Investment Climate and Opportunities in Mozambique

Centro de Promoo de Investimentos Main Characteristics of the Investment Climate Mozambique Paris 03 OCT 2003 Centro de Promoo de Investimentos CPI offers a package of services and support to local and foreign investors who wish to invest in Mozambique. www.mozbusiness.gov.mz Centro de Promoo de Investimentos Facts & Figures Population: 17.2 million Bordering 6 Countries Area: 799,380 Km2 2700 km of coast Urbanisation Rate: 29% Over 60 Rivers and Lakes

Official Language: Portuguese English is Widely Spoken Centro de Promoo de Investimentos Statistics, utilities and services Foreign Trade*** Exports US$ 703 million Imports US$ 1 063 million ***) - INE 2002. Centro de Promoo de Investimentos Statistics, utilities and services Main Export Products Aluminium,Tobacco,Citrus,Coal,Electricity,Cashew nuts, prawns, lobsters, cotton and wood. Main Import Products Transport & electrical equipment, machinery,food products, petroleum products and cereals.

Centro de Promoo de Investimentos Statistics, utilities and services Main Export Markets Spain, South Africa, USA, Malawi,Zimbabwe,India, U.K. Japan, Portugal, Main Import origins South Africa, Portugal, USA, Japan, India e France Statistics, Utilities And Services Centro de Promoo de Investimentos Macroeconomic Indicators GDP (1996 constant prices) 90,000 80,000

10E3 M T 70,000 60,000 50,000 GDP (1996 constant prices) 40,000 30,000 20,000 10,000 0 1996 1997 1998 1999 Years 2000 2001

2002 Statistics, Utilities And Services Centro de Promoo de Investimentos Macroeconomic Indicators Exchange rate 25,000 U SD /M Z M 20,000 15,000 10,000 5,000 0 1996 1997 1998

1999 Years 2000 2001 2002 Centro de Promoo de Investimentos Economic growth in Africa was dismal in 2002 (at 3.2 %) The best performers were Mozambique, Rwanda and Uganda, whose economies grew by 12%, 9.9% and 6.2% respectively Mozambique managed to attract $518m in FDI in 2001 In the past decade, Mozambican incomes have nearly doubled. Centro de Promoo de Investimentos Known as the "gateway to Southern Africa Macro-economic stability and a political

environment conducive to investment. Massive rehabilitation programme of port and other infra-structural facilities No exchange controls on the repatriation of profits Ability to hold foreign currency accounts Established Export Processing Zones A large and dedicated labour force available at highly competitive rates Centro de Promoo de Investimentos Countries FDI in USD South Africa 1,164,399,211.35 Great Britain 717,845,843.56 Portugal 253,458,655.69

Japan Ireland 130,382,200.00 103,000,000.00 DYNAMIC OF FDI Centro de Promoo de Investimentos FDI - TOP 5 01/01/1997 - 30/06/2002 6% 4% 11% 49% 30% South Africa Great Britain Portugal Japan Ireland Centro de Promoo de Investimentos

Inward FDI Performance Index Rank Economy Value 1988-1990 Value 1998-2000 18 Singapore 13.8 2.2 19 Guyana 0.7 2.2

20 Vietnam 1.0 2.0 21 Kazakhstan 3.3 2.0 22 Finland 0.5 1.9 23

Mozambique 0.3 1.8 24 Bulgaria 0.8 1.8 24 United Kingdom 3.3 1.8 DYNAMIC OF FDI Centro de Promoo de Investimentos FDI by Provinces 1990 - 2002

Cabo Delgado Niassa Nampula Zambzia Tete Manica Sofala Inhambane Gaza Maputo Vale do Zambeze DYNAMIC OF FDI Centro de Promoo de Investimentos FDI by Sector 1990 - 2002 1,800,000,000 1,600,000,000 1,400,000,000 1,200,000,000 1,000,000,000 800,000,000 600,000,000 400,000,000 200,000,000 0

