Although the general investment climate in Mozambique has improved significantly over the last several years, with economic growth rates among the highest in Africa, political stability and government promotion of foreign direct investment, corruption remains a serious problem for foreign companies. In fact, most observers agree that corruption is one of the main constraints for doing business in Mozambique. For instance, the companies surveyed in the World Economic Forum Global Competitiveness Report 2010-2011 cite corruption as the second most problematic factor for doing business in Mozambique, and the World Bank and IFC Enterprise Surveys 2007 reveal that 25% of the surveyed companies identify corruption as a major constraint. Moreover, Mozambique's formal economy is shadowed by a substantial informal sector. According to the World Bank & IFC Enterprise Surveys 2007, more than three-quarters of service companies report that they must compete against unregistered or informal companies, and almost half of these companies identify the practices of competitors in the informal sector as a major constraint.

Several sources indicate that petty corruption is widespread in Mozambique. For example, the US Department of State 2008 reports that rent-seeking activities by public officials are common, whereas the World Bank & IFC Enterprise Surveys 2007 report that 15% of the responding companies expect to pay make informal payments to public officials to 'get things done'. According to Transparency International's National Integrity Systems 2007, nearly one-third of surveyed companies admit to paying bribes to public officials to expedite routine government services. The African Development Bank reports in the Mozambique Private Sector 2008 that petty corruption is perceived to be especially frequent in urban areas, where private companies are located. The US Department of State 2011 reports that a problem in solving the frequent occurrence of corruption within the Mozambican business environment is the fact that senior officials often find themselves in conflicts of interest between their public roles and their private business interests. According to the US Department of State 2007, the close ties between the private sector and the ruling party breed a range of uncompetitive practices in the country by virtually institutionalising donations to FRELIMO in some business circles in return for undue advantages.

Public procurement is an area of business activity where foreign companies are very likely to encounter corruption. For example, the World Bank & IFC Enterprise Surveys 2007 report that 32% of companies expect to give gifts to secure a government contract. Business executives surveyed by the World Economic Forum Global Competitiveness Report 2010-2011 point to a significant extent of favouritism of well-connected companies and individuals in government officials' decisions regarding policies and contracts. Furthermore, business executives also indicate that the diversion of public funds to companies, individuals or groups due to corruption is quite common and that the lack of ethical behaviour of companies in their interactions with public officials, politicians and other companies represents a competitive business disadvantage for Mozambique. In order to best reduce the risk of extortion and demands for bribes in the procurement process, companies considering bidding on public tenders are advised to use a specialised due diligence tool on public procurement. Furthermore investors considering establishing themselves in Mozambique are generally advised to consult with experienced attorneys, to develop, implement and strengthen integrity systems, and to carry out extensive due diligence before committing funds or when already doing business in the country.

The slow and cumbersome administrative procedures in most public services fuel a high level of corruption in Mozambique. For instance, according to the US Department of State 2011, the regulatory burden created by overly complicated procedures related to obtaining various licences produces a market for corrupt practices, in which public officials often request facilitation payments. These cumbersome regulations not only fuel corruption but also pose obstacles to foreign direct investment in Mozambique. This perception is supported among others by the World Economic Forum Global Competitiveness Report 2010-2011, in which business executives cite inefficient government bureaucracy as one of the greatest constraints on business operations in Mozambique. In the same survey, companies perceive government administrative requirements to be quite burdensome. Heavy bureaucracy and rigid laws increase the costs of doing business in Mozambique. Similarly, the World Bank & IFC Doing Business 2011 reports that Mozambique performs poorly in terms of dealing with construction permits, enforcing contracts, registering property and trading across borders. Companies report that officials use time-consuming and complicated procedures to deliberately delay permits and, when the application period has expired, demand bribes for renewing a permit. Many companies consider this complicated and non-transparent administrative procedure as a major obstacle to doing business in Mozambique.

In contrast to the above, it is important to note that some improvements in the regulatory environment have been registered within the last few years. These improvements are partly the result of the establishment of the Investment Promotion Centre (CPI), which is intended to function as a one-stop shop for investors. Among a range of useful services, the CPI assists foreign investors to obtain necessary licences and permits. The Commercial Code 2005 (in Portuguese) is also seen as a step forward in relation to modernising the regulatory system. Moreover, according to the World Bank & IFC Doing Business 2011, Mozambique has made starting up businesses considerably easier by eliminating requirements for minimum capital and introducing a simplified licensing process. Starting a business in Mozambique now requires the entrepreneur to go through an average of 13 days, and 9 procedures at a cost of approximately 14% of GNI per capita, which is significantly less time consuming and less costly than the regional average.

Companies should note that the commercial court system in Mozambique does not offer effective means for settling commercial disputes. The Commercial Code 2005 provides a modern legal basis for the resolution of commercial disputes, but serious deficiencies within the judicial system have limited the impact of the code, and companies typically settle disputes privately or not at all, as reported by the US Department of State 2011. Similarly, the Bertelsmann Foundation 2011 also reports that the judiciary remains one of the weakest sectors in Mozambique. The judiciary is not only subjected to political interference from the ruling elite, but also to criminal networks and people with wealth. For disputes between international and domestic companies, the code closely follows the  United Nations Commission of International Trade Law (UNCITRAL). The National Assembly has passed alternative dispute resolution legislation and has also established the Center for Commercial Arbitration, Conciliation and Mediation (CASM), which offers commercial arbitration services. Mozambique has ratified the New York Convention 1958 and is a member of the International Centre for Settlement of Investment Disputes (ICSID), and thus accepts binding international arbitration of investment disputes between foreign investors and the state as long as provisions for such recourse have been specified in a written contract. Access the Lexadin World Law Guide for a collection of legislation in Mozambique.

Individual Corruption

Several sources including the Bertelsmann Foundation 2010 and the Heritage Foundation 2011 point out that the judiciary in Mozambique remain weak and is marred by corruption. This is also illustrated in Afrobarometer 2008 , in which approximately one-third of Mozambicans believed that some judges and magistrates are involved in corruption. On the contrary, a majority of respondents from the same survey show ‘a lot’ of trust in the court system.

Several citizens have accused the Govuro District Judge of abuse of power, as he allegedly collected fines without issuing receipts, as reported in an August 2010 article by AllAfrica.

