This piece highlights issues for consideration when starting a foreign business in Mozambique in four areas: 1) foreign business start-up, 2) access to industrial land, 3) foreign ownership issues across sectors, and 4) commercial dispute arbitration.
Foreign Business Start-Up
It takes 12 procedures and 34 days to establish a foreign-owned limited liability company (LLC) in Maputo, Mozambique. This is faster than the IAB regional average for Sub-Saharan Africa and the IAB global average. A foreign company establishing itself in Maputo is not required to seek an investment approval unless it wants to avail itself of investment incentives offered by the Investment Promotion Centre (CPI). It will, however, need to authenticate the parent company’s documentation in the Mozambican embassy or consulate in its country of origin. In addition, foreign companies that engage in retail and wholesale trade qualify as foreign-trade operators and must obtain a foreign-trade operator card from the Ministry of Trade and Industry. This card takes 7 days to obtain. Registration with the Legal Entities Registrar Office of Maputo takes 1 to 2 days. The required documents are available online, but cannot be submitted online. Any company in Mozambique may freely open and maintain bank accounts in foreign currency. The minimum paid-in capital requirement of MZM 20,000 (~$740) was abolished by Law No. 2/2009 of April 24, 2009 (DL2/09). Instead, said law stipulates that shareholders may now decide on the proper capital of the company. The minimum investment value necessary to take advantage of any guarantees and fiscal benefits is $50,000 for foreign investments.
Access to Industrial Land
In Mozambique, all land is considered property of the state and therefore cannot be sold. The available option for foreign companies seeking to acquire land in Maputo is the lease of publicly held land. Foreign companies may lease land provided they have an authorized investment project as provided by Mozambique’s investment law and the company is established or registered in Mozambique. The process of leasing land requires negotiations with the relevant public authority and members of the surrounding community in which the land is located and consequent approval from both the public authority and community members. Land may be leased for a maximum of 99 years. Approval is required from the provincial government to lease land of up to 10,000 ha. For greater amounts of land, approval must be sought from the relevant minister. Lease contracts offer the lessee the right to subdivide or sublease the leased land, subject to approval by the relevant authority. Most land-related information can be found in the cadastre.
Foreign Ownership Issues across Sectors
Most of the industries covered by the Investing Across Sectors indicators are open to foreign equity ownership in Mozambique. The Media Law (No. 18/91), however, stipulates that only Mozambique citizens may own media enterprises, including television channels and newspapers. Foreign capital participation in such companies is only permitted up to a maximum of 20%. Furthermore, fixed-line telecommunications is one of the sectors reserved for public investment. The right to establish and operate fixed-line telecommunication services is granted exclusively to one Mozambican company, Telecommunications of Mozambique S.A.R.L., which is a joint stock/public limited company. Its current license expires in 2028 and is renewable.
Commercial Dispute Arbitration
Law No. 11/99 governs mediations and arbitration in Mozambique. The same rules apply to both domestic and international arbitrations. Unless there are specific laws providing otherwise, commercial disputes can generally be submitted to arbitration. There are also restrictions on disputes involving state entities that can be submitted to arbitration. Parties are free to select arbitrators of any nationality, gender, or professional qualifications in both domestic and international arbitrations. The law stipulates that arbitrators must be impartial and independent. Parties are also free to have foreign lawyers represent them in domestic arbitration proceedings. There is no online arbitration in Mozambique, but the Center for Arbitration, Conciliation, and Mediation (CACM) administers domestic and international arbitrations. It takes less than 30 days from filing the request for arbitration to the constitution of the arbitration tribunal. Domestic courts do not have a clear pro-arbitration policy, and the law does not require courts to assist the arbitration process by ordering the production of documents or the appearance of witnesses. Arbitration awards are enforced in the Judicial Court of Maputo, and decisions regarding enforcement can be appealed to the Supreme Court. On average, it takes around 46 weeks to enforce an arbitration award rendered in Mozambique, from filing an application to a writ of execution attaching assets (assuming there is no appeal), and 121 weeks for a foreign award.
Source: Investment Across Borders Report by The World Bank. The World Bank authorizes the use of this material subject to the terms and conditions on its website, http://www.worldbank.org/terms.”
