Lisbon, Portugal, 13 Feb – Mozambique has “modern” financial and tax systems that make the country an “excellent” destination for foreign investment, despite needing to make its labor laws more flexible as well as those for setting up companies, a legal report published in Lisbon has said.

For Miranda, Correia, Amendoeira e Associados, the Portuguese law firm with the greatest presence in Portuguese-speaking Africa, Mozambique “now offers good guarantees for the respective rights of all who plan to invest there.”

Those guarantees the law firm says in the report to which Macauhub had access, are the result of, “a significant effort on the part of the authorities to give the country an institutional and standard framework that can provide for the current needs of the various economic players, including the civil service itself.”

Mozambique’s financial sector, which has been subject to a significant amount of reform over the last 15 years and which led to the liberalization of the banking and insurance sectors, as well as having new legislation, also has a “modern system,” which has contributed in a positive way to corporate activity.

“Despite the potential of the system having already been tested, especially by the banking sector, that potential is very far from having been fulfilled and the success of this young system, especially in terms of its capital markets, will be proven by current and future investors,” the report says.

In terms of foreign trade, the Portuguese law firm says that Mozambique currently has the lowest import taxes in the whole of Southern Africa, as well as being, “on the way to becoming an excellent destination for investment within the context of Africa.”

“A balanced economic liberalization policy, the reduction of obstacles to foreign trade and the reduction of bureaucracy in licensing processes have set Mozambique on the road to development, the results of which will be felt in the not too distant future,” the report adds.

Last week, the International Monetary Fund (IMF) called on the Mozambican government to speed up the process of an overall reduction of import taxes, from 25 percent currently to 20 percent.

The country’s tax framework is, for the law firm, an attractive factor that allows small and medium-sized investors to take advantage of benefits, “without eliminating the margin of negotiation of large investment projects.”

According to the law firm’s report, the main obstacles lie in corporate law and laws governing setting up companies, as well as labor laws, which continue to be biased in workers’ favor, which comes as a result of the country’s communist heritage.

“The country’s rapid economic development and far-reaching reform of economic legislation that has accompanied it have not been kept up by appropriate laws governing companies, which are an essential instrument for channeling foreign investment,” despite the government having noted the problem, the report says.

Despite these setbacks the Portuguese law firm says it considers that, “Mozambique now has a judicial and institutional system that is capable of protecting industrial rights and private interests in the industrial, commercial or services sectors.”

Mozambique thus provides, “a climate that favors the development of national and foreign investment,” says Miranda, Correia, Amendoeira e Associados.

In terms of the sectors with greatest investment potential, the report highlights tourism and mining, where there are already many large-scale projects.

Energy is a sector “whose potential is far from exhausted and in which soon steps will be taken to liberalize activities such as production, distribution and supply of electricity and distribution and supply of natural gas.” (macauhub)