Construction

Background

Like many industries in Mozambique, the construction sector is still a relatively new one. After the independence from Portugal significant changes to the regulation of land, ownership and construction of property affected a once thriving industry. Visitors to Maputo, the country's capital are often surprised at the level of development, more advanced than most African cities in comparison but in a state of disrepair.

Interest in construction began to resurface only recently. Stimulated by the interest of the extractive sector, rising disposable incomes, material availability and a sudden low supply of key infrastructure particularly residential construction. This shortage of housing within urban areas has allowed rental rates to skyrocket.

Across the main urban centres, the signs of this rebirth are obvious. Houses are being removed and replaced with apartment blocks as a new generation of owners buy property and consider the benefits of living close to work.

Development Challenges

Construction is still a much smaller part of the GDP for the following reasons:

Most funding for construction comes from donor to build roadways, schools and dams. Second to this, is private housing for the luxury market. Construction for about 75% of the urban centres is for low cost informal housing

This has an effect on the kind of materials, services and quality that is available. There is almost always a limitation with respect to these and compromises are unfortunately made

As a result construction materials are imported rather than made locally. Only, the most basic materials such as cement is manufactured

There is persistent problem with the level of skills in the building industry as compared to other countries. People in the trade have learned on the job and not through formal study which limits the quality of their work and knowledge they have to be creative

The cost of the labour is not tied directly to the hours spent, therefore there is less incentive by workers to finish a job and move to the next which causes delays in construction projects

Tax Insights

By way of comparison to other industries in Mozambique, agriculture is suitably better positioned for attracting investments and should do well. In practice the following factors, both favorable and unfavorable exist:

Audit Opportunities