Mozambique has passed a decree to regulate the Sovereign Fund Law, marking a pivotal step in establishing a robust legal framework for managing revenues from the country’s oil and natural gas exploration.
The newly approved regulation signifies a significant leap forward in promoting transparency, accountability, and good governance in Mozambique’s natural resources sector.
Enacted under Law 1/2024 of 9th January, the Mozambique Sovereign Fund aims to ensure the responsible management of non-renewable resource proceeds, fostering sustainable socioeconomic development and securing savings for future generations.
The recently endorsed decree stands out by embedding fundamental principles such as transparency, accountability, legality, independence, prudence, and risk management, along with mechanisms to address potential conflicts of interest. These principles form the bedrock of the Sovereign Fund’s governance structure.
A notable feature is the establishment of an independent Supervisory Committee composed of civil society representatives.
This committee will oversee all activities related to revenues, deposits, resource allocation, and fund management, ensuring transparency and accountability by reporting directly to the Assembly of the Republic and publishing quarterly findings.
Moreover, the decree mandates the formation of an Investment Advisory Council comprising financial experts and independent government members.
This advisory body will evaluate investment opportunities, assess risks, and monitor the Sovereign Fund’s performance.
Incorporating an Investment Advisory Council with expertise and independence is essential for ensuring that investment decisions are guided by technical criteria and aligned with the country’s interests, addressing concerns raised by civil society regarding the choice of the Bank of Mozambique as the fund’s manager.
The governance and transparency aspects extend beyond these bodies, with the regulation also requiring independent internal and external audits of the fund’s accounts and operations.
Detailed regular reports, including information on investments, revenues, profitability, and risk levels, must also be published, laying the groundwork for management based on international best practices.
While the decree represents a significant advancement for transparency and good governance in Mozambique’s natural resources sector, its effective implementation hinges on the joint commitment of the government, civil society, the private sector, and international partners to ensure compliance with established guidelines.
This collaborative effort is crucial to responsibly managing revenues from oil and gas exploration and fostering the country’s sustainable development in the medium and long term.
