REPUBLIC OF MOZAMBIQUE Investment & Export Promotion Agency (APIEX)

MOZAMBIQUE-ESWATINI-NORTHERN KWAZULU NATAL

APIEX OBJECTIVE & MANDATE

Maputo, 28 March 2019

by: Lourenço Sambo– Director General

PRESENTATION LAYOUT

APIEX MANDATE

WHY MOZAMBIQUE

INVESTMENT OPPORTUNITIES

1

2

3

Banco Nacional de Investimento • 3

APIEX’S OBJECTIVE &

MANDATE?

APIEX

• Investment and Export Promotion Agency (APIEX) is a public institution that results from the extinction of the Investment Promotion Centre (CPI), the Special Economic Zones Authority (GAZEDA) and the Institute for Export Promotion (IPEX), whose purpose is to promote and facilitate private, public investment and exports, special economic zones, industrial free zones and rapid development zones.

Responsibilities • Development and implementation of actions for the promotion and

management of private and or public investment processes

• Promotion and coordination of actions related to the creation, development and management of special economic areas (SEZ’s) and industrial freeze zones (IFZ’s);

• Promotion of national exports.

INVESTMENT & EXPORT PROMOTION AGENCY

(APIEX)

ROLE OF APIEX

NATURE

• Public institution

• Endowed with administrative and financial autonomy

MANDATE

• Promotion and facilitation of investment and exports

SUBORDINATION

• Minister of Trade & Industry

APIEX

APIEX´s PILLARS

FACILITATION DEVELOPMENT PROMOTION ADVISORY

6

Banco Nacional de Investimento • 7

WHY

MOZAMBIQUE ?

Economy Indicators 2017

GDP Real Value and Growth US$ 13.407 Million and Growth Rate 3.7%

GDP per Capital US$ 466.18

GDP by sector (%) Agriculture : 22.5% Construction : 1.7 % Manufacturing : 8.7% Mining : 5.6% Services : 6.8%

Inflation rate 5.7%

Unemployment rate 25.04%

Currency Metical

Major Banks Millennium BIM/ Barclays and Standard Bank

Lending Rate 20.4%

KEY ECONOMIC DATA

Categories 2017

Population 28.8 million inhabitants

Population density 36,1 km2

Gender composition 47.81% male and 52.19 % female

Age Group 0-14 years old : 44,92% 15-24 years old : 21,51%% 25-54 years old : 27,24% %

55 + years old : 6,32% %

Retirement Age Men 65 years old /Women 60 years old

Life Expectancy Men: 55.7 years old Women: 59.4 years old

Language Majority: Portuguese

Literacy Level 58.8 %

Religion 34% Catholic /20% Muslims and 46% Traditional Religion

DEMOGRAPHY

WHY MOZAMBIQUE?

$5 billion

Nacala corridor rail and port project to

open new markets for farm produce

and boost regional integration.

$2.7 billion

Port of Macuse and 639km

Moatize-Macuse Railway

project to transport coal

$2.3 billion

Chipata-Petauke-Serenje railway

line to

provide an alternative trade route

to the

east coast of Africa via the port of

Nacala

$2.5 billion

Trans-Zambezi rail project to link

Zimbabwe to Mozambique

through Zambia

$500 million

coal terminal to be built by

Essar Ports

$550 million

Techobanine Port open for

discussion between

Mozambique, Botswana and

Zimbabwe

$500 million

upgrade to the Port of Beira in

Mozambique

$750 million

planned for Port of Maputo

to boost handling capacity

to an annual 48 million tons

a year by 2033.

$99.4 million

development for graphite project

in Ancuabe

Over $50 billion

dollars

of investment in gas

projects are under

development

PRIVATE INVESTMENT IN MOZAMBIQUE Source of FDI inflow to Mozambique: 2009 - 2018

Total: 12.3 Billions US$

America

Europe

Asia

Oceania

Africa

2.89% 38.40%

33.71%

24.61%

0.38%

Source：APIEX 2019

TOTAL INVESTMENT INFLOW IN MOZAMBIQUE (2014-2018)

12

Agriculture and Agro-industry

7%

Aquaculture and Fisheries

5%

Construction and Public Works

6%

Energy

26%

Industry

20%

Services

19%

Transportation and Communications

8%

Tourism and Hospitality

9%

MOZ Total Investment flow (2014-2018)

