By Samantha Cyrne at H. Gamito, Couto, Gonçalves Pereira, Castelo Branco & Associados
In a country where the land is the property of the state and cannot be sold or otherwise alienated, charged or encumbered, the question is often raised of how foreign investors can develop their projects on a land which they cannot own.
In Mozambique, the land cannot be owned but it can be used and enjoyed by means of the concession of a right of land use and benefit (“Direito de Uso e Aproveitamento da Terra” or “DUAT”), which can be granted to either natural or legal persons, in accordance with the conditions and limitations set forth in the applicable Land Law (Law nr. 19/97, of October 1).
Foreign persons are not excluded from the benefit of this right of land use and benefit, provided that they have an investment project duly approved and (i) if they are natural persons, provided that they have been resident in the Republic of Mozambique for at least five years; or (ii) if they are legal persons, provided that they are established or registered in the Republic of Mozambique.
The right of land use and benefit can be acquired by either occupancy or concession given by the competent public authorities and be transferred by inheritance or inter vivos, by means of the transfer of the infrastructures, constructions and improvements existing on the land.
Regarding the transfer of the right of land use and benefit, the Land Law distinguishes between the transfer of urban tenements – when a building is incorporated on the land and the source of income depends mainly on such building and not on the land itself – in which case the transfer of the building includes the automatic transfer of the right of land use and benefit, without need for the prior authorization of the competent public authorities; and the transfer of rural tenements – a demarcated portion of land where the constructions on it have no independent economic use or value and the source of income depends mainly on the land itself – in which case the transfer of the constructions does not imply the automatic transfer of the right of land use and benefit, which is subject to the prior approval of the public authorities.
When applying for the concession of a right of land use and benefit or the purchase of improvements on such land, some restrictions must be considered such as the fact that no right of land use and benefit can be acquired in total and partial protections zones, although special licences may be issued for the exercise of specific activities in such areas.
The total and partial protection zones are part of the public domain, which is an area considered to be destined for the satisfaction of the public interest, and are usually intended for nature conservation or preservation activities or for state security and defence.
Another restriction to be considered is the fact that some real estate which reverted in favour of the Estate in 1976 is subject to a specific burden of nontransmissibility in favour of foreign persons.
As to the duration of the right of land use and benefit, beside some situations where it is not subject to time limit, namely (a) where the right of land use and benefit was acquired by local communities by means of occupancy; (b) where the right of land use and benefit is intended for personal residential purposes; or (c) where national individual persons intend it for family use, the right of land use and benefit granted for purposes of economic activities is subject to a maximum term of 50 years and may be renewed for an equal period upon request.
According to the applicable legislation, the right of land use and benefit will extinguish (i) when the holder of the right of land use and benefit fails to achieve the exploitation plan or the investment project intended for such land; (ii) by revocation of the right of land use and benefit for reasons of public interest, preceded by the payment of a fair indemnification and/or compensation; (iii) on the expiry of the term or renewal of the right of land use and benefit; or (iv) when the holder of the right of land use and benefit waives such right. Upon termination of the right of land use and benefit, the non-removable improvements on the land shall revert to the state.
This is a general overview of the current legal land regime in Mozambique, which has been applied so far, not impeding the development of important investment projects in Mozambique, in areas such as coal exploration, biofuel production, forestry plantation or paper production, that depend on the concession of rights of land use and benefit over large areas, which, in most cases, have been applied for and duly granted, thus enabling the successful implementation of these projects.