Business Corruption

The courts and the legal system in Mozambique are unreliable, compounding the risks related to business operations, particularly in relation to contract enforcement. According to the US Department of State 2011 the judicial system has been largely ineffective in resolving commercial disputes. The USAID Mozambique Democracy and Governance Assessment 2009 reports that the judiciary's lack of credibility has prompted the business organisation Confederation of Labour Associations to set up parallel arbitration systems. The administrative burden increases the use of facilitation payments within the judicial system. The World Economic Forum Global Competitiveness Report 2010-2011 reveals that Mozambique's courts are both insufficiently efficient and subject to political influences of members of government, citizens and companies.

According to the World Bank & IFC Enterprise Surveys 2007, a little less than one-fifth of surveyed companies perceived the judicial system in Mozambique to be fair, impartial and uncorrupted.

Political Corruption

The judiciary in Mozambique is vulnerable to corruption, permeating all actors within the judicial chain such as attorneys, judges, lawyers and diligence officers, as reported by Tiri National Integrity System Survey 2007.

The US Department of State 2010 reports that Mozambique's judiciary is heavily influenced by the executive branch and the ruling party, particularly in the lower level. Moreover, the judiciary suffers from understaffing, insufficient training, lack of transparency and corruption. The USAID Mozambique Democracy and Governance Assessment 2009 reports that the greatest constraint on achieving a well-functioning judiciary in Mozambique is a lack of capacity, manifested by a shortage of qualified personnel, limited budgets and several districts which lack courts.

Frequency

The World Bank & IFC: Doing Business 2011:
- Enforcing a commercial contract in Mozambique requires a company to go through an average of 30 administrative procedures, which takes an average of 730 days and cost an average of 142.5% of the claim.

The World Economic Forum Global Competitiveness Report 2010-2011:
- Business executives give the Mozambican judiciary's level of independence from influences of government, citizens, or companies a score of 2.9 on a 7-point scale (1 'heavily influenced' and 7 'entirely independent').

- Business executives give the efficiency of the legal framework for private companies to settle disputes and to challenge the legality of government actions and/or regulations a score of 3.5 and 3.4 respectively on a 7-point scale (1 'extremely inefficient' and 7 'highly efficient').

Afrobarometer: Summary of Results Mozambique 2008:
- 33% of citizens responding to a survey believe that 'some' judges and magistrates are corrupt, 10% state that 'most’ of them are corrupt and 4% state that 'all' of them are corrupt.

- 55% of citizens surveyed state that they trust the courts of law 'a lot', 15% state that they 'somewhat' trust it and 7% state that they do not trust it at all.

The World Bank & IFC: Enterprise Surveys 2007:
- Only 17% of foreign companies perceive the judicial system to be fair, impartial and uncorrupted.

Individual Corruption

The widespread of corruption amongst the police force is illustrated in Afrobarometer 2008, in which more than one-third of households surveyed believe that 'some' police are corrupt.

According to the US Department of State 2010, police officers often demand identification papers just to extort payments, and that crime victims avoid seeking police assistance as they expect to be asked for bribes and do not trust that the police will help. The Heritage Foundation 2011 also mentions that corruption and extortion by police are pervasive, and the impunity of police officers remains a serious problem. Similarly, the news agency Information Agency of Mozambique reports on several cases in 2009 and 2010 in which traffic police officers have extorted or demanded bribes from motorists.

Business Corruption

Companies surveyed by the World Economic Forum Global Competitiveness Report 2010-2011 report that the police cannot be relied upon consistently to enforce law and order. This is further corroborated by the World Bank & IFC Enterprise Surveys 2007, which reveals that more than one-third of the surveyed companies pay for security in Mozambique, while an equal part identifies crime, theft and disorder as major constraints on business operations in the country.

Political Corruption

The Police for Criminal Investigation (PIC) agency has the mandate to investigate corruption cases, however, it is itself frequently accused of high levels of theft and embezzlement, and PIC officers have been transferred to other departments in order to prevent them from completing investigations of cases which could implicate high-ranking government officials, as reported by the USAID Corruption Assessment 2005. Nevertheless, according to Global Integrity 2007, in practice, the law enforcement officials enjoy some protection from criminal investigations. Generally, the law enforcement agencies are not protected from political interference, and appointments are often based on criteria other than professional, such as party loyalties.

According to Bertelsmann Foundation 2010, organised crime networks are acknowledged by public officials and the Minister of Interior to be linked to police cadres. This is supported in a January 2009 article by AllAfrica, reporting that five police officers from the Maputo City Police, one of them a PIC officer, were arrested for allegedly supplying weapons to local gangs in exchange for a share of the proceeds of their criminal activities.

Frequency

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the reliability of the police services to enforce law and order a score of 3.7 on a 7-point scale (1 being 'cannot be relied upon at all' and 7 'can always be relied upon').

Afrobarometer: Summary of Results Mozambique 2008:
- 34% of citizens responding to a survey believe that 'some' police officers are corrupt, 20% state that 'most' of them are corrupt and 10% state that 'all' of them are corrupt.

- 44% of citizens surveyed state that they trust the police 'a lot', 15% state that they 'somewhat' trust them and 15% state that they do not trust them at all.

The World Bank & IFC: Enterprise Surveys 2007:
- More than 34% of companies surveyed pay for security.

- More than 33.5% of companies identify crime, theft and disorder as major constraints to doing business in the country.

Individual Corruption

According to Global Integrity 2007, petty corruption in the form of bribes and kickbacks is common in the education, health, water and electricity sectors. However, on the contrary, a large percentage of household respondents surveyed by Afrobaromter 2008 reported that they have never paid a bribe, given a gift, or done a favour to government officials in order to get water or sanitation services, or to get a document or a permit in 2007.

Business Corruption

According to the World Bank & IFC Enterprise Surveys 2007, some of the companies surveyed report that obtaining utility services such as telephone, electrical and water connections, or obtaining licences or permits may sometimes be followed by demands for bribes, such as gifts.

Another site for corrupt practices is the business inspections conducted by government officials. Thus, Global Integrity 2007 reports that, in practice, business inspections by government officials to ensure public health and safety standards are sometimes carried out in an arbitrary and ad-hoc manner, and bribes are paid by companies in return for favourable treatment or expedited processing.

