Mozambique, a country of approximately 36.8 million people, stands at a pivotal moment in its economic development. Despite steady growth, various challenges like illicit trade, VAT evasion, and a highly informal economy continue to limit revenue mobilization and constrain GDP expansion. 

With informal employment reaching 95.7% of the workforce, a significant share of economic activity remains outside the formal system. However, ongoing investments in digital infrastructure create a strong opportunity to address these issues through targeted digital transformation. 

In this post, we’ll discuss how four comprehensive systems in particular — digital track and trace, B2B & B2C e-invoicing, and self-employment tax solution — offer a clear path to help Mozambique increase fiscal revenues and drive sustainable economic growth. 

Digital Track and Trace Systems to Combat Illicit Trade 

Illicit trade remains a major obstacle to revenue collection in Mozambique, particularly in sectors such as tobacco and alcohol where excise taxes are significant. Weak supply chain visibility allows untaxed or counterfeit goods to circulate freely, undermining legitimate businesses and eroding the tax base. 

Digital track and trace systems offer a direct and proven way to address this issue. By assigning unique identifiers to products and tracking them throughout the supply chain, governments can gain real-time visibility into production, distribution, and sales. This ensures that taxes are properly applied and paid at each stage while preventing illicit goods from entering the formal market. 

The potential impact of such a system in Mozambique is substantial. In the tobacco sector, the licit market currently accounts for 85% of total activity, equivalent to approximately US $416 million, according to the data provided by Statista. But if the country were to implement a solution such as traceCORE Digital Track and Trace, this share could increase to 95%, raising the market value to around US $465 million, as estimated by our team.

The effect is even more pronounced in the alcohol sector, where the licit market currently represents only 48%, or US $843 million. With effective track and trace in place, this could also expand to 95%, reaching approximately US $1.7 billion. 

Taken together, these improvements would generate an overall increase of US $874 million in the taxable market base. Beyond the immediate fiscal gains, enhanced transparency would strengthen regulatory enforcement, improve market conditions for compliant businesses, and increase investor confidence in Mozambique’s economy.

B2B and B2C E-Invoicing to Reduce VAT Evasion 

VAT inefficiency is another critical challenge. According to MRA and USAID, Mozambique’s VAT gap is estimated at 54%, with annual losses reaching approximately US $1.3 billion. This reflects systemic issues in how transactions are recorded and reported, with paper-based processes and fragmented systems making it difficult for authorities to detect underreporting and fraud. 

The introduction of a comprehensive B2B and B2C e-invoicing solutions has the potential to fundamentally transform VAT compliance. By digitizing invoicing and transmitting transaction data to tax authorities in real time, such systems create a transparent and tamper-resistant record of economic activity. 

If Mozambique were to implement traceCORE B2B and B2C E-Invoicing, the country could reduce its VAT gap from 54% to just 5%. Based on our estimates, this shift would translate into an additional US $1.2 billion in annual revenue. Beyond increasing collections, e-invoicing also simplifies compliance for businesses, reduces administrative burdens, and provides governments with high-quality data for fiscal planning and economic analysis. 

Self-Employment Digital Tax Solutions to Formalize Informal Work 

The scale of informal employment in Mozambique represents both a challenge and an opportunity. With 95.7% of the workforce operating informally, as reported by ILO, the majority of economic participants remain outside the tax system. This limits revenue generation while also preventing individuals from accessing formal financial services and protections. 

A digital system like traceCORE Self-Employment Tax Solution, combined with a simplified tax regime, offers a practical pathway to formalization. By introducing a low, accessible tax rate, such as 5%, and enabling mobile-based registration and payment, the government can make compliance straightforward and attractive for informal workers. 

If implemented effectively, such a system could bring approximately 4.1 million people in Mozambique into the formal economy. According to our estimates, this transition would generate an additional US $847 million in annual revenue while also fostering financial inclusion and improving the overall resilience of the labor market.

Digital tools are essential in this context, as they eliminate many of the logistical and administrative barriers that have historically discouraged formal participation.

The Importance of Expert Advisory in Implementation 

While the economic case for these digital solutions is compelling, their successful implementation depends on careful planning and execution. The Government of Mozambique must address regulatory frameworks, ensure interoperability between systems, manage stakeholder engagement, and support users through the transition. 

This makes the role of experienced advisory partners particularly important. traceCORE are digital transformation experts who not only deliver the underlying technology but also offer strategic advisory services that guide governments through each stage of implementation.  

From policy design to system integration and operational rollout, this combination of expertise helps ensure that digital transformation initiatives achieve their full potential.

Conclusion 

Mozambique has a clear opportunity to accelerate GDP growth by leveraging digital transformation to address structural inefficiencies in its economy. The combined impact of a track and trace system, e-invoicing, and a self-employment tax solution represents a great opportunity to expand the tax base, improve compliance, and formalize economic activity. 

These reforms go beyond revenue collection. They lay the foundation for a more transparent, inclusive, and competitive economy — one in which businesses can thrive, investors can operate with confidence, and citizens can participate more fully in economic life. 

With the right mix of technology, policy alignment, and expert guidance, Mozambique can convert its digital momentum into sustained economic growth and position itself as a leader in digital fiscal innovation.