Mozambique Market Entry

Mozambique Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

When deciding to enter the Mozambican market, Czech exporters must take several factors into account. Check smber for agriculture and fishing facts of Mozambique.

Characteristics of Mozambique:

  • low purchasing power – the middle class is still growing very slowly;
  • interest rather in cheap and simple products (for consumer goods products from South Africa, China and India predominate);
  • for state projects, there is a need to anticipate payment issues and offer flexible payment terms (Mozambique is struggling with a debt crisis);
  • knowledge of Portuguese, or at least English;
  • the need to secure local representation or find a reliable distributor/agent – either directly in Mozambique or at least in South Africa;
  • cultural specifics (see chapter 6.8);
  • outdated infrastructure for the movement of goods within the country.

Goods are imported to Mozambique via the ports of Maputo, Beira or Nacala, or via South Africa. In the countryside, daily necessities are mostly sold in small shops and markets, which are plentiful or directly on the street. Shops and supermarkets exist only in large cities. Direct personal contact with the client and the price is a basic prerequisite for sales success. Consumer goods can be sold on the local market through distributors and wholesalers who have their own distribution channels for local retail chains. The basic criterion of most potential distributors is the price, which must at least match the South African competition, even after taking into account the costs of transport and customs duties. For deliveries of machines and more complex equipment, the customer expects a sufficient supply of spare parts and service.

The best market entry strategy is through a local agent or distributor familiar with the language and local business practices, who works either on a contract basis establishing some form of “ad hoc” commission or on a long-term contractual basis. The most suitable for the supplier is to find a reputable partner who would work on his own account and pay for the offered goods himself when taking them. For larger volumes, you can consider opening a sales agency or branch. “Joint-ventures” between domestic buyers and foreign suppliers are very effective. For any major case, it is essential that the local representative has very good contacts with the local administration. A thorough due diligence of the partner is always necessary. For a basic check of the partner, you can contact the Pretoria Office or the Honorary Consul in Mozambique.

Forms and conditions of operation on the market

4 types of companies in Mozambique:

  • Sociedade Anónima de Responsabilidade Limitada (“SARL”) – a combination of a joint-stock company and a limited liability company; they must have at least 10 shareholders and no minimum capital is set, they are closed for large investment projects
  • Sociedade Por Quotas (“SQ” or “Limitada”) – similar to a limited liability company, must have a min. 2 partners and the share capital is set at million Mozambican meticals, they close on small and medium projects
  • Sociedade em Comandita – similar to a Czech limited partnership
  • Sociedade em Nome Colectivo – similar to a Czech public company

The company is established at the founding general meeting, where the founding partners or their representatives meet (power of attorney certified by a Czech notary in Portuguese or with an official translation, in the case of natural persons a copy of the passport or OP, in the case of legal entities, an extract from the OR with translation). The capital is deposited into a bank account. The articles of association must contain, among other things, the exact name and seat of the company, legal form, share capital, date of establishment, names of all statutory representatives. Supporting documents must be officially translated into Portuguese. Documents are usually written in Portuguese in Mozambique. To register a company in the commercial register (Registro das Entidades Legais), it is necessary to submit the minutes of the founding meeting of the statutory body (board of directors) certified by a notary, proof of the establishment of a special bank account, on which the share capital was deposited, as well as the articles of association of the company and certified identity documents of the owners (residence permit for foreigners). The business name of the company must be reserved in advance. After completing the registration in the commercial register, the company is required to be registered with the tax office, on the basis of which a tax identification number (NUIT) is assigned. We recommend setting up your company with a local lawyer with knowledge of the language and Mozambican/Portuguese commercial law.

Marketing and communication

Promotion, marketing and advertising is quite well developed and, in principle, the methods do not differ from European ones. Due to the non-existent awareness of Mozambican consumers about Czech products, there is a need for effective marketing (we recommend entrusting it to a local marketing company in coordination with the importer), otherwise Czech exporters cannot establish themselves against the already existing South African and Asian competition.

Common methods are advertisements in the press and specialist magazines, large-scale billboards, advertising spots on television or radio. All mass media can be used. The print media with the greatest reach are: the daily newspapers Noticias, O País, weekly Domingos and private weekly newspapers Savana and Demos.

Television advertising is considered the most effective form of product promotion, but its impact is limited only to the urban population. There are two local television stations broadcasting in Mozambique – the state-owned TVM and the private STV. Broadcasts from the Portuguese station Radio Televisao de Portugal and the Brazilian station Miramar are also available. In addition to the state radio, Radio Moçambique, several private stations broadcast in Mozambique, but mostly covering only large agglomerations. The field of internet marketing is developing rapidly.

