Date: 11 December 2007 MCLI takes pleasure in forwarding to you ...

Mozambique ranks among bottom 5 countries for Human DevelopmentAngola, Mozambique and Guinea Bissau have fallen in the ranking of the HumanDevelopment Index drawn up by the United Nations, and are now amongst the 16 worstclassified countries of the 177 nations analyzed by the UN.The UN Human Development Index, which for this year’s report is based on figures for2005, assesses countries not only based on their Gross Domestic Product (GDP), but alsobased on well-being indicators, such as life expectancy, education and health.According to the report, Guinea Bissau fell by two places in relation to last year and isthe worst-placed Portuguese-speaking African country, in 175th place. It is followed byMozambique in 172nd place (falling four places) and Angola in 162nd (dropped oneplace), countries which are placed in the low human development group. (the Investor,www.clubofmozambique.com)GOVERNMENTChinese chamber of commerce set up in MozambiqueThe Chinese Chamber of Commerce in Mozambique was established last Wednesday inthe Mozambican capital of Maputo. The chamber aims to help Chinese companiespromote their businesses in Mozambique and boost exchanges and cooperation.Chinese Ambassador to Mozambique Tian Guangfeng, who attended a ceremony tolaunch the chamber, expressed his hope that the chamber will strive to provide Chinesebusinesses with consulting services on policies, regulations and market information in thesoutheastern African country. (xinhua)ECONOMYCost of finance major constraint to competitivenessThe chairperson of the Confederation of Mozambican Business Associations (CTA),Salimo Abdula, speaking at the annual private sector conference last week, stressed thatthe top problem facing business, particularly in the light of the impending southernAfrican free trade area, was access to credit, and the cost of this money.The interest rates charged by commercial banks remained high, and persuading them tolend money in the first place was difficult. He warned that the regional integration ofSADC means that Mozambican companies will be competing with companies from othercountries where money is cheaper. He suggested that the government should assist bysetting up a Structural Fund to modernize Mozambican factories. (the Investor,www.clubofmozambique.com)Mozambique: The Business View- a report from Business Leadership SA andBrenthurst FoundationThe report "Mozambique: the business view" was released during November by BusinessLeadership South Africa and the Brenthurst Foundation. It is the first in a series ofpractical surveys on the business and investment climate of African countries that will beproduced over the next year.Company representatives interviewed for this report all agreed that the businessenvironment had improved significantly, particularly over the past two to five years.Many business people, Mozambicans in particular, highlighted how far the government –and the country – had come in a short time. But they also listed many challenges stillfaced by business operators, and proposed some solutions. Click here for the full report.(the Investor, www.clubofmozambique.com)Shoprite opens in Matola

The South African group Shoprite last Wednesday inaugurated its fifth supermarket inMozambique, in the southern city of Matola.The Matola supermarket represents an investment of eight million US dollars, and thechairperson of the Shoprite board, White Besson, expects a return on this investment ineight years.The Shoprite Matola operation will employ 129 people, and will also give an opportunityto 130 local farmers to sell their produce. (aim)10,000 km cable to improve broadband accessThe construction of a 10,000 kilometer undersea fiber-optic cable is to bring hugeimprovements to Mozambique's Internet and telecommunications access.For the construction of the connection a 70 million US dollar loan has been agreed by theInternational Finance Corporation (IFC), the African Development Bank (AfDB), theEuropean Investment Bank (EIB), Germany's development bank (KfW), and thedevelopment bank of France (AFD). Construction of the East African Submarine CableSystem will begin in December, and once fully operational will link 21 African countriesto Europe. The cable could transform telecommunications for 250 million Africans andsubstantially reduces costs for consumers and businesses. It is planned to complete theproject in time for the 2010 football World Cup in South Africa. (the Investor,www.clubofmozambique.com)Bureaucracy continues to hinder business in the countryBureaucracy continues to hinder the business climate in Mozambique and a minimum of10 documents are needed to export goods, the chairman of the Confederation ofEconomic Associations (CTA), Salimo Abdula said Wednesday in Maputo.Abdula pointed to bureaucracy as one of the main obstacles to corporate activities inMozambique, whilst speaking at the 10th Private Sector Conference.The chairman of the CTA compared the cost of doing business in Mozambique with thatof South Africa, concluding that in South Africa it was cheaper.“Exporting via the port of Durban (South Africa) costs US$1,085, whilst exporting viathe port of Maputo costs US$1,115,” Abdula noted. (macauhub)DONORSGermany invests in Mozambican schoolsThe Mozambican government, through the central bank, the Bank of Mozambique,signed on Monday a contract with the German government, through the DevelopmentBank (KFW) in terms of which the later is to grant five million Euros (about sevenmillion US dollars) for the building of new schools and purchase of the necessaryfurniture in southern Inhambane, and central Manica and Tete provinces in 2008.Education and Culture director of Construction Carlos Chissano told reporters of thedaily 'Noticias' that the money will be used to build 180 classrooms and houses for theteachers. By the end of this year, this institution is hoping to have built more than 1,400classrooms and a number of other infrastructures. (aim)Portugal supports Mozambican Interior MinistryThe Portuguese authorities announced last Wednesday a grant of 1.4 million Euros (abouttwo million US dollars) to Mozambique, for training and equipping the police,the fire brigade and the immigration authorities.Portuguese Ministry of State Administration, Paulo Caldas, said that his country isprepared to receive Mozambican staff from the three sectors to be trained as trainers.