Political Corruption

According to a 2010 news article by AFP, in February 2010, the trials against former Transport Minister Antonio Munguambe and four former officials of the Mozambique Airports Company (ADM) were concluded, convicting the five defendants guilty of illicitly draining the company of USD 1.7 million and using the public funds for luxury houses and gifts to family members. In this first corruption case at ministerial level, Munguambe was sentenced to 20 years in prison, while the four former officials received prison sentences ranging between 2 and 22 years. However, according to another news article published by AFP in May 2011, the Supreme Court reduced the prison term for Munguambe from twenty years to four and a half years, giving the reason that embezzlement from a public company merited a lesser penalty than stealing money from the government

Frequency

The World Bank & IFC: Doing Business 2011:
- In order to obtain a construction permit, a company must go through 17 procedures and spend 381 days at a cost of approximately 530.3% of income per capita.

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give government administrative requirements (permits, regulations, reporting) in Mozambique a score of 3.4 on a 7-point scale (1 'extremely burdensome' and 7 'not burdensome at all').

Afrobarometer: Summary of Results Mozambique 2008:
- 58% of citizens surveyed who applied for an official document or a permit in 2007 did not pay any bribe to obtain it.

- 65% of respondents who applied for public utilities, such as water or sanitation did not pay any bribe to obtain it.

The World Bank & IFC: Enterprise Surveys 2007:

- 15% of companies surveyed report that they expect to make informal payments to public officials to 'get things done'.

- 7% of companies expect to give gifts in order to obtain an operating licence.

- 4% of companies expect to give gifts in order to obtain a construction permit.

- 9%, 16% and 18% of companies expect to give gifts to get a phone, water and electrical connection respectively.

- 14% of companies perceive business licences and permits as a major constraint to doing business.

Individual Corruption

The USAID Corruption Assessment 2005 states that city officials at the municipal level hold a great deal of discretion in relation to the allocation of land access permits. This opens up for demands for bribes in the interactions between citizens and the land administration authorities.

Business Corruption

Land is officially owned by the state, and private companies can only apply for land use rights. The USAID Corruption Assessment 2005 mentions access to land as one of the areas most vulnerable to corruption at the municipal level in Mozambique. In a similar vein, according to Bertelsmann Foundation 2010, private property regulations are not enforced consistently and without discrimination in Mozambique. Thus, companies should be aware that land is treated like private property when it comes to disbursing it among the political elite. Moreover, companies should also note that they might lose out against other bigger, connected companies.

Frequency

The World Bank & IFC: Doing Business 2011:
- Registering property in Mozambique requires a company to go through an average of 8 administrative procedures, lasting an average of 42 days and costing 10% of the property value.

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the protection of property rights in Mozambique, including financial assets, a score of 3.3 on a 7-point scale (1 'very weak' and 7 'very strong').

Individual Corruption

About one-third of citizens surveyed in Afrobarometer 2008 state that they think some tax officials are involved in corruption, while a smaller percentage think that most or all of tax officials are corrupt.

Business Corruption

According to the World Bank & IFC Enterprise Surveys 2007, one-tenth of companies surveyed report that they expect to give gifts when meeting with tax officials. Moreover, a significant amount of companies report that a typical company under-report their sales for tax purposes.

According to Global Integrity 2007, tax administration is amongst the public sectors that are commonly affected by corruption.  In practice, tax laws are not always enforced uniformly and without discrimination in Mozambique, and some groups may consistently avoid paying taxes due to their connections. Tax inspections are allegedly characterised by demands for bribes due to the lack of control over inspectors who are relatively free to interpret and enforce rules. This is reportedly a particular problem at the municipal level.

Frequency

The World Bank & IFC: Doing Business 2011:
- Paying taxes in Mozambique requires a company to make an average of 37 payments every year, taking up an average of 230 hours at a total tax rate of a little more than 34% of profits.

Afrobarometer: Summary of Results Mozambique 2008:
- 33% of citizens surveyed state that 'some' tax officials are corrupt, 13% state that 'most’ of them are corrupt and 6% state that 'all' of them are corrupt.

The World Bank & IFC: Enterprise Surveys 2007:
- 10% of companies expect to give gifts in meetings with tax officials.

- 73% of companies report that a typical company reports less than 100% of its sales for tax purposes.

- 16% of companies identify tax administration as a major constraint.

Business Corruption

According to Global Integrity 2007, in practice, customs and excise laws in Mozambique are not always enforced uniformly or without discrimination, and some groups are more likely to evade customs and excise laws due to their connections.

Moreover, the Mozambican customs system lacks transparency and is not always efficient, as illustrated in the World Economic Forum Global Enabling Trade Report 2010 where business surveyed executives rate the transparency of the border administration in relation to irregular payments in export and import and the efficiency of customs administration as relatively low, constituting a competitiveness disadvantage for the country.

Political Corruption

A 2007 report on corruption and reform in the customs in Mozambique by the Centre for Public Integrity (Centro de Integridade Pública Mozambique, CIP) states that the reform of the customs administration initialised in 1996 has reduced the magnitude of corruption in the sector, even though the level of corruption remains high. According to the report, the reform has had some success in changing the custom staff's perception of involvement in corruption, an act that is now considered risky.

On the other hand, Transparency International's National Integrity Systems 2007 portrays Mozambique's customs administration as a corruption-prone area. Citing data from the National Civil Service Authority, the report states that the customs is the most corruption-prone part of the state apparatus, despite being the only sector of the civil service to have a code of conduct. In 2006, over 190 disciplinary proceedings were initiated against customs officials, compared to well over 40 in the police force and 40 in the judiciary. Among the offences leading to the proceedings were illicit user charges and falsification of documents. Another source, Global Integrity 2007, also states that the customs administration is one of the public sectors that are plagued by corruption.

Frequency

The World Bank & IFC: Doing Business 2011:
- Exporting a standardised shipment of goods requires a company to obtain and fill out 7 documents, taking an average of 23 days at a cost of USD 1,100 per container.

- Importing a standardised shipment of goods requires a company to acquire and fill out 10 documents, taking an average of 30 days at a cost of USD 1,475 per container.

World Economic Forum: The Global Enabling Trade Report 2010:
- Business executives give the transparency of border administration (pervasiveness of undocumented extra payments or bribes connected with imports and exports) in Mozambique a score of 3.2 on a 7-point scale (1 'non-transparent' and 7 'transparent').

