New report published by AMER

15th August, 2023

CESET asked AMER to produce a detailed proposal package of fiscal and non-fiscal incentives aligned with each GESIS progression stage; a clear definition of pathways that the GESIS working group could follow for approval of the proposed package of incentives; definition of instrument(s) whereby the package of incentives will be approved, according to the law, and a list of different institutions that the GESIS working group should be engaged with and the kind of engagement according to its role in relation to incentives approval.

Upon analysing and reviewing the current policy and legal framework applicable to the energy sector, one easily reaches the conclusion that it does not provide gender and social inclusion promotion norms. Operators have no incentive to consider gender and social inclusion in the implementation of their project, hence the need to provide fiscal and nonfiscal incentives to ensure gender and social inclusion in off-grid energy projects.

In terms of fiscal incentives, specific tax rebate and fiscal incentives are necessary for the off-grid sub-sector to go beyond what the Investment legislation currently offer to investors that meet the 7,5 million Meticais (USD118,000) threshold, which is: i) Exemption from payment of customs duties and VAT on import of equipment (5 years); Reduction of rates applied for corporate income tax and (IRPC) and Personal Income Tax (IRPS) purposes (80% reduction of standard rate from the 1st to the 5th tax years; 60% reduction from the 6th to 10th tax years; and 25%reduction from the 11th to the 15th tax years.

Other non-fiscal incentives include access to DUAT for gender and social inclusion projects; exemption from licensing requirements fees; more expats quotas; available financing on non-commercial terms etc.

For those proposed incentives to be materialized ARENE as the regulatory authority will play a key role, working with other key stakeholders such as Assembly of the Republic (Parliament) which has the constitutional mandate to enact fiscal and tax legislation including incentives; the Ministry of Economy and Finance, alongside the Ministry of Mineral Resources and Energy, which is the energy line ministry will together spearhead the proposal of fiscal and non-fiscal incentives for approval both in Parliament for the former and to the Government (Cabinet) on the latter; the Ministry of Land and Environment, plays a pivotal role on energy projects as they issue DUATs and environmental licenses for projects to be implemented; Ministry of Gender, Children and Social Action which caters for gender and social inclusion shall be considered as a key stakeholder; academia and civil society organisations. Beyond the Mozambique State’s entities it is important to consider international and multilateral stakeholders which can provide funding for off-grid projects that subscribe to gender and social inclusion issues through GESIS.

It would be important to link GESIS’s proposed incentives to project financing like what commercial banks and multilateral financing institutions do with Environmental, Social and Corporate Governance (ESG) and human rights at large.

You can download a copy of the full report below.