MOZAMBIQUE: FEBRUARY ECONOMIC DIGEST

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TAGS: ECON EAGR EINV ETRD EFIN KFLU MZ
SUBJECT: MOZAMBIQUE: FEBRUARY ECONOMIC DIGEST

REF: 05 MAPUTO 1646


1. This is a brief review of significant economic
developments in Mozambique during February 2006. We provide
this as a supplement to our other reporting. The items
discussed are:

- Business Start-up Time Drops
- Most Foreign Currency Bids/Invoices Banned
- Bird Flu: Further Bans on Chicken Imports
- French Company invests in Mozambican Sugar

Business Start-up Time Drops
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2. In February the World Bank presented its "Doing Business
in 2006" report. In the report the World Bank writes that,
based on 2005 data, it takes 139 days, on average, to start
up a business in Mozambique. At the report launching,
however, a World Bank official added that recent data showed
the start-up period had shortened to 111 days -- a figure
which will appear in the 2007 report. While 111 days still
represents a significant delay, the trend is positive and a
marked improvement from the World Bank's "Doing Business in
2005" report on Mozambique, where it reported a start-up time
of 153 days. In conjunction with the release of the new
report, President Guebuza reaffirmed Mozambique's commitment
to improving its business environment, stating "(w)e want
businesses to be able to be started in the shortest possible
time and, why not, in a single day. We want licenses to be
issued in a record time." President Guebuza also
acknowledged the need for businesses and entrepreneurs to
have better access to credit.

Procurement: Most Foreign Currency Bids/Invoices Banned
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3. Under the new procurement regulation, contractors will no
longer be allowed to put in bids or issue invoices in foreign
currency. The coordinator of the government's Administration
and Financial Reform Technical Unit (UTRAF),Carlos Jessen,
stated that this step is part of a range of measures to
modernize the government's financial administration system,
adding that the new measures are aimed at halting capital
flight and controlling inflation. (Note: Jessen also added
the qualification that in "exceptional instances envisioned
in tender documents" some invoices could be in foreign
currency. End note.) For more on Mozambique's new
procurement regulation, please see reftel.

Bird Flu: Further Bans on Chicken Imports
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4. In response to the recent reports of Avian Influenza in
poultry in Nigeria, Egypt and Niger, as well as its spread
across Europe, the government of Mozambique announced at the
end of February that it was banning the import of all chicken
products from any country in which the H5N1 Avian Influenza
virus had been reported. This measure is part of
Mozambique's effort to prevent entry of the virus into the
country. In addition to banning imports, Mozambique's plan
includes inspection of ports and airports. So far the
government has only USD 14 million set aside to cover the
cost of containment, including poultry slaughter and
reimbursement to farmers. The Mozambican poultry industry is
worth an estimated USD 75 million.

French Company invests in Mozambican Sugar
--------------


5. The French sugar company Tereos Group has decided to
invest USD 30 million in the Mozambican sugar industry.
Tereos Group, Europe's second largest sugar company, has
purchased 50 percent of the shares in Sena Holdings Limited,
which controls the Sena Company -- owner and operator of
Mozambique's largest and most modern sugar refinery. Sena
Holdings was previously owned entirely by a Mauritian
consortium.
La Lime