Mozambique: Simplifying processes for companies at top of government agenda for 2008

14 January 2008

Maputo, Mozambique, 14 Jan- The government of Mozambique for this year has programmed a number of reforms aimed at simplifying processes for companies, in order to make the country the most competitive market in southern Africa by 2015.

The Memorandum of Political and Financial Policies, published last week in Washington by the International Monetary Fund (IMF) showed that the first of the reforms to go ahead was scheduled to be inspections of economic activities, to be adopted by the Council of Ministers by March.

The aim, according to the Memorandum is to “reduce the cost of inspections and fines, whilst increasing conformity,” with the legal framework in the country.

The program for simplification of the business licensing process should also be in effect within the same period. The Ministry for Industry and Trade will transfer authority for granting those licenses to “one-stop” branches in each of the provinces in order to speed up procedures.

A new bankruptcy law has also been outlined for the corporate sector, with the aim of “simplifying the process of closure and increasing the recovery rate in order to help viable businesses to overcome short term cash-flow crises and allow bankrupt businesses to quickly go into liquidation.”

In order to “make cross-border trade easier” the government plans to review legal procedures required for importing and exporting, in order to reduce documentation, signatures and the time needed.”

This year will also see adjustments to the system for reimbursement of Mozambique’s equivalent of value added tax (VAT), identifying regular exporters and auditing their reimbursement requests, whilst also recognizing service providers and suppliers of public works to the government and improving the coordination with customs in terms of information about goods transported.

“The government of Mozambique is focused on accelerating reforms to reduce the costs of business activities and make the country’s business climate the most competitive in the Southern African Development Community by 2015,” said the Memorandum of Understanding, drawn up with the IMF.

The document also outlined four “key actions” to be carried out in 2009, namely the consolidation of the licensing process and cross-border trade.

“By the end of 2009, Mozambique should be one of the most efficient countries in the SADC in dispatching goods, both for import, and for export. This will require a reduction in the number of documents needed to less than half,” the Memorandum said.

Other objectives outlined for 2009 are the simplification of tax declarations, the introduction of electronic procedures, and registering property.

This, the Memorandum said, should be geared up “via the improvement of communication between the various government agencies and the development of an electronic database for real estate registration.”

In the last list of the best countries in which to do business (Doing Business 2007), drawn up by the World Bank, Mozambique moved up six places (to 134th, amongst 178 countries), against the previous year, and were amongst the most applauded within Africa.

The report particularly values reforms carried out over the last year in the areas of business start-ups, investor protection and contractual obligations, three of the ten factors that weigh on the final assessment.

Amongst the aspects considered, the best in Mozambique, according to the World Bank, remained payment of taxes (33rd) and cross-border trade (72nd); and the worst was its labor system (162nd).

The wave of reforms underway as part of the Policy Support Program (2007-2010) currently in force, also covers the public sector, namely the decentralization strategy, which will be drawn up over the coming year in order to be approved by the Council of Ministers in December.

“The strategy will propose, amongst other things, a clear legal, regulatory and institutional framework for tax collection, responsibility for expenditure, the role of sub-national units (provinces, districts and municipalities) and monitoring of internal tax operations,” the Memorandum said.

There will also be a new pay policy for the public sector, a boost to the powers of the Administrative courts and the General Inspectorate for Finance in carrying out internal and external audits, in order to increase accountability in the public sector as well as drawing up an anti-corruption strategy.

There will also be a review of the Community Courts Law, by September, and of the Penal Process Code, by June.

Of the seven measures outlines for implementation in the first six months of the program, just one was not fulfilled – the memorandum of understanding between the Finance Ministry and the Bank of Mozambique for transfer of costs of monetary policy management to the State Budget.

Those that were implemented included the adoption of new contract models for mining and oil concessions. (macauhub)