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Exchange procedures for investment in Mozambique by foreign entities

Pedro Couto, Célia Francisco and Erna Guetsa of Couto Graça & Associados in Maputo considered issues concerning exchange procedures

The theme that we propose to cover is inspired by foreign entities’ growing interest in investing in Mozambique.

We do not intend to deal with this subject exhaustively as it is not our intention to present a dissertation on the subject, but only to provide basic guidelines that will assist  foreign entities when investing in Mozambique, to provide an analysis of the applicable procedures and also an understanding of  the foreign exchange rules and regulations.

As such, it is important to consider that the investments made by foreign entities in Mozambique are regulated by Exchange Law- Law nº 11/2009 of March 11 and the Regulation in respect thereof approved by Decree 83/2010 of December 31.

Certain concepts are set out in such legislation and have to be taken into account before making any investments in Mozambique which investments would constitute an exchange control matter. Before dealing with this further,  it is necessary to bear in mind that any act, business or transaction between residents and non-residents, which results or may result in payment from or receipt of any amount in Mozambique or abroad is considered an exchange operation.

In this definition there is a concept that raises many questions, namely, the concept of resident or non-resident entities.

To this effect, article 3 of the Exchange Law establishes that a Mozambican resident is defined as the following:

  • Mozambican nationals;
  • Foreigners residing in Mozambique for more than one year (except diplomats and similar individuals and their families);
  • Mozambican nationals that stay abroad for more than a year, either for health reasons or study purposes;
  • Corporate bodies registered in Mozambique;
  • Public entities as well as Mozambican public funds with financial and administrative autonomy;
  • Mozambican diplomats and similar individuals residing abroad;
  • Branches, representations, and other forms of other companies incorporated abroad but registered in Mozambique.

The exchange operations are classified by  law as either current transactions or capital transactions.

Current transactions consist of any payments or receipts in a foreign currency, that are not intended for the transfer of capital, namely being transactions for the payment or receipt of money in connection with foreign trade. Capital transactions are those that the law expressly defines as such under article 6 of the Exchange Law.

As such, the biggest difference between the two in terms of procedure is that  transactions classified as capital transactions are subject to prior approval by the Central Bank before being implemented, followed by a registration at the same entity. Current transactions are, however, not subject to prior authorization before being executed. They can be concluded and the registration is effect  by the commercial banks used for such transactions.

It is important to keep in mind that it is established by law that, payments or receipt of funds from and to the country shall be executed exclusively by banks authorized to operate in Mozambique.

In order to obtain authorisation for a capital transaction, the parties must submit to the Central Bank all the necessary documents or prove the complete characterisation of the operation, the identity of the parties involved, determination of the operation value and the form of fulfillment of the obligations. The Central Bank can, on its analysis, request more information or documents.

Regarding the documents to be submitted to the Central Bank, it is necessary to bear in mind that documents issued outside of Mozambique have to be legalised in order for them to be valid in Mozambique and if issued in a different language, they must be translated into Portuguese by a sworn translator.

In light of the above and in order to give a practical example of this, we will now describe procedures relating to the occurrence of a  foreign direct investment in Mozambique.

Foreign direct investment in Mozambique is defined by law as, any form of contribution of foreign capital susceptible to pecuniary evaluation, that constitutes capital or resource that is invested by a foreign investor from outside of Mozambique at their own risk for the realization of a project of economic activity, or for the acquisition of a lasting interest in companies that operate outside of the investor economy which is registered and operating in Mozambique.

This  is established in the exchange law as a capital transaction, and as we have referred above, is subject to authorisation and a registration process that has to be made within 90 days from the day of the issuance of the authorisation or from the day of the receipt of the amount of the investment.

In order to make such registration, it is necessary to deliver to the Central Bank the application form duly filled in, identification documents and a copy of the bank borderaux that proves the receipt of the foreign currency when applicable. To confirm the registration, the Central Bank will issue a Private Capital Import Bulletin “BICP” (Boletim de Importação de Capitais Privados).The absence of the referred registration in the established time results in the non recognisation of the right to re-distribute the profits or dividends as well as the re-export of the invested capital.


Article written by: Pedro Couto, Célia Francsico and Erna Guetsa of our member firm Couto, Graca & Associados (CGA), Mozambique


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