- Business executives give the efficiency of customs administration (burden of customs procedures) in Mozambique a score of 3.1 on a 7-point scale (1 'extremely inefficient' and 7 'extremely efficient').

The World Bank & IFC: Enterprise Surveys 2007:
- 10% of companies surveyed expect to give gifts to get an import licence.

Business Corruption

According to the ACIS’s Combating Business Participation in Corruption in Mozambique Toolkit 2006, companies cite the payment of commissions to those responsible for both government and private procurement as a major issue. Corruption in public procurement typically takes the form of bribes and kickbacks for contracts, conflicts of interests, collusive bidding, bid rigging and manipulation of bidding procedures by public officials, false or duplicate invoices by contractors, and fake purchases which are then used for personal consumption or resold, as reported by Transparency International's National Integrity Systems 2007.

Furthermore, nearly one-third of companies surveyed in the World Bank & IFC Enterprise Surveys 2007 report that they expect to give gifts in order to win a government contract. Companies are recommended to use a specialised public procurement due diligence tool in order to mitigate the corruption risks associated with public procurement in Mozambique. 

Read more about public procurement in Mozambique under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

According to Global Integrity 2007, the regulations addressing conflict of interest for public procurement officials are not enforced, as many companies bidding for public tenders are owned by senior public officials. This is especially the case in public tenders for road construction. Unsuccessful bidders can challenge procurement decisions in courts, but due to the prevalence of conflicts of interest they may not succeed in actually altering the decision. This picture is backed by Transparency International's National Integrity Systems 2007, according to which contracting procedures in local municipalities are marked by corruption, especially within infrastructure development and maintenance, such as municipal roads, where contracts are used to strengthen patronage networks or demand commissions.

Read more about public procurement in Mozambique under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 2.5 on a 7-point scale (1 'very common' and 7 'never occurs').

- Business executives give the favouritism of government officials towards well-connected companies and individuals when deciding upon policies and contracts a score of 3.0 on a 7-point scale (1 'always show favouritism' and 7 'never show favouritism').

The World Bank & IFC: Enterprise Surveys 2007:
- 32% of companies polled expect to give gifts to secure a government contract.

- The value of a gift expected to secure a government contract is 2.4% of the contract value.

Business Corruption

Companies report that bribery is not uncommon when dealing with environmental inspections in Mozambique. For instance, Global Integrity 2007 reports that business inspections by government officials to ensure public environmental standards are often carried out in an arbitrary and ad-hoc manner, and bribes are sometimes extracted from companies in return for favourable treatment or expedited processing. Likewise, the US Department of State 2011 also reports that environmental regulations often are disregarded or enforced randomly to generate revenues from fines.

Companies operating in Maputo should be aware that water-theft is becoming a serious problem. According to Transparency International's Global Corruption Report 2008, inefficiencies and poor supervision have given rise to a flourishing 'water-mafia' in Maputo. In an informal water market, around 200 small-scale suppliers channel water from private, unregulated boreholes through self-built networks to thousands of clients, covering as much as 40% of all city districts.

Political Corruption

According to the International Institute for Environment and Development's Biofuels, land access and rural livelihoods in Mozambique 2010, corruption has been identified as a constraint particularly affecting the natural resource management sector in Mozambique.

The IRC International Water and Sanitation Centre assesses in an October 2009 article that there is a great risk of corruption in Mozambique's water section. The IRC will provide guidance on the development of a water anti-corruption strategy in Mozambique and has in this context conducted research on the sector and concludes that low levels of public accountability, relatively young institutions and major planned investments in the sector make the water sector an area in which corruption can easily occur.

According to CMI Corruption and Industrial Fishing in Africa 2008, agreements granting foreign companies access to marine resources may have an impact on the independence of policy makers, particularly when the state is dependent on revenues from these access agreements. An example of such a situation is the lack of law enforcement against illegal fishing and logging carried out by Chinese companies in Mozambique. According to the report, the lack of prosecutions in relation to these illegal commercial activities can be explained by Chinas economic importance in the country.

• Legislation: The Government of Mozambique approved an Anti-Corruption Law (Law 6/2004) in 2004 which criminalises extortion, attempted corruption, active and passive bribery. According to Global Integrity 2007, all persons are covered under Law 6/2004; however, in practice it is not clear whether the Law is applied to foreign officials. Moreover, the Law only defines passive and active bribery; it does not cover other forms of corruption such as the diversion of funds, trafficking in influence, illicit enrichment and the laundering of the proceeds from corruption, as pinpointed in a 2008 report by the Centre for Public Integrity (Centro de Integridade Pública Mozambique, CIP). The Anti-Corruption Law is also silent on other forms of corruption such as embezzlement. Nevertheless, according to a July 2011 news article by AFP, the government of Mozambique has proposed new anti-corruption laws and toughened the Penal Code to criminalise embezzlement, influence peddling and graft, and the Parliament is expected to approve the changes. The Law stipulates that all contracts to which state or municipal bodies are party must incorporate an anti-corruption clause and that whistleblowers are to be protected. Public officials now have to present a list of their assets every year and a final list on leaving office. However, according to the US Department of State 2009, only one senior governmental official declared his assets in 2009. Both the US Department of State 2010 and the Bertelsmann Foundation 2010 report that the law is not always effectively enforced, and most high-level political and economic elites are often immune from prosecution, even when the case involves serious crimes. In addition to the law, both the United Nations Convention against Corruption (UNCAC) and the African Union Convention on Preventing and Combating Corruption have been signed and ratified by Mozambique, but not yet implemented. The Law on Money Laundering from 2002 was in 2004 supplemented with the Decree 37/2004 which provides details on the implementation of supervision authorities and due diligence and reporting procedures. The anti-money laundering law outline as predicate offences for money laundering, drug trafficking, theft, robbery, fraud, trading in arms, terrorism, extortion, corruption, speculation and dealing in contraband. Financial institutions are obliged to conduct costumer identification, and procedures to report suspicious transactions are introduced. The law is criticised for not applying to lawyers, notaries and NGOs that could be susceptible to money laundering. Furthermore, Attorney-General Augusto Paulino, as cited in a April 2011 news article by AllAfrica, stated that the current laws on corruption and the theft of state funds and assets are inadequate and out-of-date. Paulino also pointed out several weaknesses of the current legislation, amongst them, including the current anti-corruption legislation only covers corruption in the public sector, but not in the private sector. Access the Lexadin World Law Guide for a collection of legislation in Mozambique.

