The government in Mozambique is beginning to move away from a centrally-planned economy through the introduction of free market reforms. The country’s exchange rate is now determined by market forces, as are interest rates and prices. Government subsidies and restrictions on imports have been lifted in a bid to open up the economy, along with the reduction and simplification of import tariffs and the liberalisation of crop marketing.

Other economic reforms include the introduction of a privatisation programme which involves the entire banking sector as well as various State-owned manufacturing operations.

In recent years, Mozambique’s economic growth rates have been among the highest in the world. The serious flooding in Mozambique during 2000 and 2001 negatively affected economic growth, but with the assistance received from donors, the economy was recovered and investment brought back on track. The Mozal project, the sugar industry, and the gas pipelines, are proceeding with the backing of foreign investors.

The country, however, still depends on foreign aid to assist in balancing the budget. Trade imports still exceed exports. As the country’s transport and trade links with the rest of the region improve, the government is optimistic about attracting increasing foreign investment.

Mozambique is essentially an agriculture-based economy. The contribution of the agricultural sector, at 32 percent of GDP in 1999, is believed to be substantially underestimated in official statistics. More than 75 percent of the population is employed in the sector. The main products are maize, rice, beans, vegetables, cassava and sisal. The main export crops are prawns and shrimp, cashew nuts, cotton, copra and sugar. Agriculture has benefited from the combination of an improved economic environment, good rains in recent years and the considerable increase in output resulting from the large-scale return of refugees to the countryside since the mid-1990s. Since 1996, Mozambique has achieved virtual self-sufficiency in grains and, at present, cereal and cassava production exceeds national needs. Still, agricultural productivity remains well below the African and regional average, and the sector has considerable unexploited potential for further growth. Increases in output have also been encouraged by the rehabilitation of infrastructure, including roads, and the gradual restoration of rural trading networks. Road transport remains generally poor, however, and the more fertile northern regions remain isolated and often impenetrable.

The geographic position of the country in relation to neighbouring landlocked countries and regions has historically made transport services - roads, railways, ports, shipment and transhipment - a central element of the economy and a significant foreign exchange earner. Commerce and services as a whole account for about 40 percent of GDP.

The Cahora Bassa Hydroelectric Dam, which has a capacity of 2,075 megawatts a year, is servicing a current annual national consumption of around 200 megawatts. Once the newly constructed aluminium smelter in Maputo (MOZAL) is fully on stream it will consume another 450 megawatts. Electricity is also exported to Malawi, South Africa, Swaziland and Zimbabwe.

Industrial development in Mozambique has been slow, due to the effects of the long civil war that destroyed the transport system and other infrastructure. The country has considerable mineral resources, and the mining industry has the potential to play a major role in the economy. Diamond exploration is presently being carried out by the Portuguese firm Tamega and large reserves of natural gas in the Pande region are likely to be exploited in the near future. The downstream oil industry is under development with several international oil companies already active in the marketing and distribution of petroleum products in the country.

PRIVATISATION PROGRAMME
The Mozambican government views privatisation as being central to realising its vision of the private sector becoming the country’s engine of economic growth. Since the early 1990s, the objectives of the public enterprise reform and divestiture programme have been to reduce the role of the public sector and to promote the development of an efficient private sector. Over 1,400 public enterprises have been divested so far. The sale of State-owned enterprises had yielded a total of US$144 million in local and foreign currencies by 1999.

Mozambique is known to have large mineral deposits, specifically of coal, natural gas, rare earth minerals, gold, titanium and non-metallic minerals. There is also potential for oil and diamonds. Exploration work carried out over the last 20 years has led to the discovery of important deposits of heavy mineral beach sands, coal, gold, tantalum-niobium and other rare metals, graphite, black granite, gemstones and other dimension stones. The result of this increased geological knowledge has been an increase in investment by leading international and regional mining companies, particularly for gold, diamonds, gemstones and titanium.

At present mining contributes only 2 percent to GDP. However, the informal production of gold and gemstones means this figure is probably slightly higher; some 50,000 artisanal workers mine alluvial gold and gemstones. Three mining operations, including gold, bauxite and graphite, produce the bulk of the official mineral output. New projects being developed include mining of heavy mineral sands, natural gas, aluminium smelting, iron and steel.

The recent floods hampered further development of the sector in recent years, which destroyed infrastructure. Exploration work has been minimal as a result since then.

The government is actively encouraging foreign investment in the mining sector. A new mining and geological policy has been introduced. Applications for mining and exploration rights are handled by the National Directorate of Mines, through the Ministry of Mineral Resources and Energy.

