
(ACP/EC) SPS 
 SACU EC Sugar 
Protocol World 
market  
2001 22,000 8,295,502 12,786 8,331 n.a. n.a. n.a. n.a. n.a. ..  
2002 78,000 18,000,000 13,248 9,140  n.a.  n.a.  n.a.  n.a.  n.a. 56,351 
2003 62,755 18,770,230 13,000 10,400  n.a.  n.a.  n.a. 11,481  ..a 27,874 
2004 90,907 25,795,865 13,218 3,000  n.a.  n.a. 17,200 7,771  ..a 49,718 
2005 87,851 37,700,109 14,604 16,800  n.a.  n.a. n.a.  5,797 18,650 32,000 
2006 170,311 64,633,200 25,658 30,000  n.a.  n.a. 1,366 n.a. 13,707 99,580 
2007 93,754 45,856,704 0 32,159 4,632 26,324 n.a.   n.a. 14,237 16,402 
.. Not available. 
n.a. Not applicable. 
a Mozambique acceded to the EC Sugar Protocol in 2003:  it wa s allocated a quota of 6,125 tonnes in 2004 with the same quota 
attributed retroactively in 2003;  three years of quota was exported in 2005. 
Note: CQ - Complementary quota; SPS - Special preferential sugar regime. 
Source:  Mozambican authorities. 
18. The protection granted to the Mozambican suga r industry has been the subject of long 
standing debate.  In 2000, the Government decided to  maintain the level of import protection for sugar 
in place since 1999, but to review the policy annu ally, based on domestic and international sugar 
market developments.18  At the last review, in 2004, it was decided that the sugar sector policy should 
not be amended.19   
(b) Cotton 
19. Cotton seed is the primary cash crop for an estimated 350,000 farmers in Mozambique’s 
northern and central provinces.  Production reached  115,000 tonnes in 2006, after a period of lower 
annual production due to declining world market co tton prices.  According to the DTIS, the operation 
of the subsector is affected by costs and delays:  on the one hand, in distributing inputs to farmers;  
                                                      
18 IMF (2000). 
19 Information provided by the authorities. Mozambique WT/TPR/S/209 
 Page 55 
 
 
and on the other, due to financing difficulties for cotton ginning companies caused by the delay 
between the purchase of inputs and the sale of cotton lint in the international market.20  
20. Cotton seed is produced mainly under "out-growing" contracts under which the cotton 
companies provide  farmers and/or their associations  with seeds, fertilizers, and equipment on credit, 
for the season, agreeing on an exclusive buying arra ngement for their crop with the cotton company.  
The Government grants cotton ginning companies cl osed concessions as exclusive buyers for cotton 
seed in a specific geographical area, for up to 20 years.21  The Cotton Institute of Mozambique (IAM) 
establishes the minimum purchase pric e for cotton on the basis of, inter alia , the producer’s share of 
the revenue earned upon export of the cotton lint, the  world market price of cotton lint, freight and 
insurance costs to South East Asia, the differentia l for the quality of Mozambican cotton, and the tax 
on cotton transactions  to help finance IAM's activities.22  This tax is set annually by agreement 
between IAM and the cotton companies;  it was 2.5%  of the f.o.b. value of exports in 2007/08.   
Exporters are required to have their consignments weighed and the quality of the cotton certified by 
IAM.   
21. The simple average tariff on cotton (HS Chapter 52) is 14.7% (Table AIII.1), with protection 
ranging from the minimum of 2.5% for cotton lint, to 7.5% for cotton thread, and the maximum of 
20% for cotton fabric.  VAT at 17% applies bot h to imported cotton lint and cotton seed.  Cotton 
companies may obtain fiscal benefits under the Investment Code, and IAM may import equipment 
exempt from border taxes on their behalf.   
(c) Tobacco 
22. Tobacco production increased by 131% betwee n 2002 and 2006, to reach 59,000 tonnes 
(Table IV.2);  some 120,000 smallholders were en gaged directly in tob acco production in 2005.  
Tobacco has also attracted commercial farmers.  Th e organization of the tobacco subsector is similar 
to that of cotton (since 2002), insofar as tobacco companies obtain closed concessions for up to ten 
years  and conclude “out-growing”  contracts with farmers and/or th eir associations located in the area 
concerned.23  The three tobacco-processing companies ar e Mozambique Leaf Tobacco (MLT), Joao 
Ferreira dos Santos (JFS), and St andard Comercial (STANCOM).  Until the establishment of MLT’s 
processing unit in 2005, all domestic production was e xported in the form of raw tobacco leaf to 
Malawi and Zimbabwe for processing and export.    
23. Only companies producing tobacco products may import tobacco leaf24, but only MLT has a 
processing unit in Mozambique.  In 2006, imports of unmanufactured tobacco amounted to 
US$15.5 million.   Imported cigars, cigarettes, and tobacco are subject to the maximum tariff of 20% 
(Table AIII.1), VAT of 17%, and an excise duty of 65%.25  Using the ISIC definition, tobacco 
manufacturing is subject to the maximum level of  tariff protection of 20%, well above the overall 
average of 10.1% (Table AIV.1).  
                                                      
20 USAID (2004). 
21 Decree No. 8/91 of 23 April 1991, and its regulations in Ministerial Diploma No. 91/94 of 
29 June 1994.  The system of closed concessions was relaxed in 2000 to allow the farmer to sell cotton to a company other than the concessionaire,  provided no inputs had been received.   The authorities are considering a 
revision to these regulations to reduce the term of concessions to 5-10 years, expand private ginning capacity, 
and enlarge the opportunities for farmers to sell cotton outside the concession regime. 
22 Information provided by the authorities. 
23 Ministerial Diploma No. 176/2001 of 28 November 2001. 
24 Article 22 of Ministerial Diploma No. 176/2001 of 28 November 2001. 
25 Decree No. 37/2002 of 11 December 2002. WT/TPR/S/209 Trade Policy Review 
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(d) Cashews 
24. Cashew nuts are among Mozambique's four leadin g agricultural exports (with sugar, cotton, 
and tobacco).  The social and economic signifi cance of cashews derive from their position as the 
single leading cash crop, with nuts harvested by about 1.2 million farmers, and significant female 
employment in the processing sector.26  Plantations of trees date fro m the 1950s and 1960s, and many 
trees are infected with mildew, which reduces th eir productivity;  Mozambique was the world’s 
leading producer of cashew nuts in the 1970s.  In  2007, some 75,000 tonnes were produced, of which 
about 20,280 tonnes were processed domestically, us ing mainly labour-intensive methods;  the rest 
was exported raw to India.27  In 2008, the National Institute for Cashews (INCAJU) anticipated 
production of 85,000 tonnes, of  which some 25,000 tonnes would be processed domestically.28  
25. INCAJU is in charge of implementing the Government’s cashew promotion strategy.  
INCAJU's objectives are to increase production to a ta rget level of 100,000 tonnes, and to promote 
domestic processing, preferably by the use of labour-intensive shelling techniques.  INCAJU sets an indicative minimum export price for raw cashew nuts as the basis for the imposition of the 18% tax on 
exports of raw nuts.  The minimum price export was fixed at Mt 15/kg (about US$0.60) at the end of 
2007.  The policy of taxing growers for the benef it of processors was heavily debated in the 1990s.
29  
However, the export tax on raw nuts is INCAJU's  main source of revenue.  INCAJU supplies 
extension services to farmers, and sets the dates to start harvesting;  it promotes the renewal of 
plantations, supplying farmers with fungicides.   
26. The current regime for internal and exte rnal trade in raw cashew nuts dates from 2003.30  
Only operators and processors licensed by th e Ministry of Commerce may purchase the nuts.  
Exporters' consignments must be weighed, and th e quantity and quality of the nuts certified, by 
INCAJU.  Only national persons (i ncluding companies majority held by nationals) may export raw 
cashew nuts;  however, processors are prohibited fro m exporting the raw cashew nuts they purchase.  
Imported cashew nuts are subject to a tariff of 20%.  
(iv) Fisheries and aquaculture31 
27. Mozambique has considerable potential for fisher ies and aquaculture, due to its 6,942 km of 
coastline and its exclusive economi c zone (EEZ) covering 493,672 km2.  Mozambique classifies its 
fishery activity as industrial, semi-industrial (vessels under 20 metres in length), and artisanal.  For 2007, the authorities anticipated an annual catch of  33,000 tonnes from industrial and semi-industrial 
activities, and 55,000 tonnes for artisanal activities.  In 2007,
 aquaculture production was about 
4,000 tonnes and the value of exports amounted to US$1 million.  I n 2005, Mozambique exported 
about 16,500 tonnes of fishery products, mainly to South Africa and the EC, and earned close to 
US$100 million (Table IV.4).  Shrimp accounts for a substantial portion of export revenues earned 
from fishery products;  certain Mozambican vessels and establishments meet the sanitary 
                                                      