They will return to Mozambique to train other Mozambican trainers, so that the countryno longer depends on foreign instructors.Caldas praised the training undertaken by ACIPOL, and said that other Portuguesespeaking countries are considering copying the Mozambican model for training their ownhigh ranking police officers. (the Investor, www.clubofmozambique.com)European Union funds reconstruction of railroad lineThe European Union (EU) is to donate 3.86 million euros to Mozambique to help financereconstruction of the Limpopo railroad, which links the port of Maputo and the bordertown of Chicualacuala, in Gaza province.According to Mozambican newspaper Notícias, work on the railroad is expected to cost 6million euros and will be carried out by Portuguese-Mozambican consortiumConduril/Marcleusa Construções and is expected to take 10 months.The project includes reconstruction of eight stations and respective water and energysupply systems. (macauhub)MINING AND ENERGYGovernment of Mozambique gathers national stakeholders to discuss sustainabledevelopment of biofuels in MozambiqueOn 5th and 6th December 2007, the Government of Mozambique, represented by theMinistries of Agriculture and Energy, will bring together national stakeholders for aworkshop on sustainable production of biofuels in Mozambique. The workshop is aresponse to the European Commission (EC) request for submission of Mozambicancomments on the EC proposed sustainability criteria. The workshop will include keycontributions from European representatives, national policy makers, private sector, civilsociety, as well as biofuel producers. The aim of the event is for government officials andnational stakeholders to jointly discuss the possible impact on Mozambique of theEuropean proposed sustainability criteria for biofuels. The workshop and its discussionswill also serve as technical input for policy makers in drafting a Mozambican policyframework for biofuels in 2008. For more information contactanna.locke@cepagri.gov.mz. (Solutions Biofuel Task Force,www.clubofmozambique.com)Solar panels to electrify rural areasA number of districts not covered by the country's power grid will receive solar panels in2008. This investment, by the National Energy Fund (FUNAE), is to cater mainly for thedistricts that are not yet benefiting from the power distributed by the publicly ownedMozambican electricity company EDM.Energy Minister Salvador Namburete said in Maputo on Sunday that this investmentcomes because 'there are schools without electricity in the country, health posts andmaternities, that have to function, even at night, using kerosene lamps or candles for thelack of electricity'. Less than eight per cent of the Mozambican population had access toelectricity in 2005, and the majority of those who did were living urban areas, and in therural areas only two per cent had access to this commodity. (the Investor,www.clubofmozambique.com)New Chairman of Cahora Bassa appointedA general meeting of the shareholders of Hidroelectrica de Cahora Bassa (HCB) haselected former Mozambican Transport Minister, Paulo Muxanga, chairman of the new

oard of directors to substitute Portuguese appointee Joaquim da Silva Correia, in linewith the company’s new shareholding structure.The Mozambican state now holds 85 per cent of the shares, and the Portuguese state 15per cent. Previously Portugal owned 82 per cent of HCB, and so there was always aPortuguese majority on the board, and a Portuguese chairperson.There are six Mozambican directors (Manuel Tome, Gildo Sibumbe, Max Tonela, IsabelGuembe, Domingos Torcida and Rosaque Guale), and two Portuguese directors(Fernando Marques da Costa and Alvaro Pinto Correia). (the Investor,www.clubofmozambique.com)Australian mining company says coal production to begin in 2010Coal production in Mozambique's Tete province is expected to be launched in 2010,according to concession-holder Riversdale Mining, of Australia. Riversdale is back byIndia’s Tata Steel, who recently invested US $100 million in the acquisition of a 35percent stake in two mining projects, in Benga and Tete.The Benga license, in the district of Moatize, Tete province, is estimated to have reservesof 1255 billion tons of coal, according to figures published by Riversdale.Last week, ArcelorMittal, the world’s largest steel maker, announced that it would gointo coal production in Mozambique, with an initial investment of US$2.5 million whichhas given the company a 35 percent share in Rio Minjova Mining and Exploration, in ajoint venture with Black Gold. (the Investor, www.clubofmozambique.com)Government to analyze tourmaline reserves in ManicaThe illegal mining for tourmaline stones, both by Mozambicans and by foreigners, hasled the Mozambican Ministry of Natural Resources to send a ream of geologists to thedistrict of Bárue, in Manica province, according to newspaper Notícias.In a dispatch dated November 12, the Natural Resources Minister, Esperança Biasordered the suspension of all activities related to the sale of precious and semi-preciousstones in the Bárue district, as well as issuing licenses for exploration in the region.The move, according to the dispatch, “aims to reorganize the processes for licensing, aswell as improve the system for inspection of license-holders for selling mining productsfrom the Bárue district." (macauhub)LEGAL NEWS BY MOZLEGALNew Regulations for Tourism PublishedLast week, new regulations for tourism activities were officially announced to the generalpublic. These regulations, all of which have officially entered into force, cover: TourismEntertainment, Tourism Transport, Tourism Accommodation and Restaurants and theRight to Periodic Habitation.The Regulation of the Right to Periodic Habitation establishes the conditions for the useof time share and fractional ownership in Mozambique, along with other forms of touristaccommodations. It establishes also the procedures to be followed and the requirementsfor the setting up of legal fractional systems for tourism developments such as priorapprovals and financial guarantees, among others. This new regulation undoubtedlyincreases opportunities for tourist accommodation projects and making the conditions fortourism investment more flexible and secure. For more information, contact Mozlegal’sElisabete Silva, elisabete.silva@mozlegal.com.Assembly passes new tax codes

