CTA for Reforms to Reduce Costs of Doing Business

Mozambique's Confederation of Business Associations (CTA) has issued a compelling call for structural reforms aimed at significantly reducing the costs of doing business, enhancing corporate liquidity, and bolstering legal predictability within the country. This initiative underscores the private sector's urgent demand for a more conducive investment climate, highlighting persistent challenges such as a complex tax regime, bureaucratic inefficiencies, and inadequate infrastructure. The proposed reforms seek to streamline administrative processes, rationalize fiscal policies, and ensure consistent application of laws, thereby fostering greater investor confidence and stimulating economic growth. The CTA's advocacy is crucial for driving policy changes essential for Mozambique's economic diversification and competitiveness in the regional and global markets.

Mozambique's business landscape, while rich in potential, continues to grapple with significant hurdles that impede growth and deter investment. In response, the Confederation of Business Associations (CTA), a prominent voice of the Mozambican private sector, has intensified its advocacy for comprehensive structural reforms. The CTA's recent pronouncements underscore a critical need to address the high costs of doing business, improve corporate liquidity, and strengthen legal predictability, which are identified as fundamental pillars for a thriving economy. This call to action reflects a broader consensus within the private sector that sustained economic development hinges on a more efficient, transparent, and stable regulatory environment.

The urgency of these reforms is amplified by Mozambique's historical performance in global ease of doing business indices, which consistently highlight areas requiring substantial improvement. While the government has made efforts to attract foreign direct investment and streamline certain procedures, the practical realities for businesses on the ground often remain challenging. This article will delve into the specific concerns raised by the CTA, examining them within the context of Mozambique's existing legal and regulatory framework, and exploring the implications for legal practitioners advising clients operating or seeking to invest in the country.

This analysis aims to provide legal professionals with a comprehensive understanding of the current reform agenda, its underlying rationale, and the potential impact on various sectors. By dissecting the key areas of concern—namely, business costs, corporate liquidity, and legal predictability—the article will illuminate the intricate interplay between policy, legislation, and practical business operations in Mozambique, offering insights into the evolving legal landscape.

Mozambique's legal and regulatory framework for business has undergone several transformations since the country's economic liberalisation. Key legislation includes the Private Investment Law (Lei n.º 8/2023, de 9 de Junho), which repealed the long-standing Law n.º 3/93, de 24 de Junho, aiming to establish a more attractive and secure environment for both domestic and foreign investments by providing tax and non-tax guarantees and incentives. This new law, which entered into force in September 2023, seeks to simplify investment procedures and enhance investor protection.

Further foundational legislation includes the Commercial Code (Decreto-Lei n.º 1/2022, de 25 de Maio), which governs commercial activities and company formation, and the Labour Law (Lei n.º 13/2023, de 25 de Agosto), which came into effect in February 2024, replacing the previous Law n.º 23/2007. These legal instruments form the bedrock upon which businesses operate. Despite these legislative efforts, Mozambique has historically faced challenges in its business environment, as evidenced by its rankings in global reports such as the World Bank's Doing Business. For instance, in 2019, Mozambique was ranked 138 out of 190 economies in the ease of doing business, with particular difficulties noted in areas like starting a business, registering property, and enforcing contracts.

Pervasive issues such as bureaucratic inefficiencies, corruption, and underdeveloped infrastructure have consistently been cited as major impediments to private sector development. These challenges contribute significantly to high operational costs and create an unpredictable environment for investors, necessitating the structural reforms advocated by the CTA. The government has acknowledged these issues, with initiatives like the Economic Acceleration Stimulus Package (PMAE) in 2022 introducing fiscal reforms and investment incentives to improve the business climate.

The CTA's call for reforms directly addresses several critical areas impacting the Mozambican business environment. One primary concern is the high cost of doing business, which is exacerbated by a complex and often burdensome tax system. The CTA has specifically advocated for a review of taxation, noting that the current Corporate Income Tax (IRPC) rate of 32% does not adequately differentiate between small, medium, and large enterprises, and that other taxes like VAT and customs duties contribute to high operational expenses. Recent tax reforms, such as those introduced by Law No. 20/2022, Law No. 10/2025, Law No. 11/2025, and Law No. 12/2025, have attempted to introduce fiscal incentives, reduce corporate tax rates for specific sectors like agriculture, and expand the VAT base to digital services. However, the CTA argues that more targeted adjustments are needed to stimulate productive investment and broaden the tax base effectively.

Corporate liquidity is another significant challenge, often hampered by the aforementioned high costs, difficulties in accessing finance, and foreign currency constraints. The CTA has proposed mechanisms for transparent allocation of foreign currency, prioritising industrial and agricultural importers, and the establishment of industrial financing lines with subsidised rates. This highlights a systemic issue where businesses struggle to maintain sufficient working capital, impacting their ability to invest and expand. The Central Bank's monetary policy, including interest rates, also plays a role in the cost of credit, further affecting liquidity, particularly for small and medium-sized enterprises (SMEs).

Legal predictability, a cornerstone of investor confidence, remains a persistent concern. While the new Private Investment Law (Lei n.º 8/2023) aims to provide guarantees such as equal treatment, respect for property rights, and free movement of capital, the inconsistent and unpredictable application of laws and regulations at various administrative levels continues to be a major impediment. Bureaucratic delays, particularly in obtaining licenses and permits, and the lack of human capacity within public administration, contribute to this unpredictability. The ongoing revision of the Commercial Code and the recent Labour Law (Lei n.º 13/2023) are intended to modernise the legal framework, but their effective and consistent implementation will be crucial for improving legal certainty.

The CTA has outlined six priority reforms to address these issues: improving infrastructure and logistics, ensuring a competitive energy and fuel supply, enhancing industrial competitiveness and business inclusion, optimising agriculture and post-harvest logistics, boosting tourism and connectivity, and reforming inspection and business sustainability. Specific proposals include implementing a single national logistics window, creating a competitive industrial energy tariff, revising tax codes to align rates with economic sector realities, and investing in digitalisation to reduce bureaucracy. These proposals reflect a comprehensive approach to tackling the multifaceted challenges faced by businesses in Mozambique, aiming to create a more streamlined and supportive operational environment.

The CTA's persistent advocacy for structural reforms in Mozambique is a clear signal of the private sector's commitment to fostering a more dynamic and competitive economy. The proposed measures, spanning fiscal policy, administrative efficiency, infrastructure development, and legal predictability, are not merely aspirational but are critical for unlocking Mozambique's vast economic potential. Legal practitioners advising clients in Mozambique must remain acutely aware of these ongoing reform efforts, as they directly influence the operational landscape, risk assessments, and strategic planning for businesses.

For legal professionals, the CTA's agenda highlights key areas for engagement and expertise. This includes advising on the implications of evolving tax legislation, navigating administrative procedures, ensuring compliance with new labour laws, and advocating for clients in disputes arising from regulatory inconsistencies. Monitoring the implementation of the new Private Investment Law (Lei n.º 8/2023) and the revised Commercial and Labour Codes will be paramount. The success of these reforms will ultimately depend on sustained political will, effective collaboration between the public and private sectors, and a commitment to transparent and consistent application of the law, paving the way for a more predictable and prosperous business environment in Mozambique.