26 INCAJU (2007). 
27 Mozambique News Agency, AIM Report No. 331 , 18 December 2006.  Viewed at: http://www. 
poptel.org.uk/mozambique-news/newsletter/aim331.html [29 June 2008]. 
28 Mozambique News Agency, AIM Report No. 357 , 21 April 2008.  Viewed at:  http://www.poptel. 
org.uk/mozambique-news/newsletter/aim357.html#story8 [29 June 2008]. 
29 Mozambique News Agency, AIM Report, No. 117 , 8 September 1997.  Viewed at:  http://www. 
poptel.org.uk/mozambique-news/newsletter/aim117.html [29 June 2008]. 
30 Decree No. 33/2003 of 19 August 2003. 
31 The principal sources for this section are:  Alfonso (2004);  and FAO (2005). Mozambique WT/TPR/S/209 
 Page 57 
 
 
requirements of the EC, their main destination market.32  Foreign vessels fishing  under bilateral 
agreements in Mozambican waters also provide compensation to Mozambique.   
28. The Ministry of Fisheries has been responsible  for the Government’s policy on fisheries and 
aquaculture since 200033;  a new licensing and fishery management framework was adopted in 2003.34  
According to the authorities, "the Marine Fi sheries Regulation (REPMAR) is based upon modern 
management concepts and established the use of  co-management in fisheries management, the 
obligatory use of devices to protect endangered speci es such as turtles (TEDs) and to reduce the by-
catch, and, for the first time, the po ssibility to create artificial reefs".35  Fishermen must obtain a 
fishing licence.  The use of TEDs became mandatory as from 2005.36  The National Fisheries 
Research Institute advises the  authorities on fishery stocks, many of which are considered to be fully 
exploited, and the Ministry sets annual quotas for catches by species for the industrial and semi-
industrial fleets.  Other instruments used to mana ge stocks include closed seasons, limitations on the 
number of vessels, catch quotas, and mesh size regul ations.  Co-management practices are strongest in 
the industrial shallow-water shrimp  fisheries.  Artisanal fishing is also regulated;  however, in 
practice, monitoring and enforcement along Mozambique’s long coastline are weak. 
29. As noted, commercial aquaculture is a nascen t activity.  The regulatory framework for 
aquaculture defines norms and requirements for aqu aculture farms;  establishes procedures for their 
licensing; establishes restrictions on the importation of live animals to the be used  in aquaculture;  and 
addresses environmental issues such as the c onversion of mangrove into aquaculture ponds.37   
30. Using the ISIC definition, the fisheries subsect or enjoys relatively hi gh tariff protection of 
18.5% (Table AIV.1) . 
31. Foreign vessels may fish in Mozambique’s EEZ on ly under bilateral agreements.  The EC and 
Mozambique first concluded an agreement for shrimp and tuna fishing in 1998;  this lapsed and was 
renewed in 2004, with a new five-year fisheri es partnership agreement (FPA) taking effect on 
1 January 2007.38  The FPA only covers tuna fishing, a nd allows 44 purse seiners and 45 long-liners 
belonging to EC states to fish in Mozambican waters, with an annual catch of 10,000 tonnes of tuna.  
These vessels must obtain a fishing licence from the Mi nistry of Fisheries, which is issued at the 
request of the EC.  Revenues from licence fees are expected to reach €300,000 annually, and the EC 
has pledged annual compensation of €900,000.   
                                                      
32 The list of establishments that meet EC sanitary requirements may be consulted at:  
https://sanco.ec.europa.eu/traces/output/FFP_MZ_en.pdf [30 June 2008].  The EC policy is outlined in Health 
and Consumer Protection Directorate online information, "Import conditions for fishery products".  Viewed at:  
http://ec.europa.eu/food/international/trade /im_cond_fish_en.pdf [30 June 2008]. 
33 Law No. 3/90 of 26 September 1990. 
34 Decree No. 43/2003 of 10 December 2003. 
35 Alfonso (2004). 
36 WWF (2004). 
37 Decree No. 35/2001 of 11 November 2001. 
38 Europa Press Release IP/06/1898, "EU and Mozambique initial new fisheries partnership 
agreement", 22 December 2006.  Vi ewed at: http://europa.eu/rapid/pre ssReleasesAction.do?reference=IP/06/ 
1898&format=HTML [30 June 2008]. WT/TPR/S/209 Trade Policy Review 
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Table IV.4 
Exports of fishery products, 2002-07  
 2002 2003 2004 2005 2006 2007 
Volume (tonnes)        
Lobster 100 21 30 10 4 8 
Crab 110 435 192 324 235 170 
Prawns  1,570 1,139 1,021 1,667 658 886 
Fish 500 445 607 329 65 164 
Shrimp catches 9,500 7,963 9,084 9,414 5,200 3,769 
Shrimp aquaculture .. 435 214 1,017 228 168 
Squid and octopus 100 85 203 165 30 4 
Kapenta 2,034 2,757 5,149 3,615 2,020 1,177 
Seaweed 0 0 92 36 .. .. 
Other 20 31 0 0 .. .. 
Total 13,534 13,312 16,591 16,577 .. 6,346 
Export revenues (US$1,000)   
Lobster 1,100 230 334 117 44 83 
Crab 330 1,301 575 972 705 510 
Prawns  8,200 6,336 5,685 8,845 3,460 4,598 
Fish 1,250 1,113 1,517 823 163 411 
Shrimp catches 72,800 71,665 72,671 75,310 41,600 30,156 
Shrimp aquaculture .. 3,915 1,286 6,106 1,368 1,010 
Squid and octopus 250 212 506 414 75 10 
Kapenta 2,441 3,309 6,179 4,337 2,424 1,766 
Seaweed 0 0 110.4 43 .. .. 
Other 10 4 0 0.201 .. .. 
Total 86,381 88,085 88,864 96,966 49,839 38,544 
.. Not available. 
Note:  Does not include catches under bilate ral agreements on access to Mozambique's EEZ. 
Source:   Information provided by the Mozambican authorities. 
 
(v) Forestry39 
32. Forests covered about a quarter  of Mozambique’s land area in  2005, mainly open broadleaved 
forest, with substantial areas of savannah and scrubl and.  Farmers exploit forestry resources to obtain 
wood for fuel, which accounts for about 80% of the energy used by households, and also clear f orests 
to expand land under cultivation .  On a commercial basis, forests are exploited through the granting 
of "simple licences" (to Mozambicans only) or of concessions (to all persons).  Logs are either 
exported in the rough or transformed into sawn ti mber.  In 2005, the total log cut was 102,627 cubic 
metres, of which 51,000 cubic metres were exported in  the form of logs, and the rest were exported 
after processing.  Production is subject to royalties,  which amounted to about US$6 million in 2005.  
Promotion of exports of processed forestry produc ts is among the Government ’s priorities.  Hence, 
about 3 million hectares have been identified for plantation forestry.   
33. Mozambique’s policy for the development of fo restry and wildlife dates from 1997;  the basic 
law, adopted in 1999, remains in place.40  The objective of forestry policy is the sustainable 
management of forestry resources in order to  contribute to poverty reduction and to economic 
development.  The last audit of forestry res ources, which dates back to 1994 established that 
Mozambique had 20 million hectares of productive forest, 20 million cubic metres of commercial stock and an annual allowable cut of 500,000 cu bic metres.  Hence, this annual quota may be 
                                                     
 
39 The main source for this section is USAID (2006). 
40 Law No. 10/99 of 7 June 1999. Mozambique WT/TPR/S/209 
 Page 59 
 
 
excessive in relation to actual stocks.  The administra tion of the forestry policy is the responsibility of 
the National Directorate of Forests and Wildlife,  a unit of the Ministry of Agriculture.  New 
regulations in 2002 introduced a prohibition on exports of Class 1 speci es (defined in Annex I of the 
regulations), reserving them for local processors, while permitting exports of precious tropical wood 
species, such as ebony and rosewood, and other species.41  The "simple licence", which is an annual 
logging permit for cuts up to 500 cubic metres, is available only to Mozambican nationals, and is 
issued by the provincial authorities.  In principle,  the licence requires a simplified plan to manage the 
forest. For other forestry operators, including forei gners, the 50-year concession (renewable) concerns 
the right to log a specified area, and in principle re quires a management plan to ensure the sustainable 
management of the forests concerned, with logging permits issued annually in accordance with this 
plan;  a condition of their grant is the pledge to establish a sawmill.  Concessions are granted by the 
provincial authorities for areas of up to 20,000 hectares,  and by the Ministry of Agriculture for areas 
between 20,000 and 100,000 hectares, a decision of th e Council of Ministers is required for areas over 
100,000 hectares.  Concession-holders pay royal ties per cubic metre of cut wood, assessed by 
species42;  a 25% reduction applies if it is processed locally  prior to export.  In 2003, the Government 
signed the African Forest Law Enforcement and Governance (AFLEG) initiative, committing itself, 
internationally, to fight illegal logging, trade, and corruption, and to promote sound forest governance.  
34. Using the ISIC definition, the simple average of the tariff on imported products in the timber 
subsector is well below the overall average, at 2.5% (Table AIV.1).  VAT is also levied on timber (Chapter III(2)(iv)(b)). 
(3) M
INING , ENERGY AND WATER  
(i) Mining, petroleum, and natural gas 
35. Mozambique has considerable mineral res ources including ilmenite (Corridor Sands and 
Moma projects), tantalite (Marropino and Morrua mines), coal (Chipanga IX and Moatize mines), 
bauxite, gold, and gemstones, which are exported without processing (Table IV.5).43  Exports of these 
products earned about US$5.3 million in 2007.  Al uminium, Mozambique’s leading export, is 
produced by Mozal under the IFZ regime from imported alumina.  In addition, Mozambique also 
produces natural gas , which is entirely exported via pipeline to South Africa and earned revenues of 
about US$69 million in 2007.  Natural gas production has increased five-fold since the first TPR in 
2001.  Mozambique does not currently produce oil, but investment by companies in prospecting and exploring for oil and gas in northern and central areas has risen sharply since world market prices 
started to increase in 2003.
44 
                                                      
41 Decree No. 12/2002 of 6 June 2002. 
42 Table II, Decree No. 12/2002 of 6 June 2002.  These are:  Mt 2 million for precious tropical woods;  
500,000 for Class 1;  300,000 for Class 2;  200,000 for Class 3;  100,000 for Class 4.  Local communities are in principle to receive a 20% revenue share, but there appear  to be difficulties in practice in the implementation of 
this requirement. 
43 The main source on the state of  resources is Yaeger (2005). 
44 Mozambique News Agency, AIM Report, No. 316 , 14 March 2006.   WT/TPR/S/209 Trade Policy Review 
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Table IV.5 
Production of leading exported mining products, 2002-07 
Product 2002 2003 2004 2005 2006 2007 Exports 
2007 Exports 
2007 (US$'000) 
Natural Gas 
(million GJ) 2.4 2.5 49.7 89.0 102.2 104.5 100.5 53,249 
Natural Gas 
(condensed) (bbl) 0 0 295,313 531,096 696,048 695,938 752,429 16,125 
Coal (ton) 43,512 36,742 16,525 3,417 40,953 23,601 22,475 804 
Bauxite (ton) 9,119 11,793 8,977 9,517 11,069 8,650 8,650 623 
Tantalite (kg) 42, 500 62,000 712,095 281,212 80,132 196,432 19,586 492 
Bentonite (ton)  15,594 24,627 16,627 17,318 3,515 9,706 8,347 227 
Source:  Information provided by the Mozambican authorities. 
 
36. All mineral substances found in the soil or subso il or in the territorial waters of Mozambique 
are property of the State.  Access to mining and petroleum (including natural gas) resources is 
regulated through the Mining Code (section (b) below) and the Petroleum Code (section (c)), 
introduced in 2002 and 2001, respectively.  Appr oved mining and petroleum investment projects are 
eligible for customs duty and fiscal incentives under a revised framework introduced in 200745, 
replacing the Investment Code (Chapter II(4)).  Prio r to the change, certain export-oriented projects 
(e.g. Moma Titanium Sands Project) had obtained I ndustrial Free Zone regime  benefits.  Under the 
new regime, customs duty, VAT, and excise duty exemptions continue to apply to imported 
equipment, but new investment projects no longer obtai n a reduction to the 32% tax rate applicable to 
profits.   
37. In 2006, the authorities announced their intention to join the Extractive Industries 
Transparency Initiative (EITI), which concerns transp arency of state receipts generated from natural- 
resource-based enterprises;  Mozambique in tends to formalize its candidacy in 2008.46   
(a) Mining  
38. Mozambique adopted a new Mining Code in 200 2 and its regulations were revised in 2006.47  
The Code covers the reconnaissance, prospection, e xploration, mining, processing, and trade of useful 
mineral substances found in the soil or subsoil (inc luding mineral water, with the exception of liquid 
or gaseous hydrocarbons, which are the subject of a separate regulatory framework).  The Code is 
administered by the National Directorate of Mining (NDM), which operates a portal providing 
investors with information on Mozambique ’s mining resources and policy framework.48  NDM also 
operates the Mining Cadastre, which records mining titles.   
39. Under Mozambique’s mining regulations, foreign and national persons may apply for licences 
to engage in reconnaissance, or prospection and research, and may obtain mining concessions.  
Mining certificates for small-scale industrial mining activities are reserved to Mozambican persons 
(natural and majority-owned legal persons).  Perm its are reserved to Mozambican persons engaged in 
artisanal activity, in the areas set aside for this purpose.  The Minister in charge of mining is 
responsible for granting licences, concessions, an d certificates, while Provincial Governors are 
                                                      
45 Law No. 13/2007 of 27 June 2007.  Regulations were issued in February 2008. 
46 Information on Extractive Indust ries Transparency Initiative (EIT I).  EITI online information. 
Viewed at:  http://eitranspar ency.org/ [9 April 2008]. 
47 Law No. 14/2002 of 26 June 2002 and its regulations contained in Decree No. 62/2006 of 
26 December 2006. 
48 Direção Naçional de Minas online informa tion.  Viewed at:  http://www.dnm.gov.mz/ 
[28 June 2008]. Mozambique WT/TPR/S/209 
 Page 61 
 
 
responsible for issuing certificates to quarries to produce building materials, as well as granting 
permits to artisanal producers. 
40. Application for a mining title is made to the NDM, is granted by the Minister, and mining 
titles granted or revoked are publis hed in the Government Gazette  (Boletim da Republica ).  A licence 
to engage in reconnaissance may be issued fo r areas of up to 100,000 hectares, and a licence to 
prospect and research for an area of up to 25,000 hectares.  Maximum time-limits for title validity are set down in the regulations:  up to two years, non- renewable for reconnaissance;  and five years, 
renewable once for prospection and research.  The time limits are set out in the mining concessions 
and certificates;  they depend on the project, but are renewable.  Applications for titles are subject to 
processing fees, with receipts shared between th e State (60%) and the Mining Development Fund 
(40%);  the latter assists small-scale artisanal mining.
49  Title holders are required to observe the 
norms in force for the protection of the environment50, and an environmental impact assessment by 
the Ministry of the Environment is required;  this  varies according to the activity (e.g. prospection, 
construction or exploitation).  The operations of title-holders are subject to inspection by the Ministry 
in charge of mining. 
41. Title-holders are subject to surface and prod uction taxes, which were increased in 2007.51  
Taxes are assessed on the value of production:  10%  for diamonds, precious metals and gemstones;  
6% for semi-precious stones;  5% for basic mineral substances; and 3% for ot her mineral substances.  
Surface taxes vary according to type of mining title.52  Proceeds of surface and product taxes are to be 
shared with local communities;  their shar e is allocated through the national budget.    
42. The holder of a title to engage in prospection and research is allowed to export only mineral 
samples for analysis and testing abroad.  Persons  holding a mining concession, certificate or permit, 
may market and process the minerals they produce.   Regulations were a dopted in 2005 concerning 
licensing to purchase minerals from artisanal producers, for jewellery manufacture or onward sale to processors, or to purchase minerals from industrial mines to sell or process.
53  The Bank of 
Mozambique regulates the commercialization of gold.   
43. Average tariff protection for mining and quarrying  is low (3.7%), as most activities, with the 
exception of salt mining (with a 20% tariff), are subject  to tariffs of 2.5% to 7.5% (Table AIV.1). 
(b)  Petroleum and natural gas 
44. Mozambique adopted a new Petroleum Code in 2001;  its regulations were issued in 2004.54  
Petroleum titles are granted separately for surveying (up to two years);  exploration and production 
(eight years, renewable);  and for oil or gas pipe line construction and operation (up to 30 years).  All 
contracts take the form of concessions.  In princi ple, concessions are publicly tendered, but directly 
negotiated contracts are possible under limited circ umstances (e.g. to link adjoining concessions).  
                                                      
49 Decree No. 17 of  24 June 2005. 
50 Decree No. 26 of 20 August 2004 and the Mi nisterial Diploma No. 189 of 14 December 2006. 
51 Law No. 11/2007 of 27 June 2007 revoked Articles 27 to 31 of Law No. 14/2002 of 26 June 2002. 
52 Article 16, Law No. 11/2007 of 27  June 2007.  For prospection an d research licences, the surface tax 
rises from Mt 250,000/km2 in year one to Mt 3 million/km2 in years nine and ten.  For mining concessions, the 
surface tax is Mt 2.5 million for years on e to five, and Mt 5 million thereafter. 
53 Decree No. 16/2005 of 24 June 2005.  According to Article 8, the fees are: Mt 10 million for persons 
engaged in purchasing minerals from artisanal producers for jewellery manufacture;  Mt 15 million for persons minerals from artisanal producers for onward sale to the pr ocessor;  and Mt 25 million for a licence to engage in 
purchasing minerals from industrial mines to sell or process. 
54 Law No. 3/2001 of 21 February 2001 and  its regulations are contained in Decree No. 24/2004 of 
20 August 2004. WT/TPR/S/209 Trade Policy Review 
Page 62 
 
 
Applications for a concession are made to th e National Petroleum Institute, which makes 
recommendations to the Minister in charge.  The Minister  approves the award of the concession 
contract, which is published in the Boletim da Republica .  The criteria for qualification and the 
application procedures are the same for national an d foreign persons.  Petroleum projects are subject 
to environmental impact assessments undertak en by the Ministry of the Environment.55   
45. Title-holders are subject to productio n taxes, which were revised in 2007.56  Taxes are 
assessed on the value of production:   10% for crude petroleum;  and 6% for natural gas.  Proceeds of 
these taxes are to be shared with local communities;  an allocation is set aside in the national budget.   
Operators of oil or gas pipelines are required to transport oil or gas produced by third parties on reasonable and non-discriminatory commercial terms.  Operators of petroleum facilities and pipelines 
are required to procure goods and services by tende r and grant a preference for locally produced 
goods and services, and observe safe working practices.
 