The Mozambican parliament, the Assembly of the Republic, last Thursday passed thefirst reading of a government bill amending the country's tax codes.Under the bill anyone who earns, in a year, up to 36 times the statutory monthlyminimum wage is exempt from income tax, thus annual incomes of up to 59,220 meticais(slightly less than 2,500 US dollars) will pay no tax.On higher incomes, tax rates begin at 10 per cent and rise to 32 per cent. Only incomes inexcess of 1,512,000 meticais (62,500 dollars) a year are taxed at the highest rate.Pensions too will be entirely exempt from income tax.But for the first time, interest earned on deposit accounts, and on income from securitiesquoted on the Mozambican stock exchange will be taxed (at a rate of 10 per cent). Thisexplains why, despite reducing the tax burden on most citizens, the government isconfident that the new income tax code will raise more money than the old one. (theInvestor, www.clubofmozambique.com).Value-added tax undergoes changes under the new tax codeUnder the new tax code passed by the Mozambican parliament last Thursday, the Valueaddedtax (VAT) has undergone alterations. The new code, however, retains exemptionsfor key industries. Thus the sale of sugar, vegetable oil and soap, and the import ofmachinery, spare parts and raw materials for companies making these goods will remainexempt from VAT until the end of 2010.But the VAT exemption on rent of buildings for industrial or commercial purposes hasbeen abolished, with the exception of buildings in rural areas. So as from January 2008,the owners of the vast amount of rented office space in Maputo will have to pay VAT atthe standard rate of 17 per cent. The bill slashes VAT by 60 per cent on public works,such as roads, bridges and dams. (the Investor, www.clubofmozambique.com)CAL offers companies specific training sessions on new labor lawFrom 17 August to 24 October 2007, the Labor Arbitration Center (CAL) held severalseminars, in Maputo and throughout the provinces, to raise awareness about the newLabor Law (Law No. 23/2007, of August 1), which entered into force on 31 October2007. The Minister of Labor, Maria Taipo, was present at the opening seminar onAugust 17, and the Vice Minister of Labor was present at the seminar in Inhambane.CAL also organized training courses on the Labor Law according to the needs of some ofthe center’s clients. We are available to our customers to organize training courses withintheir companies, in particular, training in the area of labor relations in accordance toneeds of the company and its employees. For more information, contact:cal@arbitrationmz.com.OVER THE BORDERRessano Garcia border post open 24 hours a dayMozambique's main border post with South Africa, at Ressano Garcia, will operate 24hours a day through the month of December and until 15 January.Making this announcement, the southern regional director of Mozambican Customs,Gonçalves Mandava, said the measure is intended to speed up the clearance ofmerchandise, and the movement of tourists and other travelers during the festiveseason.This, he added, means that the number of customs and immigration staff and policeofficers on duty at Ressano Garcia over the next month and a half must be increased. (theInvestor, www.clubofmozambique.com)

PMAESA Conference in Seychelles, 10-14 December 2007The Port Management Association of Eastern and Southern Africa (PMAESA) will holdan Africa Ports/Maritime Conference in Seychelles on December 10-14. The conference,titled, “African Ports towards African Union Integration” is for those with a keen interestin Ports in East and Southern Africa. For further enquiries and registration, contactJerome Ntibarekerwa at +254 41 2223 245. Click here for Conference InformationBrochure. (the Investor, www.clubofmozambique.com)TENDERSDutch Government starts new funds for pilot investment projectsIn a Press Release received by the Investor, it was announced that local companies whowant to set up a pilot investment in Mozambique with a Dutch or other Dutch-registeredbusiness partner can now tender for financial support for up to 60% of the project-costs.This financial support is provided through the Dutch ‘Programme for Co-operation withEmerging Markets’ (PSOM), with the objective to promote sustainable economic andprivate sector development. Maximum project size can be about EUR 825,000.The new qualification round started 3 December 2007. On 20 February 2008 at 3.00 PM,the original proposal has to be received by the EVD (the Dutch government agencyresponsible for PSOM) in the Netherlands. The required documents are available atwww.psom.nl. the Investor, www.clubofmozambique.com)THE INVESTOR by Adrian FreyThe #1 Newsletter for top business, investment, and legal news in MozambiqueNovember 27 200774 th IssueMOZAMBIQUE REVIEWCahorra Bassa will have only Mozambican directors after payment of debt toPortugalPayment of the US$700 million to Portugal will be made from the operating revenues ofthe Cahora Bassa Hydroelectric Dam (HCB) and not one cent would come from the statebudget, said Mozambican energy minister, Salvador Namburete in Maputo last Tuesday.Speaking to journalists on the preparations of the official ceremony for payment of thedebt and alteration to the shareholder structure of HCB, Namburete said that theconsortium made up of Portuguese bank BPI and France’s Calyon, which will loan themoney to Mozambique to pay Portugal, would not be involved in the dam’s management.On November 26, the Mozambican government will transfer US$700 million and, on thesame day, in a general meeting, the company’s new board of directors will be chosen,made up entirely of Mozambicans, according to Namburete. (macauhub)SADC regional integration defendedThe idea that competition from South Africa will kill off Mozambican industries isgreatly exaggerated, Tomaz Salomao, the Executive Secretary of the Southern AfricanDevelopment Community (SADC), told the Mozambican parliament, the Assembly ofthe Republic, last Thursday. "South Africa wants greater productive capacity in its

neighbors, because it doesn't want citizens of other SADC countries to come pouringover its borders", Salomao stressed."In my opinion, Mozambique will emerge a winner from regional integration", Salomaosaid. And while it was true that many Mozambique small and medium companies mightnot be able to compete against South African companies, "they can certainly competeagainst Malawian, Zambian or Tanzanian companies." (aim)Mozambique a valuable model- Aga KhanThe Aga Khan, spiritual leader (Imam) of the Ismaili Muslims, last week praisedMozambique as a model of successful post-conflict development and hailed the country'seconomic performance and tenacity in overcoming difficulties. "In an era whenfrustration often breeds cynicism concerning the possibility of progress, Mozambique canprovide inspiration and encouragement to other post-conflict societies," he said. The AgaKhan noted that Mozambique’s growth is one of the best in Africa. “Recent progress hasbeen built on sound principles - and for that reason, Mozambique has become a valuablemodel for the whole of the developing world," he said.The Ismaili leader made the remarks at an official banquet in Maputo, held in his honorby Mozambique's President, Armando Guebuza, who invited him to the country. (the newnation)Mozambique’s population is 20.4 millionMozambique’s population stands at 20.5 million, according to provisional census resultsreleased Friday by the National Statistics Institute (INE).As in previous censuses, women outnumber men in Mozambique, with 10.7 millionfemales to 9.8 million males in the latest population survey.Provisional census statistics show that Mozambique’s population has grown by around28% from 10 years ago, when there were 16.1 million people in the country. Annualpopulation increase stands at 2.4 percent.The most densely populated regions of the country are the provinces of Nampula andZambezia, which together have about 40 percent of the total population. Mozambique’sfive most populous provinces are Nampula, with 4 million people, Zambezia, with 3.9million, Tete, Sofala and Cabo Delgado. (macauhub)GOVERNMENTSouth Africa and Mozambique sign treatySouth Africa and Mozambique on Tuesday signed a treaty for the establishment of a JointPermanent Commission on Defense and Security (JPCDS).Speaking at the signing of the agreement, SA Defense Minister Mosiuoa Lekota saidcooperation on defense and security between SA and Mozambique was critical "if SA isto host a successful and secure 2010 FIFA World Cup tournament in two year's time".The agreement would see the two countries co-operate in the fields of defense andsecurity, as well as the exchange of information on the activities and movement ofelements involved in crime such as drug smuggling and human trafficking. (iol)

