Supporting the Policy Enabling Environment for Development

Business Enabling Environment

Although the business-enabling environment has improved in recent years, cumbersome regulations and procedures still impose heavy costs on business.  These include burdensome and opaque approval process, licenses, and special levies that impede market entry and raise the costs of doing business.  Mozambique remains one of the world’s most difficult places to do business and is not keeping pace with other countries in implementing business environment reforms, which resulted in Mozambique dropping in rank from 134 to 137 (out of 190 countries) in the World Bank’s 2017 Doing Business Report. SPEED+ will work with MIC to target key reforms that will help Mozambique improve not only it’s Doing Business ranking, but the overall business environment, which will attract new investment and spur economic growth.

The 2007 Labor Law currently in effect has only limited potential to promote investment, competitiveness, and new employment.  In certain cases, more recent implementing regulations have made the regulatory environment more restrictive, such as Decree no. 37/2016 and Decree no 108/2014 which create more onerous requirements for in-quota approval of foreign workers.  New reforms that provide greater flexibility, particularly on hiring of foreign workers and cause for dismissal, can help promote more economic activity, reduce unemployment and move workers to the formal sector.

The Minister of Labor, Employment and Social Security (MITESS) stated earlier this year that the Labor Law will be reviewed and updated in late 2017.  To help CTA prepare for well-informed and substantiated discussions with MITESS during the reform process, SPEED+ will develop a report that outlines key reforms that would have the greatest positive impact on job creation, economic growth, and poverty alleviation.   The objective is to achieve a more balanced, practical and effective Labor Law, which serves the interests of both employees and employers, and is appropriate for the current socio-economic reality of the country and responsive to the needs of the private sector.