46. Mozambique's imports of refined oil products amounted to US$345 million in 2006.57  
Mozambique’s National Oil Company (Empressa Nacional de Petroleos de Moçambique , 
PETROMOC), the state oil company established in  1997 to import and retail oil products, is 
undergoing restructuring in order to improve its  efficiency and oper ational and financial 
performance.58  Imports are purchased exclusively by IMOPETRO, established in 1998 to take over 
the oil importing function of PETROMOC.59  PETROMOC continues to dominate the distribution of 
oil products in Mozambique, owning 20 of the country's 28 depots;  the rest are owned by BP and Mobil.  In addition, PETROMOC operates service stations across the country, accounting for about 
one third of the retail market in 2006, competi ng with BP, Mobil, Total, and other operators.
60 
47. The liberalization of downstream petroleum activitie s is in its initial stages, as the regulatory 
framework dates from 2006.61  Separate licences are required for:  refining;  the operation of port and 
storage facilities;  transportation;  distribution;  and retail activities.  A single operator may, however, hold several licences.  The criteria for qualificatio n and application procedures are the same for 
national and foreign persons. Licences are granted by the Ministry of Energy, upon application and 
payment of fees
62, with the exception of the licences to enga ge in retail activities, which are granted 
by the energy authorities at provincial level;  licences are indefinite provided their terms and 
conditions are observed.  
48. PETROMOC has established a facility to produce biofuel from sugar cane.  Imports of 
biofuels and of biofuel-containing fuel products  appear to be prohibited under Law No. 63/2006.63   
49. Fuel prices are set according to the regulat ory framework for downstream petroleum activities 
adopted in 2006.64  Prices of fuel products are fixed and adjusted on a monthly basis by the Ministries 
                                                      
55 Decree No. 26 of 20 August 2004 and the Mi nisterial Diploma No. 189 of 14 December 2006. 
56 Law No. 12/2007 of 27 June 2007 revoked Articles 24 and 25 of Law No. 3/2001 of 
21 February 2001. 
57 Ministry of Energy (2006) . 
58 IMF Country Report No. 07/36;  and IMF Country Report No. 08/15.  Viewed at: 
http://www.imf.org/external/ [22 July 2008]. 
59 Decree Nº1/97 of 28 January 1997. 
60 Ministry of Energy (2006). 
61 Law No. 63/2006 of 26 December 2006. 
62 Article 19, Law No. 63/2006 of 26 December 2006.  Fees are:  Mt 250,000 for pro duction, and the 
operation of storage or port facilities;  and Mt 350,000 for distribution. 
63 Article 32 of Law No. 63/2006 of 26 December 2006. 
64 Chapter V, Law No. 63/2 006 of 26 December 2006. Mozambique WT/TPR/S/209 
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of Energy, and of Planning and Finance.  Prices are based on the c.i.f. price inclusive of customs 
duties and VAT, with regulated margins for the pur chasing entities, distributors, and retailers, as well 
as adjustments for the costs of transporting fuel. 
(ii) Electricity and water 
50. Mozambique’s installed capacity is currently 2. 357 GW, of which 90% is due to the majority 
state-owned Cahora-Bassa Hydroelectric Facility (HCB) in Tete province on the Zambezi river.65  
Electricity of Mozambique (EDM), which holds a de facto  monopoly on the transmission, 
distribution, and sale of electricity in urban areas,  also has a small installed capacity to generate 
electricity.  Private operator ENMo & Elgas produces el ectricity from natural gas.  In 2006, electricity 
exports reached 12,825 GWh, while imports were  9,839 GWh, and domestic consumption was 9,418 
GWh.66  Mozambique is a major supplier to the Southe rn Africa Energy Pool, exporting electricity to 
Zimbabwe and South Africa.  Imports to supp ly the aluminium smelter Mozal accounted for 
7,884 GWh in 2006, about 83% of that year's domestic consumption.67  Mozal’s electricity 
consumption has climbed steeply in recent years as its production capacity has expanded, raising 
associated imports.  Imports of electricity enter duty free, but are subject to 17% VAT.   
51. In 1997, the State issued the regulatory framework to liberalize the production, transportation, 
and distribution of electricity68;  however, this is not being impl emented as the electricity regulator, 
the National Electricity Council (Concelho N acional de Electricidade, CNELEC), although 
established by law in 200069, has yet to become fully operational.70  Once established, this entity will 
be responsible for granting permits and concessions to operators, and also examining proposals for 
tariffs.  Since 2003, the electricity prices charged by  EDM, which differentiates between categories of 
consumers (social, domestic, agricultu ral, and general, plus large cons umers), have been set with the 
use of a formula.71  Aluminium producer Mozal obtains a preferential tariff of US$0.01/KWh, 
compared to the price of US$0.09/KWh for other dom estic users supplied by EdM, and this low price 
is one of the main reasons for the location of the smelter in Mozambique, as all alumina is imported.  
Specific fees apply to each connection.  
52. The National Water Policy adopted in 1995 provide d for the water subsector to be opened to 
private companies.  In 1998, a new legal framework  for the water subsector was adopted and several 
institutions were created to regulate the sector72:  the Fund for the Investment and the Patrimony of 
Water Supply (Fundo de Investimento e Patrimonio do Abastecimento de Agua, FIPAG), which is the 
government body responsible for managing the wa ter subsector;  the Water Regulatory Council 
(Conselho de Regulaçao do Abastecimento de Agua, CRA ), a body composed of three consumer reps 
nominated by the responsible Ministry, which sets the water tariff policy, upon proposals by FIPAG.73  
After an international tendering process, in 1999 FIP AG granted a contract to Waters of Mozambique 
                                                      
65 The State obtained 85% of the facility from the State of Portugal in 2005 for US$950 million.  The 
balance remains held by the Stat e of Portugal (ESKOM, undated). 
66 Ministry of Energy (2006) . 
67 The main reason for Mozal’s imports of electricity is that Cahora Bassa, which produces most of 
Mozambique’s electricity, is far away from Maputo, wh ere Mozal is located.  Th us, Mozal buys its supplies 
from the South African elect ricity grid, via ESKOM, while Cahora Ba ssa exports to neighbouring countries. 
68 Law No. 21/97 of 1 October 1997. 
69 Decree No. 25/2000 of 3 October 2000. 
70 USAID (2006d). 
71 Decree No. 29/2003 of 23 June 2003. 
72 Decrees No. 72/98, 73/98, and 74/98 of 23 December 1998. 
73 CRA online information.  Viewed at:  http://www.cra.org.mz [2 June 2008]. WT/TPR/S/209 Trade Policy Review 
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(Aguas de Moçambique,  AdM)74, to manage the water supply services in five major cities (Maputo, 
Beira, Quelimane, Nampula, and Pemba).  The dele gated management contract (15 years for Maputo, 
and 5 years for the others) concerned the infr astructure, which remains government-owned, and 
collecting water fees.  In 2004, the five-year mana gement contracts were extended for further five-
years, and additional cities were included;  accord ing to the CRA, water supplies for 11 cities were 
under delegated management contract  in 2007, covering 3.3 million pe ople, with an additional three 
cities under consideration.  The Government’s curre nt goal is to increase the water supply coverage 
rate to 60% in urban areas by 2009, r eaching approximately 4 million people.  
(4) MANUFACTURING  
53. The contribution of manufacturing to GDP has fluctuated somewhat during the period under 
review, with a slight increase due principally to Mozal, an aluminium smelter project that started 
operating in 1999 and has since expanded its capacity (Chart IV.1).75  In 2005, the authorities 
estimated that two thirds of industrial activity was due to Mozal;  however, the company’s contribution to sectoral employment appears to be low, as it employed only 1,000 workers in 2005.  
Aluminium is Mozambique’s leading export, earning revenues of US$1.48 billion in 2007, up 5.6% 
over the 2006 level.  This project was establis hed under Mozambique’s Industrial Free Zone (IFZ) 
Regulation, which provides fiscal and border ta x exemptions for export-oriented projects 
(Chapter III(3)(vi));  several industrial projects in Mozambique are under the IFZ regime, including 
Mozal, Moma (ilmenite), and a number of textile manufacturing and tyre companies.  Industrial 
activity outside the IFZ regime consists mainly of  the manufacture of sugar, flour, beer, mineral 
water, cement, soap, certain galvanized steel pr oducts, and cigarettes, main ly supplying the domestic 
market, although exports of sugar, beer, and cement are significant.  About 90% of companies operating in the manufacturing sector are micro enterprises (with less than 25 employees). 
 
 
                                                     
 
74 Owned by Saur International (38.5%), IPE-Aguas de Portugal (31.5%), and Mazi-Mozambique 
(30%), a national consortium of investors.  PR Newswire , "Saur International signs Water Supply Contract in 
Mozambique".  Viewed at:  http://www.prnewswire.co .uk/cgi/news/release?id=35452 [1 July 2008].   
75 Mozal 1, the US$1.34 billion development launched in 1998, was the biggest single investment 
project ever undertaken in Mozambique.  It opened on 29 September 2000.  The Mozal 2 expansion project, 
approved in June 2001, increased the output of the smelter from 253,000 to 506,000 tpa of primary ingots.   BHP Billiton is Mozal’s operator and has a 47.1% interest in the joint venture.  The other partners are:  
Mitsubishi Corporation (25%), Industrial Development Corporation of South Africa Limited (24%), and the 
Government of Mozambique (3.9%).  BHP Billiton online information.  Viewed at:  http://bhpbilliton.com/bb/ourBusinesses/aluminium/ mozal/aboutMozal.jsp [10 July 2008]. Mozambique WT/TPR/S/209 
 Page 65 
 
 
0510152025
2000 2001 2002 2003 2004 2005 2006
Source: Mt  billion Chart IV.1
Industrial production, with and without Mozal, 2000-06
Information provided by the Mozambican authorities.With Mozal
Without Mozal
 