Corporate income tax on mining companies is 35 percent, with a 50 percent reduction over the first 10 years from the start of production. The government has introduced the following incentives:
-    Exploration and development expenditures may be accumulated and carried forward until the first year of production;
-    A choice of depreciation rates;
-    Exemption on import duties for all equipment, material and subcontractors;
-    Exemption from dividend withholding tax; and
-    Exemption from sales tax, duties and taxes on mineral exports. 

There is considerable potential for Mozambique to become a major producer of natural gas. Substantial reserves have been discovered including three onshore gasfields at Pande, Temane and Buzi-Divinhe. Pande’s reserves are estimated at more than 2.1 Tcf, Temane at around 1.0 Tcf, and Buzi has recoverable reserves of around 10 Bcf. At present gas production is limited to domestic supply from the Pande gasfield to neighbouring villages. There are plans to develop the three areas.

Mozambique launched its First Offshore Licensing Round in March 2000, when 14 blocks, mainly in the Mozambique basin, were offered. Blocks will be awarded under Production Sharing Agreements between the government, Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) and private oil companies. Companies presently involved in the upstream industry include Enron Oil and Gas Resources Inc, Energy Africa, Sasol Petroleum International, Leopardus Resources Limited, Lonrho de Provuma Petroleum, Zarara Petroleum Resources, Elf, TotalFinaElf SA, BP, Trefoil Limited and Western. These companies are conducting geophysical surveys of the offshore areas.

The State-owned oil company ENH is presently negotiating with Sasol Petroleum International and Enron Oil and Gas to construct a pipeline that will transport gas from the Pande and Temane gasfields to South Africa’s Gauteng province. An existing pipeline between Beira and Harare has been extended and is now operating close to full capacity.

Mozambique has immense agricultural potential, with an estimated 36 million hectares of arable land, of which only 10 percent is presently in productive use. The wide diversity of soil types and the diverse climatic conditions in the country are suitable for a large variety of crops. Most of the agriculture practised in Mozambique is non-irrigated. However, Mozambique’s network of more than 60 rivers has allowed the construction of irrigation schemes. Total potential irrigated area is estimated at 3.3 million hectares.

The most important cash crops include cotton, copra, tea, cashew, and citrus fruits. At present the agricultural sector is still dominated by the family subsector which accounts for 90 percent of the cultivated areas and includes 2.5 million households. This subsector relies on rain-fed farming and has very basic techniques resulting in low yields. The remaining arable land is cultivated by large commercial farms that concentrate on cash and export crops.

There are a number of irrigation systems in the country. The main ones are at Chokwe and the sugar plantations in Incomati, Maragra, Buzi, Mafambisse and Luambo, covering a total of some 59,000 hectares. The Zambezi Valley has great investment potential in the agricultural sector offering both excellent arable land and readily available irrigation. To assist the development of this area, the government set up the Zambezi Planning Office in 1997 to promote and coordinate social and economic development. Special tax incentives are also offered.

Post-independence policies adhered to the principle of large-scale State farming and the collectivisation of peasant agriculture. The economic result was that the marketed agricultural output halved between 1981 and 1986. Alternative policies were implemented with the new economic reforms and a new emphasis on market incentives and the primacy of smallholder agriculture now prevails.

Some larger export crop farms have been revived through foreign direct investment and joint venture companies, such as the cotton and citrus producer Lonrho Mozambique Agriculture Company (LOMACO), which operates in several regions of Mozambique.

The advent of peace, a generally improved policy environment and favourable climatic conditions have resulted in significantly better harvests in recent years. As a result, Mozambique has returned to self-sufficiency in maize, the staple crop.

Cotton and cashew nuts are still the dominant export crops. Other subsectors with export potential are citrus, tea, copra, tobacco, mafurra, sunflower and soya.

Rehabilitation of the existing agriculture-related infrastructure, including roads, railway lines, ports, irrigation systems, and water and power supply, is a priority of the government and of the international aid agencies assisting the Mozambican agricultural sector. Development of commercial agriculture in suitable areas of existing water resources and irrigation networks such as Chokwe and Massingir in the Gaza province, and Corrumana in Maputo province is another priority of the government.

In 1996 the Mozambican government launched an ambitious commercial agriculture joint venture between South African farmers and Mozambique (MOZAGRIUS, coordinated by the Ministry of Agriculture and Rural Development), a broadly successful scheme to attract farmers from South Africa to the largest and most fertile northern province of Niassa. Farmers participating in the scheme have already settled in Niassa. There is also an influx of farmers from Zimbabwe who have already started settling in the Manica province, following the recent developments on the land issue in Zimbabwe.

