Mozambique: State stimulus measures for economy renew confidence – businesses

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Mozambique: State stimulus measures for economy renew confidence – businesses

9:13 CAT | 15 Aug 2022

Image: CTA

The CTA-Confederation of Economic Associations of Mozambique, the country’s largest business organisation, said on Friday that the measures announced on Tuesday by the government, “renewed confidence in the economy,” highlighting the positive impact that the stimuli will have on agriculture.

“The CTA considers that this package of measures represents a renewal of confidence in the economy, in general, and in public-private dialogue, in particular,” a statement from the organisation said.

The statement noted that with the reduction of the rate of corporate income tax (IRPC) from 32 percent to 10 percent, in agriculture, “the government is freeing up resources at zero cost for reinvestment.

The incentive, the text continues, is aligned with the current challenges of the sector, particularly at the level of food crop production.

“We believe that national private investment may increase, boosting commercial agriculture,” which currently does not account for half of the agricultural sector’s production.

Of the approximately $3.7 billion (€3.5 billion) that the area contributes to the gross domestic product (GDP), the largest share is from the family sector, CTA says.

The organisation also welcomes the fact that the package of measures announced on Tuesday includes the stimulus to local production of goods purchased at scale by the State, considering that the decision will boost national companies.

“The Government makes purchases of goods and services averaging over $500 million [486 million euros] a year,” CTA notes.

The amount, it warns, has been a factor in pressure on the balance of payments deficit and unpredictability of the exchange rate due to excessive recourse to imports.

By changing its policy of purchasing for the State, the government is opening up space for industrialisation and more business opportunities for Mozambican companies, the document said.

The confederation also welcomes the innovations in the rules for granting visas, advocating their rapid implementation to attract private foreign investment and galvanise tourist demand.

CTA admitted that it wanted more stimulus for the economy, but recognised the limitations imposed by the economic climate.

The boosts mentioned by Mozambican businesspeople are part of the SAP-Stimulus Package for Economic Acceleration, a set of 20 measures announced by the president of the Republic and head of government, Filipe Nyusi, with the aim of responding to the country’s growth needs, the negative impact of the Russia-Ukraine war, armed violence in Cabo Delgado province, northern Mozambique, and natural disasters.

Source: Lusa