54. Mozambique’s industrial development policy, a dopted in July 2007, identifies a number of 
constraints facing the development of manufacturi ng, including:  obsolete plant and equipment;  
inadequate supply of skilled labour;  imported products, that are not subject to the customs duties and 
taxes designed to protect the local product;  high cost s of inputs, transportation, and credit;  irregular 
supply of electricity and water;  high relian ce on imported inputs;  and the low levels of 
standardization (Chapter III(2)(vi)).76  An additional constraint to industrial development is that 
Mozambique requires all companies or persons wish ing to undertake an industrial activity to obtain a 
licence from the Ministry of Commerce77; instead of requiring licences only for business activities 
that pose a significant risk to saf ety, health, or the environment.78 
55. The Mozambican authorities recognize that the tr ade liberalization to which it is committed 
under SADC and the EPA with the EC will redu ce to zero the protection granted to domestic 
producers in the medium-term, exposing their i ndustries to more competition.  As regards 
development opportunities, the authorities are ta rgeting agri-food businesse s, furniture, building 
materials, chemicals, and recycling.  The Governme nt also continues to promote large-scale industrial 
projects (Chapter II(4)), and supports capacity-buildi ng for companies to be able to better identify 
market opportunities and the means to satisfy them. 
56. Generally speaking, the authorities consider the tariff primarily as an instrument to generate 
fiscal revenues, but they are also prepared to use th e tariff as an instrument of industrial policy and job 
creation (Chapter II(2)).  Tariff protection in the manufacturing sector stood at 10% (ISIC) in 2008, 
just below the overall average of 10.1%;  however, tariff protection ranges from 0 to 20% depending 
on the activity (Table AIV.1).  For instance, the ma nufacture of beverages, foodstuffs, and cigarettes 
                                                      
76 Ministry of Industry and Commerce, (2007). 
77 Decree No. 39/2003 of 26 November 2003. 
78 FIAS (2006). WT/TPR/S/209 Trade Policy Review 
Page 66 
 
 
is given average MFN tariff protection of 16.2%, with a large number of products subject to the 
maximum rate of 20% (Table AIV.1).  This tariff structure does not encourage investment, 
particularly in agri-food industries, targeted by th e Government for further development, because high 
tariff protection increases the cost of imported inputs.  Furniture manufacturing, another industry 
targeted by the authorities, also has above-average ta riff protection (18.9%), and this is true of textiles 
(15.5%) and manufacturing of clothing (19.4%), which the authorities are intent upon promoting.  Moreover, imported manufactured products that co mpete with locally manufactured products are 
subject to surtaxes, in addition to the customs duties, as in the case of sugar, cement, and certain 
galvanized steel products.  Cement and certain galvanized steel products are major inputs in 
Mozambique’s megaprojects, one of the pillars of  the Governments industrial policies;  these 
megaprojects have stimulated dema nd for imports of building materials and cement, which accounted 
for 10% of total imports in 2007 (Chapter I(3)).  Ho wever, the protection granted to both cement and 
galvanized steel products increases the costs of such materials.  Imported manufactured products are 
also subject to VAT at 17% and, some, including al coholic beverages and tobacco products, to excise 
taxes (Chapter III(2)(iv)). 
(5) 
  S ERVICES  
(i) Financial services 
(a) Banking and micro-finance services 
57. The banking and micro-finance services subsector comprises:  nine commercial deposit 
banks, with majority-foreign capital79;  three micro-financing banks80; five credit unions;  20 foreign 
exchange bureaus;  and 20 credit service providers.81  Privatization in the 1990s reduced the 
Government’s role to that of a minority stake-hol der.  According to the Bank of Mozambique, the 
largest banks operating in the market are the Banco Internacional de Mo çambique (BIM), Banco 
Comercial e de Investimentos (BCI), Standard Ba nk and Banco Austral, with 88.9% of the total 
assets, 91.6% of total deposits, 86.9% of total loan s, and 76.4% of the total capital of the banking 
system, resulting in high levels of concentr ation in the banking subsector (Table IV.6).82  The Bank of 
Mozambique notes that of Mozambique’s 128 district s, only 33 have bank branches (26 at the end of 
2006), demonstrating the low, but increasing, penetra tion of financial services in the countryside.  
This increasing penetration is in part due to relaxed reserve requirements on credit institutions 
extending their services to rural areas.  
58. In 2003, an assessment of the financial sector  revealed that the operation of the banking 
subsector was affected in 2002 by the high level of concentration of loans (five banks accounted for 
96% of total deposits), increasing level of dollariza tion, a low degree of financial intermediation, a 
high share of loans made to state-owned enterprises, high real lending rates, low loan to deposit ratio 
(50% in 200683), and a high share of non-performing loans.84  In 2006, a further assessment indicated 
that access to affordable finan ce remained an outstanding constraint on business activity and 70% of 
                                                      
79 Banco Internacional de Moçambique, Banco Austral, Standard Bank, Banco Comercial e de 
Investimentos, Banco Internacional de Comércio, SARL União Comercial de Bancos (Moçambique), African Banking Corporation, Banco de Desenvolvimento e Comércio and Banco Mercantil e de Investimento.  
80 Socremo – Banco de Microfinanças, Novo Banco and Banco Oportunidade de Moçambique. 
81 For information on financial service providers, see Banco de Moçambique online information.   
Viewed at:  http://www.bancomoc.mz/ index. php?menu=T11&lang=po [2 June 2008]. 
82 Banco de Moçambique (2008). 
83 KPMG (undated). 
84 IMF (2007c). Mozambique WT/TPR/S/209 
 Page 67 
 
 
enterprises did not have access to a bank loan or ove rdraft facility, and the access of the agriculture 
sector to credit in particular remained low.85   
Table IV.6  
Banking sector indicators, 2006 
(Mt million) 
 Assets Loans Deposits Net profit (loss) Return on average equity 
BIM 24,670,763 10,780,971 20,835,941 1,156,492 65.2 
BCI Formeto 14,038,177 7,666,881 10,510,073 512,003 47.9 
Standard Bank 3,379,746 3,119,533 11,329,944 452,300 41.7 
Banco Austral 6,353,686 1,262,493 4,395,812 7,609 2.1 
African Banking Corporation 1,641,505 525,850 1,047,988 58,244 28.2 
BDC 1,535,110 923,584 1,090,746 82,696 47.9 
UCB 1,214,791 872,883 845,337 36,709 14.5 
BIC 444,414 138,511 320,768 9,162 11.9 
BMI 390,403 118,257 256,324 (12,406)a -20.7 
a Represents net loss. 
Source:  KPMG (undated), Banking Survey 2006 .  Viewed at:  http://www.kpmg.co .mz/en/destaques/pesquisa_sobre_o_ 
sector_banc_rio_em_mo_ambique. 
 
59. Banking and micro-finance activities are subject to the banking law86;  several major changes 
were made to the law in 200487, concerning credit institutions an d financial services, and micro-
finance banks88, and in 2007 concerning the bankruptcy of credit institutions and a law on the national 
payments system.  Under the new regime, these regulations are administered by the Bank of 
Mozambique;  previously, the Ministry in charge  of finance had responsibility for managing the 
development of branches of credit institutions and fi nancial services.  The Bank of Mozambique also 
exercises supervisory activities, and these have b een strengthened through capacity-building.  Since 
2008, the Bank of Mozambique, uses the framew ork of Capital Adequacy, Asset Quality, 
Management, Earnings and Liquidity (CAMEL)  to determine the soundness of banks and guide its 
supervisory activity. As from 1 January 2008,  Bank of Mozambique has required the credit 
institutions to observe the norms of the IFRS in or der to increase transparency to international levels. 
The new law provides for a fund to be established to guarantee deposits. 
60. Mozambican specific service commitments under the GATS concern only banking and other 
financial services (excluding insura nce), in all four modes of supply.  Foreign financial service providers 
(including insurance) can operate in Mozambique as long as th ey abide by the domestic rules and 
regulations governing investment a nd operations of such institutions.89 
                                                      