Mozambique extends voter registrationThe Mozambican government says the registration of voters in the country has beenextended to 15 March 2008.Initially, the exercise was scheduled to last for just 60 days from 24 September to 22November 2007, but that was on the assumption that voting in the provincial electionswould be held 16 January. A constitutional amendment passed last week by theMozambican parliament, has made it possible to postpone these elections, and they willnow probably coincide with the parliamentary and presidential elections in late 2009.The government decree, extending the voters' registration period, states that registrationwould be interrupted 16 December for the festive season, and will resume 14 January.(the Investor, www.clubofmozambique.com)ECONOMYPakistan trade team to visit Mozambique in FebruaryHonorary Consul General of Mozambique Khalid Tawab has said that a high-poweredPakistan trade delegation will visit Mozambique in February 2008 to exploreopportunities of increasing two-way trade and investment. He said that two-way tradewas almost negligible and it could be increased manifold with little efforts.Khalid Tawab pointed out that the Mozambique industrial sector was underdevelopedand to meet the local requirement, it imported goods from across the world. Mozambiquealso provides excellent opportunities in investment, and was to provide land free of costfor establishing industrial units, he said. He said in addition to exporting goods toMozambique, Pakistan could benefit from its location and could use Mozambique forexporting goods to other countries in the vicinity. (the Investor,www.clubofmozambique.com)New structure for second largest bankMozambique's second largest bank, the BCI- Fomento, after lengthy negotiations, has anew ownership structure, as of last Thursday, when the long-awaited sale of shares to theMozambican group INSITEC was finalized.The largest shareholder is the Portuguese state bank, the Caixa Geral de Depositos(CGD), whose holding rises from 42 to 51 per cent. A second Portuguese financialinstitution, the BPI (Portuguese Investment Bank) holds 30 per cent, while INSITECholds the remaining 19 per cent. This is the result of the sale of the shares held by thecompany SCI, led by former Finance Minister Abdul Magid Osman. INSITECchairperson Celso Correia, at the age of just 29, will take over from Magid Osman asnon-executive chairperson of the BCI board. Ibraimo Ibraimo, takes over as head of anexecutive commission to run the bank. (the Investor, www.clubofmozambique.com)Guebuza on Public/Private PartnershipMozambican President Armando Guebuza stressed in Kampala last Thursday the need toestablish partnerships between the public and private sectors to promote development. Headded, however, that this implies knowledge of the role each sector has to play, andgiving it its due value.Guebuza said it is the primary responsibility of governments to design policies that createa good business environment by granting incentives and rewards to investors.For its part, the private sector should provide the know-how, technologies and thenecessary finance to make partnership effective. (allafrica)Industry contributes to just 12 percent of GDP total

Mozambique’s industry has a weighting in the country’s gross domestic product (GDP)of just 12 percent, due to a lack of investment in the manufacturing industries, thenational director for Industry, Sérgio Macamo said last Thursday in Maputo.The poor level of influence of Mozambique’s industries on the country’s developmentreflects the situation of most African nations, in which industry contributes less than 15percent, and in some cases less than 5 percent, said Macamo.The focus on exporting raw materials, rather than on the manufacturing sector, is one ofthe causes of the weak impact of industry on the performance of African economies, hesaid. In the Mozambican case, the situation is made worse because most of the country'smanufacturing units are not in operation, Macamo said. (macauhub)Sugar production expected to fall short of targets this yearMozambican sugar production in Mozambique this year will fall short of its 272,000 tontarget, the Center for Agricultural Promotion (Cepagri) said Tuesday, in its report on thethird quarter.According to the report, sector production will total just 265,000 tons, which is 7,000tons less than projected. The deficit also affected cane production, in which the 2.2million tons were projected for this year, and actual production will total 2.18 milliontons.Despite not meeting these targets, “the country will be able to meet the needs of thenational market and the quotas from which it benefits in preferential markets. (theInvestor, www.clubofmozambique.com)Glassware factory to resume production next yearThe glassware company Vidreira, located in the southern Mozambican city of Matola,which has been paralyzed for the best part of a decade, will resume production in mid-2008, according to the National Director of Industry, Sergio Macamo.Vidreira told AIM that a South African group, which he did not name, is taking over thefactory, the only plant in Mozambique which can produce bottles.Macamo declined to say how much money the South Africans would invest in Vidreira.According to Macamo, when Vidreira is again rehabilitated it will provide bottles for themajor Mozambican consumers of glassware - notably, the beer company Cervejas deMocambique, and the local branch of Coca-Cola. (aim)Cotton reference price only in 2008The director of the Mozambique Cotton Institute (IAM), Norberto Mahalambe, hasregretted that so far the producers and buyers of raw cotton have been unable to agree areference price. The IAM introduced a reference price (rather than a legally bindingminimum price) for the first time this year.But Mahalambe told AIM that he hoped a consensus will be reached when negotiationsbetween representatives of the producers and buyers of cotton resume in April.Mahalambe said that the producers are proposing a selling price of 6.2 meticais (about 26US cents) a kilo of raw cotton, while the buyers were prepared to offer only six meticais.At the end of the meeting, the buyers upped their offer to 6.1 meticais.The gap had narrowed dramatically since the start of this year's discussions. (the Investor,www.clubofmozambique.com)Banks making huge profitsThe performance of Mozambican banks during the 2006 financial year was not onlybetter than the previous year's results, but also exceeded the expectations of the banksthemselves. According to the 2007 survey of the banking sector, published jointly by the