Investment Priorities Centro de Promoo de Investimentos The Mozambican Government welcomes FDI in the following industries Manufacturing Mineral Exploration and Processing Tourism Fishing and Aqua-culture Construction Forestry Centro de Promoo de Investimentos Investment opportunities Agriculture, Agribusiness & Livestock Industry, Forestry & Mining Manufacturing & Power Generation Oil & Gas Tourism & Hunting Transport & Communication Banking & Insurance Industrial Free Zones Centro de Promoo de Investimentos

Investment Guarantees The security and legal protection of property, rights and other assets; Unrestricted import and repayment of loan and equity investment capital; Repatriation of dividends, profits and capital; Liberalized banking and foreign exchange; Investment dispute resolution under ICC or ICSID arbitration Investment risk insurance under MIGA and OPIC facilities. Centro de Promoo de Investimentos Nacala Development Corridor Tourism Lichinga LILONGW

E Salima Nacala Free Port Agrobusi ness Mandimba NACALA Cuamba Malema MOZAMBIQUE Nampula BLANTYRE Lilongwe-Nacala Railway Upgrade (~US$250 mn) Tete Moma Mineral Sands (~US$100 mn)

Centro de Promoo de Investimentos BEIRA Development Corridor TOURISM TOURISM PROJECTS PROJECTS CHROMITE CHROMITE BASED BASED PROJECTS PROJECTS INFRASTRUCTURE INFRASTRUCTURE Road, Road, Rail, Rail, Electrity, Electrity, Pipelines, Pipelines, Telecoms Telecoms

ENERGY ENERGY PROJECTS PROJECTS FORESTRY FORESTRY PROJECTS PROJECTS SUGAR SUGAR PROJECTS PROJECTS ASSORTED ASSORTED MANUFACTURING MANUFACTURING PROJECTS PROJECTS PORT PORT PROJECTS PROJECTS GAS GAS BASED

BASED CHEMICAL CHEMICAL POSSIBILITIES POSSIBILITIES (methanol (methanol HOT IRON BRIQUETTED PLANT Synfuel Synfuel Plant Plant diesel/petrol/waxes diesel/petrol/waxes FERTILISER FERTILISER & & EXPLOSIVES EXPLOSIVES PLANT INDUSTRIAL PLANT INDUSTRIAL PARKS PARKS

Zambezi Valley SDI Angonia Chifunde Centro de Promoo de Investimentos Moatize(~US$ 500 mn) Thermal Station (~US$ 1bn) FURANCUNGO TETE Cahora Bassa - 2 GW Zumba FINGOE Tsangano TSANGANO CHIPERA Chiuta

SONGO MPHENDA ULONGUE Macanga Maravia MALAWI Peasant Agriculture PANDA UNCUA CHITIMA Magoe MOATIZE Mpanda Uncua 1.2 GW Cahora Bassa TETE

MILANGE Moatize Lugela Coke by rail to Beira Sena Line rehabilitation: Beira-Moatize - 580 Km Mocuba Maganja Pebane da Costa Km Inhamitanga-Marromeu-88 Morrumbala D. Ana -Vila ZNova Fteira-44 Km IA E B M US$ CostZ ~342 AM Milange LUGELA

Changara Mutarara LUENDA Tambara Guro Mutarara-1.2 GW GURO ZIMBABWE CATANDICA NAMACURRA Marigue Mocassa Forestry Gorongosa Caia

Nicoadala CAIA Mopeia Namacurra QUELIMANE Quelimane Sena Sugar Inhassunge INHAMINGA Cheringoma GORONGOSA MUTARE NANTE NICOADALA SOFAL

A Barue MAGANJA DA COSTA MORRUMBALA VILA DE SENA MANIC A HARARE CHEMBA Chemba Marromeu Chinde CHINDE Manica

Gondola MUANZA MANICA Muanza CHIMOIO Nhamatanda Dondo Coal Terminal (Savane) DONDO Sussundenga Buzi BEIRA PEBANE Centro de Promoo de Investimentos Natural Gas Pipeline BEIRA