85 It was 12% in May 2008.  For the composition of credits in May 2008 see Banco de Moçambique 
online information.  Viewed at:  http://www.ba ncomoc.mz/index.php?menu=4312&lang=po&id=2294 
[20 July 2008]. 
86 Law No. 15/99 of 1 November 1999.  For information on Mozambique’s banking and micro-finance 
regulations,  see Banco de Moçambique online informatio n.  Viewed at:  http://w ww.bancomoc.mz/index.php? 
menu=T15&lang=po [20 July 2008]. 
87 Law No. 9/2004 of 21 July 2004.   
88 Decree No. 57/2004 of 10 December 2004. 
89 WTO document GATS/SC/58, 15 April 1994. WT/TPR/S/209 Trade Policy Review 
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(b) Insurance services 
61. Since Mozambique’s first TPR in 2001, the regulatory framework governing insurance 
services has changed with the introduction of the Insurance Law and other regulations.90  As a result 
of this regulatory change foreign investment in th e insurance sector was allowed; and the provision of 
life and non-life-insurance was separated (i.e. an insurance company may only provide one type of 
insurance).  The insurance industry is regulated by the General Insurance Inspectorate under the 
tutelage of the Ministry of Finance, which recei ves applications for insurance service providers.  
Companies wishing to offer insura nce services must establish as public  limited companies and comply 
with the law governing the sector.  Since 2006, the minimum capital requirements have been 
Mt 67 million for life insurance and Mt 33 million for non-life insurance.  The requirements for 
setting up an insurance company, including capital requirements, are the same for foreign and Mozambican insurers.  Insuran ce companies, with exception of those incorporated in another 
jurisdiction, need to be incorporated as a company in Mozambique and obtain a special registration to 
conduct insurance business.  To obtain this registra tion, authorization to operate in Mozambique is 
required from the Ministry of Finance, as well as a licence from the General Insurance Inspectorate.  
Foreign investors may file their application through the CPI and may obtain incentives under the Code 
of Fiscal Benefits.  In general, risks cannot be  covered by non-resident companies, unless the 
companies established in Mozambique deem that th e risk is too high.  However, the purchase of an 
insurance abroad need to be approved by the  General Insurance Inspectorate.  Insurance providers are 
free to set their own premiums and rates, except for compulsory insurance, which comprises civil 
liability for owners of motor vehicles, introduced in 2003
91, and occupational health insurance, which 
are regulated by the Inspectorate. 
62. All insurance companies are required to main tain solvency margins based on premiums, 
claims, and liabilities as stipulated in the Regulation.92  In order to ensure that solvency and prudential 
standards are observed, insurance companies must submit annual bala nce sheets to the Inspectorate to 
be audited.  If the established limits are not respect ed the Inspectorate will warn the company.  The 
law allows for the imposition of sanctions when the limits and prudential regulations are not followed; 
however, no such sanctions have been imposed since 2003.  
63. In 2007, there were five insurance comp anies operating in the sector, which remains 
dominated by Seguradora Internacional de Mo zambique (SIM) and Empresa Moçambicana de  
Seguros (EMOSE) (formerly fully state owned)93, with some 65% of the market (Table IV.7).94  Only 
SIM and EMOSE offer both life and non-life insuran ce because they were established prior to 2003 
when the Insurance Law came into  force.  EMOSE is the only company that is fully Mozambican 
owned, while Global Alliance is totally foreig n owned;  the other companies operating in 
Mozambique are of mixed capital.   
64. Reinsurance services, which are not available in Mozambique at the time of its previous TPR, 
have been available domestically since 2007.  Th ey are provided mainly by ZIMRE;  EMOSE's 
market share is almost negligible.  Re -insurance services may be purchased abroad. 
65. Mozambique made no specific commitme nts on insurance services under the GATS. 
                                                      
90 Law No. 3 of 21 January 2003. 
91 Law No. 2/2003 of 21 January 2003. 
92 Regulation 42/2003 of 10 December 2003 and Ministerial Diploma 112/2004 of 23 June 2004. 
93 The State still owns 80% of the EMOSE and the remainder is owned by the workers (information 
provided by the authorities). 
94 Global Alliance Seguros (2007). Mozambique WT/TPR/S/209 
 Page 69 
 
 
Table IV.7 
Insurance market shares, 2004-07 
(Per cent) 
Company Type of insurance 2004 2005 2006 2007 
EMOSE Life and non-life 28.0 31.7 28.0 28.7 
SIM Life and non-life 42.2 34.7 35.5 36.9 
Global Alliance (GA) Non- life  18.3 22.7 22.3 18.7 
M.C. de Seguros Non-life  2.0 2.4 2.8 2.8 
Hollard Non-life  9.4 8.5 11.4 12.8 
Source : Information provided by the Mozambican authorities.   
(ii) Telecommunications and postal services 
66.  The telecommunications subsector of Mozambique comprises: the incumbent, 
Telecomunicacoes de Moçambique, E.E. (TDM)95;  two mobile telephone companies,  Mozambique 
Cellular (mCel),  which was established in 1997, is wholly ow ned by the State and claims 70% of the 
market96, and Vodacom Mozambique, which started ope rating in 2003;  18 data transmission and 
internet operators;  as well as 10 internet service pr oviders (ISPs), which resell TDM’s internet access 
products.  As a result of the growth in mobile  telephony, teledensity has increased sharply in 
Mozambique since 2001 to reach 15.6 lines per 100 inha bitants in 2007 (Table IV.8).  Access to the 
Internet, however, which depends on a fixed-line (only 78,000 in 2007, down from 87,291 in 2001), a 
satellite link or WiMax, is still low, and expensive. 
Table IV.8 
Telecommunications service indicators, 2001-07 
 2001 2002 2003 2004 2005 2006 2007 
Fixed lines 87,291 87,367 77,576 75,256 65,992 70,313 78,000 
Mobile telephones 89,000 170,000 470,000 610,473 1,503,943 2,339,317 3,079,783 
Total subscribers 176,291 257,367 547,576 685,729 1,569,935 2,409,630 3,157,783 
Teledensity (lines per 
100 inhabitants) 0.5 0.9 2.6 3.4 8.4 12.6 15.6 
Source : Information provided by the Mozambican authorities. 
67. TDM holds the single licence to supply fixed-line telephony, which expires in 2028.  Its 
exclusivity concerns the supply of fixed-line te lecommunications network services (telephone lines), 
customer premises equipment, local and long-distan ce (national and international) calls.  Since 1999, 
the Government had been planning to sell a stake in TDM to a strategic investor, with its monopoly 
preserved for five years thereafter;  however, this sale has been postponed indefinitely.97  T D M ’ s  
telecommunications infrastructure consists of a national backbone, covering all provinces up to the 
district level, which it is extending.98  This network is a combination of different technologies, 
including VSAT, wireless loop, copper cable, and a 5 Gbps marine fibre optic cable along the coast.  
MCel's and Vodacom's GSM mobile networks c over mainly urban areas, but both are expanding 
                                                      
95 TDM online information.  Viewed at:  http://www.tdm.mz/ [16 July 2008].  TDM is owned by the 
State (80%) and its employees (20%).   
96 MCel (2006). 
97 Pinter (2003). 
98 Partnership for Higher Education (2003). WT/TPR/S/209 Trade Policy Review 
Page 70 
 
 
coverage to rural areas.  MCel was awarded a lic ence to operate a 3G service in 2006, which will 
enable it to offer high-speed broadband data services.99 
68.  A new telecommunications law was adopted in 2004100, to guide the liberalization of the 
fixed-line subsector;  it specified 31 December 2007 for the end of TDM’s exclusivity over fixed-line 
telephony, as the authorities hope to attract other fixed-line telephony operators.101  The Instituto 
Nacional das Comunicações de Moçambique (INCM ), established in 1992, is the independent 
regulator for telecoms, postal, TV, and radio ser vices in Mozambique, a nd is under the technical 
responsibility of the Ministry of Transport and Communications (MTC).102  INCM's responsibilities 
include the licensing and registration of service providers103, spectrum management, the national 
numbering plan, and setting regulated tariffs.  Licence fees are one-off and licensees are also subject 
to an annual turnover tax, of up to 3% (with the ex ception of ISPs);  receipts from the turnover tax are 
shared between the Governme nt (55%) and INCM (45%).104  Use of the spectrum is also subject to 
annual charges.105  INCM is also responsible for issuing homologation certificates to equipment used 
for telecommunications activities, including handsets,  subject to the payment of stamp taxes.   
69.  Licences contain universal service access obliga tions that are proportional, transparent and 
non-discriminatory.106  The supply of universal basic services is financed through a special fund, the 
Universal Access Fund107, financed by a levy of 1% of th e annual turnover of licence holders and 
registered service providers.108  Mobile telephony licences are awarded through a bidding procedure.  
INCM sets the interconnection tariffs for TDM,  MCel, and Vodacom on the basis of long-run 
incremental costs.109 Mozambique did not take part in the extended negotiations on 
telecommunications services at the WTO.  
70. Postal services in Mozambique are provided by Correios de Moçambique (CDM).110  T w o  
delivery services are operated in the country; one using post office boxes, which are available at all post offices for an annual rental fee, and the other is by house delivery.  Delivery times are variable, 
but CDM has introduced a service called Correio Azul, which is speedier  than basic services.  CDM 
has a monopoly of reserved postal services (universal mail services and postal financial services), and 
offers financial services, aimed at the micro-fina nce market and the payment of pensions.  A number 
of private operators have been given licences to  offer express mail services in urban areas (for 
example, DHL), in addition to those proposed by CDM.  
                                                     
 
99 Cellular News, "3G Contract Signed in East-African Nation of Mozambique", 29 January 2008.  
Viewed at:  http://www.cellular-news.c om/story/28923.php [17 July 2008].   
100 Law No. 8/2004 of 21 July 2004. 
101 Article 70, Law No. 8/2004 of 21 July 2004. 
102 Decree No. 32/2001 of 6 November 2001. 
103 Licensing categories include:  fixed telephony;  mobile telephony;  data transmission and Internet;  
cable television;  and radio.  Registration con cerns Internet access servi ce providers (ISPs).   
104 Decree No. 64/2004 of 29 December 2004. 
105 Decree No. 63/2004 of 29 December 2004. 
106 Article 39 of  Law No. 8/2004 of 21 July 2004. 
107 Decree No. 69/2006 of 26 December 2006. 
108 Ministerial Diploma No. 79/2007 of 11 June 2007. 
109 Resolution No. 13 CA/INCM/20007 of 19 December 2007 sets out the termination rates for TDM, 
MCel, and Vodacom for 2008 and 2009.  The regulation on interconnection is contained in Decree No. 34/2001 
of 1 November 2001;  it makes reference to the Fourth GATS Protocol on Basic Telecommunications Services. 
110 UK Trade & Investment online information.  Vi ewed at:  https://www.uktradeinvest.gov.uk/ukti/ 
appmanager/ukti/countries?_nfpb=true&portlet_3_5_ac tionOverride=%2Fpub%2Fportlets%2FgenericViewer%
2FshowContentItem&_windowLabel=portlet_3_5&portlet_3_5navigationPageId=%2Fmozambique&portlet_3_
5navigationContentPath=%2FBEA+Repository% 2F324%2F226685&_pageLabel=CountryType1 
[10 October 2008]. Mozambique WT/TPR/S/209 
 Page 71 
 