• Government Strategies: The government passed an Anti-Corruption Strategy 2006-2010 in 2006 which aims at involving all relevant actors in the fight against corruption in Mozambique. The strategy contains operational plans for five sectors: health, education, finance, police and justice. A Technical Commission (CT) has been established to assist the government, civil society, the private sector and the donor community in supervising and coordinating implementation of the strategy.

• Anti-Corruption Agencies: In 2005, the Central Office for Combating Corruption (Gabinete Central de Combate à Corrupção, GCCC) was established within the Attorney General's Office (in Portuguese) to replace the now defunct anti-corruption agency from 2003, known as the Anti-Corruption Unit. The GCCC carries out investigations of complaints in relation to corruption-related offences within the public sector and has delegations in Maputo, Beira and Nampula. The unit receives an increasing number of reports on corruption, but the number of investigations and prosecutions is still low, due partly to understaffing and lack of funds and according to Transparency International's National Integrity Systems 2007, also due to a lack of political will to fight corruption. However, the number of investigated cases has increased over the last couple of years. In 2009, the GCCC had 534 cases of corruption and theft of state property under investigation, of which 27 came to trial. Like its predecessor, the GCCC is also heavily funded by USAID. According to the USAID Mozambique Democracy and Governance Assessment 2009, the Supreme Court has decided that the GCCC do not have jurisdiction to investigate embezzlement, as a consequence of the Anti-Corruption Law not criminalising embezzlement. Moreover, Global Integrity 2007 reports that according to the same Supreme Court decision, the GCCC can investigate corruption issues but it cannot prosecute them. Global Integrity 2007 also states that the GCCC is not free of political interference since appointments to the office are made by the Attorney General, who himself is appointed by the government. Moreover, politically important people who are notified to testify before the CCCG are not prosecuted if they refuse to show up.

• The Inter-Ministerial Commission for Public Sector Reform (Comissão Interministerial da Reforma do Sector Público - CIRESP) was established in 2000 and is responsible for implementing and monitoring the Anti-Corruption Strategy as well as the Global Strategy of Public Sector Reform. The latter aims at enhancing transparency in the public sector and diminishing red tape. More information about the CIRESP and the reform of the public sector can be found at the website of the Ministry of Public Administration.

• Supreme Audit Institution: The Administrative Tribunal (Autoridade Tributária, AT) is the state inspection entity responsible for inspecting the legality of the state and its expenditures. It is formally independent from the government and enjoys juridical and administrative autonomy. However, according to Global Integrity 2007, the appointments to the AT do not always support its independence from the executive; thus, appointments are sometimes based on political considerations, and individuals appointed may have clear party loyalties. In addition, in practice, the head of the AT is not sufficiently protected from removal without relevant justification. Furthermore, the government usually only gives superficial attention to the audit reports. Nevertheless, the institution is singled out in the Tiri National Integrity System Survey 2007 as being increasingly on the front-line in the fight for improved accountability and transparency in the financial management of the state. The same report from Tiri also states that by law, the municipalities’ accounts have to be audited twice annually and the reports will have to be sent to the AT every six months. In case of something doubtful, the TA will send a team of auditors to a specific municipality. Several observers, including Transparency International's National Integrity Systems 2007, note that the AT struggles with inadequate funds and lack of qualified staff, despite ongoing support from the Swedish development agency, SIDA. According to a September 2010 news article by AllAfrica, provincial branches were planned to be set up in Sofala, Zambezia and Nampula provinces, which is believed that they will help to relieve some of the pressure away from the AT in the capital city.

• Ombudsman: According to Transparency International's National Integrity Systems 2007, the Ombudsman's Office is a relatively new creation in Mozambique's institutional set up. It was established as an independent institution in 2005 in accordance with Article 256 of the 2004 Constitution, with responsibilities to safeguard justice to citizens, defence of the law and justice in the functioning of the public administration. The Ombudsman's Office is intended to handle complaints and initiate investigations in relation to public administration. If its investigations show that mistakes have been committed by the public administration, the Ombudsman must inform Parliament and the Attorney General. Although it has a constitutional mandate, the Ombudsman's Office has not yet been institutionalised in practice, and according to the US Department of State 2010, no Ombudsman has yet been appointed.

• E-Governance: E-governance in Mozambique is not particularly well-developed. Although most ministries and government institutions have websites, many of them are regularly offline. Furthermore, it is not clear to what extent the functioning websites offer any web-based services to companies that can prevent or substitute direct interaction with public officials. Exceptions, however, are the Ministry of Industry and Trade (Ministério da Indústria e Comércio, in Portuguese) and the Portal of the Government (Portal do Governo de Moçambiqu, in Spanish) which offer information on licensing requirements, customs and tax procedures as well as various registration forms.

• Whistle-Blowing: Article 13 in the Anti-Corruption Law 2004 provides protection for both public and private sector employees who report cases of corruption committed by public officials. However, a 2008 report by the Centre for Public Integrity (Centro de Integridade Pública Mozambique, CIP) points out that the Law only deals with whistleblower protection ‘very superficially’, and it does not specify the need to protect witnesses. A major impediment in fighting corruption in Mozambique is that many instances of corruption are not reported by households, public officials and companies due to individuals' fear of retaliation and poor protection of whistleblowers in practice. Global Integrity 2007 reports that a mechanism through which public sector corruption can be reported exists in Mozambique, but that the staff rarely act on or investigate complaints. Complaints can be reported to Central Office for Combating Corruption (Gabinete Central de Combate à Corrupção, GCCC) at +258 21 490 051 or online via the Attorney General's website (in Portuguese).

• Public Procurement: Public procurement in Mozambique is well-regulated by the Public Procurement Law (Law 54/2005). Prior to the passing of this law, public procurement in Mozambique was characterised by massive and institutionalised fraud and corruption. The new law contains provisions on conflicts of interest for procurement officials, mandatory professional training, requirements for competitive bidding, complaint procedures, and rules for debarment of companies found guilty of violating procurement regulations. Thus, in law, major procurements require competitive bidding, and strict formal requirements limit the extent of sole sourcing. Furthermore, unsuccessful bidders can ask for an official review of the bidding process and can challenge the concrete procurement decision in the courts. According to Tiri Reconstruction National Integrity System Survey Mozambique 2007, the procurement law decentralises procurement not only to line ministries, but also to provincial, district and municipal levels, which could be a source of concern seen in light of the poor evaluation of the capacity of local government administrations to manage their responsibilities. A new central agency, the Functional Unit for Procurement Supervision, has been established to monitor procurement processes, ensure accountability and provide training on new procurement regulations to ministerial staff at all levels. Nevertheless, according to Global Integrity 2007, the effectiveness of procurement processes could be questioned, as companies guilty of major violations of procurement regulations, including bribery, are in practice not prohibited from participating in future procurement bids.

