Mozambique is a diverse and large country with traditional business etiquette. Although there are many prospects for businesses and expatriates alike, starting and conducting business there can be problematic. In fact, when it comes to ‘ease of business’ Mozambique ranks 135 out of 190 countries.
This low ranking comes from the countries regulatory system; companies are likely to be faced with a myriad of requirements for permits, approvals and clearances – all which take a significant amount of time and effort to obtain. These difficulties leave space in the system for corruption, with bribes often requested to facilitate routine transactions. That being said, as long as companies are aware of the challenges Mozambique brings, companies and expatriates will find many opportunities to thrive.
Registering your business in Mozambique
The procedure to register a business can be complicated and time-consuming, but by following the correct steps, compliantly, companies should experience success.
To register a business, companies should:
- Obtain certification of a unique name (certidão de reserva de nome) at the Conservatória do Registo das Entidades Legais (Legal Entities Registrar);
- Open a provisional bank account and obtain a verification of deposit with a local bank or bank commission;
- Register with the Legal Entities Registrar of Maputo (Conservatória do Registo das Entidades Legais); request a commercial registry certificate;
- Publish company statutes in the official gazette (Boletim da República);
- Register for taxes and obtain NUIT from Tax Authority (Repartição de Finanças);
- Apply for a simplified operational license from the Municipality;
- Declare the beginning of activity at the tax department (Repartição de Finanças)
- Declare the beginning of activity with the provincial labour department;
- Register the employee list with the provincial labour department;
- Register workers with the social security system;
- Submit the leave application plan for the year;
- Subscribe a workmen’s compensation insurance coverage
Entry Strategy – becoming a part of the Mozambican community
Once the relevant legal hurdles have been completed, businesses will benefit from taking the time to create positive working relationships with the community, which is small enough that most locals know one another fairly well and competitors in one area may be partners in another.
Mozambicans strongly value face-to-face meetings, formal written letters, and personal relationships. Patience and flexibility are essential for success and business cards are generally exchanged. Bear in mind though, that Mozambicans don’t always arrive on time for appointments and sometimes miss them altogether. This stems from the recent increase in business – many tend to over-schedule appointments rather than decline a meeting invitation out of politeness. This is especially true of a core group of technocrats in government, who are in great demand.
As well as creating positive relationships, most companies find it advantageous to establish a local office in Mozambique to assist in dealing with officials and clients and also to obtain the most updated information on potential new business opportunities. If this isn’t possible, companies should at least make frequent visits to Mozambique to ensure they are building new contacts and maintaining current ones.
Market challenges companies face in Mozambique
Once you’ve successfully set up your business and begun to make positive business relationships with the local community, you’re still likely to face many challenges when conducting day to day business. Such as:
At times, bureaucracy remains unresponsive to the needs of the private sector, especially that of small and medium-sized enterprises. Most companies cite the slow pace of conducting business as one of the main challenges in Mozambique, mainly due to the lack of human capacity in areas necessary for business. The government has few qualified staff, especially in the lower ranks, as competition for attracting the best talent is intense in and between the private and public sectors.
In addition, the top-heavy hierarchy in the decision-making process can hinder market efficiency.
Corruption in Mozambique is a top concern and can sometimes become a business barrier. Portions of a comprehensive anti-corruption bill were passed by the Mozambican Parliament in 2012, but delays in customs procedures are still quite common and many still face corruption - the rule of law and enforcement often struggle to contain the problem due to lack of resources and training.
Mozambique has implemented a new customs system called ‘Single Electronic Window’ (SeW), based on a model used in Singapore. The system has been rolled out throughout the country with the main aim of facilitating international trade and enhancing the business environment compliantly. Although this is a step in the right direction, users report that it has not significantly improved or streamlined the process yet.
The labour market remains rigid and the pool of highly trained personnel is thin as, over the last 20 years, the ministry of labour has enforced quotas limiting the number of foreign employees companies could hire, in efforts to provide more locals with opportunities to up-skill and learn new trades. This means there are some significant skills gaps still in place which impedes businesses requiring high-skilled labour. Companies should bear in mind that to contract a foreign worker, authorization must be granted by the Ministry of Labour together with a work visa and there must be no Mozambicans with relevant qualifications to do the job.
The local Mozambican workforce
The estimated local workforce is approximately 13 million, out of a total population of nearly 30 million. Of which, 79.77% of the population over 25 have no education, with the vast majority of Mozambique’s workforce not completing secondary school. These statistics are considerably worse amongst females over 25, with only 16.56% having some education at all. This presents a significant skills deficit with serious consequences to productivity and employability of Mozambique’s growing population.
That being said, Mozambicans are typically hard-working and motivated individuals and with the right investment into training, businesses with find they are able to thrive.
NES and Mozambique
Incorporating and conducting business in Mozambique is not without its challenges. If you’re a company looking to invest in the region, our dedicated Global Mobility professionals globally and on the ground can offer consultancy, policy reviews and benchmarking, compliance audits, vendor management and more to alleviate the mobility burden and tackle the complexities of managing an internationally mobile workforce. If you need support, get in touch with our experts today.
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