 
(iii) Transport 
(a) Maritime transport, ports, and railway services111 
71. Mozambique is served by four shipping compani es, of which one is Navinter, the privatized 
state enterprise.  Maritime transport is through th e three main commercial ports:  Maputo, Beira, and 
Nacala.  Apart from containers, the main comm odities handled in Maputo are coal, alumina 
(imported) and aluminium (exported) , ferro-chrome, cereals, and suga r;  Beira handles mainly cereals, 
granite, fuel, fertilizers, and ferro-chrome;  while N acala handles mainly fuel, clinker, and fertilizers.  
Between 2001 and 2006, the volume of freight handled  through these ports increased (Table IV.9).  
As Mozambique is a strategic gateway to neighbouri ng countries, each port is linked to a rail and road 
transport "corridor", established on the basis of bilateral transport agre ements, including with 
landlocked Zimbabwe, Malawi, and Zambia.  Trucks and railway li nks are used to transport the 
mineral production to these ports, for onwards ship ping.  The National Railway System (Caminhos de  
Ferro de Moçambique, CFM) consists of thr ee subsystems: CFM-South, CFM-Centre and CFM-
North.  CFM-South, the main railway line, carri ed 1.5 million liquid tonnes of cargo in 2007, while 
CFM-Centre carried just 290,000 liquid tonnes and CFM-North carried 114,000 liquid tonnes.112 
Table IV.9  
Port traffic, 2001-06 
Port 2001 2002 2003 2004 2005 2006 
Maputo 4,002 4,423 5,035 5,540 6,382 6,609 
Beira 2,356 2,762 2,323 2,274 2,419 2,653 
Nacala 743 780 808 909 876 950 
Quelimane 133 164 177 217 243 219 
Pemba 78 71 67 78 78 105 
Total 7,312 8,200 8,410 9,018 9,998 10,536 
Source:  Information provided by the Mozambican authorities. 
72. The Ministry of Transport and Communications  (MTC) is responsible for national policy in 
maritime transport and port services, as well as railways.  The Mozambique Ports and Railways 
Authority (CFM) is the state-owned enterprise in char ge of the State’s port and railway infrastructure.  
Since 1995, Mozambique has granted concessions to private companies to operate its principal port 
terminals, including the Maputo container, sugar, and citrus terminals, the Matola coal and container 
terminals, and the container and multipurpose terminals at  the Port of Beira.  This approach led to the 
grant of concessions to operate the ports and railway s infrastructures in three segments (north, central, 
and south) to joint ventures formed between CFM and consortia of private companies.  The port of 
Maputo has been operated by the Sociedade de Desenvolvimento do Porto de Maputo, since 2003  
under a 15-year concession (renewable), in a joint venture with a private operator.113  The joint 
venture includes the management of the Maputo suga r and produce terminals, and the Matola coal 
                                                      
111 This section is based on:  CFM (2006);  and Bila, Chambal, and Tamele. (2007). 
112 CFM-South: Maputo-South Africa (Ressano Garcia Line, 88 km), Maputo-Swaziland (Goba Line, 
71 km), and Maputo-Zimbabwe (Limpopo Line, 534 km);  CFM-Centre:  Beira-Zimbabwe (Machipanda Line, 
318 km); Dondo–Moatize (Sena line, 545 km);  CFM-North: Nacala-Malawi  (Nacala Corridor Line, 610 km), 
Cuamba–Lichinga (Lichinga Line, 626 km). 
113 See Porto Maputo online information, "Joint Announcement of Operations", 24 March 2003.  
Viewed at:  http://www.portmaputo. com/news/portnews0324.htm.  CFM owns 49% of the joint venture and a 
consortium of private companies holds  51% (Mersey Docks and Harbour (18.3%);  Skanska (16.33%);  Liscont 
(14.84%);  Mocambique Gestores (1.53%)).  The consortium pledged to invest US$57 million in the port.  
Mozambique News Agency, AIM Report No. 192 , 9 October 2000.  Viewed at:  
http://www.pop tel.org.uk/mozambique-news/newsletter/ aim192.html#story6 [10 July 2008]. WT/TPR/S/209 Trade Policy Review 
Page 72 
 
 
terminal.  CFM continues to operate the oil and gr ain terminals, as well as CFM-South portion of the 
railway system.  Since 1998, the container and general cargo terminals at the port of Beira have been operated by  Cornelder de Moçambique (CdM), a semi-private company
114, and the Companhiados 
Caminhos de Ferro da Beira (CCFB) has ope rated CFM-Centre since 2004 under a 25-year 
concession.115  For Nacala, the port and railways infrastructure is under a 15-year concession (since 
2005) to Corredor de Desenvolvimento do Norte, a pr oject that integrates the Central East African 
Railway System to the Malawian railway infrastructures.116  The National Institute for Hydrography 
and Navigation (INAHINA) manages the naviga tion aids system, including the operation, 
maintenance, and information systems. 
(b) Road transport 
73. Given its position as a transportation gateway to southern Africa, the rehabilitation and 
development of Mozambique’s road transport links have played a central role in the Government’s 
development plans since the advent of peace in 1992.117  According to the authorities, Mozambique 
has 17,800 km of classified road, of which 5,083 km are paved.  The authorities estimate that 88% of the paved network and 52% of the unpaved  network are in good or fair condition.
118  Mozambique has 
one toll road linking Maputo with Witwatersrand in South Africa.119   
74. The Ministry of Public Works and Housing has overall responsibility for the road network.  
Under the Integrated Road Sector Programme (Programma Integrado do Sector de Estradas , PRISE), 
which covers 2007–11, the Government continues to prioritize the expansion of links to agricultural 
areas, securing access to ports, upgrading corridors to neighbouring countries to encourage industrial 
investment, improving the coastal road network to stimulate development of tourism, as well as 
improving the main north-south road that runs from Maputo to Pemba .120  Since 2003, this strategy 
has been implemented by the National Administrati on of Roads (Administração Nacional de Estradas , 
ANE)121, whose responsibilities include planning the development and mainte nance of the public 
roads system, implementing national roads programm es, recommending projects to be financed, and 
examining and proposing administrative and technical  regulations for roads.  ANE has decentralized 
road-building and maintenance to district level, exercising a supervisory function.  PRISE will costs 
US$1 billion, and will be financed with public funds (from the Road Fund (21%) and other public 
funds (11%), and 68% from official aid).  Th e Road Fund was separated  from ANE in 2003 to 
improve both the financial and executive functions, and is financed by border taxes for the use of 
                                                      
114 CFM owns 33% of the company and Cornelder Holding owns 67%.  The smaller port of Quelimane 
is also managed by the same operator under a joint venture, Cornelder Quelimane, of which 49% is held by 
CFM and the remainder by Cornelder Holding (Sturrock Shipping online information, "Port of Beira".  Viewed at:  http://www.sturrockshipping.co. za/upload/sapor t/file/9_07_PORT_OF_Beira.pdf [10 July 2008]).   
115 CCFB is 49% owned by CFM, with the rest owned by the Indian companies RITES (26%) and 
Ircon (25%).   Jane's online information,  "Beira Railway Company (CCFB)".  Viewed at:  http://www.janes.com/ 
extracts/extract/ jwr /jwr_ a361.html [10 July 2008].   
116 CFM owns 49% of the joint venture.  For information on the project, see: 
http://www.portodenacal a.co.mz/eng/index.ph p [10 July 2008]. 
117 DFID (2006). 
118 The unclassified road network is estimated to be 20,000 km;  it was due to be mapped in 2007. 
119 In 1997 the concession contract was signed between the Republic of Mozambique, the Republic of 
South Africa, the South-African Roads Board and TRAC Trans African Concessions (Pty) Ltd. 
120 For information on the Roads and Bridges Management and Maintenance Project (RBMMP), phases 
I and II, spanning 1992-99 and 1994-2003 respec tively, see:  http://web.worldbank.org/WBSITE/ 
EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:21274208~menuPK:3266877~pagePK:51236175~piPK:43
7394~theSitePK:73154,00.html [18 July 2008]. 
121 ANE online information.  Viewed at:  http://www.ane.gov.mz/[18 July 2008]. Mozambique WT/TPR/S/209 
 Page 73 
 
