Challenges and Opportunities for Efficient Land Use in Mozambique: Taxes, Financing, Infrastructure

This research paper by the Climate Policy Initiative examines barriers to agricultural productivity and natural resource management in Mozambique. It identifies bureaucratic delays in tax and trade administration, limited access to credit for small farmers, and gaps in energy and irrigation infrastructure as primary obstacles. The authors propose low-cost policy modifications, including streamlining government administration, developing public-private partnerships, prioritizing key infrastructure, and increasing revenue-sharing mechanisms for community-led natural resource protection.

• Administrative inefficiencies and bureaucratic delays in tax and trade processes are more detrimental to the agricultural sector than the actual tax and fee rates. While the agricultural sector benefits from a special income tax of 10% (compared to a general rate of 32%) and VAT exemptions, slow VAT refund processing and complex registration rules create significant barriers to investment.
• Small-scale farmers face severe credit constraints, with only 2.3% of small farms borrowing money according to 2010 Agricultural Census data. This is driven by high interest rates exceeding 20%, a lack of collateral due to the non-transferability of land, low financial literacy, and the physical absence of banks in rural areas.
• Public-private partnerships (PPPs) intended to support larger agricultural enterprises are currently limited by high transaction costs and the requirement for a public tender and extensive administrative process for every individual deal, which slows project emergence and increases corruption risks.
• Energy access is a critical bottleneck for agricultural processing and irrigation, with less than 7% of the rural population having electricity. Private investment in renewable energy is hindered by a 17% import tariff on components for wind and solar systems and a lack of incentives for off-grid energy.
• Current revenue-sharing mechanisms for natural resource protection are insufficient or inconsistently applied. The 2.75% royalty allocation from natural gas and mining activities to local communities is described as extremely low by international standards, and the 20% return of licensing fees from forestry and wildlife projects is not always implemented.
• The document highlights the importance of community engagement for project success, citing the New Forests Company in Niassa as a positive example for its revolving fund for community projects, while noting that the Chikweti company in the same province was forced out due to poor community relations.

APA

Climate Policy Initiative (2016). Challenges and Opportunities for Efficient Land Use in Mozambique: Taxes, Financing, Infrastructure. https://www.climatepolicyinitiative.org/publication/challenges-opportunities-efficient-land-use-mozambique-taxes-financing-infrastructure/

Chicago

Climate Policy Initiative. Challenges and Opportunities for Efficient Land Use in Mozambique: Taxes, Financing, Infrastructure. 2016. https://www.climatepolicyinitiative.org/publication/challenges-opportunities-efficient-land-use-mozambique-taxes-financing-infrastructure/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Challenges and Opportunities for Efficient Land Use in Mozambique: Taxes, Financing, Infrastructure |date=12 October 2016 |url=https://www.climatepolicyinitiative.org/publication/challenges-opportunities-efficient-land-use-mozambique-taxes-financing-infrastructure/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2016challenges, author = {{Climate Policy Initiative}}, title = {{Challenges and Opportunities for Efficient Land Use in Mozambique: Taxes, Financing, Infrastructure}}, institution = {Climate Policy Initiative}, year = {2016}, month = oct, url = {https://www.climatepolicyinitiative.org/publication/challenges-opportunities-efficient-land-use-mozambique-taxes-financing-infrastructure/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }