Economy of Mozambique - Extensive Economic Reform

Extensive Economic Reform

Economic reform has been extensive. Over 1,200 state-owned enterprises (mostly small) have been privatized. Preparations for privatization and/or sector liberalization are underway for the remaining parastatals, including telecommunications, electricity, water service, airports, ports, and the railroads. The government frequently selects a strategic foreign investor when privatizing a parastatal. Additionally, customs duties have been reduced, and customs management has been streamlined and reformed. The government introduced a highly successful value-added tax in 1999 as part of its efforts to increase domestic revenues. Plans for 2001-02 include Commercial Code reform; comprehensive judicial reform; financial sector strengthening; continued civil service reform; improved government budget, audit, and inspection capability; and introduction of the private management of water systems in major cities. The process of liberalization in Mozambique was an initiative from the World Bank. In the Mid 1990s, World Bank made it necessary for the nation to liberalize their cashew sector. The lifting of protectionist measures for the cashew industry in Mozambique was an attempt to increase the incomes of cashew farmers and reduce poverty in the country. This policy of liberalization has been one of most contentious policies.