• Energy has the

largest % of

investment inflow

(2014-2018) : 26%

• It is followed by

Industry (20%) and

Services (19%)

• Agriculture and

Agro-industry

received merely 7% of

the total investment

inflows during the

period

Source：APIEX 2019

Banco Nacional de Investimento • 13

LEGAL

FRAMEWORK

LEGAL FRAMEWORK

Investment Law (Regulations & Code o Fiscal Benefits; Land Law;

Labour Law;

PPP’s Law;

Environmental Law; Petroleum Law; Mining Law;

Forex Law.

TAXATION SYSTEM

IMPORT

CUSTOMS DUTIES

Equipment 5.0%

Raw Material 2.5%

Semi-finished products 7.5%

Finished products

20.0%

VAT

17.0%

IRPC

(Residents & non Residents)

32.0%

IRPS

Minimum 10.0%

Maximum 32.0%

WITHHOLDING TAX

(Dividends)

20.0%

Social Security:

4% (employer)

3% (employee)

TAX INCENTIVES

GENERAL BENEFITS

In Respect of Import of Goods:

Exemption from customs duties and VAT on

the import of capital equipment, spare and accessory parts.

In Respect of Income Tax:

Investment Tax Credit; Accelerated Depreciation ; Tax Deductions (Professional Training; Use of

new Technology)

TAX INCENTIVES

SPECIFIC BENEFITS

Creation of Basic Infrastructures;

Trade and Industry in Rural Areas;

Manufacturing & Assembly Industry;

Agriculture and Fisheries;

Hotels and Tourism

Science and Technology Parks

Large Scale Projects

Rapid Development Zones

Industrial Free Zones

Special Economic Zones

Mining Activities

Oil & Gas operations

SPECIAL ECONOMIC ZONES & INDUSTRIAL FREE ZONES SPECIAL ECONOMIC

ZONES (SEZ) – Involves investment in

all sectors

– For both export and local markets

– Business must be located in the zone

INDUSTRIAL FREE ZONES (IFZ) – Manufacturing for

exports;

– Should export at least 70% of the products;

– Can be single factory unit (Stand alone).

o ZFI Revúboe

GEOGRAPHIC LOCALIZATION OF SEZ (ZEE) & IFZ (ZFI) IN MOZAMBIQUE

19

Special Economic Zone Developers

IRPC exemption in the first 5 tax years

50% reduction in the rate of IRPC from the

6th to the 10th tax year

25% reduction in the rate of IRPC for the

remaining life of the project

Special Economic Zone Enterprises

IRPC exemption in the first 3 tax years

50% reduction in the rate of IRPC from the

4th to the 10th tax year

25% reduction in the rate of IRPC from the 11th to the 15th tax

year

Special Economic Zone Service Enterprises

50% reduction in the rate of IRPC for

a period of 5 tax years

FISCAL BENEFITS FOR SEZ

(IRPC-Corporate Income Tax)

20

Industrial Free Zone Developers

& Enterprises

IRPC exemption in the first 10 tax years

50% reduction in the rate of IRPC tax from the 11th to the 15th

tax year

25% reduction in the rate of IRPC for the

remaining life of the project

Isolated Free Zone Enterprises

IRPC exemption in the first 5 tax years

50% reduction in the rate of IRPC tax from the 6th to the

10th tax year

25% reduction in the rate of IRPC for

the remaining life of the project

FISCAL BENEFITS FOR IFZ

(IRPC-Corporate Income Tax)

AGRICULTURE

INFRASTRUCTURE ENERGY MANUFACTURING TOURISM OIL & GAS

PRIORITY SECTORS

INVESTMENT OPPORTUNITIES

OVERVIEW

The development of mega-projects to explore the country’s natural resources can only be fully

implemented if supported by complementary infrastructures and services

Agriculture

Logistics Manufacturing

Investment Opportunities

Fisheries Infrastructures

Aquaculture

DC

’s

No

rth

DC

’s

So

uth

1

2

3

4

Development

Corridors

Name Regional

connection

Nacala Malawi

Sena-Zambeze Zambia

Beira Zimbabwe

• Maputo

• Limpopo

• Libombos

South Africa /

Swaziland

1

2

3

4

Source: APIEX

• Mozambique lacks the necessary infrastructures to further improve its economic growth;