The sugar industry in Mozambique currently comprises six different companies with their own factories and cane plantations. Açucareira de Maragra and Açucareira de Xinavane are located in the south of the country in various parts of the country. The total plantation area of about 52,800 hectares is equipped with suitable irrigation systems.

In 1972, the country reached a record production figure of 325,051 tonnes, 60 percent of which was destined for export. In the early 1970s, sugar was the country’s third major export commodity and one of the main employment generators with 45,000 workers. It currently employs 17,000 seasonal and permanent workers. In 1999, the sugar yield reached 50,745 tonnes, the maximum since independence.

The redevelopment of the sugar industry was launched at the end of 1999, with a special incentives scheme for the sector. The special scheme will run for five years (until 12 October 2004). Sugar mill rehabilitation is in progress at two sites with investment funding from Tongaat Hulett Inc., the Arab Bank for Economic Development in Africa (BADEA), the OPEC Fund and the Credit Guarantee Insurance Corporation from South Africa.

The recent initiative by the European Union to liberalise all trade with least developed countries includes sugar. Although the European Union sugar import regime’s complete liberalisation will not occur until 2008, the initiative could potentially have a very beneficial impact on the sector.

LIVESTOCK PRODUCTION
Mozambique has excellent climatic and land conditions for the development of livestock. Livestock population throughout Mozambique declined sharply in the 1980s because of the civil war and collectivisation policies.

The rearing of cattle, pigs, goats, rabbits and poultry has great potential as the existing supply does not meet domestic demand, with significant volumes of meat, poultry and dairy products currently being imported, mainly from South Africa and Europe. Local production covers only a small fraction of the existing market demand.

The government has given priority to the introduction of animal stock extension and rearing programmes. Of particular need in the immediate short term are investments in poultry and pig production and in the supply of feedstock to these industries.

FISHERIES
The fisheries sector is a major player in the economy accounting for 43 percent of exports and around 5 percent of GDP. Development of the sector has seen catches rising more than 13 percent a year since 1997.

The sector has both industrial and small-scale fisheries and employs up to 100,000 people, 90 percent of whom are artisanal fishermen, or involved in fish processing and marketing activities. Mozambique has a potential catch of fish and shellfish of some 300,000 tonnes a year.

The Mozambican fishing fleet is limited, although there are a number of direct licensing schemes and joint venture companies with Japanese, Spanish, Portuguese and South African fishing firms. Prawns and shrimp are harvested mainly by these companies. The government announced several measures in 1999 to stimulate local processing and development of the semi-industrial sector in which Mozambican capital is predominant.

Aquaculture in Mozambique is in its infancy and its future development is a top priority for the government, especially of shrimp aquaculture. The first major foreign investment came from the French firm Aquamar, Lda which is currently managing a prawns and shrimp farming operation at Quelimane, Zambezia province. Opportunities also exist for the culture of oysters, mussels, algae and pearls.

Other export species include crayfish, shrimp, fish, and langoustine. Mozambique exports primarily raw fish. The government strategy is to promote the value-added in this sector and it thus welcomes foreign investors who can provide semi-industrial shrimp vessels as well as installations of processing plants. Furthermore, Mozambique needs to improve its services to the fishing industry. Opportunities exist for the manufacture of rope, steel cable, marine engineering consultancies, and marine electronics.

FORESTRY
Mozambique has an estimated 19 million hectares of productive woodland. Tropical hardwoods are the most valuable products, although pine and eucalyptus plantations also exist. The more important species include umbila, jambirre, chanfuta, and African sandalwood.

Forestry exports have increased since the end of the war and amounted to the equivalent of US$10.9 million in 1998. Unregulated cutting of tropical hardwoods has greatly increased in recent years, and the government is now attempting to bring greater control to the sector. The Mozambican State forestry company, Ifloma, which has large eucalyptus plantations in Manica province, is to be privatised.

The country’s logging capacity is estimated at around 500,000 cubic metres per year. Current off-take is well below this level. Apart from the natural forests, there is potential for the development of plantation forests with around one million hectares of land with suitable conditions available.