Issues of intellectual property protection

Intellectual property rights must be registered locally and enforced under local laws. The trademark owner should register it in Mozambique.

Mozambique is a signatory to most of the standard international conventions and protocols aimed at the protection of intellectual property, including the Berne Convention for the Protection of Literary and Artistic Works and the Paris Convention for the Protection of Industrial Rights. As a WTO member, Mozambique is a signatory to the TRIPS Agreement. Mozambique is also a member country of WIPO (World Intellectual Property Organization). Despite participation in these international conventions and despite laws passed to protect intellectual property, very little has been done to stop the sale of pirated music recordings, computer software, drugs, clothing, etc.

Public procurement market

Public tenders are governed by Declaration No. 57/2005, which entered into force in November 2006. Tenders are published in the daily press (mainly in the Noticias newspaper) and on the portal http://www.concursos.co.mz/, or on websites individual offices. Mozambique is not yet working with an electronic public procurement system. Tenders issued by international donors (including the EU) are available online on their websites.

An entity with majority Mozambican capital has a competitive advantage. In Mozambique, contacts play a big role, you cannot enter a competition for larger tenders without preparation and survey of the terrain, knowledge of local competition and conditions. Participation in contract tenders requires long-term monitoring of the situation with the necessary preliminary lobbying of the relevant central authorities and the provision of relevant information even before the official announcement of tender conditions. This is practically impossible without a permanent presence on the local market.

Tenders of state institutions often require responses only in Portuguese in the form of an official letter, deliveries are made only in local currency (meticals) and in some cases bank guarantees issued by Mozambican banks are also required.

Payment terms, payment ethics and resolution of commercial disputes

Mozambique is a member of the Multilateral Investment Guarantee Agency (MIGA), Overseas Private Investment Corporation (OPIC) and has acceded to the Convention on the Recognition of International Arbitration Awards (New York Convention) and is a member of the International Center for Settlement of Investment Disputes (ICSID). It recognizes the decisions of foreign courts and arbitrations (after assessment and approval by the Supreme Court). Commercial disputes in Mozambique are dealt with by commercial courts, court proceedings are very slow and law enforcement is very difficult and lengthy. In addition, full knowledge of Mozambican law and procedural customs is always required. In 1999, Law 11/99 on Arbitration was passed, which allows for arbitration proceedings at the Center for Arbitration, Conciliation and Mediation (CACM).

However, there are usually high costs associated with the resolution of disputes, therefore it is generally recommended to resolve the dispute by agreement to avoid long and expensive negotiations and out-of-court settlements.

Even in Mozambique, a well-written business contract (preferably by a local lawyer) is of fundamental importance for the prevention and resolution of business disputes, it is always necessary to thoroughly check with whom we conclude the contract (due diligence).

The place of dispute resolution must always be specified in the commercial contract. In relation to Czech companies, we have not yet recorded a case of a commercial dispute that would have to be resolved by a third party (court). In any case, we recommend incorporating into the contract a provision on the basis of which any arbitration proceedings would take place outside of Mozambique.

Visas, fees, specific conditions for traveling to the territory

Documents
Passport valid for at least 6 months from the date of entry into the territory of Mozambique.

Visa, entry regime, registration obligation
A Mozambique visa can be obtained at any Mozambique embassy. However, cases were recorded when disproportionately high financial guarantees were required from Czech citizens at some African embassies. It is therefore recommended to secure a visa at the Embassy of Mozambique in Berlin, consularly responsible for the Czech Republic: Botschaft von Mozambique Strom Strasse 47 10551 Berlin tel.: +49 30 39876500 fax: +49 30 39876503, http://www.embassy-of-mozambique. de/ At the Embassy of Mozambique in Berlin, the fees for a single-entry visa valid for up to thirty days are set at EUR 30, for a single-entry visa valid for up to sixty days EUR 40, for a single-entry visa valid for up to ninety days EUR 50 and for a multiple-entry visa valid for up to ninety days, EUR 60. The applicant must fill out the form and attach two photographs.

Since the beginning of 2017, it has been possible to obtain a visa for tourists traveling to Mozambique at Maputo International Airport without the need to apply for a visa through the Embassy of Mozambique. A visa issued in this way is valid for 30 days for 2 entries and its price is 50 USD (or the equivalent amount in rands or meticals).