Pande/Temane Dev. & pipeline ~US$ 1bn Field Dev., Power Station, Transmission ~US$ 2 bn Pipeline ~US$ 900 mn Maputo (Mozal, MISP) Richards Bay Durban Sishen Kudu Power Station, ~US$ 0.6-1.1 bn Cape Town Mossgas Gas-based

investment projects Limpopo SDI GONAREZHOU NATIONAL PARK Centro de Promoo de Investimentos ZINAVE NATIONAL PARK BANHINE NATIONAL PARK LIMPOPO VALLEY KRUGER NATIONAL PARK Chibuto Corridor Sands USD 1 bl LIMPOPO PARK

Centro de Promoo de Investimentos GONAREZHOU NATIONAL PARK ZINAVE NATIONAL PARK BANHINE NATIONAL PARK LIMPOPO VALLEY KRUGER NATIONAL PARK Centro de Promoo de Investimentos Investment Guarantees Treaties and Bilateral Agreements New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards Cotonou Agreement

Investment Protection Conventions Alger, Denmark, Egypt, France, Germany, Nederlands, OPIC, Indonesia, Italy, Mauritius, Peoples Republic of China,Cuba, Portugal, South Africa,Sweden, Switzerland, USA and Zimbabwe Double Taxation Treaties Portugal, Mauritius , Italy and United Arab Emirates Centro de Promoo de Investimentos Investment Incentives General Benefits: Exemption from import duties on goods in customs tariff class K; Exemption on Stamp duty on company incorporation; 50% Reduction on the rate of real property transfer (SISA); Investment tax credit varying from 5% to 15% of total investment ; Deductible expenditure on advanced technology, professional training and construction of infrastructures of public utility; Accelerated depreciation; Centro de Promoo de Investimentos Investment Incentives Special Fiscal Benefits (Rapid Development Zones): Exemption from import duties on goods in customs tariff class

K and I; Exemption on Stamp duty on company incorporation; Exemption from real property transfer (SISA); Investment tax credit varying from 20% of total investment ; Deductible expenditure on advanced technology, professional training and construction of infrastructures of public utility; Accelerated depreciation (2 times the normal rate); Centro de Promoo de Investimentos Investment Incentives Special Fiscal Benefits (Agriculture): Exemption from import duties on goods in customs tariff class K; Exemption on Stamp duty on company incorporation; 50% Reduction on the rate of real property transfer (SISA); 80% reduction in corporate tax; Deductible expenditure on advanced technology, professional training and construction of infrastructures of public utility; Accelerated depreciation (2 times of normal rate); Centro de Promoo de Investimentos Investment Incentives Special Fiscal Benefits (Hotel and Tourism): Exemption from import duties on goods in customs tariff class K;

Exemption on Stamp duty on company incorporation; 50% Reduction on the rate of real property transfer (SISA); Investment tax credit varying from 8% to 18% of total investment ; Deductible expenditure on advanced technology, professional training and construction of infrastructures of public utility; Accelerated depreciation (3 times normal rate); Centro de Promoo de Investimentos Investment Incentives Special Fiscal Benefits (Large Scale projects-over US$ 500million): Exemption from import duties on goods in customs tariff class K; Exemption on Stamp duty on company incorporation; 50% Reduction on the rate of real property transfer (SISA); Investment tax credit varying from 5% to 30% of total investment ; Deductible expenditure on advanced technology, professional training and construction of infrastructures of public utility; Accelerated depreciation (2 times normal rate); Centro de Promoo de Investimentos Investment Incentives Special Fiscal Benefits (Industrial Free Zones): Exemption from import duties, Value Added Tax, and Specific

Consumption Tax on all construction material, machinery equipment and goods for the project; Exemption on Stamp duty on company incorporation; Exemption on real property transfer (SISA); 60% reduction on income tax To qualify the company should export a minimum of 85% and create jobs for Mozambican nationals Centro de Promoo de Investimentos Investment Promotion Centre The Investment Promotion Centre - CPI, has the mandate to: promote and facilitate national and foreign investment in Mozambique; operates as a one stop-shop; receive and registration of investment project proposals; facilitate the concession of fiscal and customs incentives; identify potential partners for joint-ventures; identify and disseminate investment opportunities ; provide institutional assistance to investors in the implementation and exploration of investment projects. www.mozbusiness.gov.mz

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