Agricultural Production ('000 tonnes, crop year July-June)

1994/95

1995/96

1996/97

1997/98

1998/99

Export crops

Cashew nuts

33.4

66.5

43.3

51.7

58.7

Cotton

51.0

50.5

74.0

91.0

106.7

Sugar cane

313.2

315.9

278.9

368.7

469.5

Copra

26.4

22.3

35.6

36.0

44.4

Tea

1.0

1.7

1.5

1.5

5.4

Sisal

24.0

24.0

24.0

24.0

24.0

Internal market crops

Maize

168.6

252.7

256.3

270.2

304.1

Rice

13.6

21.2

24.9

26.7

28.9

Cassava

36.2

31.4

76.1

74.8

83.8

Beans

30.4

39.0

45.0

45.7

68.1

Horticultural products

30.5

33.3

50.0

50.3

51.0

Fishing Production (tonnes)

1994

1995

1996

1997

1998

Fish

13,489

12,620

10,229

10,200

6,173

Prawns*

6,645

7,520

7,857

8,680

8,456

Lobster

307

238

276

207

227

At independence, Mozambique’s industrial base was well-developed by Sub-Saharan Africa standards, thanks to a boom in investment in the late 1960s and early 1970s. Indeed, in 1973, value-added in manufacturing was the sixth highest in Sub-Saharan Africa. However, further industrialisation was stopped by the hasty exodus of 90 percent of Portuguese settlers, which left the country virtually without skilled manpower. The situation was exacerbated by the civil war during the following years.

Since 1995, production in manufacturing has increased sharply, induced by the massive and successful privatisation of industries. Manufacturing output increased by an annual average of 10.6 percent between 1995-2000, rising by 46 percent in 1999 alone.

The main manufacturing operations include light engineering, food industries, textiles, brewing, soft drinks, cement, oils, soaps, and chemicals. The diversification of the sector is underway with the construction of major aluminium, steel, and iron plants. Mozambique’s industrial sector is concentrated in the urban centres of Maputo, Beira, and Nampula.

Industry has benefited from the stabilisation of the macro-economic situation, changes to the import tariff structure that have lowered the costs of intermediate and capital goods, and the rapid increase in demand resulting from massive foreign investment and high economic growth. It continues to suffer, however, from a shortage of capital and the fairly high cost of borrowing.

Tourism has the potential to become a significant earner of foreign exchange for Mozambique. In the colonial period, the southern and central parts of the country were well-developed tourist destinations. Since the end of hostilities and the 1994 democratic elections, the number of visitors has picked up, particularly those from South Africa, Zimbabwe and, more recently, Portugal.

The objective of the government’s National Tourism Strategy is to promote high-value, low-volume tourism. Demand for quality accommodation is strong and investment is addressing this. The number of business-class hotels in Maputo has increased from virtually nil in 1993 to eight by the end of 2000.

With 2,515 kilometres of Indian Ocean coastline dotted with sandy beaches and clear water, colonial hotels, an abundance of some of the world’s most exquisite seafood, as well as an interior with fantastic scenery and wildlife, Mozambique has the potential to become one of the most attractive tourist destinations in Southern Africa. Beach tourism has expanded along the southern coast, including the islands of the environmentally unique Bazaruto archipelago in Inhambane province. The area is receiving continuing investment and expansion. Important tourism nodes have also developed elsewhere on the south coast at Inhambane, Xai-Xai, Inhaca Island and Ponta do Ouro.

Ten percent of Mozambique’s total land area is allocated for wildlife management, including national parks, game reserves and hunting areas. Private sector involvement in the wildlife sector is promoted in tourism development and marketing outside of the core conservation areas. Certain activities within the main conservation areas may also be contracted out to the private sector. Eight of the 68 tourism projects involving FDI were registered for the development of wildlife-based activities. A number of private investors have opened hunting and nature reserves in several of the more remote areas of the centre and north, including the large Niassa Reserve in Niassa province.

Rehabilitation of several of the country’s game parks with World Bank and European Union funding is underway including the initiative to establish the cross-border Great Limpopo Transfrontier Park connecting the Kruger Park in South Africa with the Banhine Reserve in Mozambique and the Gonarezhou Park in Zimbabwe.

The tourism sector offers a number of investment opportunities. Around 40 percent of the existing hotel beds are located in Maputo. There is potential for construction of hotels outside the capital in the major tourism areas.

Mozambique’s export commodities include sugar, cashew nuts, citrus fruits, coal, coffee, tea, timber and fisheries (prawns and shrimp). The main imported goods include raw materials, spare parts, mining equipment, pharmaceuticals, consumer goods, chemical goods and crude oil.