Mozambican Association of Banks (AMB) and the consultancy company KPMG, the realgrowth in the sector in 2006 was a remarkable 136 per cent. Some factors contributing tothe success, according to Hermenegildo Gamito, chairperson of the AMB, included"more prudent" intervention by the central bank in terms of interest rates and theexchange rates, and improvements in the management of the commercial banks. Anotherfactor is the strong growth in the Mozambican economy; Gross Domestic Product grewby 9.6 per cent in 2006. (the Investor, www.clubofmozambique.com)DONORSBeijing to send farming and medical specialists to MozambiqueAround one hundred Chinese specialists and young volunteers are to travel toMozambique to provide agricultural, medical and educational services, the Chinese statepress reported last Tuesday. The visit is part of the cooperation activities between Chinaand Africa, that the Chinese president Hu Jintao announced in Beijing in November2006, during the head of state and government summit of the China-Africa CooperationForum.As part of the Chinese cooperation program for Africa, in 2006 China cancelled millionsof dollars of debt owed by 28 African countries and pledged to provide US$5 billion inpreferential loans to the continent, as well as academic and professional training to15,000 African workers. The plan also includes greater openness of the Chinese marketto African products and construction of five areas of economic cooperation in Africa.(macauhub)MINING AND ENERGYRiversdale to raise USD $205 million for Mozambique MineRiversdale Mining Ltd., the Australia-based coal-mining company backed by India's TataSteel Ltd., said it will sell shares worth as much as A$235 million (the equivalent ofabout $205 million US dollars) to fund the development of a project in Mozambique.Riversdale will issue as many as 25.3 million shares at A$9.30 each, mostly toinstitutional clients of Hartleys Ltd. and RBC Capital Markets, the Sydney-basedcompany said last week in a statement to the Australian Stock Exchange. (the Investor,www.clubofmozambique.com)Fuel prices rise again in MozambiqueThe Mozambican authorities have increased fuel prices with immediate effect followingcrude oil price hikes on the world market.A press release from the Ministry of Energy on Thursday (22/11) said the price of petrolrose by nine percent from 30.14 to 32.84 meticais per liter ( 24.3 meticais=One USD).Diesel goes up from 29.46 to 31.02 meticais a liter, an increase of 5.3 per cent, whilekerosene rises by 2.6 per cent from 23.53 to 24.14 meticais a liter).Liquefied petroleum gas is up by 5.7 per cent with a kilo now selling at 44.05 from 41.66meticais. (the Investor, www.clubofmozambique.com)Mozambique: Energem Resources lists on London Stock ExchangeA South African renewable energy company has decided to press ahead with a listing onLondon stock exchange (Aim), despite scrapping plans for a new fundraising in light ofthe turbulent markets. Energem Resources, which is backed by RAB Capital, the privateequity firm, started planning a London listing in May to raise money for its investmentsin farming jatropha, an inedible plant with seeds that can be turned into biofuel.

Brian Menell, the company's chairman, who is a former De Beers executive, isunderstood to believe that London-based investors have a greater interest in renewableenergy projects and a greater understanding of Africa than investors in other markets.The decision to invest in the jatropha project in Mozambique follows the company'smoves to dispose of its mining interests. It also has an ethanol production facility inKenya. (Solutions Biofuel Task Force, shannon.gopaul@clubofmozambique.com)LEGAL NEWS BY MOZLEGALBill on human rights commissionThe Mozambican parliament, the Assembly of the Republic, on Wednesday passed thefirst reading of a government bill to set up a National Human Rights Commission(CNDH). Introducing the bill, Justice Minister Esperanca Machavela stressed the state'srole in protecting citizens against violations of their rights. The bill states that the CNDHwill receive and investigate complaints from citizens about alleged violations of theirrights. Should its investigations turn up evidence that a crime has been committed, it mustsend the case to the Attorney- General's Office for prosecution.The issue of how to appoint the CNDH members will now be discussed again within theparliamentary commissions before the bill comes back to the plenary for its secondreading. (allafrica)Security companies write to GuebuzaBoth the private security companies, and the trade union representing security guards,have written to Mozambican President Armando Guebuza asking him to seek an opinionfrom the Constitutional Council as to whether the new regulations governing this sectorof activity are in violation of the constitution, reports the latest issue of the Maputoweekly "O Pais". The new regulations governing security companies were approved inApril, but not published until September. They amazed the companies because theysought to change completely their status.One key clause determines that, in all security companies, the majority of the shares mustbe owned by Mozambican citizens. All managers and directors of the companies mustalso be Mozambicans. (allafrica)TOURISMSustainable management of conservation areasMozambican Tourism Minister Fernando Sumbana has reiterated the importance ofupgrading the management of conservation areas to the highest standards to allowsustainable use of the country's natural resources.He was speaking in Maputo last Wednesday at the opening of a conference on"Sustainable Funding for Conservation Areas" that is to work out a strategy for suchareas. He explained that the country is striving to produce a national policy forconservation areas that will guide the management projects.Sumbana said that the Mozambican state will spend about three million US dollars a yearon these activities, and foreign donors will add another two million US dollars for thesame projects in parks and reserves. (allafrica)Mozambique: Africa ‘Hot Spot’ in Somak Holidays brochureThe UK based award-winning Africa specialist, Somak Holidays (www.somak.co.uk) hasrecently unveiled its latest Africa brochure. The brochure has been exclusively producedwith Virgin Atlantic. Highlights include new safaris in undiscovered gaming parks in