Conditions of travel to the territory
Mozambique is a relatively safe country by African standards, but general safety principles must also be observed here (do not carry visibly valuable items, large sums of money, avoid crowded areas at night, pay more attention in places with an increased concentration of people). An increase in the number of kidnappings of businessmen settled in Mozambique for a long time with the aim of extorting a ransom is registered. The prevailing poverty of a large part of the population can result in attacks on tourists and theft. After dark, it is not recommended to move on foot, but rather to use the services of a taxi or hotel vehicle. Currently, it is absolutely impossible to recommend individual hiking or hiking. Political meetings and other gatherings can turn into violent clashes with the police, so it is best to avoid them. Currently, due to occasional armed clashes between members of the armed forces and RENAMO guerrillas, travel to the central and northern parts of Mozambique (Tete, Manica, Sofala, Zambezia provinces) is not recommended. In addition, in the northern province of Cabo Delgado, terrorist attacks by ISIL against the local population and authorities are ongoing.

Taking pictures of military installations, government buildings and other strategic objects (including railway stations and airports) is prohibited.

There is only one direct connection from Europe to Mozambique via Lisbon. It is also possible to use connections with a transfer in Johannesburg (Durban, Cape Town), Dubai, Nairobi, Addis Ababa, Dar-Es Salaam, Harare or Luanda. Domestic air transport and connections with neighboring countries are provided by Airlines of Mozambique (LAM). When traveling by car, an international driver’s license is required. Drive on the left. If a traveler arrives in Mozambique with a car registered in a foreign country, payment of a liability insurance fee is required at the border.

The network of accommodation facilities and gas stations is sparse and travelers are advised to stock up on longer routes. Maputo is connected to South Africa by a high-quality toll road, and the quality of the main EN1 road linking Maputo with the central and northern provinces of Mozambique is gradually increasing.

We recommend that you report serious accidents, assaults or injuries to your health immediately to the Honorary Consul of the Czech Republic in Maputo and ask for qualified advice on the next course of action.

Before traveling to Mozambique, every traveler should visit a specialist doctor – a specialist in tropical diseases (in Prague, for example, the Clinic of Geographical Medicine of the Vinohrady Royal Hospital or the Center for Travel Medicine), where all recommended vaccinations can be completed. Travelers heading to Mozambique do not need to have a yellow fever vaccination, it is mandatory only in the case of previous travel to countries with the occurrence of yellow fever (e.g. Angola, Tanzania and others). Malaria is widespread in Mozambique and AIDS is also rampant.

Citizens of the Czech Republic are advised to voluntarily register in the DROZD database, which serves the Ministry of Foreign Affairs for the provision of rapid assistance in emergencies and for the effective organization of assistance in the event of natural disasters and social unrest, before the trip.

Employment of citizens from the Czech Republic

The labor market is rigid and is seen as an obstacle to entrepreneurship. The Mozambican government prefers that foreign firms train and employ local forces. A foreign worker can only be employed if he proves the necessary professional qualifications and it is not possible to find a Mozambican citizen with the required qualifications for the vacant position. A legal regulation from 1999 set limits on the number of foreigners employed in Mozambique depending on the size of the company (even when negotiating the investment, it must be specified how many local and how many foreign workers the company will employ. The standard quotas are: small companies (up to 10 employees – 10 %, medium-sized companies (up to 100 employees) – 8%, large companies 5% Mining and oil companies have increased quotas.

Employment of foreign workers (including management) is subject to approval by the Ministry of Labour. Only then can the worker apply for a work permit/ID (DIRE) issued by the Home Office (Immigration Office). The process is very lengthy, DIRE is issued for 1 year and also very difficult to renew.

Employment is governed by the Labor Code No. 23/2007 of August 2007. It strongly protects the rights of employees (among other things, it enshrines the right to collective bargaining, the method of resolving labor disputes, introduces collective agreements, the working conditions of women and minors, the obligation to protect health, the minimum wage, sets employers’ social contributions, vacation and fines for breaking the law, etc.). The amount of minimum monthly wages depends on the specific field, they change every year and range between 74 USD (agriculture), 110 USD (industry and services) and 195 USD (mining and oil sector).

All employees are required to register in the National Social Security System and pay contributions in the amount of 7% of the gross salary (4% paid by the employer, 3% by the employee).

Fairs and events

The FACIM International General Fair was scheduled to take place from August 29 to September 4, 2022 and will be in virtual form.
Address: FACIM – Feira Agro-Pecuaria, Comercial e Industrial de Mocambique Av. 10 de Novembro, n°25 Maputo, Mozambique
Tel: +258 21 321 293/1
Email: [email protected]

Other conferences or sector events are held randomly and organized by different institutions.

Mozambique Market Entry