• General Comments on the Anti-Corruption Initiatives: The Government of Mozambique has been vocal about its intentions to curb corruption. However, there are concerns that many initiatives are without much support in the political system and that some of the steps are merely 'window-dressing' to please donors. Consequently, some observers note that corruption in Mozambique is not a problem of inadequate laws, but of laws not being enforced. In order to tackle entrenched corruption in the country, stronger anti-corruption legislations will be needed. Currently the Anti-Corruption Law 2004 does not cover private sector corruption, and whistleblower protection is identified by many observers as being weak. Although the Office of Ombudsman was set up in 2005, no Ombudsman has yet been appointed. Last but not least, a more effective oversight of the procurement process will be needed in order to reduce corruption in the procurement sector. 

• Media: The law guarantees freedom of speech and press in Mozambique, however, the government sometimes restricts these rights in practice. The media is a key player in the fight against corruption in Mozambique, and according to Freedom House 2011, local journalists have played an important role by investigating and exposing corruption cases involving high-profile corruption cases. Nevertheless, many of these journalists are subject to threats and intimidation by officials and the Carlos Cardoso murder case in 2000 illustrates that practising critical journalism is indeed dangerous in Mozambique. Defamation of the president is illegal by law and according to Freedom House 2010, libel laws have been used to prosecute critical journalists, and many journalists admitted that self-censorship is a common practice. Moreover, there were several cases of harassment of journalists throughout 2009, primarily committed by political supporters intimidating journalists that they perceived to favour political rivals. According to the US Department of State 2010, the government does not restrict internet use; however, opposition leaders have alleged that government intelligence agents monitored e-mail. Reporters without Borders 2010 ranks Mozambique 98th out of 178 countries in relation to press freedom, while Freedom House 2011 ranks Mozambique 90th out of 196 countries and describes the country's press environment as 'partly free'.

• Civil Society: Civil society in Mozambique is generally considered to be relatively free. NGOs are also free to operate within Mozambique, but they have to register with the government. According to the Bertelsmann Foundation 2010, a strong network of civil society organisations has yet to develop in the country. CSOs often rely on donor's economic support and are in general ineffective in empowering people and representing citizen's interests. An increasing number of private interest groups monitoring the government are reportedly taking form, but they are still far too weak to put real pressure on government decisions. Moreover, many of the CSOs have been established by individuals with close ties to the ruling party. On the other hand, Freedom House 2011 reports that NGOs such as the Centre for Public Integrity (Centro de Integridade Pública Mozambique, CIP) have played an important role in investigating and exposing corruption cases. Hence, Global Integrity 2007 evaluates CSOs in Mozambique as ‘strong’, and states that CSOs can in practice operate freely on the condition that high ranking officials and their close ties do not feel threatened.

• Centre for Public Integrity of Mozambique (Centro de Integridade Pública Mozambique, CIP): The CIP is a non-profit and non-partisan organisation established with the aim of promoting integrity, transparency, ethics and good governance in the public sphere, and promoting human rights in Mozambique. The CIP has conducted studies of corruption within specific sectors in Mozambique, for example, in the health sector, the education sector and the judicial system, which are accessible at its website.

• Associaçao de Comércio e Indústria (ACIS): ACIS is a non-profit association founded in 2000 with the aim of promoting investment and development in Mozambique, and of establishing links between government and the private sector in the interests of improved dialogue and economic development. ACIS has produced a very useful toolkit for companies to avoid corruption and is involved in advocacy work in a range of areas relevant for companies. Useful information on investing in Mozambique can be found at the website of ACIS, which includes, among other things, links and guides to laws and regulations.

• Ética Moçambique (in Portuguese): Ética Moçambique is a non-profit association established in August 2001 with the aim of promoting public integrity and ethics, and of fighting corruption. An example of a successful initiative is Ética Moçambique, which has launched its own anti-corruption campaign and contributed to the World Bank Governance and Anti-Corruption Diagnostic Survey 2005. Ética Moçambique has been a driving force behind the setting up of anti-corruption centres in Mozambique's provincial capitals, where people can anonymously report incidences of corruption, and also runs a civic education campaign to help citizens identify and protect themselves against corrupt officials or activities. Norway, Sweden, Finland, Canada, Denmark, Ireland, Switzerland and the United States are major donors to Ética Moçambique. The organisation has a reporting mechanism, called Linha Verde (800 800 900), through which citizens can report cases of corruption. Read more about Ética Moçambique here.

The websites listed below provide useful facts on Mozambique as well as contacts and tools for companies operating in Mozambique:

• International Finance Corporation: Global SME Toolkit
  Guide to sustainable business management practices for SMEs.
• Business Fighting Corruption
  An online resource centre for business on collective action to avoid corruption which contains a guide and resources for partnerships with companies and other stakeholders to fight against corruption.
• CIA World Factbook: Mozambique Profile
• World Bank: Mozambique Data Profile

Sources for further reading:

• The Bertelsmann Foundation: Transformation Index - Mozambique 2011.
• US Department of State: Investment Climate Statement - Mozambique 2011.
• US Department of State: Human Rights Report - Mozambique 2010.
• Transparency International: Global Corruption Report 2007.

UNCAC Status: Signed 25 May 2004. Ratified 9 April 2008.

Status on UNCAC Implementation
This field describes the country's status on the United Nations Convention against Corruption. Please note any declarations and reservations made upon ratification. The list of signatories can be found on the UNODC website. Read more about the UNCAC.

Other Relevant Conventions or Treaties:

• African Union Convention on Preventing and Combating Corruption: Signed 15 December 2003. Ratified 2 August 2006.
  Read Transparency International's summary and assessment of the convention.
• United Nations Convention against Transnational Organized Crime: Signed 15 December 2000. Ratified 20 September 2006.
  Read Transparency International's summary and assessment of the convention.