Southern Tanzania, brand new eco-tours, a wider variety of boutique lodges in Kenya, reemergingdestinations such as Mozambique and more affordable Namibia tours.Mozambique has made a welcome return to Somak Holidays’ Africa program and thenew brochure features suggested itineraries that allow holiday-makers to discover thecountry’s excellent diving and exceptional gaming lodges. After a comparative regressionin tourism in the 1990’s, Mozambique is re-emerging as a premier tourist destination andSomak predicts it will be Africa’s holiday hot-spot for 2008. (the Investor,www.clubofmozambique.com)OVER THE BORDERMugabe will attend EU-Africa summitZimbabwe's President Robert Mugabe will attend the European Union-Africa summit onDecember 8-9 in Lisbon, the Lusa news agency reported Tuesday."Yes, I'm going," Mugabe said when questioned by Lusa.Mugabe, who has ruled Zimbabwe since its 1980 independence from Britain and isaccused by the West of stifling democracy and leading his southern African nation toeconomic ruin, had said he meant to attend the Lisbon summit, although he faces an EUtravel ban. British Prime Minister Gordon Brown has vowed that neither he nor anysenior cabinet member will attend if Mugabe turns up.Several other European countries have rejected inviting Mugabe, accused of human rightsviolations. (the Investor, www.clubofmozambique.com)THE INVESTOR by Adrian FreyThe #1 Newsletter for top business, investment, and legal news in MozambiqueNovember 20 200773 rd IssueEDITOR’S NOTEDear readers,Watch out for the first edition of the Mozambican Traveler, the free electronic magazinefrom Club of Mozambique! Our first issue will appear the end of November, just in timefor that last minute booking for the holiday season. Tour operators and travel agentsspecializing in the area are welcome to contact us with information about their operationsand activities. In addition to news from the travel industry, we would like to include ourreader’s own experiences. If you would like to subscribe emailMTsubscribe@clubofmozambique.com. For more information on how to contributearticles or advertise in our publication, contact MTeditor@clubofmozambique.com.Sincerely,Adrian FreyMOZAMBIQUE REVIEWSon of ex-Mozambique leader dies amid murder probe

The eldest son of former Mozambique President Joaquim Chissano has died while underinvestigation for possible involvement in the 2000 murder of a journalist, state radioreported on Monday. The Mozambican businessman, Nyimpine Chissano, died in theearly hours of Monday, victim of a stroke (or cerebrovascular accident (CVA)).Mozambican authorities have been investigating Chissano's son since his name surfacedin connection with the gangland shooting of Carlos Cardoso, who was the Africannation's best-known investigative journalist.Two people tried in 2003 for the murder accused Nympine Chissano of orderingCardoso's assassination. He denied involvement. (the Investor,www.clubofmozambique.com)Doing Business Reformers’ Club honors five African countries for making businesseasierThe top Doing Business Reformers’ Club honors in sub-Saharan Africa went to fivecountries that implemented three or more reforms in the past year, making it easier forentrepreneurs and businesses to operate and contribute to economic development.The International Finance Corporation (IFC) and the World Bank awarded Ghana,Kenya, Mozambique, Burkina Faso, and Mauritius top honors.One of the reforms that Mozambique was recognized is the replacement of legislationdating from 1888 with a new commercial code that introduces stricter corporategovernance rules and strengthens the rights of minority shareholders. The new code alsomodernizes the business registration process, cutting provisional registration and makingnotaries optional. Start-up time for new firms fell by almost 3 months. Specialized judgesfor commercial cases should improve court efficiency. (the Investor,www.clubofmozambique.com)Government reviews HIV/AIDS strategyThe Mozambican government has decided to review its strategy for preventing the spreadof HIV/AIDS after finding that the current plans are not effective.Health Minister Ivo Garrido, speaking in his capacity as spokesperson of the SteeringCouncil of the National AIDS Council (CNCS), declared that the current strategies arenot yielding the desired results. As for when the new strategy will be presented, Garridosaid that, although the Steering Council does not take decisions, “It is our wish that, atleast by early next year proposals on coordination will exist”.Garrido said that a new report on HIV prevalence in the country is due within the nextfew weeks. The figures currently in use are somewhat out of date, since they are drawnfrom the epidemiological surveillance round of 2004, which estimated the HIVprevalence rate at 16.2 per cent among adults aged between 15 and 49. (aim)GOVERNMENTGovernment receives praise for improved tax collectionThe International Monetary Fund (IMF) last Monday praised Mozambique for its"continued robust economic growth" in 2007 so far, with "good prospects" for the rest ofthe year. The Assistant Director of the IMF's African Department, Jean Clement, hadparticular praise for the government's tax collection. Clement noted that by the end ofSeptember the government found itself in a much better fiscal position than expected.More taxes, both direct and indirect, than programmed had been collected. (Indeed, thegovernment expects the extra revenue raised to reach 800 million meticais - 32 millionUS dollars - by the end of the year, which has allowed it to adjust the 2007 budgetaccordingly). "Tax administration has improved, notably in speeding up the registration

