Legal Market Overview
Mozambique continued to suffer from the fallout of the 2016 debt scandal, in which $1.4bn of undisclosed debt was unearthed. In 2017, as debt levels reached unsustainable levels, the country announced that it would be unable to make its debt repayments to international creditors.
The debt crisis shook Mozambique’s relationship with the IMF, which froze payments to the country following the disclosure of the hidden debt. Although foreign investors have since returned, FDI is still below the level hoped for by the government. In September 2018, President Filipe Nyusi announced that the country is working with the IMF in an attempt to restore credibility and transparency and improve macroeconomic stability.
Offering some hope in an otherwise gloomy economic outlook is the promise of Mozambique’s offshore gas. A floating LNG facility is currently being manufactured and is expected to start producing gas in Area 4 of the Rovuma Basin in 2022. The Area 4 concession is operated by a consortium of major international players including Exxon Mobil and Italian energy giant Eni.
International investors doing business in Mozambique are served by local and foreign firms, including a number of leading Portuguese firms with associations in the country. Outside of Portugal, Shearman & Sterling LLP and magic circle firms Linklaters Business Services and Clifford Chance are among the leading international players in the market.