• The country has established Development Corridors to connect areas of industry with areas of trade, and foster

economic and social development

AGRICULTURE/AGRIBUSINESS

MOZAMBIQUE AGRICULTURAL POTENTIAL

Significant private sector investments

More than USD 14 billion expected in investments in infrastructure until 2020

Numerous innovative public-private partnerships

Agricultural development seen as critical to country´s development

Government business incentive programs

Specific organizations set up to organize and assist investors

36 million hectars of arable land, of which only 15% (5.2 million hectars) is utilized

Tropical to sub-tropical climate with fertile soil and ample rainfall

Tremendous irrigation potential from major rivers

Strong and growing economy(Average GDP growth ~8% per year between 2000 and 2010)

Reliance on imports: Large import substitution opportunity

Coastal position: Access to international and regional markets

Enabling Environment

for Investments Government Committed

to Market-Driven Growth

Strong Market Dynami

cs

Good Agro-Climatic Conditions

Source: MASA

High

Agricultural

Potential

EXTENSIVE WATERWAYS

YEAR-ROUND PRODUCTION POTENTIAL

10 DISTINCT AGRO-CLIMATIC ZONES

VAST UNUTILIZED

ARABLE LAND

Unutilized

30.6

85.0%

Utilized

5.4

15.0%

Arable

Land

36.0

Land Suitability

Mill

ion

Hecta

res

Suitable for rainfall

agriculture

Moderately suitable for

rainfall agriculture

Utilization of Arable Land

Major rivers :Zambezi, Limpopo,

Sabie, and others offer

tremendous irrigation potential

Tropical climates offer

potential for year-round,

high yield crop production

Mozambique has ideal growing conditions – plentiful water supply combined with

diverse micro-climates to support a broad range of agricultural commodities

AGRICULTURE POTENTIAL

2. ECONOMIC CONTIBUTION

The agriculture sector is the mainstay source of income in Mozambique and

presents a good and growing perfomance

Agriculture Share

GDP Employment

Other sectors Agriculture

Agriculture employs about 80% of

the total labor force. However, the

sector contributes in 22% to the

GDP.

AGRICULTURE SECTOR

AGRICULTURE STRATEGIC PLAN

The PEDSA identifies six growth corridors for agriculture development as well as

specific value chains

Corridor Value Chain

Pemba-Lichinga Potato, wheat, beans, maize, soya, forestry,

cotton, sesame and poultry.

Nacala Cassava, maize, cotton, sesame, fruit, poultry,

groundnuts, cashew and forestry.

Zambeze Valey Rice, maize, potato, cattle, goats, sesame,

cotton e poultry

Beira Corridor Rice, maize, potato, cattle, goats, sesame,

cotton e poultry

Limpopo Rice, horticulture, red meat and poultry.

Maputo Rice, horticulture, red meat and

poultry.

LAND RIGHTS

Land is property of the State and cannot be sold, mortgaged or as a security:

Lease basis for 50 years renewable.

No Free Hold.

Individuals and entities are entitled to apply for the concession for the right to use and exploit land (DUAT) for a determined period of time;

There are full property rights over the infrastructures built on the land.

Arroz Soja Banan

a 8 C

ad

eia

s d

e

Va

lor

PR

iori

tári

as

Sugar

(export.)

Rice Maize Cassava Poultry Meat

Vegetables Sesame

(export.)

Cashew-nut

(export.)

Soy

(export.) Cotton (export.)

Beans

Banana

(export.)

15

CA

DE

IAS

DE

VA

LO

R E

ST

RA

TÉ

GIC

AS

Source: MASA

Sweet

potatoes Potatoes

Macadamia

(export.) Paprica

(export.)

VALUE CHAINS WITH GREATEST OPPORTUNITIES IN AGRICULTURE

- 15 strategic value chains identified;

- 8 have been prioritized.

