Legal Update/ Mozambique: Amendments to the Investment Law

 

Decree No. 20/2021, of 13 April, which amends the Regulation of the Investment Law, raises the minimum investment amounts, according to legal database Legis-PALOP+TL.

The minimum value of foreign direct investment (FDI), resulting from the contribution of equity by foreign investors, is increased to the equivalent of 7 500 000 Meticais corresponding to about USD 130 000 (instead of 2 500 000 Meticais corresponding to about USD 45,000), for the specific purpose of transferring profits abroad and re-exportable invested capital.

The foreign investor whose activity meets at least one of the following requirements is also eligible for the right to transfer profits and re-exportable invested capital:
⦁ Generate an annual sales volume not less than three times the amount set out in the previous number, as from the third year of activity;
⦁ Annual exports, of goods or services, at least equivalent to 4 500 000 Meticais corresponding to about USD 81 000 (instead of 1 500 000 Meticais corresponding to about USD 27 000);
⦁ Create and maintain direct employment for at least twenty-five national workers, enrolled in the social security system from the second year of activity.

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Under the new law, it is incumbent on the Minister who oversees the Finance area (instead of the Minister who oversees the Planning and Development area) to coordinate the investment processes under the terms of the Investment Law approved by Law No. 3/93, of 24 June, that is to the Minister of Economy and Finance according to the current structure of the Government in Mozambique.

Legis-PALOP+TL adds that it is anticipated that the adjustment of the minimum value of foreign direct investment will be approved by Ministerial Diploma from the Minister of Economy and Finance, after hearing the Governor of the Bank of Mozambique.

The promotion of the economic potential existing in the country, in accordance with the Government’s policies and strategies, ensuring appropriate forms of reception, assistance and implementation of private and public investment projects, of national or foreign origin, including the Special Economic Zones (SEZs) and Industrial Free Zones (IFZs), is the exclusive responsibility of the Agency for the Promotion of Investment and Exports, IP (APIEX, IP), a public institute that also promotes national exports and provides institutional assistance to investors, during the implementation and effective realization of phase authorized projects.

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This update confirms the institutional change that occurred with the creation of APIEX by Decree No. 60/2016, of 12 December, which came into force in June 2017, whereby both CPI and GAZEDA were removed competences that they held as organs of the State apparatus in the scope of investment – the former with responsibility for the promotion, reception, analysis, monitoring and verification of investments made in the Country, and the latter with responsibilities for the coordination of all actions related to the creation, development and management of SEZs and IFZs, with APIEX now responsible for all private or public, national or foreign investment processes.

In addition to the representatives designated by the Ministers and the Governors of the Province, also the Secretaries of State at central Government level, the Secretaries of State in the Province and the Presidents of the Municipal Councils and the other top leaders of the State institutions must designate representatives when requested by APIEX, to ensure the necessary interinstitutional articulation.

At the level of each province where the investment project is located, the Secretary of State in the Province and the Governor of the Province should articulate in terms of promoting, attracting and facilitating investments.

 

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