Transparency CPI: 2011: 120/182 (Score: 2.7)

Transparency CPI
This field consists of the score for the country in question on the Corruption Perceptions Index from Transparency International as well as its ranking.

World Bank CORR Index (-2.5 - +2.5): 2010: -0.40

World Bank Corruption Index
This field consists of the score for the country in question on the 'Control of Corruption' indicator in the World Bank Governance Research Indicator Country Snapshot (GRICS): 1996-2010.

OECD Country Risk Classification (0-7): 2011: 6

Country Risk Classification
The classification of countries by risk category has the aim of providing OECD countries with a basis for calculating the premium interest rate to be charged to cover the risk of non-repayment of export credits. Countries are placed in risk categories 0 - 7, with 0 being the lowest risk category and thus the least expensive. Conversely, premium group 7 is the highest risk category. Each classification is comprised of 2 components: 1) an assessment of the country's economic/financial situation, and 2) its overall political stability. Access the complete list of OECD Country Risk Classification figures.

Data Verification:

Publication date: October 2011

Data verified by: Global Advice Network

General Information Sources

• US Department of State: Investment Climate Statement - Mozambique 2011.
• The World Bank & IFC: Doing Business 2011.
• Freedom House: Freedom in the World - Mozambique 2011.
• The Heritage Foundation: Index of Economic Freedom - Mozambique 2011.
• AFP: 'Mozambique proposes new anti-corruption laws', 27 July 2011.
• AFP: 'Mozambican ex-minister goes to jail but term slashed', 24 May 2011.
• World Economic Forum: The Global Competitiveness Report 2010-2011.
• US Department of State: Human Rights Report - Mozambique 2010.
• The Bertelsmann Foundation: Transformation Index - Mozambique 2010.
• State of the Union: Relatório do estado da união africana - Moçambique 2010.
• AllAfrica: 'Mozambique: Assembly Approves 2010 Plan And Budget', 16 April 2010.
• allAfrica: 'Mozambique: Guebuza Hears Corruption Allegations', 11 may 2010.
• AllAfrica: 'Mozambique: Administrator of Chemba District Accused of Extortion', 2 August 2010.
• AFP: 'Mozambique ex-minister gets 20 years for corruption', 27 February 2010.
• Mail&Guardian Online: 'Donors put brakes on Mozambique aid', 1 July 2010.
• US Department of State: Human Rights Report - Mozambique 2009.
• Freedom House: Freedom in the World - Mozambique 2009.
• Afrol News: ''Corruption to increase' after Mozambique polls', 24 November 2009.
• CIP: Mozambique political process bulletin: CNE excludes 104,000 votes in response to ballot box stuffing, Number 39, 16 November 2009.
• Afronline: 'Frelimo wins but opposition claims of fraud', 12 November 2009.
• AllAfrica: 'Mozambique: MDM Lists Examples of Alleged Fraud', 10 November 2009.
• CIP: Mozambique political process bulletin: Misconduct in hundreds of polling stations. Number 34, 9 November 2009.
• African Development Bank: Mozambique Private Sector Country Profile 2008.
• Afrobarometer: Summary of Results - Mozambique 2008.
• Transparency International: Global Corruption Report 2008.
• Transparency International: National Integrity Systems Country Study Report Mozambique 2007.
• Afrobarometer: 'Uncritical Citizenship' in a 'low-information' society: Mozambicans in Comparative Perspective, December 2007.
• Tiri: Reconstruction National Integrity System Survey Mozambique 2007.
• Freedom House: Countries at the Crossroads - Mozambique 2007.
• Global Integrity: Mozambique Country Report 2007.
• The World Bank & IFC: Enterprise Surveys 2007.
• Forum for African Investigative Reporters: 'The dogs watch and the caravan is surprised', 2006.
• Transparency International: Global Corruption Report 2006.
• ACIS: Combating Business Participation in Corruption in Mozambique Toolkit 2006.
• USAID: Corruption Assessment: Mozambique 2005.
• The World Bank: Governance and Anti-Corruption Diagnostic Survey 2005.
• Economic Commission for Africa: African Governance Report 2005.
• UNICEF: Mozambique at a glance.

Corruption Levels Sources

Judicial System

• US Department of State: Investment Climate Statement - Mozambique 2011.
• The World Bank & IFC: Doing Business 2011.
• World Economic Forum: The Global Competitiveness Report 2010-2011.
• The Bertelsmann Foundation: Transformation Index - Mozambique 2010.
• US Department of State: Human Rights Report - Mozambique 2010.
• AllAfrica: 'Mozambique: District Judge Accused of Power Abuse and Extortion', 4 August 2010.
• USAID: Mozambique Democracy and Governance Assessment 2009.
• Afrobarometer: Summary of Results - Mozambique 2008.
• Freedom House: Freedom in the World - Mozambique 2008.
• US Department of State: Investment Climate Statement - Mozambique 2008.
• AllAfrica: 'Mozambique: Anti-Corruption NGO criticises Constitutional Council', 8 January 2008.
• Tiri: Reconstruction National Integrity System Survey Mozambique 2007.
• The World Bank & IFC: Enterprise Surveys 2007.
• AfriMAP: Mozambique: Justice Sector and the Rule of Law 2006.
• The World Bank: Governance and Anti-Corruption Diagnostic Survey Mozambique 2005.

Police

• US Department of State: Investment Climate Statement - Mozambique 2011.
• The Heritage Foundation: Index of Economic Freedom - Mozambique 2011.
• World Economic Forum: The Global Competitiveness Report 2010-2011.
• US Department of State: Human Rights Report - Mozambique 2010.
• The Bertelsmann Foundation: Transformation Index - Mozambique 2010.
• AIM: 'Policemen arrested for extortion', No.406, 27 July 2010.
• AIM/AllAfrica: 'Policemen Arrested for Extortion, Collaboration With Criminals', 3 January 2009.
• Afrobarometer: Summary of Results - Mozambique 2008.
• Freedom House: Freedom in the World - Mozambique 2008.
• The World Bank & IFC: Enterprise Surveys 2007.
• Tiri: Reconstruction National Integrity System Survey Mozambique 2007.
• Global Integrity: Mozambique Country Report 2007.
• USAID: Corruption Assessment Mozambique 2005.