of taxpayers, and in increasing the inspections of large taxpayers", said Clement. (theInvestor, www.clubofmozambique.com)Portuguese parliamentary delegation in MaputoThe chairperson of the Portuguese parliament, Jaime Gama, said on Thursday that hisinstitution wants stronger political and institutional ties with its Mozambican counterpart,the Assembly of the Republic, to enhance friendship between the two countries. Gamawas speaking in Maputo, after a courtesy meeting with the Mozambican Minister in thePresidency for Parliamentary Affairs, Isabel Nkavandeca. For her part, Nkavandeca said“We wanted to know about the legislative process in the Portuguese parliament, andabout their willingness to help ours in every aspect”. (aim)ECONOMYCountry to have favorable economic climate in 2008Mozambique’s economy is to benefit from a favorable climate in 2008 despite aprojected balance of trade deficit due to the price of fuel, an IMF official said in Maputolast Monday. On giving a brief assessment of the performance of the economy, fromJanuary to September this year, Jean Clément, the deputy director of the IMF AfricaDepartment said that Mozambique had robust economic growth, adding that for 2007growth of some 7 percent was expected, which would be one of the highest levels inAfrica. Clément also said that optimism for 2008 was driven by the fact that, in line withthe Plan of Action for Reduction of Absolute Poverty (PARPA) II, the government hadagreed to move ahead with the second stage of reforms, in order to improve the businessclimate. (macauhub)Investment approved so far this year around seven billion dollarsA total of 87 projects worth about 7.3 billion US dollars were approved by theMozambican government between January and October this year, according to theInvestment Promotion Center (CPI).The largest projects are in the sectors of mineral resources, agriculture and agro-industry,and industry, among them a coal mining project in the central province of Tete, an oilrefinery in the northern province of Nampula, and a project to produce bio-ethanol in thesouthern province of Gaza.Investment projects came from a total of 23 countries from Africa, the United States,Europe, Asia, the Middle East and Australia (the Investor, www.clubofmozambique.com)Mozambique was country with greatest growth between 1996 and 2005Mozambique was the African country to post greatest diversified and sustained economicgrowth between 1996 and 2005, followed closely by Sao Tome and Principe and CapeVerde, the World Bank said last Wednesday.With average annual growth of 8.3 percent between 1996 and 2005, Mozambiqueexceeded Rwanda (7.6 percent), Sao Tome (7.1 percent) and, also, Botswana andUganda, in the list of “diversified” economies, according to the Development Indicatorsfor Africa 2007 report. The “diversified economies” are one of the groups into which theWorld Bank divided the countries of the African continent, in the analysis of around 25years of statistics, and the other two categories are “oil economies” and “low growtheconomies.” (macauhub)Sesame production scaled up in Central Mozambique

Peasant farmers in Chibabava district, in the central Mozambican province of Sofala,have embarked on large scale production of sesame, as a cash crop, as part of a projectlaunched in 2004. Starting in that year, farmers produced sesame in small areas, forhousehold consumption, but they are now looking at it as a cash crop for the local marketand to sell to Indian and European trading companies.Sesame has an advantage over many other cash crops, because it is easy to handle, andfetches higher prices than other crops, including cotton.In the 2006/2007 campaign, peasants produced 550 tons of sesame, up from 250 tonsproduced in the 2005/2006 campaign, and for the next harvest, the peasants are expectedto produce 900 tons. (cpi)Fruit processing factory for InhambaneA fruit processing factory should begin operations in December in the southernMozambican province of Inhambane, the Provincial Director of Agriculture, PedroZucula, has told AIM.Although a wide variety of fruit grows abundantly in Mozambique, most of the tinnedfruit, jams, preserves and fruit juice consumed in the country is currently imported,mainly from South Africa. Zucula said the factory is budgeted at 700,000 euros (almost amillion US dollars). The money comes from the government’s own AgriculturalPromotion Fund. Zucula said that, when working at full capacity, the factory will be ableto process five tons of fruit an hour. (aim)Mozambique sees Pemba challenging African PortsMozambique's state-owned Ports and Railways Company (CFM) said on Tuesday itplanned to upgrade its bustling port in Pemba and hoped it would become a shippinggateway for the eastern African region. The refurbishment of the port in the northernprovince of Cabo Delgado is expected to cost several million dollars and be completed by2009, according to a statement by, Orio Benzane, a CFM official. The company expectsthat Pemba, which has seen an eight-fold increase in traffic since 2006, will be able tohandle large cargo ships and compete with rival ports at Dar es Salaam in Tanzania andMombasa in Kenya after its redevelopment. Benzane said the Pemba port was ideallypositioned to become one of east Africa's most important ports largely because of arelatively deep harbor that did not require dredging. (the Investor,www.clubofmozambique.com)DONORSDonors pledge continued supportForeign donors have pledged continuing financial support for the Mozambicangovernment’s public sector reform program. Donor and government representatives metin Maputo last Thursday in the “Partnership Committee” established to oversee thereforms. At the end of the meeting, donor spokesperson Miguel Ronda told reporters that22 million US dollars in funding is guaranteed for next year.“We shall continue to finance the public sector reform. We have a memorandum onfinancing with the government which goes up to 2011”, said Ronda. (the Investor,www.clubofmozambique.com)World Bank supports macroeconomic management projectsThe World Bank said last Tuesday in Washington it had approved US$70 million infunding for macroeconomic management, governance and economic developmentprojects in Mozambique, with the aim of fighting poverty.