AGRIBUSINESS OPPORTUNITIES (1-3)

7

Banana

Rice

Maize

Soy

beans

The National production registers the same grows rate with the imports in the last years;

60% of the country rice consumption is imported and Mozambique is the third larger importer of rice in the SADC region

The increasing demand due to the edible food and poultry subsector development;

The soya represents the main component of chikens feedsctock costs (~ 74%)

The food crop in Mozambique and basic food crop in the whole Southern Countries

Offers huge investment oportunities for local agri-processing in order to supply the local and regional markets

Enough capacity installed to contribute to the deficit reduction in the Middle least, Mediterrany market and with minor incidence in the Southern region;

Good competitiveness due to low operational, dredging and export tariffs costs

Highlights from value chains

AGRIBUSINESS OPPORTUNITIES (2-3)

8

Fruit and Vegetables

Sugarcane

Cotton

Cassava

National production almost doubled in the past 5 years and should continue to grow

Ideal climate and land available of high quality Trade treaties with EU and SACU permit export on favorable terms

New uses of cassava as animal feed and as raw material for beer, alcohol and bio-ethanol industries

Costs for cassava are approximately half of other related crops

Increases in international prices heightened profitability from production Opportunities for ginning of cotton for export of high quality cotton lint and

processing of cotton seed into oil and cake

Favourable agro-ecological conditions and potoential of year-round production Counter-Seasonal demand with Middle Eastern and Asian markets – ideal for

export Recent entry of large supermarket buyers such as Shoprite and Massmart /

Walmart

Highlights from value chains

AGRIBUSINESS OPPORTUNITIES (3-3)

9

Cashew

Livestock

Forestry

Poultry

Demand for poultry has grown meaningfully across Africa In Mozambique, consumption is expected to more than triple in 10 years Impact of considerable growth in mining and oil & gas on working population will

gelp fuel domestic demand

Third largest agricultural export from Mozambique Most exports are of raw nuts, providing opportunity for investments in cashew

processing for export markets

High imports of beef, mainly from South Africa, provide opportunity for import substitution

Potential for production of pig, cattle, and goat for local consumption with significant export opportunities for goat meat to the Middle East

Growing global demand for forestry products can be an opportunity for Mozambique, given its strategic location

Large commercial plantations are already being developed in the northern and central regions of Mozambique

Highlights from value chains

FISHERIES/AQUACULTURE

THE AQUACULTURE SECTOR

Excellent conditions for the development of aquaculture in the country (rivers, lakes, dams and long coast);

Mainly consists of the production of marine shrimp, seaweed and freshwater fish such as tilapia.

Many family small-scale subsistence aquaculture

POTENTIALITIES FOR THE DEVELOPMENT OF AQUACULTURE

Marine aquaculture • 7,592 ha for land tanks • 32,124 ha for cage cultivation • 10,591 ha for growing seaweed • Only about 850 ha are exploited

POTENTIALITIES FOR THE DEVELOPMENT OF AQUACULTURE

Aquaculture inland waters • Approximately 258,000

hectares of suitable land are estimated;

• About 180 ha are currently being exploited

• Production in 2015 was 1400 tons of fish

POTENTIALS OF AQUACULTURE IN MOZAMBIQUE

Domestic market The consumption of fish in the country is estimated at 5-10 kg / inhabitant / year Against 18.5 kg / inhabitant / year worldwide average consumption Regional market Neighbouring countries with the highest demand for fish (dry) - 3,000 tonnes are informally marketed annually to neighbouring countries (South Africa, Zimbabwe, Zambia, Malawi, Tanzania, Congo via Zambia)

MARKET POTENTIALS

International market Asia offers higher demand for crab, clams, microalgae Currently about 200 tons of crab and clams are exported annually to Asia

Live crabs boxes being loaded at Maputo

International Airport

CHALLENGES IN AQUACULTURE DEVELOPMENT

Increase aquaculture production and productivity

Ensuring access to the market and financial services

Strengthening research and research services Institutional support

Ordering of aquaculture activity

Improvement of the legal framework

PERSPECTIVES

Increase the production of small-scale aquaculture from 838 tons to 40,000 tons by 2020;

Increase the industrial aquaculture production from 264 tons to 78,000 by 2020.

INFRASTRUCTURE DEVELOPMENT OF DRY PORTS

Source: MTC

Ports

www.apiex.co.mz

www.apiex.gov.mz +258 21321291/2/3

Av. Ahmed Sekou Touré,

2539

P O Box 2539

Maputo, Mozambique

+258 82 305 6432

THANK YOU!