Licences, Infrastructure and Public Utilities

• The World Bank & IFC: Doing Business 2011.
• AFP: 'Mozambican ex-minister goes to jail but term slashed', 24 May 2011.
• World Economic Forum: The Global Competitiveness Report 2010-2011.
• AFP: 'Mozambique ex-minister gets 20 years for corruption', 27 February 2010.
• African Economic Outlook: Innovation and ICT in Africa 2009.
• AllAfrica: 'Mozambique: Witness Confirms Sale of Property to Airport Boss', 26 November 2009.
• UK Anti-corruption Forum: 'Newsletter No. 16', November 2009.
• Afrobarometer: Summary of Results - Mozambique 2008.
• The World Bank & IFC: Enterprise Surveys 2007.
• The World Bank: Governance and Anti-Corruption Diagnostic Survey Mozambique 2005.

Land Administration

• The World Bank & IFC: Doing Business 2011.
• World Economic Forum: The Global Competitiveness Report 2010-2011.
• USAID: Corruption Assessment Mozambique 2005.
• CTA: Mozambique - Business Environment Assessment 2004.

Tax Administration

• The World Bank & IFC: Doing Business 2011.
• Afrobarometer: Summary of Results - Mozambique 2008.
• The World Bank & IFC: Enterprise Surveys 2007.
• Global Integrity: Mozambique Country Report 2007.
• Global Integrity: Mozambique Country Report 2006.
• Transparency International: Global Corruption Report 2005.
• The World Bank: Governance and Anti-Corruption Diagnostic Survey Mozambique 2005.
• USAID: Corruption Assessment Mozambique 2005.

Customs Administration

• The World Bank & IFC: Doing Business 2011.
• World Economic Forum: Global Enabling Trade Report 2010.
• US Department of State: Investment Climate Statement - Mozambique 2009.
• AllAfrica: 'Mozambique: Strong Growth in Maputo Port Traffic Forecast', 15 July 2009.
• Transparency International: National Integrity Systems Country Study Report Mozambique 2007.
• The World Bank & IFC: Enterprise Surveys 2007.
• Global Integrity: Mozambique Country Report 2007.
• Centro de Integridade Pública: Corruption and Reform in the Customs in Mozambique 2007.
• Global Integrity: Mozambique Country Report 2006.
• ACIS: Combating Business Participation in Corruption in Mozambique Toolkit 2006.
• Allbusiness: 'Scanning the plan', August-September 2006.

Public Procurement and Contracting

• World Economic Forum: The Global Competitiveness Report 2010-2011.
• US Department of State: Investment Climate Statement - Mozambique 2009.
• US Department of State: Investment Climate Statement - Mozambique 2008.
• The World Bank & IFC: Enterprise Surveys 2007.
• Tiri: Reconstruction National Integrity System Survey Mozambique 2007.
• Transparency International: National Integrity Systems Country Study Report Mozambique 2007.
• Global Integrity: Mozambique Country Report 2007.
• ACIS: Combating Business Participation in Corruption in Mozambique Toolkit 2006.

Environment, Natural Resources and Extractive Industry

• US Department of State: Investment Climate Statement - Mozambique 2011.
• International Institute for Environment and Development: Biofuels, land access and rural livelihoods in Mozambique 2010.
• IRC: 'Developing a water anti-corruption strategy in Mozambique', 26 October 2009.
• Transparency International: Global Corruption Report 2008.
• Chr. Michelsen Institute: Corruption and Industrial Fishing in Africa 2008.
• The World Bank: Governance and Anti-Corruption Diagnostic Survey Mozambique 2005.

Public Anti-Corruption Initiatives Sources

• AFP: 'Mozambique proposes new anti-corruption laws', 27 July 2011.
• AllAfrica: 'Paulino Calls for Stronger Anti-Corruption Laws', 27 April 2011.
• The Bertelsmann Foundation: Transformation Index - Mozambique 2010.
• US Department of State: Human Rights Report - Mozambique 2010.
• AllAfrica: 'Decentralisation of Administrative Tribunal', 20 September 2010.
• US Department of State: Human Rights Report - Mozambique 2009.
• USAID: Mozambique Democracy and Governance Assessment 2009.
• US Department of State: Investment Climate Statement - Mozambique 2009.
• AllAfrica: 'Mozambique: 403 Cases of Corruption investigated this year', 9 December 2009.
• CIP: Contribution to an improvement in the anti-corruption legal framework 2008.
• US Department of State: Investment Climate Statement - Mozambique 2008.
• AllAfrica: 'Mozambique: Anti-Corruption Measures Should be Accelerated', 1 May 2008.
• Transparency International: National Integrity Systems Country Study Report Mozambique 2007.
• Freedom House: Countries at the Crossroads - Mozambique 2007.
• Tiri: Reconstruction National Integrity System Survey Mozambique 2007.
• Global Integrity: Mozambique Country Report 2007.
• Swiss Peace: Fast Update - Mozambique Trends in Conflict and Cooperation 2007.
• Institute for Security Studies: Confronting the Proceeds of Crime in Southern Africa No. 132, May 2007.
• Capito, Benjamin: 'Evaluation of anti-money laundering mechanisms in Mozambique, 2004 to 2006', Confronting the Proceeds of Crime in Southern Africa, Ed. Charles Gorodema, ISS Monograph Series, No. 132, May 2007.
• Global Integrity: Mozambique Country Report 2006.
• The World Bank: Governance and Anti-Corruption Diagnostic Survey 2005.

Private Anti-Corruption Initiatives Sources

• Freedom House: Freedom of the Press Index 2011.
• Freedom House: Freedom in the World - Mozambique 2011.
• Freedom House: Freedom of the Press - Mozambique 2010.
• Reporters Without Borders: Mozambique Country Report 2010.
• Reporters Without Borders: Press Freedom Index 2010.
• US Department of State: Human Rights Report - Mozambique 2010.
• The Bertelsmann Foundation: Transformation Index - Mozambique 2010.
• The Bertelsmann Foundation: Transformation Index - Mozambique 2008.
• Tiri: Reconstruction National Integrity System Survey Mozambique 2007.
• Global Integrity: Mozambique Country Report 2007.
• Freedom House: Countries at the Crossroads - Mozambique 2007.
• The World Bank: Governance and Anti-Corruption Diagnostic Survey 2005.