1. General information regarding farming in Mozambique
As you might know, Mozambique does not have the same problem with land issues as Zimbabwe. Only 10 per cent of the fertile land is currently used in Mozambique. It is the policy of the Mozambican Government to welcome foreign farmers.
Please note that it is not possible to own land in Mozambique. However, land can be granted by a 50-year lease concession. This concession may be renewed for another 50 years thereafter. A foreigner cannot directly apply for land. He can register a company in Mozambique (and own it per 100 per cent) and then apply for a land concession. The second condition for a foreigner when applying for a land concession is that he has investment authorisation from the Mozambican Investment Promotion Centre (Centro de Promoção de Investimentos - CPI).
In order to get such an investment authorisation, a minimum investment of US$ 50,000 is required. Such an investment can be in cash or in assets. You can import your assets at a preferential rate and also import your cattle. Cattle do not usually have to go into quarantine, provided that they have had certain vaccinations.
Please note that an investor must prove his ability to realise the investment. This can either be by bank statements, a bank guarantee or by presenting an inventory of the assets he wants to invest.
It is possible to get bank loans in Mozambique for agricultural projects. The banking sector was successfully privatised in Mozambique and currently about 10 private banks are in the market.
Apart from Portuguese-owned private banks, there is also a bank from Mauritius. From South Africa Nedbank and ABSA are present in Mozambique.
The interest rate for US$ denominated loans is about 10-12 per cent.
There are two ways to become a farmer in Mozambique: One is that somebody applies for land directly from the Government. This is the cheapest solution because then no price for the land has to be paid. However, in certain areas, such as the areas close to the big cities, it might be difficult to find free land.
The second possibility is to buy a property from a previous owner. According to Mozambican legislation, it is not possible to sell land. However, it is possible to sell the infrastructure on the land, such as buildings, fencing, walls, irrigation systems, dams etc. In practice, a seller always calculates a value for the land when he sells his "infrastructure". Currently prices between US$ 50-200 are paid per hectare of farming land, depending on the area and the fertility of the land.
An interested farmer must be very careful both when asking for a land concession from the Government and when buying a property from a previous owner.
We saw many problematic cases where Government Officials promised an investor a certain area. They claim to have a very powerful cousin who can get a land concession easily and in no time. The farmer is then asked for an up-front payment. Often such deals never happen or do not provide the purchaser with legal title, which results in the Government having to cancel the illegal concession again.
The problem when buying from a private owner is that very often their land title deeds have never been issued. We saw very few properties where the seller has all his papers in order. They often want to sell based on a land application and claim that it is just a formality to get the formal title. This is not correct. We therefore give special attention to the conducting of a proper title deed search right from the beginning.
We are in constant contact with local farmers who want to sell their property. However, this market is still small. We inform our clients regularly on the farms for sale.
Please note that we do all our services 100 per cent legally. We respect all the legal requirements and involve the correct governmental institutions from the beginning. When working with us, a farmer can feel secure that everything is done correctly and according to Mozambican legislation.
A farmer must pay an annual leasing fee to the Government. The annual leasing fee is very small. Please note that this leasing fee must also be paid when buying property from a private owner. This fee depends on the province where you want to farm and varies from US$ 1.5 - 3 per hectare per year.
2. Steps required to become a farmer in Mozambique
The following steps must be completed:
1. You identify an area where you would like to farm. You then inform us and we will liaise with the relevant Governmental official to find out whether the land is free.
2. You then have to draft a project proposal. This includes a basic business plan where you describe what you intend to do. In this plan you describe your investment, your return, how many jobs you will create etc. We will assist you in finalising such a proposal. This proposal will then be submitted to the Investment Promotion Centre (CPI) for approval. Please note that you can only apply for a land concession with an approved investment project.
3. You then have to register a company. This takes about two weeks. As soon as we have registered your company we must apply for your business license.
4. As soon as you have your company registered and your investment proposal is approved or at least submitted, you can formally apply for the land you want. Government officials will then go to the area and liaise with the local community to see whether the land is in fact available. If this is confirmed, the proposal goes for approval to the relevant Governmental institution. This is in your case the Minister of Agriculture. This process takes 90 days. The outcome of this process is a provisional title deed. Please note that it is only possible to get a final title after you have implemented your investment project.
5. We then apply for the work and residence permits for you and your family.
Depending on the area the whole process takes between 90 days and one year. At the end you have your project approved by the CPI, you have a provisional land concession, a registered company, a business license and a work and residence permit.
The last step is then that you start moving to your farm. We will assist you in importing all your goods to Mozambique and will register you company with the Ministries of Finance and Labour.
For more info please contact: Mozambican Investment Promotion Centre