 
national roads, as well as taxes on petroleum products .  Some 11% of budgetary expenditure in 2006 
was allocated for government investment in roads.  
(c) Air transport and airport services 
75. Liberalization of air transport in Mozambique, which dates from 1998, provided for 
competition to the state-owned airline, Linhas Aereas de Moçambique (LAM), on domestic routes.122  
A new policy governing civil aviation was adopted in 2007 (replacing the 2002 policy)123, to support 
the development of the transport and tourism subsectors.  Since 20 01, policy-making and the technical 
regulation of the sector are the responsibility of the Instituto de Aviação Civil de Moçambique 
(IACM).124  The IACM manages the national air space, airports, and airfields, and administers safety 
standards.  It negotiates Mozambique’s bilateral agreements on air transport, and grants operating 
licences and other documents required for air carri ers and suppliers of services at airports and 
airfields.125 
76. Only TAP (of Portugal) operates an intercontinen tal direct flight to Mozambique, while the 
state-owned airline, Linhas Aereas de Moçambi que (LAM) operates only on regional routes.  W ith 
the exception of flights originating in Lisbon, other flights from Europe and the United States to 
Maputo are routed through Johannesburg in South Africa, and hence are more expensive than 
flights to other destinations in the region;  this is a constraint to industrial and tourism development.
126  LAM lost its exclusive rights to serve the five main cities of Mozambique in 
2002127, and licensed competitors entered the market, o ffering the same routes for much lower prices.   
77. International air travel is provided for under bilateral agreements.  Mozambique’s agreement 
with Portugal provides for a single national carrier to  be nominated by each party, and specifies routes 
and their frequency, for a term of ten years.  Moza mbique signed a bilateral agreement with France in 
1991, which allows for two weekly frequencies be tween Paris and Maputo but it is not being 
implemented because of lack of demand.  Mozambique ’s bilateral agreement with South Africa, last 
revised in 2003, allows only one carrier per pa rty to fly between Maputo and Johannesburg:  LAM 
and South African Airways (SAA).  The agreement a llows South African carriers to fly from specific 
points in South Africa to Beira, Maputo, Nampula, Pemba, and Vilanculus.  A ll the recent agreements 
provide for the first four freedoms, but since the authorities adopted a new air transport policy in December 2007, they intend to include the fifth fr eedom, and accordingly revise bilateral agreements. 
Mozambique has also signed the 1988 Yamoussoukr o Declaration and the SADC Protocol, both of 
which provide for granting of Fifth freedom rights.
128  None of the bilateral agreements authorizes 
domestic cabotage.  The air transport regulator y framework in Mozambique appears to limit 
competition in the industry;  the policy of singl e-designation affects the supply of seats, reduces 
flexibility in scheduling, increases price, and reduc es service quality.  The country’s civil aviation 
policy is largely focused on protecting the nationa l carrier (LAM), rather than supporting the 
industry’s overall development.  As a result, it is difficult to create a business climate that is 
conducive to attracting tourists when air travel acc ounts for close to 40% of the trip’s expenditure.129   
                                                      
122 USAID (2006c). 
123 Resolution of the Council of Ministers No. 40/2002 of 14 May 2002. 
124 Decree No. 41/2001 of 11 December 2001. 
125 Decree No. 39/98 of 26 August 1998. 
126 IFC (2006).   
127 Mozambique News Agency, AIM Report No. 232 , 20 May 2002.  Viewed at: http://www.poptel. 
org.uk/mozambique-news/newsletter/aim232.html [10 July 2008]. 
128 IFC (2006). 
129 IFC (2006). WT/TPR/S/209 Trade Policy Review 
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78. Mozambique has three international airports  and 19 national ones, and 386 airfields.  The 
international airports are at Maputo, Beira and Nampula.  Airport services are supplied by the state-owned enterprise Aeroportos de Moçambique (ADM),  under an exclusivity regime (it can however 
contract out services itself), and are under expansion.   ADM sets the rates for its services subject to 
approval by the Ministry of Transport and Comm unications (MTC).  Among its sources of revenues 
are a departure tax of US$20, if the destination is outside Africa, and of US$10 if the destination is 
within Africa.  
(iv) Tourism 
79. Mozambique’s tourism potential is largely untappe d (in relation to other destinations in the 
Indian Ocean)
130, but is developing rapidly.131  Tourism is attracting substan tial levels of foreign direct 
investment, with close to US$1 billion in invest ment projects approved in 2007 (Table IV.10), 
including four- and five-star luxury hotels.  Moza mbique has a capacity of 17,035 beds, of which 
2,879 are in four- and five-star hotels, and 3,197 in three-star hotels.  The number of tourists has risen 
by 40% since 2002, many from South Africa132, and the authorities report rising revenues, from 
US$64 million in 2002 to US$157 million in 2007.  Th e capital city of Maputo attracts about 55% of 
nights spent by national and intern ational visitors, mainly due to business tourism as well as visits 
from family and friends.  Other areas of Mozambique  attract tourists seeking discovery tourism, and 
adventure sports, and eco-tourists.  
Table IV.10 
Tourism indicators, 2002-07 
 2002 2003 2004 2005 2006 2007 
International tourism arrivals (thousands)       
Business 222 141 131 175 310 351 
Leisure 210 187 254 275 214 261 
Family 109 113 85 128 140 159 
Total 541 441 470 578 664 771 
Investment projects       
Proposals 116 115 116 169 169 171 
Acceptances 68 80 55 95 105 133 
Share of proposals accepted (% ) 58.6 69.6 47.4 56.2 61.9 78.0 
Rooms built 590 857 1,855 2,704 2,855 8,040 
Jobs created 530 1,191 1,922 2,232 3,896 17,936 
Total investment (US$ milli on) 65.1 51.9 67. 2 83.7 604.2 977.2 
Source:  Information provided by the Mozambican authorities. 
80. Mozambique has three principal tourism zones: in the South, including Maputo and four 
major national parks;  in the Centre, where hunti ng attractions and the Gorongosa National Park are 
located;  and in the Nort h, where eco-tourists are attracted to  Pemba’s spectacular beaches, coastal 
and marine resources, and the Niassa Reserve (on the border with Tanzania).  Mozambique has 
progressively placed 31% of its land surface under conser vation;  this consists  of six national parks 
                                                      
130 The direct contribution of tourism to Mozambique’s economy was estimated by the authorities at 
2.5% of GDP in 2003.  In comparison, tourism’s share of GDP is about 6.9% on average in sub-Saharan Africa, 
8% in South Africa, and 10.2% worldwide (IFC, 2006). 
131 USAID (2004). 
132 South African's are the only tourists who do not require visas for holiday visits;  but visas are 
required for business visits.  According to the IFC, competing countries like Brazil, Cape Verde, Mauritius, 
Seychelles, and Maldives allow visa-free entry to Port uguese, other EC and U.S. tourists, while Mozambique 
requires a visa in all cases (IFC, 2006). Mozambique WT/TPR/S/209 
 Page 75 
 
 
and six natural reserves, which are state-mana ged, as well as 12 hunting reserves (coutadas), and 
13 game farms, which are privately managed.  R eceipts from taxes and entrance charges to national 
parks or natural reserves are shar ed between the Central Governme nt and local communities (received 
a share of 20% in 2006 and 2007).  However, much of the tourism infrastructure in place in the 
hinterland prior to independence has fallen into di srepair and many of these tourism destinations lack 
appropriate amenities.  In addition, other barrier s to Mozambique’s tourism development include 
expensive intercontinental air fares, limited in ternal transport services, and onerous visa 
requirements.133 
81. As was the case at the time of the first TPR, rebuilding the tourism industry retains a central 
role in the Government’s development plans.  Si nce 2000, the Ministry of Tourism has managed all 
aspects of the policies applying to investment in  the activity, including:  the management of 
conservation areas;  project appraisal and approval,  upon referral of the CPI if fiscal benefits are 
sought;  the provision of permits to use land, as the owne rship of all land is reserved to the State;  and 
promotional activities.  A new Tourism Policy and Implementation Strategy financed by official 
development aid, was adopted in 2003134;  it integrates local decision-makers in tourism projects, 
emphasizes their poverty reducing potential, and conti nues to aim at the sust ainable management of 
natural resources.  This was followed by the Stra tegic Plan for the Development of Tourism in 
Mozambique in 2004, covering 2004-2013.  Th is plan focusses on developing iconic tourism 
products, with strong marketing a nd promotional potential to attract targeted tourism.  The 
Government has identified priority areas for tourism investment (PATIs)135, in most instances 
overlapping with conservation areas, transfrontier c onservation areas (TFCAs), and tourist routes, in 
an integrated spatial plan, which takes into account Mozambique’s transport infrastructure. 
82. Investment in tourism is covered by the I nvestment Code, and incentives are provided under 
the Code of Fiscal Benefits (Chapter II(4)).  T ourism activities are regulated under a law adopted in 
2004136, which requires suppliers of different tourism products and services to be licensed, subject to 
the payment of fees, and to observe standards of qualit y, as laid down by the Ministry of Tourism.  To 
date, specific regulations have b een issued for travel agencies137, as well as persons providing 
animation services (cultural, entertainment, sports).138  Prices of hotel services are freely set, but 
depend on their classification. 
                                                      
133 IFC (2006). 
134 Government Resolution No. 14 of 4 April 2003. 
135 Three types of PATIs are identif ied: existing destinations (Type A), such as Maputo;  existing 
destinations with limited development (Type A/B), such as Pemba;  and existing destinations with no 
development (Type B), such as Gorongosa National Park. 
136 Law No. 4/2004 of 17 June 2004 replaced Law No. 14/99 of 1 November 1999. 
137 Decree No 41/2005 of 30 August 2005. 
138 Decree No. 40/2007 of 24 August 2007. WT/TPR/S/209 Trade Policy Review 
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83. As part of its tourism policy, the Governme nt issued a regulation in 2007 on transport 
services supplied to tourists, which a pplies to all licensed tour operators.139  This requires an 
application for a licence to be made to the Ministry of Transport and Communications (MTC), stating the nature of the transportation service provided,  and an inspection of the licensee’s premises.  
Vehicles used for the transportation of tourists are re quired to be in perfect condition.  Operators must 
lodge a caution (Mt 500,000), and be insured. 
84. Mozambique has not made specific commitments  on tourism under the GATS.  It has been a 
member of the World Tourism Organization (UNWTO) since 1995.
140 
                                                      
139 Decree No. 41/2007 of 24 August 2007. 
140 UNWTO online information:  Viewed at:  http ://www.unwto.org/states/index.php [10 July 2008]. Mozambique WT/TPR/S/209 
 Page 77 
 
 
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