Public administration will be the main beneficiary of the funding, in order to boostmacroeconomic management, with around 40 percent of the total investment, accordingto the indicative program announced in Washington.The projects included are the continued application of the state financial administrationinformation technology (e-SISTAFE), strengthening of tax authorities, creation of a stateprocurement center and increasing the coverage and efficiency of internal and externalauditing organisms. (macauhub)MINING AND ENERGYFormal transfer of control of Cahora Bassa dam 26-27 of NovemberThe Mozambican government has confirmed that the formal transfer of control of the2,075 MW Cahora Bassa hydroelectric dam in the central province of Tete will take placeon the 26th and 27th of November.Under the agreement, Mozambique will pay 700 million dollars for 67 per cent of theshares in HCB, raising the Mozambican state's holding in the company from 18 to 85 percent, while the Portuguese state retains the remaining 15 per cent. Under Mozambicancontrol, HCB will, for the first time, start paying taxes to the Mozambican state,according to Government spokesperson, Luis Covane. It would also preferentially sourcegoods and services from Mozambican suppliers, and provide employment forMozambican workers. (the Investor, www.clubofmozambique.com)ArcelorMittal Signs Memorandum of Cooperation with GovernmentArcelorMittal, the world's largest steel company, on Tuesday announced it had signed aMemorandum of Cooperation with the Republic of Mozambique. The agreement willhelp stimulate economic growth and further the development of the steel industry andmining sector for the citizens of the Republic of Mozambique.The Memorandum aims to strengthen cooperation between the Parties through thedevelopment of certain synergies and further investment in the primary and downstreamsteel industries, as well as mining of raw materials in the form of iron ore, and coal withspecific focus on metallurgical coal. With regards to downstream, ArcelorMittal plans tobuild a new bar rolling mill with a yearly capacity of 400,000 tons. (businesswire)National electricity grid expandsBy the end of 2006, Mozambique’s national electricity grid, based on the Cahora Bassadam on the Zambezi, provided a permanent source of power to the capitals of 53 of thecountry’s 128 districts, Energy Minister Salvador Namburete told the Mozambicanparliament, the Assembly of the Republic, last Wednesday.Namburete said that four districts were supplied from the grids of neighboring countries(Malawi and Zimbabwe), while three took their power from electricity generated bynatural gas in Inhambane province. The remaining 67 districts depended on dieselpoweredgenerators or solar panels. This year a further 10 district capitals are beingconnected to the national grid, and the planned figure for 2008 is 11, said Namburete.(the Investor, www.clubofmozambique.com)Pan African Resources says Manica gold project drilling confirm expectationsPan African Resources PLC said results from the ongoing drilling program at the Manicagold project in Mozambique continues to confirm its expectations in terms of bothvolumes and grade of the deposit.

The gold mining and exploration company said the final geological model is expected toreach completion by January, upon which final mine optimization will be completed inhouse.(hemscott)No negative impact from oil explorationProspection for oil and natural gas off the coast of the central Mozambican province ofSofala is unlikely to endanger the environment or the livelihoods of fishermen, reportsMonday's issue of the daily 'Noticias'.These findings are contained in a preliminary report on a study on the impact of seismicactivities in the Sofala and M-10 offshore blocks, conducted by staff of the environmentalstudies company "Impacto", divulged in Beira, on Friday. (aim)LEGAL NEWS BY MOZLEGALBilateral investment treaties – Mozambique ranks highMozambique currently ranks in the top three of SADC countries in terms of bilateralinvestment treaties (BITs) concluded. Only South Africa and Mauritius have concludedmore BITs. BITs are agreements between two countries to support and protectinvestments by companies between these two countries. Investors can rely on BITs toprotect their investments against political risks, such as expropriation. Mozambique hasconcluded 12 BITs so far. These cover main investing countries such as the USA,Switzerland, the UK and South Africa. For more information contact Mozlegal’sCommercial Department at geert.klok@mozlegal.com.Authorities Ban Precious Stone Mining- Báruè, Manica ProvinceThe Mozambican Ministry of Mineral Resources has cancelled all licenses granted for themining and selling of precious stones tourmaline and rubilite, in Báruè district, Manica.The discovery of deposits of these precious stones near the village of Nhampassa resultedin a “gold rush” of miners and traders reported daily Notícias. In a dispatch datedNovember 12, the Minister of Mineral Resources, Esperança Bias, outlawed all mining orsale of precious stones in Báruè. Any person found in possession of these minerals orfound trying to sell them will face heavy fines, and the stones will be confiscated. So faralready 10 kilos of tourmaline and rubilite have been confiscated. For more informationregarding mining licenses contact Mozlegal at geert.klok@mozlegal.com.Labor Law must be obeyed by allMozambique's labor legislation "must be obeyed by all", declared Labor Minister HelenaTaipo last Thursday. Answering questions in the Mozambican parliament, the Assemblyof the Republic, about the inhuman conditions at Golden Fields, a company owned byformer foreign minister Leonardo Simao and his wife Josefina, Taipo stressed"Employers must not relegate the conditions of their work force to a secondary position".Golden Fields’ workers were hired from the central provinces of Tete and Manica, withpromises of decent accommodation: but once in the district of Moamba, Maputoprovince, they found they had to live in inhumane conditions.Taipo said the General Labor Inspectorate visited the company and found "grossviolations of the law that are assaults against health and human dignity". (the Investor,www.clubofmozambique.com)TOURISMMozambique to privatize Maputo Reserve

Mozambique plans to invite private companies to build hotels and other facilities aroundthe Maputo Reserve to try to spur tourism, a Tourism Ministry official said lastWednesday. The country hopes that by encouraging international hotel chains to provideluxury accommodation it will attract bigger tourism spenders.The government will soon launch an international tender for the nature reserve, which is120 km (75 miles) south of the capital Maputo and about 10,000 hectares in size.In July, the government said it would invest $54 million to revamp national parks andwildlife that have struggled to recover from a 17-year civil war which ended 15 yearsago. (the Investor, www.clubofmozambique.com)OVER THE BORDERMore clarity over tax treatmentRatification of a double taxation avoidance treaty between South Africa and Mozambiquewould provide South African businesses with certainty over the tax treatment of theirinvestments, South African Revenue Service manager of international treaties Ron vander Merwe said last week. The treaty before SA Parliament took more than two years tofinalize because of difficulties in reaching agreement over the Portuguese text. Keyelements of the treaty include the elimination of double taxation, the reduction ofwithholding tax rates and prevention of fiscal evasion.South African companies have invested heavily in a number of projects in Mozambique.Large South African projects include the $14bn Sasol gas pipeline, a $50m SAB Millerinvestment, a $63m project by Illovo Sugar, a Xinavane investment of $70m, a CDMinvestment of $22m and a $15,5m investment by McCormack.(the Investor,www.clubofmozambique.com)