Although exports have gradually recovered since the mid-1990s, they have underperformed, particularly relative to the country’s high GDP growth, despite the boost from electricity exports which amounted to US$34 million in 1998.

Agricultural exports are constrained by the weaknesses of the rural sector, including poor infrastructure and an underdeveloped trading network. Aside from cashew nuts and cotton, other subsectors that could make a significant contribution to exports, such as citrus, tea, copra and tobacco are still stagnant. Sugar has great potential with sugar exporters to benefit from the United States of America quota allocations and also from the liberalisation of the European Union’s trade regime applicable to least developed countries.

Exports of manufactured goods, which account for more than 10 percent of total exports, have performed well. Textiles, tyres and processed raw materials drive the sector.

Imports were boosted by mega-projects like MOZAL and rose rapidly in 1999 to reach an estimated US$1.4 billion. Meanwhile, exports rose only slightly, to US$266 million. Consequently, the trade deficit rose from US$717 million in 1998 to an estimated US$1.15 billion in 1999.

Economic recovery and increasing foreign investment will further accel­erate import growth, although some import substitution has taken place in recent years with the increased production of raw and processed agricultural and consumer goods.

Trade with other African countries has increased in recent years. South Africa and Zimbabwe are significant markets for Mozambican exports. Spain is the second largest export market, with the exports dominated by seafood products, and South Africa has emerged in recent years as the dominant foreign supplier of imports.

Whereas merchandise exports have traditionally been weak, services, including foreign exchange from the port and railway services and remittances from Mozambican miners working in South Africa, have in the past brought in substantial receipts. Although the services balance is still negative because of debt-servicing outflows, the deficit has narrowed since the late 1980s. Imminent privatisation and investment in the port and rail corridors is expected to re-establish the prominence of the transhipment sector’s contribution to foreign exchange earnings.

Export Promotion
The cornerstone of Mozambique’s push to expand its export markets are the Industrial Free Zones (IFZs). If an export industry is located in an IFZ, it will enjoy full exemption of customs duties, import or export taxes on construction material, machinery and equipment. IFZ enterprises will also be exempted from tax on dividends for 10 years. The proposed sites for the development of IFZs are at the Industria Ceramica de Mozambique site in Maputo province, Sofala province near the port of Beira, Nampula province and the port of Nacala.

National and foreign investors may hold licences for the development and/or administration of IFZs. The IFZs are geared towards exports, although a maximum of 15 percent of their output may be sold on the domestic market, against payment of customs duties on imported components.

The minimum investment required to obtain a licence to develop and administer an IFZ is set at US$5 million and the minimum amount of investment required to qualify for direct investment under the IFZ regime and for an IFZ certificate is US$5,000.

The Beira and Maputo Free Trade Zones have been officially approved, but are not yet operational.

Mozambique is eligible for duty-free export quotas to the European Union markets and to the United States of America and other developed economies under the GSP. Mozambique also has a special trade agreement with South Africa.

Membership of International Organisations
Mozambique is a member of the Southern African Development Community (SADC), African Union (AU), United Nations, World Trade Organisation (WTO), World Bank and International Monetary Fund (IMF).  

Main Exports (fob; US$ m)

1995

1996

1997

1998

1999

Prawns

73.1

70.3

85.1

72.6

65.5

Electricity

0.0

0.0

0.0

36.2

62.9

Cashew nuts (raw)

5.6

29.3

15.1

21.6

25.1

Cotton

19.8

26.8

25.2

22.3

19.9

Manufactured products

5.1

8.3

19.9

14.3

13.9

Timber

9.6

9.8

13.8

11.0

8.8

Cashew nuts (processed)

6.9

17.2

0.0

19.1

7.8

Citrus fruit

1.3

1.0

0.8

0.4

5.8

Sugar

7.3

12.8

12.8

8.4

5.5

Fuel (bunkering)

4.5

2.6

2.4

1.3

4.4

Copra

6.1

3.7

4.6

5.0

3.5

Tyres and inner tubes

2.7

2.4

3.3

3.4

1.0

Tea

0.0

0.0

0.6

0.5

0.2

Coal

0.5

0.4

0.3

0.2

0.0

Total including others

167.6

218.6

216.4

248.2

268.9

1998

270.4

252.7

148.7

88.4

Main Trading Partners (US$ m)

1996

1997

1998

1999

2000

Exports to:

Zimbabwe

10

10

43

40

65

South Africa

44

36

40

71

53

Portugal

17

21

18

25

42

Spain

48

42

38

35

39

United States of America

26

26

14

13

17

Imports from:

South Africa

270

647

317

302

425

Portugal

49

47

64

43

92

Japan

31

35

30

44

51

United States of America

33

40

40

44

36

Zimbabwe

31

18

18

20

5

In 1978 all private banks operating in Mozambique were nationalised and merged into two State institutions, the Banco de Moçambique (the Central Bank) and the Banco Popular de Desenvolvimento (BPD). During the 1980s and early 1990s the banking system operated virtually as an arm of the State budget, most credit being directed to assist troubled State enterprises.

