As part of Mozambique’s Tariff Offer for the African Continental Free Trade Area (AfCFTA), the CTA is proposing the creation of a Competitiveness Fund for strategic goods.

Speaking at the Consultation Seminar on Mozambique’s Tariff Offer for the AfCFTA, CTA President Agostinho Vuma argued that the Fund aims to subsidize primary production factors and respective services for certain products such as cereals, vegetables and chicken, which the country has favourable conditions to be competitive.

Thus, he stressed: “The Fund would speed up the process of the country achieving self-sufficiency in these strategic products, by 2030 or sooner.” To finance the Fund, CTA proposes changing the tariff disarmament schedule for strategic products.

“To capitalize the Fund, we propose applying the amount resulting from the difference between the current proposal and our proposal, which consists of moving goods from category A to C, assumed to be lost in the current fiscal scenario of the tariff disarmament period,” said Agostinho Vuma.

As a private sector, CTA will continue to advocate for the effective implementation of the Agreements to which the country is a signatory, in the expectation that they will have positive effects on the Mozambican economy and, consequently, increase the profitability of the national private sector.

Likewise, the CTA has argued that the Tariff Offer should take into account the aspect of local processing in order to add value to products.
By opting for this strategy, intra-African trade could increase from less than 20% today to more than 50% by 2045, as well as increasing Africa’s share of global trade from two percent to 12%. A quick projection shows that the value of trade could triple in just one year.
CTA also defended the need to improve payment systems, the transport infrastructure network and logistics to support intra-African trade, because even if tariff barriers are eliminated, as long as high transaction costs prevail, the private sector will benefit little from the elimination or reduction of customs tariffs.

The Confederation of Economic Associations of Mozambique (CTA) is proposing that the Ministry of Economy and Finance (MEF) offset the debt that the state has with suppliers through tax obligations. The proposal aims to ease the financial pressure on companies that provide services and goods to the state.

During a meeting held last Friday, March 8, with representatives of the MEF, the CTA presented the proposal as a way of mitigating the effects of the state’s late payments to suppliers. The suggestion also includes the possibility of using this mechanism for processes related to VAT refunds.

In response, the MEF said that it will analyze the mechanism for extending the compensation of the various tax obligations, showing openness to considering the CTA’s proposal as part of a review of tax policy. The Ministry has promised to incorporate some of the points raised by entrepreneurs into the ongoing tax reform, including the revision of the IRPC code and the creation of incentives for entrepreneurs.

This CTA proposal comes in a context in which the Mozambican government has been facing challenges in paying its debts to suppliers. In November 2023, the Executive announced that it had settled around three million euros in overdue payments, but the total debt is still significant. The CTA estimated that this debt exceeds 400 million dollars and advocated the inclusion of a specific item in the 2024 State Budget to settle these arrears.

CTA’s proposal represents an attempt to find creative solutions to deal with the economic challenges faced by Mozambican companies due to delays in state payments. The MEF’s positive response in analyzing the proposal is a sign that the authorities are open to dialogue and finding solutions that benefit the country’s economy.