Mozambique lost over USD 2.3 billion through under-invoicing schemes in the extractive industry

The extractive activities carried out by politically exposed persons, such as those mentioned above, often yield little benefit for the communities where they occur. In mineral-rich regions like Nampula and Cabo Delgado, local populations have frequently endured forced removals, environmental pollution, and unfulfilled promises of prosperity (see inter alia here).

A significant challenge arises when politically exposed persons serve as local partners of foreign extractive companies within communities, as these individuals are often closely connected to local authorities—both aligned with the same ruling party. In such contexts, even tax regulations requiring extractive companies to allocate ten percent of all royalties paid to the areas where they operate have yielded little tangible benefit locally in Cabo Delgado.

At a tax workshop held in Pemba, Cabo Delgado, in February 2025, local participants demanded that all mining taxes and royalties from joint ventures between foreign multinationals and local partners be paid within the province and spent in consultation with local communities. They expressed support for the political platform of opposition candidate Venancio Mondlane, who had advocated this very point in the recent elections. Attendees also voiced deep mistrust of “Maputo deals,” referring to tax payments by extractive companies made in Mozambique’s capital. “Those in Maputo do not have control over the company’s operations on the ground, and not all activities are declared,” one participant explained. Another added that he suspected tax officials frequently turn a blind eye to companies that evade declarations or payments. “Some people within the tax authority end up receiving extra payments from these taxes,” he said. “There is a network facilitating such schemes.” However, Anibal Mbalango, a tax authority official and workshop organiser, rejected these suggestions, expressing strong doubts that local tax payments could be effectively managed outside of Maputo. A few months later, Mbalango was appointed as the new national director of Mozambique’s tax authority.