After 1992, the government’s economic reform programme covered the financial sector. Foreign banks were now allowed to invest in Mozambique, interest rates were deregulated, and the regulatory and commercial activities of the Central Bank were separated. Banco de Moçambique assumed the Central Bank function while Banco Comercial de Moçambique (BCM) led the commercial banking sector. In 1996 BCM was sold, and in 1997 the BPD. A 51 percent share of the joint stock of the BCM was sold to a group of foreign investors, including the Banco Mello, the União dos Bancos Portugueses, the National Merchant Bank of Zimbabwe and Impar, a Mozambican insurance company. BPD was acquired by a consortium of Malaysian and local investors through the privatisation process and changed its name to Banco Austral. The Malaysian consortium has recently divested its interest in Banco Austral and the shareholding was taken up by South Africa’s ABSA Bank.

Liberalisation attracted many new entrants into the banking sector. Until 1992, the Banco Standard Totta de Moçambique (BSTM) was the only private bank operating in the country. Since then, it has been joined by the Banco de Fomento a Exterior (BFE) and the Banco Internacional de Moçambique (BIM), whose main shareholder is the Banco Comercial Português. Banco Comercial de Investimentos (BCI), a joint venture involving the Caixa Geral de Depósitos, a wholly owned bank by the Portuguese State, the Banco Ultramarino, and Mozambican investors opened in mid-1997. Other international banking groups are also considering opening subsidiaries in Mozambique.

Consolidation in the Portuguese banking sector in early 2000 saw BIM and BCM become the largest and third largest Mozambican banks respectively, under the ownership of one company. The transformation of the banking sector has been rapid, and the branch network has expanded into the northern and central regions.

The Commonwealth Development Corporation (CDC), together with a group of development finance institutions, has established Mozambique’s first venture capital fund, the Mozambique Investment Company. In addition, the CDC has made a number of important investments, including the country’s first leasing firm, the United Leasing Company (ULC).

Borrowing rates in the domestic banking sector remain high and lag behind the sharp fall in inflation over the past three years. Real interest rates rose to 32 percent in 1996, although they have since fallen to around 18 percent, an indication of increased competition in the financial sector. High, albeit declining, interest rates have been maintained by structural constraints to financial intermediation, including credit ceilings imposed by the Central Bank, the limited number of clients, deficiencies in the judicial system, and the limited availability of loan collateral, partly due to the constitutional prohibition on the ownership of land.

In October 1999, a stock market was inaugurated in Maputo (Bolsa de Valores de Moçambique - BVM). The exchange was opened with the support of the Lisbon Stock Exchange and the World Bank. Operations on the exchange are hampered by a lack of legislation for trading and a shortage of potential listings. The business sector has only recently begun to produce audited financial results. The Johannesburg Stock Exchange has indicated it will provide technical support for the exchange.

The government wants to distribute its holdings in some privatised companies to the public through the stock exchange. The country's leading brewery, Cervejas de Mocambique (CDM), has met the listing requirements and a number of other companies have expressed interest in listing.

The insurance market is still immature. The legal framework needs to be reformed and enhanced with a view to setting up an adequate supervisory and regulatory framework protecting the interests of both insurers and clients. A commission for the inspection of the insurance activity, involving all the existing insurance companies, has been set up at the Ministry of Planning and Finance and tasked with drawing up proposals for specific regulations to create an enabling environment for the growth of the industry.

Exchange Controls
Foreign investors are allowed to operate both local and foreign currency accounts. Foreign currency accounts for investors may be denominated as retention accounts, meaning the availability of foreign currencies is guaranteed.

Foreign retention accounts, where foreign currency receipts from Mozambique-derived production and sales are received and held in foreign bank accounts, are permitted on a case-by-case basis.

The right of foreign investors to repatriate capital, dividends and other distributions of profit is guaranteed by law. Firms are obliged to register all imports of goods or money with the Central Bank. Future repatriation of non-registered investment is not guaranteed.