According to official data, in recent years agricultural production has increased from 20 million tons to 43 million tons in the period 2018 to 2020, and is expected to reach 47 million tons by 2022.

Still, the levels of growth shown in the statistics are close to the demographic growth of the rural population, which reflects the urgent need to increasingly prioritize the sector, for the sake of the development and economic and social stability of the country and of the more than 20 million Mozambicans who live directly from agriculture.

The sector still faces several structural challenges, such as: lack of capital by companies and producers, a tax regime unfavorable to the sector and to attracting investment, limited access to quality inputs, limited access to credit, high energy costs, deficient road and rail infrastructure network, high transport and logistics costs, low labor productivity, and susceptibility to the influence of weather conditions, which with climate change have become more frequent and violent.

The recent increase in the price of sea freight and fuel and fertilizers is sure to worsen further due to the war between Russia and Ukraine, which will continue to choke businesses.

We recognize that the Government has made a huge effort to support agriculture, namely through the allocation of 10% of the budget to the sector, and the SUSTENTA Program, but, in our opinion, these actions are insufficient to achieve the goals of increasing family income, if not accompanied with other reforms in critical areas.

In public-private dialogue, the business community has advocated the adoption of measures to boost the sector, especially agribusiness, through reforms such as

• (a) reduction of the Corporate Income Tax - IRPC rate in the Agricultural Sector from the current 32% to 10%;
• (b) the issue of VAT exemption across the entire value chain from agriculture to agro-processing.
• (c) to eliminate circulation fees for agricultural products at the district and provincial level;
• (d) revision of Law 13/99 on Cashew Promotion, Production, Processing and Export to update the surcharge;
• (e) passing the fertilizer law and its regulations, and eliminating fertilizer tariffs from the current 2.5% to zero (Abuja Declaration);
• (f) resolving the error in the customs tariff, which brings tax charges for some molecules and for pesticides in small packages, which is affecting hundreds of thousands of family producers (requesting that a transitional mechanism be created, while the tariff review process takes place).

It is also imperative that measures be taken to facilitate access to agricultural credit, which currently stands at less than 1% of the total credit allocated to the sectors.

In the set of priorities we would like on this occasion to dwell on the reinstatement of the incentive that is the reduced Corporate Income Tax rate for the agricultural sector, i.e. IRPC of 10%.

Since the incentive lapsed in 2015, the government has repeatedly assured its renewal during annual negotiations and discussions within the Public-Private Dialogue, but, we have yet to see this measure materialize.

Recently, within the scope of the 2021 minimum wage negotiation process, this promise was reiterated and it was assured that actions would be taken for the effective reinstatement of the reduced IRPC rate of 10% for sector A, livestock and forestry, for the period from 2021 to 2024 as a measure to cushion the impact of the minimum wage increase by 10% on the financial situation of companies which is per se fragile.

In this sense, we reiterate the need to reinstate the IRPC incentive of 10% to catalyze national and foreign private investment in the agricultural sector, as well as the promotion of new technologies, research, and greater resilience to climate change, at a time when the sector is still recovering from the impact of natural disasters.